WUHAN CITY, China, April 1, 2014 /PRNewswire/ -- 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 financial results for its fourth quarter and year ended December 31, 2013.
2013 Financial and Operating Highlights (comparisons are to 2012):
Fourth Quarter 2013 Highlights (comparisons are to Fourth Quarter 2012):
Outlook for 2014
Mr. Zhihong Jia, Chairman and CEO of Kingold, stated, "Kingold's growth accelerated throughout 2013, which we believe was largely the result of our continued push to gain market share from competitors in addition to utilizing gold leasing agreements to increase our capacity. This resulted in solid revenue and earnings growth. We are also seeking new means of diversifying our business through the development of the Wuhan Kingold Jewelry International Industry Park, which we believe will be an integral part of the Company's long-term growth strategy by creating a major hub for the jewelry industry in the central region of China. We believe this park will become a sought after location to display well-known jewelry brands while also serving as a platform for Kingold to sell to new clients. We also expect to expand our international presence in 2014, beginning with our recently announced joint venture agreement to enter the Kuwait market. We were pleased with our progress during 2013, where we diversified our revenue base while still remaining focused on our core competency of designing and manufacturing 24-karat gold jewelry products of the highest quality."
Operational Review
Kingold processed a total of 51.1 metric tons of 24-karat gold products in 2013, a 35.2% increase over the 37.8 metric tons processed in 2012. The Company achieved its previously announced guidance range of between 50-55 metric tons processed.
In the fourth quarter of 2013, Kingold processed approximately 14.3 metric tons of 24-karat gold products, an increase of 88.2% over the 7.6 metric tons processed in the fourth quarter of 2012.
Jewelry Business
Investment Gold Business
Metric Tons of Gold Processed | |||||
Three Months Ended: | |||||
December 31, 2013 | December 31, 2012 | ||||
Branded* | 8.3 | 58% | 4.2 | 55% | |
Customized** | 6.0 | 42% | 3.4 | 45% | |
Total | 14.3 | 100% | 7.6 | 100% | |
Year Ended: | |||||
December 31, 2013 | December 31, 2012 | ||||
Branded* | 28.6 | 56.0% | 18.9 | 50.0% | |
Customized** | 22.5 | 44.0% | 18.9 | 50.0% | |
Total | 51.1 | 100% | 37.8 | 100% | |
* Branded Production: The Company purchases gold from the Shanghai Gold Exchange to produce branded products. ** Customized Production: Clients who purchase customized products supply gold to the Company for processing. | |||||
Market Overview
2013 Fourth Quarter Financial Review
Full Year 2013 Financial Review
Balance Sheet and Cash Flow
(in millions except for percentages) | 12/31/2013 | 12/31/2012 | % Change | |
Cash | $ | 2.3 | 2.5 | (8%) |
Inventories (gold) | 174.4 | 150.0 | 16.3% | |
Working Capital | 199.8 | 149.2 | 33.9% | |
Stockholders' Equity | 214.9 | 161.5 | 33.1% |
Kingold's net cash from operating activities can fluctuate significantly due to changes in inventories (principally gold). Other factors that may vary significantly include our accounts payable, purchases of gold and income taxes. The Company expects the net cash that it generates from operating activities to continue to fluctuate as its inventories, receivables, accounts payables and the other factors described above change with increased production and the purchase of larger quantities of raw materials (gold).
Outlook for 2014
Based on the Company's existing resources and capacity (which includes the Company's recent proceeds from its previously announced financing and gold lease agreements), Kingold believes gold processed will be between 60 metric tons and 70 metric tons during 2014. This guidance is based solely on current projected, organic growth, and would represent a 17.4% to 37.0% increase from the 51.1 metric tons processed in 2013.
Conference Call
Kingold also announced that it will also discuss these results, including the Company's outlook for 2014, in a conference call tomorrow morning (April 1, 2014) at 8:30 a.m. ET. The dial-in numbers are:
Live Participant Dial In (Toll Free): | 877-407-9038 | |
Live Participant Dial In (International): | 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/q4-2013. 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. These include statements regarding Kingold's new joint venture in Kuwait, including statements regarding the expected market for the joint venture, and Kingold's ability to capitalize on its international expansion. 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)
Email: bl@kingoldjewelry.com
INVESTOR RELATIONS
The Equity Group Inc.
