GUSHAN ENVIRONMENTAL ENERGY LTD (ADR) 
By NEW YORK, June 4, 2012 /PRNewswire/ -- Gushan Environmental Energy Limited ("Gushan" or the "Company"; NYSE: GU), a manufacturer of copper products and a producer of biodiesel in China, today announced its unaudited consolidated financial results for the first quarter of 2012.
Highlights for the First Quarter of 2012(Note 1)
-- Total revenues increased by 7.6% year-to-year and decreased by 33.3%
quarter-on-quarter to RMB266.5 million (US$42.3 million).
-- Gross profit amounted to RMB12.7 million (US$2.0 million), compared to a
gross profit of RMB4.4 million for the first quarter of 2011 and a gross
profit of RMB30.8 million for the fourth quarter of 2011.
-- Loss from operations amounted to RMB3.0 million (US$0.5 million),
compared to a loss from operations of RMB14.5 million for the first
quarter of 2011 and a loss from operations of RMB671.1 million for the
fourth quarter of 2011.
-- Net loss attributable to the Company amounted to RMB2.1 million (US$0.3
million), compared to a net loss of RMB17.5 million for the first
quarter of 2011 and a net loss of RMB683.1 million for the fourth
quarter of 2011.
-- Sales volume of copper products increased by 38.7% year-to-year and
decreased by 25.2% quarter-on-quarter to 5,132 tons.
-- Average selling price of copper products decreased by 13.5% year-to-year
and increased by1.8% quarter-on-quarter to RMB51,540 (US$8,184.2) per
ton.
-- Sales volume of biodiesel decreased by 97.2% year-to-year and increased
by 54.9% quarter-on-quarter to 127 tons. (Note 2)
-- Average selling price of biodiesel increased by 19.6% year-to-year and
decreased by 4.9% quarter-on-quarter to RMB6,421 (US$1,019.6) per ton.
(Note2)
-- Cash balance amounted to RMB51.6 million (US$8.2 million) as of March
31, 2012.
Note 1: Translation from RMB into US$ at RMB6.2975 to US$1.00, see "Currency Convenience Translation" below.
Note 2: 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.
Financial Results for the First Quarter of 2012
Revenues
The Company's revenues amounted to RMB266.5 million (US$42.3 million) for the first quarter of 2012, representing an increase of 7.6% from RMB247.8 million for the first quarter of 2011 and a decrease of 33.3% from RMB399.6 million for the fourth quarter of 2011. The increase on a year-to-year basis was mainly due to the consolidation of Xiangbei's results beginning in August 2011.
The Company's revenues from its copper products business totaled RMB265.2 million (US$42.1 million) for the first quarter of 2011, representing an increase of 19.36% from RMB222.2 million for the first quarter of 2011 and a decrease of 33.0% from RMB395.8 million for the fourth quarter of 2011. The sales volume of copper products was 5,132 tons for the first quarter of 2012, representing an increase of 38.7% from 3,701 tons for the first quarter of 2011 and a decrease of 25.2% from 6,860 tons for the fourth quarter of 2011. The average selling price of copper products was RMB51,540 (US$8,184.2) per ton for the first quarter of 2012, representing a decreased of 13.5% from RMB59,558 per ton for the first quarter of 2011 and an increase of 1.8% from RMB50,615 per ton for the fourth quarter of 2011. The increase in revenues from the Company's copper products business on a quarter-on-quarter basis was mainly due seasonality, as demand for copper products in China is generally higher in the forth quarter of the year due to the Chinese New Year holiday in the first quarter of the year, during which some of the Company's copper products customers recess their operations for as long as three weeks.
