China Solar & Clean Energy Solutions, Inc. Reports Full Year 2008 Financial Results and Announces New Chief Operating Officer and Chief Technology Officer
Posted on: Thursday, 16 April 2009, 08:00 CDT
BEIJING, April 16 /PRNewswire-Asia-FirstCall/ -- China Solar & Clean
Energy Solutions, Inc. ("CSOL" or "China Solar" or the "Company")
(OTC Bulletin Board: CSOL), a premier manufacturer and distributor of solar
water heaters, renewable energy solutions, and space heating devices in the
People's Republic of China, today reported its financial results for the year
ended December 31, 2008 and announced two new additions to its senior
management team -- Mr. Edward Chan and Dr. Weizhong Xiang as Chief Operating
Officer and Chief Technology Officer, respectively.
Full Year 2008 Results
Revenues for 2008 increased 44.8% to $53.7 million, compared to $37.1
million for 2007, driven by higher revenues from the Heat Pipe and
Energy-saving segments. Heat Pipe revenues increased 136% to $16.6 million
from $7.0 million in 2007, as CSOL did not begin to sell Heat Pipe related
products until its acquisition of Tianjin Huaneng on July 1, 2007, and
therefore, Heat Pipe revenue in 2007 only reflected 2H07 total sales.
Energy-saving revenues increased 169% to $9.1 million, versus $3.4 million in
2007, as the Company completed its acquisition of Shenzhen PengSangPu ("SZPSP")
in March 2008. During the year, revenues for the Solar Heater/Biomass
Stove/Boiler ("Solar-Biomass-Boiler") segment decreased by $1.6 million to
$25.1 million in 2008, as the Company accounted for the sales of certain
products of this segment under a new fourth segment and, to a lesser extent,
due a decrease in the selling prices as a result of increased competition. In
2008, the Company added a new revenue segment named Solar Heat Collector and
Others and recorded $3.0 million of revenues in this segment, as compared to
zero in 2007.
Gross margin for 2008 was 17.4%, compared to 22.4% in 2007, primarily due
to a decrease in the selling prices as a result of increased competition in
the industry. Operating expenses increased to $9.1 million for 2008 as
compared to $5.1 million for 2007, primarily due to higher marketing and
promotional expenses and higher salary and benefits associated with the
expansion of the sales force. While recurring administrative expenses
improved in 2008, the Company incurred one-time liquidated expenses of
approximately $0.5 million paid to certain investors due a delay in effecting
a registration pursuant to its agreement with such investors in its February
2008 private placement. The Company also recognized higher administrative
expenses attributable to the consolidation of SZPSP and professional fees
associated with the private placement.
Operating income was $0.2 million for 2008, as compared to $3.2 million
for 2007, and operating margin was 0.5% in 2008, as compared to 8.6% in 2007.
In 2008, the Company recognized non-recurring expenses of approximately $3.0
million, including goodwill impairment of $2.3 million related to its
acquisition of SZPSP and inventory write-downs of approximately $0.2 million.
Consequently, the Company reported a net loss of $4.2 million in 2008,
compared with a net income of $2.5 million in 2007. Net loss per share was
$0.34 in 2008 versus diluted net income per share of $0.22 in 2007.
Cash and cash equivalents decreased to $2.4 million on December 31, 2008,
compared to $5.5 million on December 31, 2007. This decrease was due to
increased spending on working capital and capital expenditures and to two
loans totaling $3.4 million made to Shenzhen Fuwaysun Technology Co., Ltd.
("Fuwaysun"), as part of a pending acquisition agreement between China Solar
and Fuwaysun. Net cash used in operating activities was $4.6 million for 2008,
as compared to net cash provided for operations of $4.7 million for 2007,
mainly due to an increase in inventories, advancements to suppliers, and
production costs for energy saving projects. As of December 31, 2008, the
Company had net working capital of $8.7 million and zero debt.
Mr. Deli Du, Chief Executive Officer and President of CSOL, commented,
"While I'm pleased that our total revenue increased 45% in 2008, in retrospect,
fiscal year 2008 was a transition year for CSOL. Although we have
successfully integrated our acquisitions of Tianjin Huaneng and SZPSP and
witnessed higher revenues in their respective segments, we experienced lower
selling prices and gross margins in our Solar Heater segment. As we continued
to invest into our sales organization and manufacturing infrastructure, we
have yet to realize the full benefits from these investments and therefore
incurred net losses for the full fiscal year. I am, however, excited about
the significant expansion of our senior management team. In March, we
announced the appointment of Ms. Veronica Jing Chen, a seasoned executive with
broad experience and proven leadership, as our new Chief Financial Officer.
Today, I am delighted to announce the creation of two new senior positions of
Chief Operating Officer and Chief Technology Officer and the addition of two
excellent members to our growing senior management team, as we demonstrate our
commitment to continue building a strong, diverse and capable management
team."
