-- Full Year Revenue Increases 60% to $87.1 Million
-- Full Year Net Income Increases 61% to $8.6 Million
XIAN, China, April 1, 2008 /Xinhua-PRNewswire-FirstCall/ -- China Bio Energy Holdings (OTC Bulletin Board: CBEH), (CBEH or the “Company”), an energy company engaged in the wholesale distribution and processing of heavy oil and finished oil products and the development, production and distribution of bio-diesel fuel, today announced consolidated financial results for the fiscal year ended December 31, 2007.
Fiscal 2007 Results
Net sales for 2007 were approximately $87.1 million, a 60% increase as compared to net sales in 2006 of approximately $54.4 million. The net sales increase was a result of the Company’s territorial expansion into five new provinces in China through the opening of two new representative offices. In addition, the Company started production of the new biodiesel production line in October 2007, which resulted in a $4.4 million increase in biodiesel sales.
Gross profit was approximately $10.5 million for 2007, an increase of 58% as compared to approximately $5.8 million for 2006. Gross margin as a percentage of sales increased from 11% in 2006 to 12 % in 2007. The slight increase in gross margin was mainly due to greater production of biodiesel and sales volume of oil products in 2007.
Operating expenses, consisting of selling, general and administrative expenses, were approximately $2.1 million for 2007 as compared to $0.4 million for 2006, an increase of approximately $1.8 million or 498%. General and administrative expenses increased $1.3 million from 2006, of which $1.1 million was associated with the Company’s reverse merger and financing in 2007. The major expenses related to the reverse merger and financing included U.S. and Chinese legal counsel expenses, auditing expenses, consulting expenses, and due diligence expenses.
Net income in 2007 was $8.6 million as compared to $5.3 million in 2006, an increase of $3.2 million or 61%. This increase was due to the benefit of the economies of scale resulting from the growth in revenue and corresponding efficiencies in manufacturing operations and the extension in industry chain. Earnings per diluted share decreased to $0.21 in 2007 from $0.22 in 2006, a decrease of roughly 5%. The decrease was primarily the result of a $3.4 million deemed dividend to preferred shareholders related to warrants and conversion rights attached to the Company’s preferred shares. The management of CBEH believes that the sales revenue and net income will continue to grow well as the increases of the output of biodiesel and oil products business. Excluding the deemed dividend to preferred shareholders, earnings per share actually increased 55% to $0.34 per share.
“We are pleased with our results for 2007,” stated Gao Xincheng, Chief Executive Officer of China Bio Energy. “All segments of our business experienced significant growth and we believe that we are well positioned to continue growing. With the launch of our new bio diesel production facility in October of 2007 we expect bio diesel fuel revenue to continue to increase in 2008. As we did in 2007 we plan to continue to strengthen our distribution channel for our petroleum products business and expect that business to continue to grow as well.”
About China Bio Energy Holdings
CBEH is a distributor of petroleum related products and a manufacturer and distributor of biodiesel fuel. CBEH sells a variety of related products including, gasoline (used primarily in automobiles), diesel fuel (commercial vehicles, agricultural machines, etc.), heavy oil and slurry (ship boilers, heating furnaces, metallurgical furnaces and other industrial furnaces), residual oil (utilized to manufacture petroleum coke, residual lubricating oil and asphalt or as a feedstock for cracking), and naphtha (used to manufacture ethane, propane, benzene, toluene and xylene). Sales of oil products in 2007 currently accounts for approximately 94% of CBEH’s total revenues.
Bio-diesel refers to a clean burning alternative fuel produced from domestic, renewable resources. Bio-diesel is made through a chemical process whereby glycerin is separated from fat or vegetable oil. Bio-diesel contains no petroleum, but it can be blended at any level with petroleum diesel to create a bio-diesel blend and can be used in compression-ignition (diesel) engines with little or no modifications. Bio-diesel is the ideal substitute of petro-diesel and it has many benefits, including excellent environmental performance, superior ignition, compatibility with existing diesel engines, better lubrication to extend the life time of engines, and renewability. Sales of bio-diesel fuel in 2007 account for approximately 6% of the Company’s total revenues. The percent of bio-diesel in the Company’s total revenues will increase greatly as the output of biodiesel increases.
