PINGDINGSHAN, China, Feb. 12, 2015 (GLOBE NEWSWIRE) -- SinoCoking Coal and Coke Chemical Industries, Inc. SCOK, a vertically integrated producer of clean energy products located in Henan Province, today announced that for the second fiscal quarter of 2015 ended December 31, 2014, the company had income from operations of $523,305 on revenue of $12,677,319 compared to income from operations of $1,540,556 on revenue of $13,208,253 in the like year-ago quarter.
Due primarily to a noncash gain of $5,452,865 recorded for the change in fair value on revaluation of its warrant liability, the company reported fiscal Q2 2015 net income of $3,981,858, or $.17 per share, versus a net loss of $106,658, or $(.01) per share, for the same year-ago period. Weighted average number of shares for the 2015 second fiscal quarter was 23,960,217 compared to 21,121,372 for fiscal Q2 in 2014.
The four percent decrease in second quarter revenue compared to the same period last year resulted primarily from the slowdown in sales of most of SinoCoking's traditional coal and coke products. However, the decrease in revenue from these products was offset in part by revenue of $2,139,171 from the company's clean-burning syngas, generated and sold beginning in October 2014.
Gross profit margin in fiscal Q2 '15 increased to 21.2 percent from 15.6 percent in fiscal Q2 '14, resulting mainly from the higher profit margin of syngas.
For the six-months ended December 31, 2014, the company reported income from operations of $1,882,688 on revenue of $26,251,155 compared to income from operations of $3,993,402 on revenue of $30,684,223 in the corresponding prior year period. An adjustment of $3,425,703 for change in fair value of warrants in the fiscal 2015 six-month period resulted in net income of $1,428,601, or $.06 per share, versus net income of $1,054,226, or $.05 per share, in the comparable year-ago period. Weighted average number of shares for the six-month periods was 22,642,611 versus 21,121,372, respectively.
Revenue for the first six months of fiscal 2015 decreased 14.4 percent year-over-year, as there was no Syngas production and sales during Q1 '15 to help offset declining sales of SinoCoking's traditional products. However, gross profit margin for the first half of fiscal 2015 increased to 18.9 percent from 16.8 percent in the first half of fiscal 2014.
"This has been a highly constructive quarter," said SinoCoking CEO Mr. Jianhua Lv. "The rapid and successful launch of our aboveground syngas facility has demonstrated SinoCoking's ability to redefine itself as a producer of clean energy products. With this transition into the clean energy space, we are creating new revenue and profit centers that we expect to improve the company's financial results going forward, and at the same time mitigate negative impact on operations related to softness in the traditional coal and coking businesses."
Now under construction at the site of SinoCoking's first aboveground facility, which currently produces 25,000 cubic meters of syngas per hour, is a second facility with a similar capacity target. When completed and operating at full capacity – expected toward the end of March 2015 - the two facilities' combined syngas output of 50,000 cubic meters per hour is expected to rank among the highest syngas production for any coking plant in China. Additionally, the company believes these first two facilities are the only ones in China that, to date, combine coking and syngas in parallel.
SinoCoking also said that completion of the first phase of its underground coal gasification facility, expected later this month, should enable the company to produce an additional 60,000 cubic meters of syngas per hour, and that the ultimate goal is to expand output of that facility's capacity to 880,000 cubic meters of syngas per hour by the end of fiscal year 2018.
Previously, during construction of the first aboveground facility last summer, Mr. Lv had estimated gross profit margin on syngas sales of between 45 and 50 percent based on a price of $0.139 per cubic meter. Since the company began selling syngas in October 2014, the actual gross profit margin has been 40.6 percent based on an average price of $.10 per cubic meter. "Even though the actual price and gross profit are below what we had anticipated initially, the gross profit margin from syngas revenue is significantly higher than that of any other current SinoCoking product. We do not expect the $.10 price per cubic meter to change for the near future as we continue to achieve higher and higher levels of production."
