PINGDINGSHAN, China, May 14, 2015 (GLOBE NEWSWIRE) -- SinoCoking Coal and Coke Chemical Industries, Inc. SCOK, a vertically integrated producer of clean energy products located in Henan Province, today reported financial results for the third fiscal quarter and nine-month period ended March 31, 2015.
A summary of financial results and business highlights is outlined below.
Third Fiscal Quarter Financial Highlights:
- Net income of $2,989,851 ($0.12 per share) increased 283%, compared to net income of $781,065 ($0.04 per share) in Q3 2014.
- Gross profit margin improved to 37% vs. 22%, primarily from syngas higher profit margin.
- Prior to adjustments for interest expense of $1.26 million and a noncash gain for the change in fair value of warrants of $1.89 million, operating income was $3.08 million vs. $2.07 million in the prior year.
- Year-over-year revenue was $10.86 million vs. $10.99 million. A decline in revenue from traditional coal and coke products was offset by rising syngas sales.
Nine-Month Financial Highlights:
- Net income of $4,418,452 ($0.19 per share) increased 141%, compared to net income of $1,835,291 ($0.09 per share) in the comparable year-ago period.
- Gross profit margin improved to 24% vs. 18%, aided by the sale of syngas in the second half of the nine-month period.
- Prior to adjustments for interest expense of $4.26 million and a noncash gain for the change in fair value of warrants of $5.32 million, operating income was $4.97 million vs. $6.06 million in the prior year.
- Year-over-year revenue was $37.11 million vs. $41.68 million. As a result of change in revenue mix, we were able to achieve higher net income in spite of lower overall revenues.
For the third fiscal quarter ended March 31, 2015, SinoCoking derived 49% of its revenue from coke products, 4% from coal products and 47% from syngas products, as compared with 94% from coke products and 6% for coal products for the three months ended March 31, 2014, when there was no syngas production. For the nine-month period ended March 31, 2015, coal, coke and syngas products accounted for 69%, 11% and 20% of revenue, respectively, as compared with 86% from coke products and 14% from coal products in the comparable year-ago period.
"We are excited by the rapid ramp-up and success of our syngas program during a time when there has been a nationwide softening of demand for both coal and coking products," said SinoCoking CEO Mr. Jianhua Lv. "We will continue to expand our business from coal and coke products to clean-burning energy products; and, with continued improvements in our operation technology and expansion of production capacity, we expect syngas to contribute a progressively higher proportion of future revenue."
Mr. Lv said the company's second aboveground facility in Henan Province has completed construction and is expected to double total syngas output to approximately 50,000 cubic meters per hour by the end of the current quarter.
With current and projected production schedules for both facilities, Mr. Lv estimated that at $0.10 per cubic meter, total syngas output in calendar 2015 should range between 272.6 million and 344.89 million cubic meters and, on that basis, would contribute between $27.26 million – $34.49 million to SinoCoking's total revenue during that period. He noted that revenue contribution month-to-month may vary from company estimates due to the influence of certain operational and market factors.
Of the $45.11 million in current maturities of long-term loans recorded at the close of Q3 2015, about $29.41 million is due on October 2, 2015 and $12.74 million is due on April 2, 2016. According to Mr. Lv, "We intend to negotiate with the lender, Bairui Trust, to further extend the maturity dates of these outstanding loans by an additional two to three years, and to repay the loans through our operational cash flow. However, we cannot guarantee success in such negotiations and we will continue to explore additional options for financing our growth."
SinoCoking's operations and financial condition for the third fiscal quarter and nine-month period ended March 31, 2015 and 2014 are more fully discussed in its Form 10-Q on file with the Securities and Exchange Commission. Investors are encouraged to carefully review the Form 10-Q for a complete analysis of the company's results from operations and financial condition.
