SinoCoking Coal and Coke Chemical Industries Announces Fiscal 2013 Third Quarter Financial Results PR Newswire PINGDINGSHAN, China, May 14, 2013 PINGDINGSHAN, China, May 14, 2013 /PRNewswire-FirstCall/ -- SinoCoking Coal and Coke Chemical Industries, Inc. (Nasdaq: SCOK) (the "Company" or "SinoCoking"), a vertically-integrated coal and coke processor, announced today its financial results for the fiscal 2013 third quarter ended March 31, 2013. Fiscal 2013 Third Quarter vs. Fiscal 2012 Third Quarter oTotal revenue was $13.9 million, as compared to $16.8 million. oGross margin was 15.0%, as compared to 15.7%. oNet income, including foreign currency transaction adjustment, was $1.2 million or $0.02 per diluted share, as compared to net income of $2.1 million or $0.07 per diluted share. Fiscal 2013 Third Quarter Fiscal 2012 Third Quarter Product MT* Weighted Revenue % of MT* Weighted Revenue % of type Sold Average (million) Total Sold Average (million) Total Price/MT* Revenue Price/MT* Revenue Coke Products Coke 38,220 $ 212 $ 8.1 57.6% 37,111 $ 230 $ 8.5 50.7% Coal Tar 1,357 $ 258 $ 0.4 2.9% 1,563 $ 257 $ 0.2 1.1% Coal Products Raw Coal 11,281 $ 58 $ 0.7 4.7% 15,778 $ 88 $ 1.3 8.0% Washed 27,295 $ 177 $ 4.8 34.7% 38,425 $ 176 $ 6.8 40.2% Coal *metric ton Discussing fiscal 2013 third quarter financial results, SinoCoking's Chairman and CEO, Mr. Jianhua Lv, noted, "The ongoing mining moratorium continues to limit raw coal supplies in Henan. In addition, operations at our four coal mines remain idle, and we must continue to meet our coal requirements from other provinces." The 17.3% decrease in total revenue for the quarter was due to: oApproximately $2.0 million decrease in washed coal revenue resulting from lower sales volume despite a slightly increased average selling price; oApproximately $0.6 million decrease in raw coal revenue due to limited supply, as well as decreased average selling price; and, oApproximately $0.4 million decrease in coke revenue mainly due to lower average selling price despite the higher sales volume. Of note, decreases in washed coal, raw coal and coke revenue were slightly offset by an increase in coal tar revenue due to higher average selling price, despite the decreased sales volume." Recent business highlights: Mr. Lv added, "Over the last several quarters, we have seen a slight but steady improvement in coke demand, mainly from steel mills. Thus, since the beginning of fiscal 2013, we have taken steps to position SinoCoking to take advantage of market opportunities that may arise if demands for coal, coke and coke by-products recover in fiscal 2014. Such steps include: Upgrading technical capabilities of our existing coking facility oTo reduce our dependency on high cost raw materials, such as coking coal, we upgraded our existing coking facility, which has an annual production capacity of 250,000 metric tons. The facility can now produce high quality coke and coke by-products using low cost raw coal, such as long flame coal. We also upgraded oven capabilities to improve their energy efficiency, capture additional by-products for refinement into high value-added chemical products, and satisfy strict environmental requirements. Resuming construction of the new coking facility oIn April we resumed construction of our new facility, which we plan to complete before fiscal 2014 year-end. Trial production will start immediately after construction. Additionally, we received approval from local authorities to increase the facility's designed annual production capacity from 900,000 metric tons to 1.2 million metric tons. Such increase, if implemented, would enable us to further expand our product offering by recapturing additional coke by-products for refinement into high value-added chemical products. This fits well with our business plan to focus on increasing our market share in China's coal chemical industry which has been growing rapidly. Signing a leasing agreement to operate a 200,000 metric tons coking facility for a period of one year oTrial production at our recently leased coke production facility began on April 24, 2013. This facility is approximately 3 miles from our existing coking facility and rail yard. We have started work to improve both the efficiency of the coke ovens and the quality of the coke produced at this facility, and will gradually increase production to full capacity. Coke by-products such as crude benzol, sulfur, sulfur ammonia and purified coal gas will be produced at the same time, thereby increasing our product portfolio. Through operating this facility, we aim to gain and hone the skills needed to operate and manage its new type of coke ovens, which will be a valuable experience once our state-of-the-art coking facility is completed and becomes operational. Continuing to invest to improve safety of our coal mines oAs required by the Henan government, we are upgrading the safety-related systems at our coal mines in order to be approved to resume our mining operations. We are also in the process of merging the operations of Hongchang mine, Shunli mine and Shuangrui mine. To date, we have invested a total of approximately $27.9 