BEIJING, April 3 /Xinhua-PRNewswire-FirstCall/ -- Sino Gas
International Holdings, Inc. (OTC:SGAS) (BULLETIN BOARD: SGAS)
('Sino Gas' or the 'Company'), a leading developer of natural gas
distribution systems in small- and medium- sized cities, as well as
a distributor of natural gas to residential, commercial and
industrial customers in China, today reported financial results for
the fiscal year ended on December 31, 2006. Full Year 2006
Highlights -- Total net revenues were $10.9 million -- Operating
income was $5.2 million -- Net income was $5.2 million, or $0.32
per diluted share -- Number of new households connected in 2006 was
24,500 Commenting on the results, Mr. Yu-Chuan Liu, President and
CEO of the Company, said: '2006 was a very important year for Sino
Gas, as we completed a reverse merger transaction and successfully
became a publicly traded company in the U.S., gaining access to a
broader investor base to support the future growth of our business.
As part of the reverse merger we also completed two private
financing transactions that were critical to support the expansion
of our business in the second half of 2006. However, the funds did
not arrive as early as planned, preventing us from completing our
investment in two industrial projects and one mid-sized city during
the fourth quarter. We estimate this delay resulted in a missed
revenue opportunity of about $1.4 million in higher-margin
connection fees, and adversely impacted our results for the quarter
and the full year. Since receiving the net proceeds from our
private financing transactions we have been able to complete the
acquisition of several new subsidiaries and picked up the pace in
the development of new projects which, we expect, will positively
impact our results for the first quarter of 2007. Going forward, we
remain confident in our business plan and the opportunities ahead
for growing our business profitably' Revenues for the three months
ended December 31, 2006 decreased 22.2% over the same period in
2005 to $5.9 million, due to lower connection fees resulting from
the delay in receiving the proceeds from the Company's private
financing transactions. Gross profit for the three months ended
December 31, 2006 decreased 32% from the same period last year to
$3.4 million, or 57% of revenues compared to $4.9 million, or 65%
of revenues in the fourth quarter of 2005. This decrease in gross
profit and margin was due to the loss in connection fees from
missed project opportunities, which have a higher margin than gas
sales. Selling, general and administrative expenses were $558,846
or 9% of revenue, in the fourth quarter of 2006, versus 453,641 or
6% of revenue, in the comparable period last year. The increase in
operating expenses in the quarter relative to the same period last
year was mostly the result of advisory, legal and auditing fees
associated with the Company's reverse merger transaction. Operating
income for the three months ending December 31, 2006 decreased 37%
to 2.9 million, or 49% of sales, compared to $4.4 million for the
same period of 2005. Net income during the quarter decreased 35.6%
year-over-year to $3.0 million, down from $4.5 million in the
fourth quarter of 2005, mainly due to lower revenues and higher
operating expenses. Earnings per diluted share were $0.19 in the
quarter. Full Year 2006 Results Revenues for the fiscal year ended
December 31, 2006 decreased 0.3% to $10.9 million, compared to
$10.9 million in fiscal year 2005. Connection fees accounted for
66% of revenues in the past year, versus 75% in 2005, with natural
gas sales accounting for the balance in both years. In 2006 gross
profits were $6.5 million, or 60% of revenue, down from $6.8
million in 2005. Operating income decreased 11% to $5.2 million, or
48% of revenues, compared to $5.8 million in 2005. Net income
decreased 9% to $5.2 million, or $0.32 per diluted share, compared
to $5.7 million, or $0.40 per share for the fiscal year 2005.
Financial Condition At December 31, 2006, the Company had $3.6
million in total cash and short-term investments, $6.8 million in
working capital, and $2.4 million in short-term debt. Cash flow
from operations for fiscal year 2006 totaled $5.3 million, up from
$2.9 million in the same period last year. Capital expenditures
totaled $9.1 million for the full fiscal year. Shareholders' equity
stood at $25.4 million, compared to $12.6 million at year end 2005.
