HUIZHOU, Guangdong, China, Sept.
10 /PRNewswire-Asia/ --
This press release is issued for information purposes only and
does not constitute an offer to sell or the solicitation of an
offer to subscribe for or buy any security, nor is it a
solicitation of any vote or approval in any jurisdiction, nor shall
there be any sale, issuance or transfer of the securities referred
to in this press release in any jurisdiction in contravention of
applicable law.
Neither the United States Securities and Exchange Commission nor
any state securities commission has approved or disapproved of the
Proposed Offer or securities to be issued in connection therewith,
or passed upon the adequacy or accuracy of this press release, or
the merits or fairness of the Proposed Offer. Any representation to
the contrary is a criminal offense.
Qiao Xing Universal Resources, Inc. (Nasdaq: XING) ("the
Company" or "XING"), an emerging Chinese resources company
headquartered in Huizhou,
Guangdong Province, today
announced its unaudited results for the six months ended
June 30, 2010.
First Half Highlights
-- The Company reported net income of RMB100.6 million (US$14.8 million),
or RMB1.12 (US$0.17) per basic share, compared to a net loss of
RMB184.1 million or RMB3.62 per basic share in the first half of 2009
(after attribution of the non-controlling interest).
-- Net sales were RMB465.9 million (US$68.7 million) compared to
RMB1,044.1 million in the first half of 2009.
-- Gross profit was RMB77.3 million (US$11.4 million) compared to RMB215.8
million in the first half of 2009. Gross margin was 16.6% compared to
20.7% in the first half of 2009.
"We are pleased to return to profitability following our efforts
to strategically transform the Company into a resources-focused
enterprise," commented Mr. Ruilin
Wu, the Company's Chairman and Chief Executive Officer.
"Recently, we have made a proposal to privatize Qiao Xing Mobile
Communication Co., Ltd (NYSE: QXM, or "QXMC"), which represents a
major milestone for our business. In addition, we are making steady
progress in our proposed acquisitions of molybdenum, copper, lead
and zinc mines. These developments demonstrate our clarity on
future direction and our confidence in the long- term growth in the
resources industry. We believe we are on the right track to
enhancing long-term shareholder value."
Financial Review of Operations for Molybdenum Mine Business
-- Consolidated revenue from the mining business for the first half of
2010 totaled RMB141.9 million (US$20.9 million). Gross profit was
RMB66.4 million (US$9.8 million), resulting in gross margin of 46.8%.
Net income totaled RMB45.4 million (US$6.7 million), of which RMB27.5
million (US$4.1 million) was generated in the second quarter of 2010.
Net income in the second quarter of 2010 increased by 53.3% from the
first quarter of 2010, when business was seasonally slower as most
mining businesses in North China shut down operations for the long
Chinese New Year holiday in February 2010.
-- Molybdenum concentrate production in the first half of 2010 was 1,550.0
tons (3.42 million pounds), equivalent to 745.7 tons (1.64 million
pounds) of molybdenum metal.
-- Average cost of sales of molybdenum metal produced in the first half of
2010 was RMB101,144 (US$14,915) per ton, or RMB45.97 (US$6.78) per
pound. Average cash cost of molybdenum metal produced in the first half
of 2010 was RMB65,276 (US$9,626) per ton, or RMB29.60 (US$4.36) per
pound. (The Company produces molybdenum concentrate and does not
engage in smelting operations, so the cash cost does not include the
cost of smelting).
-- Capital expenditures for the mining business in the first half of 2010
totaled RMB33.6 million (US$4.9 million). These capital expenditures
were all used for the construction of the Company's Chifeng Haozhou
mine.
The average price of molybdenum concentrate sold by the
Company's Chifeng Haozhou Mine for the six months ended
June 30, 2010 was RMB2,212 per ton, representing an increase of
2.4% from RMB2,160 per ton for the
six months ended December 31,
2009.
Financial Review of Operations for Telecommunication Business
-- Revenues were RMB324.0 million (US$47.8 million) compared to RMB1,039.6
million in the first half of 2009.
-- Handset shipments were 621,000 units compared to 1,593,000 units in the
first half of 2009.
-- Gross margin was 3.3% compared to 20.7% in the first half of 2009.
-- Operating loss was RMB85.1 million (US$12.6 million) compared to
operating income of RMB122.6 million in the first half of 2009.
-- Net loss was RMB64.5 million (US$9.5 million) in the first half of 2010
compared to net loss of RMB 62.1 million in the first half of 2009.
Our telecommunications business is operated through QXMC.
