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China Natural Gas Announces Second Quarter 2013 Financial Results



      China Natural Gas Announces Second Quarter 2013 Financial Results

PR Newswire

XI'AN, China, Aug. 14, 2013

XI'AN, China, Aug. 14, 2013 /PRNewswire / -- China Natural Gas, Inc. ("China
Natural Gas" or the "Company") (PINK: CHNG), a leading provider of compressed
natural gas (CNG) for vehicular fuel and pipeline natural gas for industrial,
commercial and residential use in Xi'an, China, today announced its financial
results for the second quarter ended June 30, 2013.

Second Quarter 2013 Results

Revenue in the second quarter of 2013 decreased by 9.6% to $34.2 million from
$37.9 million in the second quarter of 2012, driven by the closure of three
fueling stations in the second quarter of 2012, three fueling stations in the
third quarter of 2012, one fueling station in October 2012, and one fueling
station in April 2013 because of changes in market conditions. Sales revenue
of natural gas decreased by 9.1% year-over-year to $31.8 million from $34.9
million in the second quarter of 2012. Gasoline revenue in the second quarter
of 2013 decreased by 28.2% to $0.5 million, from $0.7 million in the same
period of the prior year, mainly because the closure of one gasoline fueling
stations during the fourth quarter of 2012. Installation and automobile
conversion services revenue decreased by 12.9% year-over-year to $2.0 million,
from $2.3 million a year ago. In the second quarter of 2013, sales of natural
gas, gasoline, and installation and automobile conversion services contributed
92.7%, 1.5%, and 5.8% of total revenue, respectively.

Gross profit in the second quarter of 2013 decreased 18.7% to $11.2 million
from $13.8 million in the same period of the prior year. Gross margin in the
second quarter of 2013 was 32.8%, compared to 36.5% a year ago. Gross margin
decreased primarily due to the decrease in gross margin for our LNG business.

Operating income in the second quarter of 2013 was $4.0 million, a decrease of
38.6% year-over-year from $6.6 million, primarily attributable to the decrease
in gross profit of natural gas from fueling stations and LNG.

Income tax expense was $0.7 million at an effective tax rate of 18.2%, as
compared to $1.3 million at an effective tax rate of 19.8% in the second
quarter of 2012. The decrease of effective income tax rate was primarily
attributable to the reduced income tax rate of 15% enjoyed by JBLNG beginning
on January 1, 2013.

Net income in the second quarter of 2013 decreased by 37.4% to $3.2 million or
$0.15 per diluted share from $5.1 million or $0.24 per diluted share in the
second quarter of 2012.

As of June 30, 2013, the Company had $7.4 million of cash and cash equivalents
on hand, compared to $10.9 million of cash and cash equivalents as of December
31, 2012. The decrease was primarily attributable to the construction of
pipelines in Shaanxi Province and LNG fueling stations in Hubei Province, and
the repayment of the loans from Shanghai Pudong Development Bank.

Net cash provided by operating activities was $10.0 million for the six months
ended June 30, 2013, as compared to net cash provided by operations of $18.8
million for the six months ended June 30, 2012. The decrease was primarily due
to the increase in advances to suppliers, accounts receivable and other
receivable, and adjustments for non-cash expense items.

Conference Call

Management will hold a conference call on Friday, August 16, 2013 at 9:00 a.m.
EDT (6:30 a.m. Pacific) to discuss its second quarter results.

To participate in the call please dial 1-800-860-2442, or 1 412-858-4600 for
international calls, approximately 10 minutes prior to the scheduled start
time.

A replay of the call will be available 1 hour after the end of the conference
through End Date on Aug 26, 2013 at 9:00 am EDT. The number for the replay is
1-877-344-7529 or 1-412-317-0088 for international calls;the pass code for
the replay is 10032849.

About China Natural Gas, Inc.

China Natural Gas (http://www.naturalgaschina.com) transports and sells
natural gas to vehicular fueling terminals, as well as commercial, industrial
and residential customers through its distribution networks in China's
Shaanxi, Henan and Hubei Provinces. As of June 30, 2013, the Company owns
approximately 120 km of high-pressure pipelines and operates 19 CNG fueling
stations in Shaanxi Province, 10 CNG fuelling stations in Henan Province and 1
CNG fueling station in Hubei Province. China Natural Gas' five primary
business lines include: (1) the distribution and sale of CNG through
Company-owned CNG fueling stations for hybrid (natural gas/gasoline) powered
vehicles; (2) the installation, distribution and sale of piped natural gas to
residential, commercial and industrial customers through Company-owned
pipelines; (3) production and sales of LNG through our LNG production facility
in Jingbian County, Shaanxi Province,and sales of LNG through our mobile
fueling truck; (4) the distribution and sale of gasoline through Company-owned
CNG fueling stations for hybrid (natural gas/gasoline) powered vehicles; and
(5) the conversion of gasoline-fueled vehicles to hybrid (natural
gas/gasoline) powered vehicles through its auto conversion division.