Business Outlook The Company believes that the natural gas market
is at a very early stage of its development, representing only 3%
China's current energy consumption, compared to a world average of
24%. The Chinese government is actively encouraging the development
of the natural gas industry in order to take advantage of China's
substantial gas reserves, while diversifying energy sources and
improving the environment. As a result, industry analysts forecast
270 cities in China to be supplied by natural gas in 2010, compared
to 140 in 2005. In order to participate in the expected rapid
growth of the natural gas distribution industry in China, on
September 7, 2006, Sino Gas International Holdings, Inc. (formerly
Dolce Ventures, Inc.), completed a reverse merger with Gas
Investment China Co., Ltd.(Gas (BVI)), a privately-held British
Virgin Islands corporation, to reorganize as a publicly-traded
company. The transaction was consummated on September 7, 2006,
resulting in Gas (BVI) and its operating subsidiary in China,
Beijing Zhong Ran Wei Ye Gas Co., Ltd. (Beijing Gas), becoming 100%
indirectly owned by Sino Gas International Holdings, Inc. This
transaction will give the Company access to the US capital markets
and allow it to broaden its investor base and to support the
accelerated growth of its business. 'Our strategy is to focus on
small-to-mid-sized cities where there is less competition from
larger players, to secure long term supply of natural gas to
support the continuous expansion of our customer base, and to
finance the development of our pipeline network at a favorable cost
of capital to create long term value for our shareholders,' Mr. Liu
stated. 'We are very pleased with our progress to-date in executing
our strategy and we are excited about the opportunities ahead for
profitable growth as we continue the build- out of our natural gas
distribution systems to supply small- to mid-sized cities in
China.' Recent Events In December 2006, the Company entered into a
stock purchase agreement to acquire Yuxian Jinli Gas Co., Ltd. and
Xiahuayuan Jinli Gas Co., Ltd., two privately held natural gas
distribution businesses in the Hebei Province of China for
approximately $1.5 million in cash. The transaction added 4,800
residential customers to Sino Gas's distribution system, and will
add other 4000 households in 2007. In January 2007, the Company
entered into a stock purchase agreement to acquire all the capital
stock of Beijing Chenguang Gas Co., Ltd., a privately held natural
gas distribution business in Beijing, China for approximately $3.35
million in cash. This transaction included the exclusive concession
rights to operates seven gas distribution systems and added 25,202
residential customers and four industrial projects to Sino Gas's
distribution system. This transaction was completed on 18th of
February 2007. Conference Call The Company will host a conference
call at 9:00 a.m. Eastern Time on Tuesday, April 3, 2007 to discuss
the fourth quarter and 2006 year end financial results. Joining Mr.
Yu-chuan Liu, President and Chief Executive Officer of Sino Gas,
will be Ms. Fang Chen, Chief Financial Officer, and Mr. Brad Shao,
Assistant Chief Financial Officer. The Company plans to make an
earnings announcement at the close of business on Monday, April 2,
2007. To participate in the live conference call, please dial the
following number five to ten minutes prior to the scheduled
conference call time: 888-482-0024. International callers should
dial 617-801-9702. When prompted by the operator, mention
Conference Passcode 83082355. If you are unable to participate in
the call at this time, a replay will be available for three days
starting on Tuesday, April 3 at 11:00 a.m. Eastern Time. To access
the replay, dial 888-286-8010 and enter the passcode 67802839.
