BEIJING, China, April 1, 2008 /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 and a
distributor of natural gas to residential, commercial and
industrial customers in the People's Republic of China, today
reported financial results for its fourth quarter and fiscal year
ended December 31, 2007. Fourth Quarter 2007 Highlights -- Revenue
reached $9.4 million, up 59.0% from the fourth quarter of 2006 --
Gross profit was $5.6 million, up 66.0% from the fourth quarter of
2006 -- Operating income was $4.55 million, up 58.6% from the
fourth quarter of 2006 -- Net income was $4.45 million, up 49.6%
from the fourth quarter of 2006 -- Sales of natural gas totaled
7.71 million cubic meters, up 9.8% from the fourth quarter of 2006
-- The number of new households connected was 17,677 up 41.1% from
the fourth quarter of 2006 Fiscal Year 2007 Highlights -- Revenue
reached $20.3 million, up 86.4% from 2006 -- Gross profit reached
$10.8 million, up 66.1% from 2006 -- Operating income totaled $8.0
million, up 53.9% from 2006 -- Net income rose to $7.7 million, up
49.2% from 2006 -- Earnings per diluted share were $0.35 -- Sales
of natural gas were 25.89 million cubic meters, up 87.2% from 2006
-- Connected 39,306 new households in 2007, up 60.2% from new
households connected in 2006 -- Completed a private placement
financing, generating $18.8 million in gross proceeds --
Established exclusive concession rights for natural gas
distribution in Baishan County in Jilin Province -- Acquired
Guannan Zhongyuan Natural Gas Co., Ltd., including 3,951 connected
households and concession rights in Guannan County in Jiangsu
province -- Acquired Beijing Chenguang Gas Co., Ltd., including
25,202 residential customers, four industrial locations and
exclusive concession rights to operate seven gas distribution
systems 'Sino Gas had a very successful fiscal year 2007. We were
able to extend further into our existing markets and significantly
increase both the number of connected households and our sales of
natural gas. We successfully expanded into the Northeastern region
of China. We had strong growth in revenue and profits in 2007 which
we expect to continue in 2008 by making additional acquisitions,'
said Mr. Yu-Chuan Liu, President and CEO of Sino Gas. Fourth
Quarter 2007 Results Revenues for the three months ended December
31, 2007 were $9.4 million, a 59.0% increase from $5.9 million for
the three months ended December 31, 2006. New connection fees came
from connecting 17,677 new households during the fourth quarter of
2007, up 41.1% from connecting 12,524 new households in the fourth
quarter of 2006. Connection fees accounted for 74.4% of revenues in
the fourth quarter of 2007. Gas sales were 7.71 million cubic
meters in the fourth quarter of 2007, a 9.8% increase from 7.02
million cubic meters in the fourth quarter of 2006. Because of the
seasonal nature of construction, new connections are highest in the
third and fourth quarters of every year, while gas sales remain
relatively stable throughout the year. Gross profit for the three
months ended December 31, 2007 was $5.6 million, an increase of
66.0% from $3.4 million in the fourth quarter of 2006. Gross profit
increased mostly because of increased new connection volumes. Gross
profit margin for the fourth quarter of 2007 was 59.5%, compared to
56.9% in the fourth quarter of 2006. Operating expenses in the
fourth quarter of 2007 were $1.0 million, an increase of 109.3%
from $491,158 in the fourth quarter of 2006. Operating expenses in
the quarter increased because of the Company's expansion leading to
increased staff salaries, social insurance costs, travel and
communications expenses, and increased depreciation costs
associated with the acquisition of new assets. Operating expenses
were 11.0% of revenues in the fourth quarter of 2007, up from 8.3%
in the fourth quarter. Operating income in the fourth quarter of
2007 was $4.55 million, an increase of 58.6% from $2.9 million in
the fourth quarter of 2006. Operating margin was 48.5% in the
fourth quarter of 2007, compared to 48.6% in the fourth quarter of
2006. Net income during the quarter was $4.45 million in the fourth
quarter of 2007, up 49.6% from $2.98 million in the fourth quarter
of 2006. Full Year 2007 Results Revenues for fiscal year 2007 were