The decrease in revenues was primarily due to lower unit
shipments and a decrease in the average selling price ("ASP") of
products sold in the first half of 2010.
The decrease in handset shipments was primarily due to fewer new
model launches and a slow-down in shipments amid intense
competition in the PRC handset market.
The ASP of handset products decreased to RMB513 (US$76) in
the first half of 2010 from RMB646 in
the first half of 2009, which was primarily due to the launch of
lower-priced products to target the lower-end market and price
reductions to drive sales in an increasingly competitive
environment.
Gross profit in the first half of 2010 was RMB10.8 million (US$1.6
million), compared to RMB214.8
million in the same period of 2009. The year-over-year
decline in gross profit and gross margin was primarily a result of
the decline in ASP.
Selling and distribution ("S&D") expenses in the first half
of 2010 were RMB60.9 million
(US$9.0 million), compared to
RMB52.5 million in the same period of
2009. The increase in S&D expenses was primarily due to the
airtime costs incurred from the sale of handset products through
the infomercial arrangement. Airtime costs incurred from TV
infomercial sales were RMB55.2
million in the first half of 2010, compared to RMB42.0 million in the same period of 2009. The
increase in airtime costs was however offset by lower payroll costs
and other advertising and promotion expenses.
General and administrative ("G&A") expenses were
RMB23.5 million (US$3.5 million), compared to RMB23.9 million in the same period of 2009.
Share-based compensation expenses recognized in G&A were
RMB9.3 million (US$1.4 million) in the first half of 2010,
compared to RMB5.5 million in the
first half of 2009.
Research and development ("R&D") expenses were RMB9.4 million (US$1.4
million), compared to RMB13.5
million in the same period of 2009. The lower R&D
expenses were primarily due to lower payroll costs and software
license fees.
Total share-based compensation expenses, which have been
allocated to S&D, G&A and R&D expenses, increased to
RMB11.0 million (US$1.6 million) in the first half of 2010 from
RMB6.5 million in the same period of
2009.
Operating loss for the first half of 2010 was RMB85.1 million (US$12.6
million), compared to operating income of RMB122.6 million in the first half of 2009.
Financial Conditions
As of June 30, 2010, XING and its
subsidiaries held US$538.2 million in
cash and cash equivalents and US$519.5
million in working capital. Shareholders' equity was
US$652.5 million as of June 30, 2010.
As of June 30, 2010, QXM and its
subsidiaries held US$436.5 million in
cash and cash equivalents and US$401.0
million in working capital. Shareholders' equity was
US$419.8 million as of June 30, 2010.
Outlook
-- We anticipate that in the second half of 2010, we will see continued
growth in our Haozhou Molybdenum Mining business, which may grow
eventually to contribute net profit of over US$24 million in FY2011.
-- The acquisition of Balinzuo Banner Xinyuan Mining Co., Ltd, which owns
a relatively large-scale lead-zinc mine in Balinzuo Banner, in the
Inner Mongolia Autonomous Region of the People's Republic of China, is
expected to be completed in the fourth quarter of 2010. We expect to
increase this Lead-zinc mine's production capacity to mill 2,000 tons
of ore per day after completion of the acquisition and hope that it
will be another major cash and net income generator to XING.
-- We are now evaluating the opportunities of acquiring some other big
mines. With the expected completion of the proposed privatizing of our
subsidiary QXMC, XING will have strong financial resources for future
acquisitions and become a "Pure Resources, Bigger Player" finally.
Foreign Exchange Rate Used
The United States dollar (US$)
amounts disclosed in this press release are presented solely for
the convenience of the reader. Translations of the amounts from
Renminbi (RMB) into United States
dollars for the convenience of readers were calculated at the noon
buying rate of US$1.00 = RMB6.7815 on June 30,
2010 in The City of New
York for the cable transfers of RMB as certified for customs
purposes by the Federal Reserve Bank of New York. No representation is made that the
RMB amounts could have been, or could be, converted into US$ at
that rate on June 30, 2010, or at any
other certain date. The percentages stated are calculated based on
RMB.
