NEW YORK, Dec. 21, 2011 /PRNewswire/ -- Gushan
Environmental Energy Limited ("Gushan" or the "Company"; NYSE: GU),
a leading producer of biodiesel and a manufacturer of copper
products in China, today announced
its unaudited consolidated financial results for the third 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 Third Quarter of
2011(Note 1)
- Total revenues increased by 1,044.7% year-to-year and by 45.3%
quarter-on-quarter to RMB475.3
million (US$74.5
million).
- Gross profit amounted to RMB3.8
million (US$0.6 million),
compared to a gross loss of RMB23.9
million for the third quarter of 2010 and a gross profit of
RMB5.8 million for the second quarter
of 2011.
- Loss from operations amounted to RMB18.4
million (US$2.9 million),
compared to a loss from operations of RMB1,016.1 million for the third quarter of 2010
and a loss from operations of RMB23.2
million for the second quarter of 2011.
- Net loss attributable to the Company amounted to RMB20.7 million (US$3.2
million), compared to a net loss of RMB999.0 million for the third quarter of 2010
and a net loss of RMB26.4 million for
the second quarter of 2011.
- Non-GAAP net loss attributable to the Company amounted to
RMB18.5 million (US$2.9 million), compared to a non-GAAP net loss
attributable to the Company of RMB55.7
million for the third quarter of 2010 and a non-GAAP net
loss attributable to the Company of RMB21.9
million for the second quarter of 2011. (Note
2)
- Sales volume of biodiesel decreased by 97.6% year-to-year and
by 94.0% quarter-on-quarter to 203 tons. (Note
3)
- Average selling price of biodiesel increased by 44.9%
year-to-year and by 10.0% quarter-on-quarter to RMB6,771 (US$1,061.6) per ton. (Note
3)
- Sales volume of recycled copper products increased by 54.0%
quarter-on-quarter to 7,635 tons.
- Average selling price of recycled copper products decreased by
1.9% quarter-on-quarter to RMB59,473
(US$9,324.7) per ton.
- Cash balance amounted to RMB88.1
million (US$13.8 million) as
of September 30, 2011.
Note 1: Translation from RMB into US$ at
RMB6.3780 to US$1.00,
see "Currency Convenience Translation" below.
Note 2: GAAP represents Generally
Accepted Accounting Principles in the
United States of America ("U.S. GAAP" or "GAAP") in this
press release. 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 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 3: 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 fourth consecutive quarter of revenue growth was
driven by continued expansion of our recycled copper products
business, which is demonstrating significant growth both
organically and through strategic acquisitions," said Jianqiu Yu, Chairman and Principal Executive
Officer of Gushan, "During the third quarter we acquired a
controlling interest in recycled copper producer Hunan Yin Lian
Xiangbei Copper Company Limited and in December 2011 we acquired control of Guangzhou
Taiyue Communications Company Limited, a manufacturer of copper
cables for use in the telecommunications and personal computing
industries. In our biodiesel business, raw material shortages
negatively impacted production despite a continued rebound in
diesel prices and some moderation in raw material cost inflation.
We are carefully monitoring market conditions as we evaluate
resuming production at idled plants."
Financial Results for the Third Quarter
of 2011
Revenues
The Company's revenues amounted to RMB475.3 million (US$74.5
million) for the third quarter of 2011, representing an
increase of 1,044.7% from RMB41.5
million for the third quarter of 2010 and an increase of
45.3% from RMB327.1 million for the
second quarter of 2011.
The increase in revenues on a year-to-year basis was mainly due
to the revenue contribution of the recycled copper products
business. During the third quarter of 2011, the revenues from our
recycled copper products business amounted to RMB472.5 million (US$74.2
million), comprising revenue from our two consolidated
subsidiaries, Mianyang Jin Xin Copper Company Limited
("Jin Xin") and Hunan Yinlian
Xiangbei Copper Company Limited ("Xiangbei"), of RMB421.7 million (US$66.1
million) and RMB63.8 million
(US$10.0 million) (including
RMB12.0 million (US$1.9 million) of revenues attributable to
intracompany sales), respectively. As a result of the Company's
initial acquisition of a 67% beneficial ownership interest in
Jin Xin, in November 2010, the Company began consolidating
Jin Xin's operating results into its
operating results. In January 2011,
the Company acquired an additional 8% beneficial ownership interest
in Jin Xin, increasing its
beneficial ownership in Jin Xin to
75%. Furthermore, as a result of the Company's acquisition of a 75%
beneficial ownership interest in Xiangbei in August 2011, the Company began consolidating
Xiangbei's operating results into its operating results. The
increase in revenues on a sequential quarterly basis was mainly due
to the increase in revenues from Jin
Xin and the consolidation of Xiangbei's revenues starting in
August 2011.
The Company's revenue from its biodiesel business totaled
RMB1.8 million (US$0.3 million) for the third quarter of 2011,
representing a decrease of 95.8% from RMB41.5 million for the third quarter of 2010 and
a decrease of 92.1% from RMB22.3
million for the second quarter of 2011. The decrease in
revenue from the biodiesel business 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
declines in biodiesel revenues and sales volume were attributable
to continued suspension of production at most of the Company's
biodiesel plants due to unfavorable market conditions and temporary
shortage of raw materials due to local governments cracking down on
certain alleged practices of vendors of used cooking oil that
forced some of our suppliers to suspend operations.
