TIANJIN, China, Aug. 20 /PRNewswire-Asia-FirstCall/ -- China New
Energy Group Company (OTC:CNER) (BULLETIN BOARD: CNER) ("China New
Energy" or the "Company"), a leading energy project developer
specializing in development of natural gas distribution networks,
and distribution of natural gas in China, announced its financial
results for the second quarter ended June 30, 2009. Second Quarter
2009 Highlights -- Revenue increased 47% year-over-year to $2.8
million -- Gross profit increased 47% year-over-year to $2.1
million -- Gross margin was 74.6%, compared to 74.6% in the prior
year period -- Operating income increased 12% year-over-year to
$1.3 million -- Net income from continuing operations increased to
$1.0 million from a loss of $32,000 in the prior year period --
Completed a private placement with gross proceeds of $5.4 million
-- Further strengthened its management team with appointment of new
Chief Executive Officer Second Quarter Results For the second
quarter of fiscal 2009, revenue increased 47% to $2.8 million from
$1.9 million the same quarter a year ago. The growth was primarily
attributable to an increase in connected households in the cities
where the Company supplies natural gas and operates its gas
distribution network. "We are pleased to achieve solid revenue
growth this quarter from our existing operations," said Mr. Yangkan
Chong, the Company's Chief Executive Officer. "For the next few
quarters, we will work actively to seek additional project
opportunities. Our successful operating history and experienced
management team should enable us to win more bids, increase our
market share and maintain a steady growth rate." Gross profit
increased 47% to $2.1 million from $1.4 million a year ago. Gross
margin was 74.6%, equivalent to the gross margin in the same
quarter in 2008. Selling, general and administrative (SG&A)
expenses increased 235%, to $0.8 million from $0.2 million during
the same period in 2008. As a percentage of revenues, SG&A
expenses increased to 27% compared to 11.8% for the same period in
2008. Such increase in SG&A expenses was mainly attributable to
an increase in sales and administrative personnel. As a result,
operating income for the second quarter was $1.3 million or 47.8%
of revenues, up from $1.2 million or 62.8% of revenues in the same
period of 2008. Net income from continuing operations was $1.0
million for the second quarter, up from a loss of $32,000 for the
same period of 2008, as a result of the factors described above.
Six Month Results Revenue for the first six months of 2009 was $3.1
million, up 56% from $2.0 million a year ago, which was mainly
attributable to an increase in the Company's customer base. Gross
profit was $2.2 million, or 69% of revenue, up 49% from $1.4
million, or 72% of revenue, in the same period of 2008, due to an
increase in connection costs. SG&A expenses increased to $1.2
million, or 37% of revenue, up from $0.5 million, or 23% of revenue
during the same period of 2008 due to an increase in salaries and
depreciation charges. As a result, operating income for the six
months was $1.0 million or 31.9% of revenues, compared to $1.0
million or 48.7% of revenues in the same period of 2008. Net income
from continuing operations for the six months was $0.6 million
compared to net loss of $0.3 million for the same period of 2008.
Financial Condition As of June 30, 2009, the Company had working
capital of $9.1 million. Shareholders' equity was $27.6 million as
of June 30, 2009. Business Outlook Currently, natural gas
consumption in the PRC accounts for less than 3% of its total
energy consumption. However, driven by environmental pressure from
the demand side and improvements in social infrastructure with
economic growth, in the west in particular, and stable energy
supply, it is anticipated that the use of natural gas will grow
very rapidly in the PRC. According to the statistics of the China
National Development and Reform Commission, the consumption of
natural gas has increased from 24.5 billion cubic meters in 2000 to
55.6 billion cubic meters in 2006, which represented an average
growth of 32.42% per year. From the 4th Annual Asia Natural Gas
Congress 2008, experts anticipated that the demand for natural gas
in China would grow rapidly to 150 billion cubic meters in 2010 and
to 240 billion cubic meters in 2015. To the date, the Company owns
the exclusive rights to develop distribution networks to provide
natural gas to industrial, commercial and residential consumers in
the cities of Dashiqiao, Acheng and Nandaihe in north China. "We
are pleased to announce these strong quarterly results," said Mr.
