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China Precision Steel Announces Fiscal 2013 Year End Results

         China Precision Steel Announces Fiscal 2013 Year End Results

PR Newswire

SHANGHAI, Oct. 13, 2013

SHANGHAI, Oct. 13, 2013 /PRNewswire/ -- China Precision Steel, Inc. (NASDAQ:
CPSL), a niche precision steel processing company principally engaged in
producing and selling high precision, cold-rolled steel products, announced
today its financial results for the fiscal year 2013 ended June 30, 2013.

Full Year 2013 Highlights

  oRevenue was $36.5 million
  oTotal volume sold was 56,232 tons
  oGross loss was $11.8 million
  oNet loss was $69.0 million
  oNet loss per share was $17.76

"We started the year off with a challenging environment of overcapacity of
steel production combined with sluggish demand which resulted in a significant
drop in our sales volume for fiscal year 2013. In response to the industry's
problems, the State Council and other oversight organizations have decided to
implement steps to address the overcapacity including putting aside funds for
promoting restructuring and mergers of steel companies," commented Mr. Hai
Sheng Chen, CEO of China Precision Steel. "While government organizations work
to improve the conditions in the industry, we are pleased to have experienced
a progressive increase in our sales volume from the low of the first quarter
in fiscal year 2013, primarily due to strengthening of our relationships with
customers in less competitive markets such as the auto and international
markets."

Revenue for fiscal year 2013 was $36.5 million, down 74.5% from revenue of
$143.0 million in fiscal year 2012. High carbon and low carbon products
accounted for 38.2% and 59.8% of sales, respectively, compared to 18.3% and
79.3%, respectively, in the prior year. International sales represented 10% of
total sales, up from 5% in fiscal year 2012.

With China's economy losing steam over the past year combined with
overcapacity and softening demand for steel, steel prices have been under
pressure. Subsequently, gross loss for the fiscal year 2013 was $11.8 million
compared to a gross loss of $5.8 million in fiscal year 2012. Gross margin was
(32.2%), compared to gross margin of (4.1%) a year ago. Operating loss was
$70.2 million, compared to operating loss of $14.0 million in fiscal year
2012. Net loss was $69.0 million, compared to a net loss of $16.9 million a
year ago. Fully diluted loss per share was $17.76, compared to fully diluted
loss per share of $4.37 for fiscal year 2012.

Financial Condition

As of June 30, 2013, China Precision Steel had $75,243 in cash and cash
equivalents, total liabilities of $67.0 million. Stockholders' equity was
$52.9 million, compared to $118.9 million as of June 30, 2012.

"China's economy appears to be improving as economic activity is increasing
and confidence is returning for the country's growth prospects. As a result,
many local governments that hadn't been able to expand investments amid the
economic slowdown are now restarting their plans to spend on infrastructure
which is expected to support the rebound in demand for steel," Mr. Chen
continued. "While the economy and the steel industry in particular are in the
early stages of turning around, we are taking steps to improve our working
capital and operating cash flow by implementing policies to reduce our
accounts receivable. We are also working to continue to strengthen our
collection efforts as well as tighten controls on all further credit sales to
minimize future risks during this difficult environment. We remain committed
to our shareholders and will continue to focus on building long-term
shareholder value."

About China Precision Steel

China Precision Steel is a niche precision steel processing company
principally engaged in the production and sale of high precision cold-rolled
steel products and provides value added services such as heat treatment and
cutting medium and high carbon hot-rolled steel strips. China Precision
Steel's high precision, ultra-thin, high strength (7.5 mm to 0.05 mm)
cold-rolled steel products are mainly used in the production of automotive
components, food packaging materials, saw blades, steel roofing and textile
needles. The Company sells to manufacturers in the People's Republic of China
as well as overseas markets such as Nigeria, Ethiopia, Thailand and Indonesia.
China Precision Steel was incorporated in 2002 and is headquartered in Sheung
Wan, Hong Kong. Additional information can be found at the Company's website
http://chinaprecisionsteelinc.com.

