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Pingtan Marine Enterprise Reports Financial Results for the Third Quarter and Nine Months Ended September 30, 2016

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FUZHOU, China, Nov. 8, 2016 /PRNewswire/ --

  • Company to Hold Conference Call on Wednesday, November 9, 2016, at 8:30 AM ET

Pingtan Marine Enterprise Ltd. (Nasdaq: PME) ("Pingtan" or the "Company"), a global fishing company based in the People's Republic of China (PRC), announced today its unaudited financial results for the third quarter and nine months ended September 30, 2016.

The Company's recent notable events are as follows:

  • October 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 November 15, 2016 to shareholders of record on October 31, 2016.  This marks the eighth consecutive quarterly dividend paid by the Company, which it intends to continue paying on a quarterly basis.
  • The Company previously announced in August 2016, that 13 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 Timor-Leste. In November, these 13 fishing vessels have completed its modification process to change their fishing method in order to meet the local requirements, and are on the way to their operating destination in the sea area of Timor-Leste.

Management Comments

Mr. Xinrong Zhuo, Chairman and CEO of the Company, commented, "In the third quarter 2016, we continued to reach out to different countries and regions seeking to expand our fishing territories. We are pleased to announce that 13 of our fishing vessels are on the way to their fishing destination in the sea area of Timor-Leste, and we expect to put these vessels in full operation the upcoming weeks. Meanwhile, we are also in the process of negotiating with delegates from several countries with fertile fish resources, and we have already looked into opportunities outside of Asia-Pacific. We are committed to providing a variety of natural seafood products around the world to Chinese consumers."

Factors Affecting Pingtan's Results of Operation – Indonesia Moratorium

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 nine-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.

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.

Among the company's 135 fishing vessels, 13 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 the Arafura Sea in Indonesia.

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

  • As a result of the above, revenue was $1.2 million compared to $2.7 million.
  • Gross loss was $12.3 million compared to of $6.5 million.
  • Net loss was $13.9 million, or $0.16 per basic and diluted share, compared to net income of $22.5 million, or $0.26 per basic and diluted share. 

Third Quarter 2016 Selected Financial Highlights

($ in millions, except per share data)

Three Months ended September 30,


2016

2015


(Unaudited)

(Unaudited)

Revenue

$1.2

$2.7

Cost of Revenue

$13.5

$9.2

Gross loss

$(12.3)

$(6.5)

Gross Margin

(1,053.3%)

(237.4%)

Net (loss) income

$(13.9)

$22.5

Basic and Diluted Weighted Average Shares

79.1

79.1

Net (loss) income per ordinary share (in $)

$(0.16)

$0.26

Balance Sheet Highlights

($ in millions, except per share data)



9/30/2016

(Unaudited)

12/31/2015

(Audited)

Cash and Cash Equivalents



$0.6

$11.4

Total Current Assets



48.5

91.9

Total Assets



225.3

231.9

Total Current Liabilities



56.7

42.5

Total Long-term Debt, net of current portion



31.8

22.6

Total Liabilities



88.5

65.1

Shareholders' Equity



136.7

166.8

Total Liabilities and Shareholders' Equity



225.3

231.9

Book Value Per Share (in $)



$1.73

$2.11

Consolidated Financial and Operating Review

Revenues

Revenues from the fishing business and sales of frozen fish and other marine catches, for the three months ended September 30, 2016, were $1.2 million compared to $2.7 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, as well as decrease in average unit sale price compared to prior year period.

For the nine months ended September 30, 2016, the Company's revenues were $7.4 million compared to $46.7 million in the first nine months of 2015. The decrease was primarily due to decrease in sales volume due to the moratorium described above.

Gross Margin

As a result of the moratorium described above, the Company's gross margin was negative for the three and nine months ended September 30, 2016.

Selling Expenses

Selling expenses were $0.09 million for the three months ended September 30, 2016, compared to $0.3 million in the prior-year period.

For the nine months ended September 30, 2016, selling expenses were $0.5 million, compared to $1.3 million in the same period of 2015.

General & Administrative Expenses

For the three months ended September 30, 2016 and 2015, general and administrative expenses were $0.7 million.

For the nine months ended September 30, 2016, general and administrative expenses were $3.0 million compared to $2.5 million in the same period of 2015.

Net (Loss) Income

For the three months ended September 30, 2016, net loss was $13.9 million, or $(0.16) per basic and diluted share, compared to net income of $22.5 million, or $0.26 per basic and diluted share, in the same period of 2015. The decrease was primarily due to the factors described above.