The Company's revenues from its biodiesel business totaled RMB1.3 million (US$0.2 million) for the first quarter of 2012, representing a decrease of 94.8% from RMB25.6 million for the first quarter of 2011 and a decrease of 64.9% from RMB3.8 million for the fourth quarter of 2011. The sales volume of biodiesel was 127 tons for the first quarter of 2012, as compared to 4,532 tons for the first quarter of 2011 and 82 tons for the fourth quarter of 2011. The average selling price of biodiesel was RMB6,421 (US$1,019.6) per ton for the first quarter of 2012, representing an increase of 19.5% from RMB5,371 per ton for the first quarter of 2011 and a decrease of 4.9% from RMB6,754 per ton for the fourth quarter of 2011. The decrease in revenue from the biodiesel business was attributable to the continued suspension of substantially all of the Company's biodiesel production, due primarily to the continued shortage of raw materials and reduced demand due to a slowing PRC economy. Since the third quarter of 2012, only the Company's Sichuan biodiesel production facility has remained in operation. The Company does not expect to resume production of biodiesel and biodiesel by-products on a large-scale basis in the near future.
Cost of Revenues
Cost of revenues for the first quarter of 2012 totaled RMB253.8 million (US$40.3 million), representing an increase of 4.3% from RMB243.4 million for the first quarter of 2011 and a decrease of 31.2% from RMB368.8 million for the fourth quarter of 2011. The increase on a year-to-year basis was mainly due to the consolidation of Xiangbei's results beginning in August 2011. The decrease on a quarter-on-quarter basis was mainly due to the decrease in sales of copper products due to seasonality, as demand for copper products in China is generally higher in the forth quarter of the year due to the Chinese New Year holiday in the first quarter of the year, during which some of the Company's copper products customers recess their operations for as long as three weeks.
The cost of revenues of the Company's copper products business totaled RMB252.1 million (US$40.0 million) for the first quarter of 2012, representing an increase of 19.0% from RMB211.8 million for the first quarter of 2010 and a decrease of 28.0% from RMB350.3 million for the fourth quarter of 2011. The unit cost of raw materials for the copper business was RMB47,623 (US$7,562.2) per ton for the first quarter of 2012, representing a decreased of 15.2% from RMB56,173 per ton for the first quarter of 2011 and an increase of 11.1% from RMB42,872 per ton for the fourth quarter of 2011.
The cost of revenues of the Company's biodiesel business totaled RMB1.7 million (US$0.3 million) for the first quarter of 2012, representing a decrease of 94.6% from RMB31.6 million for the first quarter of 2011 and a decrease of 90.8% from RMB18.5 million for the fourth quarter of 2011. The decline in the cost of revenues of the Company's biodiesel business was due to the continued suspension of substantially all of the Company's biodiesel production. The unit cost of raw materials for the biodiesel business was RMB4,658 (US$739.7) per ton for the first quarter of 2012, representing an increase of 13.6% from RMB4,100 per ton for the first quarter of 2011 and an increase of 0.2% from RMB4,647 per ton for the fourth quarter of 2011.
Gross Profit
The Company's gross profit for the first quarter of 2012 totaled RMB12.7 million (US$2.0 million), compared to a gross profit of RMB4.4 million for the first quarter of 2011 and a gross profit of RMB30.8 million for the fourth quarter of 2011.
The Company's gross profit for the first quarter of 2012 was composed of a gross profit of RMB13.1 million (US$2.1 million) from its copper products business, representing a gross profit margin of 4.9%, which was partially offset by a gross loss of RMB0.4 million (less than US$0.1 million) from its biodiesel business, representing a gross loss margin of 28.1%.
The Company's gross profit for the first quarter of 2011 was composed of a gross profit of RMB10.4 million from its copper products business, representing a gross profit margin of 4.7%, which was partially offset by a gross loss of RMB6.0 million from its biodiesel business, representing a gross loss margin of 23.7%.
The Company's gross profit for the fourth quarter of 2011 was composed of a gross profit of RMB45.5 million from its copper products business, representing a gross profit margin of 11.5%, which was partially offset by a gross loss of RMB14.7 million from its biodiesel business, representing a gross loss margin of 388.3%.