Expanded Management Team
CSOL has appointed Mr. Edward Chan and Dr. Weizhong Xiang to two newly
created positions of Chief Operating Officer and Chief Technology Officer,
respectively.
Mr. Chan, COO, has rich operations knowledge and a strong management track
record gained from more than 20 years of experience in sales, marketing and
general management with various companies throughout China. Prior to joining
CSOL, he was the Associate Managing Director of Shenzhen Coolead Industry Co.
Ltd., a company specialized in constructing energy efficient buildings in
China. Before that, Mr. Chan served as marketing director of Hitachi China,
Strategy General Manager of Broad Air Conditioning, Business Consultant of
Philips (China) and Sales manager of Aluminum Corporation of China. Mr. Chan
holds an MBA from Royal Roads University and a Bachelor's degree from the Hong
Kong Polytechnic University.
Dr. Xiang, CTO, possesses deep technical expertise in large-scale clean
tech and energy-saving projects as well as broad engineering experience in the
United Kingdom and China. Prior to joining CSOL, he served as Vice Director
of the Hoare Lea Consulting Engineers, a firm of consulting engineers
specializing in mechanical, electrical and environmental engineering. Dr.
Xiang has consulted and advised on more than 50 large-scale construction
projects, primarily consisting of clean tech and energy-saving building
projects, such as London 2012 Olympic projects, Heathrow Airport and the
University of Oxford Science Park. Before that, he was Senior Analyst in
charge of thermal products analysis at GE (UK) Fluid and Heat Division, where
he successfully led the development of several major products and optimized
product designs in various others. A registered engineer in the United
Kingdom, Dr. Xiang holds a Ph.D from Brunel University and a Master's Degree
from the Harbin Institute of Technology.
Mr. Du continued, "I am elated in welcoming Messrs. Chan and Xiang to our
senior management team. As COO, Mr. Chan will lead our continued efforts in
streamlining our operations while helping me to coordinate our launch of new
products and expansions into new markets. As CTO, Dr. Xiang will draw on his
deep expertise to lead our technology teams in the development and adoption of
new products and technologies. We plan to leverage Dr. Xiang's rich
experience and strong technical skills, both in China and the UK, to integrate
our various technologies and products and to innovate new clean energy
solutions as we aim capture a growing share of China's large clean energy
market opportunities."
Growth Strategy
Mr. Du concluded, "With our strong, expanded management team in place, our
solid portfolio of technologies and products in development, our nationwide
distribution and sales force strengthened, CSOL is well positioned to capture
the many attractive opportunities in our immediate industry, as well as
complementary markets in China and abroad. I am encouraged by the
government's initiatives to expand the availability of and access to
electricity in China's immense rural areas, which will create substantially
higher demand for our products and solutions. I am energized by our gainful
technical and marketing abilities to win additional market share in the
energy-saving segment, as our customers continue to recognize the economic and
social benefits of recycling. I am excited by our unique business model and
pioneering solutions for solar projects in hot water systems throughout
China's numerous Universities. This business model, though requiring initial
capital investments, can deliver reliable profits and cash flows for many
years to come. We continue to explore government-supported financing
facilities and subsidies that can further accelerate the ROIs of our unique
solutions.
"Moreover, we continue to pursue additional strategic opportunities to
further augment our existing business. On April 9, 2009, our Board approved
an amendment to extend the consummation of our acquisition of Fuwaysun until
June 30, 2009. We believe that Fuwaysun's market leadership in portable solar
applications for rural settings, combined with our nationwide distribution and
marketing resources, will deliver immediate accretion to our revenue, margins,
and overall profits upon completion of the acquisition. We have identified
many applications both in China and abroad for Fuwaysun's core technologies,
and we are very excited by the responses from Fuwaysun's existing and
potential customers. We remain confident that we will complete Fuwaysun's
acquisition by the end of June 2009.
"Thus, as we near the completion our business transition and the
completion of our Fuwaysun acquisition, I believe that CSOL will achieve
strong revenue growth, margin expansions, and solid profits and cash flows in
the near future. Our new management team is dedicated to growing a strong,
profitable and responsive enterprise at China Solar, and importantly, to
serving the best interests of our supportive shareholders and maximizing our
shareholders' value."
About China Solar & Clean Energy Solutions, Inc
China Solar & Clean Energy Solutions, Inc. operates through its wholly
owned subsidiaries Bazhou Deli Solar Energy Heating Co. Ltd. ("Deli Solar
(Bazhou)"), Beijing Deli Solar Technology Development Co., Ltd., Shenzhen
PengSangPu Solar Industrial Products Corporation and its 51% ownership in
Tianjin Huaneng Group, all located in the PRC. The Company manufactures and
distributes hot water and space heating devices to customers in the PRC, in
addition to waste heat recovery systems. For more information, please visit
http://www.delisolar.com .
