GUSHAN ENVIRONMENTAL ENERGY LTD (ADR) 
By NEW YORK, May 26, 2011 /PRNewswire/ -- 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 of 2011.
As of November 12, 2010, the ratio for Gushan's ADSs representing ordinary shares has changed from one (1) ADS representing two (2) ordinary shares to one (1) ADS representing ten (10) ordinary shares. Gushan presents all per ADS data and number of ADSs in this announcement as if the ratio change was effective as of the beginning of the earliest period presented.
Highlights for the First Quarter of 2011
-- Total revenues increased by 241.7% year-to-year and by 5.5%
quarter-on-quarter to RMB246.9 million (US$37.7 million).
-- Gross profit amounted to RMB3.8 million (US$0.6 million), compared to a
gross loss of RMB34.1 million for the first quarter of 2010 and a gross
profit of RMB17.9 million for the fourth quarter of 2010.
-- Loss from operations amounted to RMB14.5 million (US$2.2 million),
compared to a loss from operations of RMB67.0 million for the first
quarter of 2010 and an income from operations of RMB68.4 million for the
fourth quarter of 2010.
-- Net loss attributable to the Company amounted to RMB17.5 million (US$2.7
million), compared to a net loss of RMB62.9 million for the first
quarter of 2010 and a net profit of RMB61.4 million for the fourth
quarter of 2010.
-- Non-GAAP net loss attributable to the Company amounted to RMB20.9
million (US$3.2 million), compared to a non-GAAP net loss of RMB54.2
million for the first quarter of 2010 and a non-GAAP net loss of RMB40.0
million for the fourth quarter of 2010. (Note 1)
-- Sales volume of biodiesel decreased by 70.9% year-to-year and by 19.6%
quarter-on-quarter to 4,532 tons.
-- Average selling price of biodiesel increased by 23.4% year-to-year and
by 11.1% quarter-on-quarter to RMB5,371 (US$820.2) per ton.
-- Sales volume of recycled copper products decreased by 2.3%
quarter-on-quarter to 3,701 tons.
-- Average selling price of recycled copper products increased by 10.9%
quarter-on-quarter to RMB59,558 per ton.
-- Cash balance amounted to RMB142.5 million (US$21.8 million) as of March
31, 2011.
(US$ in thousands, except per share
data, per ADS data and operating
data) Three months ended
------------------
March 31, 2010
--------------
(Note 2)
--------
Revenues 11,032
Gross profit (loss) (5,211)
Income (loss) from operations (10,237)
Net income (loss)
attributable to the Company (9,602)
Net income (loss)
attributable to the Company
per ordinary share -Diluted (0.06)
Net income (loss)
attributable to the Company
per ADS - Diluted (note 3) (0.58)
Non-GAAP net loss
attributable to the Company
per ADS - Diluted (Note 1&
3) (0.50)
Gross profit (loss) margin
(Note 4) (47.2%)
Operating profit (loss)
margin (Note 4) (91.8%)
Net income (loss) margin
(Note 4) (87.0%)
Non-GAAP net loss margin
(Note 1&4) (75.1%)
Sales volume of biodiesel
(Note 5) tons 15,560
Average selling price of
biodiesel (Note 5) RMB/ton 4,351
Sales volume of biodiesel by-
products tons 2,355
Average selling price of
biodiesel by-products RMB/ton 1,925
Sales volume of recycled
copper products tons -
Average selling price of
recycled copper products RMB/ton -
(US$ in thousands, except per share
data, per ADS data and operating
data) Three months ended
------------------
December 31,
2010
-------------
(Note 2)
--------
Revenues 35,724
Gross profit (loss) 2,736
Income (loss) from operations 10,448
Net income (loss)
attributable to the Company 9,373
Net income (loss)
attributable to the Company
per ordinary share -Diluted 0.06
Net income (loss)
attributable to the Company
per ADS - Diluted (note 3) 0.57
Non-GAAP net loss
attributable to the Company
per ADS - Diluted (Note 1&
3) (0.37)
Gross profit (loss) margin
(Note 4) 7.7%
Operating profit (loss)
margin (Note 4) 29.2%
Net income (loss) margin
(Note 4) 26.2%
Non-GAAP net loss margin
(Note 1&4) (17.1%)
Sales volume of biodiesel
(Note 5) tons 5,635
Average selling price of
biodiesel (Note 5) RMB/ton 4,835
Sales volume of biodiesel by-
products tons 1,017
Average selling price of
biodiesel by-products RMB/ton 2,170
Sales volume of recycled
copper products tons 3,787
Average selling price of
recycled copper products RMB/ton 53,697
(US$ in thousands, except per share
data, per ADS data and operating
data) Three months ended
------------------
March 31, 2011
--------------
(Note 2)
--------
Revenues 37,697
Gross profit (loss) 577
Income (loss) from operations (2,213)
Net income (loss)
attributable to the Company (2,668)
Net income (loss)
attributable to the Company
per ordinary share -Diluted (0.02)
Net income (loss)
attributable to the Company
per ADS - Diluted (note 3) (0.16)
Non-GAAP net loss
attributable to the Company
per ADS - Diluted (Note 1&
3) (0.19)
Gross profit (loss) margin
(Note 4) 1.5%
Operating profit (loss)
margin (Note 4) (5.9%)
Net income (loss) margin
(Note 4) (7.1%)
Non-GAAP net loss margin
(Note 1&4) (8.4%)
Sales volume of biodiesel
(Note 5) tons 4,532
Average selling price of
biodiesel (Note 5) RMB/ton 5,371
Sales volume of biodiesel by-
products tons 549
Average selling price of
biodiesel by-products RMB/ton 2,221
Sales volume of recycled
copper products tons 3,701
Average selling price of
recycled copper products RMB/ton 59,558
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, impairment loss of and loss on disposal of property, plant and equipment, change in fair value of contingent consideration liability, provision (reversal) for consumption tax and income tax effect thereof. 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 announcement.
Note 2: Translation from RMB into US$ at RMB6.5483 to US$1.00, see "Currency Convenience Translation" below.
