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Pingtan Marine Enterprise Reports Financial Results for the First Quarter Ended March 31, 2016

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Company to Hold Conference Call on Wednesday, May 11, 2016, at 8:30 AM ET

FUZHOU, China, May 10, 2016 /PRNewswire/ -- 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 the first quarter ended March 31, 2016.

Factors Affecting Pingtan's Results of Operation

As previously disclosed in Form 10-K and 10-Q the Company filed in 2015, 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.

Among the Company's 135 fishing vessels, 117 of these vessels operate in the Arafura Sea of Indonesia. To cooperate and comply with the Indonesian government's fishing license check procedures, in January 2015, the Company reduced its operations - since February 2015, Pingtan has 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 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.

As a result, the Company's sales for the three months ended March 31, 2016 decreased significantly as compared to the three months ended March 31, 2015.

During the three months ended March 31, 2016, the Company purchased fish from a third party to satisfy customer demands. The resale of purchased fish to its customers 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 months ended March 31, 2016.

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

  • As a result of the above, revenue from fishing business was $4.1 million compared to $28.7 million.
  • Gross loss was $3.3 million, compared to gross profit of $11.5 million, and gross margin was (80.5%) compared to 39.9%, due to reduced scale of operations resulted by the moratorium described above.
  • Net loss was $5.5 million, or $(0.06) per basic and diluted share, compared to net income of $8.4 million, or $0.10 per basic and diluted share. The decrease was primarily due to the same reasons described above.

Management Commentary

Mr. Xinrong Zhuo, Chairman and CEO of the Company, commented, "While the first quarter of 2016 was challenging due to the moratorium by the Indonesian government, our team successfully met customer demands and needs by purchasing fish for resale from a third party supplier. These resale activities of purchased fish generated a positive gross margin on such sales and helped us to continue to maintain positive relationships with key customers. We believe it is only a matter of time before fully licensed fishing companies like Pingtan are allowed to resume fishing in Indonesian waters. We continue seeking to diversify our fishing territories and we are actively negotiating with neighboring countries to expand into new fishing regions."

First Quarter 2016 Selected Financial Highlights 


($ in millions, except per share data)

Three Months ended March 31,


2016


2015


(Unaudited)


(Unaudited)

Revenue

$4.1


$28.7

Cost of Revenue

$7.4


$17.3

Gross (Loss) Profit

$(3.3)


$11.5

Gross Margin

(80.5%)


39.9%

Net (Loss) Income

$(5.5)


$8.4

Basic and Diluted Weighted Average Ordinary Shares Outstanding

79.1


79.1

Net (Loss) Income Per Ordinary Share Attributable to Owners of The Company 

$(0.06)


$0.10





BBalance Sheet Highlights 


($ in millions, except per share data)

3/31/2016


12/31/2015


(Unaudited)


(Audited)

Cash and Cash Equivalents

$2.6


$11.4

Total Current Assets

62.8


91.9

Total Assets

222.3


231.9

Total Current Liabilities

38.2


42.5

Total Long-term Debt, net of current portion

22.7


22.5

Total Liabilities

60.9


65.0

Shareholders' Equity

161.4


166.9

Total Liabilities and Shareholders' Equity

222.3


231.9

Book Value Per Share (in $)

$2.04


$2.11

Consolidated Financial and Operating Review

Revenue

Revenue from the fishing business, sales of frozen fish and other marine catches for the three months ended March 31, 2016, were $4.1 million compared to $28.7 million for the same period in 2015. The decrease was primarily due to the Company ceasing its operations in Indonesia waters since February 2015 resulting from the moratorium described above.

Gross Margin

The Company's gross margin was (80.5%) for the three months ended March 31, 2016, compared to 39.9% in the prior-year period. The significant decrease was primarily due to the reduced scale of operations resulting in lower revenue, which is reflected in the allocation of fixed costs, mainly consisting of depreciation, to cost of revenue; partially offset by the positive gross margin from our fish resale activities.

Selling Expenses

Selling expenses were $0.3 million, for the three months ended March 31, 2016, compared to $0.7 million, in the prior-year period.

General & Administrative Expenses

For the three months ended March 31, 2016, general and administrative expenses were $1.5 million, compared to $1.4 million, in the prior-year period.

