Yalian Steel Corporation announced its financial and operating results for the three and six months ended March 31 2012. The Company or Yalian refers to Yalian Steel Corporation and its subsidiary, Yangzhou Yalian Steel Pipe Co Ltd which operates primarily within the People Republic of China. Yalian reports its results in Canadian dollars as reported here unless otherwise stated.
For the three months ended March 31 2012, Yalian reported revenues of USD 2,078,000; cost of sales of USD 2,685,000; operating expenses of USD 624,000 and finance expenses of USD 382,000. Net loss for the three months ended March 31 2012 was USD 1,614,000, or USD 0.02 per share.
For the six months ended March 31 2012, Yalian reported revenues of USD 4,351,000; cost of sales of USD 5,849,000; operating expenses of USD 1,213,000 and finance expenses (net of income) of USD 652,000. Net loss for the six months ended March 31 2012 was USD 3,363,000, or USD 0.03 per share.
As at March 31 2012, cash and cash equivalents were USD 3,279,000, short term deposit was USD 3,576,000 and the Company had a working capital deficiency of USD 14,201,000. Total assets were USD 88,717,000, short-term and long-term loans, net of financing costs, were USD 38,903,000 and total shareholders' equity was USD 39,375,000.
As at March 31, 2012, the Company has short-term loans and current portion of long-term loans due to mature within the next twelve months in the amount of USD 29,410,000. The Company is currently making arrangements with banks to renew loans or obtain new short term loans to repay these obligations. Management is confident of securing additional loans or other financings which are required in order to fund its working capital and refinancing needs, both in the short and long term. However, there can be no assurance that adequate loans or other financings can be secured.
Operational and Business Highlights
During the quarter ended March 31 2012, the Company manufactured and delivered 17 sales orders compared to 15 for the three-month period ended March 31 2011. In terms of volume, total sales orders manufactured and delivered amounted to 3,079 tonnes for the three months ended March 31 2012 as compared to 9,243 tonnes for the three months ended March 31 2011.
The Company continues to engage with senior officers from three major domestic oil & gas companies in China, China National Petroleum Corporation China National Offshore Oil Corporation（"CNOOC"）and Sino-China Petrochemical Corporation to gain access to and to be eventually included in their key purchasing networks, as well as to build strategic alliances with them which will foster the Company's long-term growth. Now the Company is a qualified supplier of CNPC and has obtained steel pipe orders for the projects undertaken by CNOOC and SINOPEC.
The Company is working to develop and expand its business in global markets by actively participating in a number of major international trade shows and engaging with various distributors. Currently, the Company's products are sold to customers in North America, Latin America, Middle East, and Europe etc.
The Company substantially completed the construction of its new anti-corrosion line in March 2012.Total cost of the project is approximately CNY 55 million. This new coating line is integrated within its industrial chain and expected to be an essential part of the Company's business development plans. The Company is the first pipe manufacturer in China equipped with semi-automatic control system in the coating line, which increases safety and precise control of the production process.
With the new anti-corrosion line the Company can provide external and internal 3PE, 3PP, FBE/DFBE coating service with annual capacity of 2,500,000 square meters for the external coating line and 2,000,000 square meters for internal the coating line. The anti-corrosion feature plays an important role in extending the longevity of the steel pipe, saving energy and also decreasing environmental accidents that could be caused by leakage of fluids carried by the pipe line.
Subsequent to the quarter end, the Company obtained an CNY 20,000,000 line of credit from the Bank of Nanjing. The credit facility is valid for six months from March 31 2012 to October 30, 2012. As of the end of May 2012, total of CNY 6,000,000 demand loans were drawn and total of CNY 12,000,000 was earmarked for the issuance of bankers' acceptance notes against the credit line. In connection with the issuance of the banker's acceptance notes, CNY 6,000,000 cash deposits have been placed with the Bank of Nanjing as collateral. In addition, total of USD 3,172,000 short term loans were repaid subsequent to the quarter end.
Source - Yalian Steel
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