Antelope Enterprise Announces First Half 2024 Financial Results

NEW YORK, Sept. 30, 2024 (GLOBE NEWSWIRE) -- Antelope Enterprise Holdings Limited (NASDAQ Capital Market: AEHL) ("Antelope Enterprise", "AEHL" or the "Company"), is the majority owner of Hainan Kylin Cloud Services Technology Co., Ltd ("Kylin Cloud"), the operator of a livestreaming ecommerce business in China, and the Company expects to shortly enter the energy field through the production of electricity in Texas using natural gas generators, today announced its financial results for the six months ended June 30, 2024.

First Half 2024 Summary

   -- Revenue generated from the livestreaming ecommerce business was $43.4 
      million, a 2.6% decrease as compared to $44.6 million for the same period 
      of 2023. 
 
   -- Gross profit generated from the livestreaming ecommerce business was $3.5 
      million, a 48.7% decrease as compared to $6.8 million for the same period 
      of 2023. 
 
   -- Loss from operations from the livestreaming ecommerce business was $6.5 
      million, as compared to loss from operations of $5.5 million for the same 
      period of 2023. 

Will Zhang, Chairman and CEO of Antelope Enterprise, commented, "The revenue for the livestreaming ecommerce business segment came in at $43.4 million for the first six months of 2024, modestly lower than the $44.6 million in revenue recorded for the six months of 2023. This slight decline was due to loss of a few major clients and a change in business strategy to secure a larger number of mid-tier clients to help to mitigate the risk of retaining major clients. Our majority-owned Kylin Cloud subsidiary had engagements with more than 70 clients in the first half of 2024 represents an increase of nearly 20 clients compared to the same period in 2023."

"Kylin Cloud provides turnkey livestreaming marketing and broadcasting services to consumer brand companies by matching consumer brand products with the appropriate hosts and influencers. We believe that there is a tremendous market opportunity ahead for livestreaming ecommerce and believe that Kylin Cloud has the resources, infrastructure and team culture to achieve sustained growth in this B2C ecosystem," CEO Will Zhang continued.

"In an important strategic development for the Company, we recently announced that we are planning to enter the energy field in the third quarter of 2024, and that we are going to launch this business in Texas to meet the rapidly growing needs of the computing power industry. We believe that our new positioning in the energy supply sector is extremely timely to meet the high expected demand for energy due to the growth of these sectors," concluded Chairman and CEO Will Zhang.

Six Months Results Ended June 30, 2024

Revenue for the six months ended June 30, 2024 was $43.5 million, a decrease of $1.1 million or 2.6% from $44.6 million for the same period of 2023. The decrease in revenue was due to the loss of a few of the livestreaming businesses' major clients in the current period. This propelled a change in business strategy to focus on securing a larger number of mid-tier clients to mitigate the risk associated with an over-concentration of major clients. In the first half of 2024, we had business engagements with more than 70 clients which represented an increase of nearly 20 clients compared to the same period in 2023.

Gross profit for the six months ended June 30, 2024 was $3.5 million, a decrease of $3.3 million or 48.7% as compared to $6.8 million for the same period of 2023. The decrease in gross profit was due to the decrease in revenue and an increase in the cost of goods sold of $2.1 million or 5.7% in the current period. The increase in cost of goods sold was due to increased training, management and support costs attributable to the livestreaming businesses' focus on mid-tier clients. For the first half of 2024, the gross profit margin was 8.0% for the livestreaming ecommerce business as compared to a gross profit margin of 15.3% for the first half of 2023.

Other income for the six months ended June 30, 2024 was $0.7 million, an increase of $0.2 million or 59.2% as compared to $0.4 million for the same period of 2023. Other income primarily consists of interest income of $0.2 million and other income of $0.4 million.

Selling and distribution expenses for the six months ended June 30, 2024 were $3.1 million, a decrease of $4.0 million or 55.9% as compared to $7.1 million for the same period of 2023. The decrease in selling and distribution expenses was due to decreased advertising and promotion expenses of $3.5 million and decreased commission expenses of $0.5 million.

Administrative expenses for the six months ended June 30, 2024 were $6.9 million, an increase of $1.3 million or 22.8% as compared to $5.6 million for the same period of 2023. The increase in administrative expenses was due to an increase in stock compensation expense of $0.8 million and the $0.5 million increase in professional service expenses.