Net (Loss) Income

Net loss for the three months ended March 31, 2016, was $5.5 million, or $(0.06) per basic and diluted share, compared to net income of $8.4 million, or $0.10 per basic and diluted share, in the same period of 2015. The decrease was primarily due to the reasons described above.

Conference Call Details

Pingtan also announced that it will discuss financial results in a conference call on Wednesday, May 11, 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/q1-2016. 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, including statements that the Company's expectation is that the MMAF will implement new fishing policies, that the Company seeks to expand into new fishing territories to help reduce its dependency on a single region, diversify its revenue stream and fulfill the needs of its customers. 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:
The Equity Group Inc.
Adam Prior, Senior Vice President
Tel: (212) 836-9606
aprior@equityny.com

In China
Katherine Yao, Senior Associate
Tel: +86 10 6587 6435
kyao@equityny.com

 

PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)
(IN U.S. DOLLARS)





For the Three Months Ended
March 31,





2016


2015















REVENUE

$

4,115,098

$

28,732,824








COST OF REVENUE


7,427,810


17,266,289








GROSS (LOSS) PROFIT


(3,312,712)


11,466,535








OPERATING EXPENSES:






Selling


343,020


705,520


General and administrative


1,467,471


1,444,214










Total Operating Expenses


1,810,491


2,149,734








(LOSS) INCOME FROM OPERATIONS


(5,123,203)


9,316,801








OTHER INCOME (EXPENSE):






Interest income


2,367


19,232


Interest expense


(522,265)


(953,644)


Foreign currency transaction gain


20,797


37,381


Grant income


154,447


-


Loss on equity method investment


(10,316)


(3,345)


Other expense


(264)


(163)










Total Other Income (Expense), net


(355,234)


(900,539)








(LOSS) INCOME BEFORE INCOME TAXES


(5,478,437)


8,416,262








INCOME TAXES


413


-








NET (LOSS) INCOME

$

(5,478,850)

$

8,416,262








LESS: NET (LOSS) INCOME ATTRIBUTABLE TO THE NON-CONTROLLING INTEREST


(378,471)


193,015








NET (LOSS) INCOME ATTRIBUTABLE TO OWNERS OF THE COMPANY

$

(5,100,379)

$

8,223,247








COMPREHENSIVE (LOSS) INCOME:






NET (LOSS) INCOME


(5,478,850)


8,416,262


OTHER COMPREHENSIVE INCOME







Unrealized foreign currency translation gain


879,423


646,756


COMPREHENSIVE (LOSS) INCOME

$

(4,599,427)

$

9,063,018


LESS: COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO THE NON-CONTROLLING INTEREST

(309,448)


387,343


COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO OWNERS OF THE COMPANY

$

(4,289,979)

$

8,675,675








NET (LOSS) INCOME PER ORDINARY SHARE ATTRIBUTABLE TO OWNERS OF THE COMPNAY






Basic and diluted

$

(0.06)

$

0.10








WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING:






Basic and diluted


79,055,053


79,055,053

 

 

PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(IN U.S. DOLLARS)



March 31, 2016


December 31, 2015

ASSETS


(Unaudited)








CURRENT ASSETS:





   Cash

$

2,583,497

$

11,448,684

   Restricted cash


2,208,471


1,577,642

   Accounts receivable, net of allowance for doubtful accounts


8,921,998


12,575,042

   Inventories, net of reserve for inventories


3,789,465


2,336,167

   Advances to suppliers


36,059,841


35,994,146

   Prepaid expenses


546


1,818

   Prepaid expenses - related parties


2,783,783


4,640,166

   Receivable from transferring equity method investment shares


-


15,406,659

   Other receivables


78,088


78,051

   Other receivables - related parties


6,412,506


7,887,527






         Total Current Assets


62,838,195


91,945,902






OTHER ASSETS:





   Cost method investment


3,256,874


3,235,398

   Equity method investment


30,678,214


30,486,314

   Prepayment for long-term assets


21,425,085


11,654,645

   Property, plant and equipment, net


104,139,615


94,555,114






         Total Other Assets


159,499,788


139,931,471






         Total Assets

$

222,337,983

$

231,877,373






LIABILITIES AND SHAREHOLDERS' EQUITY










CURRENT LIABILITIES:





   Accounts payable

$

946,414

$

978,353

   Accounts payable - related parties


1,076,728


408,631

   Short-term bank loans


18,002,118


21,971,438

   Long-term bank loans - current portion


12,763,846


12,679,680

   Accrued liabilities and other payables


4,563,261


5,044,049

   Dividend payable


790,551


-

   Due to related parties


24,644


1,384,644






         Total Current Liabilities


38,167,562


42,466,795






OTHER LIABILITIES:





   Long-term bank loans - non-current portion


22,720,576


22,570,755






         Total Liabilities


60,888,138


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 March 31, 2016 and December 31, 2015)


79,055


79,055

   Additional paid-in capital


111,008,085


111,008,085

   Retained earnings


28,427,110


34,318,040

   Statutory reserve


9,391,827


9,391,827

   Accumulated other comprehensive loss


(3,515,951)


(4,326,351)

   Total equity attributable to owners of the company


145,390,126


150,470,656

   Non-controlling interest


16,059,719


16,369,167






     Total Shareholders' Equity


161,449,845


166,839,823






     Total Liabilities and Shareholders' Equity

$

222,337,983

$

231,877,373

 

 

PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN U.S. DOLLARS)






For the Three Months Ended
March 31,






2016


2015









CASH FLOWS FROM OPERATING ACTIVITIES:






Net (loss) income

$

(5,478,850)

$

8,416,262


Adjustments to reconcile net (loss) income from operations to net cash







provided by operating activities:







Depreciation


1,682,985


1,528,756



Increase in allowance for doubtful accounts


277,982


160,765



Increase in reserve for inventories


1,550,335


-



Loss on equity method investment


10,316


3,345


Changes in operating assets and liabilities:







Accounts receivable


3,406,211


19,795,236



Inventories


(2,967,993)


7,266,034



Advances to suppliers


170,802


-



Prepaid expenses


1,266


13,289



Prepaid expenses - related parties


1,860,757


(10,140,274)



Deferred expenses - related parties


-


472,387



Other receivables


(17)


164,836



Other receivables - related parties


(97)


-



Accounts payable


(37,895)


122,267



Accounts payable - related parties


656,067


(2,307,645)



Advances from customers


-


(155,489)



Accrued liabilities and other payables


(507,011)


792,197



Due to related parties


-


3









NET CASH PROVIDED BY OPERATING ACTIVITIES


624,858


26,131,969









CASH FLOWS FROM INVESTING ACTIVITIES:







Refunds from commercial retail space prepayments


-


22,497,898



Purchase of property, plant and equipment


(113,479)


(16,361)



Prepayments made for long-term assets


(20,108,663)


-



Proceeds from transferring equity method investment share


15,291,759


-



Payments for equity method investment


-


(40,744,483)









NET CASH USED IN INVESTING ACTIVITIES


(4,930,383)


(18,262,946)









CASH FLOWS FROM FINANCING ACTIVITIES:







Proceeds from short-term bank loans


3,156,505


7,153,729



Repayments of short-term bank loans


(7,214,044)


(6,158,048)



Repayments of long-term bank loans


-


(6,506,894)



Increase in restricted cash


(611,670)


-



Advances from related parties


200,000


1,100,000



Payments made for dividend


-


(790,551)



Capital contribution from non-controlling interest


-


65,191,173



Payments made to related parties in connection with the termination of VIE


-


(13,527,168)









NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES


(4,469,209)


46,462,241









EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS


(90,453)


296,407









NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS


(8,865,187)


54,627,671









CASH AND CASH EQUIVALENTS - beginning of period


11,448,684


12,752,272









CASH AND CASH EQUIVALENTS - end of period

$

2,583,497

$

67,379,943









SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:






Cash paid for:








Interest

$

556,138

$

939,951




Income taxes

$

-

$

-









NON-CASH INVESTING AND FINANCING ACTIVITIES:






Acquisition of property and equipment by decreasing prepayment for long-term assets

$

10,551,314

$

-


Offset other receivables - related parties against due to related parties

$

1,560,000

$

-

 

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SOURCE Pingtan Marine Enterprise Ltd.