Gushan June 15, 2009
NEW YORK, May 15 /PRNewswire-FirstCall/ -- Gushan Environmental
Energy
Limited ("Gushan" or the "Company"; NYSE: GU), a leading producer
of biodiesel
in China, today announced its unaudited consolidated financial
results for the
first quarter ended March 31, 2009.
Highlights for First Quarter 2009
-- Total revenues decreased by 18.1% year-to-year and 13.5%
quarter-on-quarter to RMB272.7 million (US$39.9 million).
-- Gross profit decreased by 80.1% year-to-year and 57.8%
quarter-on-quarter to RMB27.7 million (US$4.1 million).
-- Income from operations decreased by 98.6% year-to-year and
94.7%
quarter-on-quarter to RMB1.7 million (US$0.2 million).
-- Net loss amounted to RMB2.3 million (US$0.3 million), compared
to net
income of RMB111.2 million for the first quarter of 2008 and net
loss
of RMB37.7 million for the fourth quarter of 2008.
-- Net income excluding share-based compensation (non-GAAP)
amounted toRMB8.0 million (US$1.2 million), compared to a net income
of RMB115.7
million for the first quarter of 2008 and a net loss of RMB27.0
million for the fourth quarter of 2008. (Note 1)
-- Sales volume of biodiesel increased by 22.3% year-to-year and
12.9%
quarter-on-quarter to 63,290 tons.
-- Average selling price of biodiesel decreased by 27.4%
year-to-year and
21.4% quarter-on-quarter to RMB4,003 (US$585.8) per ton.
-- Annual biodiesel production capacity increased by 100,000 tons
(or
approximately 30 million gallons) year-to-year and 50,000 tons (orapproximately
15 million gallons) quarter-to-quarter to 340,000 tons.
-- Cash balance amounted to RMB837.4 million (US$122.6 million)
with no
bank borrowings as of March 31, 2009.
(in US$ thousands,
except per share data) Three Months Ended
March 31, December 31, March 31,
2008 2008 2009
(Note 2) (Note 2) (Note 2)
Revenues 48,713 46,120 39,916
Gross profit 20,355 9,629 4,060
Income from operations 17,924 4,676 248
Net income (loss) 16,270 (5,517) (339)
Net income (loss) per
Ordinary share - Diluted 0.097 (0.033) (0.002)
Net income loss) per
ADS - Diluted 0.194 (0.066) (0.004)
Non-GAAP net income (loss)
per ADS - Diluted (Note 1) 0.202 (0.047) 0.014
Gross profit margin (Note 3) 41.8% 20.9% 10.2%
Operating Profit margin (Note 3) 36.8% 10.1% 0.6%
Net income (loss) margin
(Note 3) 33.4% (12.0%) (0.9%)
Non-GAAP net Income (loss)
margin (Note 1) 34.8% (8.6%) 2.9%
Sales volume
of biodiesel tons 51,761 56,063 63,290
Average selling
price of
biodiesel RMB/ton 5,512 5,092 4,003
Sales volume
of biodiesel
by-products tons 6,074 6,025 5,888
Average selling
price of
biodiesel
by-products RMB/ton 7,824 4,921 3,289
Note 1: GAAP represents Generally Accepted Accounting Principles
in the United States of America ("U.S. GAAP" or "GAAP") in this
announcement. All non-GAAP measures exclude share-based compensation
expenses. For further details on non-GAAP measures, please refer to
the reconciliation table and a detailed discussion of management's
use of non-GAAP information set forth elsewhere in this press
release.
Note 2: Translation from RMB into US$ at RMB6.8329 to US$1.00, see
"Currency Convenience Translation" below.
Note 3: Gross profit margin, operating profit margin and net
income margin
represent gross profit, operating profit and net income,
respectively, divided
by revenues.
"The impact of the global economic slowdown, falling world oil
prices and
contraction in China's industrial production made for a very
challenging
environment during the first quarter and this was reflected in
Gushan's
results," said Jianqiu Yu, Chairman and Principal Executive
Officer of Gushan.
"While the global economic outlook remains uncertain, there are
some signs
that industrial activity in China is recovering and we believe
that Gushan's
position as one of China's leading biodiesel producers, strong
financial
position and strong customer and supplier relationships leave it
well-positioned to benefit from any economic improvement."
Financial Results for the First Quarter 2009
Revenues
The Company's revenues amounted to RMB272.7 million (US$39.9
million) for
the first quarter of 2009, representing a decrease of 18.1% from
RMB332.9
million for the first quarter of 2008 and a decrease of 13.5% from
RMB315.1
million for the fourth quarter of 2008. The decreases in revenues
on both a
year-to-year basis and a sequential quarterly basis were mainly
due to a
decrease in average selling prices of both biodiesel and biodiesel
by-products
and a slight decrease in sales volume of the Company's biodiesel
by-products.
