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Form 8-K Pingtan Marine Enterpris For: Nov 09


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Exhibit 99.1

 

 

 

pingtan
marine enterprise Reports FINANCIAL RESULTS

for
the THIRD quarter and NINE months ended SEPTEMBER 30, 2020

 

Company to Hold
Conference Call on Tuesday, November 10, 2020, at 8:30 AM ET

 

FUZHOU, China,
November 9, 2020 – Pingtan Marine Enterprise Ltd. (Nasdaq: PME), (“Pingtan” or the “Company”),

today announced its unaudited financial results for the third quarter and nine months ended September 30, 2020.

 

Third Quarter
2020 Financial Highlights

 

Revenue was $15.4 million.

 

Gross profit was $1.7million.

 

Net income was $0.8 million.

 

Net income attributable to owners of the Company was $0.7
million, or $0.01 per basic and diluted share.

 

Management
Comments

 

Mr. Xinrong Zhuo, Chairman and CEO of the
Company, commented: “Although the overall economic environment in China continued to be impacted by the COVID-19 pandemic
during the third quarter, we were really pleased with our performance for the quarter with our revenue increasing by 38.2% and
our sales volumes increasing by 69.3%, compared to the same period of the prior year. Recently, we have made a series of positive
announcements about the operations of Pingtan, including 10 rebuilt large scaled squid jigging vessels sailing to sea for operations
and 21 fishing vessels returning to fishing grounds after routine repair and maintenance. In addition, we announced that the Pingtan
International Marine Industry and Logistic Park, our strategic investment project that is a key step in our long-term growth strategy
and an important link to start our direct-to-retail business, is expected to commence operation by the end of this year. We believe
that these recent business developments will have a positive impact on our results for the fourth quarter and lay a good foundation
for further development in 2021.”

 

Factors Affecting Pingtan’s Results
of Operations

 

COVID-19 pandemic

 

The effect of the COVID-19 pandemic
is still evolving and continues to cause major economic disruptions to businesses and markets worldwide as the virus spreads or
resurgence in certain jurisdictions. As the first country to be engulfed in the pandemic, China introduced strict emergency quarantine
measures and travel restrictions to contain the pandemic, which had a big impact on China’s economy in the first half of 2020.
Although it was generally believed that the pandemic was under control in the third quarter, the PRC government continued to take
precautionary quarantine measures to avoid additional outbreaks of the pandemic, which had an adverse impact on the economic activities
in the PRC.  

 

 

November 9, 2020

 

The continued precautionary quarantine
measures taken by the PRC government and travel restrictions implemented by some countries have had a significant impact on many
sectors across China, which has also adversely affected the Company’s operations. To reduce the impact on its production and operation,
the Company has taken and may continue to take actions in response as necessary, including but not limited to, continued shifts
in work system, paid leave and reducing the number of foreign crews on its vessels. The Company’s management is focused on
mitigating the effects of COVID-19 on its business operations while protecting the health of its employees. The Company will continue
to actively monitor the situation and may take further actions that alter its business operations as may be required by local authorities
or that the Company determines in the best interests of its employees, customers, partners, suppliers and other stakeholders.

 

Some of Pingtan’s customers are fish processing
plants that export processed fish products to foreign countries. These customers reduced or postponed their purchases from the
Company in the initial stage of the pandemic, but since the middle of the second quarter, they have adjusted their business strategies
in relation to exportation or domestic sale. Because of the reduction or postponement, the Company has taken and may continue to
take necessary de-stocking measures, such as lowering the selling prices of catches and extending the term of payment for certain
accounts receivable, which may adversely affect the financial conditions and working capital of the Company.

 

The situation created by the COVID-19 pandemic
has led to an unprecedented economic uncertainty globally. However, the extent of the impact on the Company’s financial condition
and results of operations is still highly uncertain and will depend on future developments, such as the ultimate duration and scope
of the outbreak, its impact on its customers and exporters, how quickly normal economic conditions, operations, and the demand
for its products can resume and whether the pandemic leads to recessionary conditions in China.

  

While the Company anticipates that its
results of operations will continue to be impacted by the COVID-19 pandemic in the fourth quarter of 2020, it is unable to reasonably
estimate the extent of the impact on its full-year results of operations, its liquidity or its overall financial position.

 

 

November 9, 2020

 

The Company’s Fishing Fleet

 

As of September 30, 2020, of the Company’s
143 vessels, 79 were located in the international waters, 12 were located in the Bay of Bengal in India, 13 were located in the
PRC, 37 were located in the Arafura Sea in Indonesia, 1 transport vessel was in the modification and rebuilding stage and 1 new
krill fishing vessel was in the building stage.