Loss from continuing operations before taxation for the six months ended June 30, 2024 was $6.5 million, an increase of $1.1 million or 19.3% as compared to a loss from continuing operations before taxation of $5.5 million for the same period of 2023. The increase was due to the decrease in gross profit in the current period as compared to the same period of 2023, as described above, as well as an increase in administrative expenses which was partly offset by a decrease in selling and distribution expenses.

Loss per basic share and fully diluted share from continuing operations for the six months ended June 30, 2024 were $0.96, as compared to loss per basic and fully diluted share of $3.38 for the same period of 2023.

Financial Condition

As of June 30, 2024, the Company had $2.3 million in cash and cash equivalents, an increase of $1.7 million or 333.2% as compared to $0.6 million as of December 31, 2023. As of June 30, 2024, working capital (current assets minus current liabilities) was $5.8 million and the current ratio (current assets divided by current liabilities) was 2.6 times, as compared to working capital of $4.2 million and a current ratio of 8.0 times as of December 31, 2023. Stockholders' equity as of June 30, 2024 was $18.0 million, an increase of $3.6 million or 25.2% as compared to $14.4 million as of December 31, 2023.

Liquidity and Capital Resources

Our cash flow analysis for each of the accounts includes the cash flow transactions of discontinued operations.

Cash flow used in operating activities was $7.2 million for the six months ended June 30, 2024, an increase of $1.6 million as compared to $5.6 million for the same period of 2023. The increase of cash outflow was mainly due to an increase in cash outflow on loan receivables of $0.9 million, an increase in cash outflow on other receivables and prepayments of $0.9 million, and increased cash outflow on trade receivables of $1.5 million. This was partly offset by a decrease in operating cash outflow before working capital changes of $0.6 million, a decrease in cash outflow from trade payable of $0.7 million, a decrease in cash outflow on accrued liabilities and other payables of $0.8 million, a decrease in cash outflow on taxes payable of $0.6 million and increased cash inflow on unearned revenue of $0.9 million. Also, there was cash inflow from operating activities of $2.0 million from our discontinued operations for the six months ended June 30, 2023.

Cash flow used in investing activities was $0.3 million, compared to a cash inflow of $0.3 million for the same period of 2023. The increase in cash outflow was mainly due to the acquisition of fixed assets of $1.8 million, which was partly offset by collection of note receivable of $1.5 million and decrease in restricted cash of $0.1 million.

Cash flow generated from financing activities was $10.1 million for the six months ended June 30, 2024, compared to $5.7 million for the same period of 2023, primarily due to an increase in the proceeds from warrants exercised of $1.2 million and an increase in proceeds from a promissory note of $4.6 million. This was partly offset by a decrease in equity financing of $3.4 million for the six months ended June 30, 2024 compared with the six months ended June 30, 2023. For the six months ended June 30, 2023, net cash used in financing activities includes a cash outflow of $2.1 million from our discontinued operations.

Business Outlook

We own a majority position of a livestreaming ecommerce business, Hainan Kylin Cloud Services Technology Co., Ltd ("Kylin Cloud"), and aim to launch an energy supply business in the third quarter of 2024. Kylin Cloud's SaaS+ systems platform strategically matches hosts and influencers to consumer brand products which results in increased sales for these companies.

In the last few years, livestreaming ecommerce has comprised an ever-increasing percentage of China's ecommerce sales which we expect to continue in the years ahead, spurred by a consumer ecosystem that includes a young demographic and their high usage rate of mobile devices. We believe that Kylin Cloud is unique in the livestreaming space since it utilizes advanced analytics that matches hosts and influencers to consumer brand products which facilitates unique content for higher conversion rates as compared to traditional ecommerce.

In the current period, the business strategy of the livestreaming business was modified to focus on securing a larger number of mid-tier clients to mitigate the risk associated with an over-concentration of major clients. Since some of these new clients are still in the beginning stages of collaboration and their business volume has just started to grow, it will take time for the new mid-tier clients to develop and increase their sales volume. In the first half of 2024, the livestreaming business had business engagements with more than 70 clients, which represented an increase of nearly 20 clients compared to the same period in 2023.

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September 30, 2024 07:00 ET (11:00 GMT)