Attached files
| file | filename |
|---|---|
| EX-32.2 - EXHIBIT 32.2 - KINGOLD JEWELRY, INC. | v418123_ex32-2.htm |
| EX-31.1 - EXHIBIT 31.1 - KINGOLD JEWELRY, INC. | v418123_ex31-1.htm |
| 10-Q - FORM 10-Q - KINGOLD JEWELRY, INC. | v418123_10q.htm |
| EX-31.2 - EXHIBIT 31.2 - KINGOLD JEWELRY, INC. | v418123_ex31-2.htm |
| EX-32.1 - EXHIBIT 32.1 - KINGOLD JEWELRY, INC. | v418123_ex32-1.htm |
Exhibit 99.1
KINGOLD JEWELRY REPORTS FINANCIAL RESULTS
FOR THE SECOND QUARTER ENDED JUNE 30, 2015
Company to Hold Conference Call with Accompanying Slide Presentation on Wednesday, August 19, 2015, at 5:00 PM ET
WUHAN CITY, China, August 19, 2015 - Kingold Jewelry, Inc. (“Kingold” or the “Company”) (NASDAQ: KGJI), one of China’s leading manufacturers and designers of high quality 24-karat gold jewelry, ornaments and investment-oriented products, today announced its unaudited financial results for the second quarter ended June 30, 2015.
2015 SECOND QUARTER FINANCIAL HIGHLIGHTS (ALL RESULTS ARE COMPARED TO PRIOR YEAR PERIOD)
| · | Net sales were $249.4 million, a decrease of 26.6% compared to $339.8 million, largely due to decreases in production, sales volume and selling prices |
| · | Processed a total of 14.5 metric tons of 24-karat gold products, compared to 17.9 metric tons |
| · | As a result of lower gold prices, the Company incurred a $7.3 million write-down on the value of its inventory |
| · | Gross profit decreased to $2.4 million compared to $24.5 million, and gross margin was 1.0% compared to 7.2%, primarily due to the write-down of inventory as the result of the drop of gold prices in 2015 |
| · | Net income was $0.6 million, or $0.01 per diluted share, compared to $16.8 million, or $0.25 per diluted share |
Mr. Zhihong Jia, Chairman and CEO of the Company, commented, “We were pleased to maintain profitability during the second quarter of 2015 given the sharp drop of gold prices and the succeeding lower demand for gold products. China’s economy has been cooling off since the beginning of 2015, and the red-hot stock market during the first half of 2015 made the demand for gold much less appealing. Thus, Chinese consumers have slowed their demand for gold substantially. However, we believe market conditions will motivate us to enhance our design capabilities to solidify our position as one of our industry’s leaders, to establish new partner banks to further extend our coverage for our investment gold products, and to seek and explore new opportunities to expand our sales channels.”
UPDATE ON Kingold Jewelry cultural industry Park (“Jewelry park”)
Mr. Jia stated, “The construction company working on the Jewelry Park is working on the exterior walls and landscaping, and our staff is working actively in preparation for the grand opening of the Jewelry Park scheduled for December 2015. We are all excited and looking forward to sharing future achievements with our investors.”
2015 SECOND QUARTER OPERATIONAL REVIEW
| · | For the three months ended June 30, 2015, Kingold processed approximately 14.5 metric tons of 24-karat gold products, compared to 17.9 metric tons processed in the second quarter of 2014 |
| Kingold Jewelry, Inc. | Page 2 |
| August 19, 2015 |
| Metric Tons of Gold Processed | ||||
| Three Months Ended: | ||||
| June 30, 2015 | June 30, 2014 | |||
| Volume | % of Total | Volume | % of Total | |
| Branded* | 6.9 | 47.6% | 8.7 | 48.6% |
| Customized** | 7.6 | 52.4% | 9.2 | 51.4% |
| Total | 14.5 | 100.0% | 17.9 | 100% |
| Six Months Ended: | ||||
| June 30, 2015 | June 30, 2014 | |||
| Volume | % of Total | Volume | % of Total | |
| Branded* | 12.5 | 46.6% | 16.6 | 51.4% |
| Customized** | 14.3 | 53.4% | 15.7 | 48.6% |
| Total | 26.8 | 100.0% | 32.3 | 100% |
| * | Branded Production: | The Company acquires gold from the Shanghai Gold Exchange to produce branded products. | ||
| ** | Customized Production: | Clients who purchase customized products supply gold to the Company for processing. |
| · | For the three months ended June 30, 2015, the Company processed a total of 14.5 metric tons of gold, of which branded production was 6.9 metric tons, representing 47.6% of total gold processed, and customized production was 7.6 metric tons, representing 52.4% of total gold processed in the second quarter of 2015. In the second quarter of 2014, the Company processed a total of 17.9 metric tons, of which branded production was 8.7 metric tons, or 48.6% of the total gold processed, and customized production was 9.2 metric tons, or 51.4 % of total gold processed. |
2015 SECOND QUARTER FINANCIAL REVIEW
Net Sales
Net sales for the three months ended June 30, 2015 were $249.4 million, a decrease of $90.3 million, or 26.6%, from net sales of $339.8 million for same period in 2014. The decrease in net sales was primarily due to decreased production and sales volume as well as a decrease in the average selling price for branded and customized production and gold trade-in.