 

Third Quarter 2020 Selected Financial Highlights

 

($ in millions, except for shares and per share data)   Three Months ended
September 30,
 
    2020     2019  
    (Unaudited)     (Unaudited)  
Revenue   $      15.4     $      11.2  
Cost of Revenue   $ 13.8     $ 7.6  
Gross Profit   $ 1.7     $ 3.6  
Gross Margin     10.7 %     32.1 %
Net income attributable to owners of the Company   $ 0.7     $ 4.0  
Basic and Diluted Weighted Average Shares Outstanding     79.1       79.1  
EPS (in $)   $ 0.01     $ 0.05  

 

Balance Sheet Highlights

 

($ in millions, except for book value per share data)   9/30/2020     12/31/2019  
    (Unaudited)     (Audited)  
Cash and Cash Equivalents   $ 3.4     $ 10.1  
Total Current Assets   $ 115.7     $ 64.3  
Total Assets   $ 517.7     $ 404.1  
Total Current Liabilities   $ 111.3     $ 88.8  
Total Long-term Debt, net of current portion   $ 239.6     $ 160.2  
Total Liabilities   $ 350.9     $ 249.1  
Shareholders’ Equity   $ 166.8     $ 155.1  
Total Liabilities and Shareholders’ Equity   $ 517.7     $ 404.1  
Book Value Per Share (in $)   $ 2.10     $ 1.96  

 

Consolidated Financial and Operating Review

 

Revenue

 

Revenue for the three months ended September
30, 2020 was $15.4 million, an increase of $4.3 million, or 38.2%, as compared to the same period in 2019. Sales volumes in the
three months ended September 30, 2020 increased by 69.3% to 14,697,306 kg from 8,681,467 kg in the three months ended September
30, 2019. Average unit sale price decreased by 18.6% in the three months ended September 30, 2020 as compared to the three months
ended September 30, 2019.

 

For the nine months ended September 30,
2020, the Company’s revenue increased to $56.2million from $55.1 million for the nine months ended September 30, 2019. Sales
volumes in the nine months ended September 30, 2020 increased by 52.2% to 49,991,024 kg from 32,852,810 kg in the nine months ended
September 30, 2019. Average unit sale price decreased by 33.3% in the nine months ended September 30, 2020 as compared to the nine
months ended September 30, 2019.

 

For the three and nine months ended September
30, 2020, the increase in revenue as compared to the same period in 2019 was primarily attributable to changes in different sales
mix and the increase of sales volumes as a result of more vessels in operation. For the three and nine months ended September 30,
2020, the decrease in the average unit sale price as compared to the same period in 2019 was primarily attributable to the fish
species with the highest sales volume being sold at lower selling prices. Indian Ocean squid was our major product for the three
and nine months ended September 30, 2020.An increase in the number
of fishing vessels catching Indian Ocean squid in the Indian Ocean fishing grounds led to an increased supply, which negatively
affected the average unit sale price. Lower unit sales prices are expected to continue for the remainder of year 2020 due to such
increased supply as well as restrained demand from the impact of the COVID-19 pandemic.

 

 

November 9, 2020

 

Gross Margin

 

Gross profit for the three months ended
September 30, 2020 was $1.7 million, representing a change of $1.9 million, or 53.7%, as compared to gross profit of $3.6 million
for the three months ended September 30, 2019. The Company’s gross margin was 10.7% for the three months ended September
30, 2020, as compared to 32.1% in the prior-year period.

 

Gross profit for the nine months ended
September 30, 2020 was $9.6 million, representing a change of $7.4 million, or 43.4%, as compared to gross profit of $16.9 million
for the nine months ended September 30, 2019. For the nine months ended September 30, 2020, gross margin decreased to 17.0% from
30.7% for the nine months ended September 30, 2019.

 

The decrease in gross margin for the three
and nine months ended September 30, 2020 as compared to the three and nine months ended September 30, 2019 was primarily due to
the decrease in average unit sale price by 18.6% and 33.3%, respectively, as well as the increase in cost due to increased production
activities. A key species of our sales mix was Indian Ocean squid whose market price was on the low side, and the market price
of frozen seafood was affected due to the COVID-19 pandemic, which together led to a decrease in gross margin.

 

Selling Expenses

 

Selling expenses were $1.3 million for
the three months ended September 30, 2020, compared to $0.7 million for the prior-year period. The increase was primarily due to
the increase in insurance, storage fees and customs clearance charge as a result of an increase in the number of vessels being
insured, the number of deliveries from ports to the warehouse in China and the increase in satellite communication fees for fishing
vessels.