FINANCIAL TABLES FOLLOW
Qiao Xing Universal Resources, Inc. and its Subsidiaries
Condensed Consolidated Profit and Loss Account
For six months ended June 30
2009 2010
RMB'000 RMB'000 US$'000
Net sales 1,044,144 465,856 68,695
Cost of goods sold (828,350) (388,557) (57,297)
Gross profit 215,794 77,299 11,398
Total operating expenses (125,938) (103,920) (15,324)
Income from operation 89,856 (26,621) (3,926)
Net non-operating income (loss) (109,792) 117,019 17,256
Income before income tax (19,936) 90,398 13,330
Provision for income tax (35,499) (17,962) (2,649)
Net income from continuing
operations, net of tax (55,435) 72,436 10,681
Discontinued operations, net of tax (145,480) -- --
Net income (loss) for the year (200,915) 72,436 10,681
Net loss (income) attributable to the
noncontrolling interest 16,842 28,166 4,154
Net income (loss) after
attribution of the
noncontrolling interest (184,073) 100,602 14,835
To participatory convertible notes -- -- --
To common stock (184,073) 100,602 14,835
Basic earnings (loss) per common
share:
Before extraordinary gain (3.62) 1.12 0.17
Extraordinary gain -- -- --
After extraordinary gain (3.62) 1.12 0.17
Weighted average number of shares
outstanding
Basic 50,876,616 89,897,243 89,897,243
Qiao Xing Universal Resources, Inc. and its Subsidiaries
Condensed Consolidated Balance Sheet
December 31, June 30,
2009 2010
RMB'000 RMB'000 US$'000
ASSETS
CURRENT ASSETS
Cash and cash equivalents 3,709,503 3,649,528 538,159
Restricted cash 251,720 155,053 22,864
Bills receivable -- -- --
Accounts receivable, net 123,082 293,530 43,284
Inventories 98,012 145,452 21,448
Prepaid expenses 184,339 160,781 23,709
Other current assets 37,025 33,684 4,967
Due from related parties 25 25 4
Deferred income taxes 15,942 13,087 1,930
Deferred debt issuance costs, net -- -- --
Assets held for sale 163,000 -- --
Due from discontinued operations 200,000 130,000 19,170
TOTAL CURRENT ASSETS 4,782,648 4,581,140 675,535
NON-CURRENT ASSETS
Property, machinery and
equipment, net 170,485 236,629 34,893
Proven and probable reserves 712,121 694,453 102,404
Construction-in-progress 86,591 42,394 6,251
Investment at cost 5,000 -- --
Goodwill 82,058 82,058 12,100
Value beyond proven and probable
reserves 67,295 67,295 9,923
Other acquired intangible assets,
net 4,433 2,216 328
Deferred income taxes -
noncurrent -- 1,618 239
TOTAL NON-CURRENT ASSETS 1,127,983 1,126,663 166,138
TOTAL ASSETS 5,910,631 5,707,803 841,673
LIABILITIES, MINORITY INTERESTS AND
SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short term bank borrowings 884,708 715,600 105,522
Accounts payable 60,750 85,823 12,655
Other payables 57,238 10,205 1,505
Accrued liabilities 40,472 40,757 6,010
Deposits received 1,310 1,310 193
Deferred revenues 16,370 49,418 7,287
Due to related parties 5,118 5,153 760
Taxation payable 15,016 16,330 2,409
Convertible notes 233,716 112,162 16,539
Embedded derivatives liabilities 63,096 14,439 2,129
Assets retirement obligation 4,013 7,050 1,040
TOTAL CURRENT LIABILITIES 1,381,807 1,058,247 156,049
LONG-TERM LIABILITIES
Shareholders loans 6,732 6,688 986
Warrants liabilities 148,921 45,099 6,650
Deferred tax liabilities 175,281 172,661 25,461
TOTAL NON-CURRENT LIABILITIES 330,934 224,448 33,097
TOTAL LIABILITIES 1,712,741 1,282,695 189,146
SHAREHOLDERS' EQUITY
XING equity
Common stock, par value RMB0.008
(equivalent of US$0.001);
authorised 200,000,000 shares as
of December 31, 2009 and March
31, 2010; outstanding and fully
paid - 82,327,993 shares as of
December 31, 2009 and
90,294,134 shares as of March
31, 2010 602 669 99
Additional paid-in capital 2,404,998 2,554,802 376,731
Cumulative translation
adjustments (160,352) 897,338 132,322
Retained earnings 796,736 (160,217) (23,626)
TOTAL XING EQUITY 3,041,984 3,292,592 485,526
NONCONTROLLING INTEREST 1,156,086 1,132,516 167,001
TOTAL EQUITY 4,198,070 4,425,108 652,527
TOTAL LIABILITIES & SHAREHOLDERS'
EQUITY 5,910,631 5,707,803 841,673
About Qiao Xing Universal Resources, Inc.
