Exhibit 99.1

 

 

 

pingtan marine enterprise Reports FINANCIAL RESULTS

for the second quarter and six months ended June 30, 2016

 

Company to Hold Conference Call on Tuesday, August 9, 2016, at 8:30 AM ET

 

FUZHOU, China, August 8, 2016 – 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 second quarter and six months ended June 30, 2016.

 

The Company's recent notable events are as follows:

July 20, 2016: 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 August 15, 2016 to shareholders of record on July 31, 2016.  This marks the seventh consecutive quarterly dividend paid by the Company, which it intends to continue paying on a quarterly basis.
  
August 4, 2016: The Company announced that thirteen fishing vessels controlled by the Company have obtained fishing licenses from the Ministry of Agriculture and Fisheries of Democratic Republic of Timor-Leste and are expected to operate in the sea area of Democratic Republic of Timor-Leste.
  
During the three months ended June 30, 2016, the Company continued to resell fish purchased from third parties to satisfy customer demands. The resale generated a positive gross margin on such sales. The positive gross margin in these reselling activities partially offset the decrease in the Company’s overall gross margin for the three and six months ended June 30, 2016.

 

Management Comments

 

Mr. Xinrong Zhuo, Chairman and CEO of the Company, commented, “In the first half of 2016, our management team was dedicated in expansion of our fishing territories and region. Recently, we were pleased to announce that we will operate thirteen of our fishing vessels in the sea area of Democratic Republic of Timor-Lest. We have seen demand in China for natural seafood products continue to increase; we believe this is driven in part by the impact of the Indonesia moratorium. We will continue to explore new areas in which to deploy our vessels and solidify our position as a leading fishing company in China.”

 

Factors Affecting Pingtan’s Results of Operation – Indonesia Moratorium

 

Among the company’s 135 fishing vessels, 13 of these vessels have obtained fishing licenses from the Ministry of Agriculture and Fisheries of Democratic Republic of Timor-Leste and will operate in the sea area of Democratic Republic of Timor-Leste; 12 vessels are operating in the Bay of Bengal in India; 6 vessels are licensed to operate in Western and Central Pacific Ocean of the international waters and the remaining vessels are licensed to operate in Arafura sea of Indonesia.

 

As previously disclosed in Form 10-K and 10-Q the Company filed in 2015 and 2016, in early December 2014 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 fight illegal fishing activities. As a result, all licensed fishing vessels operating in Indonesian waters were informed by the Indonesian government to operate within strict guidelines and subsequently to cease operation, in order to avoid potential enforcement actions by the Indonesian Navy such as boat seizures.

 

 

 

 

Pingtan Marine Enterprise, Ltd. Page 2
August 8, 2016  

 

To cooperate and comply with the Indonesian government’s fishing license check procedures; the Company reduced its operations in January 2015. Since February 2015, Pingtan has ceased operations of the vessels in Indonesian waters. Since the Company derives a majority of its revenue from this area, this ban caused a significant drop in production.

 

In November 2015, the Indonesian government announced that the moratorium had concluded. The Company’s expectation is that the MMAF will implement new fishing policies and resume the license renewal process, although this has not yet occurred. In the interim, the Company’s financial results will continue to be materially adversely affected by this moratorium.

 

Second Quarter 2016 Financial Highlights (all results are compared to prior year period)

 

As a result of the above, revenue was $2.1 million compared to $15.3 million.
  
Gross loss was $3.0 million compared to gross profit of $1.2 million, and gross margin was (144.5%) compared to 7.9%, due to the moratorium described above.
  
Net loss was $4.5 million, or $0.05 per basic and diluted share, compared to net loss of $1.6 million, or $0.02 per basic and diluted share.

 

Second Quarter 2016 Selected Financial Highlights

 

($ in millions, except per share data)  Three Months ended June 30, 
   2016   2015 
   (Unaudited)   (Unaudited) 
Revenue  $2.1   $15.2 
Cost of Revenue  $5.1   $14.0 
Gross (loss) Profit  $(3.0)  $1.2 
Gross Margin   (144.5%)   7.9%
Net Loss  $(4.5)  $(1.6)
Basic and Diluted Weighted Average Shares (((Outstanding   79.1    79.1 
EPS (in $)  $(0.05)  $(0.02)

 

Balance Sheet Highlights

 

