Exhibit 99.1

 

 

pingtan marine enterprise Reports FINANCIAL RESULTS

for the third quarter and nine months ended September 30, 2015

 

Company to Hold Conference Call on Tuesday, November 10, 2015, at 8:30 AM ET

 

FUZHOU, China, November 9, 2015 – Pingtan Marine Enterprise Ltd. (Nasdaq: PME), (“Pingtan,” or the “Company”) a global fishing company based in the People’s Republic of China (PRC), today announced its unaudited financial results for the third quarter and nine months ended September 30, 2015.

 

Company Declares Cash Dividend During Period

 

October 9, 2015: The Company announced that it has declared a cash dividend of $0.01 per share of common stock outstanding. The dividend was payable in cash on or about November 16, 2015 to shareholders of record on October 16, 2015.  This marks the fourth consecutive quarterly dividend paid by the Company.

 

Factors Affecting Pingtan’s Results of Operation

 

As previously disclosed, the Indonesian government introduced a six-month moratorium on issuing new fishing licenses and renewals so that the country’s Ministry of Maritime Affairs and Fisheries (“MMAF”) could monitor the operations of existing fleets and to fight illegal fishing activities. As a result, all licensed fishing vessels operating in Indonesian waters have been informed by the Indonesian government to only operate within strict guidelines in order to avoid potential enforcement actions by the Indonesian Navy such as boat seizures.

 

Among the 135 fishing vessels, 117 vessels are licensed to operate in the Arafura Sea of Indonesia. To cooperate and remain in compliance with the Indonesian government’s fishing license check procedures, in January 2015, the Company lowered its operation to approximately half of its normal level; and from February 2015, Pingtan temporarily ceased operations of the 117 vessels which are licensed to operate in Indonesian waters. Since the Company derives a majority of its revenue from this area, this temporary ban caused a significant drop in production.

 

The Indonesian government had previously expected the license check of fishing vessels to be completed by April 30, 2015. As of the date of this report, the license check was still in process. While the Company believes that over the long-term the Indonesian government’s anti-illegal fishing measures will be beneficial to fully licensed fishing companies such as PME, it cannot guarantee when fishing will resume in this area, and its financial condition and results of operation will continue to be materially impacted while this moratorium is in existence.

 

 

Pingtan Marine Enterprise, Ltd.
November 9, 2015
Page 2

 

As a result, the Company’s sales for the three and nine months ended September 30, 2015 decreased significantly as compared to the three and nine months ended September 30, 2014.

 

Mr. Xinrong Zhuo, Chairman and CEO of the Company, commented, “The moratorium enacted by the Indonesian government significantly affected our overall operating results since the beginning of the year, and we continue to fully cooperate with the Indonesian government. We have operated successfully and in full concert with their government in the past. While this moratorium affected our short-term financial outlook, we feel that our size and capitalization offers us a competitive opportunity over smaller enterprises that can not leverage these resources. In addition, we are also continuing to work closely with the Chinese government to deliver quality consumer products to individuals throughout China. During the third quarter, Pingtan received a $31.7 million dollar incentive grant from the Chinese government relating to fuel expenditure incurred in 2014. We intend to devote additional time and resources to our current operations in the Indian Exclusive Economic Zone and the Western and Central Pacific Ocean of the International Waters to provide high quality products to our customers in China during the fourth quarter.”

 

Third Quarter 2015 Financial Highlights (all results are compared to prior year period)

 

As a result of the above, revenue was $2.7 million compared to $54.4 million.
Gross loss was $6.5 million compared to gross profit of $15.5 million, and gross margin decreased to (237.4%) compared to 28.5%, due to the moratorium described above.
Net income was $22.5 million, or $0.26 per basic and diluted share, compared to net income of $14.2 million, or $0.18 per basic and diluted share. This increase was largely due to the $31.7 million paid to the Company as an incentive grant, which was booked as other income, net.