Gross Profit
Gross profit for the three months ended June 30, 2015 was $2.4 million, a decrease of $22.1 million, or 90.1%, from $24.5 million for the same period in 2014.
Gross Margin
Gross margin for the three months ended June 30, 2015 was 1.0%, compared to 7.2% for the same period in 2014. The primary reason for the substantial decrease in gross margin was the drop in gold prices in 2015 resulting in a $10.3 million write-down of inventory. Due to this decline, orders from our customized production segment, which normally has a higher margin than branded production, were noticeably reduced.
Net Income
For the foregoing reasons, net income for the three months ended June 30, 2015 was $0.6 million, or $0.01 per diluted share based on 66.0 million weighted average diluted shares outstanding, compared to $16.8 million, or $0.25 per diluted share based on 66.8 million weighted average diluted shares outstanding in the prior-year period.
| Kingold Jewelry, Inc. | Page 3 |
| August 19, 2015 |
Balance Sheet and Cash Flow
| (in millions except for percentages) | 6/30/2015 | 6/30/2014 |
% Changed | ||
| (Unaudited) | (Unaudited) | ||||
| Cash | $1.5 | 6.8 | (77.9%) | ||
| Inventories (gold) | 241.1 | 209.6 | 15.0% | ||
|
Working Capital (Current Assets – Current Liabilities) |
165.9 | 223.1 | (25.6%) | ||
| Stockholders’ Equity | 267.4 | 244.1 | 9.5% |
Net cash used in operating activities was $23.6 million for the six months ended June 30, 2015, compared with net cash provided by operating activities of $8.8 million for the same period in 2014. The change was mainly due to the decrease in net income and a $10.3 million write-down of inventory reflecting the decline in gold prices.
Kingold’s net cash from operating activities can fluctuate significantly due to changes in inventories (principally gold). Other factors that may vary significantly include the Company’s purchases of gold and income taxes. The Company expects that the net cash it generates from operating activities will continue to fluctuate as the Company’s inventories, receivables, accounts payables, and the other factors described above change with increased production and the purchase of larger quantities of raw materials (principally gold).
OUTLOOK FOR 2015
With the overall commodity market and gold market under continued pressure, Kingold anticipates a weak demand for gold in China for the rest of 2015. The Company expects that its gold processed is expected to be between 45 metric tons and 55 metric tons during 2015.
Conference Call Details
Kingold also announced that it will discuss its financial results in a conference call on Wednesday, August 19, 2015, at 5:00 PM ET.
The dial-in numbers are:
| Live Participant Dial In (North America): | 877-407-9038 |
| Live Participant Dial In (China): | 4001-202-840 |
| Live Participant Dial In (Other Countries): | 201-493-6742 |
The conference call will also be webcast live. To listen to the call, please go to the Investor Relations section of Kingold’s website at www.kingoldjewelry.com, or click on the following link: http://kingoldjewelry.equisolvewebcast.com/q2-2015. The Company will also have an accompanying slide presentation available in PDF format on its homepage prior to the conference call.
About Kingold Jewelry, Inc.
Kingold Jewelry, Inc. (NASDAQ: KGJI), centrally located in Wuhan City, one of China’s largest cities, was founded in 2002 and today is one of China’s leading designers and manufacturers of 24-karat gold jewelry, ornaments, and investment-oriented products. The Company sells both directly to retailers as well as through major distributors across China. Kingold has received numerous industry awards and has been a member of the Shanghai Gold Exchange since 2003. For more information, please visit www.kingoldjewelry.com.
| Kingold Jewelry, Inc. | Page 4 |
| August 19, 2015 |
Business Risks and Forward-Looking Statements
This press release contains forward-looking statements that are subject to the safe harbors created under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. You can identify these forward-looking statements by words such as “expects,” “believe,” “project,” “anticipate,” or similar expressions. The forward-looking statements in this release include, but are not limited to, statements regarding Kingold’s outlook with respect to its 2015 gold processing, expectations with respect to expansion into a higher margin, direct retail business through the online retail store, expectations with respect to completion of construction of the Jewelry Park and planned grand opening, as well as its ability to engage in presales and finance the remaining construction, and its expectations with respect to a long-term partnership with Fosun. Readers are cautioned that actual results could differ materially from those expressed in any forward-looking statements. Forward-looking statements are subject to a number of risks, including those contained in Kingold’s SEC filings available at www.sec.gov, including Kingold’s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date on which they are made. Kingold undertakes no obligation to update or revise any forward-looking statements for any reason.