Note 3: As of November 12, 2010, the ratio for Gushan's ADSs representing ordinary shares has changed from one (1) ADS representing two (2) ordinary shares to one (1) ADS representing ten (10) ordinary shares. The Company presents all per ADS data and number of ADSs in this announcement as if the ratio change was effective as of the beginning of the earliest period presented.
Note 4: Gross profit (loss) margin, operating profit (loss) margin, net income (loss) margin and non-GAAP net income (loss) margin, represent gross profit (loss), operating profit (loss), net income (loss) attributable to the Company and non-GAAP net income (loss) attributable to the Company, respectively, divided by revenues.
Note 5: Sales volume of biodiesel includes biodiesel sold as a refined oil product to the fuel market and biodiesel sold as fatty acid methyl ester, an intermediate product to the chemical industry. Average selling price of biodiesel represents total average selling price of biodiesel sold as a refined oil product to the fuel market and biodiesel sold as an intermediate product to the chemical industry.
"Gushan's recycled copper business, Mianyang Jin Xin Copper Limited, acquired in late 2010 contributed to strong revenue growth in the first quarter of 2011," said Jianqiu Yu, Chairman and Principal Executive Officer of Gushan, " While selling prices for both recycled copper products and biodiesel are rising in line with increased demand and economic growth in China, inflation in raw material prices remains a significant challenge and the Company is exploring opportunities to control raw material costs and diversify its raw material sources."
Financial Results for the First Quarter of 2011
Revenues
The Company's revenues amounted to RMB246.9 million (US$37.7 million) for the first quarter of 2011, representing an increase of 241.7% from RMB72.2 million for the first quarter of 2010 and an increase of 5.5% from RMB233.9 million for the fourth quarter of 2010.
The increase in revenues on a year-to-year basis was mainly due to revenue contribution of RMB221.3 million (US$33.8 million) from the recycled copper business of Mianyang Jin Xin Copper Limited ("Jin Xin"). As a result of the Company's initial acquisition of a 67% beneficial ownership interest in Jin Xin, from November 2010, the Company began consolidating Jin Xin's operating results into its operating results. In January 2011, we acquired an additional 8% beneficial ownership interest in Jin Xin, which increased our beneficial ownership interest in Jin Xin to 75%. The increase in revenues on a sequential quarterly basis was mainly due to the increase in average selling price of recycled copper products.
The Company's revenue from its biodiesel business totaled RMB25.6 million (US$3.9 million) for the first quarter of 2011, representing a decrease of 64.6% from RMB72.2 million for the first quarter of 2010 and a decrease of 13.2% from RMB29.4 million for the fourth quarter of 2010. The decrease in revenue on both a year-to-year and sequential quarterly basis was mainly due to a decrease in the sales volume of both biodiesel and biodiesel by-products.
The sales volume of biodiesel amounted to 4,532 tons for the first quarter of 2011, representing a decrease of 70.9% from 15,560 tons for the first quarter of 2010 and a decrease of 19.6% from 5,635 tons for the fourth quarter of 2010. The average selling price of biodiesel was RMB5,371 (US$820.2) per ton for the first quarter of 2011, representing an increase of 23.4% from RMB4,351 per ton for the first quarter of 2010 and an increase of 11.1% from RMB4,835 per ton for the fourth quarter of 2010.
The sales volume of biodiesel by-products amounted to 549 tons for the first quarter of 2011, representing a decrease of 76.7% from 2,355 tons for the first quarter of 2010, and a decrease of 46.0% from 1,017 tons for the fourth quarter of 2010. The average selling price of biodiesel by-products was RMB2,221 (US$339.2) per ton for the first quarter of 2011, representing an increase of 15.4% from RMB1,925 per ton for the first quarter of 2010 and an increase of 2.4% from RMB2,170 per ton for the fourth quarter of 2010.
The year-to-year decrease in the sales volume of biodiesel was mainly due to the temporary suspension of operations at the Company's Shanghai plant and Sichuan plant since April 2010 and August 2010, respectively. The Company suspended production at its Shanghai plant beginning April 2010 due to the heightened enforcement of control measures relating to poisonous, hazardous and flammable chemicals adopted by the Shanghai municipal government during the hosting of the Expo 2010 from May 1, 2010 to October 31, 2010. The Company decided to extend the suspension of production at its Shanghai plant as a result of an ongoing lawsuit filed against the Company by a construction contractor. The Company suspended production at its old plant in San Tai County in Sichuan in August 2010 in preparation for the relocation of the production lines to its new plant in Qin Dong Bei Industrial Park. The relocation of the Sichuan plant, together with the new plant, will result in a combined annual biodiesel production capacity of 100,000 tons for Sichuan Gushan.
Furthermore, to help mitigate the potential adverse impact from the consumption tax issue, the Company continued its efforts to expand alternative sales channels, including biodiesel sales as fatty acid methyl ester to the chemical industry, which are not subject to consumption tax, while reducing its sales of biodiesel to the refined oil market. This strategy contributed in part to the decrease in the sales volume of biodiesel in the recent few quarters because the size of the Company's customer base in the chemical industry is smaller than that of the refined oil market. Although the consumption tax issue was resolved in December 2010, the sales volume of the biodiesel for the first quarter of 2011 did not increase immediately as compared to the sales volume in previous quarters because of the ramp up time necessary to resume its production of biodiesel and because of the Chinese New Year holiday in February 2011.
The year-to-year increase in the average selling price of biodiesel was mainly attributable to improved conditions in the refined oil market in China following the decline in the market price of diesel in China, which began in the fourth quarter of 2008 and continued throughout the third quarter of 2009, resulting from a decrease in global oil prices and weaker industrial production in China amid the global financial crisis. The average selling price of biodiesel began to increase gradually from the fourth quarter of 2009.
The Company's revenue from its recycled copper business totaled RMB221.3 million (US$33.8 million) for the first quarter of 2011, representing an increase of 8.2% from RMB204.5 million for the fourth quarter of 2010. The increase in revenue on a sequential quarterly basis was mainly due to an increase in the average selling price of recycled copper products by 10.9% from RMB53,697 per ton for the fourth quarter of 2010 to RMB59,558 (US$9,095) per ton for the first quarter of 2011. The sales volume of recycled copper products amounted to 3,701 tons for the first quarter of 2011, representing a decrease of 2.3% from 3,787 tons for the fourth quarter of 2010. The decrease was mainly due to teething problems with the newly added production capacity, the Chinese New Year holiday in February and a reduction of business operations during a period of significant market volatility immediately following the earthquake in Japan in March.