The deterioration of the copper products business's gross profit margin on a quarter-on-quarter basis was mainly caused by a narrowing of the spread between the average selling price of copper products, which increased by 1.8%, and the average unit cost of raw materials, which increased by 11.1%, and by the Company's use of a RMB10.2 million provision for copper product inventory write-downs during the fourth quarter of 2011. The Company made this provision due to a decrease in the average selling price of copper products during October 2011.
The gross profit margin of the Company's copper products business on a year-to-year basis was relatively stable. On a year-to-year basis, the average selling price of copper products increased by 13.5% and the average unit cost of raw materials increased by 15.2%.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the first quarter of 2012 totaled RMB18.6 million (US$3.0 million), as compared to RMB16.4 million for the first quarter of 2011 and RMB29.9 million for the fourth quarter of 2011.
The increase on a year-to-year basis was mainly due to an increase in professional fees and an increase of staff costs. Professional fees increased on a year-to-year basis mainly due to the fees incurred in the first quarter of 2012 in connection with the non-binding proposal letter from Mr. Jianqiu Yu, Chairman and Principal Executive Officer of Gushan, to acquire all of the outstanding ordinary shares of the Company not currently owned, legally or beneficially, by Mr. Jianqiu Yu. Staff costs increased on a year-to-year basis was mainly due to the consolidation of Xiangbei's results beginning in August 2011.
The decrease in selling, general and administrative expenses on a sequential quarterly basis was mainly due to a decrease in staff costs and share-based compensation. Staff costs were lower during the first quarter of 2012 than during the fourth quarter of 2011 as a result of the impact of year-end bonuses, totaling RMB3.2 million, paid to all levels of the Company's employees in the fourth quarter of 2011. The decrease in share-based compensation was mainly caused by the recognition of RMB7.7 million during the fourth quarter of 2012 related to a fully-vested option granted on October 31, 2011 to the Company's chairman to purchase up to 1,013 ordinary shares of Engen Investments Limited ("Engen"), which is 75% owned by the Company and is the holding company of the Company's recycled copper products business.
Other Operating Expenses
Other operating expenses for the first quarter of 2012 were nil, as compared to RMB8.9 million for the first quarter of 2011 and RMB40.8 million for the fourth quarter of 2011.
During the fourth quarter of 2011, other operating expenses mainly consisted of depreciation of buildings and machinery, other amortization and salaries paid to factory workers of suspended biodiesel plants, totaling RMB9.7 million, an impairment loss of RMB28.2 million on a VAT recoverable and an impairment loss of RMB2.9 million on land use rights. During the first quarter of 2011, other operating expenses mainly consisted of depreciation of buildings and machinery, other amortization and salaries paid to factory workers of suspended biodiesel plants, totaling RMB8.9 million. During 2011, all of the factory workers of the suspended biodiesel plants were either laid off or transferred to the Company's Sichuan biodiesel plant and the property, plant and equipment of such suspended plants were fully impaired, as a result, the Company did not incur any other expenses related thereto during the first quarter of 2012.
Other Operating Income
Other operating income for the first quarter of 2012 amounted to RMB3.3 million (US$0.5 million), as compared to nil for the first quarter of 2011 and RMB7.6 million for the fourth quarter of 2011. Other operating income for the first quarter of 2012 and the fourth quarter of 2011 mainly represented VAT refunds relating to the copper products business received by subsidiaries of the Company.
Impairment loss on property, plant and equipment
Impairment loss on property, plant and equipment for the first quarter of 2012 was nil, as compared to RMB603.3 million for the fourth quarter of 2011.
During the fourth quarter of 2011, the Company an impairment loss of RMB603.3 million on certain property, plant and equipment as a result of its view that the possibility is remote that it will resume the production of biodiesel and biodiesel by-products on a large scale basis in the near future. As a result, such property, plant and equipment were fully impaired. The Company did not recognize an impairment loss in the first quarter of 2011.