The sales volume of biodiesel amounted to 203 tons for the third
quarter of 2011, representing a decrease of 97.6% from 8,363 tons
for the third quarter of 2010 and a decrease of 94.0% from 3,361
tons for the second quarter of 2011. The average selling price of
biodiesel was RMB6,771 (US$1,061.6) per ton for the third quarter of
2011, representing an increase of 44.9% from RMB4,672 per ton for the third quarter of 2010
and an increase of 10.0% from RMB6,156 per ton for the second quarter of
2011.
The sales volume of biodiesel by-products amounted to 115 tons
for the third quarter of 2011, representing a decrease of 90.9%
from 1,260 tons for the third quarter of 2010, and a decrease of
80.2% from 580 tons for the second quarter of 2011. The average
selling price of biodiesel by-products was RMB3,365 (US$527.6)
per ton for the third quarter of 2011, representing an increase of
73.1% from RMB1,944 per ton for the
third quarter of 2010 and an increase of 24.6% from RMB2,700 per ton for the second quarter of
2011.
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 new plant has been conducting a trial run since early
June 2011. The decrease in sales
volume of both biodiesel and biodiesel by-products on a
year-to-year basis as well as a sequential quarterly basis was
primarily due to the suspension of production at Beijing Gushan and
Hebei Gushan as a result of the Company's strategy to avoid
negative operating cash flows caused by the increasingly high raw
material input costs.
The year-to-year and sequential quarterly 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 through to 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 to 2011.
The Company's revenue from its recycled copper products business
totaled RMB473.5 million
(US$74.2 million) for the third
quarter of 2011, representing an increase of 55.3% from
RMB304.8 million for the second
quarter of 2011. The increase in revenue on a sequential quarterly
basis was mainly due to an increase in Jin
Xin's revenue by 38.3% from RMB304.8
million for the second quarter of 2011 to RMB421.7 million (US$66.1
million), reflecting mainly an increase in sales volume of
recycled copper products by 36.4% from 4,958 tons for the second
quarter of 2011 to 6,761 tons for the third quarter of 2011, and
the contribution from Xiangbei's sales of RMB51.8 million (US$8.1
million), representing a sales volume of 874 tons, since the
date of acquisition on August 1,
2011. The average selling price of recycled copper products
decreased by 1.9% from RMB60,638 per
ton for the second quarter of 2011 to RMB59,473 (US$9,324.7) per ton for the third quarter of
2011.
Cost of Revenues
Cost of revenues for the third quarter of 2011 totaled
RMB471.4 million (US$73.9 million), representing an increase of
620.9% from RMB65.4 million for the
third quarter of 2010 and an increase of 46.7% from RMB321.3 million for the second quarter of 2011.
The increase on a year-to-year basis was mainly due to cost of
revenues of RMB464.4 million
(US$72.8 million) from the Company's
recycled copper products business. The increase on a sequential
quarterly basis was mainly due to the increase in sales volume of
recycled copper products.
The cost of revenues of the Company's biodiesel business totaled
RMB7.0 million (US$1.1 million) for the third quarter of 2011,
representing a decrease of 89.3% from RMB65.4 million for the third quarter of 2010 and
a decrease of 73.5% from RMB26.4
million for the second quarter of 2011. Excluding the
provision for consumption tax, cost of revenues of the Company's
biodiesel business for the third quarter of 2011 decreased by 88.9%
from the third quarter of 2010.
Cost of revenues of the Company's biodiesel business included a
provision for consumption tax of RMB2.4
million during the third quarter of 2010. The provision was
subsequently reversed in the fourth quarter 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.
The decrease in cost of revenues of the Company's biodiesel
products 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. This was partially
offset by an increase in the overall average unit cost of used
cooking oil, which increased by 25.7% from RMB4,008 per ton for the third quarter of 2010
and by 5.6% from RMB4,770 per ton for
the second quarter of 2011 to RMB5,039 (US$790.0)
per ton in the third quarter of 2011. The increases in the cost of
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 upstream suppliers.
The cost of revenues of the Company's recycled copper products
business totaled RMB464.4 million
(US$72.8 million) for the third
quarter of 2011, representing an increase of 57.5% from
RMB294.9 million for the second
quarter of 2011. The increase was mainly due to an increase in
sales volume by 54.0% from 4,958 tons for the second quarter of
2011 to 7,635 tons for the third quarter of 2011. The unit cost of
raw materials increased by 0.3% from RMB56,191 per ton for the second quarter of 2011
to RMB56,023 (US$8,783.8) per ton for the third quarter of
2011.
Gross profit (loss)
The Company's gross profit for the third quarter of 2011 totaled
RMB3.8 million (US$0.6 million), compared to a gross loss of
RMB23.9 million for the third quarter
of 2010 and a gross profit of RMB5.8
million for the second quarter of 2011. The Company's gross
profit for the third quarter of 2011 was composed of a gross profit
of RMB9.1 million (US$1.4 million) from its recycled copper products
business, representing a gross profit margin of 1.9%, partially
offset by a gross loss of RMB5.2
million (US$0.8 million) from
its biodiesel business, representing a gross loss margin of
298.7%.
The Company's gross loss for the third quarter of 2010 was
derived from its biodiesel business, with a gross loss margin of
57.5%. Excluding the provision for the consumption tax, the gross
loss margin of the Company's biodiesel business would have been
51.7% for the third quarter of 2010. The Company's gross profit for
the second quarter of 2011 consisted of a gross loss of
RMB4.1 million from its biodiesel
business, representing a gross loss margin of 18.6%, and a gross
profit of RMB9.9 million from its
recycled copper products business, representing a gross profit
margin of 3.3%.
