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China Keli Electric Fiscal Year 2011 Financials Show 27.2% Year-over-Year Growth in Revenues and 27.8% Growth in Gross Profit

^{Published on 2011-08-26 15:36:20 - Market Wire}
 

VANCOUVER, Aug. 26, 2011 /CNW/ - China Keli Electric Co., Ltd. (TSX-V: ZKL) ("Keli" or the "Company") today announced the financial and operating results for the year ended April 30, 2011.

For the year ended April 30, 2011 ("FY2011"), reported total revenue was $15,278,059, an increase of 27.2% over FY2010 ($12,013,703), with gross profit $6,257,683, an increase of 27.8% over FY2010 ($4,895,347). Excluding the negative impact of foreign exchange, increases in both revenues and gross profit would have been greater. The Company incurred operating expenses for FY2011 of $6,738,616 ($2,455,289 for FY2010). Among the operating expenses, there were several significant charges, including non-cash stock-based compensation expenses, some expenses related to the improvement of the quality of management, and listing related expenses. The Company recognized stock-based compensation expenses of $1,145,686 for FY2011 (nil for FY2010), among which the one-off stock-based compensation expense was $917,670; the total expense for stock base compensation is a non-cash item.  In addition, in order to increase revenues in the coming year, the Company invested significant funds in FY2011 to launch a series of marketing campaigns and develop several strategic partnerships to promote its products, especially the new Smart Grid and Resistor products, to new markets and industries. As a result, the Company incurred a net loss of $765,014 for FY2011 (net income of $1,991,357 for FY2010) and the basic and diluted earnings per share ("EPS") were -$0.010 ($0.032 for FY2010). 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, and the negative effect of foreign exchange rates. Excluding stock-based compensation expenses, the Company would record a net income of $380,672. After accounting for an unrealized foreign exchange translation loss of $323,787, the Company ended FY2011 with a total comprehensive loss of $1,088,801, compared with a total comprehensive income of $624,772 for FY2010. The Company's unrealized foreign exchange losses on translation of the Group's functional currency to its 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 traditionally 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.  With the one time charges and non-cash items taken care of in this reporting period, we look forward to returning in FY2012 to a healthy positive net income, which we have historically delivered in prior years".

As of April 30, 2011, the Company had total cash and cash equivalents of $1,717,377 compared with $678,682 as of April 30, 2010. Accounts receivable were $8,648,771 as at April 30, 2011, an increase of $4,150,662 compared with $4,498,109 as at April 30, 2010. The Company's working capital was $8,537,972 as at April 30, 2011, increased from $4,640,028 as at April 30, 2010.

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 year ended April 30, 2011 include the results of operations of the Company and Creative Grace. The financial and operating results for the year ended April 30, 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 audited financial results of the Company for the fiscal year ended April, 2011 are available on SEDAR at [ www.sedar.com ].

About China Keli Electric 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.

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.

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.