Company Contact
Kingold Jewelry, Inc.
Bin Liu, CFO
Phone: +1-847-660-3498 (US) / +86-27-6569-4977 (China)
bl@kingoldjewelry.com
INVESTOR RELATIONS
The Equity Group Inc.
Katherine Yao, Senior Associate
+86 10-6587-6435
kyao@equityny.com
| Kingold Jewelry, Inc. | Page 5 |
| August 19, 2015 |
| KINGOLD JEWELRY, INC. | ||||||||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | ||||||||||||||||||||||||
| (IN U.S. DOLLARS) | ||||||||||||||||||||||||
| (UNAUDITED) | ||||||||||||||||||||||||
| For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||||||||||
| NET SALES | $ | 249,421,052 | $ | 339,766,164 | $ | 455,616,272 | $ | 647,219,263 | ||||||||||||||||
| COST OF SALES | ||||||||||||||||||||||||
| Cost of sales | (246,684,484 | ) | (314,950,855 | ) | (441,805,439 | ) | (594,244,102 | ) | ||||||||||||||||
| Depreciation | (311,110 | ) | (306,688 | ) | (620,110 | ) | (614,967 | ) | ||||||||||||||||
| Total cost of sales | (246,995,594 | ) | (315,257,543 | ) | (442,425,549 | ) | (594,859,069 | ) | ||||||||||||||||
| GROSS PROFIT | 2,425,458 | 24,508,621 | 13,190,723 | 52,360,194 | ||||||||||||||||||||
| OPERATING EXPENSES | ||||||||||||||||||||||||
| Selling, general and administrative expenses | 2,205,197 | 1,053,314 | 3,883,563 | 3,618,490 | ||||||||||||||||||||
| Stock compensation expenses | 102,344 | 612,995 | 315,127 | 1,225,990 | ||||||||||||||||||||
| Depreciation | 25,237 | 30,933 | 50,428 | 62,040 | ||||||||||||||||||||
| Amortization | 3,096 | 3,065 | 6,170 | 6,154 | ||||||||||||||||||||
| Total operating expenses | 2,335,874 | 1,700,307 | 4,255,288 | 4,912,674 | ||||||||||||||||||||
| INCOME FROM OPERATIONS | 89,584 | 22,808,314 | 8,935,435 | 47,447,520 | ||||||||||||||||||||
| OTHER INCOME (EXPENSES) | ||||||||||||||||||||||||
| Other Income | 6,530 | - | 6,530 | - | ||||||||||||||||||||
| Interest Income | 133,803 | - | 151,072 | - | ||||||||||||||||||||
| Interest expense | (84,616 | ) | (282,868 | ) | (382,153 | ) | (961,391 | ) | ||||||||||||||||
| Total other expenses, net | 55,717 | (282,868 | ) | (224,551 | ) | (961,391 | ) | |||||||||||||||||
| INCOME FROM OPERATIONS BEFORE TAXES | 145,301 | 22,525,446 | 8,710,884 | 46,486,129 | ||||||||||||||||||||
| INCOME TAX PROVISION (BENEFIT) | ||||||||||||||||||||||||
| Current | 557,373 | 5,714,928 | 3,286,274 | 12,203,971 | ||||||||||||||||||||
| Deferred | (985,503 | ) | - | (1,730,028 | ) | 274,548 | ||||||||||||||||||
| Total income tax provision (benefit) | (428,130 | ) | 5,714,928 | 1,556,246 | 12,478,519 | |||||||||||||||||||
| NET INCOME | $ | 573,431 | $ | 16,810,518 | $ | 7,154,638 | $ | 34,007,610 | ||||||||||||||||
| Add: net loss attributable to non-controlling interest | 188 | - | 188 | - | ||||||||||||||||||||
| NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS | 573,619 | 16,810,518 | 7,154,826 | 34,007,610 | ||||||||||||||||||||
| OTHER COMPREHENSIVE INCOME (LOSS) | ||||||||||||||||||||||||
| Total foreign currency translation gains (loss) | $ | 488,151 | $ | 332,315 | $ | 1,587,816 | $ | (1,666,440 | ) | |||||||||||||||
| Less: foreign currency translation gain | ||||||||||||||||||||||||
| attributable to noncontrolling interest | (81 | ) | - | (81 | ) | - | ||||||||||||||||||
| Foreign currency translation gains (loss) | ||||||||||||||||||||||||
| attributable to common stockholders | 488,070 | 332,315 | 1,587,735 | (1,666,440 | ) | |||||||||||||||||||
| COMPREHENSIVE INCOME | $ | 1,061,689 | $ | 17,142,833 | $ | 8,742,561 | $ | 32,341,170 | ||||||||||||||||
| Earnings per share | ||||||||||||||||||||||||