The deterioration in the gross margin of the Company's biodiesel
business on both a year-to-year and sequential quarterly basis was
mainly due to a provision for inventory write-downs of RMB4.5 million (US$0.7
million) because higher fixed costs of manufacturing were
used to calculate the quarter-end inventory balances as a result of
a low utilization rate during the third quarter of 2011.
The decrease in gross profit margin of the Company's recycled
copper products 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 raw materials increased by
0.3%, while the average selling price of its recycled copper
products decreased by 1.9%. Furthermore, the Company also made a
provision for inventory write-downs of RMB10.2 million (US$1.6
million) for its recycled copper products business for the
third quarter of 2011 as a result of the decrease in the average
selling price in October 2011.
Research and Development Expenses
Research and development expenses totaled RMB0.1 million (less than US$0.1 million) in the third quarter of 2011, as
compared to RMB1.0 million for the
third quarter of 2010 and RMB0.1
million for the second quarter of 2011. The decrease on a
year-to-year basis was mainly due to a decrease in depreciation
expenses as a result of 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 third
quarter of 2011 totaled RMB17.7
million (US$2.8 million), as
compared to RMB17.6 million for the
third quarter of 2010 and RMB17.7
million for the second quarter of 2011.
Other Operating Expenses
Other operating expenses for the third quarter of 2011 amounted
to RMB9.8 million (US$1.5 million), compared to RMB22.7 million for the third quarter of 2010 and
RMB8.9 million for the second quarter
of 2011. Other operating expenses mainly consisted of depreciation
of buildings and machinery and other amortization and salary paid
to factory workers during the periods in which certain plants
suspended their production.
The decrease on a year-to-year basis was mainly due to a
decrease in depreciation expenses as a result of a lower cost base
for certain of the Company's property, plant and equipment after
these assets were impaired in 2010.
As previously announced in 2009 and 2010, the Company suspended
or deferred biodiesel production in certain plants due to the
consumption tax issue, traffic controls pursuant to government
directives and the relocation of a production facility in 2009 and
2010.
Although the consumption tax issue has been resolved with the
issuance of Caishui 118, as a result of increasingly high raw
material input costs in 2011, the Company is currently evaluating
the profitability of each of its biodiesel plants. The Company will
evaluate the appropriateness of continuing, commencing or resuming
production of biodiesel at each of its biodiesel plants and will
continue, commence or resume production only if the biodiesel plant
is able to operate on a positive cash flow basis in order to
minimize the financial burden on the Company as a whole. Currently,
only the new plant in Qin Dong Bei Industrial Park in Sichuan is operating on a trial run basis.
If these suspensions and deferrals had not occurred, the
depreciation of the buildings and machinery and other amortization
and salary paid to factory workers of these plants would have been
classified as cost of revenues in corresponding periods.
Impairment loss on property, plant and equipment
As previously announced, the Company recognized an impairment
loss of RMB951.0 million on certain
property, plant and equipment located at Fujian Gushan, Hebei
Gushan, Beijing Gushan, Shanghai Gushan, Chongqing Gushan, Hunan
Gushan and Biomass, for the third quarter of 2010. The impairment
loss represented the excess of the carrying amount over the fair
value of these assets. The Company has not recognized any such
impairment loss since the third quarter of 2010.
Change in Fair Value of
Contingent Consideration
Liability
In November 2010, the Company
acquired an initial 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 which are subject to an earn-out arrangement
whereby 6 million ordinary shares were delivered to the selling
shareholder at the closing of the transactions, while the remaining
18 million ordinary shares were placed into escrow ("Jin Xin
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.
In August 2011, the Company
acquired a 75% beneficial ownership interest in Xiangbei through a
series of transactions in exchange for (i) RMB30,000,000 in cash, (ii) up to 20,000,000
newly issued ordinary shares of the Company, and (iii) up to a
14.17% interest in Engen Investment Limited, a direct, 75%-owned
British Virgin Islands ("BVI")
subsidiary of Gushan, subject to adjustment pursuant to an earn-out
arrangement. Items (ii) and (iii) above are collectively also
referred to as "Xiangbei Contingent Consideration Shares", and
together with the Jin Xin Contingent Consideration Shares, the
"Contingent Consideration Shares. The Xiangbei Contingent
Consideration Shares are subject to an earn-out arrangement whereby
20,000,000 million ordinary shares of the Company and 14.17% new
shares of Engen will be issued in stages upon the determination of
Xiangbei's net income under U.S. GAAP for the years ending
December 31, 2011, 2012 and 2013.
Under U.S. GAAP, the 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 Contingent Consideration Shares at each
reporting date would be recognized in our statement of
operations.
The Company recognized an increase in fair value of RMB2.4 million for the second quarter of 2011 and
a decrease in fair value of RMB0.1
million (less than US$0.1
million) for the third quarter of 2011. The increase in the
fair value of the Contingent Consideration Shares in the second
quarter of 2011 was mainly due to the release of 6 million ordinary
shares from escrow to the selling shareholder of Jin Xin, but the increase was partly offset by a
decrease caused by a further decrease in the market price of the
Company's ADSs and a further decrease in the estimated
probability-weighted number of ordinary shares to be further
issued. The decrease in the fair value of the Contingent
Consideration Shares in the third quarter of 2011 was mainly due to
the change in market price of the Company's ADSs and discount rates
in calculating the fair value of the liabilities.
