BEIJING, April 4 /Xinhua-PRNewswire-Firstcall/ -- General Steel Holdings,
Inc. (OTC Bulletin Board: GSHO), China's first publicly traded steel
manufacturer in the US, reports financial results for the year ending December
31, 2006.
2006 Achievements and Highlights
- Increased our production capacity by 150,000 tons to be the undisputed
dominant player in our industry
- Built 4 new production lines
- Increased our distributor base from 19 to 35
- Established 3 regional sales offices
- Hired and trained 350 new production workers
- Offered promotional pricing to fill the production from our new lines
and gain market share
- Increased productivity in our established production lines by 20%
2006 Financial Results
Net sales from operations increased to $139.5 million in 2006,
representing a 55% increase from $89.7 million in 2005. Shipment volume
increased by 68% to 341,702 tons in 2006 compared to 203,422 tons in 2005.
Overall cost of sales was $135.3 million in 2006, compare to $81.2 million in
2005, a 67% increase. Gross profit decreased from $8.6 million in 2005 to
$4.2 million in 2006. Selling, general and administrative expenses were $2.4
million in 2006, a 12.9% decrease from $2.8 million for the same period of
2005. Accounts receivable was $17.1 million at the end of 2006 compared to
$993,417 on December 31, 2005. Net income was $1.03 million in 2006 compared
to $2.74 million in 2005, a 38% decrease from 2005.
"At the end of 2005, we made the strategic decision to become the dominant
company in our industry. During 2006, we invested heavily in our operations to
implement the critical steps necessary to achieve this goal: we added four new
production lines, increased our capacity by 150,000 tons, increased our
distributor base from 19 to 35, established three regional sales offices,
hired and trained 350 new production workers, gained market share and
increased our established lines productivity by 20%."
"These investments hurt our short-term earnings, but they laid the
groundwork for our future growth plans. Although our earnings for 2006 came
in below that of 2005, we are very pleased with our results. As we enter 2007,
our new lines are now producing at the same levels of efficiency and capacity
as our original lines. This coupled with the other investments we've made
combine to make us very excited about the year ahead," stated Henry Yu, Chief
Executive Officer of General Steel Holdings, Inc.
Conference Call
Management will host a conference call at 9:00 a.m. on Wednesday, April 4
to discuss results for the fiscal year ended December 31, 2006. Joining Henry
Yu, General Steel Holdings Chief Executive Officer, on the call will be John
Chen, the company's Chief Financial Officer and Ross Warner, a Director with
the company. To participate in the conference call, please dial the following
number five to ten minutes prior to the scheduled conference call time:
1-800-860-2442. International callers should dial 1-412-858-4600. The pass
code for the call is "General Steel."
This conference call will be broadcast live over the Internet and can be
accessed by all interested parties through the following URL
http://www.videonewswire.com/event.asp?id=38724 . To listen to the live
webcast, go to the URL at least fifteen minutes prior to the start of the call
to register, download, and install any necessary audio software. For those
unable to participate during the live broadcast, a replay will be available
shortly after the call on General Steel Holdings' website
http://www.gshi-steel.com for 90 days.
About General Steel Holdings, Inc.
General Steel Holdings, Inc. through its subsidiary, Tianjin Daqiuzhuang
Metal Sheet Co., Ltd., is a leading manufacturer of high quality hot-rolled
steel sheets used in the construction of small agricultural and specialty
vehicles. Since 1988, it has expanded its operations to ten production lines
capable of processing 400,000 tons of 0.7-2.0 mm hot-rolled carbon steel
sheets per year. It is now the largest producer in its product category in
China. For more information, visit www.gshi-steel.com.
Information Regarding Forward-Looking Statements
This press release may contain certain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. These
statements are based on management's current expectations or beliefs about
future events and financial, political and social trends and assumptions it
has made based on information currently available to it. The Company cannot
assure that any expectations, forecasts or assumptions made by management in
preparing these forward-looking statements will prove accurate, or that any
projections will be realized. Such forward-looking statements may be affected
by inaccurate assumptions or by known or unknown risks or uncertainties.
Actual results may vary materially from those expressed or implied by the
statements herein. For factors that could cause actual results to vary,
perhaps materially, from these forward-looking statements, please refer to the
Company's Form 10-K, filed with the Securities and Exchange Commission, and
other subsequent filings. Forward-looking statements contained herein speak
only as of the date of this release. The Company does not undertake any
obligation to update or revise publicly any forward-looking statements,
whether to reflect new information, future events or otherwise.
