CHINA NATURAL GAS 
By - 1Q09 Revenue Increases 32.1% YoY to
- 1Q09 Gross Margin Increases859 Basis PointsYoY to 52.0% -
- 1Q09 Net IncomeIncreases 49.6%YoY to
-1Q09 Diluted EPS Increases 52.6% to $0.29 -
First Quarter 2009 Results
Revenue in the first quarter of 2009 increased 32.1% to
Gross profit in the first quarter of 2009 increased 58.2% to
Operating income in the first quarter of 2009 increased 47.8% to
Net income in the first quarter of 2009 increased 49.6% to
Mr. Qinan Ji, Chairman and CEO of China Natural Gas, commented, "We are pleased with strong financial performance in the first three months of 2009. During this quarter, we signed an agreement with the governments of Yulin city and
Liquidity and Capital Resources
As of
Reverse Stock Split
All share and per share amounts used in the Company's discussion on financial results, consolidated financial statements and notes thereto have been retroactively restated to reflect the 1-for-2 reverse stock split, which was effected on
Financial Outlook for 2009
The Company anticipates full year 2009 revenue will grow 15% to 20% to a range of
Mr. Ji concluded, "As demonstrated by our strong performance in revenue growth, gross margin expansion, and solid cash flows, the first quarter is a good start for China Natural Gas in 2009. We are very pleased with the arrival of Ms.
Conference Call
The management team will hold a conference call on
About China Natural Gas, Inc.
China Natural Gas, Inc., ("CHNG"), is the first
This press release may contain forward-looking statements. These statements are based on the current expectations or beliefs of China Natural Gas, Inc. management and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements, including the progress of construction and development activities, fluctuation of natural gas prices, the availability of natural gas supplies, changes in governmental regulations and/or economic policies.
CHINA NATURAL GAS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
(Unaudited)
Three Months Ended March 31,
2009 2008
Revenue
Natural gas revenue $ 14,965,819 $ 11,345,319
Gasoline revenue 1,174,398 1,130,750
Installation and other 2,387,449 1,549,605
Total revenue 18,527,666 14,025,674
Cost of revenue
Natural gas cost 6,746,929 6,182,274
Gasoline cost 1,130,057 1,068,037
Installation and other 1,017,028 686,887
Total cost of revenue 8,894,014 7,937,198
Gross profit 9,633,652 6,088,476
Operating expenses
Selling expenses 2,324,228 1,341,614
General and administrative expenses 1,681,921 939,325
Total operating expenses 4,006,149 2,280,939
Income from operations 5,627,503 3,807,537
Non-operating income (expense):
Interest income 8,908 55,285
Interest expense (581,492) (359,660)
Other income (expense), net (2,303) 304
Change in fair value of warrant 197,051 -
Foreign currency exchange loss (50,788) (7,430)
Total non-operating expense (428,624) (311,501)
Income before income tax 5,198,879 3,496,036
Provision for income tax 997,256 687,465
Net income 4,201,623 2,808,571
Other comprehensive income
Foreign currency translation
gain (loss) (152,115) 2,303,002
Comprehensive income $ 4,049,508 $ 5,111,573
Weighted average shares outstanding
Basic 14,600,152 14,600,152
Diluted 14,600,152 14,667,042
Earnings per share
Basic $ 0.29 $ 0.19
Diluted $ 0.29 $ 0.19
CHINA NATURAL GAS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2009 AND DECEMBER 31, 2008
March 31, December 31,
2009 2008
(Unaudited)
ASSETS
------
CURRENT ASSETS:
Cash & cash equivalents $ 9,058,361 $ 5,854,383
Accounts receivable 946,047 906,042
Other receivable - employee advances 180,205 332,263
Inventories 488,221 519,739
Advances to suppliers 684,632 837,592
Prepaid expense and other current assets 953,578 838,294
Loan receivable 293,000 293,400
Total current assets 12,604,044 9,581,713
PROPERTY AND EQUIPMENT, NET 74,549,788 76,028,272
CONSTRUCTION IN PROGRESS 25,110,473 22,061,414
DEFERRED FINANCING COSTS 1,644,372 1,746,830
OTHER ASSETS 9,278,092 8,844,062
TOTAL ASSETS $123,186,769 $118,262,291
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 1,103,837 $ 800,013
Other payables 336,936 124,151
Unearned revenue 1,138,536 944,402
Accrued interest 531,111 861,114
Taxes payable 1,904,943 1,862,585
Total current liabilities 5,015,363 4,592,265
LONG TERM LIABILITIES:
Notes payable, net of discount $14,844,315
and $15,478,395 as of March 31, 2009 and
December 31, 2008, respectively 25,155,685 24,521,605
Redeemable liabilities - warrants 17,500,000 17,500,000
Derivative liabilities - warrants 817,257 -
Total long term liabilities 43,472,942 42,021,605
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $0.0001 per share;
5,000,000 shares authorized; none issued - -
Common stock, $0.0001 per share; 45,000,000
shares authorized, 14,600,152 shares
issued and outstanding at March 31, 2009
and December 31, 2008 1,460 1,460
Additional paid-in capital 25,271,339 32,115,043
Cumulative translation adjustment 8,508,945 8,661,060
Statutory reserves 4,284,815 3,730,083
Retained earnings 36,631,905 27,140,775
Total stockholders' equity 74,698,464 71,648,421
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $123,186,769 $118,262,291
CHINA NATURAL GAS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
(Unaudited)
Three Months Ended
March 31,
2009 2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $4,201,623 $ 2,808,571
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 1,389,565 656,587
Loss on disposal of building
improvements and equipment - 11,957
Amortization of discount on senior notes 170,712 146,663
Amortization of financing costs 38,578 56,270
Stock based compensation 14,842 -
Change in fair value of warrants (197,051) -
Change in assets and liabilities:
Accounts receivable (41,244) (163,656)
Other receivable - employee advances 151,617 -
Inventories 30,812 (782,687)
Advances to suppliers 151,828 63,341
Prepaid expense and other current assets (100,912) (257,016)
Accounts payable and accrued liabilities 304,860 95,847
Other payables 212,961 1,129
Unearned revenue 195,435 22,709
Accrued interest (330,003) 73,717
Taxes payable 44,898 768,939
Net cash provided by operating activities 6,238,521 3,502,371
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (13,484) (555,720)
Proceeds from short term investments - 243,200
Additions to construction in progress (2,552,098) (9,586,215)
Prepayment on long term assets (426,913) (4,128,711)
Payment for intangible assets (35,822) -
Payment for land use rights - (25,091)
Net cash used in investing activities (3,028,317) (14,052,537)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from senior notes - 40,000,000
Payment for offering costs - (2,122,509)
Net cash provided by financing activities - 37,877,491
Effect of exchange rate changes on cash and cash
equivalents (6,226) 635,076
NET INCREASE IN CASH & CASH EQUIVALENTS 3,203,978 27,962,401
CASH & CASH EQUIVALENTS, BEGINNING OF PERIOD 5,854,383 13,291,729
CASH & CASH EQUIVALENTS, END OF PERIOD $9,058,361 $41,254,130
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid, net of capitalized interest $1,084,130 $ -
Income taxes paid $ 997,257 $ 57,893
SOURCE China Natural Gas, Inc.