Cautionary Statement Regarding Forward Looking Information
Safe Harbor Statement:
Certain statements in this news release may contain forward-looking
information about China Solar & Clean Energy Solutions and its subsidiaries
business and products within the meaning of Rule 175 under the Securities Act
of 1933 and Rule 3b-6 under the Securities Exchange Act of 1934, and are
subject to the safe harbor created by those rules. The actual results may
differ materially depending on a number of risk factors including, but not
limited to, the general economic and business conditions in the PRC, market
and customer acceptance and demand for products, ability to market products,
fluctuations in foreign currency markets, the use of estimates in the
preparation of financial statements, the impact of competitive products and
pricing, the ability to develop and launch new products on a timely basis, the
regulatory environment, fluctuations in operating results, and various other
factors beyond its control. All forward-looking statements are expressly
qualified in their entirety by this Cautionary Statement and the risks factors
detailed in the Company's reports filed with the Securities and Exchange
Commission. China Solar & Clean Energy Solutions undertakes no duty to revise
or update any forward-looking statements to reflect events or circumstances
after the date of this release.
For more information, please contact:
Veronica Chen
China Solar & Clean Energy Solutions, Inc.
Tel: +86-10-6386-8188
Email: vjchen36@hotmail.com
Michael Tieu
ICR
Tel: +86-10-6599-7960
Email: Michael.tieu@icrinc.com
CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Currency expressed in United States Dollars ("US$"))
Year Ended December 31,
2008 2007 2006
As adjusted and
Restated*
Revenue, net $53,683,651 $37,072,346 $21,468,313
Cost of revenue 28,772,078 16,842,994
44,363,787
Gross profit 9,319,863 8,300,268 4,625,319
Operating expenses:
Depreciation and
amortization 955,443 282,822 154,946
Selling and distribution 3,995,401 827,839 459,746
General and administrative 4,127,069 4,003,973 2,800,015
Total operating expenses 9,077,912 5,114,634 3,414,707
Income from operations 241,951 3,185,634 1,210,612
Other income (expenses):
Other income 197,154 220,057 45,606
Interest income 262,233 -- --
Other expense (547,705) -- --
Interest expense (292,167) (65,481) (16,717)
Loss on nonrecurring items (3,012,488) -- --
Total other income (expenses) (3,392,973) 154,576 28,889
Income before income taxes (3,151,022) 3,340,210 1,239,501
Income tax expense (193,418) (615,325) --
Minority interests (818,893) (199,744) --
NET INCOME $(4,163,332) $2,525,141 $1,239,501
NET INCOME AVAILABLE TO
COMMON STOCKHOLDERS (4,163,332) $1,549,334 1,239,501
Net income per share - basic (0.34) $0.25 0.20
Net income per share - diluted (0.34) $0.24 0.18
Weighted average shares
outstanding - basic 12,158,482 6,205,290 6,205,290
Weighted average shares
outstanding - diluted 12,158,482 6,396,697 6,957,876
* RESTATEMENT ON CONSOLIDATED FINANCIAL STATEMENTS
In April 2008, we filed a registration statement on Form S-1 with the
Securities and Exchange Commission relating to the sale by certain selling
stockholders identified in the related prospectus of up to 5,160,649 shares of
our common stock including 469,150 shares they may acquire on exercise of
warrants. When reviewing our financial statements for inclusion in the
prospectus, we became aware of an error in the calculation of diluted net
income per share for the year ended December 31, 2007. We misapplied the
treasury stock and the "if converted" methods under SFAS No. 128 and because
of the error we identified, we have restated our historical financial
statements for 2007 to record an increase of 10 cents in diluted net income
per share.
This 10 cents per share adjustment was non-cash. The error had no impact
on our reported assets, liabilities, equity, revenue, expenses or earnings.
There was no cumulative effect on retained earnings or other components of
equity in the balance sheet at December 31, 2007. It had no impact on basic
earnings per share. Nor did it have any impact on cash or cash equivalents. It
had no impact on prior year financial statements and, likewise, will have no
impact on future financial statements.