GENERAL STEEL HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2006 AND 2005
A S S E T S
2006 2005
Restated
CURRENT ASSETS:
Cash $6,831,549 $8,648,373
Restricted cash 4,231,523 2,735,583
Accounts receivable, net of allowance for
doubtful accounts of $137,132 and $1,371 as
of December 31, 2006 and December 31, 2005,
respectively 17,095,718 993,417
Notes receivable 537,946 4,960
Note receivable - related party - 2,976,000
Other receivables 268,784 109,769
Other receivables - related parties 850,400 -
Inventories 12,489,290 10,730,941
Advances on inventory purchases 2,318,344 10,716,293
Short-term investment - 37,200
Prepaid expenses - current 66,837 64,647
Total current assets 44,690,391 37,017,183
PLANT AND EQUIPMENT, net 26,606,594 18,213,872
OTHER ASSETS:
Advances on equipment purchases - 1,053,169
Prepaid expenses - non current 720,183 669,460
Intangible assets - land use right, net of
accumulated amortization 1,804,440 2,039,532
Total other assets 2,524,623 3,762,161
Total assets $73,821,608 $58,993,216
L I A B I L I T I E S A N D S H A R E H O L D E R S' E Q U I T Y
CURRENT LIABILITIES:
Accounts payable $3,001,775 $823,760
Short term loans - bank 30,284,686 27,118,800
Short term notes payable 8,153,520 5,406,400
Other payables 355,142 69,667
Other payable - related party - 980,000
Accrued liabilities 1,064,012 916,957
Customer deposits 1,093,602 1,276,536
Deposits due to sales representatives 2,051,200 1,261,080
Taxes payable 5,391,602 1,682,330
Total current liabilities 51,395,539 39,535,530
SHARES SUBJECT TO MANDATORY REDEMPTION 2,179,779 1,720,875
Total liabilities 53,575,318 41,256,405
MINORITY INTEREST 6,185,797 5,387,026
SHAREHOLDERS' EQUITY:
Common Stock, $0.001 par value, 75,000,000
shares authorized, 32,426,665 shares issued
and outstanding (including 1,176,665
redeemable shares) 31,250 31,250
Paid-in-capital 6,871,358 6,871,358
Retained earnings 4,974,187 4,207,236
Statutory reserves 1,107,010 840,753
Accumulated other comprehensive income 1,076,688 399,188
Total shareholders' equity 14,060,493 12,349,785
Total liabilities and shareholders' equity $73,821,608 $58,993,216
GENERAL STEEL HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
2006 2005 2004
Restated
REVENUES $139,494,624 $89,739,899 $87,831,919
COST OF SALES 135,324,190 81,165,850 81,613,187
GROSS PROFIT 4,170,434 8,574,049 6,218,732
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 2,421,285 2,781,070 2,316,699
INCOME FROM OPERATIONS 1,749,149 5,792,979 3,902,033
OTHER INCOME (EXPENSE), NET 82,830 (1,680,842) (1,616,377)
INCOME BEFORE PROVISION FOR
INCOME TAXES 1,831,979 4,112,137 2,285,656
AND MINORITY INTEREST
PROVISION FOR INCOME TAXES - - 906,277
NET INCOME BEFORE MINORITY
INTEREST 1,831,979 4,112,137 1,379,379
LESS MINORITY INTEREST 798,771 1,371,918 464,381
NET INCOME 1,033,208 2,740,219 914,998
FOREIGN CURRENCY TRANSLATION
GAIN 677,500 399,188 -
COMPREHENSIVE INCOME $1,710,708 $3,139,407 $914,998
WEIGHTED AVERAGE NUMBER
OF SHARES 31,250,000 31,250,000 30,259,644
EARNING PER SHARE, BASIC
AND DILUTED $0.03 $0.09 $0.03
GENERAL STEEL HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
2006 2005 2004
(Restated) (Restated)
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $1,033,208 $2,740,219 $914,998
Adjustments to reconcile net
income to cash provided by
(used in) operating activities:
Minority Interest 798,771 1,371,918 464,380
Depreciation 1,619,267 1,053,976 968,332
Amortization 297,933 289,938 287,090
Loss on disposal of equipment 28,137 25,992 22,947
Stock issued for services - - 175
Interest expense accrued on
mandatory redeemable stock 458,904 114,724 -
Allowance for bad debt 132,895 - 328
(Increase) decrease in assets:
Accounts receivable (15,871,902) (451,095) (68,085)
Notes receivable (521,888) 373,785 813,899
Other receivables (152,111) 108,860 113,366
Other receivables - related
parties (850,400) - 459,800
Inventories (1,366,266) 2,378,597 (8,024,646)
Advances on inventory
purchases - related parties - - 1,021,824
Advances on inventory
purchases 8,581,191 3,042,837 (5,638,504)
Prepaid expense - current - (63,709) -
Prepaid expense - non current 44,559 (659,742) -
Increase (decrease) in liabilities:
Accounts payable 2,106,005 523,624 (1,085,136)
Other payables 135,275 (364,090) 191,802
Other payable - related
party (980,000) (10,000) 1,011,012
Accrued liabilities 259,000 506,214 332,876
Customer deposits (221,532) (771,235) 1,095,153
Taxes payable 3,577,364 (240,347) 223,773
Net cash (used in)
provided by operating
activities (891,590) 9,970,466 (6,894,616)
CASH FLOWS FROM INVESTING ACTIVITIES:
Restricted cash (1,374,495) 861,897 (1,501,110)
Notes receivable - related
party 3,013,680 (2,932,800) -
Proceeds from short term
investment 37,671 - (24,200)
Deposits due to sales
representatives 732,073 (1,222) 369,050
Advance on equipment
purchases 1,066,504 (1,037,881) -
Additions to prepaid land use
rights (72,031) - -
Additions to equipment (2,401,860) (627,941) (253,426)
Additions to construction
in progress (6,865,560) (4,169,895) -
Cash proceeds from sale
of equipment - 8,552 226,158
Net cash used in investing
activities (5,864,018) (7,899,290) (1,183,528)
CASH FLOWS FINANCING ACTIVITIES:
Borrowings on short term loans
- bank 29,663,401 31,967,520 28,072,000
Payments on short term loans
- bank (27,462,159) (31,246,540) (16,129,300)
Borrowings on short term
notes payable 7,986,252 11,266,840 25,071,200
Payments on short term
notes payable (5,474,852) (12,782,120) (25,004,650)
Cash received on stock issuance - - 10,000
Cash received on issuance of
mandatory redeemable stock - 1,606,151 -
Net cash provided by
financing activities 4,712,642 811,851 12,019,250
EFFECTS OF EXCHANGE RATE CHANGE
IN CASH 226,142 217,536 -
(DECREASE) INCREASE IN CASH (1,816,824) 3,100,563 3,941,106
CASH, beginning of period 8,648,373 5,547,810 1,606,704
CASH, end of period $6,831,549 $8,648,373 $5,547,810