The sales volume of biodiesel amounted to 63,290 tons for the
first quarter of 2009, representing an increase of 22.3% from 51,761
tons for the first quarter of 2008 and an increase of 12.9% from
56,063 tons for the fourth quarter of 2008.
The average selling price of biodiesel was RMB4,003 (US$585.8) per
ton for
the first quarter of 2009, representing a decrease of 27.4% from
RMB5,512 per
ton for the first quarter of 2008 and a decrease of 21.4% from
RMB5,092 per
ton for the fourth quarter of 2008.
The sales volume of biodiesel by-products amounted to 5,888 tons
for the
first quarter of 2009, representing a decrease of 3.1% from 6,074
tons for the
first quarter of 2008, and a decrease of 2.3% from 6,025 tons for
the fourth
quarter of 2008.
The average selling price of biodiesel by-products was RMB3,289
(US$481.3)
per ton for the first quarter of 2009, representing a decrease of
58.0% from
RMB7,824 per ton for the first quarter of 2008 and a decrease of
33.2% from
RMB4,921 per ton for the fourth quarter of 2008.
The year-to-year increase in the sales volume of biodiesel was
mainly due
to the commencement of production at the Company's Shanghai plant
in June 2008
which added an additional 50,000 tons to the Company's annual
biodiesel
production capacity. The sequential quarterly increase in sales
volume was
principally attributed to the fact that Fujian Gushan Biodiesel
Energy Co.,
Ltd. ("Fujian Gushan"), Sichuan Gushan Vegetable Fat Chemistry
Co., Ltd.
("Sichuan Gushan") and Handan Gushan Bio-Sources Energy Co., Ltd.
("Handan
Gushan") each had resumed production after having suspended
production for a
few weeks in November and December 2008 due to repairs and
maintenance.
The year-to-year and sequential quarterly decrease in the average
selling
price of biodiesel was principally attributed to a decline in the
market price
of diesel in China which commenced in the fourth quarter of 2008
and continued
throughout the first quarter of 2009 resulting from a significant
decrease in
global oil prices and to the rapid contraction of China's
industrial
production amid the global financial crisis.
The overall decreases in sales volume of biodiesel by-products on
both a
year-to-year basis and a sequentially quarterly basis were mainly
due to
decreased sales volumes of erucic acid and erucic amide produced
by Sichuan
Gushan resulting from the lower amount of rapeseed content in the
feedstock
used at the Sichuan plant. The decreases were partly offset by the
increased
sales volumes of glycerine and plant asphalt contributed by
Beijing Gushan
Bio-sources Energy Co., Ltd. ("Beijing Gushan") and Shanghai
Gushan Bio-Energy
Technologies Co. Ltd. ("Shanghai Gushan"), as both companies
commenced
operations in 2008.
The average selling prices of all biodiesel by-products decreased
individually on both a year-to-year basis and a sequential
quarterly basis as
a result of a rapid decline in market prices of raw materials in
the chemical
industry caused by China's slowing economy.
Cost of Revenues
Cost of revenues for the first quarter of 2009 totaled RMB245.0
million
(US$35.9 million), representing an increase of 26.4% from RMB193.8
million for
the first quarter of 2008 and a decrease of 1.7% from RMB249.3
million for the
fourth quarter of 2008. This increase on year-to-year basis was
principally
attributable to increases in the Company's production volume and
in overall
average unit costs for vegetable oil offal and used cooking oil.
The decrease
of cost of revenues on a sequential quarterly basis was
principally due to the
decrease in the overall average unit cost of feedstock.
Overall average unit cost of feedstock, which mainly comprised
used
cooking oil and vegetable oil offal, amounted to RMB2,430
(US$355.6) per ton
in the first quarter of 2009, representing an increase of 6.2%
from RMB2,288
per ton in the first quarter of 2008 and a decrease of 10.1% from
RMB2,704 in
the fourth quarter of 2008. The year-to-year increase in costs of
feedstock
was caused by the increase in the Company's suppliers' costs which
are
primarily affected by general cost inflation, particularly in
labor and
transportation, in China, as well as a general increase in prices
charged by
its suppliers. The decrease in costs of feedstock on a sequential
quarterly
basis resulted from the Company's efforts in negotiating for price
reductions
with its suppliers.
