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SinoCoking Announces Fiscal 2014 Results

PINGDINGSHAN, China, Sept. 29, 2014 (GLOBE NEWSWIRE) -- SinoCoking Coal and Coke Chemical Industries, Inc. (Nasdaq: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

CONTACT: SinoCoking Song Lv, Chief Financial Officer + 86-375-2882-999 lvsong@sinocoking.net http://www.scokchina.com/ Investor Relations Counsel: Rick Eisenberg, Asia IR-PR. (212) 496-6828 rick@asia-irpr.com http://asia-irpr.com/Source:SinoCoking Coal and Coke Chemical Industries. Inc.