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Hanwei Energy Services Reports Year End Fiscal 2013 Financial and Operational Results

Jun 18 2013 12:00AM

Marketwire

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VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 06/18/13 -- Hanwei Energy Services Corp. (TSX: HE) ("Hanwei" or the "Company"), today reported its financial results for the year ended March 31, 2013 (the "2013 Fiscal Year"). All amounts are in Canadian Dollars unless otherwise noted. The Company's ongoing focus on sales, production processes and cost controls resulted in significant improvements in revenue, gross profit margin and EBITDA on a year over year basis.

----------------------------------------------------------------------------Summary of the 2013 Fiscal Year Financial Resultsin thousands of CDN$ except percentages and per share data FY2013 FY2012 Change %----------------------------------------------------------------------------Revenue 29,657 27,652 2,005 7%Gross Profit 9,879 8,985 894 10%EBITDA 4,264 533 3,731 700%Net Income 2,452 (3,959) 6,411 162% Diluted EPS 0.03 (0.06) 0.09 150%----------------------------------------------------------------------------Balance Sheet Indicators (Continuing Operations) Total Assets 61,460 61,082 378 1% Total Liabilities 26,142 27,706 -1,564 -6% Net Asset Value (NAV) 35,318 33,376 1,942 6% NAV/Share (fully diluted) 0.49 0.47 0.02 4%----------------------------------------------------------------------------



For the year ended March 31, 2013:

-- Revenue from continuing operations was $29.7 million for the 2013 Fiscal Year compared to $27.7 million for the 2012 Fiscal Year. The increase of $2.0 million (or 7%) was primarily due to international orders in the Company's Kazakhstan market that increased from $8.3 million for the 2012 Fiscal Year to $17.7 million or by 113% for the 2013 Fiscal Year. This increase was a result of ongoing direct sales and marketing efforts leveraging off the successful operating performance of previous pipe installations of the Company. This increase in the Kazakhstan market also offset a reduction in sales from the Company's China market that decreased from $18.9 million for the 2012 Fiscal Year to $10.7 million for the 2013 Fiscal Year or by 43%. This decrease was primarily due to a reduction in demand from the major Chinese customers and increased competition from alternative product suppliers.-- Gross profit for the 2013 Fiscal Year totaled $9.9 million (or 33.3% of revenue) as compared to $9.0 million (or 32.5% of revenue) for the prior year. This represents a 10% increase in gross margin on a year over year basis in context to the aforementioned 7% increase in revenues.-- The Company achieved positive EBITDA from continuing operations of $4.3 million (or 14% of revenues) for the 2013 Fiscal Year as compared to $0.5 million for the prior year representing a significant $3.7 million (or 700%) improvement in EBITDA. This was due to additional savings and ongoing control of G&A expenses, in addition to the aforementioned cost savings in production.-- The year over year increases in both gross profit margin and EBITDA, at a higher rate than the increases in year over year revenue, resulted in very positive flow through of cost savings and a significant increase in net income. Net income for the 2013 Fiscal Year was $2.5 million, or $0.03 per share (including a one-time, income tax recovery of $1.6 million or $0.02 per share), as compared to a net loss for the prior year of $4 million (or -$0.06 per share), and representing a positive improvement of $6.4 million.



Other Highlights:

-- As of March 31, 2013 the Company's cash balance was approximately $5 million versus $1 million for the same date of the prior year.-- As of March 31, 2013, the Company's Net Asset Value per share for its continuing operations was $0.49 (compared to $0.47 as at March 31, 2012).-- The Company is generating positive cash flows from operating activities significantly reducing its short-term loans. The total principal amount of all bank loans was $17.2 million as at March 31, 2013 representing a 69% debt to equity ratio (total debt including amounts due to related parties, divided by total shareholders' equity) for the Company. The Company continues to effectively manage its bank loans and debt facilities. For comparison, the aggregate principal amount of bank loans as at March 31, 2012 was $20.8 million; the aggregate principal amount of bank loans as at March 31, 2010 was $50.8 million. Bank loans have successfully been repaid, renewed or extended, when they have reached maturity.-- During the year ended March 31, 2012, the Company executed a contract for sale of the majority of its wind power equipment inventory totaling RMB 93.6 million ($15.3 million). To date RMB 75.3 million ($12.3 million) of this amount has been received by the Company with the balance of approximately RMB 18.3 million ($3.0 million) expected to be received before the end of calendar 2013.-- Subsequent to the year end, the Company had reached an agreement to sell all of the equity interest in its wholly owned subsidiary Kerui Green Energy Equipment (Tianjin) Co., Ltd. ("Hanwei Green") to a private Chinese company for an amount of RMB 65 million ($10.6 million). The major asset of Hanwei Green is a manufacturing plant located in Tianjin, China which was constructed for the production of wind blades. Hanwei has received a deposit of RMB 1.0 million ($0.2 million) from the buyer in April 2013. In addition, Hanwei shall also receive: RMB 11 million ($1.8 million) when the transfer of the business license of Hanwei Green is approved by regulatory authorities to reflect the new ownership; RMB 19 million ($3.1 million) on or before December 31, 2013; and RMB 35 million ($5.7 million) within twelve months after the agreement was signed on May 27, 2013. The remaining payments are secured by certain corporate and personal guarantees.



For the three months ended March 31, 2013:

-- Revenue for the fourth quarter of the 2013 Fiscal Year was $7.9 million as compared to $6.7 million for the same period of the prior year.-- Net income improved considerably to $1.8 million for the fourth quarter of the 2013 Fiscal Year as compared to a net loss of $0.6 million for the same period of the prior year.-- Basic and diluted earnings per share was $0.03 for the fourth quarter of the 2013 Fiscal Year as compared to basic and diluted loss per share of $0.01 for the same period of the prior year.



Hanwei will host a conference call to discuss its operational and financial results for the year ended March 31, 2013. Graham Kwan, Executive Vice President and Rick Huang, Chief Financial Officer of Hanwei will host the call. Management invites analysts and investors to participate on the conference call:

Date: Wednesday, June 19, 2013

Time: 1:30 p.m., Eastern Time

Dial in number: 1-888-430-8709 or 1-719-325-2362

A replay of the conference call will be available on the Company's website www.hanweienergy.com.

About Hanwei Energy Services Corp.

Hanwei Energy Services Corp. is a leading manufacturer of high pressure, fiberglass reinforced plastic ("FRP") pipe products and associated technologies and services for the international oil and gas infrastructure industries. Hanwei serves major energy customers in the Chinese and global energy markets.

www.hanweienergy.com

FORWARD-LOOKING INFORMATION AND NON-GAAP MEASURES

Certain information in this press release is forward-looking within the meaning of certain securities laws, and is subject to important risks, uncertainties and assumptions a description of which is set out in the risk factors section of the Company's Annual Information Form dated June 18, 2013 and Management Discussion and Analysis for the year ended March 31, 2013 both of which are filed with Canadian securities regulators and available on SEDAR at www.sedar.com. The forward-looking information in this press release describes the Company's expectations as of the date of this press release.

THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS PRESS RELEASE PRESENTS THE EXPECTATIONS OF THE COMPANY AS OF THE DATE OF THIS PRESS RELEASE AND, ACCORDINGLY, IS SUBJECT TO CHANGE AFTER SUCH DATE. READERS SHOULD NOT PLACE UNDUE IMPORTANCE ON FORWARD-LOOKING INFORMATION AND SHOULD NOT RELY UPON THIS INFORMATION AS OF ANY OTHER DATE. WHILE THE COMPANY MAY ELECT TO, THE COMPANY DOES NOT UNDERTAKE TO UPDATE THIS INFORMATION AT ANY PARTICULAR TIME, EXCEPT AS REQUIRED BY APPLICABLE SECURITIES LEGISLATION.

Neither the TSX nor its Regulation Services Provider (as that term is defined in the policies of the TSX) accepts responsibility for the adequacy or accuracy of this release.



Contacts:
Hanwei Energy Services Corp.
Graham Kwan
Executive VP, Strategic Development and Corporate Affairs
604-685-2239
gkwan@hanweienergy.com

Hanwei Energy Services Corp.
Yucai (Rick) Huang
Chief Financial Officer
604-685-2239
yhuang@hanweienergy.com
www.hanweienergy.com





Source: Marketwire


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