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Form 8-K KINGOLD JEWELRY, INC. For: Mar 31

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March 31, 2015 4:28 PM EDT

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): March 31, 2015

 

 

KINGOLD JEWELRY, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-15819   13-3883101
(State or other jurisdiction of incorporation)   (Commission File Number)   (IRS Employer Identification No.)

 

15 Huangpu Science and Technology Park

Jiang’an District

Wuhan, Hubei Province, PRC

   430023
(Address of principal executive offices)   (Zip Code)
Registrant's telephone number, including area code: (011) 86 27 65694977
           

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 
 

 

 

Item 2.02 Results of Operations and Financial Condition.

 

On March 31, 2015, Kingold Jewelry, Inc. issued a press release announcing its financial results for the fourth quarter and year ended December 31, 2014. A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K.

 

The information contained in this Item 2.02 and in the accompanying Exhibit 99.1 shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference in any filing under the Exchange Act or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

 

 

Item 7.01 Regulation FD Disclosure.

 

The information set forth in “Item 2.02. Results of Operations and Financial Condition,” including the exhibit referred to therein, is incorporated herein by reference.

 

The information contained in this Item 7.01 and in the accompanying Exhibit 99.1 shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference in any filing under the Exchange Act or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

 

 

Item 9.01 Financial Statements and Exhibits.

 

The information contained in this Item 9.01 and in the accompanying Exhibit 99.1 shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference in any filing under the Exchange Act or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

 

  (d) Exhibits

 

Exhibit No.   Description
     
99.1   Press release of Kingold Jewelry, Inc., dated March 31, 2015

 

 
 

 

 

 

SIGNATURES

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

       
  KINGOLD JEWELRY, INC.
   

 

 

  By:   /s/ Bin Liu
     

Name: Bin Liu

Title: Chief Financial Officer

Date: March 31, 2015

 

 
 

 

 

 

Exhibit 99.1

 

 

 

 

KINGOLD JEWELRY REPORTS FINANCIAL RESULTS

FOR THE FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2014

 

Company to Hold Conference Call with Accompanying Slide Presentation on March 31, 2015, at 6 p.m ET

 

WUHAN CITY, China, March 31, 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 financial results for the fourth quarter and year ended December 31, 2014.

 

2014 Financial and Operating Highlights (all results are compared to prior year period)

·Net sales was $1.1 billion compared to $1.2 billion, the decline was primarily due to lower gold pricing
·Processed a total of 60.1 metric tons [one metric ton = 35,274 ounces] of 24-karat gold products, an increase of 17.6% compared to 51.1 metric tons and within the Company’s previously announced guidance range
·Gross profit increased to $76.3 million compared to $47.0 million, and gross margin was 6.9% compared to 3.9%, largely due to the previously announced purchase of large quantities of gold at low market prices at year end of 2013 and at the beginning of 2014
·Net income was $47.3million, or $ 0.72 per diluted share, compared to $28.3 million, or $0.44 per diluted share
·Book value per diluted share was $3.91 at December 31, 2014 compared to $3.31 at December 31, 2013
·Kingold meets its previously announced 2014 guidance of between 60 metric tons and 70 metric tons with 60.1 million

 

2014 Fourth Quarter Financial Highlights (all results are compared to prior year period)

·Net sales was $209.3 million, a decrease of 34.1% compared to $317.6 million, largely due to the later Chinese New Year
·Processed a total of 13.2 metric tons of 24-karat gold products, a decrease of 7.7% compared to 14.3 metric tons
·Net income was $7.7 million, or $0.12 per diluted share, a decrease of 3.2% from $7.9 million, or $0.12 per diluted share

 

Outlook for 2015

·Company expects to process between 70 metric tons and 80 metric tons of 24-karat gold products in 2015.

 

Mr. Zhihong Jia, Chairman and CEO of the Company, commented, “We are pleased with our 2014 financial and operating results as we continued to improve our 24-karat gold manufacturing and designing capability and distribution network throughout China. In 2014, China’s gold industry was impacted by a weaker economy and overall decline in gold prices. Despite these challenges, Kingold processed 60.1 metric tons of gold products during the year and sold them to its 300 major customers from 25 provinces.”

 

UPDATE ON Kingold Jewelry cultural industry Park

·January 8, 2015: The Company announced that it has completed the framework on the property and move to the next phase of construction, which will be focused on both exterior and interior decoration and design. The Company expects to complete the entire project on time and will have a grand opening by the end of December 2015.
·January 21, 2015: The Company announced that it has formally received two separate "Certificates of Presale of Commercial Properties" from Wuhan Housing Security and Management Bureau, which cover five commercial buildings, totaling approximately 123,600 square meters (approx. 1,330,000 square feet). The Company is seeking potential buyers for these commercial properties, and is expected to utilize any proceeds from the presale of these units to complete construction. 

