TORONTO: Changfeng Energy Inc., is pleased to announce that the Company has filed its unaudited condensed interim consolidated financial results for the third quarter ended September 30th, 2015. The unaudited condensed interim consolidated financial results and Management Discussion and Analysis can be downloaded from www.SEDAR.com or from the Company’s website at www.changfengenergy.com.
Changfeng reports its financial results in Canadian dollars but earns all of its revenues and incurs most of its expenses in Chinese Renminbi (“RMB”). Accordingly, any fluctuation in the exchange rate between these two currencies will affect the reported financial information.
Total revenue for the three months ended September 30, 2015 was $13.2 million, an increase of $1.1 million, or 9%, from $12.1 million for the same period of 2014. Revenue for the nine months ended September 30, 2015 was $43.5 million, an increase of $7.3 million, or 20%, from $36.2 million for the same period of 2014. This increase is mainly resulted from appreciation of Chinese RMB to Canadian Dollar.
Gas sales revenue for the three months ended September 30, 2015 was $5.6 million, an increase of $0.9 million or 20%, from 4.7 million for the same period of 2014. Gas sales revenue for the nine months ended September 30, 2015 was $20.1 million, an increase of $3.5 million or 21%, from 16.6 million for the same period of 2014. The increase is mainly attributable to:
the appreciation of Chinese RMB to Canadian dollar
the gas sales volume increased by 7% for Sanya region for the nine months periods ended September 30, 2015, though dropped by 1% for the three months ended September 30, 2015;
the gas sales volume growth of 103% and 80% respectively in Xiangdong district for the three and nine months periods ended September 30, 2015
Pipeline installation and connection revenue for the three months ended September 30, 2015 was $5.3 million, an increase of $0.2 million or 3%, from $5.1 million for the same period of 2014. Pipeline installation and connection revenue for the nine months ended September 30, 2015 was $16.8 million, a significant increase of $3.6 million or 27%, from $13.2 million for the same period of 2014. The increase is mainly attributable to:
higher number of new residential customers connected during the nine months ended September 30, 2015 in Sanya region, which was in a total of 15,341, an increase of 5,249 or 52%, from 10,092 for the same period of 2014;
the appreciation of Chinese RMB to Canadian dollar;
partly offset by the dropping number of new customers connected and connection revenue during the three months ended September 30, 2015 both in Sanya Region and Xiangdong District.
Revenue from CNG refueling retail station for the three months ended September 30, 2015 was $2.3 million, with a slight decrease of $0.02 million, or 1%, from $2.3 million for the same period of 2014. Total revenue from CNG refueling retail station for the nine months ended September 30, 2015 was $6.7 million, an increase of $0.2 million, or 4%, from $6.5 million for the same period of 2014. The increase was totally attributable to Chinese RMB appreciation. Revenue in RMB was actually reduced by RMB 2.0 million or 15% for the three months ended September 30, 2015 and by RMB 3.1 million or 9% for the nine months ended September 30, 2015. CNG sales volume dropped by 18% and 11% respectively during the three months and nine months ended September 30, 2015 compared to the same periods of 2014 due to the increased competition in the surrounding area.
Gross margin for the three months ended September 30, 2015 increased $0.6 million, or 11%, compared to the same period in 2014, and increased 4.7 million or 26% for the nine months ended September 30, 2015 compared to the same periods in 2014. The gross margin percentage of 52% for the first nine months of 2015 is an increase of 2% from 50% for the first nine months of 2014.
As a percentage of revenue, the gross margin of the gas distribution utility of 57% for the first nine months of 2015 is an increase of 1% from 56% for the first nine months of 2014. As a percentage of revenue, the gross margin of the CNG refueling station for the first nine months of 2015 was 26%, an increase of 5% from 21% in the same period of 2014.
General and administrative expenses for the three months ended September 30, 2015 were $3.0 million, an increase of $0.1 million, or 4%, from $2.9 million in the same period of 2014. For the nine months ended September 30, 2015, general and administrative expenses were $8.4 million, an increase of $0.4 million, or 5%, from $8.0 million in the same period of 2014. General and administrative expenses as a percentage of sales for the three and nine month periods ended September 30, 2015 were 23% and 19%, compared to 24% and 22% for the same periods of 2014, respectively.
Travel and business development expenses for the three months ended September 30, 2015 were $0.7 million, approximately the same as in the same period of 2014. Travel and business development expenses for the nine months ended September 30, 2015 were $2.6 million, approximately the same as in the same period of 2014. As a percentage of sales, travel and business development expenses for the three and nine month periods ended September 30, 2015 were 5.7% and 5.9% respectively, decreased from 6.1% and 7.2% in the same periods of 2014. These expenses normally fluctuate with travel and business development activities in mainland China as the Company seeks to develop new projects in close proximity to the new national pipelines. The decrease in percentage of sales was attributed to more stringent and efficient expense management.
Net income for the three months ended September 30, 2015 was $1.0 million, or $0.02 per share (basic and diluted) compared to $0.7 million or $0.01 per share (basic and diluted) for the same period in 2014. Net income for the nine months ended September 30, 2015 was $5.8 million, or $0.09 per share (basic and diluted) compared to $3.2 million or $0.05 per share (basic and diluted) for the same period in 2014. These increases are primarily driven by an increase in sales and appreciation of Chinese RMB to Canadian dollar.
EBITDA (non-IFRS measure as identified and defined under section “Non-IFRS Measures”) for three months ended September 30, 2015 was $3.5 million, an increase of $0.7 million, or 23% from $2.8 million for the same period of 2014. EBITDA for the nine months ended September 30, 2015 was $15.1 million, an increase of $4.9 million, or 47%, from $10.3 million for the same period of 2014. The increase was driven primarily by higher sales and appreciation of Chinese RMB to Canadian dollar.
