Hanwei Energy Services Corp.
TSX : HE

Hanwei Energy Services Corp.

November 06, 2013 18:43 ET

Hanwei Energy Services Reports Second Quarter Fiscal 2014 Financial and Operational Results

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Nov. 6, 2013) - Hanwei Energy Services Corp. (TSX:HE) ("Hanwei" or the "Company"), today reported its financial results for the quarter ended September 30, 2013 (the "Reporting Period"). All amounts are in Canadian Dollars unless otherwise noted.

  • During the three-month period ended September 30, 2013 the Company received a payment of $1.2 million (RMB7 million) as part of the outstanding accounts receivable due from its wind farm customers. This contributed to Hanwei's net income for the three months ended September 30, 2013 of $1.5 million as compared to a net loss of $0.3 million for the same period of the prior year, with basic and diluted earnings per share of $0.02 as compared to basic and diluted earnings per share of nil for the prior year.
  • The total principal amount of all bank loans was reduced to $8.5 million as of September 30, 2013 (representing a debt to equity ratio of 32%) as compared to $17.2 million as at March 31, 2013 (representing a debt to equity ratio of 69%).
  • As of October 31, 2013 FRP pipe sales orders were approximately $5.4 million and are expected to be completed within the fiscal year ending March 31, 2014.
  • Net asset value per share from continuing operations (on a fully diluted basis) was $0.50 as at September 30, 2013.

As of the date of this press release, and inclusive of the above mentioned $1.2 million amount, approximately $31.8 million (RMB189.2 million) of the accounts receivable due from the Company's wind farm customers has been collected with a balance of $5.7 million (RMB34.0 million) outstanding. The full amount of this receivable was previously allowed for and the Company's wind power business has been discontinued. The Company is continuing its efforts to collect the balance of this outstanding amount.

As previously reported the Company reached an agreement on May 27, 2013 to sell all of the equity interest in its wholly owned subsidiary Hanwei Green to a private Chinese company for an amount of $10.9 million (RMB65 million). The major asset of Hanwei Green is a manufacturing plant located in Tianjin, China which was constructed for wind blade production. Regulatory documentation on the ownership transfer and sale is underway with the relevant government authorities. The Company received a deposit of $0.2 million (RMB1.0 million) in April 2013 from the buyer. According to the agreement, the Company will receive $1.8 million (RMB11.0 million) when the transfer of the business license of Hanwei Green is approved by regulatory authorities, $3.2 million (RMB19.0 million) before December 31, 2013, and $5.9 million (RMB35.0 million) within twelve months after the agreement was signed on May 27, 2013.

Also, and as previously reported, during the year ended March 31, 2012 the Company executed a contract for sale of the majority of its wind power equipment inventory to a Chinese customer for agreed items totaling $15.7 million (RMB93.6 million). To date $12.6 million (RMB75.3 million) of this amount has been received by the Company. The balance to be paid is approximately $3.1 million (RMB18.3 million) and is expected to be received during 2013.

Additional Financial Highlights

For the three months ended September 30, 2013:

  • Revenues increased by 7% to $3.8 million (from $3.6 million for the same period of the prior year) with approximately $1.9 million in sales from each of the Company's China and international markets.
  • EBITDA from continuing operations was negative $118,000 as compared to EBITDA from continuing operations of $327,000 for the same period of the prior year. The decline in EBITDA from continuing operations was primarily driven by the decline in gross profit due to weakness in the Company's China market.

For the six months ended September 30, 2013:

  • Revenues were $7.6 million representing a decline of 42% as compared to revenues of $13.2 million for the same period of the prior year. The decline was caused by continuing weakness in the Company's China market during the first quarter of the Company's 2014 Fiscal Year.
  • EBITDA from continuing operations was negative $292,000 as compared to EBITDA from continuing operations of $2.0 million for the same period of the prior year. The decline in EBITDA was primarily driven by the decline in gross profit and reduced sales.
  • Net income was $0.5 million as compared to net income of $0.6 million for the same period of the prior year, a decline of $0.1 million driven by decreased gross profit from continuing operations. Basic and diluted earnings per share was $0.01 and equal to that for the same period of the prior year.

Graham Kwan, Executive Vice President and Rick Huang, Chief Financial Officer of Hanwei will host a conference call to discuss its operational and financial results for the quarter ended September 30, 2013. Management invites analysts and investors to participate on the conference call:

Date: Thursday November 7th, 2013
Time: 1:00 p.m., Eastern Time
Dial in number: 1-888-428-9480 or 1-719-325-2281

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 world leader in the manufacturing of high pressure, fiberglass reinforced plastic ("FRP") pipe products, and associated technologies and services, for the international oil and gas and infrastructure industries. Hanwei serves major energy customers in the Chinese and global energy markets.

www.hanweienergy.com

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.

FORWARD-LOOKING INFORMATION

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.

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