$20.3 million, an increase of 86.4% from $10.8 million in fiscal
year 2006. Connection fees accounted for $13.0 million, or 64.0% of
revenues, in 2007, compared to $7.2 million, or 66.4% of revenues,
in 2006, and natural gas sales accounted for the balance of
revenues in both periods. Gross profit was $10.8 million, up 66.1%
from $6.5 million in fiscal year 2006. Gross profit margin was
53.1% in 2007, compared to 59.6% in fiscal year 2006. Operating
income was $8.0 million, up 53.9% from $5.2 million in fiscal year
2006. Operating margin was 39.7% in 2007, compared to 48.1% in
fiscal year 2006. Net income was $7.7 million in fiscal year 2007,
up 49.2% from $5.2 million in fiscal year 2006. Earnings per
diluted share were $0.35 in fiscal year 2007, compared to $0.33 per
diluted share in fiscal year 2006. Earnings per diluted share
reflect an increase of 6,318,093 in weighted average diluted shares
in 2007 due to the private placement financing closed in September
2007. The total number of connected households was 87,537 at the
end of 2007. A total of 39,306 households were added during 2007,
an increase of 60.2% from 24,534 new connected households in 2006.
Gas sales were 25.89 million cubic meters in 2007, an 87.2%
increase from 13.83 million cubic meters in 2006. Financial
Condition As of December 31, 2007, the Company had $10.9 million in
cash and cash equivalents, $8.8 million in working capital and $2.7
million in short-term bank loans. Other payables were $10.4
million, up from $1.8 million at the end of 2006, because the
assets of Baishan city gas were transferred the Company.
Shareholders' equity on December 31, 2007 was $50.9 million,
compared to $25.4 million on December 31, 2006. The Company
generated $15.36 million in cash from operating activities in 2007,
compared to $5.3 million in 2006. Cash used in investing activities
was $25.16 million in 2007, up from $12.26 million in 2006, $15.3
million of which was used for plant, property and equipment. On
September 13, 2007, the Company concluded a private placement of
shares. Approximately 8.34 million shares of the Company's common
stock were sold at $2.25 per share, generating $18.8 million in
gross proceeds. As a part of this financing, the Company cancelled
most of its outstanding warrants and clarified its capital
structure without dilution of its equity base. As of December 31,
2007, there were 25,282,380 shares of common stock issued and
outstanding. Business Outlook 'Our solid financial performance
resulted from two successful acquisitions which allowed us to
expand our distribution of natural gas into new cities. We also
increased our presence in our existing markets,' said Mr. Liu. 'Our
industry continues to grow and we will continue to pursue our
expansion strategy. We will also work on securing long-term
supplies of natural gas at favorable prices. Using the additional
capital from our recent financing and additional debt financing, we
expect to expand into Baoding, Hebei Province and two or three
small cities very soon. We are in acquisition negotiations with
Baoding Gas Company and we're working through all the regulatory
issues and deal structuring. We hope to conclude during the second
half of 2008.' Recent Events In February 2008, the Company signed a
framework agreement with Baoding Gas Company ('Baoding Gas') and
Baoding Public Utility Group in Baoding, Hebei Province. According
to the agreement, Sino Gas will provide RMB 30 million to cover
early-stage expenses in the conversion of Baoding Gas from a
government utility to a state-owned enterprise. Baoding is the
largest city in Hebei Province and the fourth largest city in
China, with a population of over 11 million people. Sino Gas plans
to acquire Baoding Gas after this conversion is complete, and the
RMB 30 million spent by the Company will become part of the
acquisition cost. In March 2008, the Company appointed Mr. Zhicheng
Zhou and Mr. Xinmin Zhang to the Company's Board of Directors. The
two new Directors replace Mr. John D. Kuhns and Ms. Fang Chen, who
resigned due to personal reasons. Conference Call The Company will
conduct a conference call at 9:00 a.m. Eastern Time on Tuesday,
April 1, 2008 to discuss the fiscal year 2007 financial results.