  

 

 

 
 

 

 

Kingold Jewelry, Inc. Page 2
March 31, 2015  

 

Chairman Jia stated, “We continue to receive regular inquiries and positive feedback on our development of the Jewelry Park, and remain on track for a grand opening in December 2015.”

 

2014 OPERATIONAL REVIEW

 

·In the fourth quarter of 2014, Kingold processed approximately 13.2 metric tons of 24-karat gold products, a decrease of 7.7% over the 14.3 metric tons processed in the fourth quarter of 2013. For the year ended December 31, 2014, the Company processed 60.1 metric tons of 24-karat gold products, an increase of 17.6% over the 51.1 metric tons processed in 2013.

 

Metric Tons of Gold Processed
  Three Months Ended:
  December 31, 2014 December 31, 2013
  Volume % of Total Volume % of Total
Branded* 5.7 43.2% 8.3 58.0%
Customized** 7.5 56.8% 6.0 42.0%
Total 13.2 100% 14.3 100%
  Year Ended:
  December 31, 2014 December 31, 2013
  Volume % of Total Volume % of Total
Branded* 28.8 47.9% 28.6 56.0%
Customized** 31.3 52.1% 22.5 44.0%
Total 60.1 100% 51.1 100%

 

*  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 December 31, 2014, the Company processed a total of 13.2 metric tons of gold, of which branded production was 5.7 metric tons, representing 43.2% of total gold processed, and customized production was 7.5 metric tons, representing 56.8% of total gold processed in the fourth quarter of 2014. In the fourth quarter of 2013, the Company processed a total of 14.3 metric tons, of which branded production was 8.3 metric tons, or 58.0% of the total gold processed, and customized production was 6.0 metric tons, or 42.0% of total gold processed.

 

For the year ended December 31, 2014, Kingold processed a total of 60.1 metric tons of gold, of which branded production was 28.8 metric tons, or 47.9% of total gold processed, and customized production was 31.3 metric tons, or 52.1% of total gold processed. In 2013, the Company processed a total of 51.1 metric tons of gold, of which branded production was 28.6 metric tons, or 56.0% of the total, and customized production was 22.5 metric tons, or 44.0% of the total.

 

2014 FINANCIAL REVIEW

 

Net Sales

Net sales for the three months ended December 31, 2014 was $209.3 million, compared to $317.6 million for the same period in 2013. The decrease in sales is largely due to the later Chinese New Year. The mid-February Chinese New Year postponed the winter sales peak to January of 2015.

 

Net sales for the year ended December 31, 2014 was 1.1 billion, decrease of 6.9% from the $1.2 billion reported in the year of 2013. The decrease in net sales was primarily driven by the decrease in the price of gold and to increased sales of customized products.

 

The Company’s total sales from its investment gold business were $19.2 million for the year of 2014, a decrease of 84.5% from $106.1 million in 2013. Demand for investment gold was down overall in light of the slow down in China’s economy.

 

 

 

 
 

 

  

Kingold Jewelry, Inc. Page 3
March 31, 2015  

 

Gross Profit

Gross profit for the three months ended December 31, 2014 was $13.9 million, a decrease of 1.8%, from $14.2 million for the same period in 2013.

 

Gross profit for the year of 2014 increased to $76.3 million, an increase of 62.4%, from $47.0 million for year of 2013.

 

Gross Margin

The Company’s gross margin was 6.7% for the three months ended December 31, 2014, compared to 4.5% in the prior year period.

 

The Company’s gross margin for the 2014 fiscal year was 6.9%, up from 3.9% in the prior year period. The substantial increase was due to the fact that the Company purchased large quantities of gold inventory at year end 2013 and beginning of 2014 at low market prices, making the first half production at a cost much lower than normal.

 

Net Income

Net income for the three months ended December 31, 2014 was $7.7 million, or $0.12 per diluted share based on 66.0 million weighted average diluted shares outstanding, compared to net income of $7.9 million in the prior year period, or $0.12 per diluted share based on 64.5 million weighted average diluted shares outstanding in the prior-year period.

 

Net income for the year of 2014 was $47.3 million, or $0.72 per diluted share based on 66.0 million weighted average diluted shares outstanding, compared to net income of $28.3 million in the prior year, or $0.44 per diluted share based on 63.9 million weighted average diluted shares outstanding, in the prior-year.

 

Balance Sheet and Cash Flow

(in millions except for percentages) 12/31/2014  2/31/2013  % Changed
  (Audited)  (Audited)   
Cash $1.3  2.3  (41.7%)
Inventories (gold) 212.4  174.4  21.8%
Working Capital 212.6  199.8  6.4%
Stockholders’ Equity 258.2  214.9  20.2%

 

 

Net cash provided by operating activities was $20.3 million for the year of 2014, compared with net cash provided by operating activities of $7.7 million for the year of 2013. The change was mainly because of the increase in net income raised from $28.3 million in the year of 2013 to $47.3 million in the year of 2014.