Forward-Looking Statements

Safe Harbor Statement Under the Private Securities Litigation Reform Act of
1995: Certain statements in this press release by China Precision Steel
constitute "forward-looking statements" for purposes of the safe harbor
provisions under The Private Securities Litigation Reform Act of 1995. These
statements include, without limitation, statements regarding: the ability of
the Company to maintain compliance with the NASDAQ minimum bid price
requirements; the ability of the Company to successfully implement planned
measures to cut costs and increase profitability and to strengthen its
financial position; the likelihood that China's economy will rebound in
response to new pro-growth policies and infrastructure projects and that the
Company will be able to benefit from any such growth; and predictions and
guidance relating to the Company's future financial performance. We have based
these forward-looking statements largely on our current expectations and
projections about future events and financial trends that we believe may
affect our financial condition, results of operations, business strategy and
financial needs but they involve risks and uncertainties that could cause
actual results to differ materially from those in the forward-looking
statements, business conditions in China, weather and natural disasters,
changing interpretations of generally accepted accounting principles; outcomes
of government reviews; inquiries and investigations and related litigation;
continued compliance with government regulations; legislation or regulatory
environments, requirements or changes adversely affecting the businesses in
which China Precision Steel is engaged; cyclicality of steel consumption
including overcapacity and decline in steel prices, limited availability of
raw material and energy may constrain operating levels and reduce profit
margins, environmental compliance and remediation could result in increased
cost of capital as well as other relevant risks not included herein. The
information set forth herein should be read in light of such risks. You are
urged to consider these factors carefully in evaluating the forward-looking
statements herein and are cautioned not to place undue reliance on such
forward-looking statements, which are qualified in their entirety by this
cautionary statement. The forward-looking statements made herein speak only as
of the date of this press release and the Company undertakes no duty to update
any forward-looking statement to conform the statement to actual results or
changes in the Company's expectations.

For more information, please contact:

Elite IR
Leslie J. Richardson, Partner
+852-3183 0283
Leslie.richardson@elite-ir.com

-Financial Tables Follow-

China Precision Steel, Inc. and Subsidiaries
Consolidated Balance Sheets
                                                   June 30,     June 30,
                                                   2013          2012
Assets
Current assets
 Cash and cash equivalents                         $75,243       $1,602,805
 Accounts receivable
    Trade, net of allowances of $30,642,373 and
    $3,231,613
    at June 30, 2013 and 2012, respectively       29,480,738    59,116,931
 Bills receivable                                  94,089        173,089
 Other                                             1,041,255     1,117,243
 Inventories, net                                  15,837,201    15,516,220
 Prepaid expenses                                  467,890       668,867
 Advances to suppliers, net of allowance of
 $19,689,609 and
    $4,623,323 at June 30, 2013 and 2012,          9,304,847     37,384,684
    respectively
Total current assets                               56,301,263    115,579,839
Property, plant and equipment
 Property, plant and equipment, net                61,366,745    67,752,991
 Construction-in-progress                          255,996       233,512
                                                   61,622,741    67,986,503
Intangible assets, net                             1,903,675     1,880,129
Goodwill                                           99,999        99,999
Total assets                                       $119,927,678  $185,546,470
Liabilities and Stockholders' Equity
Current liabilities
 Short-term loans                                  $28,028,722   $27,246,477
 Long-term loan - current portion                  16,200,000    16,200,000
 Accounts payable and accrued liabilities          7,044,007     6,772,892
 Advances from customers                           1,456,420     2,253,956
 Other taxes payables                              8,295,220     8,446,373
 Current income taxes payable                      5,993,574     5,756,178
Total current liabilities                          67,017,943    66,675,876
Long-term loan                                     -             -
Stockholders' equity:
 Preferred stock: $0.001 per value, 8,000,000
 shares
    authorized, no shares outstanding at June 30,
    2013 and
    2012, respectively                             -             -
 Common stock: $0.001 par value, 62,000,000 shares
    authorized, 3,880,866 issued and outstanding
    at
    June 30, 2013 and 2012, respectively           3,880         3,880
 Additional paid-in capital                        75,685,066    75,685,066
 Accumulated other comprehensive income            22,075,822    19,097,295
 (Accumulated deficit)/retained earnings           (44,855,033)  24,084,353
Total stockholders' equity                         52,909,735    118,870,594
Total liabilities and stockholders' equity         $119,927,678  $185,546,470