Cost of Revenues
Cost of revenues for the first quarter of 2011 totaled RMB243.1 million (US$37.1 million), representing an increase of 128.5% from RMB106.4 million for the first quarter of 2010 and an increase of 12.5% from RMB216.0 million for the fourth quarter of 2010 The increase on a year-to-year basis was mainly due to cost of revenues of RMB211.5 million (US$32.3 million) from Jin Xin.
The cost of revenues of the Company's biodiesel business totaled RMB31.6 million (US$4.8 million) for the first quarter of 2011, representing a decrease of 70.3% from RMB106.4 million for the first quarter of 2010 and an increase of 28.7% from RMB24.5 million for the fourth quarter of 2010.
Cost of revenues of the Company's biodiesel business included a reversal of a provision for consumption tax of RMB10.6 million for the fourth quarter of 2010 as compared to a provision for consumption tax of RMB4.3 million for the first quarter of 2010. The reversal of the provision for consumption tax represents the amount of provision previously made in the first three quarters of 2010. The reversal of the provision for consumption tax was made as a result of the issuance of Caishui [2010] No. 118, Notice Regarding the Exemption from Consumption Tax on Pure Biodiesel Made from Waste Animal Fats or Vegetable Oils ("Caishui 118") by the Ministry of Finance and the State Administration of Taxation of the PRC ("SAT") which clarified that, subject to fulfillment of certain conditions, pure biodiesel made from waste animal fat or vegetable oil is exempt from consumption tax in China.
Excluding the provision for (reversal of) consumption tax, cost of revenues of the Company's biodiesel business for the first quarter of 2011 decreased by 69.0% from the first quarter of 2010 and decreased by 10.1% from the fourth quarter of 2010. The decrease in cost of revenues on both a year-to-year and sequential quarterly basis was primarily attributable to a decrease in the Company's sales volume of both biodiesel and biodiesel by-products. The decrease in cost of revenues was partially offset by an increase in the overall average unit cost for vegetable oil offal and used cooking oil, which increased by 28.2% from RMB3,197 per ton for the first quarter of 2010 and by 3.0% from RMB3,981 per ton for the fourth quarter of 2010 to RMB4,100 (US$626.1) per ton in the first quarter of 2011. The increases in the cost of vegetable oil offal and used cooking oil were caused by an 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 their suppliers.
The cost of revenues of the Company's recycled copper business totaled RMB211.5 million (US$32.3 million) for the first quarter of 2011, representing an increase of 10.4% from RMB191.5 million for the fourth quarter of 2010. The increase was mainly due to the increase in unit cost of raw materials by 15.7% from RMB48,544 per ton for November and December 2010 to RMB56,173 (US$8,578) per ton for the first quarter of 2011.
Gross profit (loss)
The Company's gross profit for the first quarter of 2011 totaled RMB3.8 million (US$0.6 million), compared to a gross loss of RMB34.1 million for the first quarter of 2010 and a gross profit of RMB17.9 million for the fourth quarter of 2010. The Company's gross profit for the first quarter of 2011 was composed of a gross loss of RMB6.0 million (US$0.9 million) from its biodiesel business, representing a gross loss margin of 23.7% and a gross profit of RMB9.8 million (US$1.5 million) from its recycled copper business, representing a gross profit margin of 4.4%.
The Company's gross loss for the first quarter of 2010 was derived from its biodiesel business, with a gross loss margin of 47.2%. The Company's gross profit for the fourth quarter of 2010 was composed of RMB4.9 million from its biodiesel business, representing a gross profit margin of 16.6%, and RMB13.0 million from its recycled copper business, representing a gross profit margin of 6.4%.
Excluding the provision for (reversal of) the provision for consumption tax, the gross loss margin of the Company's biodiesel business would be 41.3% for the first quarter of 2010 and 19.3% for the fourth quarter of 2010.
The improvement in the gross margin of the Company's biodiesel business on a year-to-year basis was mainly due to a decrease in depreciation expenses due to a lower cost base for certain of the Company's property, plant and equipment after these assets were impaired in 2010. However, the improvement of the gross margin on a year-to-year basis was partly offset by a narrowing spread between the average selling price of biodiesel and the average unit cost of raw materials. The average unit costs of the Company's raw materials increased by 28.2%, while the average selling prices of its biodiesel increased by 23.4% on a year-to-year basis.
The decrease in gross profit margin of the Company's recycled copper business on a sequential quarterly basis was mainly caused by a narrowing spread between the average selling price of recycled copper products and the average unit cost of raw materials. The average unit costs of the raw materials increased by 15.7%, while the average selling prices of its recycled copper products increased by 10.9%.
Research and Development Expenses
Research and development expenses totaled RMB0.2 million (less than US$0.1 million) in the first quarter of 2011, as compared to RMB1.1 million for the first quarter of 2010 and RMB0.9 million for the fourth quarter of 2010. The decrease on a year-to-year basis was mainly due to a decrease in depreciation expenses due to a lower cost base for certain of the Company's property, plant and equipment after these assets were impaired in 2010.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the first quarter of 2011 totaled RMB16.4 million (US$2.5 million), representing a decrease from RMB17.1 million for the first quarter of 2010 and from RMB32.6 million for the fourth quarter of 2010.
The decrease on a year-to-year basis was mainly due to a decrease in share-based compensation as a result of the cancellation of certain share options in the fourth quarter of 2010. The decrease was partly offset by an increase in miscellaneous selling, general and administrative expenses incurred by Jin Xin, a subsidiary acquired in November 2010.
The decrease on a sequential quarterly basis was mainly due to a decrease in staff costs, share-based compensation and professional fees. Staff costs for the fourth quarter of 2010 included a year-end performance bonus to all levels of the Company's employees, share-based compensation for the fourth quarter of 2010 included recognition of unamortized expenses on certain share options upon the cancellation of such share options in the fourth quarter of 2010 and professional fees for the fourth quarter of 2010 included fees incurred in relation to the Jin Xin acquisition.