Qiao Xing Universal Resources, Inc. is an emerging Chinese
resources company headquartered in Huizhou, Guangdong
Province, China. The
Company was previously one of the leading players of
telecommunication terminal products in China, but made the strategic decision to
diversify into the resources industry in 2007. In April 2009, the Company acquired the 100% equity
interest in China Luxuriance Jade
Company, Ltd ("CLJC"). CLJC, through its wholly owned Chinese
subsidiaries, owns the rights to receive the expected residual
returns from Chifeng Haozhou Mining Co., Ltd. ("Haozhou Mining"), a
large copper-molybdenum poly-metallic mining company in Inner
Mongolia, China. Since then, the
Company has further refined its strategy to become a pure resources
company and is actively seeking additional acquisition targets in
the resources industry.
Safe Harbor Statement
This press release contains forward-looking statements that
involve risks and uncertainties. These include statements about our
expectations, plans, objectives, assumptions or future events. In
some cases, you can identify forward-looking statements by
terminology such as "anticipate," "estimate," "plans," "potential,"
"projects," "continuing," "ongoing," "expects," "management
believes," "we believe," "we intend" and similar expressions. These
statements involve estimates, assumptions and uncertainties that
could cause actual results to differ materially from those
expressed. You should not place undue reliance on these
forward-looking statements.
Forward-looking statements include all statements other than
statements of historical facts, such as statements regarding
anticipated acquisitions, the privatization of QXMC, anticipated
mining capacity and production volumes, long-term growth prospects
for the resources industry, the Company and value for the Company's
shareholders, mine development and capital expenditures, mine
production and development plans, estimates of proven and probable
reserves and other mineralized material and the Company's
transition to a pure resources company and bigger player within the
resources industry. Readers are cautioned that forward-looking
statements are not guarantees of future performance and actual
results may differ materially from those projected, anticipated or
assumed in the forward-looking statements.
Forward-looking statements involve inherent risks and
uncertainties. A number of factors could cause actual results to
differ materially from those contained in any forward-looking
statement. Information regarding these factors is included in our
filings with the Securities and Exchange Commission. Qiao Xing
Universal Resources, Inc. does not undertake any obligation to
update any forward-looking statement, except as required under
applicable law. All information provided in this press release is
as of September 10, 2010.
Additional Information and Where to Find It
Qiao Xing Universal Resources, Inc. plans to file a Schedule
13E-3 with the United States Securities and Exchange Commission
(the "SEC") in connection with its proposed offer to acquire all of
the outstanding shares of QXMC that it does not currently own (the
"Proposed Offer"). The Schedule 13E-3 will contain additional
information regarding the Proposed Offer, including, without
limitation, information regarding the special meeting of
shareholders of Qiao Xing Mobile Communication Co., Ltd that will
be called to consider the Proposed Offer. The Schedule 13E-3 will
contain important information about Qiao Xing Universal Resources,
Inc., Qiao Xing Mobile Communication Co., Ltd, the Proposed Offer
and related matters. Investors and shareholders should read the
Schedule 13E-3 and the other documents filed with the SEC in
connection with the Proposed Offer carefully before they make any
decision with respect to the Proposed Offer. A copy of the Scheme
of Arrangement with respect to the Proposed Offer will be an
exhibit to the Schedule 13E-3. The Proposed Offer is expected to be
exempt from the registration requirements of the United States
Securities Act of 1933 Act by virtue of the exemption provided by
Section 3(a)(10); however, it is possible that the offer may change
forms such that the exemption provided by Section 3(a)(10) may no
longer be available. In such a case Qiao Xing Universal Resources,
Inc. may file a Form F-4 with respect to the Proposed Offer.
The Schedule 13E-3 and all other documents filed with the SEC in
connection with the Proposed Offer will be available when filed
free of charge at the SEC's web site at www.sec.gov. Additionally,
the Schedule 13E-3 and all other documents filed with the SEC in
connection with the Proposed Offer will be made available to
investors or shareholders free of charge by calling or writing
to:
Company Contact: Rick Xiao, Vice President
Qiao Xing Universal Resources
Phone: +86-752-282-0268
Email: rick@qiaoxing.com
For more information, please contact:
Company Contact:
Mr. Rick Xiao, Vice President
Email: rick@qiaoxing.com
Tel: +86-752-282-0268
CCG Investor Relations Contact:
Mr. Ed Job, Account Manager
Email: ed.job@ccgir.com
Tel: +1-646-213-1914 (NY office)
SOURCE Qiao Xing Universal Resources, Inc.
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