million as follows: a.Mine upgrades totaling approximately $35.0 million, 70% or approximately $24.5 million to be paid by SinoCoking and the remainder by Henan Coal Seam Gas, our joint-venture partner. To date, we have paid approximately $17.0 million for these upgrades which are expected to be completed in calendar year 2013. b.Mine consolidation totaling approximately $32.0 million. To date, we have paid approximately $10.9 million toward such integration. We expect to complete such integration 4-6 months after we obtain clearance to resume our mining operations, which clearance we expect to receive in calendar year 2013" Mr. Lv. concluded, "Due to the recent steps taken to increase production of coke and coke by-products, we expect our top and bottom lines to substantially improve in the final quarter of fiscal 2013 and in fiscal 2014. We currently have coke production capacity of 450,000 metric tons annually, including the 200,000 metric tons we are leasing. Once construction of our new facility is completed, our coking capacity will increase by approximately 1.2 million metric tons annually." Conference Call Mr. Lv and Sam Wu, the Company's CFO, will host a conference call on Thursday, May 16, 2013 at 10:00 am ET / 10:00 pm China time to discuss fiscal 2013 third quarter financial results as well as recent corporate developments. Interested parties may participate in the call by dialing: (201) 493-6744. Please call in 10 minutes before the conference is scheduled to begin and ask for the SinoCoking call. After opening remarks, there will be a question and answer period. Questions may be asked during the live call, or alternatively, you may e-mail questions in advance to email@example.com. The conference call will also be broadcast live over the Internet. To listen to the webcast, please go to http://www.investorcalendar.com/IC/CEPage.asp?ID=170993 or visit the Company's website www.sinocokingchina.com and then go to Presentations/Events page where the conference call is posted. Please go to the website at least 15 minutes early to register, and download and install any necessary audio software. If you are unable to listen live, the conference call will be archived and can be accessed for approximately 90 days. We suggest listeners use Microsoft Internet Explorer as their web browser. About SinoCoking SinoCoking and Coke Chemical Industries, Inc., a Florida corporation, is a vertically-integrated coal and coke processor that uses coal from both its own mines and that of third-party mines to produce basic and value-added coal products for steel manufacturers, power generators, and various industrial users. SinoCoking has been producing metallurgical coke since 2002, and acts as a key supplier to regional steel producers in central China. SinoCoking also produces and supplies thermal coal to its customers in central China. SinoCoking currently owns its assets and conducts its operations through its subsidiaries, Top Favour Limited and Pingdingshan Hongyuan Energy Science and Technology Development Co., Ltd., and its affiliated companies, Henan Province Pingdingshan Hongli Coal & Coke Co., Ltd., Baofeng Coking Factory, Baofeng Hongchang Coal Co., Ltd., Baofeng Hongguang Environment Protection Electricity Generating Co., Ltd., Zhonghong Energy Investment Company, Henan Hongyuan Coal Seam Gas Engineering Technology Co., Ltd., Baofeng Shuangri Coal Mining Co., Ltd., and Baofeng Xingsheng Coal Mining Co., Ltd. For further information about SinoCoking, please refer to our periodic reports filed with the Securities and Exchange Commission. Forward Looking Statement This press release contains forward-looking statements, particularly as related to, among other things, the business plans of the Company, statements relating to goals, plans and projections regarding the Company's financial position and business strategy. The words or phrases "plans", "would be," "will allow," "intends to," "may result," "are expected to," "will continue," "anticipates," "expects," "estimate," "project," "indicate," "could," "potentially," "should," "believe," "think", "considers" or similar expressions are intended to identify "forward-looking statements." These forward-looking statements fall within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934 and are subject to the safe harbor created by these sections. Actual results could differ materially from those projected in the forward-looking statements as a result of a number of risks and uncertainties. Such forward-looking statements are based on current expectations, involve known and unknown risks, a reliance on third parties for information, transactions or orders that may be cancelled, and other factors that may cause our actual results, performance or achievements, or developments in our industry, to differ materially from the anticipated results, performance or achievements expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from anticipated results include risks and uncertainties related to the fluctuation of local, regional, and global economic conditions, the performance of management and our employees, our ability to obtain