Other Operating Income
Other operating income for the third quarter of 2011 represented
a compensation of RMB5.2 million
(US$0.8 million) from the supplier of
castor beans in Sichuan as a
result of the cancellation of the supply contract of castor beans
signed with Sichuan Gushan.
Other Income (Expense)
Other income (expense) primarily consists of interest income,
interest expenses, foreign currency exchange gain (loss), net and
other income (expense), net. Interest income for the third quarter
of 2011 amounted to RMB12,000 (less
than US$0.1 million). Interest
expenses for the third quarter of 2011 amounted to RMB2.5 million (US$0.4
million) mainly incurred by Jin
Xin in respect of short term loans. Foreign currency
exchange loss for the third quarter of 2011 amounted to
RMB3,000 (less than US$0.1 million). Other income (expenses), net for
the third 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, government subsidy income,
a loss which resulted from copper futures contracts and
compensation from a supplier of castor beans in Sichuan. Starting from the first quarter of
2011, Jin Xin sought to diversify
risks associated with the market prices for copper by using
standard futures contracts of copper traded on the Shanghai Futures
Exchange. From investing in such copper futures contracts,
Jin Xin incurred a loss of
RMB1.1 million (less than
US$0.2 million) in the third quarter
of 2011 and a loss of RMB0.4 million
in the second quarter of 2011. The increase in other income
(expense), net for the third quarter of 2011 was mainly VAT refunds
and government subsidy income totaling RMB3.2 million received by Jin Xin and Xiangbei.
Income Tax Benefit (Expense)
Income tax benefit (expense) primarily consisted of corporate
income tax ("CIT"), a provision for dividend withholding tax and
other overseas withholding tax.
CIT for the third quarter of 2011 amounted to RMB1.1 million (US$0.2
million), as compared to nil for the third quarter of 2010
and RMB1.8 million for the second
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
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 by RMB0.3
million (less than US$0.1
million) for the third quarter of 2011, RMB16.7 million for the third quarter of 2010 and
RMB0.3 million for the second quarter
of 2011. The decrease was due to the losses incurred in the
biodiesel business. In respect of its recycled copper products
business, the Company made a provision for withholding tax of
RMB0.7 million (US$0.1 million) and RMB0.5
million for the third quarter and the second quarter of
2011, respectively. Other overseas withholding tax amounted to
RMB0.3 million (less than
US$0.1 million), RMB0.3 million and RMB0.3
million for the third quarter of 2011, the third quarter of
2010 and the second quarter of 2011, respectively.
Net Loss Attributable to the
Company
Net loss attributable to the Company amounted to RMB20.7 million (US$3.2
million) for the third quarter of 2011, compared to
RMB999.0 million for the third
quarter of 2010 and RMB26.4 million
for the second quarter of 2011.
Non-GAAP net loss attributable to the Company amounted to
RMB18.5 million (US$2.9 million) for the third quarter of 2011,
compared to RMB55.7 million for the
third quarter of 2010 and RMB21.9
million for the second quarter of 2011.
Financial Condition
As of September 30, 2011, the
Company had working capital of RMB113.4
million (US$17.7 million),
reflecting total current assets of RMB433.3
million (US$67.9 million) and
total current liabilities of RMB319.9
million (US$50.2 million). Of
the total current assets, the Company had RMB88.1 million (US$13.8
million) in cash, represented by RMB50.8 million, HK$1.6
million and US$4,000 deposited
in licensed commercial banks in China and HK$0.5
million and US$5.5 million
deposited in licensed commercial banks in Hong Kong.
Recent Events
Acquisition of Taiyue
On December 6, 2011, the Company
acquired control of Guangzhou Taiyue Communications Cable Co. Ltd.
("Taiyue"), a PRC-based company in Guangdong province that is engaged in the
manufacture and sale of copper cables for use in communication and
personal computing industries. Currently, Taiyue has a daily
production capacity of approximately 24 tons of communication
cables and sells its products mainly to overseas customers and the
remaining small portion to customers in various provinces in
China.
Business Outlook for Fiscal Year
2011
During the third 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. During the third quarter of 2011, there were signs that
inflationary pressures in China
were starting to ease and this trend has continued to date. As a
result, the rate of increase in the Company's raw material input
costs during the third quarter of 2011 have fallen and the costs
themselves appear to be stabilizing. However, during the third
quarter, local governments started to clamp down on collectors of
used cooking oil to prevent them from allegedly selling used
cooking oil to processors who illegally process and resell the used
cooking oil as virgin edible oil for public consumption. This
action by the local governments has forced many used cooking oil
collectors, including our suppliers, to suspend their operations.
Consequently, there was a shortage in supply of raw materials and
the Company's biodiesel production was substantially reduced during
the third quarter. Although this shortage in raw materials has
continued to date, the Company believes that this situation cannot
continue in the long run as used cooking oil would ultimately need
to be properly processed. The Company also believes that when this
shortage of raw materials ends, the Company will be a beneficiary
as the Company's biodiesel business represents a legitimate channel
for the proper processing of used cooking oil. The Company will be
closely monitoring the raw materials situation and will evaluate
the appropriateness of increasing biodiesel production levels only
if its plants are able to operate on a positive cash flow
basis.