($ in millions, except per share data)   6/30/2016      12/31/2015  
   (Unaudited)   (Audited) 
Cash and Cash Equivalents  $2.6   $11.4 
Total Current Assets   57.3    91.9 
Total Assets   229.5    231.9 
Total Current Liabilities   45.6    42.5 
Total Long-term Debt, net of current portion   32.0    22.5 
Total Liabilities   77.6    65.0 
Shareholders’ Equity   151.9    166.9 
Total Liabilities and Shareholders’ Equity   229.5    231.9 
Book Value Per Share (in $)  $1.92   $2.11 

 

 

 

 

Pingtan Marine Enterprise, Ltd. Page 3
August 8, 2016  

 

Consolidated Financial and Operating Review

 

Revenues  

Revenues from the fishing business, sales of frozen fish and other marine catches, for the three months ended June 30, 2016, were $2.1 million compared to $15.3 million for the same period in 2015. The decrease was primarily due to significant decrease in sales volumes, as the Company temporarily ceased its operations in the Indonesia waters since February 2015 due to the moratorium described above.

 

For the six months ended June 30, 2016, the Company’s revenues were $6.2 million compared to $44.0 million in the first half of 2015. The decrease was primarily due to decrease in sales volume due to the moratorium described above.

 

Gross Margin

The Company’s gross margin was (144.5%) for the three months ended June 30, 2016, compared to 7.9% 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 maintenance fees, to cost of revenue. The maintenance fees, representing ordinary repairs and maintenance, were performed to maintain vessels in operating condition in the periods.

 

For the six months ended June 30, 2016, gross margin decreased to (102.2%) from 28.8% in the same period of 2015, the decrease was primarily due to the same reasons described above.

 

Selling Expenses

Selling expenses were $0.07 million for the three months ended June 30, 2016, compared to $0.3 million in the prior-year period.

 

For the six months ended June 30, 2016, selling expenses were $0.4 million, compared to $1 million in the same period of 2015.

 

General & Administrative Expenses

For the three months ended June 30, 2016, general and administrative expenses were $0.9 million, compared to $0.4 million in the prior-year period.

 

For the six months ended June 30, 2016, general and administrative expenses were $2.4 million compared to $1.8 million in the same period of 2015.

 

Net Income/Loss

For the three months ended June 30, 2016, net loss was $4.5 million, or $0.05 per basic and diluted share, compared to net loss of $1.6 million, or $0.02 per basic and diluted share, in the same period of 2015. The decrease was primarily due to the factors described above.

 

For the six months ended June 30, 2016, the Company’s net loss was $10 million, or $0.12 per basic and diluted share, compared to net income of $6.8 million, or $0.09 per basic and diluted share, in the same period of 2015.

 

 

 

 

Pingtan Marine Enterprise, Ltd. Page 4
August 8, 2016  

 

Conference Call Details

 

Pingtan also announced that it will discuss financial results in a conference call on Tuesday, August 9, 2016, 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/q2-2016. This webcast will be archived and accessible through the Company’s website for approximately 30 days following the call.

 

About Pingtan

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, a provider of high quality seafood in the PRC, primarily engages in ocean fishing with many of its self-owned vessels operating within the Indian Exclusive Economic Zone and the Arafura Sea of Indonesia.

 

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, Pingtan’s expectation that its continued expansions in new fishing territories would support it to solidify its position as a leading fishing company in China. 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.

 

CONTACT:

Roy Yu

Chief Financial Officer

Pingtan Marine Enterprise Ltd.

Tel: +86 591 87271753

ryu@ptmarine.net

  

INVESTOR RELATIONS COUNSEL:

The Equity Group Inc.

Katherine Yao, Senior Associate

Tel: +86 10 6587 6435

kyao@equityny.com

 

 

 

 

Pingtan Marine Enterprise, Ltd. Page 5
August 8, 2016  

 

PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)

(IN U.S. DOLLARS)

 

   For the Three Months Ended
June 30,
   For the Six Months Ended
June 30,
 
   2016   2015   2016   2015 
                 
REVENUE  $2,104,351   $15,254,003   $6,219,449   $43,986,827 
                     
COST OF REVENUE   5,145,118    14,047,666    12,572,928    31,313,955 
                     
GROSS (LOSS) PROFIT   (3,040,767)   1,206,337    (6,353,479)   12,672,872 
                     
OPERATING EXPENSES:                    
Selling   71,199    291,765    414,219    997,285 
General and administrative   910,813    369,088    2,378,284    1,813,302 
                     