Yangkan Chong, the Company's Chief Executive Officer. "We expect
our positive performance to continue through the remainder of this
year," added Mr. Chong. About China New Energy Group Company China
New Energy Group Company ("China New Energy" or the "Company") is
engaged in the development and construction of local gas
distribution networks, transportation of natural gas from suppliers
to our storage facilities in a given operational location, and
operating and maintaining the gas distribution networks, the
distribution of natural gas to residential, industrial and
commercial customers in the cities in China. Currently, the
Company, through subsidiaries in China, operates distribution
networks to provide natural gas in the cities of China. For more
information, please visit http://www.cnegc.com/ . Safe Harbor
Statement Safe Harbor Statement Under the Private Securities
Litigation Reform Act of 1995: Any statements set forth above that
are not historical facts are forward-looking statements that
involve risks and uncertainties that could cause actual results to
differ materially from those in the forward-looking statements.
Such factors include, but are not limited to, the Company's ability
to access natural gas for distribution, and ability to identify and
develop operational locations under favorable terms, changes in
natural gas pricing mechanism imposed by the Chinese government,
changes in the regulatory environment and future national or
regional economic and competitive conditions, and other factors
detailed from time to time in the Company's filings with the United
States Securities and Exchange Commission and other regulatory
authorities. The Company undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise. China New
Energy Group Company Condensed Consolidated Statement of Operations
and Comprehensive Income (Loss) - (Unaudited) (Stated in US
Dollars) For the Three months ended For the Six months ended June
30, June 30, 2009 2008 2009 2008 Revenues: Connection services
$2,627,230 $1,780,417 $2,773,982 $1,780,417 Natural gas 183,361
125,662 361,625 227,417 2,810,591 1,906,079 3,135,608 2,007,834
Cost of Sales Connection services 656,874 387,237 693,562 387,237
Natural gas 56,398 96,698 282,210 172,635 713,272 483,935 975,773
559,872 Gross Profit 2,097,319 1,422,145 2,159,835 1,447,963
Operating Expenses: Selling, general and administrative expenses
752,489 224,714 1,160,687 471,133 Total operating expenses 752,489
224,714 1,160,687 471,133 Operating income 1,344,830 1,197,430
999,148 976,829 Other Income (Expenses): Change in derivative
liability -- (910,000) -- (910,000) Interest Income 1,270 6,539
9,627 6,415 Interest (expense) -- -- (671) -- Other Income
(expenses) -- -- 93 -- Total other income (expenses) 1,270
(903,461) 9,049 (903,585) Income from continuing operations, before
tax 1,346,100 293,970 1,008,198 73,245 Income Taxes 366,790 318,047
367,787 318,047 Income (Loss) from continuing operations, net of
tax 979,310 (24,077) 640,411 (244,802) Income from discontinued
operations, net of tax -- 235,329 -- 217,491 Net Income (Loss)
979,310 211,252 640,411 (27,311) Net (Income) Loss attributable to
non controlling interest (14,051) (8,237) 6,903 (7,071) Net Income
(Loss) attributable to China New Energy Group 965,259 203,015
647,314 (34,382) Other Comprehensive income Net Income (Loss)
979,310 211,252 640,411 (27,311) Foreign currency translation
11,094 (127,843) 305 -- Comprehensive income attributable to the
Non-controlling interest (8,678) (1,291) (12,277) -- Comprehensive
income (loss) attributable to China New Energy Group $981,726
$82,118 $628,439 $(27,311) Income (Loss) per share - Basic &
Diluted Loss from continuing operations attributable to the
Company's common stockholders $(0.02) $0.00 $(0.02) $0.00
Discontinued operations attributable to the Company's common
stockholders $0.00 $0.00 $0.00 $0.00 Net (Loss) income attributable
to the Company's common stockholders $(0.02) $0.00 $(0.02) $0.00
