Exhibit 99.1

 

 

  

KINGOLD JEWELRY REPORTS FINANCIAL RESULTS

FOR THE FIRST QUARTER ENDED MARCH 31, 2016

 

Company to Hold Conference Call with Accompanying Slide Presentation on May 16, 2016, at 5:30 p.m. ET,

Anticipates Finishing Construction of Kingold Jewelry Cultural Industry Park by End of May 2016

 

WUHAN CITY, China, May 16, 2016 - 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 financial results the first quarter ended March 31, 2016, highlighted by considerable increases in net sales and net income.

 

2016 First Quarter Financial Highlights (all results are compared to prior year period)

·

Net sales were $282.2 million, an increase of 37% from $206.2 million

·

Processed 14.8 metric tons of 24-karat gold products during the period, an increase of 20.1% from 12.3 metric tons

·

Net income was $15.2 million, or $0.23 per diluted share, an increase of 131% from $6.6 million, or $0.10 per diluted share

·

Book value per diluted share was $4.29 at December 31, 2016, compared to $4.03 at December 31, 2015

 

Outlook for 2016

·

Company reiterates guidance of between 50 and 60 metric tons of 24-karat gold processed in 2016.

 

Mr. Zhihong Jia, Chairman and CEO of the Company, commented, “We were pleased to deliver solid financial and operating results for the first quarter of 2016 as we continued to improve our manufacturing capacity and distribution network. During the first quarter, our management team made adjustments on our sales go-to-market strategy and successfully achieved double-digit growth in our sales and gold processed volume.”

 

2016 FIRST QUARTER OPERATIONAL REVIEW 

·

In the first quarter of 2016, Kingold sold approximately 14.8 metric tons of 24-karat gold products, an increase of 20.1% over the 12.3 metric tons sold in the first quarter of 2015.

  

Metric Tons of Gold Sales
	Three Months Ended:
	March 31, 2016		March 31, 2015
	Volume	% of Total	Volume	% of Total
Branded*	8.2	55.1%	5.6	45.5%
Customized**	6.6	44.9%	6.7	54.5%
Total	14.8	100%	12.3	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.

 

 

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May 16, 2016

 

·

For the three months ended March 31, 2016, the Company sold a total of 14.8 metric tons of gold, of which branded production was 8.2 metric tons, representing 55.1% of total gold sold, and customized production was 6.6 metric tons, representing 44.9% of total gold sold, in the first quarter of 2016. In the first quarter of 2015, the Company sold a total of 12.3 metric tons, of which branded production was 5.6 metric tons, or 45.5% of total gold sold, and customized production was 6.7 metric tons, or 54.5% of total gold sold.

 

 

UPDATE ON Kingold Jewelry cultural industry Park

Kingold also announced today that it anticipates finishing construction of the Kingold Jewelry Cultural Industry Park by the end of May 2016.

 

Previously, the Company signed several supplemental agreements with the construction company Wuhan Wansheng which Wuhan Wansheng agreed to complete the construction and deliver the completed real estate property to us in April 2016. However, due to the cold weather condition in January and February 2016 and the construction worker leave during the Chinese Spring Festival holiday season, the final construction work of the Jewelry Park resumed in the middle of February 2016 and the landscaping, building decoration and road construction did not fully complete as of March 31, 2016. Due to the construction work delay, the inspection application with local government was also delayed until mid-April 2016 when the construction work was fully completed. Therefore, in April 2016, both parties signed an additional supplemental agreement to extend the final property delivery time to May 30, 2016 when the certificate of occupancy is expected to be obtained from local government.

 

Chairman Jia continued, “We are very excited about the anticipated completion of the Jewelry Park at the end of this month. We look forward to the Jewelry Park becoming a bridge between upstream and downstream companies within the jewelry industry. We expect increased sales upon the opening of the Jewelry Park, as well as a greater level of collaboration and exchanging of ideas amongst our jewelry industry tenants, which will increase Kingold’s brand awareness and expansion and diversification of our customer base.”

 

CONSOLIDATED FINANCIAL AND OPERATING REVIEW

 

Net Sales

Net sales for the three months ended March 31, 2016 increased 37% to $282.2 million from $206.2 million for the same period in 2015, primarily due to an increase in sales volume.

 

The average unit selling price for the Company’s customized production decreased from RMB7.05 per gram in the three months ended March 31, 2015 to RMB4.25 per gram in three months ended March 31, 2016. This decrease was primarily a result of Kingold’s sales strategy to encourage customers to purchase more customized production of its gold products during the holiday season. This resulted in an approximately $3.07 million decrease in customized production revenue, which was partially offset by an increase in branded production revenue.