For additional information on SinoCoking, please go to http://www.scokchina.com or refer to the company's periodic reports filed with the Securities and Exchange Commission (http://www.scokchina.com/sec-filings.html). Investors wishing to receive SinoCoking's corporate communications as they become available may go to the company's Investor Relations site (http://www.scokchina.com/corporate-overview.html) and register under Email Alerts.
Also, investors may submit questions directly to Mr. Lv and his staff to receive non-confidential information about the company's operations and products at the company's "Ask Management" blog (http://www.scokchina.com/ask-management.html).
About SinoCoking
SinoCoking Coal and Coke Chemical Industries, Inc. (www.scokchina.com), a Florida corporation, is an emerging producer of clean energy products located in Pingdingshan, Henan Province, China. The company has historically been a vertically-integrated coal and coke processor of 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.
Forward-Looking Statements
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, 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.
| SINOCOKING COAL AND COKE CHEMICAL INDUSTRIES, INC. AND SUBSIDIARIES | ||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||
| December 31, | June 30, | |
| 2014 | 2014 | |
| (Unaudited) | ||
| ASSETS | ||
| CURRENT ASSETS | ||
| Cash | $ 316,967 | $ 191,992 |
| Accounts receivable, trade | 17,742,845 | 8,946,435 |
| Other receivables and deposits | 5,930,399 | 5,787,232 |
| Loans receivable | 3,732,037 | 8,032,037 |
| Inventories | 2,392,834 | 7,419,821 |
| Advances to suppliers | 8,585,181 | 8,700,022 |
| Prepaid expenses | 71,668 | -- |
| Total current assets | 38,771,931 | 39,077,539 |
| PLANT AND EQUIPMENT, net | 21,787,531 | 14,426,319 |
| CONSTRUCTION IN PROGRESS | 46,964,267 | 40,389,961 |
| OTHER ASSETS | ||
| Refundable deposit | 4,881,224 | 4,873,928 |
| Prepayments | 61,908,164 | 61,815,632 |
| Intangible assets, net | 32,318,629 | 32,305,697 |
| Long-term investments | 2,902,572 | 2,898,233 |
| Other assets | 113,895 | 113,725 |
| Total other assets | 102,124,484 | 102,007,215 |
| Total assets | $ 209,648,213 | $ 195,901,034 |
| LIABILITIES AND EQUITY | ||
| CURRENT LIABILITIES | ||
| Current maturity of long term loan | $ 50,113,895 | $ 20,795,425 |
| Accounts payable, trade | 5,788 | 2,978,326 |
| Other payables and accrued liabilities | 4,332,559 | 2,460,113 |
| Other payables - related party | 2,548,117 | 526,699 |
| Acquisition payable | 4,718,516 | 4,711,463 |
| Customer deposits | 79,820 | 79,701 |
| Taxes payable | 2,031,256 | 765,421 |
| Current portion of warrants liability | 1,061,749 | -- |
| Total current liabilities | 64,891,700 | 32,317,148 |
| LONG TERM LIABILITIES | ||
| Long term loan | -- | 29,243,566 |
| Warrants liability | 5,560,681 | 16 |
| Total long term liabilities | 5,560,681 | 29,243,582 |
| Total liabilities | 70,452,381 | 61,560,730 |
| COMMITMENTS AND CONTINGENCIES | ||
| EQUITY | ||
| Common stock, $0.001 par value, 100,000,000 shares authorized, 23,960,217 shares and 21,121,372 shares issued and outstanding as of December 31 and June 30, 2014, respectively | 23,960 | 21,121 |
| Additional paid-in capital | 6,845,636 | 3,592,053 |
| Statutory reserves | 3,689,941 | 3,689,941 |