Weighted average common shares outstanding Basic & Diluted
100,000,041 100,000,041 100,000,041 97,566,244 China New Energy
Group Company Condensed Consolidated Balance Sheets (Stated in US
Dollars) June 30, 2009 December 31, 2009 2009 2008 (Unaudited)
ASSETS CURRENT ASSETS Cash and equivalents $6,128,037 $5,833,508
Accounts receivable 2,887,687 2,183,087 Other receivables 2,013,839
2,254,997 Inventories, net 245,724 254,585 Prepayment -- 1,558,361
Other current assets 77,728 3,340 Total current assets 11,353,015
12,087,878 Property, plant and equipment, net 6,819,008 6,844,262
Construction in progress 9,777,981 5,589,551 Related party
receivable -- 84,120 Intangible assets 1,834,265 1,814,316 TOTAL
ASSETS $29,784,269 $26,420,127 LIABILITIES AND EQUITY CURRENT
LIABILITIES Accounts payable $44,558 $111,660 Accrued expenses
331,008 256,071 Accruals and other payable-Third Party 544,120
3,144,043 Tax payable 688,629 693,116 Related party payable 97,969
-- Dividend payable 518,000 194,000 TOTAL CURRENT LIABILITIES
2,224,284 4,398,890 Commitments and contingencies (Note 11) China
New Energy's Stockholders' equity: Preferred shares: 10,000,000
shares authorized, $0.001 par value, 2,973,761 and 1,857,373 shares
issued and outstanding as of June 30,2009 and December 31, 2008,
respectively 2,973 1,857 Common Stock: 500,000,000 shares
authorized, $0.001 par value, 100,000,041 shares issued and
outstanding as of June 30,2009 and December 31, 2008, respectively
100,000 100,000 Additional paid in capital 27,269,162 19,725,482
Retained deficit (2,646,872) (619,357) Statutory surplus reserve
fund 1,903,034 1,903,034 Accumulated other comprehensive income
735,847 730,168 Total China New Energy's Stockholders' equity
27,364,144 21,841,184 Non-controlling interest 195,841 180,053
TOTAL EQUITY 27,559,985 22,021,237 TOTAL LIABILITIES AND EQUITY
$29,784,269 $26,420,127 China New Energy Group Company Condensed
Consolidated Statements of Cash Flows - (Unaudited) (Stated in US
Dollars) For The Six Months Ended June 30, 2009 2008 (Unaudited)
(Unaudited) Cash flows from operating activities: Net income
attributable to China New Energy Group Company $647,314 $(34,382)
(Loss) Income attributable to non- controlling interest (6,903)
15,957 Change in derivative liability -- 910,000 Adjustments to
reconcile net income to net cash used in operating activities:
Depreciation 180,187 83,066 Amortization 6,392 4,257 Changes in
operating assets and liabilities: Accounts receivable (703,104)
(393,348) Other receivables 353,535 3,141 Inventories 9,024 186,918
Prepayment 1,559,165 -- Other current assets (74,377) -- Accounts
payable (67,166) 349,426 Accrued expenses 74,772 -- Accruals and
other payable-Third Party (693,240) (801,863) Taxes payable (4,933)
(781,975) Net cash provided by (used in) operating activities
1,280,666 (458,803) Cash flows from investing activities Addition
of construction in progress (4,184,295) (1,467,327) Addition of
fixed assets (150,529) -- Increase in short-term loan -- 660,000
Payments made to acquire Chensheng (1,838,946) -- Net cash used in
investing activities (6,173,770) (807,327) Cash flows from
financing activities Issued preferred stock 4,752,140 --
Contribution from former non- controlling interest 439,060 -- Loan
from related parties -- 252,064 Net cash flows provided by
financing activities 5,191,201 252,064 Effect of exchange rate
changes in cash (3,567) (11,869) Net increase (decrease) in cash
294,529 (1,025,935) Cash- beginning of year 5,833,508 2,311,028
Cash- end of year $6,128,037 $1,285,093 For further information,
please contact: CCG Investor Relations Mr. Crocker Coulson,
President Phone: +1-646-213-1915 (New York) Mr. Gary Chin Phone:
+1-646-213-1909 Email: Web: http://www.ccgirasia.com/ DATASOURCE:
China New Energy Group Company CONTACT: CCG Investor Relations -
Crocker Coulson, President at +1-646-213-1915 or and Gary Chin at
+1-646-213-1909, both for China New Energy Group Company Web site:
http://www.cnegc.com/
Copyright