Adam Prior, Senior Vice President
(212) 836-9606
aprior@equityny.com
Katherine Yao, Associate
+86 10-6587-6435
kyao@equityny.com
KINGOLD JEWELRY, INC. CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (IN US DOLLARS)
| |||||||||||
For the three months ended December 31, | For the Years Ended December 31, | ||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||
NET SALES | $ | 317,575,713 | $ | 201,442,617 | $ | 1,189,915,923 | $ | 915,732,800 | |||
COST OF SALES | |||||||||||
Cost of sales | (301,459,623) | (189,370,237) | (1,137,310,949) | (863,563,502) | |||||||
Depreciation | (370,784) | (362,837) | (1,277,374) | (1,253,256) | |||||||
Total cost of sales | (301,830,407) | (189,733,074) | (1,138,588,323) | (864,816,758) | |||||||
GROSS PROFIT | 15,745,306 | 11,709,543 | 51,327,600 | 50,916,042 | |||||||
OPERATING EXPENSES | |||||||||||
Selling, general and administrative expenses | 1,609,851 | 1,385,011 | 4,749,488 | 4,550,669 | |||||||
Stock compensation expenses | 398,773 | 130,958 | 1,532,563 | 1,178,313 | |||||||
Depreciation | 44,930 | 44,395 | 155,216 | 148,979 | |||||||
Amortization | 6,125 | 3,020 | 12,205 | 11,978 | |||||||
Total Operating Expenses | 2,059,679 | 1,563,384 | 6,449,472 | 5,889,939 | |||||||
INCOME FROM OPERATIONS | 13,685,627 | 10,146,159 | 44,878,128 | 45,026,103 | |||||||
OTHER INCOME (EXPENSES) | |||||||||||
Interest Income | 56,253 | - | 56,253 | - | |||||||
Other Expense | (81) | (15,848) | (81) | (17,407) | |||||||
Interest expense | (2,299,217) | (108,784) | (5,411,812) | (444,997) | |||||||
Total Other Expenses, net | (2,243,045) | (124,632) | (5,355,640) | (462,404) | |||||||
INCOME FROM OPERATIONS BEFORE TAXES | 11,442,582 | 10,021,527 | 39,522,488 | 44,563,699 | |||||||
INCOME TAX PROVISION (BENEFIT) | |||||||||||
Current | 3,257,007 | 2,612,737 | 11,454,787 | 11,893,370 | |||||||
Deferred | 199,243 | - | (272,225) | - | |||||||
TOTAL INCOME TAX PROVISION | 3,456,250 | 2,612,737 | 11,182,562 | 11,893,370 | |||||||
NET INCOME | $ | 7,986,332 | $ | 7,408,790 | $ | 28,339,926 | $ | 32,670,329 | |||
OTHER COMPREHENSIVE INCOME (LOSS) | |||||||||||
Total foreign currency translation gains (loss) | $ | 1,039,417 | $ | (815,548) | $ | 5,820,020 | $ | (62,772) | |||
COMPREHENSIVE INCOME | $ | 9,025,749 | $ | 6,593,242 | $ | 34,159,946 | $ | 32,607,557 | |||
Earnings per share | |||||||||||
Basic | $ | 0.12 | $ | 0.14 | $ | 0.45 | $ | 0.61 | |||
Diluted | $ | 0.12 | $ | 0.14 | $ | 0.44 | $ | 0.60 | |||
Weighted average number of shares | |||||||||||
Basic | 64,744,686 | 54,493,966 | 63,495,520 | 53,590,528 | |||||||
Diluted | 65,580,366 | 54,669,131 | 63,902,912 | 54,359,564 |
KINGOLD JEWELRY, INC. | |||||||||
CONSOLIDATED BALANCE SHEETS | |||||||||
(IN US DOLLARS) | |||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
ASSETS | |||||||||
CURRENT ASSETS | |||||||||
Cash | $ | 2,284,930 | $ | 2,544,114 | |||||
Restricted cash | 12,668,749 | - | |||||||
Accounts receivable | 532,386 | 692,762 | |||||||
Inventories | 174,433,501 | 150,041,421 | |||||||
Other current assets and prepaid expenses | 8,252,387 | 133,539 | |||||||
Due from related party | 52,354,308 | - | |||||||
Value added tax recoverable | 6,220,866 | 7,031,374 | |||||||
Deferred income tax assets | 275,882 | - | |||||||
Total Current Assets | 257,023,009 | 160,443,210 | |||||||
PROPERTY AND EQUIPMENT, NET | 10,686,947 | 11,683,987 | |||||||
OTHER ASSETS | |||||||||
Deposit on land use right | 32,721,442 | - | |||||||
Other assets | 157,946 | 153,029 | |||||||
Land use right | 507,117 | 503,313 | |||||||
Total other assets | 33,386,505 | 656,342 | |||||||
TOTAL ASSETS | $ | 301,096,461 | $ | 172,783,539 | |||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
CURRENT LIABILITIES | |||||||||
Short term loans | $ | 49,572,985 | $ | 6,340,551 | |||||
Other payables and accrued expenses | 3,499,717 | 1,445,513 | |||||||