Safe Harbor Statement
This press release contains certain statements that may include “forward looking statements.” All statements other than statements of historical fact included herein are “forward-looking statements.” These forward-looking statements are often identified by the use of forward-looking terminology such as “believes,” “expects” or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company’s periodic reports that are filed with the Securities and Exchange Commission and available on its website
( http://www.sec.gov ). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
CHINA BIO ENERGY HOLDING GROUP CO., LTD. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
As of December 31,
2007 2006
ASSETS
CURRENT ASSETS
Cash and cash equivalents $1,382,371 $ 631,443
Restricted cash 200,000 641,433
Accounts receivable, net 288,589 5,745,362
Other receivables 1,548,681 159,857
Prepaid expenses 2,896,493 --
Advance to suppliers 16,546,506 4,276,233
Inventories 12,082,962 7,303,981
Advance to shareholders -- 22,054
Due from related party 593,696 315,497
Total current assets 35,539,298 19,095,860
CONSTRUCTION IN PROGRESS -- 515,742
PROPERTY AND EQUIPMENT, net 8,166,250 704,871
TOTAL ASSETS $43,705,548 $20,316,473
LIABILITIES AND STOCKHOLDERS’
EQUITY
CURRENT LIABILITIES
Accounts payable 179,617 2,267,116
Advance from customers 499,908 381,809
Value added tax payable 125,015 744,666
Other payables 3,165,677 282,638
Accrued expenses 67,875 --
Notes payable - trade /
related party -- 1,282,052
Loan payable 1,370,877 1,019,231
Long term notes payable -
current portion 67,287 36,670
Total current
liabilities 5,476,256 6,014,182
LONG TERM LIABILITIES 33,655 61,862
Total liabilities 5,509,911 6,076,044
COMMITMENT AND CONTINGENCIES
STOCKHOLDERS’ EQUITY
Preferred stock, $.001 par
value; authorized shares
1,000,000; issued and
outstanding 1,000,000 shares 1,000 --
Common stock, $.0001 par
value; authorized shares
80,000,000; issued and
outstanding 25,454,545 and
23,954,545 as of December
31, 2007 and 2006,
respectively 2,545 2,395
Paid in capital 19,611,938 2,533,837
Statutory reserve 2,051,030 1,110,374
Accumulated other
comprehensive income 2,319,732 624,806
Retained earnings 14,209,392 9,969,017
Total stockholders’
equity 38,195,637 14,240,429
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY $43,705,548 $20,316,473
CHINA BIO ENERGY HOLDING GROUP CO., LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
For The Years Ended December 31,
2007 2006 2005
Net sales $87,104,187 $54,427,820 $29,217,184
Cost of goods sold 77,006,690 48,666,440 24,843,313
Gross profit 10,097,497 5,761,380 4,373,871
General and
administrative expenses 1,686,760 356,392 216,362
Income from operations 8,410,737 5,404,988 4,157,509
Non-operating income (expenses)
Interest income expenses) (142,442) (86,254) (16,422)
Other income 328,264 24,845 --
Financial expenses (16,994) -- --
Total non-operating
income (expenses) 168,828 (61,409) (16,422)
Net income 8,579,565 5,343,579 4,141,087
Other comprehensive item
Foreign currency
translation gain 1,694,926 464,099 128,667
Comprehensive Income $10,274,491 $ 5,807,678 $ 4,269,754
Net income $ 8,579,565 $ 5,343,579 $ 4,141,087
Deemed dividend to
preferred stockholders 3,398,534 -- --
Net income available to
common stockholders $ 5,181,031 $ 5,343,579 $ 4,141,087
Basic and diluted
weighted average shares
outstanding
Basic 24,238,107 23,954,545 23,954,545
Diluted 25,145,122 23,954,545 23,954,545
Basic and diluted net
earnings per share
available to common
stockholders
Basic $ 0.21 $ 0.22 $ 0.17
Diluted $ 0.21 $ 0.22 $ 0.17
CHINA BIO ENERGY HOLDING GROUP CO., LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
For The Years Ended December 31,
2007 2006 2005
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $8,579,565 $5,343,579 $4,141,087
Adjustments to
reconcile net income
to net cash provided
by operating
activities:
Depreciation 228,833 104,443 65,861
Bad debt expenses -- 28,930 --
(Increase) decrease
in current assets:
Accounts receivable 5,644,946 (3,607,785) 734,378
Other receivable
