- Published: 30 September 2014
- Written by Editor
SinoCoking Announces Fiscal 2014 Results
PINGDINGSHAN, China, Sept. 29, 2014 -- SinoCoking Coal and Coke Chemical Industries, Inc. (SCOK), a vertically-integrated coal and coke processor, today announced that, for the fiscal year ended June 30, 2014, the company had net income of $990,582, or $0.05 per share, on revenue of $50,267,693, compared to net income of $1,047,693, or $0.05 per share, on revenue of $66,686,301 for the prior fiscal year ended June 30, 2013. Basic and diluted weighted average number of shares of common stock for both fiscal 2014 and 2013 was 21,121,372.
The decrease in revenue in fiscal 2014 compared to last year was the result of a slowdown in sales of most of the company's coal products, including raw coal, coal slurries, mid-coal, coke powder, and washed coal. This slowdown was caused by Chinese government policies aimed at reducing pollution and softness in the construction markets, which in turn affected demand for steel and its constituent coal. As a result, in fiscal 2014, the company's coal products contributed only 13 percent of overall SinoCoking revenue, compared to 41 percent in fiscal 2013.
These decreases were offset in part by increased demand for the company's coke products, such as finished coke, coke powder, coal tar, and crude benzol, which sell primarily to specialty steel industries including automotive, military and other non-construction industries. As a result of this increase in demand, coke products contributed 87 percent of total SinoCoking revenue in fiscal 2014 as compared to 59 percent in fiscal 2013.
In addition, due to strong increases in gross profit margin for the company's coke products, SinoCoking's overall gross profit margin in fiscal 2014 increased to 18 percent from 12 percent in fiscal 2013. This, in turn, helped the company to produce a fiscal 2014 net profit roughly comparable to that of fiscal 2013, despite a decrease in revenue of 25 percent.
SinoCoking's most prominent accomplishment, however, during fiscal 2014 was the decision to transform the company into a producer of clean-burning synthetic gas (syngas) products. This transition began in May 2014, when the company commenced plans to build to build a coke gasification facility for the conversion of carbon dioxide into syngas. This facility, which is expected to commence production by the middle of October, will have an output capacity of 25,000 cubic meters of syngas per hour.
Furthering its transition plans, in August 2014, SinoCoking announced it had signed an exclusive agreement with two prominent state institutes to build an underground coal gasification facility that will convert the coal at four SinoCoking underground mines into syngas while sequestering the resulting carbon dioxide and other greenhouse gases underground. The first phase of the project is expected to be completed in March 2015 and yield a syngas output of 60,000 cubic meters per hour.
Looking forward, SinoCoking chief executive Mr. Jianhua Lv said that he expects the company's two syngas projects, once running at full capacity, will produce "substantial revenue and gross profit."
He said the company would soon issue an update on construction and financing developments at both facilities.
Further details about the company's results in fiscal 2014 are available in its Annual Report Form 10-K, accessible in the investor relations section of the company's website at http://www.scokchina.com.
About SinoCoking
SinoCoking and Coke Chemical Industries, Inc. (www.scokchina.com), 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 PingdingshanHongyuan Energy Science and Technology Development Co., Ltd., and its affiliated companies, Henan Province PingdingshanHongli Coal & Coke Co., Ltd., Baofeng Coking Factory, BaofengHongchang Coal Co., Ltd., BaofengHongguang Environment Protection Electricity Generating Co., Ltd., Zhonghong Energy Investment Company, Henan Hongyuan Coal Seam Gas Engineering Technology Co., Ltd., BaofengShuangri Coal Mining Co., Ltd., and BaofengXingsheng 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. 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.