Related party loan | - | 209,890 | |||||||
Income tax payable | 3,269,908 | 2,587,680 | |||||||
Other taxes payable | 848,739 | 659,989 | |||||||
Total Current Liabilities | 57,191,349 | 11,243,623 | |||||||
Long term loans | 29,004,287 | - | |||||||
TOTAL LIABILITIES | 86,195,636 | 11,243,623 | |||||||
COMMITMENTS AND CONTINGENCIES | - | - | |||||||
EQUITY | |||||||||
Preferred stock, $0.001 par value, 500,000 shares | |||||||||
authorized, none issued or outstanding | |||||||||
as of December 31, 2013 and December 31, 2012 | - | - | |||||||
Common stock $0.001 par value, 100,000,000 shares | |||||||||
authorized, 64,953,462 and 54,521,140 shares issued and outstanding | |||||||||
as of December 31, 2013 and December 31, 2012 | 64,953 | 54,521 | |||||||
Additional paid-in capital | 76,847,205 | 57,656,674 | |||||||
Retained earnings | |||||||||
Unappropriated | 120,946,375 | 92,606,449 | |||||||
Appropriated | 967,543 | 967,543 | |||||||
Accumulated other comprehensive income | 16,074,749 | 10,254,729 | |||||||
Total Stockholders' Equity | 214,900,825 | 161,539,916 | |||||||
TOTAL LIABILITIES AND EQUITY | $ | 301,096,461 | $ | 172,783,540 | |||||
KINGOLD JEWELRY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (IN US DOLLARS)
| ||||||||||
For the Years Ended December 31, | ||||||||||
2013 | 2012 | |||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||
Net income | $ | 28,339,926 | $ | 32,670,329 | ||||||
Adjusted to reconcile net income to cash used in | ||||||||||
operating activities: | ||||||||||
Depreciation | 1,432,591 | 1,402,235 | ||||||||
Amortization of intangible assets | 12,205 | 11,978 | ||||||||
Share based compensation | 1,532,563 | 1,178,313 | ||||||||
Inventory valuation allowance | 1,088,901 | - | ||||||||
Deferred tax provision (benefit) | (272,225) | - | ||||||||
Changes in operating assets and liabilities | ||||||||||
(Increase) decrease in: | ||||||||||
Accounts receivable | 180,215 | 203,662 | ||||||||
Inventories | (20,400,387) | (41,984,607) | ||||||||
Other current assets and prepaid expenses | (7,566,421) | (48,588) | ||||||||
Value added tax recoverable | 1,022,705 | (2,281,708) | ||||||||
Increase (decrease) in: | ||||||||||
Other payables and accrued expenses | 1,611,132 | 562,823 | ||||||||
Income tax payable | 591,138 | 1,135,904 | ||||||||
Other taxes payable | 165,322 | 98,184 | ||||||||
Net cash provided by (used in) operating activities | 7,737,665 | (7,051,475) | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||
Cash deposit for land use right | (32,287,748) | |||||||||
Purchase of property and equipment | (78,306) | (150,091) | ||||||||
Net cash used in investing activities | (32,366,054) | (150,091) | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||
Net Proceeds from stock repurchase agreement | - | 751,765 | ||||||||
Proceeds from bank loans-short term | 48,915,939 | 6,337,537 | ||||||||
Repayments of bank loans-short term | (6,457,550) | (6,337,537) | ||||||||
Proceeds from long term loan | 28,619,860 | - | ||||||||
Restricted cash | (12,500,836) | - | ||||||||
Due from related party | (52,354,308) | |||||||||
Proceeds from officer loan | - | 209,510 | ||||||||
Net proceeds from stock issuance | 12,522,000 | - | ||||||||
Net proceeds from exercise of warrants | 4,600,400 | - | ||||||||
Net cash provided by financing activities | 23,345,505 | 961,275 | ||||||||
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | 1,023,700 | (25,768) | ||||||||
NET DECREASE IN CASH AND CASH EQUIVALENTS | (259,184) | (6,266,059) | ||||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 2,544,114 | 8,810,173 | ||||||||
CASH AND CASH EQUIVALENTS, END OF YEAR | $ | 2,284,930 | $ | 2,544,114 | ||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||||||
Cash paid for interest expense | $ | 4,444,627 | $ | 470,455 | ||||||
Cash paid for income tax | $ | 10,863,648 | $ | 10,757,465 |