Other Operating Expenses
Other operating expenses for the first quarter of 2011 amounted to RMB8.9 million (US$1.4 million), compared to RMB14.8 million for the first quarter of 2010 and RMB14.0 million for the fourth quarter of 2010. The expenses mainly consisted of depreciation of buildings and machinery, other amortization and salary paid to factory workers during the periods in which certain plants suspended production, loss of writing off a long-term payment as a result of terminating the supply contract in Indonesia and a provision for compensation to a construction contractor of Shanghai Gushan in accordance with the court's latest ruling.
Depreciation of buildings and machinery, other amortization and salary to factory workers for plants during suspension amounted to RMB8.9 million (US$1.4 million) for the first quarter of 2011, as compared to RMB14.1 million for the first quarter of 2010 and RMB8.4 million for the fourth quarter of 2010. The decrease on a year-to-year basis was mainly due to a decrease in depreciation expenses due to a lower cost base for certain of the Company's property, plant and equipment after these assets were impaired in 2010.
Due to continuous problems with the climate and quality of the castor bean produced, the Company decided to terminate its supply contract in Indonesia. The long-term payment of RMB4.8 million in connection with such supply contract for castor bean was written off in the fourth quarter of 2010.
As previously announced, Shanghai Gushan and one of its construction contractors are undergoing a lawsuit in respect of the contract sum payment and quality of certain facilities. According to the latest decision issued by the People's Court of Fengxian District, Shanghai, the Company will be liable for compensation of approximately RMB1.5 million in addition to the contract sum payable. The Company has made provisions of RMB0.7 million and RMB0.8 million in the first quarter and the fourth quarter, respectively, of 2010. No provision for such compensation was made for the first quarter of 2011.
The Company suspended or deferred production in certain plants due to the consumption tax issue, traffic controls pursuant to government directives and relocation of production facilities. As previously announced, the Company suspended production in Fujian Gushan beginning April 2009 due to road maintenance which restricted access to the plant by the Company's suppliers and customers and had not resumed production due to the consumption tax issue. The Company suspended production in Shanghai Gushan since April 2010 due to heightened enforcement of control measures relating to poisonous, hazardous and flammable chemicals adopted by the Shanghai municipal government during the hosting of the Expo 2010 and has not resumed production as a result of an ongoing lawsuit brought against it by a construction contractor of Shanghai Gushan's plant. Although construction of the production facilities for Chongqing Gushan and Hunan Gushan was completed in 2009, the Company deferred the commencement of production at these plants due to the consumption tax issue. The Company suspended production at its old plant in San Tai County in Sichuan in August 2010 in preparation for the relocation of the production lines to its new plant in Qin Dong Bei Industrial Park. If these suspensions and deferrals had not occurred, the depreciation of the buildings and machinery, other amortization and salary paid to factory workers of these plants would have been classified as cost of revenues.
Loss on Disposal of Property, Plant and Equipment
The disposal and relocation of Sichuan Gushan's property, plant and equipment was completed as of December 31, 2010. The loss on disposal of property, plant and equipment during the fourth quarter of 2010 mainly represented certain additional machinery and equipment that was scrapped and relocation expenses
Change in Fair Value of Contingent Consideration Liability
As previously announced in November 2010, the Company acquired a 67% beneficial ownership interest in Jin Xin through a series of transactions in exchange for up to 24 million of its newly issued ordinary shares ("Contingent Consideration Shares"). The Contingent Consideration Shares are subject to an earn-out arrangement whereby 6 million shares were delivered to the selling shareholder at the closing of the transactions, while the remaining 18 million ordinary shares were placed into escrow ("Additional Contingent Consideration Shares") to be released in stages upon the determination of Jin Xin's net income under U.S. GAAP for the year ended December 31, 2010 and the three years ending December 31, 2012.
According to ASC 480, Distinguishing Liabilities from Equity, and ASC 815, Derivatives and Hedging, the Additional Contingent Consideration Shares should be classified as a liability and stated at their fair value at the acquisition date and each reporting date. The subsequent change in the fair value of the Additional Contingent Consideration Shares at each reporting date would be recognized in the statement of operations. The Company recognized a decrease in fair value of RMB6.6 million for the first quarter of 2011 and an increase in fair value of RMB2.9 million for the fourth quarter of 2010.
Other Operating Income
The other operating income for the first quarter of 2011 represented processing income of RMB0.6 million (US$0.1 million) and net hedging income of RMB35,000 (less than US$0.1 million) earned by Jin Xin. Jin Xin uses part of its capacity to process recycled copper into copper products on behalf of some of its customers under processing agreements pursuant to which the raw materials are provided by the customers and Jin Xin earns a fixed income based on the quantity of output. Moreover, starting from the first quarter of 2011, Jin Xin hedged part of its inventory holdings against fluctuations of copper price by using standard future contracts of copper traded in the Shanghai Futures Exchange. During the first quarter of 2011, Jin Xin's hedging activities involved a total of 265 futures contracts with an average per contract amount of RMB350,000 (less than USD0.1 million) and an average per contract holding period of six days.
The other operating income for the fourth quarter of 2010 mainly consisted of the reversal of provisions for consumption tax of RMB103.8 million that represented the amount of the provision previously made in 2010 and processing income of RMB0.3 million earned by Jin Xin for November and December 2010. The reversal of provisions for consumption tax was based on the issuance of Caishui 118 by the Ministry of Finance of the PRC and the SAT, which clarified that, subject to fulfillment of certain conditions, pure biodiesel made from waste animal fat or vegetable oil is exempt from consumption tax in China.
Other Income (Expense)
Other income (expense) primarily consists of interest income, interest expenses, foreign currency exchange gains or losses and other income (expenses), net. Interest income for the first quarter of 2011 amounted to RMB0.1 million (less than US$0.1 million). Interest expenses for the first quarter of 2011 amounted to RMB1.4 million (US$0.2 million) mainly incurred by Jin Xin in respect of short term loans and discounting bills receivable. Foreign currency exchange loss for the first quarter of 2011 amounted to RMB54,000 (less than US$0.1 million). Other income (expenses), net for the first quarter of 2011 included, among others, income from the Company's depositary bank, a provision for business tax on intercompany advances among companies in China, VAT refunds and government subsidy income.