 

For the nine months ended September 30,
2020, selling expenses were $3.3 million, compared to $1.9 million for the same period of 2019. The increase was primarily due
to the reasons described above.

 

General & Administrative Expenses

 

For the three months ended September 30,
2020, general and administrative expenses were $1.6 million, compared to $1.5 million in the prior-year period, an increase
of $0.4 million or 2.7%.

 

For the nine months ended September 30,
2020, general and administrative expenses were $5.2 million, compared to $6.0 million in the same period of 2019, a decrease of
$0.8 million or 14.2%.

 

 

November 9, 2020

 

Net Income

 

Net income for the three months ended September
30, 2020 was $0.8 million, compared to net income of $4.4 million in the same period of 2019, a decrease of 82.3%.

 

For the nine months ended September 30,
2020, net income was $7.5 million, a slight increase of 0.8% as compared to the prior year period.

 

Net Income Attributable to Owners of
the Company

 

For the three months ended September 30,
2020, net income attributable to owners of the Company was $0.7 million, or $0.01 per basic and diluted share, compared to
net income attributable to owners of the Company of $4.0 million, or $0.05 per basic and diluted share, in the same period
of 2019.

 

For the nine months ended September 30,
2020, net income attributable to owners of the Company was $6.8 million, or $0.09 per basic and diluted share, compared to
net income attributable to owners of the Company of $6.7million, or $0.09 per basic and diluted share, in the same period
of 2019.

 

Conference Call Details

 

Pingtan will discuss the financial
results for the third quarter of 2020 during a conference call to be held on Tuesday, November 10, 2020, at 8:30 a.m. ET.

The dial-in numbers are:

Live Participant
Dial-in (Toll Free):        +1 (877)407-0310

Live Participant
Dial-in (International): +1 (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: https://78449.themediaframe.com/dataconf/productusers/pme/mediaframe/41973/indexl.html.
This webcast will be archived and accessible through the Company’s website for approximately 30 days following the call.

 

About Pingtan

 

Pingtan is a fishing company engaging in
ocean fishing through its subsidiary, Fujian Provincial Pingtan County Ocean Fishing Group Co., Ltd., or Pingtan Fishing.

 

 

November 9, 2020

 

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,
as amended. Words such as “estimate,” “project,” “forecast,” “plan,” “believe,”
“may,” “expect,” “anticipate,” “intend,” “planned,” “potential,”
“can,” “expectation” and similar expressions, or the negative of those expressions, may identify forward-looking
statements. Although forward-looking statements reflect the good faith judgment of our management, such statements can only be
based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and
uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by
the forward-looking statements. Risks include anticipated growth and growth strategies; need for additional capital and the availability
of financing; locating or re-locating vessels, in foreign waters and related license requirements; our ability to successfully
manage relationships with customers, distributors and other important relationships; actions taken by government regulators, such
as the Indonesian moratorium; technological changes; competition; demand for our products and services; the deterioration of general
economic conditions, whether internationally, nationally or in the local markets in which we operate; the impact of the current
coronavirus (COVID-19) pandemic on the Company’s financial condition, business operations and liquidity; the impact of COVID-19
on our customers and distributors; legislative or regulatory changes that may adversely affect our business; operational, mechanical,
climatic or other unanticipated issues that adversely affect the production capacity of the Company’s fishing vessels and their
ability to generate expected annual revenue and net income; and other risk factors contained in Pingtan’s SEC filings available
at www.sec.gov, including Pingtan’s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. 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, except as required by law.

 

CONTACT:

 

LiMing Yung (Michael)

Chief Financial Officer

Pingtan Marine Enterprise Ltd.

Tel: +86 591 87271753

michaelyung@ptmarine.net

 

Maggie Li
Investor Relations Manager
Pingtan Marine Enterprise Ltd.
Tel: +86 591 8727 1753
mli@ptmarine.net

 

INVESTOR RELATIONS

PureRock Communications Limited

PTmarine@pure-rock.com

 

 

November 9, 2020

 

PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME (LOSS)

(IN U.S. DOLLARS)

 

    For the Three Months Ended
September 30,
    For the Nine Months Ended
September 30,
 