Gross Profit
The Company's gross profit for the first quarter of 2009 totaled
RMB27.7
million (US$4.1 million), representing a decrease of 80.1% from
RMB139.1
million for the first quarter of 2008 and a decrease of 57.8% from
RMB65.8
million for the fourth quarter of 2008. The Company's gross profit
margin
decreased to 10.2% for the first quarter of 2009 from 41.8% for
the first
quarter of 2008 and 20.9% for the fourth quarter of 2008. On a
year-to-year
basis, the average unit costs of the Company's raw materials
increased by 6.2%
while the average selling prices of its biodiesel and biodiesel
by-products
decreased by 27.4% and 58.0%, respectively. On a sequential
quarterly basis,
although the average unit costs of the Company's raw materials
decreased by
10.1%, the average selling prices of its biodiesel and biodiesel
by-products
decreased at a higher rate of 21.4% and 33.2%, respectively. Both
trends
accounted for the decrease in the Company's gross margin.
Research and Development Expenses
Research and development expenses totaled RMB0.4 million (US$0.1
million)
in the first quarter of 2009, representing a slight decrease
compared to
RMB0.5 million for the first quarter of 2008 and RMB1.0 million
for the fourth
quarter of 2008.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the first quarter
of 2009 totaled RMB25.6 million (US$3.7 million), representing an
increase from RMB16.2 million for the first quarter of 2008 and a
decrease from RMB32.8 million for the fourth quarter of 2008.
The overall increase on a year-to-year basis was mainly due to
increases
in share-based compensation and professional fees. Share-based
compensation
for the first quarter of 2009 amounted to RMB10.3 million (US$1.5
million),
representing an increase from RMB4.5 million for the first quarter
of 2008, as
a result of the share options granted in March 2008, September
2008 and
January 2009. Professional fees totaled RMB4.9 million (US$0.7
million),
representing an increase from RMB1.7 million in the first quarter
of 2008, as
a result of additional legal, auditing and other professional
services
required in connection with the Company's expanded operations in
China during
2008 and compliance with U.S. regulatory requirements.
The overall decrease on a sequential quarterly basis was mainly
due to the
decrease in staff costs which amounted to RMB4.6 million (US$0.7
million) for
the first quarter of 2009, compared to RMB12.2 million for the
fourth quarter
of 2008. Staff costs in the fourth quarter of 2008 were higher
than staff
costs in the first quarter of 2009 primarily resulting from the
issuance of a
year-end bonus of RMB7.4 million (US$1.1 million) to all levels of
employees
in the fourth quarter of 2009.
Other Income (Expense)
Interest income for the first quarter of 2009 amounted to RMB1.0
million
(US$0.2 million), representing a decrease from RMB11.0 million for
the first
quarter of 2008 and a decrease from RMB4.7 million from the fourth
quarter of
2008. The decreases on both a year-to-year basis and a sequential
quarterly
basis were mainly due to decrease in interest rates for cash
deposited in
commercial banks.
The Company incurred a foreign currency exchange gain of RMB58,000
(US$8,000) for the first quarter of 2009, compared to a foreign
currency
exchange loss of RMB3.3 million for the first quarter of 2008 and
a foreign
currency exchange loss of RMB56.3 million for the fourth quarter
of 2008. The
foreign currency exchange loss incurred in 2008 primarily resulted
from the
depreciation of the Company's foreign currency holdings in NZ$ and
Euro
against US$ in 2008. In October 2008, the Company converted all of
its cash
deposits in NZ$ and Euro to US$. The Company does not currently
hold cash
balances in currencies other than in RMB, HK$ and US$ and does not
expect to
do so in the foreseeable future.
Income Tax Expense
Income tax expense principally comprised Enterprise Income Tax
("EIT") and a provision for dividend withholding tax during the
current and comparative periods.
EIT for the first quarter of 2009 amounted to RMB4.1 million
(US$0.6
million), representing a decrease from RMB14.1 million for the
first quarter
of 2008 and a decrease from RMB11.4 million for the fourth quarter
of 2008.
The decrease in EIT on both a year-to-year and a sequential
quarterly basis
was mainly due to the decreases in earnings before income tax
contributed by
Fujian Gushan, Sichuan Gushan and Handan Gushan. Beijing Gushan
and Shanghai
Gushan are exempted from EIT for the year ended December 31, 2008
and the year
ending December 31, 2009.
In addition, the new enterprise income tax law ("New EIT Law")
which came
into effect from January 1, 2008 also imposes a 10% withholding
tax for
dividends distributed by a foreign-invested enterprise to its
immediate
holding company outside the PRC beginning on January 1, 2008.
Since the
Company's PRC subsidiaries are invested by immediate foreign
holding
companies, the Group is subject to withholding tax for earnings
accumulated
beginning on January 1, 2008. Under the Arrangement between the
Mainland of
China and Hong Kong Special Administration Region for the
Avoidance of Double
Taxation and the Prevention of Fiscal Evasion, Hong Kong tax
residents which
hold 25% or more of the equity interest in a PRC enterprise are
entitled to a
reduced withholding rate of 5%. All of the Group's
foreign-invested
enterprises are directly held by Hong Kong tax residents.