| Basic | $ | 0.01 | $ | 0.25 | $ | 0.11 | $ | 0.52 | ||||||||||||||||
| Diluted | $ | 0.01 | $ | 0.25 | $ | 0.11 | $ | 0.51 | ||||||||||||||||
| Weighted average number of shares | ||||||||||||||||||||||||
| Basic | 65,963,502 | 65,953,462 | 65,963,502 | 65,881,239 | ||||||||||||||||||||
| Diluted | 65,963,502 | 66,088,514 | 65,963,502 | 66,337,896 | ||||||||||||||||||||
| Kingold Jewelry, Inc. | Page 6 |
| August 19, 2015 |
| KINGOLD JEWELRY, INC. | ||||||||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||||||||
| (IN U.S. DOLLARS) | ||||||||||||||||
| (UNAUDITED) | ||||||||||||||||
| June 30, | December 31, | |||||||||||||||
| 2015 | 2014 | |||||||||||||||
| ASSETS | ||||||||||||||||
| CURRENT ASSETS | ||||||||||||||||
| Cash | $ | 1,498,322 | $ | 1,331,658 | ||||||||||||
| Restricted cash | 24,901,967 | 14,793,632 | ||||||||||||||
| Accounts receivable | 132,837 | 503,406 | ||||||||||||||
| Inventories, net | 241,143,859 | 212,396,363 | ||||||||||||||
| Other current assets and prepaid expenses | 318,132 | 57,971 | ||||||||||||||
| Value added tax recoverable | 8,972,469 | 4,501,426 | ||||||||||||||
| Deferred income tax assets | 2,586,001 | - | ||||||||||||||
| Total current assets | 279,553,587 | 233,584,456 | ||||||||||||||
| PROPERTY AND EQUIPMENT, NET | 8,804,987 | 9,390,258 | ||||||||||||||
| OTHER ASSETS | ||||||||||||||||
| Deposit on land use right-Jewelry Park | 9,879,485 | 9,819,687 | ||||||||||||||
| Construction in progress - Jewelry Park | 82,965,439 | 58,310,818 | ||||||||||||||
| Other assets | 158,034 | 157,078 | ||||||||||||||
| Land use right | 488,836 | 492,027 | ||||||||||||||
| Total other assets | 93,491,794 | 68,779,610 | ||||||||||||||
| TOTAL ASSETS | $ | 381,850,368 | $ | 311,754,324 | ||||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||
| CURRENT LIABILITIES | ||||||||||||||||
| Short term loans | $ | 9,821,896 | $ | 16,270,745 | ||||||||||||
| Long term loans - current maturities | 32,715,100 | 28,844,777 | ||||||||||||||
| Debts payable, net | 65,151,912 | - | ||||||||||||||
| Other payables and accrued expenses | 4,072,649 | 2,970,770 | ||||||||||||||
| Income tax payable | 1,568,248 | 978,713 | ||||||||||||||
| Other taxes payable | 298,574 | 777,537 | ||||||||||||||
| Total current liabilities | 113,628,379 | 49,842,542 | ||||||||||||||
| Deferred income tax liability-Non-Current | 851,271 | - | ||||||||||||||
| Long term loans | - | 3,672,308 | ||||||||||||||
| TOTAL LIABILITIES | 114,479,650 | 53,514,850 | ||||||||||||||
| EQUITY | ||||||||||||||||
| Preferred stock, $0.001 par value, 500,000 shares | ||||||||||||||||
| authorized, none issued or outstanding | ||||||||||||||||
| as of June 30, 2015 and December 31, 2014 | - | - | ||||||||||||||
| Common stock $0.001 par value, 100,000,000 shares | ||||||||||||||||
| authorized, 65,963,502 and 65,963,502 shares issued and outstanding | ||||||||||||||||
| as of June 30, 2015 and December 31, 2014 | 65,963 | 65,963 | ||||||||||||||
| Additional paid-in capital | 79,775,302 | 79,460,175 | ||||||||||||||
| Retained earnings | ||||||||||||||||
| Unappropriated | 170,156,901 | 163,002,075 | ||||||||||||||
| Appropriated | 967,543 | 967,543 | ||||||||||||||
| Accumulated other comprehensive income | 16,331,452 | 14,743,718 | ||||||||||||||
| Total stockholders’ equity | 267,297,161 | 258,239,474 | ||||||||||||||
| Noncontrolling interest | 73,557 | |||||||||||||||
| Total equity | 267,370,718 | 258,239,474 | ||||||||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 381,850,368 | $ | 311,754,324 | ||||||||||||