    2020     2019     2020     2019  
                         
REVENUE   $ 15,448,083     $ 11,179,946     $ 56,218,216     $ 55,067,249  
                                 
COST OF REVENUE     13,787,521       7,594,714       46,641,884       38,134,552  
                                 
GROSS PROFIT     1,660,562       3,585,232       9,576,332       16,932,697  
                                 
OPERATING EXPENSES:                                
Selling     1,333,927       650,786       3,282,097       1,895,991  
General and administrative     809,988       628,672       2,875,463       3,113,870  
General and administrative – depreciation     773,812       913,986       2,274,579       2,885,203  
Subsidy     (4,440,731 )     (5,288,586 )     (12,778,819 )     (5,288,586 )
Impairment loss           70,896             2,546,338  
(Gain) loss on fixed assets disposal           (1,777 )           164,375  
                                 
Total Operating Expenses     (1,523,004 )     (3,026,023 )     (4,346,680 )     5,317,191  
                                 
INCOME FROM OPERATIONS     3,183,566       6,611,255       13,923,012       11,615,506  
                                 
OTHER INCOME (EXPENSE):                                
Interest income     973,265       6,131       3,335,877       26,420  
Interest expense     (4,036,524 )     (776,569 )     (9,871,949 )     (2,903,816 )
Foreign currency transaction gain (loss)     747,678       (340,012 )     402,987       (389,643 )
Gain (loss) from cost method investment     764       (6,766 )     133,517       340,885  
Loss on equity method investment     (82,586 )     (96,129 )     (351,129 )     (477,972 )
Other expense     (4,468 )     (987,517 )     (34,924 )     (735,359 )
                                 
Total Other Expense, net     (2,401,871 )     (2,200,862 )     (6,385,621 )     (4,139,485 )
                                 
INCOME BEFORE INCOME TAXES     781,695       4,410,393       7,537,391       7,476,021  
                                 
INCOME TAXES                        
                                 
NET INCOME   $ 781,695     $ 4,410,393     $ 7,537,391     $ 7,476,021  
                                 
LESS: NET INCOME ATTRIBUTABLE TO THE NON-CONTROLLING INTEREST     92,511       377,859       759,527       751,682  
                                 
NET INCOME ATTRIBUTABLE TO OWNERS OF THE COMPANY   $ 689,184     $ 4,032,534     $ 6,777,864     $ 6,724,339  
                                 
COMPREHENSIVE INCOME (LOSS):                                
NET INCOME     781,695       4,410,393       7,537,391       7,476,021  
OTHER COMPREHENSIVE INCOME (LOSS)                                
Unrealized foreign currency translation gain (loss)     5,700,836       (4,674,763 )     3,846,221       (4,842,207 )
COMPREHENSIVE INCOME (LOSS)   $ 6,482,531     $ (264,370 )   $ 11,383,612     $ 2,633,814  
LESS: COMPREHENSIVE INCOME ATTRIBUTABLE TO THE NON-CONTROLLING INTEREST     556,889       220,968       1,075,369       345,945  
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO OWNERS OF THE COMPANY   $ 5,925,642     $ (485,338 )   $ 10,308,243     $ 2,287,869  
                                 
NET INCOME PER ORDINARY SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY                                
Basic and diluted   $ 0.01     $ 0.05     $ 0.09     $ 0.09  
                                 
WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING:                                
Basic and diluted     79,071,363       79,055,053       79,060,490       79,055,053  

 

 

November 9, 2020

 

PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

(IN U.S. DOLLARS)

 

    September 30,     December 31,  
    2020     2019  
    (Unaudited)        
ASSETS            
CURRENT ASSETS:            
Cash and cash equivalents   $ 3,397,018     $ 10,092,205  
Restricted cash     14,237,932        
Accounts receivable, net of allowance for doubtful accounts     14,577,205       9,273,446  
Due from related parties     15,223,427       12,477,777  
Inventories, net of reserve for inventories     65,476,730       30,527,752  
Prepaid expenses     1,821,706       1,354,129  
Other receivables     965,499       613,384  
                 
Total Current Assets     115,699,517       64,338,693  
                 
OTHER ASSETS:                
Cost method investment     3,083,655       3,010,235  
Equity method investment     28,244,032       27,923,464  
Prepayment for long-term assets     71,380,217       49,040,338  
Right-of-use asset     159,529       438,254  
Property, plant and equipment, net     299,169,068       259,377,729  
                 
Total Other Assets     402,036,501       339,790,020  
                 
Total Assets   $ 517,736,018     $ 404,128,713  
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY                
                 
CURRENT LIABILITIES:                
Accounts payable   $ 3,380,426     $ 7,951,766  
Accounts payable – related parties     1,973,428       1,707,217  
Short-term bank loans     50,219,527       10,034,116  
Long-term bank loans – current portion     42,897,018       57,122,789  
Accrued liabilities and other payables     12,665,762       11,428,018  
Lease liability- current liability     128,618       375,922  
Due to related parties     18,354       168,328  
                 