International callers should dial 617-801-6888 and enter the same
passcode 67802839. About Sino Gas The Company, through its
indirectly wholly-owned subsidiary, Beijing Zhong Ran Wei Ye Gas
Co., Ltd. ('Beijing Gas'), and the subsidiaries of Beijing Gas, is
a leading developer of natural gas distribution systems in small-
and medium-sized cities in China, as well as a distributor of
natural gas to residential, commercial and industrial customers in
China. The company owns and operates 23 natural gas distribution
systems serving approximately 63,000 residential and eight
commercial and industrial customers. Facilities include
approximately 700 kilometers ('km') of pipeline and delivery
networks with a designed daily capacity of approximately 70,000
cubic meters of natural gas ('m3'). The company is currently
constructing four additional natural gas distribution systems and
is planning two more natural gas distribution systems. Beijing Gas
Company owns and operates natural gas distribution systems
primarily in Hebei, Jiangsu and Anhui, Shandong Provinces. For
further information, visit the Company's website at
http://www.sino-gas.com/ . 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. All statements other than statements of historical fact in
this announcement are forward-looking statements, including but not
limited to, the Company's ability to raise additional capital to
finance the Company's activities; the effectiveness, profitability,
and the marketability of its products; legal and regulatory risks
associated with the share exchange; the future trading of the
common stock of the Company; the ability of the Company to operate
as a public company; the period of time for which its current
liquidity will enable the Company to fund its operations; the
Company's ability to protect its proprietary information; general
economic and business conditions; the volatility of the Company's
operating results and financial condition; the Company's ability to
attract or retain qualified senior management personnel and
research and development staff; and other risks detailed in the
Company's filings with the Securities and Exchange Commission.
These forward-looking statements involve known and unknown risks
and uncertainties and are based on current expectations,
assumptions, estimates and projections about the companies and the
industry. The Company undertakes no obligation to update
forward-looking statements to reflect subsequent occurring events
or circumstances, or to changes in its expectations, except as may
be required by law. Although the Company believes that the
expectations expressed in these forward looking statements are
reasonable, they cannot assure you that their expectations will
turn out to be correct, and investors are cautioned that actual
results may differ materially from the anticipated results. All
information in this release is as of April 2, 2007. The Company
undertakes no duty to update any forward-looking statements to
conform the release to actual results or changes in its
circumstances or expectations after the date of this release. The
financial information stated above and in the tables below has been
abstracted from the Company's Form 10-K, filed with the SEC on
April 2, 2007, and should be read in conjunction with the
information provided therein. -- FINANCIAL TABLES FOLLOW -- Sino
Gas International Holdings, Inc. AND SUBSIDIARIES CONSOLIDATED
CONDENSED STATEMENTS OF INCOME (US Dollars - Audited) Three Months
Ended Fiscal Year Ended December 31 December 31 2006 2005 2006 2005
Net revenues 5,899,562 7,587,621 $10,870,718 $10,907,289 Cost of
revenues (2,540,014) (2,646,788) (4,389,142) (4,132,391) Gross
profit $3,359,548 $4,940,833 $6,481,576 $6,774,898 Selling and
marketing expenses (29,282) (33,100) (95,779) (99,768) General and
administrative expenses (461,876) (487,208) (1,155,849) (874,181)
Total Operating Expense (558,846) 453,641 (1,319,316) (973,949)
Income from continuing operations 2,868,390 4,420,525 $5,229,948
$5,800,949 Finance costs, net (76,068) (3,668) (78,237) (2,486)
Other income 438,345 479,585 438,186 437,750 Other expenses