and prepaid expenses (4,099,356) (143,252) 299,071
Advance to suppliers (11,484,067) (1,826,306) (4,129,702)
Inventory (4,098,099) (1,791,200) (460,985)
Due from related party (245,852) (37,756) (528,426)
Advance to shareholders -- -- --
Increase (decrease) in
current liabilities:
Accounts payable (1,889,778) 1,226,872 1,040,244
Advance from customers 87,896 (83,033) (1,456,698)
Taxes payable (643,780) 752,253 (56,980)
Other payables and
accrued expenses 2,811,389 53,803 130,706
Net cash provided by (used in)
operating activities (5,108,303) 20,548 (221,444)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Restricted cash for
investing activity (200,000) -- --
Sale of investment -- 37,175 --
Acquisition of property
and equipment (6,809,173) (412,717) (19,659)
Construction in progress -- (515,742) --
Net cash provided by
(used in) investing
activities (7,009,173) (891,284) (19,659)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Repayment from / (Advance
to) shareholder 22,617 (738) (12,790)
Repayment of short term
loan (1,577,744) -- --
Proceeds from short term
loan 269,531 1,019,231 --
Repayment of long term
notes payable (4,235) -- (21,800)
Proceeds from long term
notes payable -- 89,697 --
Issuance of preferred
stock 9,774,993 -- --
Capital contribution 3,905,724 -- --
Notes payable - trade -- (743,494) 743,494
Notes payable -
related party -- 290,726 (713,912)
Restricted cash 657,811 225,977 (14,791)
Net cash provided by
(used in) financing
activities 13,048,697 881,399 (19,799)
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 931,221 10,663 (260,902)
EFFECT OF EXCHANGE RATE CHANGE
ON CASH AND CASH EQUIVALENTS (180,293) 464,099 128,033
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 631,443 156,681 289,550
CASH AND CASH EQUIVALENTS, END
OF YEAR $1,382,371 $ 631,443 $ 156,681
Supplemental Cash flow
data:
Income tax paid $ -- $ -- $ --
Interest paid $ 137,463 $ 108,423 $ 40,016
CHINA BIO ENERGY HOLDING GROUP CO., LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
Preferred stock
Additional
paid in
Shares Amount Shares Amount capital
Balance at December
31, 2004 -- $ -- 23,954,545 $2,395 $2,533,837
Net income for the
year -- -- -- -- --
Transfer to
statutory
reserves -- -- -- -- --
Foreign currency
translation gain -- -- -- -- --
Balance at December
31, 2005 -- -- 23,954,545 2,395 2,533,837
Net income for the
year -- -- -- -- --
Transfer to
statutory
reserves -- -- -- -- --
Foreign currency
translation gain -- -- -- -- --
Balance at December
31, 2006 -- -- 23,954,545 2,395 2,533,837
Capital
contribution -- -- -- -- 3,905,724
Recapitalization on
reverse
acquisition -- -- 1,500,000 150 -150
Shares issued for
cash 1,000,000 1,000 -- -- 13,172,527
Net income for the
year -- -- -- -- --
Transfer to
statutory
reserves -- -- -- -- --
Foreign currency
translation gain -- -- -- -- --
Balance at
December 31,
2007 1,000,000 $1,000 25,454,545 $2,545 $19,611,938
Common stock
Other Total
Statutory comprehensive Retained stockholders’
reserves income earnings equity
Balance at December
31, 2004 $130,317 $32,040 $1,464,408 $4,162,997
Net income for the
year -- -- 4,141,087 4,141,087
Transfer to
statutory reserves 445,699 -- -445,699 --
Foreign currency
translation gain -- 128,667 -- 128,667
Balance at December
31, 2005 576,016 160,707 5,159,796 8,432,751
Net income for the
year -- -- 5,343,579 5,343,579
Transfer to
statutory
reserves 534,358 -- -534,358 --
Foreign currency
translation gain -- 464,099 -- 464,099
Balance at December
31, 2006 1,110,374 624,806 9,969,017 14,240,429
Capital contribution -- -- -- 3,905,724
Recapitalization on
reverse acquisition -- -- -- --
Shares issued for
cash -- -- -3,398,534 9,774,993
Net income for the
year -- -- 8,579,565 8,579,565
Transfer to
statutory
reserves 940,656 -- -940,656 --
Foreign currency
translation gain -- 1,694,926 -- 1,694,926
Balance at
December 31,
2007 $2,051,030 $2,319,732 $14,209,392 $38,195,637
For more information, please contact:
US Contact:
Mary Xia/Lin Li
Tel: +1-732-230-3148
Asia Contact:
Dan Joseph
ICR, Inc.
Tel: +86-21-6122-1077
Gaihong Li
China Bio Energy Holdings
Tel: +86-29-8320-4383