For the nine months ended September 30, 2016, the Company's net loss was $23.9 million, or $(0.28) per basic and diluted share, compared to net income of $29.4 million, or $0.35 per basic and diluted share, in the same period of 2015.

Conference Call Details

Pingtan also announced that it will discuss financial results in a conference call on Wednesday, November 9, 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/q3-2016. 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 thatit intends to continue paying on a quarterly basis and that it expects to put 13 modified vessels in full operation the upcoming weeks.. 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. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME (UNAUDITED) 

(IN U.S. DOLLARS)

 





 For the Three Months Ended


For the Nine Months Ended





 September 30,


September 30,





2016


2015


2016


2015























REVENUE

$

1,168,946

$

2,740,981

$

7,388,395

$

46,727,808












COST OF REVENUE


13,481,775


9,248,696


26,054,703


40,562,651












GROSS (LOSS) PROFIT


(12,312,829)


(6,507,715)


(18,666,308)


6,165,157












OPERATING EXPENSES:










Selling


93,843


312,574


508,062


1,309,859


General and administrative


660,700


733,923


3,038,984


2,547,225














Total Operating Expenses


754,543


1,046,497


3,547,046


3,857,084












(LOSS) INCOME FROM OPERATIONS


(13,067,372)


(7,554,212)


(22,213,354)


2,308,073












OTHER INCOME (EXPENSE):










Interest income


782


10,875


4,051


98,894


Interest expense


(738,548)


(817,321)


(1,656,672)


(2,856,516)


Foreign currency transaction loss


(86,414)


(774,934)


(542,694)


(714,620)


Grant income


-


31,691,166


153,514


31,691,166


Gain (loss) from cost method investment


-


(3,264)


378,997


417,434


Loss on equity method investment


(6,968)


(34,187)


(25,095)


(37,545)


Loss on fixed assets disposal


-


-


-


(1,544,277)


Other (expense) income


(59)


1


(476)


(212)














Total Other (Expense) Income, net


(831,207)


30,072,336


(1,688,375)


27,054,324












(LOSS) INCOME BEFORE INCOME TAXES


(13,898,579)


22,518,124


(23,901,729)


29,362,397












INCOME TAXES


-


-


993


-












NET (LOSS) INCOME

$

(13,898,579)

$

22,518,124

$

(23,902,722)

$

29,362,397












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


(1,075,177)


1,834,497


(1,750,492)


1,925,443












NET (LOSS) INCOME ATTRIBUTABLE TO OWNERS OF THE COMPANY

$

(12,823,402)

$

20,683,627

$

(22,152,230)

$

27,436,954












COMPREHENSIVE (LOSS) INCOME:










NET (LOSS) INCOME


(13,898,579)


22,518,124


(23,902,722)


29,362,397


OTHER COMPREHENSIVE LOSS











Unrealized foreign currency translation loss


(459,166)


(6,948,652)


(3,831,852)


(5,848,277)


COMPREHENSIVE (LOSS) INCOME  

$

(14,357,745)

$

15,569,472

$

(27,734,574)

$

23,514,120


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


(1,111,153)


1,277,639


(2,054,095)


1,600,169


COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO OWNERS OF THE COMPANY

$

(13,246,592)

$

14,291,833

$

(25,680,479)

$

21,913,951












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










Basic and diluted

$

(0.16)

$

0.26

$

(0.28)

$

0.35












WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING:










Basic and diluted


79,055,053


79,055,053


79,055,053


79,055,053

 

PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(IN U.S. DOLLARS)



September 30,


December 31,



2016


2015

ASSETS


(Unaudited)








CURRENT ASSETS:





    Cash

$

567,931

$

11,448,684

    Restricted cash


4,039,344


1,577,642

    Accounts receivable, net of allowance for doubtful accounts


3,140,043


12,575,042

    Inventories, net of reserve for inventories


2,287,067


2,336,167

    Advances to suppliers


34,735,933


35,994,146

    Prepaid expenses


6,297


1,818

    Prepaid expenses - related parties


1,128,172


4,640,166

    Receivable from transferring equity method investment shares


-


15,406,659

    Other receivables


171,752


78,051

    Other receivables - related parties


2,429,988


7,887,527






        Total Current Assets


48,506,527


91,945,902






OTHER ASSETS:





    Cost method investment


3,148,709


3,235,398

    Equity method investment


29,644,707


30,486,314

    Prepayment for long-term assets


16,987,556


11,654,645

    Property, plant and equipment, net


126,968,222


94,555,114






        Total Other Assets


176,749,194


139,931,471






        Total Assets

$

225,255,721

$

231,877,373






LIABILITIES AND SHAREHOLDERS' EQUITY










CURRENT LIABILITIES:





    Accounts payable

$

911,613

$

978,353

    Accounts payable - related parties


105,024


408,631

    Short-term bank loans


26,148,156


21,971,438

    Long-term bank loans - current portion


15,098,809


12,679,680

    Accrued liabilities and other payables


5,826,736


5,044,049

    Due to related parties


8,614,831


1,384,644






        Total Current Liabilities


56,705,169


42,466,795






OTHER LIABILITIES:





    Long-term bank loans - non-current portion


31,816,955


22,570,755






        Total Liabilities


88,522,124


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 September 30, 2016 and December 31, 2015)


79,055


79,055

    Additional paid-in capital


111,008,085


111,008,085

    Retained earnings


9,794,158


34,318,040

    Statutory reserve


9,391,827


9,391,827

    Accumulated other comprehensive loss


(7,854,600)


(4,326,351)

    Total equity attributable to owners of the company


122,418,525


150,470,656

    Non-controlling interest


14,315,072


16,369,167






        Total Shareholders' Equity


136,733,597


166,839,823






        Total Liabilities and Shareholders' Equity

$

225,255,721

$

231,877,373


 

PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(IN U.S. DOLLARS)






For the Nine Months Ended






September 30,






2016


2015









CASH FLOWS FROM OPERATING ACTIVITIES:






Net (loss) income

$

(23,902,722)

$

29,362,397


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







provided by operating activities:







Depreciation


4,769,455


4,360,186



Decrease in allowance for doubtful accounts


(112,562)


(87,535)



Increase in reserve for inventories


1,506,320


-



Loss on equity method investment


25,095


37,545



Loss on disposal of fixed assets


-


1,544,277


Changes in operating assets and liabilities:







Accounts receivable


9,335,357


39,365,984



Inventories


(1,520,001)


6,466,615



Advances to suppliers


297,813


(35,352,076)



Prepaid expenses


(4,590)


(4,474,501)



Prepaid expenses - related parties


3,434,109


(7,684,028)



Deferred expenses - related parties


-


977,895



Other receivables


(95,068)


88,115



Other receivables - related parties


-


4,384,313



Accounts payable


(41,081)


(31,612)



Accounts payable - related parties


(296,671)


2,624,623



Advances from customers


-


(164,133)



Accrued liabilities and other payables


930,168


3,970,928



Accrued liabilities and other payables - related party


8,709,266


-









NET CASH PROVIDED BY OPERATING ACTIVITIES


3,034,888


45,388,993









CASH FLOWS FROM INVESTING ACTIVITIES:







Refunds from commercial retail space prepayments


-


22,407,331



Purchase of property, plant and equipment


(959,034)


(16,295)



Prepayments made for long-term assets


(44,329,098)


-



Proceeds from transferring equity method investment share


15,199,416


-



Payments for equity method investment


-


(40,580,463)









NET CASH USED IN INVESTING ACTIVITIES


(30,088,716)


(18,189,427)









 

 

PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(IN U.S. DOLLARS)



For the Nine Months Ended September 30,



2016


2015

CASH FLOWS FROM FINANCING ACTIVITIES:







Proceeds from short-term bank loans


18,999,502


15,472,361



Repayments of short-term bank loans


(14,168,748)


(16,250,334)



Proceeds from long-term bank loans


18,999,270


-



Repayments of long-term bank loans


(6,216,561)


(14,255,917)



Increase in restricted cash


(2,538,303)


-



Advances from related parties


3,753,620


2,550,000



Payments made for dividend


(2,371,652)


(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 related parties under common control


-


(56,206,080)









NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES


16,457,128


(18,815,044)









EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS


(284,053)


(44,484)









NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS


(10,880,753)


8,340,038









CASH AND CASH EQUIVALENTS - beginning of period


11,448,684


12,752,272









CASH AND CASH EQUIVALENTS - end of period

$

567,931

$

21,092,310









SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:






Cash paid for:








Interest

$

1,976,789

$

2,858,417




Income taxes

$

993

$

-









NON-CASH INVESTING AND FINANCING ACTIVITIES:






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

$

38,606,518

$

-


Offset other receivables - related parties against due to related parties

$

5,114,910

$

-

 

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SOURCE Pingtan Marine Enterprise Ltd.