| Kingold Jewelry, Inc. | Page 7 |
| August 19, 2015 |
| KINGOLD JEWELRY, INC. | ||||||||||||
| CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | ||||||||||||
| (IN U.S. DOLLARS) | ||||||||||||
| (UNAUDITED) | ||||||||||||
| For the six months ended June 30, | ||||||||||||
| 2015 | 2014 | |||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
| Net income | $ | 7,154,638 | $ | 34,007,610 | ||||||||
| Adjustments to reconcile net income to cash provided by (used in) | ||||||||||||
| operating activities: | ||||||||||||
| Depreciation | 670,538 | 677,007 | ||||||||||
| Amortization of intangible assets | 6,170 | 6,154 | ||||||||||
| Amortization of deferred financing costs | 326,509 | - | ||||||||||
| Share based compensation for services | 315,127 | 1,225,990 | ||||||||||
| Inventory valuation allowance | 10,315,970 | - | ||||||||||
| Deferred tax provision (benefit) | (1,730,028 | ) | 274,548 | |||||||||
| Changes in operating assets and liabilities | ||||||||||||
| (Increase) decrease in: | ||||||||||||
| Accounts receivable | 372,622 | 456,437 | ||||||||||
| Inventories | (37,695,661 | ) | (36,496,004 | ) | ||||||||
| Other current assets and prepaid expenses | (120,344 | ) | 7,932,173 | |||||||||
| Value added tax recoverable | (5,280,553 | ) | (780,002 | ) | ||||||||
| Increase (decrease) in: | ||||||||||||
| Other payables and accrued expenses | 1,086,129 | (893,437 | ) | |||||||||
| Income tax payable | 581,994 | 2,486,400 | ||||||||||
| Other taxes payable | 366,577 | (146,790 | ) | |||||||||
| Net cash provided by (used in) operating activities | (23,630,312 | ) | 8,750,086 | |||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||
| Purchase of property and equipment | (29,825 | ) | (150,718 | ) | ||||||||
| Cash deposit for land use right-Jewelry Park | - | (10,330,282 | ) | |||||||||
| Cash payment in construction in progress-Jewelry Park | (24,233,680 | ) | - | |||||||||
| Net cash used in investing activities | (24,263,505 | ) | (10,481,000 | ) | ||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
| Capital contribution from minority interest for the new subsidiary | 73,465 | - | ||||||||||
| Proceeds from bank loans-short term | 6,530,186 | 20,759,049 | ||||||||||
| Repayments of bank loans-short term | (13,060,372 | ) | (49,333,268 | ) | ||||||||
| Proceeds from long term loan | - | 3,674,759 | ||||||||||
| Restricted cash | (9,991,098 | ) | (20,331,414 | ) | ||||||||
| Proceeds from related party loan | - | 64,971,981 | ||||||||||
| Repayments of related party loan | - | (12,994,396 | ) | |||||||||
| Net proceeds from debt financing instruments private placement | 65,301,858 | - | ||||||||||
| Deferred financing costs | (653,019 | ) | - | |||||||||
| Net cash provided by financing activities | 48,201,020 | 6,746,711 | ||||||||||
| EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | (140,539 | ) | (491,514 | ) | ||||||||
| NET INCREASE IN CASH AND CASH EQUIVALENTS | 166,664 | 4,524,283 | ||||||||||
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 1,331,658 | 2,284,930 | ||||||||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 1,498,322 | $ | 6,809,213 | ||||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||||||||
| Cash paid for interest expense | $ | 2,584,438 | $ | 6,411,325 | ||||||||
| Cash paid for income tax | $ | 2,704,280 | $ | 9,717,571 | ||||||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||||||
| Cash dividend declared | $ | - | $ | 5,276,277 | ||||||||