 

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).

 

 

 

 
 

 

 

Kingold Jewelry, Inc. Page 4
March 31, 2015  

 

 

OUTLOOK FOR 2015

Based on its existing resources and capacity, strong demand for 24-karat gold products in China, the Company believes that its gold processed is expected to be between 70 metric tons and 80 metric tons during 2015. This guidance is based solely on current projected, organic growth. The Company anticipates narrowing this guidance throughout the year, along with providing additional metrics for investors in the coming months.

 

Conference Call Details

Kingold also announced that it will discuss these financial results in a conference call on March 31, 2015, at 6 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

 

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/q4-2014. 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 2015 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.

 

 

 
 

 

 

Kingold Jewelry, Inc. Page 5
March 31, 2015  

 

 

Company Contact
Kingold Jewelry, Inc.
Bin Liu, CFO
Phone: +1-847-660-3498 (US) / +86-27-6569-4977 (China)

[email protected]

INVESTOR RELATIONS
The Equity Group Inc.
Katherine Yao, Associate
+86 10-6587-6435
[email protected]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 

 

 

Kingold Jewelry, Inc. Page 6
March 31, 2015  

 

KINGOLD JEWELRY, INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(IN U.S. DOLLARS)
 
   For the three months ended December 31,   For the years ended December 31, 
   2014   2013   2014   2013 
    　    　    　    　 
                     
NET SALES  $209,333,026   $317,575,713   $1,107,558,544   $1,189,915,923 
                     
COST OF SALES                    
Cost of sales   (195,023,389)   (302,998,188)   (1,030,010,474)   (1,141,671,197)
Depreciation   (365,074)   (370,785)   (1,296,583)   (1,277,374)
Total cost of sales   (195,388,463)   (303,368,973)   (1,031,307,057)   (1,142,948,571)
                     
GROSS PROFIT   13,944,562    14,206,740    76,251,487    46,967,352 
                     
OPERATING EXPENSES                    
Selling, general and administrative expenses   2,025,666    1,609,850    7,343,951    4,749,488 
Stock compensation expenses   1,310,995    398,773    3,149,980    1,532,563 
Depreciation   61,655    44,930    130,074    155,216 
Amortization   3,080    6,125    12,300    12,205 
Total operating expenses   3,401,396    2,059,678    10,636,305    6,449,472 
                     
INCOME FROM OPERATIONS   10,543,166    12,147,062    65,615,182    40,517,880 
                     
OTHER INCOME (EXPENSES)                    
Other Income   -    -    94,624    - 
Interest Income   -    -    305,465    56,253 
Other Expense   -    -    -    (81)
Interest expense   (307,991)   (760,649)   (1,847,240)   (1,051,564)
Total other expenses, net   (307,991)   (760,649)   (1,447,151)   (995,392)
         　         　 
INCOME FROM OPERATIONS BEFORE TAXES   10,235,174    11,386,413    64,168,031    39,522,488 
                     
INCOME TAX PROVISION (BENEFIT)                    
Current   1,258,968    3,257,007    16,836,054    11,454,787 
Deferred   1,301,027    199,243    -    (272,225)
Total income tax provision   2,559,994    3,456,250    16,836,054    11,182,562 
    　    　    　    　 
NET INCOME  $7,675,180   $7,930,163   $47,331,977   $28,339,926 
                     
OTHER COMPREHENSIVE INCOME (LOSS)                    
Total foreign currency translation gains (loss)  $278,221   $1,039,417   $(1,331,032)  $5,820,020 
    　         　      
COMPREHENSIVE INCOME  $7,953,400   $8,969,580   $46,000,945   $34,159,946 
                     
Earnings per share                    
Basic  $0.12   $0.12   $0.72   $0.45 
Diluted  $0.12   $0.12   $0.72   $0.44 
Weighted average number of shares                    
Basic   65,957,499    64,334,400    65,918,768    63,495,520 
Diluted   65,957,499    64,486,938    66,007,075    63,902,912 

 

 

 

 
 

 

Kingold Jewelry, Inc. Page 7
March 31, 2015  

 

KINGOLD JEWELRY, INC.
CONSOLIDATED BALANCE SHEETS
(IN U.S. DOLLARS)
 
   2014   2013 
   　   　 
ASSETS 
           
CURRENT ASSETS          
Cash  $1,331,658   $2,284,930 
Restricted cash   14,793,632    12,668,749 
Accounts receivable   503,406    532,386 
Inventories   212,396,363    174,433,501 
Other current assets and prepaid expenses   57,971    8,252,387 
Due from related party   -    52,354,308 
Value added tax recoverable   4,501,426    6,220,866 
Deferred income tax assets   -    275,882 
Total current assets   233,584,456    257,023,009 
           