Total Operating Expenses   982,012    660,853    2,792,503    2,810,587 
                     
(LOSS) INCOME FROM OPERATIONS   (4,022,779)   545,484    (9,145,982)   9,862,285 
                     
OTHER INCOME (EXPENSE):                    
Interest income   902    68,787    3,269    88,019 
Interest expense   (395,859)   (1,085,551)   (918,124)   (2,039,195)
Foreign currency transaction (loss) gain   (477,077)   22,933    (456,280)   60,314 
Grant income   96    -    154,543    - 
Gain from cost method investment   381,537    420,698    381,537    420,698 
Loss on equity method investment   (7,811)   (13)   (18,127)   (3,358)
Loss on fixed assets disposal   -    (1,556,353)   -    (1,556,353)
Other expense   (153)   (50)   (417)   (213)
                     
Total Other Expense, net   (498,365)   (2,129,549)   (853,599)   (3,030,088)
                     
(LOSS) INCOME BEFORE INCOME TAXES   (4,521,144)   (1,584,065)   (9,999,581)   6,832,197 
                     
INCOME TAXES   587    -    1,000    - 
                     
NET (LOSS) INCOME  $(4,521,731)  $(1,584,065)  $(10,000,581)  $6,832,197 
                     
LESS: NET (LOSS) INCOME ATTRIBUTABLE TO THE NON-CONTROLLING INTEREST   (296,844)   (102,069)   (675,315)   90,946 
                     
NET (LOSS) INCOME ATTRIBUTABLE TO OWNERS OF THE COMPANY  $(4,224,887)  $(1,481,996)  $(9,325,266)  $6,741,251 
                     
COMPREHENSIVE (LOSS) INCOME:                    
NET (LOSS) INCOME   (4,521,731)   (1,584,065)   (10,000,581)   6,832,197 
OTHER COMPREHENSIVE (LOSS) INCOME                    
Unrealized foreign currency translation (loss) gain   (4,255,671)   465,695    (3,376,248)   1,112,451 
COMPREHENSIVE (LOSS) INCOME  $(8,777,402)  $(1,118,370)  $(13,376,829)  $7,944,648 
LESS: COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO THE NON-CONTROLLING INTEREST   (633,494)   (64,813)   (942,942)   322,530 
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO OWNERS OF THE COMPANY  $(8,143,908)  $(1,053,557)  $(12,433,887)  $7,622,118 
                     
NET (LOSS) INCOME PER ORDINARY SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY                    
Basic and diluted  $(0.05)  $(0.02)  $(0.12)  $0.09 
                     
WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING:                    
Basic and diluted   79,055,053    79,055,053    79,055,053    79,055,053 

 

 

 

 

Pingtan Marine Enterprise, Ltd. Page 6
August 8, 2016  

 

PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(IN U.S. DOLLARS)

 

   June 30,
2016
   December 31,
2015
 
   (Unaudited)     
ASSETS 
         
CURRENT ASSETS:        
Cash  $2,604,108   $11,448,684 
Restricted cash   3,046,633    1,577,642 
Accounts receivable, net of allowance for doubtful accounts   3,238,645    12,575,042 
Inventories, net of reserve for inventories   7,098,524    2,336,167 
Advances to suppliers   34,871,877    35,994,146 
Prepaid expenses   -    1,818 
Prepaid expenses - related parties   2,777,748    4,640,166 
Receivable from transferring equity method investment shares   -    15,406,659 
Other receivables   77,574    78,051 
Other receivables - related parties   3,578,693    7,887,527 
           
Total Current Assets   57,293,802    91,945,902 
           
OTHER ASSETS:          
Cost method investment   3,161,032    3,235,398 
Equity method investment   29,767,747    30,486,314 
Prepayment for long-term assets   18,536,714    11,654,645 
Property, plant and equipment, net   120,708,598    94,555,114 
           
Total Other Assets   172,174,091    139,931,471 
           
Total Assets  $229,467,893   $231,877,373 
           
LIABILITIES AND SHAREHOLDERS' EQUITY 
           
CURRENT LIABILITIES:          
Accounts payable  $941,883   $978,353 
Accounts payable - related parties   1,726,973    408,631 
Short-term bank loans   22,365,200    21,971,438 
Long-term bank loans - current portion   15,157,901    12,679,680 
Accrued liabilities and other payables   5,429,213    5,044,049 
Due to related parties   23,354    1,384,644 
           