Accordingly, a rate
of 5% is applicable to the calculation of withholding tax for
these companies.
The Company has made provisions of RMB1.0 million (US$0.1 million)
for the
first quarter of 2009, RMB3.0 million for the fourth quarter of
2008 and
RMB5.4 million for the first quarter of 2008 in respect of
withholding tax
which included, among others, mainly the dividend withholding tax.
The
decreases in withholding tax on both a year-to-year and a
sequential quarterly
basis were mainly due to the decreases in net income after income
tax
contributed by Fujian Gushan, Sichuan Gushan, Handan Gushan,
Beijing Gushan
and Shanghai Gushan.
Net Income (Loss)
The Company's net loss amounted to RMB2.3 million (US$0.3 million)
for the
first quarter of 2009, compared to a net income of RMB111.2
million for the
first quarter of 2008 and a net loss of RMB37.7 million for the
fourth quarter
of 2008.
Net income excluding share-based compensation expenses (non-GAAP)
amounted
to RMB8.0 million (US$1.2 million) for the first quarter of 2009,
compared to
a net income of RMB115.7 million for the first quarter of 2008 and
a net loss
of RMB27.0 million for the fourth quarter of 2008.
Financial Condition
As of March 31, 2009, the Company had working capital of RMB708.5
million
(US$103.7 million), reflecting total current assets of RMB935.1
million
(US$136.9 million) and total current liabilities of RMB226.6
million (US$33.2
million). Of the total current assets, the Company had RMB837.4
million
(US$122.6 million) in cash, represented by RMB356.3 million,
HK$55.2 million
and US$1.4 million deposited in licensed commercial banks in the
PRC and
HK$4.3 million and US$61.3 million deposited in licensed
commercial banks in
Hong Kong. Up to the date of this announcement, the Company does
not have any
positions or commitments in respect of structured financial
products.
On March 5, 2009, the Company declared a cash dividend of RMB0.160
(US$0.023) per ordinary share of the Company, or RMB0.320
(US$0.047) per ADS
in respect of the year ended December 31, 2008. The cash dividend
will be paid
in US$ on or before May 30, 2009, resulting in an expected cash
outflow of
RMB26.7 million (US$3.9 million).
Recent Events
In March 2009, the Beijing plant's additional production
facilities commenced production, adding 50,000 tons to the Company's
annual biodiesel production capacity. As a result, these additional
facilities doubled the total biodiesel production capacity of the
Beijing plant from 50,000 tons to 100,000 tons.
Since April 2009, the Fuzhou municipal government has been
performing road
maintenance near the Fujian plant which is expected to last until
July 31,
2009. Such road maintenance has resulted in restricted access to
the Fujian
plant by the Company's suppliers and customers. As a result, the
Company has
suspended operations at the Fujian plant since April 19, 2009 and
expects the
suspension to last for a few more weeks during the course of such
road
maintenance.
In May, 2009, Shanghai Gushan has obtained a Comprehensive
Utilization of
Resources Verification Certificate ("Certificate") and is
currently in the
process of applying for a Value-added Tax ("VAT") refund and
reduction in
taxable income. An enterprise must obtain this Certificate before
it may apply
for (i) a VAT refund pursuant to the Policies for Products
Generated from
Comprehensive Utilization of Resources (Cai Shui [2008] No. 156),
a circular
on VAT jointly issued by the PRC State Administration of Taxation
("PRC SAT")
and Ministry of Finance on December 9, 2008, which stipulated that
a VAT
refund upon levy would be applicable to enterprises that produce
biodiesel by
making use of wasted animal oil or plant oil to the extent of not
less than
70% as their raw materials, and (ii) a 10% reduction in taxable
income
pursuant to article 33 of the New EIT Law issued on March 16, 2007
and article
99 of the Implementation Rules on Enterprise Income Tax Law issued
on December
6, 2007 and the relevant circulars on Comprehensive Utilization of
Resources
EIT Incentive (Cai Shui [2008] No. 47 and Cai Shui [2008] No.
117), which
stipulated that enterprises that make use of wasted biomass oil or
wasted
lubricant as 100% of their raw materials can be entitled to a 10%
reduction in
taxable income. As of the date of this results announcement, each
of Beijing
Gushan, Fujian Gushan, Sichuan Gushan and Handan Gushan has
applied for, but
not yet obtained, this Certificate.