(14,061) (13,703) (856) (1,865) Income before taxation 3,216,606
4,882,739 $5,589,041 $6,234,348 Income tax (239,529) (424,972)
(423,284) (531,915) Net income 2,977,077 4,457,767 $5,165,757
$5,702,433 Net income per share, Basic 0.21 0.31 0.36 0.40 Diluted
0.19 0.31 0.32 0.40 Weighted average shares outstanding of common
stock, Basic 14,471,980 14,361,646 14,471,980 14,361,646 Diluted
16,085,778 14,361,646 16,085,778 14,361,646 Sino Gas International
Holdings, Inc. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE
SHEET (US Dollars - Audited) 2006 2005 Assets Cash and cash
equivalents $ 3,638,673 $ 571,194 Pledged deposits 3,124,541 --
Notes receivable 477,390 -- Accounts receivable 6,534,740 7,770,168
Advances to suppliers 68,309 372,442 Prepaid expenses 141,878
12,097 Other receivables 1,263,800 437,922 Total current assets $
15,249,331 $ 9,163,823 Investments in equity securities $ 2,939,029
$ 2,443,378 Plant and equipment, net 10,608,530 3,200,682
Construction in progress 4,628,076 3,071,497 Intangible assets
457,830 437,265 Total long term assets $ 18,633,465 $ 9,152,822
Total Assets $ 33,882,796 $ 18,316,645 Accounts payable $ 3,891,388
$ 3,090,870 Short-term bank loans 2,430,445 -- Other payables
1,790,500 2,264,965 Unearned revenue 37,760 133,035 Accrued
liabilities 325,922 201,384 Total current liabilities $ 8,476,015 $
5,690,254 Total Liabilities $ 8,476,015 $ 5,690,254 Preferred stock
A US$0.001 par value; 20,000,000 authorized; nil and nil issued and
outstanding as of December 31, 2006 and 2005 respectively $ -- $ --
Preferred stock B US$0.001 par value; 5,000,000 authorized;
4,023,268 and nil issued and outstanding as of December 4023 -- 31,
2006 and 2005 respectively Common stock US$0.001 par value;
250,000,000 authorized; 14,692,647 and 14,361,646 issued and
outstanding as of December 31, 2006 and 2005 respectively 14693
14362 Additional paid-in-capital 12,069,176 4,812,650 Statutory
reserves 2,025,022 1,219,720 Retained earnings 10,469,571 6,311,794
Accumulated other comprehensive income 824,296 267,865
STOCKHOLDERS' EQUITY $ 25,406,781 $ 12,626,391 TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY $ 33,882,796 $ 18,316,645 Sino Gas
International Holdings, Inc. AND SUBSIDIARIES CASH FLOW STATEMENT
FOR FISCAL YEAR ENDED DECEMBER 31 (US Dollars - Audited) 2006 2005
Cash flows from operating activities Net incomes $ 5,165,757 $
5,702,433 Depreciation and amortization 155,374 131,865 Equity in
investments (495,651) (404,436) Decrease/(increase) in accounts and
other receivables 106,512 (6,139,281) Increase in accounts and
other payables 355,316 3,564,302 Net cash provided by operating
activities $ 5,287,308 $ 2,854,883 Cash flows from investing
activities Purchase of plant and equipment $ (7,563,222)$
(1,065,108) Pledge deposits (3,124,541) -- Payment for the
construction in progress (1,556,579) (1,537,774) Payment of cost of
intangible assets (20,565) (365,145) Net cash used in investing
activities $ (12,264,907)$ (2,968,027) Cash flows from financing
activities Issue of common stock 7,430,965 -- Bank borrowings, net
of repayment 2,430,445 -- Net cash provided by financing activities
$ 9,861,410 $ -- Net in cash and cash equivalents sourced/(used)
2,883,811 (113,144) Effect of foreign currency translation on cash
and cash equivalents 183,668 15,992 Cash and cash
equivalents-beginning of year 571,194 668,346 Cash and cash
equivalents-end of year $ 3,638,673 $ 571,194 For more information,
please contact: Sino Gas International Holdings, Inc. Ms. Fang
Chen, Chief Financial Officer Tel: +86-10-8260-0527 (China) Email:
CCG Elite Investor Relations Crocker Coulson, President Tel:
+1-646-213-1915 (New York) Email: Ed Job, CFA Tel: +1-646-213-1914
(New York) Email: DATASOURCE: Sino Gas International Holdings, Inc.
CONTACT: Ms. Fang Chen, Chief Financial Officer of Sino Gas
International Holdings, Inc., +86-10-8260-0527 (China), or ;
Crocker Coulson, President of CCG Elite Investor Relations,
+1-646-213-1915 (New York), or ; Ed Job, CFA, +1-646-213-1914 (New
York), or Web Site: http://www.sino-gas.com/
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