| Retained earnings | 113,724,008 | 112,295,407 |
| Accumulated other comprehensive income | 10,580,687 | 10,410,182 |
| Total SinoCoking Coal and Coke Chemicals Industries, Inc's equity | 134,864,232 | 130,008,704 |
| NONCONTROLLING INTERESTS | 4,331,600 | 4,331,600 |
| Total equity | 139,195,832 | 134,340,304 |
| Total liabilities and equity | $ 209,648,213 | $ 195,901,034 |
| SINOCOKING COAL AND COKE CHEMICAL INDUSTRIES, INC. AND SUBSIDIARIES | ||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | ||||
| (UNAUDITED) | ||||
| For the Three Months Ended | For the Six Months Ended | |||
| December 31, | December 31, | |||
| 2014 | 2013 | 2014 | 2013 | |
| REVENUE | $ 12,677,319 | $ 13,208,253 | $ 26,251,155 | $ 30,684,223 |
| COST OF REVENUE | 9,989,469 | 11,152,697 | 21,281,963 | 25,531,366 |
| GROSS PROFIT | 2,687,850 | 2,055,556 | 4,969,192 | 5,152,857 |
| OPERATING EXPENSES: | ||||
| Selling | 35,091 | 39,754 | 69,255 | 80,628 |
| General and administrative | 2,129,454 | 475,246 | 3,017,249 | 1,078,827 |
| Total operating expenses | 2,164,545 | 515,000 | 3,086,504 | 1,159,455 |
| INCOME FROM OPERATIONS | 523,305 | 1,540,556 | 1,882,688 | 3,993,402 |
| OTHER INCOME (EXPENSE) | ||||
| Interest income | 62,856 | 184,247 | 165,107 | 367,340 |
| Interest expense | (1,502,341) | (1,311,812) | (2,999,554) | (2,090,579) |
| Other finance expense | (51,236) | (87,717) | (51,899) | (150,260) |
| Other income, net | -- | -- | -- | -- |
| Change in fair value of warrants | 5,452,865 | -- | 3,425,703 | 12 |
| Total other income (expense), net | 3,962,144 | (1,215,282) | 539,357 | (1,873,487) |
| INCOME BEFORE INCOME TAXES | 4,485,449 | 325,274 | 2,422,045 | 2,119,915 |
| PROVISION FOR INCOME TAXES | 503,591 | 431,932 | 993,444 | 1,065,689 |
| NET INCOME (LOSS) | 3,981,858 | (106,658) | 1,428,601 | 1,054,226 |
| OTHER COMPREHENSIVE INCOME | ||||
| Foreign currency translation adjustment | 175,539 | 756,310 | 170,505 | 1,601,757 |
| COMPREHENSIVE INCOME | $ 4,157,397 | $ 649,652 | $ 1,599,106 | $ 2,655,983 |
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES | ||||
| Basic and diluted | 23,960,217 | 21,121,372 | 22,642,611 | 21,121,372 |
| EARNINGS (LOSS) PER SHARE | ||||
| Basic and diluted | $ 0.17 | $ (0.01) | $ 0.06 | $ 0.05 |
| SINOCOKING COAL AND COKE CHEMICAL INDUSTRIES, INC. AND SUBSIDIARIES | ||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| (UNAUDITED) | ||
| For the Six Months Ended December 31, | ||
| 2014 | 2013 | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||
| Net income | $ 1,428,601 | $ 1,054,226 |
| Adjustments to reconcile net income to cash provided by (used in) operating activities: | ||
| Depreciation | 652,208 | 578,000 |
| Amortization and depletion | 35,408 | 35,426 |
| Write-off of other receivables and advances to suppliers | -- | 89,348 |
| Change in fair value of warrants | (3,425,703) | (12) |
| Bad debt allowance of receivables | 1,549,034 | -- |
| Amortization of prepaid expenses | 33,332 | -- |
| Change in operating assets and liabilities | ||
| Accounts receivable, trade | (9,093,126) | (3,951,856) |
| Other receivables | (135,855) | (1,494,537) |
| Inventories | 5,035,275 | (543,788) |
| Advances to suppliers | (1,106,222) | 1,989,148 |
| Prepaid expenses | (5,000) | (193,342) |