The PRC government introduced three new regulations in relation to
consumption tax rates to be levied on diesel products which took
effect on
January 1, 2009. Measures introduced under these new regulations
include,
among others, increases in consumption tax on various refined oil
products,
including diesel. Pursuant to these regulations, consumption tax
on diesel
products levied on diesel producers would increase from RMB0.10
per liter to
RMB0.80 per liter. Prior to January 1, 2009, biodiesel products,
which are
produced from animal and vegetable fats and oils, were
specifically exempted
from consumption tax. The new regulations redefined diesel
products that are
subject to consumption tax. Under the new regulations, biodiesel
that is
processed from diesel or predominately mixed with diesel would be
subject to
consumption tax. The Company has expressed its view to the State
Administration of Taxation of Fujian Province ("Fujian SAT") that
its
biodiesel products, which are produced from used cooking oil,
vegetable oil
offal and jatropha oil, should not be subject to such consumption
tax. The
Company has been informed that the Fujian SAT and Fujian Municipal
Finance
Bureau have jointly issued a written proposal to the PRC SAT,
requesting for a
specific exclusion of biodiesel products, that do not contain
diesel content,
from paying consumption tax. However, the PRC SAT has not replied
to this
proposal as of the date of this results announcement. The Company
did not pay
consumption tax for its sales of biodiesel products during the
first quarter
of 2009. Due to ambiguity surrounding the application of the
consumption tax,
there can be no assurance that the Company's biodiesel products
are not
subject to consumption tax under the new regulations. Based on the
Company's
internal estimates, the Company sold approximately 64.6 million
liters of
biodiesel as a refined oil product during the three months ended
March 31,
2009. If the PRC SAT later determines that the Company's biodiesel
products
are subject to such consumption tax and the Company is taxed for
its sales of
biodiesel products as from January 1, 2009, the Company would be
required to
pay significant amounts of consumption tax and its business,
results of
operations and financial condition could be materially and
adversely affected.
Business Outlook for Fiscal Year 2009
Gushan currently operates five production facilities, located in
Sichuan,
Handan, Fujian, Beijing and Shanghai in China, with an annual
total biodiesel
capacity of 340,000 tons, or approximately 102 million gallons.
The Company's
new plants in Chongqing and Hunan (each with annual total
biodiesel capacity
of 30,000 tons, or approximately 9 million gallons) are targeted
to begin
production in the second quarter of 2009. The Company also targets
to increase
its total biodiesel production capacity by 50,000 tons, or
approximately 15
million gallons, by increasing the Shanghai plant's production
capacity, which
is targeted to take place in the third quarter of 2009. As a
result, the
Company targets to achieve a total annual biodiesel production
capacity of
450,000 tons, or approximately 135 million gallons, by the end of
2009. Gushan
is also constructing a new plant near the existing Sichuan
production
facility. The new plant will be dedicated to use inedible oil such
as jatropha
oil as its raw materials and is targeted to commence production in
the first
half of 2010 with an annual biodiesel production capacity of
50,000 tons.
The Company has continued to closely monitor the factors affecting
its
gross margins. Due to the significant drop in world oil prices
commencing in
the fourth quarter of 2008 and the slowdown of the Chinese economy
as a result
of the global financial crisis, both factors of which the Company
believes
have adversely affected the market prices for diesel in China, the
average
selling prices for the Company's biodiesel continued to decrease
through the
fourth quarter 2008 and the first quarter of 2009. Although the
Company was
able to reduce its raw material prices through negotiations with
its
suppliers, the rate of the decrease in the Company's selling
prices for
biodiesel during these periods have outpaced the rate of the
reduction in raw
material costs. As a result, the Company's gross margins continued
to decline
during the first quarter of 2009. However, towards the end of the
first
quarter of 2009, diesel prices in China which affect the selling
prices of the
Company's biodiesel, appears to be stabilizing. The Company
expects that the
recovery of diesel prices will follow any recovery of world oil
prices and the
Chinese economy. Meanwhile, the Company will continue to seek
further price
reductions with raw material suppliers in order to improve gross
margins and
profitability. Overall, the Company expects 2009 to be a
challenging year for
its business operations. Given the uncertain macro environment as
a result of
the global financial crisis, Gushan will continue to closely
monitor its
market situation and will make changes to its expansion plans if
necessary.Interim Financial Statements
The unaudited condensed consolidated statements of operations,
balance
sheets and cash flow statements accompanying this press release
have been
prepared by management using U.S. GAAP. These interim financial
statements are
not intended to fully comply with U.S. GAAP because they do not
present all of
the disclosures required by U.S. GAAP. The December 31, 2008
balance sheet was
derived from audited consolidated financial statements of the
Company.
Currency Convenience Translation
The conversion of Renminbi into U.S. dollars in this earnings
release,
made solely for the purpose of reader's convenience, is based on
the H.10
statistical release of the Federal Reserve Board as of March 31,
2009, which
was RMB6.8329 to US$1.00. No representation is intended to imply
that the
Renminbi amounts could have been, or could be, converted, realized
or settled
into U.S. dollars at such rate, or at any other rate. The
percentages stated
in this earnings release are calculated based on Renminbi.