| SINOCOKING COAL AND COKE CHEMICAL INDUSTRIES, INC. AND SUBSIDIARIES | ||
| CONSOLIDATED BALANCE SHEETS | ||
| June 30, | ||
| 2014 | 2013 | |
| ASSETS | ||
| CURRENT ASSETS | ||
| Cash | $ 191,992 | $ 782,018 |
| Restricted cash | -- | 9,708,000 |
| Accounts receivable, trade | 8,946,435 | 9,474,197 |
| Other receivables and deposits | 5,787,232 | 4,334,370 |
| Loan receivables | 8,032,037 | 8,032,037 |
| Inventories | 7,419,821 | 3,018,909 |
| Advances to suppliers | 8,700,022 | 8,791,837 |
| Total current assets | 39,077,539 | 44,141,368 |
| PLANT AND EQUIPMENT, net | 14,426,319 | 15,269,766 |
| CONSTRUCTION IN PROGRESS | 40,389,961 | 40,224,821 |
| OTHER ASSETS | ||
| Refundable deposit | 4,873,928 | 4,854,000 |
| Prepayments | 61,815,632 | 61,562,890 |
| Intangible assets, net | 32,305,697 | 32,244,071 |
| Long-term investments | 2,898,233 | 2,886,383 |
| Other assets | 113,725 | 113,260 |
| Total other assets | 102,007,215 | 101,660,604 |
| Total assets | $ 195,901,034 | $ 201,296,559 |
| LIABILITIES AND EQUITY | ||
| CURRENT LIABILITIES | ||
| Current portion of long term loans | $ 20,795,425 | $ 50,158,000 |
| Accounts payable, trade | 2,978,326 | 183,504 |
| Notes payable | -- | 9,708,000 |
| Other payables and accrued liabilities | 2,460,113 | 2,229,341 |
| Other payables - related party | 526,699 | 140,465 |
| Acquisition payable | 4,711,463 | 4,692,200 |
| Customer deposits | 79,701 | 208,815 |
| Taxes payable | 765,421 | 1,133,450 |
| Total current liabilities | 32,317,148 | 68,453,775 |
| LONG TERM LIABILITIES | ||
| Long term loans | 29,243,566 | -- |
| Warrants liability | 16 | 21 |
| Total long term liabilities | 29,243,582 | 21 |
| Total liabilities | 61,560,730 | 68,453,796 |
| COMMITMENTS AND CONTINGENCIES | ||
| EQUITY | ||
| Common stock, $0.001 par value, 100,000,000 shares authorized, 21,121,372 shares issued and outstanding | 21,121 | 21,121 |
| Additional paid-in capital | 3,592,053 | 3,592,053 |
| Statutory reserves | 3,689,941 | 3,689,941 |
| Retained earnings | 112,295,407 | 111,304,825 |
| Accumulated other comprehensive income | 10,410,182 | 9,903,223 |
| Total SinoCoking Coal and Coke Chemicals Industries, Inc's equity | 130,008,704 | 128,511,163 |
| NONCONTROLLING INTERESTS | 4,331,600 | 4,331,600 |
| Total equity | 134,340,304 | 132,842,763 |
| Total liabilities and equity | $ 195,901,034 | $ 201,296,559 |
| The accompanying notes are an integral part of the consolidated financial statements | ||
| SINOCOKING COAL AND COKE CHEMICAL INDUSTRIES, INC. AND SUBSIDIARIES | ||
| CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | ||
| For the Year Ended June 30, | ||
| 2014 | 2013 | |
| REVENUE | $ 50,267,693 | $ 66,686,301 |
| COST OF REVENUE | 41,275,791 | 58,478,301 |
| GROSS PROFIT | 8,991,902 | 8,208,000 |
| OPERATING EXPENSES: | ||
| Selling | 154,716 | 163,827 |
| General and administrative | 2,121,849 | 2,924,576 |
| Total operating expenses | 2,276,565 | 3,088,403 |
| INCOME FROM OPERATIONS | 6,715,337 | 5,119,597 |
| OTHER INCOME (EXPENSE) | ||
| Interest income | 566,541 | 783,938 |
| Interest expense | (4,477,049) | (3,875,029) |
| Other finance expense | (71,870) | (265,088) |
| Other income, net | 109,100 | 229,036 |
| Change in fair value of warrants | 5 | 716,627 |
| Total other expense, net | (3,873,273) | (2,410,516) |
| INCOME BEFORE INCOME TAXES | 2,842,064 | 2,709,081 |
| PROVISION FOR INCOME TAXES | 1,851,482 | 1,661,388 |
| NET INCOME | 990,582 | 1,047,693 |
| OTHER COMPREHENSIVE INCOME | ||
| Foreign currency translation adjustment | 506,959 | 2,289,251 |
| COMPREHENSIVE INCOME | $ 1,497,541 | $ 3,336,944 |
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES | ||
| Basic and diluted | 21,121,372 | 21,121,372 |
| EARNINGS PER SHARE | ||
| Basic and diluted | $ 0.05 | $ 0.05 |
| The accompanying notes are an integral part of the consolidated financial statements | ||
