Net income for 2012 was $2.5 million or $0.038 per basic and diluted share compared to $1.4 million or $0.021 per basic and diluted share for the same period in 2011, primarily due to the reasons stated above.
EBITDA for fiscal 2012 was $8.0 million, an increase of $2.1 million, or 37%, from $5.9 million for 2011, as a result of sales increases. EBITDA as a as a percentage of sales for 2012 was 24%, compared to 21% in 2011, representing an increase of 3% due to the reasons noted above relating to the sales increases, higher gross margins and a $0.7 million one-time government grant, partially offset by higher operating expenses.
During 2012, 2011 and 2010, the Company's financial position was strengthened by the positive cash flow from operating activities of $8.4 million, $4.2 million and $4.8 million, respectively. As at December 31, 2012, the Company had a working capital deficit of $12.2 million, which includes $8.9 million of deferred revenue and $4.8 million of one-year line of credit.
On December 21, 2012, the Company entered into a term loan with the Bank of China, Pingxiang Branch ("BOC, Pingxiang") for $3.2 million (RMB 20.0 million), maturing six years from the date of the first withdrawal. The proceeds from this term loan will be used to fund the construction of pipelines and related property and equipment in the Xiangdong district, Pingxiang City, Jiangxi province. As of the date of the press release, the Company withdrew $2.4 million (RMB 15.0 million).
On January 15, 2013 the Company entered another agreement with BOC, Sanya Branch to secure a bank loan facility in the amount of $8.0 million (RMB 50.0 million) (the "Term Loan"). The Term Loan has a ten-year term from the date of the first initial withdrawal, and bears interest of 110% of the prime rate set by the People's Bank of China. Upon execution of the agreement, the Company made a withdrawal of $6.4 million (RMB 40.0 million).
Gas to Electricity Exchange Program, Sanya Operation, Hainan Province
As of the date of this press release, the first phase of the construction has been completed and gone through the project acceptance. It is expected that the project will be closed out in May 2013 and the gas will be available for the Company's use.
Xiangdong Project, Pingxiang City, Jiangxi Province
The Company continues the pipeline installation and gas facility construction, including the Citygate, in the Xiangdong Ceramic Production Park (the "Park"). And the Company endeavors to sign more industrial customers.
The construction of the 25 kilometers (approximately 15 miles) pipeline, sub branch of Second West-East Pipeline ("WEP II"), to ship the gas from WEP II to the Company's Citygate in Park, has been approved by the Jiangxi Energy Board, and will be commenced in the second half of the year of 2013. This section of pipeline will be built by a state- owned Company in Jiangxi Province.
Grangdong Program, Guangdong Province
Pursuant to the press release dated March 29, 2012, the Company announced a proposed joint venture with CNPC Kunlun Natural Gas Exploitation Company Limited ("CNPC Kunlun Exploitation"), a wholly-owned subsidiary of PetroChina ("CNPC"), to jointly develop a natural gas distribution business in four prefecture-level cities in Guangdong Province, China, including Zhaoqing City, Jiangmen City, Foshan City and Zhuhai City (collectively "the Yuexi Area") ("the Guangdong project"). Due to the merge of the subsidiary of CNPC, the potential joint venture partner has been changed from CNPC Kunlun Exploitation to PetroChina Kunlun Gas Co., Ltd, Southern China Branch ("CNPC Kunlun Gas"), a wholly owned subsidiary of CNPC. The Company is working with CNPC Kunlun Gas and waiting for the approval from the head office of PetroChina.
"We are very pleased with solid performance for 2012, with strong performance in almost every area of the Company," stated Mr. Huajun Lin, Chairman and CEO of the Company, "During this year, we achieved several operational and project debt financing goals. In 2013, we will focus on connecting more industrial customers to our pipeline network in Xiangdong district, and move on the development of the Guangdong Program."
About Changfeng Energy Inc.
Changfeng Energy Inc., is a natural gas service provider with operations located throughout the People's Republic of China. The Company services industrial, commercial and residential customers, providing them with natural gas for heating purposes and fuel for transportation. The Company has developed a significant natural gas pipeline network as well as urban gas delivery networks, stations, substations and gas pressure regulating stations in Sanya City & Haitang Bay. Through its network of pipelines, the Company provides safe and reliable delivery of natural gas to both homes and businesses. The Company is headquartered in Toronto, Ontario and its shares trade on the Toronto Venture Exchange under the trading symbol "CFY". For more information, please visit the Company website at www.changfengenergy.com.
Information set forth in this news release may involve forward-looking statements under applicable securities laws. The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included in this document are made as of the date of this document and the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable securities legislation. Although Management believes that the expectations represented in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. This news release does not constitute an offer to sell or solicitation of an offer to buy any of the securities described herein and accordingly undue reliance should not be put on such.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.
Changfeng Energy Inc.
Mr. Kevin M. Zhang
Chief Financial Officer
Changfeng Energy Inc.
Ms. Ann S.Y. Lin
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