SAFE HARBOR: FORWARD-LOOKING STATEMENTS

This press release includes statements that may constitute forward-looking
statements made pursuant to the safe harbor provision of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements can
be identified by terminology such as "will," "expects," "anticipates,"
"future," "intends," "plans," "believes," "estimates" and similar statements.
China Natural Gas, Inc. may also make written or oral forward-looking
statements in its periodic reports to the U.S. Securities and Exchange
Commission on forms 10-K, 10-Q and 8-K, in its annual report to shareholders,
in press releases and other written materials and in oral statements made by
its officers, directors or employees tofourth parties. Statements that are not
historical facts, including statements about the Company's beliefs and
expectations, are forward-looking statements. Forward-looking statements
involve inherent risks and uncertainties that could cause actual results to
differ materially from the forward-looking statements. A number of important
factors could cause actual results to differ materially from those contained
in any forward-looking statement. Potential risks and uncertainties include,
but are not limited to, risks outlined in the Company's filings with the U.S.
Securities and Exchange Commission, including its registration statements on
Forms S-1 and S-3, in each case as amended. The Company does not undertake any
obligation to update any forward-looking statement, except as required under
applicable law.

This release is not an offer of securities for sale in the United States.
Securities may not be offered or sold in the United States absent registration
or an exemption from registration. Any public offering of securities to be
made in the United States will be made by means of a prospectus that may be
obtained from the issuer or selling security holder and that will contain
detailed information about the company and management, as well as financial
statements. 

 

CHINA NATURAL GAS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF JUNE30, 2013 AND DECEMBER 31, 2012

(Stated in US Dollars)
                                                June 30,        (Audited)
                                                2013            December 31,
                                                                2012
ASSETS
CURRENT ASSETS:
Cash and cash equivalents                       $ 7,385,901     $ 10,857,456
Accounts receivable, net                          2,580,664       2,148,379
Other receivables, net                            1,005,614       458,605
Employee advances                                 353,408         399,031
Inventories                                       2,916,691       2,473,933
Advances to suppliers                             9,259,807       4,869,606
Prepaid expense and other current assets          3,009,853       3,541,431
    Total current assets                          26,511,938      24,748,441
Investment in unconsolidated joint ventures       -               1,587,000
Property and equipment, net                       181,454,681     179,515,563
Construction in progress                          61,900,042      53,393,933
Goodwill                                          857,269         839,806
Other intangible assets                           21,233,562      21,400,924
Prepaid expenses and other assets                 7,538,785       7,015,142
TOTAL ASSETS                                    $ 299,496,277   $ 288,500,809
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Senior notes- current maturities                $ 39,149,998    $ 38,352,498
Current portion of bank loan payable              4,860,000       4,761,000
Redeemable liabilities - warrants                 17,500,000      17,500,000
Accounts payable and accrued liabilities          6,554,897       6,756,278
Other payable - related party                     840,041         1,616,429
Short-term borrowing - related party              2,679,945       2,679,945
Unearned revenue                                  3,283,380       3,663,570
Accrued interest                                  2,854,030       1,936,584
Taxes payable                                     1,507,698       2,232,546
Total current liabilities                         79,229,989      79,498,850
LONG-TERM LIABILITIES:
Bank loan payable, net of current portion         3,240,000       4,761,000
Total liabilities                               $ 82,469,989    $ 84,259,850
STOCKHOLDERS' EQUITY:
Preferred stock, par value $0.0001 per
share, 5,000,000 authorized, none issued and    $ -             $ -
outstanding
Common stock, par value $0.0001 per share,
45,000,000 authorized, 21,458,654 issued and      2,145           2,145
outstanding at June30, 2013 and December 31,
2012, respectively
Additional paid-in capital                        83,649,675      83,501,637
Accumulated other comprehensive income            26,073,493      21,276,931
Statutory reserves                                12,737,218      11,818,087
Retained earnings                                 94,272,625      87,410,615
Noncontrolling interests                          291,132         231,544
Total stockholders' equity                        217,026,288     204,240,959
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY      $ 299,496,277   $ 288,500,809

 