Impairment loss of goodwill
The Company recognized an impairment loss of RMB41.4 million on goodwill for the fourth quarter of 2011 as a result of its determination that the carrying value of the copper products business exceeded its fair value and that the implied fair value of goodwill of the copper products business was nil. As the Company reviews goodwill for impairment annually, no impairment loss on goodwill was recorded for the first quarter of 2012 or the first quarter of 2011.
Change in Fair Value of Contingent Consideration Liabilities
The Company recognized an increase in fair value of contingent consideration liabilities of RMB0.4 million (US$0.1 million) for the first quarter of 2012, as compared to a decrease of RMB6.6 million for the first quarter of 2011 and a decrease of RMB6.0 million for the fourth quarter of 2011.
The contingent consideration liabilities consist of obligations to issue equity securities of the Company and Engen under earn-out arrangements the Company entered into in connection with its acquisitions of the subsidiaries through which it operates its copper products business. The subsequent change in the fair value of these equity securities at each reporting date is recognized in the Company's statement of operations.
The increase in fair value of contingent consideration liabilities for the first quarter of 2012 was mainly due to an increase in the market price of the Company's ADSs and the shorter period remaining for discounting these liabilities.
The decrease in fair value of contingent consideration liabilities for the first quarter of 2011 and the fourth quarter of 2011 were mainly due to decreases in the market price of the Company's ADSs, changes in discount rates in calculating the fair value of these liabilities and decreases in the valuation of Engen as a result of downward adjustments of the Company's expectation about the financial prospects of its recycled copper products business.
Other Income (Expenses)
Other income (expenses) primarily consists of interest income, interest expenses, foreign currency exchange gain (loss), net and other income, net. Other income, net included, among others, government grant income of RMB11.2 million (US$1.8 million) for the first quarter of 2012 and RMB11.6 million for the fourth quarter of 2011.
Income Tax Expense
Income tax expense primarily consisted of corporate income tax ("CIT"), a provision for dividend withholding tax and other overseas withholding tax.
CIT for the first quarter of 2012 amounted to RMB4.0 million (US$0.6 million), as compared to RMB0.5 million for the first quarter of 2011 and RMB14.7 million for the fourth quarter of 2011.
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 dividend 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 dividend withholding tax. If the local SATs approve a reduced dividend 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 recycled copper products business, the Company made a provision for dividend withholding tax of RMB1.2 million (US$0.2 million) for the first quarter of 2012, RMB0.6 million for the first quarter of 2011 and RMB3.2 million for the fourth quarter of 2011.
In respect of its biodiesel business, no provision for dividend withholding tax was made or reduced for the first quarter of 2012 as the provision previously made had been fully reversed by the end of 2011 and all subsidiaries of biodiesel business still made losses in the first quarter of 2012. The Company reduced the provision for dividend withholding tax by RMB0.6 million for the first quarter of 2011 and RMB4.9 million for the fourth quarter of 2011. The decreases were due to the losses incurred by the biodiesel business.
Other overseas withholding tax amounted to RMB0.3 million (less than US$0.1 million), RMB0.3 million and RMB0.3 million for the first quarter of 2012, the first quarter of 2011 and the fourth quarter of 2010, respectively.
Net Loss Attributable to the Company
Net loss attributable to the Company amounted to RMB2.1 million (US$0.3 million) for the first quarter of 2012, as compared to a net loss of RMB17.5 million for the first quarter of 2011 and a net loss of RMB683.1 million for the fourth quarter of 2011.
Recent Events
Continued Listing Standards Notice from the NYSE
As previously disclosed, on May 1, 2012, the Company received a letter from the NYSE notifying it that the Company was not in compliance with one of the NYSE's standards for continued listing of its ADSs on the exchange. Specifically, the NYSE indicated that it considers the Company to be "below criteria" because, as of December 31, 20111, the Company's average global market capitalization over a consecutive 30 trading-day period was less than USD50 million and, at the same time, the Company's total stockholders' equity was less than USD50 million. On April 27, 2012, the Company reported that as of December 31, 2011, the Company's total shareholders' equity attributable to the Company was approximately USD36.2 million. As of December 31, 2011, the Company's average global market capitalization over a consecutive 30 trading-day period was approximately USD27.5 million.