Income Tax Benefit (Expense)
Income tax benefit (expense) primarily consisted of corporate income tax ("CIT"), a provision for dividend withholding tax and other withholding tax.
CIT for the first quarter of 2011 amounted to RMB0.5 million (US$0.1 million), as compared to RMB0.5 million for the first quarter of 2010 and RMB3.1 million for the fourth quarter of 2010.
According to the CIT law, which came into effect from January 1, 2008, and relevant regulations promulgated thereunder, PRC-resident enterprises are levied withholding tax at a rate of 10% on dividends to their non-PRC-resident corporate investors for earnings accumulated beginning on January 1, 2008. Undistributed earnings generated prior to January 1, 2008 are exempt from such withholding tax. 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 with Respect to Taxes on Income (the "Mainland China/HKSAR DTA") and Guoshuihan [2009] No. 601 on "How to understand and recognize the "Beneficial Owner" in Double Taxation Agreements" ("Circular 601"), a qualified Hong Kong tax resident which is the "beneficial owner" and holds 25% or more of the equity interest in a PRC resident enterprise is entitled to a reduced withholding tax rate of 5%. Pursuant to Circular 601, a beneficial owner under a tax treaty is not purely determined by its place of legal registration but also by other factors which depend on specific facts and circumstances, and significant judgment may be involved.
Although the Company intends to apply for the reduced withholding tax rate of 5% in the future when dividends for earnings accumulated from January 1, 2008 by its PRC operating subsidiaries are wired out of China, the Company made a 10% provision on such undistributed earnings for such withholding tax. If the local SATs approve a reduced withholding tax rate of 5% when such dividends are actually wired out of China, any excess provision will be reversed in subsequent financial statements.
In respect of its biodiesel business, the Company reduced the provision for withholding tax of RMB0.6 million (US$0.1 million) for the first quarter of 2011 and RMB4.3 million for the first quarter of 2010, and made a provision of RMB2.7 million for the fourth quarter of 2010. In respect of its recycle copper business, the Company made a provision for withholding tax of RMB0.6 million and RMB1.1 million for the first quarter of 2011 and the fourth quarter of 2010, respectively. Other overseas withholding tax amounted to RMB0.3 million, RMB0.3 million and RMB0.3 million for the first quarter of 2011, the first quarter of 2010 and the fourth quarter of 2010, respectively.
Net Income (Loss) Attributable to the Company
Net loss attributable to the Company amounted to RMB17.5 million (US$2.7 million) for the first quarter of 2011, compared to net loss attributable to the Company of RMB62.9 million for the first quarter of 2010 and net profit attributable to the Company of RMB61.4 million for the fourth quarter of 2010. Jin Xin's net income amounted to RMB5.3 million (US$0.8 million) for the first quarter of 2011, which is consolidated into the Company's financial statements, 75% of such profit or RMB4.0 million (US$0.6 million) is attributable to the Company. Jin Xin's net income amounted to RMB8.3 million for the fourth quarter of 2010, which is consolidated into the Company's financial statements, 67% of such profit or RMB5.6 million is attributable to the Company.
Non-GAAP net loss attributable to the Company amounted to RMB20.9 million (US$3.2 million) for the first quarter of 2011, compared to a non-GAAP net loss attributable to the Company of RMB54.2 million for the first quarter of 2010 and a non-GAAP net loss attributable to the Company of RMB40.0 million for the fourth quarter of 2010.
Financial Condition
As of March 31, 2011, the Company had working capital of RMB214.8 million (US$32.9 million), reflecting total current assets of RMB424.7 million (US$64.9 million) and total current liabilities of RMB209.9 million (US$32.0 million). Of the total current assets, the Company had RMB142.5 million (US$21.8 million) in cash, represented by RMB18.0 million, HK$47.9 million and US$0.1 million deposited in licensed commercial banks in China and HK$1.1 million and US$12.5 million deposited in licensed commercial banks in Hong Kong.
Recent Events
Issuance of an additional 6,000,000 ordinary shares in relation to the Jin Xin Acquisition
As previously announced, as part of our November 2010 acquisition of an initial 67% beneficial ownership interest in Jin Xin, we issued 18 million ordinary shares to Carling Technology Limited as escrow shares (the "Escrow Shares"). The Escrow Shares were deposited with an escrow agent for the benefit of a selling shareholder on November 30, 2010 and subject to the earn-out arrangement set forth in the stock purchase agreement with the selling shareholder. As Jin Xin's net profit for the year ended December 31, 2010 was over RMB30 million, in April 2011, the Company released 6,000,000 ordinary shares from escrow to the selling shareholder of Jin Xin under the contingent consideration arrangement.
Business Outlook for Fiscal Year 2011
During the first quarter of 2011, the Company's average biodiesel selling prices continued to improve over the previous quarter as demand for diesel in China continued its recovery in conjunction with the economic recovery in China and globally. Going forward, the Company expects this trend to continue so long as the global economy and China's economy continue to improve. However, inflationary pressures in China continue to be high, which continues to adversely affect the Company's raw material input costs, which are increasing at a rate higher than the rate of increase in the Company's average biodiesel selling prices. In particular, the Company's raw material input costs have risen significantly since the end of the first quarter 2011. As such, Gushan will continue its efforts to control its raw material input costs. As mentioned in the previous quarter's earnings results announcement, Gushan has been negotiating with the local government of Mianyang to be appointed as the exclusive collector and processor of used cooking oil in the regions under its jurisdiction. Such negotiations are still in progress and the Company will report on any material developments as and when they occur. Also, the Company continues to explore the possibility of developing an internal feedstock production capability within China. The process of searching for land in various regions of China that is suitable for cost-effective production of raw material feedstock such as castor bean and jatropha is currently ongoing. However, no assurance can be given by the Company that any of these efforts will be successful.
As a result of increasingly high raw material input costs, Gushan is currently evaluating the profitability of each of its biodiesel plant. In order to minimize the financial burden on the Company as a whole, Gushan will evaluate the appropriateness of continuing, commencing or resuming production of biodiesel at each of its biodiesel plants only if the biodiesel plant is able to operate on a positive cash flow basis. With the exception of Shanghai Gushan, the resumption of biodiesel production, which is still subject to the satisfactory resolution of a previously disclosed legal dispute with a construction contractor, Gushan expects to continue, commence or resume production of biodiesel at all of its plants as soon as possible so long as they are able to operate on a positive cash flow basis.