Total Current Liabilities   45,644,524    42,466,795 
           
OTHER LIABILITIES:          
Long-term bank loans - non-current portion   31,941,476    22,570,755 
           
Total Liabilities   77,586,000    65,037,550 
           
COMMITMENTS AND CONTINGENCIES          
           
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 June 30, 2016 and December 31, 2015)   79,055    79,055 
Additional paid-in capital   111,008,085    111,008,085 
Retained earnings   23,411,673    34,318,040 
Statutory reserve   9,391,827    9,391,827 
Accumulated other comprehensive loss   (7,434,972)   (4,326,351)
Total equity attributable to owners of the company   136,455,668    150,470,656 
Non-controlling interest   15,426,225    16,369,167 
           
Total Shareholders' Equity   151,881,893    166,839,823 
           
Total Liabilities and Shareholders' Equity  $229,467,893   $231,877,373 

 

 

 

 

Pingtan Marine Enterprise, Ltd. Page 7
August 8, 2016  

 

PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(IN U.S. DOLLARS)

 

   For the Six Months Ended
June 30,
 
   2016   2015 
         
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net (loss) income  $(10,000,581)  $6,832,197 
Adjustments to reconcile net (loss) income from operations to net cash provided by operating activities:          
Depreciation   3,303,423    3,586,876 
Decrease in allowance for doubtful accounts   (150,594)   (165,539)
Increase in reserve for inventories   2,800,637    - 
Loss on equity method investment   18,127    3,358 
Loss on disposal of fixed assets   -    1,556,353 
Changes in operating assets and liabilities:          
Accounts receivable   9,347,461    36,408,536 
Inventories   (7,696,280)   10,070,950 
Advances to suppliers   299,809    - 
Prepaid expenses   1,806    (4,562,145)
Prepaid expenses - related parties   1,789,653    (7,371,070)
Deferred expenses - related parties   -    909,427 
Other receivables   414    165,038 
Accounts payable   (14,213)   24,810 
Accounts payable - related parties   1,344,800    (2,300,861)
Advances from customers   -    (165,417)
Accrued liabilities and other payables   509,165    1,814,292 
Due to related parties   -    2 
           
NET CASH PROVIDED BY OPERATING ACTIVITIES   1,553,627    46,806,807 
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Refunds from commercial retail space prepayments   -    22,582,549 
Purchase of property, plant and equipment   (417,877)   (16,422)
Prepayments made for long-term assets   (38,406,218)   - 
Proceeds from transferring equity method investment share   15,301,282    - 
Payments for equity method investment   -    (40,897,788)
           
NET CASH USED IN INVESTING ACTIVITIES   (23,522,813)   (18,331,661)

 

 

 

 

Pingtan Marine Enterprise, Ltd. Page 8
August 8, 2016  

 

PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(IN U.S. DOLLARS)

 

   For the Six Months Ended
June 30,
 
   2016   2015 
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
Proceeds from short-term bank loans   8,118,455    6,972,517 
Repayments of short-term bank loans   (7,204,822)   (6,077,698)
Proceeds from long-term bank loans   19,126,603    - 
Repayments of long-term bank loans   (6,258,225)   (12,731,481)
Increase in restricted cash   (1,530,128)   - 
Advances from related parties   2,653,620    2,000,000 
Payments made for dividend   (1,581,101)   (790,551)
Capital contribution from non-controlling interest   -    65,436,461 
Payments made to related parties in connection with the termination of VIE   -    (13,578,066)
Acquisition of fishing vessels from related parties under common control   -    (56,206,080)
           
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES   13,324,402    (14,974,898)
           
EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS   (199,792)   (41,522)
           
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS   (8,844,576)   13,458,726 
           
CASH AND CASH EQUIVALENTS - beginning of period   11,448,684    12,752,272 
           
CASH AND CASH EQUIVALENTS - end of period  $2,604,108   $26,210,998 
           
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:          
Cash paid for:          
Interest  $1,276,407   $2,126,455 
Income taxes  $413   $- 
           
NON-CASH INVESTING AND FINANCING ACTIVITIES:          
Acquisition of property and equipment by decreasing prepayment for long-term assets  $31,138,109   $- 
Offset other receivables - related parties against due to related parties  $4,014,910   $-