Under NYSE continued listing rules, the Company has 90 days from the receipt of the letter to submit a plan advising the NYSE of definitive action the Company has taken, or is taking, that would bring the Company into conformity with the applicable standards within 18 months of receipt of the letter. If the NYSE staff determines that the Company has not made a reasonable demonstration of its ability to come into conformity with the applicable standards within 18 months, the NYSE staff will promptly initiate suspension and delisting procedures. Otherwise, if the NYSE staff accepts the plan, the Company will be subject to semi-annual review by the NYSE staff for compliance with the plan until either the Company is able to demonstrate that it has returned to compliance for a period of two consecutive quarters or until the expiration of the 18 month period. The NYSE staff will promptly initiate suspension and delisting procedures if the Company fails to meet the continued listing standards by the end of the 18-month period.
Business Outlook for Fiscal Year 2012
The Company's copper products business continued to contribute positively to the Company's overall financial performance during the first quarter of 2012 and this trend is expected to continue although the slowing of China's economy is expected to have a negative impact on this business. Given the uncertainty of the overall macro economic environment, the Company is cautiously continuing to explore the possibility of acquiring more businesses in the copper products industry to complement its existing businesses and strengthen its overall copper products business portfolio.
During the first quarter of 2012, demand for diesel in China continued to soften which resulted in a decrease in biodiesel selling prices, while shortages of raw materials for the Company's biodiesel business continued. The Company will continue to closely monitor the operating environment for its biodiesel business to determine whether it can resume large scale production of biodiesel on a positive cash flow basis.
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 Generally Accepted Accounting Principles in the United States of America ("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, 2011 balance sheet was derived from audited consolidated financial statements of the Company.
Currency Convenience Translation
The conversion of Renminbi into U.S. dollars in this earnings release, made solely for the reader's convenience, is based on the H.10 statistical release of the Federal Reserve Board as of March 31, 2012, which was RMB6.2975 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.
About Gushan Environmental Energy Limited
Gushan operates a copper products business in China that manufactures copper rods, copper wires, copper granules and copper plates primarily from recycled copper. Currently, Gushan's copper products business has two production facilities, with an aggregate daily production capacity of approximately 210 tons of recycled copper products. Gushan also produces biodiesel, a renewable, clean-burning and biodegradable fuel and a raw material used to produce chemical products, primarily from used cooking oil, and by-products from biodiesel production, including glycerine and plant asphalt. 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 490,000 tons. Currently, only Gushan's Sichuan production facility is in operation.
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. 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.
- 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, 2011 December 31, 2011 March 31, 2012
-------------- ----------------- --------------
RMB RMB RMB US$
Revenues 247,768 399,624 266,520 42,322
Cost of revenues (243,405) (368,798) (253,825) (40,306)
Gross profit 4,363 30,826 12,695 2,016
----- ------ ------ -----
Research and development (159) (119) - -
Selling, general and administrative (16,437) (29,939) (18,593) (2,953)
