NEW YORK, April 1, 2008 /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, 2007.
Financial Highlights for the Fourth Quarter of 2007: -- Revenues
increased 66.1% to $11.3 million; -- Gross profit grew 62.4% to
$5.4 million; -- Income from operations increased 29.4% to $3.0
million; and -- Net income increased 20.4% to $2.3 million or $0.08
per share. "We've made significant progress expanding our business
in 2007, ending the year with 24 CNG filling stations, 84,500
residential, commercial and industrial pipeline customers, and a
LNG processing and distribution plant under construction. I'd like
to thank all of our employees for their continued dedication,"
stated Mr. Qinan Ji, Chairman and CEO of China Natural Gas. "In
this year we have strengthened our position as the leading CNG
filling station operator and a natural gas provider in our home
market of Xi'an. We also expanded geographically into the provinces
around Shaanxi, including the Henan province and expect to
diversify our business through the LNG project in the future. With
rising fuel prices, growing awareness of 'green energy', and strong
government support, we are in a unique and enviable competitive
position," continued Mr. Qinan Ji, Chairman and CEO of China
Natural Gas. Revenue in the fourth quarter of 2007 increased 66.1%
to $11.3 million from $6.8 million in the fourth quarter of 2006,
and up 24.4% sequentially. The increase in revenue was due
primarily to the sales ramp up in the three new stations in the
third quarter of 2007 and the addition of more than 500
residential, industrial and commercial pipeline customers, bringing
the total number of customers to 84,500. Revenue from sales of
natural gas increased 76.0% to $9.0 million from $5.1 million in
the fourth quarter of 2006. Installation revenue increased 35.5% to
$2.3 million from $1.7 million in the prior year's period. Gross
profit in the fourth quarter of 2007 increased 62.4% to $5.4
million from $3.3 million in the fourth quarter of 2006. Gross
margin was 47.7%, roughly flat to last year. Operating income in
the fourth quarter of 2007 increased 29.4% to $3.0 million from
$2.3 million in the prior year's period. Operating expenses in
fourth quarter of 2007 were $2.4 million compared to $1.0 million
in the prior year period, reflecting the significantly larger
business operations with 13 new natural gas filling stations, 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. Net income in the fourth
quarter of 2007 increased 14.0% to $2.3 million, or $0.08 per
share, compared to $1.9 million, or $0.08 per share, in the fourth
quarter of 2006. Diluted shares outstanding increased 21.0% during
the year over year period to 29.3 million shares outstanding in the
fourth quarter of 2007. Financial Highlights for the Fiscal Year
2007: -- Revenue increased 88.0% to $35.4 million, driven by 13
additional CNG filling stations in 2007 and continued growth of
pipeline customers; -- Gross profit up 90.6% to $17.4 million; --
Income from operations increased 70.0% to $11.1 million; -- Net
income increased 67.2% to $9.1 million or $0.35 per share Revenue
for fiscal year 2007 increased 88.0% to $35.4 million from $18.8
million for fiscal year 2006. The increase in revenue was due
primarily to the contribution of 13 additional CNG filling stations
during 2007 and the year over year increase in residential,
industrial and commercial pipeline customers to approximately
84,500 from 75,000 in 2006. Revenue from sales of natural gas
increased 106.2% to $28.3 million from $13.7 million in the prior
year. Installation revenue increased 39.1% to $7.1 million from
$5.1 million in the fiscal year 2006. Gross profit for fiscal year
2007 increased 90.6% to $17.4 million from $9.1 million in 2006.