CHINA NATURAL GAS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

FOR THE THREE AND SIX MONTHS PERIODS ENDED JUNE30, 2013 AND 2012

(Stated in US Dollars)
                    Three Months Ended            Six Months Ended
                    June 30,                      June 30,
                    2013           2012           2013           2012
Revenues
    Natural gas     $ 31,765,252   $ 34,927,804   $ 63,945,320   $ 64,327,491
    Gasoline          503,680        701,168        978,679        1,527,063
  Installation and    1,979,026      2,272,723      4,823,289      4,324,459
others
                      34,247,958     37,901,695     69,747,288     70,179,013
Cost of revenues
    Natural gas       21,696,966     22,462,516     42,650,396     41,737,375
    Gasoline          453,364        655,614        874,025        1,443,758
  Installation and    849,457        955,283        2,046,105      1,807,528
others
                      22,999,787     24,073,413     45,570,526     44,988,661
Gross profit          11,248,171     13,828,282     24,176,762     25,190,352
Operating expenses
    Selling           6,034,037      5,619,864      11,587,891     10,570,664
  General and         1,177,469      1,636,029      2,709,459      4,347,675
administrative
                      7,211,506      7,255,893      14,297,350     14,918,339
Income from           4,036,665      6,572,389      9,879,412      10,272,013
operations
Other income
(expense):
    Interest          10,973         9,853          20,696         20,599
income
    Interest          (171,992)      (275,643)      (361,371)      (707,680)
expense
    Loss on
disposal of fixed     (358)          -              (57,403)       -
assets
    Loss on sales
of long term          (500)          -              (80,150)       -
investment
    Other income      9,543          18,763         35,742         (14,330)
(expense), net
    Change in fair    -              (1,146)        -              (1,229)
value of warrants
    Foreign
currency exchange     (4,456)        1,494          (5,269)        (504,446)
loss
                      (156,790)      (246,679)      (447,755)      (1,207,086)
Income before         3,879,875      6,325,710      9,431,657      9,064,927
income tax
Provision for         705,467        1,251,128      1,590,928      2,042,599
income tax
Net income            3,174,408      5,074,582      7,840,729      7,022,328
Less: Income
(loss)
attributable to       32,735         28,876         59,588         (199,183)
noncontrolling
interests
Net income
attributable to       3,141,673      5,045,706      7,781,141      7,221,511
China Natural Gas,
Inc.
Other
comprehensive
income
Foreign currency      3,494,137      (17,584)       4,796,562      1,741,216
translation gain
Comprehensive       $ 6,635,810    $ 5,028,122    $ 12,577,703   $ 8,962,727
income
Weighted average
shares outstanding
Basic                 21,458,654     21,458,654     21,458,654     21,458,654
Diluted               21,458,654     21,458,654     21,458,654     21,458,654
Earnings per share
Basic               $ 0.15         $ 0.24         $ 0.36         $ 0.34
Diluted             $ 0.15         $ 0.24         $ 0.36         $ 0.34

 

 

 

 

CHINA NATURAL GAS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIXMONTHS ENDED JUNE30, 2013 AND 2012

(Stated in US Dollars)
                                              2013             2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                      7,840,729        7,022,328
Adjustments to reconcile net income to net
cash  provided by operating activities:
  Depreciation and amortization                 6,938,760        6,945,862
  Provision for (recovery of)doubtful           110,063          202,100
accounts
  Loss (Gain) on disposal of equipment          57,403           -
  Loss (Gain) on sales of long term             80,150           -
investment
  Stock-based compensation                      148,038          296,076
  Change in fair value of warrants              -                1,229
  Change in assets and liabilities:
    Accounts receivable                         (493,607)        1,035,676
    Other receivables                           (963,970)        (146,652)
    Employee advances                           53,069           (137,270)
    Inventories                                 (387,209)        (591,244)
    Advances to suppliers                       (4,243,935)      (336,767)
    Prepaid expense and other current assets    655,917          3,527,412
    Accounts payable and accrued liabilities    494,285          1,830,593
    Unearned revenue                            (451,580)        (311,342)
    Accrued interest                            917,446          (25,477)
    Taxes payable                               (763,178)        (462,934)
Net cash provided by operating activities       9,992,381        18,849,590
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment for acquisition of property and         (1,411,550)      (3,592,657)
equipment
Proceeds from sales of property and             7,178            -
equipment
Proceeds from sales of long term investment     721,350          -
Additions to construction in progress           (10,367,064)     (10,459,937)
Prepayment on long-term assets                  (170,460)        52,892
Payment for acquisition of business             -                (657,007)
Payment for intangible assets                   -                (1,511,611)
Net cash used in investing activities           (11,220,546)     (16,168,320)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of short-term borrowing and other     (801,500)        -
payable, related parties
Repayment of long-term debt                     (1,603,000)      (793,500)
Repayment of senior notes                       -                (3,333,334)
Increase in restricted cash                     -                (1,890,641)
Net cash (used in) provided by financing        (2,404,500)      (6,017,475)
activities
Effect of exchange rate changes on cash and     161,110          17,388
cash equivalents
NET (DECREASE) INCREASE IN CASH AND CASH        (3,471,555)      (3,318,817)
EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF         10,857,456       9,622,883
PERIOD
CASH AND CASH EQUIVALENTS, END OF PERIOD      $ 7,385,901      $ 6,304,066
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Interest paid, net of capitalized interest    $ 284,978        $ 481,583
Income taxes paid                             $ 2,001,258      $ 1,967,965
Non-cash transactions for investing and
financing activities:
Construction materials transferred to         $ -              $ 67,142
Construction in progress
Construction in progress transferred to       $ 3,143,182      $ 18,507,550
property and equipment
Capitalized interest - amortization of        $ -              $ 2,040,389
discount of notes payable and issuance cost
Other assets transferred to construction in   $ 94,345         $ 2,395,267
progress

 

For more information, please contact:

China Natural Gas, Inc.     
Zhaoyang Qiao, CFO
Phone: +86-29-8832-7391
Email: qiaochaoyang@naturalgaschina.com

Jackie Shi
Investor Relations Director
Phone: +86-29-8832-3325 x922
Cell:  +86-139-9287-9998
Email: yjshi@naturalgaschina.com 

SOURCE China Natural Gas, Inc.

Website: http://www.naturalgaschina.com
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