Conference Call
Gushan's management will hold its first quarter 2009 earnings
conference call at 8:30 am U.S. Eastern Time (8:30 pm Beijing / Hong
Kong Time) on May 15, 2009.
Dial-in details for the earnings conference call are as follows:
US Toll Free: 1.800.901.5218
US Toll for International Callers: 1.617.786.4511
Hong Kong Toll: 852.3002.1672
Hong Kong Toll Free: 800.96.3844
China Toll Free: 10.800.130.0399
UK Toll Free: 00.800.280.0200.2
UK Toll for International Callers: 44.207.365.8426
Passcode for all regions: 57757506
A replay of the call will be available on the same day at 11:00
a.m. U.S. Eastern Time (or 11:00 p.m. Hong Kong Time) until May 22,
2009 and may be accessed by phone at the following numbers.
US Toll Free: 1.888.286.8010
US Toll for International Callers: 1.617.801.6888
Passcode for all regions: 89043568
In addition, a live and archived webcast of this conference call
will be available on the Investor Relations section of Gushan's
website at www.chinagushan.com.
About Gushan Environmental Energy Limited
Gushan is the largest biodiesel producer in China, as measured by
annual
production capacity and one of the largest biodiesel producers in
Asia, as
measured by nominal capacity, according to a report by Frost &
Sullivan, a
market research and consulting firm, dated May 23, 2008. The
company produces
biodiesel, a renewable, clean-burning and biodegradable fuel,
primarily from
vegetable oil offal and used cooking oil, and by-products from
biodiesel
production, including glycerine, plant asphalt, erucic acid and
erucic amide.
Gushan sells biodiesel directly to users, such as marine vessel
operators, as
well as to petroleum wholesalers and individual retail gas
stations. The
company currently operates five production facilities in the
Sichuan, Hebei,
Fujian provinces and Beijing and Shanghai with a combined annual
production
capacity of 340,000 tons.
Safe Harbor Statement
This press release contains forward-looking statements within the
meaning
of the safe harbor provisions of the Private Securities Litigation
Reform Act
of 1995. These forward-looking statements can be identified by
words such as
"will," "may," "expect," "anticipate," "aim," "target," "intend,"
"plan,"
"believe," "estimate," "potential," "continue," and other similar
statements.
Statements other than statements of historical facts in this
announcement are
forward-looking statements, including but not limited to, the
Company's
expectations regarding the expansion of its production capacities,
its future
business development, and its beliefs regarding its production
output. These
forward-looking statements involve known and unknown risks and
uncertainties
and are based on current expectations, assumptions, estimates and
projections
about the Company and the industry. Important risks and
uncertainties that
could cause the Company's actual results to be materially
different from
expectations include but are not limited to the effect of any
applicable
government policy, law or regulation, of natural disasters, and of
intensifying competition in the biodiesel and alternative energy
industries,
the availability of suitable raw materials to the Company, and the
risks set
forth in the Company's filings with the U.S. Securities and
Exchange
Commission, including on Form 20-F, as amended. The Company
undertakes no
obligation to update forward-looking statements, except as may be
required by
law. Although the Company believes that the expectations expressed
in these
forward-looking statements are reasonable, it cannot assure you
that its
expectations will turn out to be correct, and investors are
cautioned that
actual results may differ materially from the anticipated results.
About Non-GAAP Financial Measures
To supplement Gushan's consolidated financial results presented in
accordance with U.S. GAAP, Gushan uses the following measures
defined as non-GAAP financial measures by the SEC: net income
excluding share-based compensation, basic and diluted net income per
ADS excluding share-based compensation. The presentation of these
non-GAAP financial measures is not intended to be considered in
isolation or as a substitute for the financial information prepared
and presented in accordance with GAAP. For more information on these
non-GAAP financial measures, please see the table captioned
"Reconciliations of GAAP measures to non-GAAP measures" set forth at
the end of this release.
Gushan believes that these non-GAAP financial measures provide
meaningful
supplemental information regarding its performance and liquidity
by excluding
share-based compensation that may not be indicative of its
operating
performance from a cash perspective. Gushan believes that both
management and
investors benefit from these non-GAAP financial measures in
assessing its
performance and when planning and forecasting future periods.