 

Third Quarter 2015 Selected Financial Highlights

 

($ in millions, except per share data)  Three Months ended September 30, 
   2015   2014 
Fishing Business        
Revenue  $2.7   $54.4 
Cost of Revenue  $9.2   $38.9 
Gross Loss / Profit  $(6.5)  $15.5 
Gross Margin   (237.4%)   28.5%
Net Income  $22.5   $14.2 
Basic and Diluted Weighted Average    79.1    79.1 
EPS (in $)  $0.26   $0.18 

 

Balance Sheet Highlights

 

($ in millions, except per share data) 

9/30/2015

(Unaudited)

  

12/31/2014

(Audited)

 
Cash and Cash Equivalents  $21.1   $12.8 
Total Current Assets   98.2    105.9 
Total Assets   266.0    249.0 
Total Current Liabilities   56.2    61.1 
Total Long-term Debt, net of current portion   29.6    38.6 
Total Liabilities   85.8    99.7 
Shareholders’ Equity   180.2    149.3 
Total Liabilities and Shareholders’ Equity   266.0    249.0 
Book Value Per Share (in $)  $2.28   $1.89 

 

 

Pingtan Marine Enterprise, Ltd.
November 9, 2015
Page 3

 

Consolidated Financial and Operating Review

 

Revenues

 

Revenues from the fishing business, sales of frozen fish and other marine catches, for the three months ended September 30, 2015, were $2.7 million compared to $54.4 million for the same period in 2014. The decrease was primarily due to significant decrease in sales volumes, due to the Company temporarily ceased its operations in the Indonesia waters since February 2015 due to the moratorium described above, as well as the decrease in average unit sale price due to the different sales mix.

 

For the nine months ended September 30, 2015, the Company’s revenues were $46.7 million compared to $176.9 million in the first nine months of 2014. The decrease was primarily due to decrease in sales volume due to the moratorium described above, as well as the decrease in average unit sale price due to the different sales mix.

 

Gross Margin

 

The Company’s gross margin was (237.4%) for the three months ended September 30, 2015, compared to 28.5% in the prior-year period. The significant decrease was primarily due to the reduced scale of operations resulting from the moratorium, which is reflected in the allocation of fixed costs, mainly consisting of depreciation and labor costs, to cost of revenue. The ordinary repairs and maintenance fees were incurred in the periods to maintain vessels in operating condition and represent revenue expenditures.

 

For the nine months ended September 30, 2015, gross margin decreased to 13.2% from 33.1% in the same period of 2014, the decrease was primarily due to the same reasons described above.

 

Selling Expenses

 

Selling expenses were $0.3 million for the three months ended September 30, 2015, compared to $0.7 million in the prior-year period.

 

For the nine months ended September 30, 2015, selling expenses were $1.3 million, decreased from $1.9 million in the same period of 2014.

 

General & Administrative Expenses

 

During the moratorium period, the Company has endeavored to control corporate overhead and fixed corporate costs. For the three months ended September 30, 2015, general and administrative expenses were $0.7 million, compared to $0.8 million in the prior-year period.

 

For the nine months ended September 30, 2015, general and administrative expenses were $2.5 million compared to $2.4 million in the same period of 2014.

 

 

Pingtan Marine Enterprise, Ltd.
November 9, 2015
Page 4

 

Net Income

 

Net income from the fishing business for the three months ended September 30, 2015 was $22.5 million, or $0.26 per basic and diluted share, compared to $14.2 million, or $0.18 per basic and diluted share, in the same period of 2014.  The increase was primarily due to grant income of approximately $31.7 million offset by loss from operations of $7.6 million resulting from the moratorium described above, an increase in interest expense due to the increase of the Company’s interest bearing bank loan, and currency transaction loss due to the exchange rate fluctuation.

 

Net income from the fishing business for the nine months ended September 30, 2014 was $29.4 million, or $0.35 per basic and diluted share, compared to $52.4 million, or $0.66 per basic and diluted share, in the same period of 2014. 

 

Conference Call Details

 

Pingtan also announced that it will discuss financial results in a conference call on Tuesday, November 10, 2015, at 8:30 AM ET.