Joining Mr. Yu-chuan Liu, President and Chief Executive Officer of
Sino Gas, will be Mr. Zhou Jiang, Director of Investor Relations.
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 553 470 62. If you are unable to participate in
the call at this time, a replay will be available for 14 days
starting on Tuesday, April 1, 2008 at 11:00 a.m. Eastern Time. To
access the replay, dial 888-286-8010 and enter the passcode
55347062. International callers should dial 617-801-6888 and enter
the same passcode. 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 size cities in China, as well as a distributor of
natural gas to residential, commercial and industrial customers in
China. The Company owns and operates 24 natural gas distribution
systems serving approximately 93,700 residential and eight
commercial and industrial customers. Facilities include
approximately 700 kilometers of pipeline and delivery networks with
a designed daily capacity of approximately 70,000 cubic meters of
natural gas. Beijing Gas owns and operates natural gas distribution
systems in Hebei, Jilin, Jiangsu and Shandong Provinces. The
Company's website is: 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; the ability of the Company to
identify attractive acquisition candidates and close on
acquisitions; 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 March 31, 2008. 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 March 31, 2008, and should be read in
conjunction with the information provided therein. --FINANCIAL
TABLES FOLLOW-- SINO GAS INTERNATIONAL HOLDINGS, INC. CONSOLIDATED
STATEMENTS OF INCOME FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007
and 2006 (Stated in US Dollars) Year Ended Quarter Ended December
31 December 31 2007 2006 2007 2006 Revenue Net revenues $20,267,756
$10,870,718 $9,381,144 $5,899,562 Cost of revenues -9,499,752
-4,389,142 -3,802,834 -2,540,014 Gross profit 10,768,004 6,481,576
5,578,310 3,359,548 Operating Expenses Selling and marketing
expenses -608,830 -95,779 -232,597 -29,282 General and
administrative expenses -2,106,389 -1,155,849 -795,578 -461,876
Total operating expenses -2,715,219 -1,251,628 -1,028,175 -491,158
Operating income/(loss) 8,052,785 5,229,948 4,550,135 2,868,390
Other income (expenses) Investment income 224,722 224,722 Other
income 29,942 438,186 20,896 438,345 Other expenses -18,890 -856
-5,693 -14,061 Interest income 149,270 Interest expense -197,959
-78,237 -60,216 -76,068 Total other income (expense) 187,086
359,093 179,709 348,216 Earnings before taxes 8,239,871 5,589,041
4,729,844 3,216,606 Income tax -532,500 -423,284 -277,270 -239,529
Net income 7,707,370 5,165,757 4,452,574 2,977,077 Constructive
preferred dividend - amortization of beneficial conversion
6,418,864 Income available to common stock shareholders -1,253,107
Earnings per share Basic 0.450 -0.090 Diluted 0.350 0.330 Weighted
average shares outstanding of common stock Basic 17,165,894
14,693,186 Diluted 22,017,096 15,699,003 Earnings per share
excluding effect of constructive preferred dividend Basic 0.450
0.350 Diluted 0.350 0.330 SINO GAS INTERNATIONAL HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS AT DECEMBER 31, 2007 AND DECEMBER 31,
2006 (Stated in US Dollars) December 31, December 31, 2007 2006
ASSETS Cash & Cash Equivalents $10,915,590 $3,638,673
Restricted Cash 478,920 3,124,541 Notes Receivable 825,119 477,390
Accounts Receivable 7,315,253 6,534,740 Inventory 207,976 Advance