Other operating expenses (8,854) (40,773) - -
Impairment loss of property, plant and
equipment - (603,266) - -
Impairment loss of goodwill - (41,440) - -
Profit (loss) on disposal of property, plant
and equipment - (13) 5 1
Change in fair value of contingent
consideration liabilities 6,561 6,031 (398) (63)
Total operating expenses (18,889) (709,519) (18,986) (3,015)
------- -------- ------- ------
Other operating income - 7,633 3,272 520
--- ----- ----- ---
Loss from operations (14,526) (671,060) (3,019) (479)
------- -------- ------ ----
Other income (expense):
Interest income 141 47 94 15
Interest expense (1,409) (2,141) (2,198) (349)
Foreign currency exchange gain (loss), net (54) 510 243 38
Other income, net 473 11,612 11,027 1,751
--- ------ ------ -----
Profit (loss) before income tax (15,375) (661,032) 6,147 976
Income tax expense (775) (13,279) (5,548) (881)
---- ------- ------ ----
Net profit (loss) (16,150) (674,311) 599 95
Less: Net income attributable to non-
controlling interests (1,332) (8,829) (2,691) (427)
Net loss attributable to the Company (17,482) (683,140) (2,092) (332)
======= ======== ====== ====
Basic and diluted loss per ordinary share (0.11) (4.05) (0.01) -
Basic and diluted loss per ADS (1.08) (40.50) (0.12) (0.02)
Weighted average number of ordinary shares
outstanding - Basic and diluted 162,686,743 168,686,743 168,686,743 168,686,743
Weighted average number of ADS outstanding -
Basic and diluted 16,268,674 16,868,674 16,868,674 16,868,674
Share-based compensation expense included in:-
Cost of revenues 79 60 - -
Research and development expenses 16 4 - -
Selling, general and administrative expenses 3,093 9,556 1,468 233
GUSHAN ENVIRONMENTAL ENERGY LIMITED
UNAUDITED SEGMENT INFORMATION
(Amounts expressed in thousands, except percentage data)
Three Months Ended
------------------
March 31, 2011 December 31, 2011 March 31, 2012
-------------- ----------------- --------------
RMB RMB RMB US$
Revenues:
Biodiesel business
Biodiesel 24,340 559 818 130
Biodiesel by-products and
raw materials 1,220 3,231 511 81
----- ----- --- ---
Total biodiesel 25,560 3,790 1,329 211
products
Copper products business
Copper
products 220,394 347,209 264,524 42,005
Copper raw
materials and
scrap 1,814 48,625 667 106
Total copper products 222,208 395,834 265,191 42,111
------- ------- ------- ------
247,768 399,624 266,520 42,322
------- ------- ------- ------
Cost of revenues:
Biodiesel business (31,608) (18,507) (1,703) (270)
Copper products business (211,797) (350,291) (252,122) (40,036)
-------- -------- -------- -------
(243,405) (368,798) (253,825) (40,306)
-------- -------- -------- -------
Gross profit (loss):
Biodiesel business (6,048) (14,717) (374) (59)
Copper products business 10,411 45,543 13,069 2,075
------ ------ ------ -----
4,363 30,826 12,695 2,016
----- ------ ------ -----
Gross profit (loss) margin:
Biodiesel business -23.7% -388.3% -28.1% -28.1%
Copper products business 4.7% 11.5% 4.9% 4.9%
--- ---- --- ---
1.8% 7.7% 4.8% 4.8%
--- --- --- ---
GUSHAN ENVIRONMENTAL ENERGY LIMITED
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts expressed in thousands)
December 31, 2011 March 31, 2012
----------------- --------------
RMB RMB US$
ASSETS
Current assets:
Cash 65,519 51,603 8,194
Accounts and bills
receivable 226,704 114,758 18,223
Inventories 155,008 158,915 25,235
Prepaid expenses and other
current assets 65,545 106,891 16,974
Amounts due from related
parties 4,466 4,755 755
Income tax receivable 674 674 107
Deferred tax assets 2,019 1,714 272
Total current assets 519,935 439,310 69,760
------- ------- ------
Property, plant and
equipment, net 96,929 114,650 18,206
Land use rights 86,527 86,115 13,674
Deferred tax assets 3,294 3,019 479
Total assets 706,685 643,094 102,119
======= ======= =======
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Short term bank loans 110,000 110,000 17,467
Accounts payable 98,347 91,511 14,531
Accounts payable for
property, plant and