With regards to the recycled copper business, the Company continues to explore the possibility of acquiring businesses related to Jin Xin that will strengthen and diversify its business portfolio.
Unaudited Financial Statements
The unaudited condensed consolidated statements of operations, balance sheets and cash flow statements accompanying this announcement have been prepared by management using U.S. GAAP. These unaudited 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, 2010 balance sheet was derived from unaudited 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 reader's convenience, is based on the H.10 statistical release of the Federal Reserve Board as of March 31, 2011, which was RMB6.5483 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 of 2011 earnings conference call at 8:30am U.S. Eastern Time (8:30pm Beijing / Hong Kong Time) on May 26, 2011.
Dial-in details for the earnings conference call are as follows:
US Toll Free Number 1. 866.700.7477
US Toll Number: (for international callers) 1. 617.213.8840
Hong Kong Toll Number 852.3002.1672
Hong Kong Toll Free Number 800.96.3844
China Toll Free Number 10.800.130.0399
UK Toll Free Number 0808.234.7616
UK Toll Number (for international callers) 44.207.365.8426
Passcode: 24077303
A replay of the call will be available on the same day at 11:30 a.m. U.S. Eastern Time (or 11:30 p.m. Hong Kong Time) until June 2, 2011 and may be accessed by phone at the following numbers.
US Toll Free Number: 1.888.286.8010
US Toll Number: (for international callers) 1.617.801.6888
Passcode: 18643915
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 a leader in the China biodiesel industry, in terms of annual production capacity, and one of the leading biodiesel producers in Asia, in terms of nominal capacity. Gushan produces biodiesel, a renewable, clean-burning and biodegradable fuel and a raw material used to produce chemical products, 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 and chemical factories, as well as to petroleum wholesalers and individual retail gas stations. The Company has seven production facilities, located in the Sichuan, Hebei, Fujian and Hunan provinces and in Beijing, Shanghai and Chongqing, with a combined annual production capacity of 390,000 tons. Gushan's Hebei and Beijing production facilities are currently in operation. Gushan also operates a recycled copper business through Mianyang Jin Xin Copper Company Limited ("Jin Xin"), a 75%-owned subsidiary, that manufactures copper rods, copper wires and copper granules from recycled copper in Sichuan. Jin Xin has one plant in Sichuan, with a daily production capacity of approximately 160 tons of recycled copper products.
Safe Harbor Statement
This announcement 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 ("SEC"), 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 loss excluding share-based compensation, impairment loss and loss on disposal of property, plant and equipment, change in fair value of contingent consideration liability, provision (reversal) for consumption tax and the tax effect thereof ("non-GAAP net loss"), basic and diluted net loss per ADS excluding share-based compensation, impairment loss of property, plant and equipment, change in fair value of contingent consideration liability, provision (reversal) for consumption tax and the tax effect thereof ("basic and diluted non-GAAP net loss per ADS"). 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 "Reconciliation 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, impairment loss and loss on disposal of property, plant and equipment, change in fair value of contingent consideration liability, provision (reversal) for consumption tax and the tax effect thereof 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 loss and basic and diluted non-GAAP net loss per ADS is that these non-GAAP measures exclude share-based compensation, impairment loss and loss on disposal of property, plant and equipment, change in fair value of contingent consideration liability, provision (reversal) for consumption tax and the tax effect thereof, that have been and may 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.
- FINANCIAL TABLES FOLLOW -
GUSHAN ENVIRONMENTAL ENERGY LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts expressed in thousands, except per share data, per ADS data
and number of shares)
Three Months Ended
------------------
March 31, December 31,
2010 2010
---------- -------------
RMB RMB
Revenues 72,239 233,930
Cost of revenues (106,360) (216,013)
Gross profit (loss) (34,121) 17,917
------- ------
Research and
development (1,061) (870)
Selling, general and
administrative (17,099) (32,609)
Other operating
expenses (14,751) (13,971)
Loss on disposal of
property, plant and
equipment - (3,303)
Change in fair value
of contingent
consideration
liability - (2,868)
Total operating
expenses (32,911) (53,621)
------- -------
Other operating income - 104,118
--- -------
Income (loss) from
operations (67,032) 68,414
------- ------
Other income
(expense):
Interest income 290 320
Interest expense - (720)
Foreign currency
exchange loss, net (44) (21)
Other income, net 439 3,304
Income (loss) before
income tax (66,347) 71,297
Income tax (expense)
benefit 3,467 (7,170)
----- ------
Net income (loss) (62,880) 64,127
Less: Net income
attributable to non-
controlling interest - (2,750)
--- ------
Net income (loss)
attributable to the
Company (62,880) 61,377
=======
Net income (loss) per
ordinary share
attributable to the
Company
- Basic (0.38) 0.38
- Diluted (0.38) 0.38
Net income (loss) per
ADS attributable to
the Company
- Basic (3.77) 3.75
- Diluted (3.77) 3.75
Weighted average
ordinary shares
outstanding
- Basic 166,831,943 163,670,623
- Diluted 166,831,943 163,670,623
Weighted average ADS
outstanding
- Basic 16,683,194 16,367,062
- Diluted 16,683,194 16,367,062
Share-based
compensation expense
included in:-
Cost of revenues 162 135
Research and
development expenses 37 36
Selling, general and
administrative
expenses 5,272 6,189
Provision (reversal)