to Suppliers 27,372 68,309 Prepayments and others 320,380 141,878
Other Receivable 3,100,695 1,263,800 Total Current Assets
23,191,305 15,249,331 Investment 4,007,310 2,939,029 Property,
Plant & Equipment, net 24,572,565 10,608,530 Construction in
Progress 11,556,820 4,628,076 Intangible Assets, net 2,028,250
457,830 Total non-current assets 42,164,945 18,633,465 Total Assets
$65,356,250 $33,882,796 LIABILITIES & STOCKHOLDERS' EQUITY
LIABILITIES Bank Loans $2,734,444 $2,430,445 Accounts Payable
716,707 3,891,388 Payable Other 10,383,657 1,790,500 Unearned
revenue 312,573 37,760 Accrued Liabilities 269,794 325,922 Total
Current Liabilities 14,417,175 8,476,015 Total Liabilities
$14,417,175 $8,476,015 STOCKHOLDERS' EQUITY Preferred Stock A
US$0.001 par value; 20,000,000 authorized; 275,111 and 0 issued and
outstanding as of December 31, 2007 and 2006 respectively 275
Preferred Stock B US$0.001 par value; 5,000,000 authorized;
4,971,859 and 4,023,268 issued and outstanding as of December 31,
2007 and 2006 respectively 4,972 4,023 Common Stock US$0.001 par
value; 250,000,000 authorized; 25,282,380 and 14,693,186 issued and
outstanding as of December 31, 2007 and 2006 respectively 25,283
14,694 Additional Paid in Capital 35,247,303 18,488,040 Statutory
reserves 3,258,201 2,025,022 Retained Earnings 10,524,898 4,050,707
Accumulated other comprehensive income 1,878,142 824,296 Total
Stockholders' Equity 50,939,074 25,406,782 TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY $65,356,250 $33,882,797 SINO GAS INTERNATIONAL
HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE FISCAL
YEAR ENDED DECEMBER 31, 2007 AND 2006 (Stated in US Dollars)
December 31, December 31, 2007 2006 Cash flows from operating
activities Net income $7,707,370 $5,165,757 Other comprehensive
income 1,053,846 Depreciation expense 1,301,480 155,374
Amortization expense 323,815 Invested in restricted time deposits
2,645,622 Equity in investments 0 -495,651 Decrease/(increase) in
accounts receivables -2,924,200 106,512 Increase in inventory
-207,976 Increase in prepaid expenses -178,502 Increase in accounts
payable 5,637,161 355,316 Cash Sourced/(used) in operating
activities 15,358,616 5,287,308 Cash flows from investing
activities Investments -1,068,281 Pledge deposits -3,124,541
Purchase of property, plant and equipment -15,265,515 -7,563,222
Purchase of intangible rights -1,894,234 -20,565 Increase in
construction in progress -6,928,745 -1,556,579 Cash used/(sourced)
in investing activities -25,156,775 -12,264,907 Cash flows from
financing activities Bank loans 303,999 2,430,445 Proceeds of
issuance of common stock 16,771,077 7,430,965 Cash sourced/(used)
in financing activities 17,075,076 9,861,410 Net
increase/(decrease) in cash & cash equivalents for the year
7,276,917 2,883,811 Cash & cash equivalents at beginning of
year 3,638,673 571,194 Cash & cash equivalents at end of year
$10,915,590 $3,638,673 For more information, please contact: Sino
Gas International Holdings, Inc. Vincent Hu, Chief Financial
Officer Tel: +86-10-8260-0041 Email: CCG Elite Investor Relations
Crocker Coulson, President Tel: +1-646-213-1915 (New York) Email:
DATASOURCE: Sino Gas International Holdings, Inc. CONTACT: Vincent
Hu, Chief Financial Officer of Sino Gas International Holdings,
Inc., +86-10-8260-0041, or ; or Crocker Coulson, President of CCG
Elite Investor Relations, +1-646-213-1915 (New York),
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