equipment 65,228 65,132 10,343
Accrued expenses and other
payables 60,501 64,305 10,211
Amounts due to related
parties 66,243 - -
Income tax payable 11,614 14,990 2,380
Total current liabilities 411,933 345,938 54,932
------- ------- ------
Deferred tax liabilities 11,285 12,572 1,996
Income tax payable 10,547 10,547 1,675
Contingent consideration
liabilities, excluding
current portion 10,261 10,562 1,677
Deferred rebate income,
excluding current portion 11,040 10,119 1,607
Total liabilities 455,066 389,738 61,887
------- ------- ------
Shareholders' equity:
Ordinary shares 2 2 -
Additional paid-in capital 1,541,838 1,543,306 245,067
Treasury stock (32,972) (32,972) (5,236)
Accumulated other
comprehensive loss (63,569) (63,899) (10,146)
Accumulated deficit (1,217,439) (1,219,531) (193,653)
Total equity attributable to
the Company 227,860 226,906 36,032
------- ------- ------
Non-controlling interests 23,759 26,450 4,200
------ ------ -----
Total shareholders' equity 251,619 253,356 40,232
------- ------- ------
Total liabilities and
shareholders' equity 706,685 643,094 102,119
======= ======= =======
GUSHAN ENVIRONMENTAL ENERGY LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts expressed in thousands)
Three Months Ended
------------------
March 31, 2011 December 31, 2011 March 31, 2012
-------------- ----------------- --------------
RMB RMB RMB US$
Cash flows from operating activities
Net profit (loss) (16,150) (674,311) 599 95
Adjustments to reconcile net loss to net
cash used in operating activities:
Share based compensation 3,188 9,620 1,468 233
Depreciation 10,804 18,761 2,344 372
Land use right expense 387 415 409 65
Profit (loss) on disposal of property, plant
and equipment - 13 (5) (1)
Impairment loss of property, plant and
equipment - 603,266 - -
Impairment loss of goodwill - 41,440 - -
Impairment loss of land use rights - 2,925 - -
Impairment loss of VAT recoverable - 28,220 - -
Change in fair value of contingent
consideration liabilities (6,561) (6,031) 398 63
Foreign currency exchange (gain) loss, net 54 (510) (243) (39)
Deferred tax expense (benefit) 254 (839) 1,867 296
Inventory write-downs (reversal of write-
downs) (152) 1,096 2,662 423
Change in assets and liabilities
Accounts and bills receivable (9,020) (73,659) 111,946 17,776
Inventories 50,334 (30,868) (6,569) (1,043)
Prepaid expenses and other current assets (24,259) (36,249) (41,346) (6,565)
Accounts payable (59,390) 73,067 (6,836) (1,086)
Accrued expenses and other payables (13,155) 8,333 3,985 633
Income taxes payable (3,984) 10,398 3,376 536
Other non-current liabilities (959) (925) (922) (146)
Other assets 2,018 - - -
---
Net cash provided by (used in) operating
activities (66,591) (25,838) 73,133 11,612
------- ------- ------ ------
Cash flows from investing activities
Purchase of property, plant and equipment (20,645) (2,831) (20,161) (3,201)
Proceeds from disposal of property, plant
and equipment - - 5 1
Pledged deposit for copper future contracts (10,036) 9 - -
---
Net cash used in investing activities (30,681) (2,822) (20,156) (3,200)
------- ------ ------- ------
Cash flows from financing activities
Repayment of bank loans - (30,000) - -
Proceeds from new bank loans - 30,000 - -
Repayments of advance from related parties (34,709) (16,660) (66,519) (10,563)
Proceeds of advance from related parties 46,214 22,916 - -
Addition of advance to related parties - - (289) (46)
Acquisition of additional 8% equity interest
in a subsidiary (42,701) - - -
---
Net cash provided by (used in) financing
activities (31,196) 6,256 (66,808) (10,609)
------- ----- ------- -------
Effect of foreign exchange rate changes on
cash (1,812) (154) (85) (13)
------ ---- --- ---
Decrease in cash (130,280) (22,558) (13,916) (2,210)
Cash at beginning of period 272,822 88,077 65,519 10,404
------- ------ ------ ------
Cash at end of period 142,542 65,519 51,603 8,194
======= ====== ====== =====
SOURCE Gushan Environmental Energy Limited