Total Current Liabilities     111,283,133       88,788,156  
                 
OTHER LIABILITIES:                
Lease liability           32,203  
Long-term bank loans – non-current portion     239,627,776       160,230,498  
                 
Total Liabilities     350,910,909       249,050,857  
                 
COMMITMENTS AND CONTINGENCIES                
                 
SHAREHOLDERS’ EQUITY:                
Equity attributable to owners of the company:                
Ordinary shares ($0.001 par value; 125,000,000 shares authorized; 79,302,428 and 79,055,053 shares issued and outstanding at September 30, 2020 and December 31, 2019)     79,302       79,055  
Additional paid-in capital     82,045,993       81,682,599  
Retained earnings     61,064,318       54,286,454  
Statutory reserve     15,748,751       15,748,751  
Accumulated other comprehensive loss     (12,550,529 )     (16,080,908 )
Total equity attributable to owners of the company     146,387,835       135,715,951  
Non-controlling interest     20,437,274       19,361,905  
                 
Total Shareholders’ Equity     166,825,109       155,077,856  
                 
Total Liabilities and Shareholders’ Equity   $ 517,736,018     $ 404,128,713  

 

 

November 9, 2020

 

PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN U.S. DOLLARS)

 

    For the Nine Months Ended
September 30,
 
    2020     2019  
             
CASH FLOWS FROM OPERATING ACTIVITIES:            
Net income   $ 7,537,391     $ 7,476,021  
Adjustments to reconcile net income from operations to net cash provided by operating activities:                
Depreciation     10,616,935       7,699,244  
Increase in allowance for doubtful accounts     245,498       13,247  
Increase (decrease) in reserve for inventories     1,711,666       (370,959 )
Loss on equity method investment     351,129       477,972  
Common stock issuance for professional fee     25,974        
Loss on disposal of fixed assets           164,375  
Impairment loss of fishing vessels           2,533,091  
Changes in operating assets and liabilities:                
Accounts receivable     (5,191,192 )     4,170,551  
Inventories     (35,027,650 )     (15,713,023 )
Prepaid expenses     (432,033 )     (332,644 )
Other receivables     (328,396 )     114,731  
Other receivables – related party           (358,553 )
Accounts payable     (4,641,514 )     (3,965,580 )
Accounts payable – related parties     218,739       (2,919,909 )
Accrued liabilities and other payables     1,553,556       1,552,427  
Advance from customers     (619,235 )     839,137  
Accrued liabilities and other payables – related party           (1,290 )
Due to related parties     140,210       (9,432,979 )
                 
NET CASH USED IN OPERATING ACTIVITIES     (23,838,922 )     (8,054,141 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES:                
Purchase of property, plant and equipment     (93,357,444 )     (105,567,685 )
Proceeds from government subsidies for fishing vessels construction     28,962,913       33,128,784  
                 
NET CASH USED IN INVESTING ACTIVITIES     (64,394,531 )     (72,438,901 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:                
Proceeds from short-term bank loans     81,811,291        
Repayments of short-term bank loans     (42,908,020 )      
Proceeds from long-term bank loans     104,640,414       163,551,743  
Repayments of long-term bank loans     (46,325,253 )     (11,963,642 )
Repayments to related parties           (10,111,087 )
Loans issued to related parties     (160,070,480 )     (121,838,509 )
Repayments of loans issued to related parties     157,692,576       80,170,667  
                 
NET CASH PROVIDED BY FINANCING ACTIVITIES     94,840,528       99,809,172  
                 
EFFECT OF EXCHANGE RATE ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH     935,670       (862,543 )
                 
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH     7,542,745       18,453,587  
                 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH – beginning of period     10,092,205       1,966,855  
                 
CASH, CASH EQUIVALENTS AND RESTRICTED – end of period   $ 17,634,950     $ 20,420,442  
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                
Cash paid for:                
Interest   $ 11,012,593     $ 10,382,198  
Income taxes   $     $  
                 
RECONCILIATION TO AMOUNTS ON CONSOLIDATED BALANCE SHEETS:                
Cash and cash equivalents     3,397,018       20,420,442  
Restricted cash     14,237,932        
TOTAL CASH, CASH EQUIVALENTS AND RESTRICTED CASH   $ 17,634,950     $ 20,420,442  
NON-CASH INVESTING AND FINANCING ACTIVITIES:                
Acquisition of property and equipment by decreasing prepayment for long-term assets   $ (20,594,592 )   $  
Property and equipment acquired on credit as payable   $              22,429,610  

 

 

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