Gushan computes
its non-GAAP financial measures using the same consistent method
from quarter
to quarter. Gushan believes these non-GAAP financial measures are
useful to
investors in allowing for greater transparency with respect to
supplemental
information used by management in its financial and operational
decision
making. A limitation of using non-GAAP net income excluding
share-based
compensation, and basic and diluted earnings per share and per ADS
excluding
share-based compensation is that these non-GAAP measures exclude
share-based
compensation that has been and will continue to be for the
foreseeable future
a significant recurring expense in its business. Management
compensates for
these limitations by providing specific information regarding the
GAAP amounts
excluded from each non-GAAP measure. The accompanying tables have
more details
on the reconciliations between GAAP financial measures to non-GAAP
financial
measures.
For further information, please contact:
US Asia
Elizabeth Cheek Hoi Ni Kong
Hill & Knowlton (New York) Hill & Knowlton (Hong Kong)
Tel: (1) 212 885 0682 Tel: (852) 2894 6322
Email: Email:hoini.kong@hillandknowlton.com.hk
elizabeth.cheek@hillandknowlton.com
- FINANCIAL TABLES TO FOLLOW -
GUSHAN ENVIRONMENTAL ENERGY LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts expressed in thousands,
except per share data and number of shares)
Three Months Ended
------------------
March 31, December 31,
2008 2008 March 31, 2009
--------- ------------ --------------
RMB RMB RMB US$
Revenues 332,854 315,136 272,741 39,916
Cost of revenues (193,770) (249,340) (245,001) (35,856)
-------- -------- -------- -------
Gross profit 139,084 65,796 27,740 4,060
------- ------ ------ -----
Operating expenses
Research and
development (454) (1,043) (442) (65)
Selling, general
and administrative (16,154) (32,801) (25,607) (3,747)
------- ------- ------- ------
Total operating
expenses (16,608) (33,844) (26,049) (3,812)
------- ------- ------- ------
Income from
operations 122,476 31,952 1,691 248
------- ------ ----- ---
Other income
(expense):
Interest income 10,952 4,710 1,034 151
Foreign currency
Exchange gains
(losses), net (3,300) (56,275) 58 8
Other income
(expense), net 500 (3,692) (17) (2)
--- ------ --- --
Earnings (loss)
Before income tax 130,628 (23,305) 2,766 405
Income tax
expense (19,458) (14,391) (5,083) (744)
------- ------- ------ ----
Net income (loss) 111,170 (37,696) (2,317) (339)
======= ======= ====== ====
Net income
(loss) per
Ordinary share
- Basic 0.666 (0.226) (0.014) (0.002)
- Diluted 0.664 (0.226) (0.014) (0.002)
Net income (loss)
per ADS
- Basic 1.332 (0.452) (0.028) (0.004)
- Diluted 1.328 (0.452) (0.028) (0.004)
Weighted average
ordinary shares
outstanding
- Basic 166,831,943 166,831,943 166,831,943 166,831,943
- Diluted 167,440,885 166,831,943 166,831,943 166,831,943
Weighted average
ADS
outstanding
- Basic 83,415,972 83,415,972 83,415,972 83,415,972
- Diluted 83,720,443 83,415,972 83,415,972 83,415,972
Share-based
compensation
expense
included in:-
Cost of revenues 62 610 718 105
Research and
development
expenses 3 44 168 25
Selling, general
and
administrative
expenses 4,482 10,075 9,384 1,373
GUSHAN ENVIRONMENTAL ENERGY LIMITED
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS
(Amounts expressed in thousands)
December 31,
2008 December 31, 2008
------------ -----------------
RMB RMB US$
ASSETS
Current assets:
Cash 963,228 837,391 122,553
Accounts receivable 12,926 9,394 1,375
Inventories 59,246 53,529 7,834
Prepaid expenses and other
current assets 10,227 13,632 1,995
Income tax receivable 13,501 19,737 2,888
Deferred tax assets 1,206 1,449 212
----- ----- ---
Total current assets 1,060,334 935,132 136,857
--------- ------- -------
Property, plant and equipment, net 1,451,533 1,600,694 234,263
Land use rights 84,101 83,996 12,293
Deferred tax assets 4,568 4,156 608
Other assets 3,500 3,354 491
----- ----- ---
Total assets 2,604,036 2,627,332 384,512
========= ========= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable 3,345 6,089 891
Accounts payable for property, plant
and equipment 105,842 129,677 18,978
Accrued expenses and other payables 61,969 54,328 7,951
Income tax payable 14,108 9,875 1,445
Dividend payable - 26,693 3,907
---- ------ -----
Total current liabilities 185,264 226,662 33,172
------- ------- ------