 

Gross Profit

Gross profit for the three months ended March 31, 2016 increased 165% to $28.5 million from $10.8 million for the same period in 2015.

 

 

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May 16, 2016

 

Gross Margin

The Company’s gross margin was 10.1% for the three months ended March 31, 2016, compared to 5.2% in the prior year period. The substantial increase was due to the decreased unit cost and the increased unit price of branded production sales.

 

Net Income

Net income for the three months ended March 31, 2016 was $15.2 million, or $0.23 per diluted share based on 66.0 million weighted average diluted shares outstanding, increased 131% from net income of $6.6 million, or $0.10 per diluted share based on 66.0 million weighted average diluted shares outstanding in the prior-year period.

 

Balance Sheet and Cash Flow

(in millions except for percentages)		3/31/2016				12/31/2015				% Changed
Cash		$	13.3				3.1				335.0	%
Inventories (gold)		$	503.9				298.3				68.9	%
Working Capital		$	490.4				174.9				180.4	%
Stockholders’ Equity		$	282.9				265.6				6.5	%
Book Value Per Share (in $)		$	4.29				4.03				6.5	%

 

Net cash used in operating activities was $214.1 million for the three months ended March 31, 2016, compared with net cash provided by operating activities of $9.4 million for the same period in 2015. The significant increase in net cash used in operating activities was mainly due to $201 million in inventory purchases in anticipation of increased production/sales demand following the completion of the Jewelry Park, with sales expected to increase beginning the second quarter of 2016. In addition, due to Kingold’s bank borrowings during the quarter ended March 31, 2016, the Company was required to pledge a significant amount of gold as collateral to the banks, further increasing the Company’s inventory purchases and stockpile.

 

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 2016

Based on its existing resources and capacity, the Company reiterates its expectation that gold processed will be between 50 metric tons and 60 metric tons during 2016.

 

Conference Call Details

Kingold also announced that it will discuss these financial results in a conference call on May 16, 2016, at 5:30 p.m. ET.

The dial-in numbers are:

Live Participant Dial In (Toll Free):		877-407-9038
Live Participant Dial In (International):		201-493-6742

 

 

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May 16, 2016

 

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/q1-2016. 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.

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 statements regarding Kingold’s outlook with respect to its 2016 outlook for gold processing, its 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. 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
Phone: +86-10-6587-6435
kyao@equityny.com

 

 

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May 16, 2016

 

KINGOLD JEWELRY, INC

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(IN U.S. DOLLARS)

(UNAUDITED)

  

		For three months ended March 31,
		2016				2015
NET SALES		$	282,188,057			$	206,195,220
COST OF SALES
Cost of sales			(253,412,444	)			(195,120,956	)
Depreciation			(290,682	)			(309,001	)
Total cost of sales			(253,703,126	)			(195,429,957	)
GROSS PROFIT			28,484,931				10,765,263
OPERATING EXPENSES
Selling, general and administrative expenses			3,269,365				1,678,366
Stock compensation expenses			11,143				212,783
Depreciation			23,513				25,191
Amortization			2,890				3,075
Total operating expenses			3,306,911				1,919,415
INCOME FROM OPERATIONS		$	25,178,020			$	8,845,848
OTHER INCOME (EXPENSES)
Interest Income			59,224				17,270
Interest expense			(4,973,353	)			(297,537	)
Total other expenses, net			(4,914,129	)			(280,267	)
INCOME FROM OPERATIONS BEFORE TAXES			20,263,891				8,565,581
INCOME TAX PROVISION (BENEFIT)
Current			4,811,004				2,728,902
Deferred			255,674				(744,525	)
Total income tax provision			5,066,678				1,984,377
NET INCOME			15,197,213				6,581,204
Less: net loss attribute to the noncontrolling interest			(1,197	)			-
NET INCOME ATTRIBUTABLE TO KINGOLD JEWELRY, INC.		$	15,198,410			$	6,581,204
OTHER COMPREHENSIVE INCOME (LOSS)
Total foreign currency translation gains (loss)		$	1,962,694			$	1,099,665
Add: foreign currency translation loss attributable to noncontrolling interest			(454	)			-
Foreign currency translation gain (loss) attributable to KINGOLD JEWELRY, INC.			1,963,148				1,099,665
COMPREHENSIVE INCOME ATTRIBUTABLE TO:
KINGOLD JEWELRY, INC.		$	17,161,558			$	7,680,869
Non-controlling interest			(1,651	)			-
Total		$	17,159,907			$	7,680,869
Earnings per share
Basic and diluted		$	0.23			$	0.10
Weighted average number of shares
Basic and diluted			65,963,502				65,963,502