financing, competition, general economic conditions and other factors that are detailed in our periodic reports and on documents we file from time to time with the Securities and Exchange Commission. Statements made herein are as of the date of this press release and should not be relied upon as of any subsequent date. The Company cautions readers not to place undue reliance on such statements. The Company does not undertake, and the Company specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences, developments, unanticipated events or circumstances after the date of such statement. Actual results may differ materially from the Company's expectations and estimates. The Company provides no assurances that any potential acquisitions will actually be consummated, or if consummated that such acquisitions will be on terms and conditions anticipated on the date of this press release, and the Company makes no assurances with regard to any results of any such acquisitions. Contact: SinoCoking Investor Relations Counsel: Sam Wu, Chief Financial Officer The Equity Group Inc. + 86-375-2882-999 Lena Cati firstname.lastname@example.org email@example.com / (212) 836-9611 www.sinocokingchina.com www.theequitygroup.com See Accompanying Tables SINOCOKING COAL AND COKE CHEMICAL INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED) For the Three Months Ended For the Nine Months Ended March 31, March 31 2013 2012 2013 2012 REVENUE $ 13,903,951 $ 16,804,057 $ 52,704,787 $ 56,252,724 COST OF REVENUE 11,815,066 14,166,799 45,770,689 43,122,271 GROSS PROFIT 2,088,885 2,637,258 6,934,098 13,130,453 OPERATING EXPENSES: Selling 37,018 43,602 122,775 168,469 General and 533,055 648,834 1,741,228 1,982,620 administrative Total operating 570,073 692,436 1,864,003 2,151,089 expenses INCOME FROM 1,518,812 1,944,822 5,070,095 10,979,364 OPERATIONS OTHER INCOME (EXPENSE) Interest income 174,788 222,583 605,889 999,883 Interest expense (910,544) (302,746) (2,929,609) (1,033,768) Other finance (94,547) (34,002) (257,914) (107,435) expense Other (expense) 219,838 (47) 228,171 (9,136) income, net Change in fair value 1,150 163,394 715,997 4,526,330 of warrants Total other (expense) income, (609,315) 49,182 (1,637,466) 4,375,874 net INCOME BEFORE INCOME 909,497 1,994,004 3,432,629 15,355,238 TAXES PROVISION FOR INCOME 404,717 576,341 1,436,211 2,983,158 TAXES NET INCOME 504,780 1,417,663 1,996,418 12,372,080 OTHER COMPREHENSIVE INCOME Foreign currency translation 662,084 714,277 653,710 2,543,636 adjustment COMPREHENSIVE INCOME $ 1,166,864 $ 2,131,940 $ 2,650,128 $ 14,915,716 WEIGHTED AVERAGE NUMBER OF COMMON SHARES Basic and diluted 21,121,372 21,090,948 21,121,372 21,090,948 EARNINGS PER SHARE Basic and diluted $ 0.02 $ 0.07 $ 0.09 $ 0.59 SINOCOKING COAL AND COKE CHEMICAL INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) ASSETS March 31, June 30, 2013 2012 CURRENT ASSETS Cash $ 2,081,078 $ 2,366,718 Restricted cash 16,064,000 9,668,000 Accounts receivable, trade, net 8,382,172 12,017,231 Notes receivable, trade - 14,176,800 Notes receivable, mine acquisition - 9,155,520 Other receivables 4,398,235 1,412,008 Loans receivable 17,596,037 9,849,937 Refundable deposit 4,782,000 4,752,000 Inventories 3,015,779 2,382,444 Advances to suppliers 9,677,328 12,267,806 Prepaid expenses 2,702 633,313 Total current assets 65,999,331 78,681,777 PLANT AND EQUIPMENT, net 15,372,456 16,211,984 CONSTRUCTION IN PROGRESS 39,628,161 39,379,553 OTHER ASSETS Prepayments 61,134,100 36,071,853 Intangible assets, net 31,783,145 31,635,487 Long-term investments 2,843,569 2,825,730 Other assets 111,580 110,880 Total other assets 95,872,394 70,643,950 Total assets $ 216,872,342 $ 204,917,264 LIABILITIES AND EQUITY CURRENT LIABILITIES Short term loan - bank $ 15,302,400 $ 5,702,400 Current maturity of long term loan 23,910,000 20,592,000 Accounts payable, trade - 4,023 Notes payable 9,564,000 4,752,000 Other payables and accrued liabilities 1,241,572 802,028 Other payables - related parties 167,787 156,227 Acquisition payable 4,622,600 4,593,600 Customer deposits 126,018 138,457 Taxes payable 1,089,367 1,522,062 Total current liabilities 56,023,744 38,262,797 LONG TERM LIABILITIES Long term loan 28,692,000 36,432,000 Warrants liability 651 716,648 Total long term liabilities 28,692,651 37,148,648 Total liabilities 84,716,395 75,411,445 COMMITMENTS AND CONTINGENCIES EQUITY Common stock, $0.001 par value, 100,000,000 shares authorized, 21,121,372 shares issued and 21,121 21,121 outstanding Additional paid-in capital 3,592,053 3,592,053 Statutory reserves 3,689,941 3,689,941 Retained earnings 112,253,550 110,257,132 Accumulated other comprehensive income 8,267,682 7,613,972 Total SinoCoking Coal and Coke Chemicals 127,824,347 125,174,219 Industries, Inc's equity NONCONTROLLING INTERESTS 4,331,600 4,331,600 Total equity 132,155,947 129,505,819 Total liabilities and equity $ 216,872,342 $ 204,917,264 SOURCE SinoCoking Coal and Coke Chemical Industries, Inc. Website: http://www.sinocokingchina.com
SinoCoking Coal and Coke Chemical Industries Announces Fiscal 2013 Third Quarter Financial Results
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