China Keli Electric Co. Ltd.
TSX VENTURE : ZKL

March 31, 2011 17:30 ET

China Keli Electric Q3 2011 Financials Show 17% Yr-over-Yr Growth in Revenues and 36% Growth in Gross Profit for the Three Month Q3 Period

VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 31, 2011) - China Keli Electric Co. Ltd. (TSX VENTURE:ZKL) ("Keli" or the "Company") today announced the financial and operating results for the three and nine months ended January 31, 2011.

For the three months ended January 31, 2011, reported total revenue was $2,991,162, an increase of ~17% over the same period in 2010 ($2,559,660), with gross profit $1,277,338, an increase of ~36% ($940,893 for the same period in 2010).

For the nine months ended January 31, 2011, reported total revenue was $10,097,820, an increase of 8.1% over the same period in 2010 ($9,339,975), with gross profit $4,481,640, an increase of 19.4% ($3,753,091 for the same period in 2010); excluding the negative impact of foreign exchange, increases in both revenues and gross profit would have been greater. The Company incurred operating expenses for the nine months ended January 31, 2011 of $4,522,048 ($1,865,629 for the same period in 2010). Among the operating expenses, there were several significant one-time charges, including stock-based compensation expenses, some expenses related to the improvement of the quality of management and listing related expenses. Also in this quarter, in order to increase revenues in the coming year, the Company launched a series of marketing campaigns in the third quarter, with a total expenditure of approximately $550,000, to promote its products, especially the new Smart Grid and Resistor products, to new markets and industries. As a result, the Company made a net loss of $336,526 for the nine months ended January 31, 2011 (net income of $1,562,107 for the same period in 2010) and the basic and diluted earnings per share ("EPS") were -$0.004 ($0.025 for the same period in 2010). Reduced net income and EPS were due primarily to all the one-time charges for such items as stock based compensation, listing related expenses, marketing campaigns, etc and the negative effect of foreign exchange rates. After accounting for an unrealized foreign exchange translation gain of $206,293, the Company ended the first nine months of FY2011 with a total comprehensive loss of $130,233, compared with a total comprehensive income of $618,754 for the first nine months of FY2010. The Company's unrealized foreign exchange gains (losses) on translation of the Group's functional currency to reporting currency are subject to fluctuations in the exchange rate between the RMB and the Canadian dollar in each reporting period.

"With all the holiday periods, Q3 is traditional slow, and we used the time to gear up for Q4 and FY2012," said Lou Meng Cheong, Keli's CEO, "We are very confident that our investment of time, money and energy in Q3 will result in significantly improved results in Q4 and beyond. In the meantime, we still managed to post significant revenue and gross profit gains."

As of January 31, 2011, the Company had total cash and cash equivalents of $1,077,191 compared with $678,682 as of April 30, 2010. Accounts receivable were $5,156,620 as at January 31, 2011, an increase of $658,511 compared with $4,498,109 as at April 30, 2010. The Company's working capital was $8,609,539 as at January 31, 2011, increased from $4,640,028 as at April 30, 2010.

Note: For clearer understanding of these results, the following M&A history should be noted:

The Company completed its qualifying transaction with Creative Grace Limited ("Creative Grace") resulting in a merger of the two companies on May 5, 2010. The financial and operating results for the nine months ended January 31, 2011 include the results of operations of the Company and Creative Grace. The financial and operating results for the nine months ended January 31, 2010 include the results of operations of Creative Grace only. The functional currency of the Company and its subsidiaries is Chinese Yuan (also known as "Renminbi" or "RMB"). The financial and operating results of the relevant periods have been translated into Canadian dollars. Depending on the magnitude of changes in foreign currency exchange rates, the impact on the financial and operating results may or may not be material.

Full financial results of the Company for the nine months ended January 31, 2011 are available on SEDAR at www.sedar.com.

About China Keli Eletric Company Ltd.

China Keli Electric Company Ltd. specializes in the manufacturing of electrical components and equipment, including pre-assembled mini substations, electrical controllers, pressurized and vacuumed switchgears and circuit breakers in the manufacturing.

For further Company information please access our website: www.zkl.cc

This press release contains forward-looking statements based on current expectations. These forward-looking statements entail various risks and uncertainties that could cause actual results to differ materially from those reflected in these forward-looking statements. Risks and uncertainties about Keli's business are more fully discussed in the Company's disclosure materials filed with the securities regulatory authorities in Canada. All amounts are stated in Canadian dollars unless noted otherwise.

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

Contact Information

  • China Keli Electric Co. Ltd.
    Michael Raymont
    EVP Finance and Corporate Development
    (403) 389-3488
    mraymont@zkl.cc
    or
    Brisco Capital Partners
    Scott Koyich
    President
    (403) 262-9888
    skoyich@briscocapital.com