China Precision Steel, Inc. and Subsidiaries
Consolidated Statements of Operations and Comprehensive Income
For the Years Ended June 30, 2013 and 2012
                                            2013          2012
Sales revenues                              $36,527,550   $142,973,631
Cost of goods sold                          48,301,295    148,780,427
Gross (loss)                                (11,773,745)  (5,806,796)
Operating expenses
    Selling expenses                        112,991       209,793
    Administrative expenses                 2,465,576     2,684,432
    Bad debts written off                   14,147,604    -
    Allowance for bad and doubtful debts    41,466,990    5,022,138
    Depreciation and amortization expense   199,885       216,444
    Total operating expenses                58,393,046    8,132,807
(Loss) from operations                      (70,166,791)  (13,939,603)
Other income/(expense)
    Other revenues                          4,784,116     89,604
    Interest and finance costs              (3,556,711)   (3,104,207)
    Total other income/(expense)            1,227,405     (3,014,603)
(Loss) from operations before income tax    (68,939,386)  (16,954,206)
Provision for income tax
    Current                                 -             (5,061)
    Total income tax (benefit)              -             (5,061)
Net (loss)                                  (68,939,386)  (16,949,145)
Basic (loss) per share                      ($17.76)      ($4.37)
Basic weighted average shares outstanding   3,880,866     3,880,866
Diluted (loss) per share                    (17.76)       (4.37)
Diluted weighted average shares outstanding 3,880,866     3,880,866



China Precision Steel, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
For the Years Ended June 30, 2013 and 2012
                                                    2013          2012
Cash flows from operating activities
 Net (loss)                                         (68,939,386)  (16,949,145)
 Adjustments to reconcile net income to net cash
 provided by operating activities
 Depreciation and amortization                     9,104,176     9,043,993
 Allowance for bad and doubtful debts              47,437,208    5,022,138
 Reversal of provision for bad and doubtful debts  (5,970,218)   -
 Bad debts written off                             14,147,604    -
 Other income - write off of accounts payable and  (3,116,535)   -
 other payables
 Other income - write off of advances from         (984,970)     -
 customers
 Inventory provision                               518,184       350,817
 Gain on disposal of property, plant and equipment -             (36,993)
 Net changes in assets and liabilities:
 Accounts receivable, net                          3,328,317     (19,407,494)
 Inventories                                       (298,456)     9,637,950
 Prepaid expenses                                  212,651       (31,828)
 Advances to suppliers                             1,464,390     10,632,903
 Accounts payable and accrued expenses             3,211,106     1,620,381
 Advances from customers                           124,940       (60,058)
 Other taxes payable                               (450,470)     2,041,833
 Current income taxes                              33,412        (32,269)
Net cash (used in)/provided by operating activities (178,047)     1,832,228
Cash flows from investing activities
 Purchase of property, plant and equipment,        (489,526)     (340,155)
 including construction in progress
 Purchases of intangible assets                    (2,737)       -
 Proceeds from disposal of property, plant and     -             56,006
 equipment
Net cash (used in) investing activities             (492,263)     (284,149)
Cash flows from financing activities
 Repayments of short-term loans                    (757,381)     (2,697,352)
Net cash (used in) financing activities             (757,381)     (2,697,352)
Effect of exchange rate                             (99,871)      44,324
Net (decrease) in cash                              (1,527,562)   (1,104,949)
Cash and cash equivalents, beginning of year        1,602,805     2,707,754
Cash and cash equivalents, end of year              $75,243       $1,602,805

SOURCE China Precision Steel Inc.

Website: http://chinaprecisionsteelinc.com