of consumption tax of
biodiesel included
in:-
Cost of revenues 4,317 (10,588)
Other operating income - (103,780)
Three Months Ended
------------------
March 31, 2011
RMB US$
Revenues 246,852 37,697
Cost of revenues (243,070) (37,120)
-------
Gross profit (loss) 3,782 577
----- ---
Research and
development (159) (24)
Selling, general and
administrative (16,437) (2,510)
Other operating
expenses (8,854) (1,352)
Loss on disposal of
property, plant and
equipment - -
Change in fair value
of contingent
consideration
liability 6,561 1,002
Total operating
expenses (18,889) (2,884)
------- ------
Other operating income 616 94
--- ---
Income (loss) from
operations (14,491) (2,213)
------- ------
Other income
(expense):
Interest income 141 22
Interest expense (1,409) (215)
Foreign currency
exchange loss, net (54) (8)
Other income, net 438 67
Income (loss) before
income tax (15,375) (2,347)
Income tax (expense)
benefit (775) (118)
---- ----
Net income (loss) (16,150) (2,465)
Less: Net income
attributable to non-
controlling interest (1,332) (203)
------ ----
Net income (loss)
attributable to the
Company (17,482) (2,668)
Net income (loss) per
ordinary share
attributable to the
Company
- Basic (0.11) (0.02)
- Diluted (0.11) (0.02)
Net income (loss) per
ADS attributable to
the Company
- Basic (1.08) (0.16)
- Diluted (1.08) (0.16)
Weighted average
ordinary shares
outstanding
- Basic 162,686,743 162,686,743
- Diluted 162,686,743 162,686,743
Weighted average ADS
outstanding
- Basic 16,268,674 16,268,674
- Diluted 16,268,674 16,268,674
Share-based
compensation expense
included in:-
Cost of revenues 79 12
Research and
development expenses 16 2
Selling, general and
administrative
expenses 3,093 473
Provision (reversal)
of consumption tax of
biodiesel included
in:-
Cost of revenues - -
Other operating income - -
GUSHAN ENVIRONMENTAL ENERGY LIMITED
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts expressed in thousands)
December
31, 2010
--------
RMB
ASSETS
Current assets:
Cash 272,822
Pledged deposit for
copper future contracts -
Accounts receivable 48,639
Bills receivable 9,550
Inventories 176,023
Prepaid expenses and
other current assets 53,706
Income tax receivable 674
Deferred tax assets 2,439
Total current assets 563,853
-------
Property, plant and
equipment, net 663,946
Land use rights 87,568
Deferred tax assets 4,609
Goodwill 18,674
Total assets 1,338,650
=========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Short term bank loans 60,000
Accounts payable 79,163
Accounts payable for
property, plant and
equipment 47,153
Accrued expenses and
other payables 61,074
Amounts due to related
parties 30,709
Income taxes payable 10,075
Total current liabilities 288,174
-------
Deferred tax liabilities 9,766
Income tax payable 9,762
Contingent consideration
liability 13,585
Other non-current
liabilities 15,450
Total liabilities 336,737
-------
Shareholders' equity:
Ordinary shares 2
Additional paid-in
capital 1,547,035
Treasury stock (32,972)
Accumulated other
comprehensive loss (59,159)
Retained earnings
(Accumulated deficit) (469,758)
Total equity attributable
to the Company 985,148
-------
Non-controlling interest 16,765
------
Total shareholders'
equity 1,001,913
---------
Total liabilities and
shareholders' equity 1,338,650
=========
March 31, 2011
RMB US$
ASSETS
Current assets:
Cash 142,542 21,767
Pledged deposit for
copper future
contracts 10,036 1,533
Accounts receivable 67,209 10,264
Bills receivable - -
Inventories 125,841 19,217
Prepaid expenses and
other current
assets 75,947 11,598
Income tax
receivable 674 103
Deferred tax assets 2,427 371
Total current assets 424,676 64,853
------- ------
Property, plant and
equipment, net 662,671 101,197
Land use rights 86,991 13,285
Deferred tax assets 4,277 653
Goodwill 18,674 2,852
Total assets 1,197,289 182,840
========= =======
LIABILITIES AND
SHAREHOLDERS'
EQUITY
Current liabilities:
Short term bank
loans 60,000 9,163
Accounts payable 19,773 3,019
Accounts payable for
property, plant and
equipment 36,081 5,510
Accrued expenses and
other payables 45,693 6,978
Amounts due to
related parties 42,214 6,447
Income taxes payable 6,091 930
Total current
liabilities 209,852 32,047
------- ------
Deferred tax
liabilities 9,734 1,486
Income tax payable 9,762 1,491
Contingent
consideration
liability 9,210 1,406
Other non-current
liabilities 14,338 2,190
Total liabilities 252,896 38,620
------- ------
Shareholders'
equity:
Ordinary shares 2 -
Additional paid-in
capital 1,511,586 230,837
Treasury stock (32,972) (5,035)
Accumulated other
comprehensive loss (61,016) (9,318)
Retained earnings
(Accumulated
deficit) (487,240) (74,407)
Total equity
attributable to the
Company 930,360 142,077
------- -------
Non-controlling
interest 14,033 2,143
------ -----
Total shareholders'
equity 944,393 144,220
------- -------
Total liabilities
and shareholders'
equity 1,197,289 182,840
========= =======
GUSHAN ENVIRONMENTAL ENERGY LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts expressed in thousands)
Three Months Ended
------------------
March 31, December 31,
2010 2010
---------- -------------
RMB RMB
Cash flows from operating
activities
Net (loss) income (62,880) 64,127
Adjustments to reconcile net
income (loss) to net cash
used in operating
activities:
Share based compensation 5,471 6,360
Depreciation 36,329 9,196
Land use right expense 369 378
Loss on disposal of property,
plant and equipment - 3,303
Change in fair value of
contingent consideration
liability - 2,868
Foreign currency exchange
losses, net 44 21
Deferred tax expense
(benefit) (3,932) 3,314
Inventory write-back (write-
downs) 2,737 (3,558)
Provision for doubtful debts 14 33
Change in assets and
liabilities
Accounts receivable 446 14,767
Bills receivable - (9,550)
Inventories (2,140) (107,215)
Prepaid expenses and other
current assets (4,325) (16,511)
Income tax receivable 1,298 1,047
Accounts payable 1,687 71,882
Accrued expenses and other
payables (5,923) 8,363
Income taxes payable (2,757) 4,531
Provision (reversal) for
consumption tax 4,317 (114,368)
Other non-current liabilities (998) (973)