Gross margin increased 68 basis points to 49.1% from 48.4% in the
year 2006, reflecting the mix shift year over year to higher margin
natural gas revenue. Operating expenses in the fiscal year 2007
increased 142.2% to $6.3 million from $2.6 million, reflecting
costs associated with 13 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. Operating income increased 70.0% to $11.1 million from
$6.5 million. Operating margin decreased by 3.4% to 31.3% compared
to 34.6% in the prior year as a result of increased operating
expense. Net income for fiscal year 2007 increased 67.2% to $9.1
million, or $0.35 per share, compared to $5.5 million, or $0.23 per
share, in the fiscal year 2006. Balance Sheet As of December 31,
2007, the Company had cash and cash equivalents of $13.3 million
compared to $20.7 million as of September, 2007 and $7.6 million as
of June 30, 2007. Fiscal Year 2008 Update For the fiscal year 2008,
the Company continues to anticipate revenue and net income growth
of at least 70%. Please note that this financial guidance excludes
the impact of interest charges and other costs associated with the
Company's 5.0% Guaranteed Senior Notes due 2014 and warrants
representing the right to purchase 2,900,000 shares of the
Company's common stock to Abax Lotus Ltd. for approximately US$40
million. 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. CONTACT In the U.S.: Ashley Ammon MacFarlane or Bill Zima
Integrated Corporate Relations 203-682-8200 In Asia: Xuyang Zhang
Integrated Corporate Relations, Inc. +86 10 8523 3087 CHINA NATURAL
GAS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF
DECEMBER 31, 2007 and 2006 2007 2006 A S S E T S CURRENT ASSETS:
Cash & cash equivalents $13,291,729 $5,294,213 Short-term
investments 238,554 - Accounts receivable 306,179 569,037 Other
receivable 824,020 711,279 Inventories 231,339 285,537 Advances
663,041 960,681 Prepaid expense and other current assets 109,722
304,620 Total current assets 15,664,584 8,125,367 PROPERTY AND
EQUIPMENT, net 32,291,995 17,193,728 CONSTRUCTION IN PROGRESS
2,210,367 2,343,499 OTHER ASSETS 3,123,052 803,757 Total other
assets TOTAL ASSETS $53,289,998 $28,466,351 LIABILITIES AND
STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and
accrued liabilities $487,710 $406,212 Other payables 55,979 279,236
Unearned revenue 327,220 284,011 Taxes Payable 1,211,775 1,866,688
Total current liabilities 2,082,684 2,836,147 COMMITMENTS AND
CONTINGENCIES - - STOCKHOLDERS' EQUITY: Preferred stock, $0.0001
per share; authorized 5,000,000 shares; none issued - - Common
stock, $0.0001 per share; 45,000,000 authorized shares 29,200,304
and 24,210,183 shares issued and outstanding at December 31, 2007
and 2006, respectively 2,920 2,421 Additional paid-in capital
32,046,879 18,223,911 Cumulative translation adjustment 3,477,025
839,452 Statutory reserves 1,802,735 750,886 Retained earnings
13,877,755 5,813,534 Total stockholders' equity 51,207,314
25,630,204 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $53,289,998
$28,466,351 CHINA NATURAL GAS, INC. AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME FOR THE YEARS
ENDED DECEMBER 31, 2007 AND 2006 Quarter Ended December 31, Years
Ended December 31, 2007 2006 2007 2006 Revenue Natural gas revenue
$9,034,065 $5,132,909 $28,278,033 $13,713,145 Installation and
other 2,263,014 1,670,193 7,114,020 5,115,645 Total revenue
11,297,079 6,803,102 35,392,053 18,828,790 Cost of revenue Natural
gas cost 4,863,065 2,800,858 14,838,997 7,663,060 Installation and
other 1,047,344 686,115 3,186,078 2,054,940 Total cost of revenue
5,910,409 3,486,973 18,025,075 9,718,000 Gross profit 5,386,670
3,316,129 17,366,978 9,110,790 Operating expenses Selling expenses
1,235,113 384,504 3,451,161 1,308,464 General and administrative
expenses 1,127,309 594,594 2,837,768 1,287,735 Total operating
expenses 2,362,422 979,098 6,288,929 2,596,199 Income from
operations 3,024,248 2,337,031 11,078,049 6,514,591 Non-operating
income (expense): Interest income 29,127 33,847 70,697 41,109 Other
income 10,114 - 39,076 - Other expense (6,229) (68,839) (7,100)
(79,021) Foreign exchange loss (162,142) - (150,729) - Total non-
operating expense (129,130) (34,992) (48,056) (37,912) Income
before income tax 2,895,118 2,302,039 11,029,993 6,476,679
Provision for income tax 596,045 392,579 1,913,923 1,025,584 Net
income 2,299,073 1,909,460 9,116,070 5,451,095 Other comprehensive
income Foreign currency translation gain 1,316,695 318,848
2,637,573 610,705 Comprehensive Income $3,615,768 $2,228,308
$11,753,643 $6,061,800 Weighted average shares outstanding Basic
29,195,247 24,210,183 26,200,679 23,872,936 Diluted 29,563,243
24,210,183 26,301,802 23,872,936 Earnings per share Basic $0.08
$0.08 $0.35 $0.23 Diluted $0.08 $0.08 $0.35 $0.23 DATASOURCE: China
Natural Gas, Inc. CONTACT: In the U.S.: Ashley Ammon MacFarlane, or
Bill Zima, +1-203-682-8200, or In Asia: Xuyang Zhang,
+86-10-8523-3087, all of Integrated Corporate Relations for China
Natural Gas, Inc.
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