Meanwhile, the Company's recycled copper products business
continued to contribute positively to the Company's overall
financial performance and this trend is expected to continue. The
Company believes that the acquisition of Taiyue will also provide
additional positive contribution. The Company continues to explore
the possibility of acquiring more businesses in the recycled copper
products industry that will complement its existing businesses and
strengthen its overall recycled copper products 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 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
September 30, 2011, which was
RMB6.3780 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 third quarter of 2011 earnings
conference call at 8:30am U.S.
Eastern Time (9:30pm Beijing / Hong Kong Time) on December 21, 2011.
Dial-in details for the earnings conference call are as
follows:
|
|
US Toll Free Number
|
|
1 718 354
1231
|
|
US Toll Number: (for
international callers)
|
|
186 651
94004
|
|
Hong Kong Toll Number
|
|
852
2475 0994
|
|
Hong Kong Toll Free
Number
|
|
800
930 346
|
|
China Toll Free
Number
|
|
400 620
8038
|
|
UK Toll Free Number
|
|
800 819
0121
|
|
UK Toll Number (for
international callers)
|
|
080 823
46646
|
|
Conference ID:
|
|
37472491
|
|
|
|
|
|
|
A replay of the call will be available on the same day at
11:30 a.m. U.S. Eastern Time (or
12:30 p.m. Hong Kong Time) until
December 28, 2011 and may be accessed
by phone at the following numbers.
|
|
US Toll Free Number:
|
|
1 718 354
1232
|
|
US Toll Number: (for
international callers)
|
|
186 6214
5335
|
|
Conference ID:
|
|
37472491
|
|
|
|
|
|
|
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 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. Gushan's Sichuan production facility is currently in
operation. Gushan also operates a copper products business through
Engen Investments Limited ("Engen"), a 75%-owned subsidiary, that
manufactures copper rods, copper wires, copper granules and copper
pads primarily from recycled copper and communication cables from
copper wires. Currently, Engen has three plants, with a daily
production capacity of approximately 210 tons of recycled copper
products and approximately 24 tons of communication cables.
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.
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 (the portion to be borne by the
Company), provision 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 (the portion to be borne by the Company), provision 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 (the portion to be
borne by the Company), provision 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 (the portion to be
borne by the Company), provision for consumption tax and the tax
effect thereof, that have been and may 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
|
|
|
|
|
September
30,
2010
|
|
|
June
30, 2011
|
|
|
September
30,
2011
|
|
|
RMB
|
RMB
|
RMB
|
|
|
US$
|
|
Revenues
|
|
41,519
|
|
|
327,078
|
|
|
475,264
|
|
|
74,516
|
|
|
Cost of
revenues
|
|
(65,400)
|
|
|
(321,282)
|
|
|
(471,441)
|
|
|
(73,917)
|
|
|
Gross profit
(loss)
|
|
(23,881)
|
|
|
5,796
|
|
|
3,823
|
|
|
599
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
Research and
development
|
|
(956)
|
|
|
(137)
|
|
|
(103)
|
|
|
(16)
|
|
|
Selling,
general and administrative
|
|
(17,632)
|
|
|
(17,670)
|
|
|
(17,699)
|
|
|
(2,775)
|
|
|
Other
operating expenses
|
|
(22,701)
|
|
|
(8,862)
|
|
|
(9,762)
|
|
|
(1,531)
|
|
|
Impairment
loss of property, plant and equipment
|
|
(950,951)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Loss on
disposal of property, plant and
equipment
|
|
(1)
|
|
|
—
|
|
|
(7)
|
|
|
(1)
|
|
|
Change in
fair value of contingent consideration liability
|
|
—
|
|
|
(2,356)
|
|
|
125
|
|
|
20
|
|
|
Total
operating expenses
|
|
(992,241)
|
|
|
(29,025)
|
|
|
(27,446)
|
|
|
(4,303)
|
|
|
Other
operating income
|
|
—
|
|
|
—
|
|
|
5,214
|
|
|
817
|
|
|
Loss from
operations
|
|
(1,016,122)
|
|
|
(23,229)
|
|
|
(18,409)
|
|
|
(2,887)
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
512
|
|
|
217
|
|
|
12
|
|
|
2
|
|
|
Interest expense
|
|
—
|
|
|
(1,454)
|
|
|
(2,512)
|
|
|
(394)
|
|
|
Foreign
currency exchange gain (loss),
net
|
|
7
|
|
|
(278)
|
|
|
(3)
|
|
|
—
|
|
|
Other
income
(expense),
net
|
|
(123)
|
|
|
1,346
|
|
|
2,177
|
|
|
342
|
|
|
Loss before
income tax
|
|