 

The dial-in numbers are:

 

Live Participant Dial In (Toll Free):         877-407-0310
Live Participant Dial In (International):       201-493-6786

  

To listen to the live webcast, please go to http://www.ptmarine.com and click on the conference call link at the top of the page, or go to: http://ptmarine.equisolvewebcast.com/q3-2015. This webcast will be archived and accessible through the Company’s website for approximately 30 days following the call.

 

About Pingtan Marine

 

Pingtan is a global fishing company, engaging in ocean fishing through its wholly-owned subsidiary, Fujian Provincial Pingtan County Ocean Fishing Group Co., Ltd., or Pingtan Fishing. Pingtan Fishing primarily engages in ocean fishing with many of its self-owned vessels that are licensed to operate within the Indian Exclusive Economic Zone, the Arafura Sea of Indonesia and the Western and Central Pacific Ocean of international waters. Pingtan Fishing is a growing fishing company and provider of high quality seafood in the PRC.

 

Business Risks and Forward-Looking Statements

 

This press release may contain forward-looking statements that are subject to the safe harbors created under the Securities Act of 1933 and the Securities Exchange Act of 1934. Such forward looking statements include, but are not limited to, potential long-term benefits of the Indonesian government’s anti-illegal fishing measures to fully licensed fishing companies such as Pingtan, potential opportunities afforded Pingtan due to its size and capitalization over smaller enterprises that cannot leverage these resources, Pingtan’s ability to provide high quality products to its customers in China during the fourth quarter of 2015 and Pingtan’s ability to control corporate overhead and fixed corporate costs during the moratorium by the Indonesian government. Readers are cautioned that actual results could differ materially from those expressed in any forward-looking statements. In addition, please refer to the risk factors contained in Pingtan's SEC filings available at www.sec.gov, including Pingtan's most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Definitive Proxy Statement. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date on which they are made. Pingtan undertakes no obligation to update or revise any forward-looking statements for any reason.

 

 

Pingtan Marine Enterprise, Ltd.
November 9, 2015
Page 5

 

CONTACT:

Roy Yu

Chief Financial Officer

Pingtan Marine Enterprise Ltd.

Tel: +86 591 87271753

ryu@ptmarine.net

 

INVESTOR RELATIONS:

The Equity Group Inc.

Katherine Yao, Senior Associate

Tel: +86 10 6587 6435

kyao@equityny.com

 

 

Pingtan Marine Enterprise, Ltd.
November 9, 2015
Page 6

 

PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)

(IN U.S. DOLLARS)

 

  For the Three Months Ended
September 30,
   For the Nine Months Ended
September 30,
 
  2015   2014   2015   2014 
                
REVENUE  $2,740,981   $54,416,793   $46,727,808   $176,909,177 
                    
COST OF REVENUE   9,248,696    38,932,806    40,562,651    118,388,729 
                    
GROSS (LOSS) PROFIT   (6,507,715)   15,483,987    6,165,157    58,520,448 
                    
OPERATING EXPENSES:                    
     Selling   312,574    675,442    1,309,859    1,914,815 
     General and administrative   733,923    828,530    2,547,225    2,407,370 
                    
        Total Operating Expenses   1,046,497    1,503,972    3,857,084    4,322,185 
                    
(LOSS) INCOME FROM OPERATIONS   (7,554,212)   13,980,015    2,308,073    54,198,263 
                    
OTHER INCOME (EXPENSE):                    
     Interest income   10,875    4,845    98,894    14,016 
     Interest expense   (817,321)   (679,484)   (2,856,516)   (3,088,685)
     Foreign currency transaction (loss) gain   (774,934)   171,058    (714,620)   (286,576)
     Grant income   31,691,166    716,121    31,691,166    1,240,542 
     Investment (loss) income from cost method investment   (3,264)   2,399    417,434    348,382 
     Loss on equity method investment   (34,187)   -    (37,545)   - 
     Loss on fixed assets disposal   -    -    (1,544,277)   - 
     Other income (expense)   1    (424)   (212)   (335)
                    