| Accounts payable, trade | (2,975,332) | 1,464,233 |
| Other payables and accrued liabilities | 1,778,225 | 229,536 |
| Customer deposits | -- | (81,350) |
| Taxes payable | 1,263,983 | 61,188 |
| Net cash used in operating activities | (4,965,172) | (763,780) |
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||
| Collection of principal of loans receivable | 4,500,000 | -- |
| Loan out principal of loans receivable | (200,000) | -- |
| Payments of construction in progress | (14,497,925) | -- |
| Purchase of equipment | -- | -- |
| Net cash used in investing activities | (10,197,925) | -- |
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||
| Change in restricted cash | -- | 9,762,000 |
| Payments of note payable | -- | (9,762,000) |
| Proceeds from short-term loans - others | -- | 162,700 |
| Payment of short-term loans - others | -- | (162,700) |
| Proceeds from issuance of common shares | 13,204,538 | -- |
| Proceeds from (payment to) related parties | 2,019,836 | (66,160) |
| Net cash provided by (used in) financing activities | 15,224,374 | (66,160) |
| EFFECT OF EXCHANGE RATE ON CASH | 63,698 | 135,250 |
| INCREASE (DECREASE) IN CASH | 124,975 | (694,690) |
| CASH, beginning of period | 191,992 | 782,018 |
| CASH, end of period | $ 316,967 | $ 87,328 |
| SUPPLEMENTAL CASH FLOW INFORMATION: | ||
| Cash paid for income tax | $ 827,448 | $ 859,388 |
| Cash paid for interest expense, net of capitalized interest | $ 2,127,570 | $ 1,906,313 |
| NON-CASH TRANSACTIONS OF INVESTING AND FINANCING ACTIVITIES | ||
| Recalsification of salary payable to related parties to other payable to related parties | $ -- | $ 190,000 |
| Common share issued for the payment of a service fee | $ 100,000 | $ -- |
| Issuance of warrants related to the sale of common stock | $ 10,048,116 | $ -- |
| Transfer of construction in progress into plant and equipment | $ 7,987,721 | $ -- |
| SINOCOKING COAL AND COKE CHEMICAL INDUSTRIES, INC. AND SUBSIDIARIES | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF EQUITY | ||||||||
| Accumulated | ||||||||
| Additional | Retained earnings | other | ||||||
| Common Stock | paid-in | Statutory | comprehensive | Noncontrolling | ||||
| Shares | Par Value | capital | reserves | Unrestricted | income | interest | Total | |
| BALANCE, July 1, 2012 | 21,121,372 | $ 21,121 | $ 3,592,053 | $ 3,689,941 | $ 110,257,132 | $ 7,613,972 | $ 4,331,600 | $ 129,505,819 |
| Net income | 1,047,693 | 1,047,693 | ||||||
| Foreign currency translation adjustments | 2,289,251 | 2,289,251 | ||||||
| BALANCE, June 30, 2013 | 21,121,372 | 21,121 | 3,592,053 | 3,689,941 | 111,304,825 | 9,903,223 | 4,331,600 | 132,842,763 |
| Net income | 990,582 | 990,582 | ||||||
| Foreign currency translation adjustments | 506,959 | 506,959 | ||||||
| BALANCE, June 30, 2014 | 21,121,372 | 21,121 | 3,592,053 | 3,689,941 | 112,295,407 | 10,410,182 | 4,331,600 | 134,340,304 |
| Issuance of common shares | 2,838,845 | 2,839 | 3,253,583 | 3,256,422 | ||||
| Net income | 1,428,601 | 1,428,601 | ||||||
| Foreign currency translation adjustments | 170,505 | 170,505 | ||||||
| BALANCE, December 31, 2014 (UNAUDITED) | 23,960,217 | $ 23,960 | $ 6,845,636 | $ 3,689,941 | $ 113,724,008 | $ 10,580,687 | $ 4,331,600 | $ 139,195,832 |
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