(1,015,726)
|
|
|
(23,398)
|
|
|
(18,735)
|
|
|
(2,937)
|
|
|
Income
tax (expense)
benefit
|
|
16,706
|
|
|
(2,276)
|
|
|
(1,753)
|
|
|
(275)
|
|
|
Net loss
|
|
(999,020)
|
|
|
(25,674)
|
|
|
(20,488)
|
|
|
(3,212)
|
|
|
Less: Net
income attributable to non-controlling interest
|
|
—
|
|
|
(731)
|
|
|
(166)
|
|
|
(26)
|
|
|
Net loss
attributable to the
Company
|
|
(999,020)
|
|
|
(26,405)
|
|
|
(20,654)
|
|
|
(3,238)
|
|
|
Net loss per
ordinary share attributable to the
Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
Basic
|
|
(5.99)
|
|
|
(0.16)
|
|
|
(0.12)
|
|
|
(0.02)
|
|
|
-
Diluted
|
|
(5.99)
|
|
|
(0.16)
|
|
|
(0.12)
|
|
|
(0.02)
|
|
|
Net
loss per ADS attributable
to the Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
Basic
|
|
(59.88)
|
|
|
(1.57)
|
|
|
(1.22)
|
|
|
(0.19)
|
|
|
-
Diluted
|
|
(59.88)
|
|
|
(1.57)
|
|
|
(1.22)
|
|
|
(0.19)
|
|
|
Weighted
average ordinary shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
Basic
|
|
166,831,943
|
|
|
168,225,205
|
|
|
168,686,743
|
|
|
168,686,743
|
|
|
-
Diluted
|
|
166,831,943
|
|
|
168,225,205
|
|
|
168,686,743
|
|
|
168,686,743
|
|
|
Weighted
average ADS outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
Basic
|
|
16,683,194
|
|
|
16,822,521
|
|
|
16,868,674
|
|
|
16,868,674
|
|
|
-
Diluted
|
|
16,683,194
|
|
|
16,822,521
|
|
|
16,868,674
|
|
|
16,868,674
|
|
|
Share-based
compensation expense included in:-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
|
108
|
|
|
60
|
|
|
62
|
|
|
10
|
|
|
Research and
development expenses
|
|
2
|
|
|
10
|
|
|
(20)
|
|
|
(3)
|
|
|
Selling,
general and administrative expenses
|
|
4,687
|
|
|
2,119
|
|
|
2,229
|
|
|
349
|
|
|
Provision of
consumption tax of biodiesel included in:-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
|
2,433
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GUSHAN
ENVIRONMENTAL ENERGY LIMITED
|
|
UNAUDITED
SEGMENT
INFORMATION
|
|
(Amounts
expressed in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
September
30, 2010
|
|
|
June
30,
2011
|
|
|
September
30, 2011
|
|
|
RMB
|
RMB
|
RMB
|
|
|
US$
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Biodiesel
business
|
|
41,519
|
|
|
22,255
|
|
|
1,754
|
|
|
275
|
|
|
Recycled
copper products business
|
|
—
|
|
|
304,823
|
|
|
473,510
|
|
|
74,241
|
|
|
|
|
41,519
|
|
|
327,078
|
|
|
475,264
|
|
|
74,516
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Biodiesel
business
|
|
(65,400)
|
|
|
(26,393)
|
|
|
(6,994)
|
|
|
(1,097)
|
|
|
Recycled
copper products business
|
|
—
|
|
|
(294,889)
|
|
|
(464,447)
|
|
|
(72,820)
|
|
|
|
|
(65,400)
|
|
|
(321,282)
|
|
|
(471,441)
|
|
|
(73,917)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
(loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Biodiesel
business
|
|
(23,881)
|
|
|
(4,138)
|
|
|
(5,240)
|
|
|
(822)
|
|
|
Recycled
copper products business
|
|
—
|
|
|
9,934
|
|
|
9,063
|
|
|
1,421
|
|
|
|
|
(23,881)
|
|
|
5,796
|
|
|
3,823
|
|
|
599
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
(loss) margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Biodiesel
business
|
|
(57.5%)
|
|
|
(18.6%)
|
|
|
(298.7%)
|
|
|
(298.7%)
|
|
|
Recycled
copper products business
|
|
—
|
|
|
3.3%
|
|
|
1.9%
|
|
|
1.9%
|
|
|
|
|
(57.5%)
|
|
|
1.8%
|
|
|
0.8%
|
|
|
0.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GUSHAN
ENVIRONMENTAL ENERGY LIMITED
|
|
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
(Amounts
expressed in thousands)
|
|
|
|
|
|
|
December 31,
2010
|
|
|
September
30, 2011
|
|
|
|
|
|
RMB
|
|
|
RMB
|
|
|
US$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
272,822
|
|
|
88,077
|
|
|
13,810
|
|
|
Pledged deposit for copper
future contracts
|
|
|
—
|
|
|
9
|
|
|
1
|
|
|
Accounts
receivable
|
|
|
48,639
|
|
|
152,983
|
|
|
23,986
|
|
|
Bills
receivable
|
|
|
9,550
|
|
|
62
|
|
|
10
|
|
|
Inventories
|
|
|
176,023
|
|
|
125,236
|
|
|
19,636
|
|
|
Prepaid expenses and other
current assets
|
|
|
53,706
|
|
|
57,516
|
|
|
9,018
|
|
|
Amount due from related
parties
|
|
|
—
|
|
|
4,492
|
|
|
704
|
|
|
Income tax
receivable
|
|
|
674
|
|
|
674
|
|
|
106
|
|
|
Deferred tax
assets
|
|
|
2,439
|
|
|
4,219
|
|
|
661
|
|
|
Total
current assets
|
|
|
563,853
|
|
|
433,268
|
|
|
67,932
|
|
|
Property, plant and
equipment, net
|
|
|
663,946
|
|
|
716,827
|
|
|
112,391
|
|
|
Land use rights
|
|
|
87,568
|
|
|
89,972
|
|
|
14,107
|
|
|
Deferred tax
assets
|
|
|
4,609