Deferred tax liabilities 21,951 22,786 3,335
Income tax payable 5,500 5,800 849
Other non-current liabilities 13,551 12,988 1,901
------ ------ -----
Total liabilities 226,266 268,236 39,257
------- ------- ------
Shareholders' equity:
Ordinary shares 1 1 -
Additional paid-in capital 1,475,669 1,485,939 217,468
Accumulated other comprehensive loss (47,359) (47,293) (6,922)
Retained earnings 949,459 920,449 134,709
------- ------- -------
Total shareholders' equity 2,377,770 2,359,096 345,255
--------- --------- -------
Total liabilities and
shareholders' equity 2,604,036 2,627,332 384,512
========= ========= =======
GUSHAN ENVIRONMENTAL ENERGY LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts expressed in thousands)
Three Months Ended
------------------
March 31, December 31,
2008 2008 March 31, 2009
----------- -------------- --------------
RMB RMB RMB US$
Cash flows from
operating
activities
Net income (loss) 111,170 (37,696) (2,317) (339)
Adjustments to
reconcile net
income to net
cash provided by
operating
activities:
Share-based
compensation 4,547 10,729 10,270 1,503
Depreciation 14,652 23,102 23,966 3,507
Land use rights
expense 224 340 350 51
Loss on disposal of
property, plant and
equipment - 57 44 7
Foreign currency
exchange loss
(gain), net 3,300 56,275 (58) (8)
Deferred tax expense 5,692 (3,520) 1,004 147
Change in assets and
liabilities
Accounts receivable (4,127) 7,772 3,532 517
Inventories (5,160) 864 5,717 837
Prepaid expenses
and other current
assets (473) 196 (3,400) (498)
Income tax receivable (1,642) (4,936) (6,236) (913)
Accounts payable 3,559 (1,851) 2,744 402
Accrued expenses and
other payables (630) 3,274 (7,641) (1,118)
Income tax payable (3,063) 1,754 (3,933) (576)
Other non-current
liabilities (599) (564) (564) (82)
Other assets 155 146 146 21
--- --- --- --
Net cash
provided by
operating
activities 127,605 55,942 23,624 3,458
------- ------ ------ -----
Cash flows from
investing
activities
Purchase of
property, plant
and equipment (246,453) (226,582) (149,365) (21,860)
Proceeds from
disposal of
property,
plant and
equipment - - 30 4
Payments for land
use rights (12,745) (21,209) (248) (36)
------- ------- ---- ---
Net cash used in
investing
activities (259,198) (247,791) 149,583) (21,892)
-------- -------- -------- -------
Cash flows from
financing
activities
Payments for
expenses related
to Initial
Public Offering (7,950) - - -
------ ----- ----- -----
Net cash used in
financing
activities (7,950) - - -
------ ----- ----- -----
Effect of foreign
exchange rate
changes on cash (33,240) (57,232) 122 18
------- ------- --- --
Decrease in cash (172,783) (249,081) (125,837) (18,416)
Cash at beginning
of period 1,380,735 1,212,309 963,228 140,969
--------- --------- ------- -------
Cash at end of
period 1,207,952 963,228 837,391 122,553
========= ======= ======= =======
GUSHAN ENVIRONMENTAL ENERGY LIMITED
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
(Amounts expressed in thousands, except per share data)
Three Months Ended
------------------
March 31, December 31,
2008 2008 March 31, 2009
---------- ------------- --------------
RMB RMB RMB US$
GAAP net income (loss) 111,170 (37,696) (2,317) (339)
Share-based compensation 4,547 10,729 10,270 1,503
----- ------ ------ -----
Non-GAAP net income (loss 115,717 (26,967) 7,953 1,164
======= ======= ===== =====
GAAP net income (loss)
per ADS - Basic 1.332 (0.452) (0.028) (0.004)
Share-based compensation
per ADS - Basic 0.055 0.129 0.123 0.018
----- ----- ----- -----
Non-GAAP net income
(loss) per ADS - Basic 1.387 (0.323) 0.095 0.014
===== ====== ===== =====
GAAP net income (loss)
per ADS - Diluted 1.328 (0.452) (0.028) (0.004)
Share-based compensation
per ADS - Diluted 0.054 0.129 0.123 0.018
----- ----- ----- -----
Non-GAAP net income
(loss) per ADS - Diluted 1.382 (0.323) 0.095 0.014
===== ====== ===== =====
SOURCE Gushan Environmental Energy Limited
-0- 05/15/2009
/CONTACT: US, Elizabeth Cheek, Hill & Knowlton (New York),
+1-212-885-0682, elizabeth.cheek@hillandknowlton.com, or Asia, Hoi
Ni Kong,
Hill & Knowlton (Hong Kong), +852-2894-6322,
hoini.kong@hillandknowlton.com.hk/
/Web Site: http://www.chinagushan.com /
(GU)
CO: Gushan Environmental Energy Limited
ST: New York, China
IN: OIL ENV
SU: ERN ERP CCA ASI
PR
-- NY17671 --
7671 05/15/2009 08:02 EDT http://www.prnewswire.com