The following table sets forth the income statement impact of the
restatement:
December 31, 2007
As reported Adjustment As Restated
Diluted - Total
weighted average
shares outstanding 11,233,026 (4,836,329) 6,396,697
Diluted net income
per share $0.14 0.10 0.24
The impact of the restatement on the disclosures of earnings per share
data is set forth in the table below:
December 31, 2007
As reported Adjustment As Adjusted
Denominator:
- Weighted average
preferred stock
outstanding 1,337,097 (1,337,097) --
- Weighted average
warrant shares
outstanding 3,690,639 (3,499,232) 191,407
Diluted - Total
weighted average
shares outstanding 11,233,026 4,836,329 6,396,697
Diluted net income
per share $0.14 0.10 0.24
CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
(Currency expressed in United States Dollars ("US$"),
except for number of shares)
As of December 31,
2008 2007
ASSETS
Current assets:
Cash and cash equivalents $2,404,996 $5,466,637
Accounts receivable, net 7,284,255 7,453,009
Inventories 6,950,844 3,875,658
Other receivables and prepayments 7,870,575 1,637,948
Lease receivables, current 156,579 --
Total current assets 24,667,249 18,433,252
Property, plant and equipment, net 15,366,009 8,819,216
Goodwill 2,284,903 1,789,324
Intangible assets, net 1,709,184 1,597,921
Customer relationships, net 1,017,500 --
Intellectual property - unpatented
technology, net 869,500 --
Lease receivables, non-current 654,578 --
TOTAL ASSETS $46,568,923 $30,639,713
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, trade $5,301,349 $2,111,028
Income tax payables 2,236,298 1,108,433
Other payables and accrued liabilities 8,386,698 8,552,452
Total current liabilities 15,924,345 11,771,913
Deferred tax liability 15,779 --
Minority interests 1,704,248 935,825
Stockholders' equity:
Convertible preferred stock: par value
$0.001; 25,000,000 shares authorized,
373,000 and 1,774,194 shares issued and
outstanding, respectively 373 1,774
Common stock, $0.001 par value; 66,666,667
shares authorized; 13,799,450 and
6,205,690 shares issued and
outstanding, respectively 13,799 6,205
Additional paid-in capital 22,966,404 9,260,607
Accumulated other comprehensive income 1,615,082 1,134,270
Retained earnings 3,365,788 7,529,119
Profit earning reserves 963,106 --
28,924,551 17,931,975
Total stockholders' equity
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $46,568,923 $30,639,713
CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Currency expressed in United States Dollars)
Years ended December 31,
2008 2007 2006
Cash flows from operating activities:
Net income (4,163,332) $2,525,141 $1,239,501
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 1,280,429 324,157 178,437
Impairment for goodwill,
inventory 2,702,488 -- --
Provision for allowance on
accounts receivable 978,006 650,432 (77,267)
Changes in operating assets and
liabilities:
Accounts receivable, trade (965,831) (7,232,995) (238,334)
Inventories (3,313,403) (3,559,893) 67,418
Other receivables and prepayments (6,232,627) (250,037) (238,268)
Accounts payable, trade 3,190,321 1,963,127 58,526
Income tax payable 1,127,865 1,108,433 --
Other payables and accrued
liabilities (59,921) 8,209,641 262,885
Minority interest 818,893 935,825 --
Net cash provided by operating
activities (4,637,112) 4,673,831 1,252,898
Cash flows from investing activities:
Acquisition of a subsidiary (662,491) (489,459) --
Deposits made to acquire subsidiary -- -- (256,278)
Purchase of intangible assets (981,283) (635,726) (932,732)
Purchase of property, plant and
equipment (7,364,222) (4,294,741) (2,815,398)
Net cash used in investing
activities (9,007,996) (5,419,926) (4,004,408)
Cash flows from financing activities:
proceeds from warrants exercised 107,500 (180,694) (130,112)
Capital contribution received from
shareholders 9,995,156 -- --
Proceeds from issuance of
preferred stock (net of offering
costs of $169,000 paid in cash) -- 2,581,000 --
Related receivable -- -- 82,639
Related payables -- -- 22,528
Net cash (used in) provided by
financing activities 10,102,656 2,400,306 (24,945)
Foreign currency translation
adjustment 480,812 600,361 359,352
NET CHANGE IN CASH AND CASH
EQUIVALENTS (3,061,640) 2,254,572 (2,417,103)
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 5,466,637 3,212,065 5,629,168
CASH AND CASH EQUIVALENTS,
END OF YEAR 2,404,996 $5,466,637 $3,212,065
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid for income taxes 538,332 $939,798 $--
Cash paid for interest expenses 302,961 $95,446 $16,717
SUPPLEMENTAL DISCLOSURE OF NONCASH
INVESTING AND FINANCING TRANSACTIONS
SUPPLEMENTAL DISCLOSURE OF NONCASH
INVESTING AND FINANCING TRANSACTIONS
Warrant shares granted for offering
costs $541,695 $138,338 $--
Issuance of common stock for
acquisitions of SZPSP $2,839,458 $-- $--
Issuance of warrants for the $92,193
acquisitions of SZPSP $-- $--
Preferred share converted $1,401 $-- $--
SOURCE China Solar & Clean Energy Solutions, Inc.
Source: PR Newswire
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