|
|
|
3,589
|
|
|
563
|
|
|
Goodwill
|
|
|
18,674
|
|
|
37,179
|
|
|
5,829
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
|
1,338,650
|
|
|
1,280,835
|
|
|
200,822
|
|
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Short term bank
loans
|
|
|
60,000
|
|
|
110,000
|
|
|
17,247
|
|
|
Accounts
payable
|
|
|
79,163
|
|
|
25,280
|
|
|
3,964
|
|
|
Accounts payable for
property, plant and equipment
|
|
|
47,153
|
|
|
65,897
|
|
|
10,332
|
|
|
Accrued expenses and other
payables
|
|
|
61,074
|
|
|
53,867
|
|
|
8,446
|
|
|
Amounts
due to related
parties
|
|
|
30,709
|
|
|
59,853
|
|
|
9,384
|
|
|
Income taxes
payable
|
|
|
10,075
|
|
|
5,017
|
|
|
787
|
|
|
Total
current liabilities
|
|
|
288,174
|
|
|
319,914
|
|
|
50,160
|
|
|
Deferred tax
liabilities
|
|
|
9,766
|
|
|
7,334
|
|
|
1,150
|
|
|
Income tax
payable
|
|
|
9,762
|
|
|
9,762
|
|
|
1,531
|
|
|
Contingent consideration
liability
|
|
|
13,585
|
|
|
14,891
|
|
|
2,335
|
|
|
Other non-current
liabilities
|
|
|
15,450
|
|
|
12,030
|
|
|
1,886
|
|
|
Total
liabilities
|
|
|
336,737
|
|
|
363,931
|
|
|
57,062
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares
|
|
|
2
|
|
|
2
|
|
|
—
|
|
|
Additional paid-in
capital
|
|
|
1,547,035
|
|
|
1,532,218
|
|
|
240,235
|
|
|
Treasury stock
|
|
|
(32,972)
|
|
|
(32,972)
|
|
|
(5,170)
|
|
|
Accumulated other
comprehensive loss
|
|
|
(59,159)
|
|
|
(62,975)
|
|
|
(9,874)
|
|
|
Accumulated
deficit
|
|
|
(469,758)
|
|
|
(534,299)
|
|
|
(83,772)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
attributable to the Company
|
|
|
985,148
|
|
|
901,974
|
|
|
141,419
|
|
|
Non-controlling
interest
|
|
|
16,765
|
|
|
14,930
|
|
|
2,341
|
|
|
Total
shareholders' equity
|
|
|
1,001,913
|
|
|
916,904
|
|
|
143,760
|
|
|
Total
liabilities and shareholders'
equity
|
|
|
1,338,650
|
|
|
1,280,835
|
|
|
200,822
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GUSHAN
ENVIRONMENTAL ENERGY LIMITED
|
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(Amounts
expressed in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
September
30, 2010
|
|
|
June
30,
2011
|
|
|
September
30, 2011
|
|
|
RMB
|
RMB
|
RMB
|
|
|
US$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating
activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
(999,020)
|
|
|
(25,674)
|
|
|
(20,488)
|
|
|
(3,212)
|
|
|
Adjustments to reconcile
net loss to net
cash used in
operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share based
compensation
|
|
4,797
|
|
|
2,189
|
|
|
2,271
|
|
|
356
|
|
|
Depreciation
|
|
33,877
|
|
|
11,101
|
|
|
18,552
|
|
|
2,909
|
|
|
Land use right
expense
|
|
360
|
|
|
386
|
|
|
403
|
|
|
63
|
|
|
Loss on disposal of property,
plant and equipment
|
|
1
|
|
|
—
|
|
|
7
|
|
|
1
|
|
|
Impairment loss
of property, plant and
equipment
|
|
950,951
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Change in fair value of
contingent consideration
liability
|
|
—
|
|
|
2,356
|
|
|
(125)
|
|
|
(20)
|
|
|
Foreign currency exchange
(gain) loss,
net
|
|
(7)
|
|
|
278
|
|
|
3
|
|
|
—
|
|
|
Deferred tax expense
(benefit)
|
|
(16,706)
|
|
|
505
|
|
|
621
|
|
|
97
|
|
|
Inventory write-downs
(utilization of write-downs)
|
|
210
|
|
|
(14)
|
|
|
14,729
|
|
|
2,309
|
|
|
Loss from copper futures
contracts
|
|
—
|
|
|
437
|
|
|
1,110
|
|
|
174
|
|
|
Change in assets and
liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
386
|
|
|
(41,583)
|
|
|
(8,715)
|
|
|
(1,366)
|
|
|
Bills receivable
|
|
—
|
|
|
—
|
|
|
(62)
|
|
|
(10)
|
|
|
Inventories
|
|
(3,786)
|
|
|
17,424
|
|
|
(17,060)
|
|
|
(2,675)
|
|
|
Prepaid expenses and other
current assets
|
|
(576)
|
|
|
2,821
|
|
|
3,915
|
|
|
614
|
|
|
Accounts payable
|
|
847
|
|
|
9,498
|
|
|
(20,590)
|
|
|
(3,228)
|
|
|
Accrued expenses and other
payables
|
|
2,043
|
|
|
2,624
|
|
|
3,922
|
|
|
615
|
|
|
Income tax payable
|
|
—
|
|
|
(5,303)
|
|
|
343
|
|
|
54
|
|
|
Provision for consumption
tax
|
|
2,433
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Other non-current
liabilities
|
|
(989)
|
|
|
(949)
|
|
|
(933)
|
|
|
(146)
|
|
|
Other assets
|
|
1,513
|
|
|
2,017
|
|
|
1,105
|
|
|
173
|
|
|
Net cash used in operating
activities
|
|
(23,666)
|
|
|
(21,887)
|
|
|
(20,992)
|
|
|
(3,292)
|
|
|
Cash flows from investing
activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property, plant and
equipment
|
|
(44,075)
|
|
|
(12,529)
|
|
|
(15,289)
|
|
|
(2,397)
|
|
|
Temporary receipt from