| SINOCOKING COAL AND COKE CHEMICAL INDUSTRIES, INC. AND SUBSIDIARIES | ||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| For the Years Ended June 30, | ||
| 2014 | 2013 | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||
| Net income | $ 990,582 | $ 1,047,693 |
| Adjustments to reconcile net income to cash provided by (used in) operating activities: | ||
| Depreciation | 908,232 | 1,270,847 |
| Amortization and depletion | 70,913 | 69,371 |
| Write-off of other receivables and advances to suppliers | 89,298 | 484,075 |
| Change in fair value of warrants | (5) | (716,627) |
| Bad debt allowance of AR OR | 169,936 | -- |
| Inventories impairment reserves | 169,957 | -- |
| Gain on unpayable liabilities | (96,472) | -- |
| Change in operating assets and liabilities | ||
| Accounts receivable, trade | 427,486 | 2,757,701 |
| Notes receivable, trade | -- | (398,250) |
| Other receivables | (1,558,667) | (2,862,730) |
| Inventories | (4,568,625) | (576,277) |
| Advances to suppliers | 128,205 | 3,681,517 |
| Prepaid expenses | -- | 636,908 |
| Accounts payable, trade | 2,800,529 | 176,623 |
| Other payables and accrued liabilities | 323,870 | 1,405,131 |
| Customer deposits | (130,272) | 66,344 |
| Taxes payable | (373,545) | (414,772) |
| Net cash provided by (used in) operating activities | (648,578) | 6,627,554 |
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||
| Principal advances of loans receivable | -- | (9,924,800) |
| Repayment of loans receivable | -- | 10,792,300 |
| Payments on equipment and construction in progress | -- | (580) |
| Net cash provided by investing activities | -- | 866,920 |
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||
| Change in restricted cash | 9,770,396 | 128,000 |
| Proceeds from notes payable | -- | 9,558,000 |
| Repayments of notes payable | (9,770,396) | (4,779,000) |
| Proceeds from short-term loans | 163,700 | 9,558,000 |
| Repayments of short-term loans | (489,380) | (15,292,800) |
| Repayments of long term loans | -- | (7,965,000) |
| Proceeds (repayments) from related party | 385,000 | (22,201) |
| Net cash provided by (used in) financing activities | 59,320 | (8,815,001) |
| EFFECT OF EXCHANGE RATE ON CASH | (768) | (264,173) |
| DECREASE IN CASH | (590,026) | (1,584,700) |
| CASH, beginning of year | 782,018 | 2,366,718 |
| CASH, end of year | $ 191,992 | $ 782,018 |
| SUPPLEMENTAL CASH FLOW INFORMATION: | ||
| Cash paid for income tax | $ 1,738,133 | $ 1,960,151 |
| Cash paid for interest expense, net of capitalized interest | $ 3,376,213 | $ 2,148,427 |
| NON-CASH TRANSACTIONS OF INVESTING AND FINANCING ACTIVITIES | ||
| Construction-in-progress acquired with prepayments made by note receivables, trade | $ -- | $ 15,611,400 |
| Construction-in-progress acquired with prepayments made by note receivables, mine acquisition | $ -- | $ 9,207,540 |
| Repayment of loan receivables through note receivables, trade | $ -- | $ 955,800 |
| Reclassification of short-term loans to long-term loans | $ 29,243,566 | $ -- |
| The accompanying notes are an integral part of the consolidated financial statements | ||
| SINOCOKING COAL AND COKE CHEMICAL INDUSTRIES, INC. AND SUBSIDIARIES | ||||||||
| CONSOLIDATED STATEMENTS OF EQUITY | ||||||||
| Accumulated | ||||||||
| Additional | Retained earnings | other | ||||||
| Common Share | 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 |
| The accompanying notes are an integral part of the consolidated financial statements | ||||||||
SinoCoking Song Lv, Chief Financial Officer + 86-375-2882-999 This email address is being protected from spambots. You need JavaScript enabled to view it. http://www.scokchina.com/ Investor Relations Counsel: Rick Eisenberg, Asia IR-PR. (212) 496-6828 This email address is being protected from spambots. You need JavaScript enabled to view it. http://asia-irpr.com/