Other assets 1,513 6,285
Net cash used in operating
activities (28,730) (55,700)
------- -------
Cash flows from investing
activities
Purchase of property, plant
and equipment (8,284) (83,524)
Proceeds from disposal of
property, plant and
equipment - 859
Acquisition of a subsidiary
(net of cash RMB3,032
acquired) - 2,874
Acquisition of additional 8%
beneficial ownership
interest in a subsidiary - -
Pledged deposit for copper
future contracts - -
Net cash used in investing
activities (8,284) (79,791)
Cash flows from financing
activities
Purchase of treasury stock - (32,972)
Proceeds from new bank loans - 10,000
Repayment of the amount due
to related parties - (3,291)
Proceeds of advance from
related parties - -
Net cash provided by (used
in) financing activities - (26,263)
--- -------
Effect of foreign exchange
rate changes on cash (153) (4,259)
---- ------
Decrease in cash (37,167) (166,013)
Cash at beginning of period 571,188 438,835
------- -------
Cash at end of period 534,021 272,822
======= =======
Three Months Ended
------------------
March 31, 2011
RMB US$
Cash flows from operating
activities
Net (loss) income (16,150) (2,466)
Adjustments to reconcile net
income (loss) to net cash
used in operating
activities:
Share based compensation 3,188 487
Depreciation 10,804 1,650
Land use right expense 387 59
Loss on disposal of property,
plant and equipment - -
Change in fair value of
contingent consideration
liability (6,561) (1,002)
Foreign currency exchange
losses, net 54 8
Deferred tax expense
(benefit) 254 39
Inventory write-back (write-
downs) (152) (23)
Provision for doubtful debts - -
Change in assets and
liabilities
Accounts receivable (18,570) (2,836)
Bills receivable 9,550 1,458
Inventories 50,334 7,687
Prepaid expenses and other
current assets (24,259) (3,705)
Income tax receivable - -
Accounts payable (59,390) (9,070)
Accrued expenses and other
payables (13,155) (2,009)
Income taxes payable (3,984) (608)
Provision (reversal) for
consumption tax - -
Other non-current liabilities (959) (146)
Other assets 2,018 308
Net cash used in operating
activities (66,591) (10,169)
------- -------
Cash flows from investing
activities
Purchase of property, plant
and equipment (20,645) (3,153)
Proceeds from disposal of
property, plant and
equipment - -
Acquisition of a subsidiary
(net of cash RMB3,032
acquired) - -
Acquisition of additional 8%
beneficial ownership
interest in a subsidiary (42,701) (6,521)
Pledged deposit for copper
future contracts (10,036) (1,533)
Net cash used in investing
activities (73,382) (11,207)
Cash flows from financing
activities
Purchase of treasury stock - -
Proceeds from new bank loans - -
Repayment of the amount due
to related parties (30,709) (4,690)
Proceeds of advance from
related parties 42,214 6,447
Net cash provided by (used
in) financing activities 11,505 1,757
------ -----
Effect of foreign exchange
rate changes on cash (1,812) (277)
------ ----
Decrease in cash (130,280) (19,896)
Cash at beginning of period 272,822 41,663
------- ------
Cash at end of period 142,542 21,767
======= ======
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,
2010 2010
---------- -------------
RMB RMB
GAAP net income (loss)
attributable to the Company (62,879) 61,377
Share-based compensation 5,471 6,360
Loss on disposal of property,
plant and equipment - 3,303
Change in fair value of
contingent consideration
liability - 2,868
Provision (reversal) for
consumption tax 4,317 (114,368)
Income tax effect of
reconciliation items (1,146) 500
Non-GAAP net loss
attributable to the Company (54,237) (39,960)
======= =======
GAAP net income (loss)
attributable to the Company
per ADS -Basic 3.75
(3.77)
Share-based compensation 0.33 0.39
Loss on disposal of property,
plant and equipment - 0.20
Change in fair value of
contingent consideration
liability - 0.18
Provision (reversal) for
consumption tax 0.26 (6.99)
Income tax effect of
reconciliation items (0.07) 0.03
Non-GAAP net loss
attributable to the Company
per ADS - Basic (3.25) (2.44)
===== =====
GAAP net income (loss)
attributable to the Company
per ADS -Diluted 3.75
(3.77)
Share-based compensation 0.33 0.39
Loss on disposal of property,
plant and equipment - 0.20
Change in fair value of
contingent consideration
liability - 0.18
Provision (reversal) for
consumption tax 0.26 (6.99)
Income tax effect of
reconciliation items (0.07) 0.03
Non-GAAP net loss
attributable to the Company
per ADS - Diluted (3.25) (2.44)
===== =====
Three Months Ended
------------------
March 31, 2011
RMB US$
GAAP net income (loss)
attributable to the Company (17,482) (2,668)
Share-based compensation 3,188 487
Loss on disposal of property,
plant and equipment - -
Change in fair value of
contingent consideration
liability (6,561) (1,002)
Provision (reversal) for
consumption tax - -
Income tax effect of
reconciliation items - -
Non-GAAP net loss
attributable to the Company (20,855) (3,183)
======= ======
GAAP net income (loss)
attributable to the Company
per ADS -Basic (1.07) (0.16)
Share-based compensation 0.20 0.03
Loss on disposal of property,
plant and equipment - -
Change in fair value of
contingent consideration
liability (0.40) (0.06)
Provision (reversal) for
consumption tax - -
Income tax effect of
reconciliation items - -
Non-GAAP net loss
attributable to the Company
per ADS - Basic (1.27) (0.19)
===== =====
GAAP net income (loss)
attributable to the Company
per ADS -Diluted (1.07) (0.16)
Share-based compensation 0.20 0.03
Loss on disposal of property,
plant and equipment - -
Change in fair value of
contingent consideration
liability (0.40) (0.06)
Provision (reversal) for
consumption tax - -
Income tax effect of
reconciliation items - -
Non-GAAP net loss
attributable to the Company
per ADS - Diluted (1.27) (0.19)
===== =====
For further information, please contact:
US Asia
Elizabeth Cheek Rico Ngai
Hill & Knowlton (New York) Hill & Knowlton (Hong Kong)
Tel: (1) 212 885 0682 Tel: (852) 2894 6204
Email: Email:
elizabeth.cheek@hillandknowlton.com rico.ngai@hillandknowlton.com.hk
SOURCE Gushan Environmental Energy Limited