For additional information on SinoCoking, please go to http://www.scokchina.com or refer to the company's 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 | ||
| March 31, | June 30, | |
| 2015 | 2014 | |
| (Unaudited) | ||
| ASSETS | ||
| CURRENT ASSETS | ||
| Cash | $ 103,831 | $ 191,992 |
| Accounts receivable, net | 16,476,915 | 8,946,435 |
| Other receivables and deposits | 4,973,125 | 5,787,232 |
| Loans receivable | -- | 8,032,037 |
| Inventories | 1,987,291 | 7,419,821 |
| Advances to suppliers | 9,302,744 | 8,700,022 |
| Prepaid expenses | 41,669 | -- |
| Total current assets | 32,885,575 | 39,077,539 |
| PLANT AND EQUIPMENT, net | 21,476,310 | 14,426,319 |
| CONSTRUCTION IN PROGRESS | 47,159,165 | 40,389,961 |
| OTHER ASSETS | ||
| Refundable deposits | 4,901,480 | 4,873,928 |
| Prepayments | 62,165,079 | 61,815,632 |
| Intangible assets, net | 32,434,960 | 32,305,697 |
| Long-term investments | 2,914,617 | 2,898,233 |
| Other assets | 114,368 | 113,725 |
| Total other assets | 102,530,504 | 102,007,215 |
| Total assets | $ 204,051,554 | $ 195,901,034 |
| LIABILITIES AND EQUITY | ||
| CURRENT LIABILITIES | ||
| Current portion of long term loans | $ 45,111,059 | $ 20,795,425 |
| Accounts payable, trade | 45,403 | 2,978,326 |
| Other payables and accrued liabilities | 2,951,444 | 2,460,113 |
| Other payables - related party | 1,893,226 | 526,699 |
| Acquisition payable | 4,738,098 | 4,711,463 |
| Customer deposits | 80,151 | 79,701 |
| Taxes payable | 1,637,330 | 765,421 |
| Current portion of warrants liability | 289,481 | -- |
| Total current liabilities | 56,746,192 | 32,317,148 |
| LONG TERM LIABILITIES | ||
| Long term loans | -- | 29,243,566 |
| Warrants liability | 4,442,823 | 16 |
| Total long term liabilities | 4,442,823 | 29,243,582 |
| Total liabilities | 61,189,015 | 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 March 31, 2015 and June 30, 2014, respectively | 23,960 | 21,121 |
| Additional paid-in capital | 6,846,397 | 3,592,053 |
| Statutory reserves | 3,689,941 | 3,689,941 |
| Retained earnings | 116,713,859 | 112,295,407 |
| Accumulated other comprehensive income | 11,256,782 | 10,410,182 |
| Total SinoCoking Coal and Coke Chemicals Industries, Inc's equity | 138,530,939 | 130,008,704 |
| NONCONTROLLING INTERESTS | 4,331,600 | 4,331,600 |
| Total equity | 142,862,539 | 134,340,304 |
| Total liabilities and equity | $ 204,051,554 | $ 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 Nine Months Ended | |||
| March 31, | March 31, | |||
| 2015 | 2014 | 2015 | 2014 | |
| REVENUE | $ 10,860,134 | $ 10,993,882 | $ 37,111,289 | $ 41,678,105 |
| COST OF REVENUE | 6,846,870 | 8,545,142 | 28,128,833 | 34,076,508 |
| GROSS PROFIT | 4,013,264 | 2,448,740 | 8,982,456 | 7,601,597 |
| OPERATING EXPENSES: | ||||
| Selling | 34,585 | 37,723 | 103,840 | 118,351 |
| General and administrative | 894,165 | 342,598 | 3,911,414 | 1,421,425 |
| Total operating expenses | 928,750 | 380,321 | 4,015,254 | 1,539,776 |
| INCOME FROM OPERATIONS | 3,084,514 | 2,068,419 | 4,967,202 | 6,061,821 |
| OTHER INCOME (EXPENSE) | ||||
| Interest income | 190 | 58,895 | 165,297 | 426,235 |
| Interest expense | (1,264,104) | (872,615) | (4,263,658) | (2,963,194) |
| Other finance expense | (563) | (27,689) | (52,462) | (177,949) |
| Change in fair value of warrants | 1,889,365 | -- | 5,315,068 | 12 |
| Total other income (expense), net | 624,888 | (841,409) | 1,164,245 | (2,714,896) |
| INCOME BEFORE INCOME TAXES | 3,709,402 | 1,227,010 | 6,131,447 | 3,346,925 |
