NEW YORK, April 17 /PRNewswire-FirstCall/ -- China Natural Gas,
Inc. (OTC:CHNG) (BULLETIN BOARD: CHNG) , one of the leading
providers of pipeline natural gas for industrial, commercial and
residential use and compressed natural gas (CNG) for vehicular fuel
in Xi'an, China, today announced its fourth quarter and full year
financial results for the fiscal year ended December 31, 2006.
Financial Highlights for the Fourth Quarter 2006: -- Revenue
increased 218% to $6.8 million, driven by the construction of an
additional 14 CNG filling stations in the Xian area in 2006 and
continued growth of pipeline customers; -- Gross profit up 189% to
$3.3 million; -- Income from operations increased 286% to $2.3
million; -- Net income increased 271% to $2.1 million; and -- Net
income per diluted share increased 304% to $0.08 per share. "We are
very pleased with our performance through the fourth quarter of
2006, which exceeded our expectations by all measures," stated Mr.
Qinan Ji, Chairman and CEO of China Natural Gas. Financial
Highlights for Fiscal Year 2006: -- Revenues increased 288% to
$18.8 million; -- Gross profit grew 272% to $9.1 million; -- Income
from operations increased 343% to $6.5 million; and -- Net income
increased 310% to $6.1 million or $0.23 per share. "We made great
progress expanding our business in 2006, ending the year with
seventeen CNG filling stations and 75,000 residential, commercial
and industrial pipeline customers. I'd like to thank all of our
employees for their outstanding effort," said Mr. Qinan Ji,
Chairman and CEO of China Natural Gas. "As the sole authorized
provider of pipeline natural gas to customers in our service area,
and with 15 new company-owned filling stations slated to begin
construction by the end of 2007, we are truly in a unique and
enviable competitive position." Revenue for fiscal year 2006
increased 288% to $18.8 million from $4.9 million for fiscal year
2005. The sharp increase in revenue was due primarily to the
contribution of 14 newly constructed CNG filling stations during
2006 and a material increase in the number of residential,
industrial and commercial pipeline customers compared to 2005.
Revenue from sales of natural gas increased 713% to $13.7 million
from $1.7 million in the prior year. Construction and installation
revenue increased 62% to $5.1 million from $3.2 million in the
fiscal year 2005. Gross profit for fiscal year 2006 increased 272%
to $9.1 million from $2.5 million in 2005. Gross margin decreased
200 basis points to 48.4% from 50.4% in the year 2005, reflecting
the significant increase in revenues generated from company-owned
CNG filling stations, which generate a lower gross margin than
installation and construction revenue. While the Company's overall
gross margin declined year over year, gross margin for sales of
natural gas, excluding construction and installation revenue,
increased to 44.1% from 23.3% in the prior year. Management
believes that sales of CNG through its filling stations provide the
best opportunity for future revenue and profit growth. Operating
expenses in fiscal year 2006 increased 166% to $2.6 million from
$1.0 million, reflecting the construction and operation of 14 new
natural gas filling stations during the year, as well as continued
expenses related to the identification of future natural gas
filling station locations and costs associated with the government
licensing and approval process. As a percent of revenue, operating
expenses decreased to 13.8% in 2006 from 20.1% in 2005. Operating
income increased 343% to $6.5 million from $1.5 million. Operating
margin increased substantially by 430 basis points to 34.6%
compared to 30.3% in the prior year. Net income for fiscal year
2006 increased 310% to $6.1 million, or $0.23 per share, compare to
$1.5 million, or $0.08 per share, in the fiscal year 2005. Balance
Sheet As of December 31, 2006, the Company had $5.3 million cash
and cash equivalents on hand compared to $675,000 at December 31,
2005. Fiscal Year 2007 Update The Company expects to add up to
30,000 new pipeline customers by the end of 2007. Additionally, the
Company expects to start construction of an additional 15 CNG
filling stations through the remainder of the year. About China
Natural Gas, Inc. China Natural Gas, Inc., ("CHNG"), is the first
China-based natural gas company publicly traded in the US. It
currently owns and operates a 120 kilometer long compressed natural
gas pipeline in Xi'an, China, a fast growing Chinese city supported
by a population of approximately eight million and is the "gateway"
to the broad Western regions of China. CHNG has three profitable
business segments: end user delivery of natural gas services to
residential, commercial and industrial customers; wholesale natural
gas to retail natural gas filling stations; and retail natural gas
at company-owned natural gas filling stations. The city of Xi'an
has approximately 20,000 Taxis, 3,000 buses and 2,000 special
purpose vehicles that are powered by compressed natural gas. This
press release may contain forward-looking statements. These
statements are based on the current expectations or beliefs of
China Natural Gas, Inc. management and are subject to a number of
factors and uncertainties that could cause actual results to differ
materially from those described in the forward-looking statements,
including the fluctuation of natural gas prices, the availability
of natural gas supplies, changes in governmental regulations and/or
economic policies. CHINA NATURAL GAS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR THE THREE AND TWELVES MONTH PERIODS ENDED DECEMBER 31, 2006 AND
2005 (UNAUDITED) For three Month Periods For the Twelve Month
Periods Ended December 31, Ended December 31, 2006 2005 2006 2005
Revenue Natural gas revenue $5,132,909 $622,137 $13,713,145
$1,687,154 Construction / installation revenue 1,670,193 1,514,520
5,115,645 3,163,545 Total revenue 6,803,102 2,136,657 18,828,790
4,850,699 - - Cost of revenue - - Natural gas cost 2,800,858
463,058 7,663,060 1,293,585 Construction / installation cost
686,115 525,680 2,054,940 1,110,452 3,486,973 988,738 9,718,000
2,404,037 - - Gross profit 3,316,129 1,147,919 9,110,790 2,446,662
- - Operating expenses - - Selling expenses 384,504 175,503
1,308,464 474,855 General and administrative expenses 594,594
367,237 1,287,735 500,228 Total operating expenses 979,098 542,740
2,596,199 975,083 - - Income from operations 2,337,031 605,179
6,514,591 1,471,579 - - Non-operating income(expense): - - Interest
income 33,847 1,237 41,109 2,131 Other income (expense) (68,839)
(203) (79,021) (671) Total non-operating income (expense) (34,992)
1,034 (37,912) 1,460 - - Income before income tax 2,302,039 606,213
6,476,679 1,473,039 Income tax 392,579 90,932 1,025,584 220,956 - -
Net income 1,909,460 515,281 5,451,095 1,252,083 Other
comprehensive income Foreign currency translation gain 318,848
228,175 610,705 228,175 - - Comprehensive Income $2,228,308
$743,456 $6,061,800 $1,480,258 - Weighted average shares
outstanding Basic & diluted weighted average number of shares
outstanding 24,210,183 26,417,777 23,872,936 16,269,528 Earnings
per share Basic & diluted earnings per share $0.08 $0.02 $0.23
$0.08 The accompanying notes are an integral part of these
consolidated financial statements DATASOURCE: China Natural Gas,
Inc. CONTACT: Investor Relations, Ashley Ammon MacFarlane or Bill
Zima, both of Integrated Corporate Relations, +1-203-682-8200, for
China Natural Gas, Inc.
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