government in relation to relocation of property, plant and
equipment
|
|
16,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Acquisition of
subsidiary, net of
cash acquired
|
|
—
|
|
|
—
|
|
|
(27,549)
|
|
|
(4,319)
|
|
|
Pledged deposit for copper
future contracts
|
|
—
|
|
|
—
|
|
|
8,480
|
|
|
1,330
|
|
|
Net cash used in investing
activities
|
|
(28,075)
|
|
|
(12,529)
|
|
|
(34,358)
|
|
|
(5,386)
|
|
|
Cash flows from
financing
activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment of bank
loans
|
|
—
|
|
|
(30,000)
|
|
|
(10,000)
|
|
|
(1,568)
|
|
|
Proceeds from new
bank loans
|
|
—
|
|
|
50,000
|
|
|
40,000
|
|
|
6,272
|
|
|
Repayment of the amount due
to related parties
|
|
—
|
|
|
(16,000)
|
|
|
(3,113)
|
|
|
(488)
|
|
|
Proceeds of advance from related
parties
|
|
—
|
|
|
5,000
|
|
|
2,015
|
|
|
316
|
|
|
Net cash
provided by
financing
activities
|
|
—
|
|
|
9,000
|
|
|
28,902
|
|
|
4,532
|
|
|
Effect of foreign exchange rate
changes on cash
|
|
(4,807)
|
|
|
(1,388)
|
|
|
(1,213)
|
|
|
(190)
|
|
|
Decrease in cash
|
|
(56,548)
|
|
|
(26,804)
|
|
|
(27,661)
|
|
|
(4,336)
|
|
|
Cash at beginning of
period
|
|
495,383
|
|
|
142,542
|
|
|
115,738
|
|
|
18,146
|
|
|
Cash at end of
period
|
|
438,835
|
|
|
115,738
|
|
|
88,077
|
|
|
13,810
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GUSHAN
ENVIRONMENTAL ENERGY LIMITED
|
|
RECONCILIATION OF GAAP MEASURES
TO NON-GAAP MEASURES
|
|
(Amounts
expressed in thousands, except per ADS data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
September
30, 2010
|
|
|
June
30,
2011
|
|
|
September
30, 2011
|
|
|
|
RMB
|
RMB
|
RMB
|
|
|
US$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net
loss attributable to the
Company
|
|
(999,020)
|
|
|
(26,405)
|
|
|
(20,654)
|
|
|
(3,238)
|
|
|
Share-based
compensation
|
|
4,797
|
|
|
2,189
|
|
|
2,271
|
|
|
356
|
|
|
Impairment loss of
property, plant and equipment
|
|
950,951
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Loss on disposal of
property, plant and equipment
|
|
1
|
|
|
—
|
|
|
7
|
|
|
1
|
|
|
Change in fair value of
contingent consideration liability (the portion to
be borne by the Company)
|
|
—
|
|
|
2,356
|
|
|
(171)
|
|
|
(27)
|
|
|
Provision for consumption
tax
|
|
2,433
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Income tax effect of
reconciliation items
|
|
(14,826)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Non-GAAP net
loss attributable to the
Company
|
|
(55,664)
|
|
|
(21,860)
|
|
|
(18,547)
|
|
|
(2,908)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net loss
attributable to the
Company per ADS – Basic
|
|
(59.88)
|
|
|
(1.57)
|
|
|
(1.22)
|
|
|
(0.19)
|
|
|
Share-based
compensation
|
|
0.29
|
|
|
0.13
|
|
|
0.13
|
|
|
0.02
|
|
|
Impairment loss of
property, plant and equipment
|
|
57.00
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Loss on disposal of
property, plant and equipment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Change in fair value of
contingent consideration liability (the portion to
be borne by the Company)
|
|
—
|
|
|
0.14
|
|
|
(0.01)
|
|
|
—
|
|
|
Provision for consumption
tax
|
|
0.15
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Income tax effect of
reconciliation items
|
|
(0.89)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Non-GAAP net
loss attributable to the
Company per ADS - Basic
|
|
(3.33)
|
|
|
(1.30)
|
|
|
(1.10)
|
|
|
(0.17)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net loss
attributable to the
Company per ADS – Diluted
|
|
(59.88)
|
|
|
(1.57)
|
|
|
(1.22)
|
|
|
(0.19)
|
|
|
Share-based
compensation
|
|
0.29
|
|
|
0.13
|
|
|
0.13
|
|
|
0.02
|
|
|
Impairment loss of
property, plant and equipment
|
|
57.00
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Loss on disposal of
property, plant and equipment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Change in fair value of
contingent consideration liability (the portion to
be borne by the Company)
|
|
—
|
|
|
0.14
|
|
|
(0.01)
|
|
|
—
|
|
|
Provision for consumption
tax
|
|
0.15
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Income tax effect of
reconciliation items
|
|
(0.89)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Non-GAAP net
loss attributable to the
Company per ADS - Diluted
|
|
(3.33)
|
|
|
(1.30)
|
|
|
(1.10)
|
|
|
(0.17)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE Gushan Environmental Energy Limited