China Keli Electric Co. Ltd. (TSX VENTURE: ZKL) ("Keli" or the
"Company") today announced the financial and operating results for
the three and nine months ended January 31, 2011.
For the three months ended January 31, 2011, reported total
revenue was $2,991,162, an increase of approx. 17% over the same
period in 2010 ($2,559,660), with gross profit $1,277,338, an
increase of approx. 36% ($940,893 for the same period in 2010).
For the nine months ended January 31, 2011, reported total
revenue was $10,097,820, an increase of 8.1% over the same period
in 2010 ($9,339,975), with gross profit $4,481,640, an increase of
19.4% ($3,753,091 for the same period in 2010); excluding the
negative impact of foreign exchange, increases in both revenues and
gross profit would have been greater. The Company incurred
operating expenses for the nine months ended January 31, 2011 of
$4,522,048 ($1,865,629 for the same period in 2010). Among the
operating expenses, there were several significant one-time
charges, including stock-based compensation expenses, some expenses
related to the improvement of the quality of management and listing
related expenses. Also in this quarter, in order to increase
revenues in the coming year, the Company launched a series of
marketing campaigns in the third quarter, with a total expenditure
of approximately $550,000, to promote its products, especially the
new Smart Grid and Resistor products, to new markets and
industries. As a result, the Company made a net loss of $336,526
for the nine months ended January 31, 2011 (net income of
$1,562,107 for the same period in 2010) and the basic and diluted
earnings per share ("EPS") were -$0.004 ($0.025 for the same period
in 2010). Reduced net income and EPS were due primarily to all the
one-time charges for such items as stock based compensation,
listing related expenses, marketing campaigns, etc and the negative
effect of foreign exchange rates. After accounting for an
unrealized foreign exchange translation gain of $206,293, the
Company ended the first nine months of FY2011 with a total
comprehensive loss of $130,233, compared with a total comprehensive
income of $618,754 for the first nine months of FY2010. The
Company's unrealized foreign exchange gains (losses) on translation
of the Group's functional currency to reporting currency are
subject to fluctuations in the exchange rate between the RMB and
the Canadian dollar in each reporting period.
"With all the holiday periods, Q3 is traditional slow, and we
used the time to gear up for Q4 and FY2012," said Lou Meng Cheong,
Keli's CEO, "We are very confident that our investment of time,
money and energy in Q3 will result in significantly improved
results in Q4 and beyond. In the meantime, we still managed to post
significant revenue and gross profit gains."
As of January 31, 2011, the Company had total cash and cash
equivalents of $1,077,191 compared with $678,682 as of April 30,
2010. Accounts receivable were $5,156,620 as at January 31, 2011,
an increase of $658,511 compared with $4,498,109 as at April 30,
2010. The Company's working capital was $8,609,539 as at January
31, 2011, increased from $4,640,028 as at April 30, 2010.
Note: For clearer understanding of these results, the following
M&A history should be noted:
The Company completed its qualifying transaction with Creative
Grace Limited ("Creative Grace") resulting in a merger of the two
companies on May 5, 2010. The financial and operating results for
the nine months ended January 31, 2011 include the results of
operations of the Company and Creative Grace. The financial and
operating results for the nine months ended January 31, 2010
include the results of operations of Creative Grace only. The
functional currency of the Company and its subsidiaries is Chinese
Yuan (also known as "Renminbi" or "RMB"). The financial and
operating results of the relevant periods have been translated into
Canadian dollars. Depending on the magnitude of changes in foreign
currency exchange rates, the impact on the financial and operating
results may or may not be material.
Full financial results of the Company for the nine months ended
January 31, 2011 are available on SEDAR at www.sedar.com.
About China Keli Eletric Company Ltd.
China Keli Electric Company Ltd. specializes in the
manufacturing of electrical components and equipment, including
pre-assembled mini substations, electrical controllers, pressurized
and vacuumed switchgears and circuit breakers in the
manufacturing.
For further Company information please access our website:
www.zkl.cc
This press release contains forward-looking statements based on
current expectations. These forward-looking statements entail
various risks and uncertainties that could cause actual results to
differ materially from those reflected in these forward-looking
statements. Risks and uncertainties about Keli's business are more
fully discussed in the Company's disclosure materials filed with
the securities regulatory authorities in Canada. All amounts are
stated in Canadian dollars unless noted otherwise.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this press release.
Contacts: China Keli Electric Co. Ltd. Michael Raymont EVP
Finance and Corporate Development (403) 389-3488 mraymont@zkl.cc
Brisco Capital Partners Scott Koyich President (403) 262-9888
skoyich@briscocapital.com
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