PROPERTY AND EQUIPMENT, NET   9,390,258    10,686,947 
           
OTHER ASSETS          
Deposit on land use right-Jewelry Park   9,819,687    32,721,442 
Construction in progress - Jewelry Park   58,310,818    - 
Other assets   157,078    157,946 
Land use right   492,027    507,117 
Total other assets   68,779,610    33,386,505 
TOTAL ASSETS  $311,754,324   $301,096,461 
           
LIABILITIES AND STOCKHOLDERS' EQUITY 
           
CURRENT LIABILITIES          
Short term loans  $16,270,745   $49,572,985 
Long term loans - current maturities   28,844,777    - 
Other payables and accrued expenses   2,970,770    3,499,717 
Income tax payable   978,713    3,269,908 
Other taxes payable   777,537    848,739 
Total current liabilities   49,842,542    57,191,349 
           
Long term loans   3,672,308    29,004,287 
TOTAL LIABILITIES   53,514,850    86,195,636 
           
COMMITMENTS AND CONTINGENCIES   -    - 
           
EQUITY          
Preferred stock, $0.001 par value, 500,000 shares          
authorized, none issued or outstanding          
as of December 31, 2014 and December 31, 2013   -    - 
Common stock $0.001 par value, 100,000,000 shares          
authorized, 65,963,502 and 64,953,462 shares issued and outstanding          
as of December 31, 2014 and December 31, 2013   65,963    64,953 
Additional paid-in capital   79,460,175    76,847,205 
Retained earnings          
Unappropriated   163,002,075    120,946,375 
Appropriated   967,543    967,543 
Accumulated other comprehensive income   14,743,718    16,074,749 
Total stockholders' equity   258,239,474    214,900,825 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $311,754,324   $301,096,461 

  

 

 
 

 

 

Kingold Jewelry, Inc. Page 8
March 31, 2015  

 

KINGOLD JEWELRY, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN U.S. DOLLARS)
 
   For the years ended December 31, 
   2014   2013 
CASH FLOWS FROM OPERATING ACTIVITIES          
Net income  $47,331,977   $28,339,926 
Adjusted to reconcile net income to cash provided by          
operating activities:          
Depreciation   1,426,657    1,432,591 
Amortization of intangible assets   12,300    12,205 
Share based compensation for services   3,149,980    1,532,563 
Inventory valuation allowance   -    1,088,901 
Deferred tax provision (benefit)   -    (272,225)
Changes in operating assets and liabilities          
(Increase) decrease in:          
Accounts receivable   26,053    180,215 
Inventories   (38,924,060)   (20,400,387)
Other current assets and prepaid expenses   8,193,528    (7,566,421)
     Deferred offering costs   -      
Value added tax recoverable   1,959,688    1,022,705 
Increase (decrease) in:          
Other payables and accrued expenses   (512,197)   1,611,132 
Income tax payable   (2,273,323)   591,138 
Other taxes payable   (66,538)   165,322 
Net cash provided by operating activities   20,324,065    7,737,665 
CASH FLOWS FROM INVESTING ACTIVITIES          
Purchase of property and equipment   (190,403)   (78,306)
Proceeds from sale of property and equipment   1,970    - 
Cash deposit for land use right-Jewelry Park   -    (32,287,748)
Cash payment in construction in progress-Jewelry Park   (35,590,752)   - 
Net cash used in investing activities   (35,779,185)   (32,366,054)
CASH FLOWS FROM FINANCING ACTIVITIES          
Proceeds from bank loans-short term   24,000,521    48,915,939 
Repayments of bank loans-short term   (57,031,746)   (6,457,550)
Proceeds from long term loan   3,672,486    28,619,860 
Restricted cash   (2,194,663)   (12,500,836)
Proceeds from related party loan   65,082,981    - 
Repayments of related party loan   (13,016,596)   (52,354,308)
Cash dividend paid   (5,276,277)   - 
Net proceeds from exercise of warrants   10,000    4,600,400 
Net proceeds from stock issuance   -    12,522,000 
Net cash provided by financing activities   15,246,706    23,345,505 
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS   (744,858)   1,023,700 
NET INCREASE IN CASH AND CASH EQUIVALENTS   (953,272)   (259,184)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR   2,284,930    2,544,114 
CASH AND CASH EQUIVALENTS, END OF YEAR  $1,331,658   $2,284,930 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION          
Cash paid for interest expense  $14,140,388   $4,444,627 
Cash paid for income tax  $18,834,998   $10,863,648 
           

 

 

 


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