        Total Other Income (Expense), net   30,072,336    214,515    27,054,324    (1,772,656)
                    
INCOME BEFORE INCOME TAXES   22,518,124    14,194,530    29,362,397    52,425,607 
                    
INCOME TAXES   -    -    -    - 
                    
NET INCOME  $22,518,124   $14,194,530   $29,362,397   $52,425,607 
                    
LESS: NET INCOME ATTRIBUTABLE TO THE NON-CONTROLLING INTEREST   (1,834,497)   -    (1,925,443)   - 
                    
NET INCOME ATTRIBUTABLE TO OWNERS OF THE COMPANY  $20,683,627   $14,194,530   $27,436,954   $52,425,607 
                    
COMPREHENSIVE INCOME:                    
   NET INCOME   22,518,124    14,194,530    29,362,397    52,425,607 
   OTHER COMPREHENSIVE (LOSS) INCOME                    
       Unrealized foreign currency translation (loss) gain   (6,948,652)   302,391    (5,848,277)   (690,948)
   COMPREHENSIVE INCOME  $15,569,472   $14,496,921   $23,514,120   $51,734,659 
   LESS: COMPREHENSIVE INCOME ATTRIBUTABLE TO THE NON-CONTROLLING INTEREST   (1,277,639)   -    (1,600,169)   - 
   COMPREHENSIVE INCOME ATTRIBUTABLE TO OWNERS OF THE COMPANY  $14,291,833   $14,496,921   $21,913,951   $51,734,659 
                    
NET INCOME PER ORDINARY SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY                    
    Basic and diluted  $0.26   $0.18   $0.35   $0.66 
                    
WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING:                    
    Basic and diluted   79,055,053    79,055,053    79,055,053    79,055,053 

 

 

Pingtan Marine Enterprise, Ltd.
November 9, 2015
Page 7

 

PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(IN U.S. DOLLARS)

 

   September 30, 2015   December 31, 2014 
   (Unaudited)     
ASSETS        
CURRENT ASSETS:          
    Cash  $21,092,310   $12,752,272 
    Accounts receivable, net of allowance for doubtful accounts   10,221,351    49,999,712 
    Inventories   5,442,615    12,123,405 
    Prepaid expenses   38,647,378    32,913 
    Prepaid expenses - related parties   14,522,315    7,319,975 
    Deferred expenses - related parties   46,083    1,029,114 
    Other receivables   79,374    22,656,232 
    Other receivables - related parties   8,163,049    - 
           
        Total Current Assets   98,214,475    105,913,623 
           
OTHER ASSETS:          
    Cost method investment   3,305,109    3,421,031 
    Equity method investment   54,733,971    15,964,812 
    Prepayment for long-term assets   14,649,387    13,750,102 
    Property, plant and equipment, net   95,061,020    109,980,617 
           
        Total Other Assets   167,749,487    143,116,562 
           
        Total Assets  $265,963,962   $249,030,185 
           
LIABILITIES AND SHAREHOLDERS' EQUITY          
           
CURRENT LIABILITIES:          
    Accounts payable  $1,111,274   $1,181,977 
    Accounts payable - related parties   5,057,984    2,601,314 
    Advances from customers   -    164,724 
    Short-term bank loans   28,571,024    30,353,890 
    Long-term bank loans - current portion   12,150,209    18,868,616 
    Accrued liabilities and other payables   9,263,009    5,602,307 
    Due to related parties   23,354    2,373,352 
           
        Total Current Liabilities   56,176,854    61,146,180 
           
OTHER LIABILITIES:          
    Long-term bank loans - non-current portion   29,572,854    38,625,071 
           