 

 

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May 16, 2016

 

KINGOLD JEWELRY, INC

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN U.S. DOLLARS)

(UNAUDITED)

 

		March 31, 2016				March 31, 2015
ASSETS
CURRENT ASSETS
Cash		$	13,266,877			$	3,100,569
Restricted cash			42,599,678				26,649,687
Accounts receivable			887,683				1,624,323
Inventories			503,893,855				298,303,185
Other current assets and prepaid expenses			3,119,680				1,046,032
Value added tax recoverable			44,907,520				15,526,002
Total current assets			608,675,293				346,249,798
PROPERTY AND EQUIPMENT, NET			7,396,378				7,622,509
OTHER ASSETS
Deposit on land use right - Jewelry Park			9,357,810				9,296,763
Construction in progress - Jewelry Park			132,262,641				105,844,259
Other assets			149,690				148,713
Land use right			454,232				454,180
Total long-term assets			149,620,751				123,366,424
TOTAL ASSETS		$	758,296,044			$	469,616,222
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short term loans		$	49,927,512			$	55,455,428
Debts payable, net			-				61,471,962
Construction payables - Jewelry Park			36,437,781				23,876,642
Deposits payable - Jewelry Park			22,327,831				22,182,171
Other payables and accrued expenses			3,995,749				6,355,979
Due to related party			450,025				200,059
Income tax payable			4,878,962				1,119,918
Other taxes payable			262,059				710,104
Total current liabilities			118,279,919				171,372,263
Deferred income tax liability - Non-Current			2,045,934				1,774,993
Long term loans			355,074,542				30,808,571
TOTAL LIABILITIES			475,400,395				203,955,827
COMMITMENTS AND CONTINGENCIES
EQUITY
Preferred stock, $0.001 par value, 500,000 shares authorized, none issued or outstanding as of March 31, 2016 and March 31, 2016			-				-
Common stock $0.001 par value, 100,000,000 shares authorized, 65,963,502 shares issued and outstanding as of March 31, 2016 and March 31, 2016			65,963				65,963
Additional paid-in capital			80,066,064				79,990,717
Retained earnings
Unappropriated			199,762,557				184,564,147
Appropriated			967,543				967,543
Accumulated other comprehensive income (deficit)			1,961,899				(1,249	)
TOTAL STOCKHOLDER'S EQUITY			282,824,026				265,587,121
Noncontrolling interest			71,623				73,274
TOTAL EQUITY			282,895,649				265,660,395
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	758,296,044			$	469,616,222

 

 

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KINGOLD JEWELRY, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(IN U.S. DOLLARS)

(UNAUDITED)

 

		For the three months ended March 31,
		2016				2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net income		$	15,197,213			$	6,581,204
Adjusted to reconcile net income to cash provided by operating activities:
Depreciation			314,195				334,192
Amortization of intangible assets			2,890				3,075
Amortization of deferred financing costs			144,097				-
Share based compensation for services and warrants expense			75,347				212,783
Inventory valuation allowance			-				2,978,101
Deferred tax provision (benefit)			255,674				(744,525	)
Changes in operating assets and liabilities
(Increase) decrease in:
Accounts receivable			736,891				503,537
Inventories			(200,793,983	)			(2,360,577	)
Other current assets and prepaid expenses			(2,037,978	)			(48,362	)
Deferred offering costs			-				(488,249	)
Value added tax recoverable			(28,871,518	)			158,617
Increase (decrease) in:
Other payables and accrued expenses			(2,362,754	)			442,050
Customer deposits			-				687,386
Income tax payable			3,252,855				1,749,934
Other taxes payable			151				(652,139	)
Net cash provided by (used in) operating activities			(214,086,920	)			9,357,027
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment			(42,449	)			(26,586	)
Construction in progress-Jewelry Park			(13,101,275	)			(5,561,161	)
Net cash used in investing activities			(13,143,724	)			(5,587,747	)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of bank loans – short term			(6,115,740	)			-
Proceeds from long term loan			319,547,435				-
Restricted cash			(15,555,150	)			(10,839	)
Proceeds from related party loan			250,226				-
Proceeds from (repayment of) debt financing instruments-private placement			(61,157,404	)			65,099,928
Net cash provided by financing activities			236,969,367				65,089,089
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS			427,585				269,714
NET INCREASE IN CASH AND CASH EQUIVALENTS			10,166,308				69,128,083
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			3,100,569				1,331,658
CASH AND CASH EQUIVALENTS, END OF PERIOD		$	13,266,877			$	70,459,741
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest expense		$	3,951,608			$	1,332,444
Cash paid for income tax		$	1,111,571			$	978,968