| PROVISION FOR INCOME TAXES | 719,551 | 445,945 | 1,712,995 | 1,511,634 |
| NET INCOME | 2,989,851 | 781,065 | 4,418,452 | 1,835,291 |
| OTHER COMPREHENSIVE INCOME (LOSS) | ||||
| Foreign currency translation adjustment | 676,095 | (1,236,437) | 846,600 | 365,320 |
| COMPREHENSIVE INCOME (LOSS) | $ 3,665,946 | $ (455,372) | $ 5,265,052 | $ 2,200,611 |
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES | ||||
| Basic and diluted | 23,960,217 | 21,121,372 | 23,076,987 | 21,121,372 |
| EARNINGS PER SHARE | ||||
| Basic and diluted | $ 0.12 | $ 0.04 | $ 0.19 | $ 0.09 |
| SINOCOKING COAL AND COKE CHEMICAL INDUSTRIES, INC. AND SUBSIDIARIES | ||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| (UNAUDITED) | ||
| For the Nine Months Ended March 31, | ||
| 2015 | 2014 | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||
| Net income | $ 4,418,452 | $ 1,835,291 |
| Adjustments to reconcile net income to cash provided by (used in) operating activities: | ||
| Depreciation | 1,052,240 | 640,309 |
| Amortization and depletion | 53,126 | 53,250 |
| Bad debt expense | 1,645,659 | 89,298 |
| Change in fair value of warrants | (5,315,068) | (12) |
| Amortization of prepaid expenses | 58,331 | -- |
| Change in operating assets and liabilities | ||
| Accounts receivable, trade | (8,428,248) | (38,624) |
| Other receivables | 841,985 | (1,406,410) |
| Inventories | 5,450,252 | (2,219,390) |
| Advances to suppliers | (1,215,314) | (1,957,529) |
| Prepaid expenses | -- | -- |
| Accounts payable, trade | (2,936,709) | 1,666,570 |
| Other payables and accrued liabilities | (807,441) | 754,872 |
| Customer deposits | -- | (81,519) |
| Taxes payable | 863,744 | (87,979) |
| Net cash used in operating activities | (4,318,991) | (751,873) |
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||
| Collection of principal of loans receivable | 8,232,037 | -- |
| Loan out principal of loans receivable | (200,000) | -- |
| Payments of construction in progress | (6,511,939) | -- |
| Purchase of equipment | (7,040,567) | -- |
| Net cash used in investing activities | (5,520,469) | -- |
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||
| Change in restricted cash | -- | 9,782,343 |
| Payments of note payable | -- | (9,782,343) |
| Repayment of short-term loans - Bairui Trust | (8,132,990) | -- |
| Proceeds from short-term loans - CPL | 2,958,329 | -- |
| Proceeds from short-term loans - others | -- | 162,700 |
| Repayment of short-term loans - others | -- | (162,700) |
| Proceeds from issuance of common shares | 13,204,539 | -- |
| Proceeds from (payment to) related parties | 1,380,735 | 176,962 |
| Net cash provided by financing activities | 9,410,613 | 176,962 |
| EFFECT OF EXCHANGE RATE ON CASH | 340,686 | (2,766) |
| DECREASE IN CASH | (88,161) | (577,677) |
| CASH, beginning of period | 191,992 | 782,018 |
| CASH, end of period | $ 103,831 | $ 204,341 |
| SUPPLEMENTAL CASH FLOW INFORMATION: | ||
| Cash paid for income tax | $ 1,330,554 | $ 1,292,053 |
| Cash paid for interest expense | $ 4,893,353 | $ 1,910,285 |
| NON-CASH TRANSACTIONS OF INVESTING AND FINANCING ACTIVITIES | ||
| Reclassification of salary payable to related parties to other payable to related parties | $ -- | $ 190,000.00 |
| Common share issued for the payment of a service fee | $ 100,000 | $ -- |
| Issuance of warrants related to the sale of common stock | $ 10,047,356 | $ -- |
| Transfer of construction in progress into plant and equipment | $ 7,040,567 | $ -- |
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