        Total Liabilities   85,749,708    99,771,251 
           
SHAREHOLDERS' EQUITY:          
    Equity attributable to owners of the company:          
    Ordinary shares ($0.001 par value; 225,000,000 shares authorized; 79,055,053          
        shares issued and outstanding at September 30, 2015 and December 31, 2014)   79,055    79,055 
    Additional paid-in capital   111,011,856    117,525,377 
    Retained earnings   47,171,563    21,315,710 
    Statutory reserve   6,412,892    6,412,892 
    Accumulated other comprehensive (loss) income   (1,768,587)   3,925,900 
    Total equity attributable to owners of the company   162,906,779    149,258,934 
    Non-controlling interest   17,307,475    - 
           
        Total Shareholders' Equity   180,214,254    149,258,934 
           
        Total Liabilities and Shareholders' Equity  $265,963,962   $249,030,185 

 

 

Pingtan Marine Enterprise, Ltd.
November 9, 2015
Page 8

 

PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(IN U.S. DOLLARS)

 

   For the Nine Months Ended September 30, 
   2015   2014 
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net income  $29,362,397   $52,425,607 
Adjustments to reconcile net income from operations to net cash provided by operating activities:          
Depreciation   4,360,186    4,022,232 
Decrease in allowance for doubtful accounts   (87,535)   - 
Loss on equity method investment   37,545    - 
Loss on disposal of fixed assets   1,544,277    - 
Changes in operating assets and liabilities:          
Accounts receivable   39,365,984    (32,622,490)
Inventories   6,466,615    2,918,687 
Prepayments made for inventories purchased   (35,352,076)     
Prepaid expenses - other   (4,474,501)   3,956,449 
Prepaid expenses - related parties   (7,684,028)   (3,111,736)
Deferred expenses - related parties   977,895    (2,239,090)
Advances to suppliers   -    (258,408)
Other receivables   88,115    (156,943)
Other receivables - related parties   4,384,313    - 
Accounts payable   (31,612)   (1,839,459)
Accounts payable - related parties   2,624,623    (6,849,973)
Advances from customers   (164,133)   (130,484)
Accrued liabilities and other payables   3,970,928    241,133 
Due to related parties   -    23,348 
NET CASH PROVIDED BY OPERATING ACTIVITIES   45,388,993    16,378,873 
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Refunds from commercial retail space prepayments   22,407,331    - 
Prepayments made for commercial retail space   -    (22,461,657)
Purchase of property, plant and equipment   (16,295)   (1,268,934)
Proceeds from government grants for fishing vessels construction   -    1,195,275 
Payments for equity method investment   (40,580,463)   (15,946,109)
NET CASH USED IN INVESTING ACTIVITIES   (18,189,427)   (38,481,425)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Proceeds from short-term bank loans   15,472,361    44,891,439 
Repayments of short-term bank loans   (16,250,334)   (17,724,568)
Proceeds from long-term bank loans   -    3,742,454 
Repayments of long-term bank loans   (14,255,917)   (5,682,835)
Advances from related parties   2,550,000    650,000 
Payments made for dividend   (1,581,101)   - 
Capital contribution from non-controlling interest   64,928,741    - 
Payments made to related parties in connection with the termination of VIE   (13,472,714)   - 
Acquisition of fishing vessels from relate parties under common control   (56,206,080)   - 
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES   (18,815,044)   25,876,490 
           
EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS   (44,484)   (132,878)
           
NET INCREASE IN CASH AND CASH EQUIVALENTS   8,340,038    3,641,060 
           
CASH AND CASH EQUIVALENTS - beginning of period   12,752,272    8,156,599 
           
CASH AND CASH EQUIVALENTS - end of period  $21,092,310   $11,797,659 
           
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:          
Cash paid for:          
Interest  $2,858,417   $4,065,601 
Income taxes  $-   $- 
           
NON-CASH INVESTING AND FINANCING ACTIVITIES:          
Acquisition of property and equipment by decreasing prepayment for long-term assets  $-   $27,099,444 
Decrease in cost of property and equipment by proceeds from government grants  $-   $1,195,275 
Decrease in cost of property and equipment by recognition of deferred grant income  $-   $512,261