-- Company achieves record shipment volume and total revenues --
Income from operations was $12.9 million BEIJING, Aug. 10
/PRNewswire-Asia-FirstCall/ -- General Steel Holdings, Inc.
("General Steel" or "the Company") (NYSE:GSI), one of China's
leading non-state-owned producers of steel products and aggregators
of domestic steel companies, today announced its financial results
for the second quarter ended June 30, 2009. Second Quarter of 2009
Highlights -- Aggregate shipment volume reached a record high of
956,321 metric tons, an increase of 62.7% year-over-year -- Total
revenues increased 5.7% to a record $408.9 million from $387.0
million in the year-ago period -- Gross margin was 5.5%, compared
to 4.0% in the previous quarter and 5.9% in the second quarter of
2008 -- Income from operations was $12.9 million -- Adjusted
non-GAAP net income grew to $1.4 million, or earnings per basic and
diluted share of $0.04 (adjusted non-GAAP net income is defined as
GAAP net income less non-operating, non-cash expenses associated
with the Company's December 2007 convertible bond issuance) --
Relocated an 800,000 metric ton capacity rebar processing line from
the Company's Maoming facility to its Longmen Joint Venture
("Longmen JV") in order to meet strong demand and take advantage of
higher selling prices -- Logged utilization rates in excess of 85%
at the Company's two new 1,280 cubic meter blast furnaces brought
on-line in late 2008 and January of 2009 First Half of 2009
Highlights -- Aggregate shipment volume reached a record high of
1.67 million metric tons, an increase of 50.4% year-over-year --
Total revenues increased 7.8% to a record $731.7 million from
$678.6 million in the year-ago period -- Gross margin was 4.8%,
compared to 5.3% in the year-ago period -- Income from operations
was $16.7 million -- Adjusted non-GAAP net income grew to $4.6
million, or earnings per basic and diluted share of $0.12 (adjusted
non-GAAP net income is defined as GAAP net income less
non-operating, non-cash expenses associated with the Company's
December 2007 convertible bond issuance) "Building off of the
momentum we established in the first quarter, we were able to
achieve record shipment volume and total revenues during second
quarter," said Mr. Henry Yu, General Steel's chairman and chief
executive officer. "Government growth initiatives such as 'Go West'
development, aggressive stimulus spending on infrastructure in
rural China and the newly announced Guanzhong-Tianshui Special
Economic Zone helped to insulate us from the economic slowdown. In
addition, our centrally located, Shaanxi-based Longmen facility
enables us to cost-effectively supply construction-related steel
throughout central and western areas of China which continues to
shield us from the glut of overcapacity along the eastern
seaboard." Mr. Yu continued, "During the quarter, we saw gross
margin at our largest subsidiary, Longmen JV, expand to nearly
seven percent. This is a significant accomplishment as it validates
that our strategy of improving the profitability of acquired assets
is working. As the impetus for consolidation strengthens, our deep
market understanding, established track record and distinctive
ability to align interests at the provincial and local levels of
government as well as among management teams, creates numerous
opportunities for consolidation." Selected Financial Results for
the Second Quarter and First Half of 2009 Total revenues for the
second quarter of 2009 increased 5.7% year-over-year to $408.9
million from $387.0 million in the year-ago period. Total revenues
for the first half of 2009 increased 7.8% year-over-year to $731.7
million from $678.6 million in the year-ago period. The increase in
total revenues was predominantly due to increased shipment volume
at the Company's Longmen JV, which in the first half of 2009
increased 51.3% year-over-year, and Baotou Steel Pipe JV, which in
the first half of 2009 increased 41.7% year-over-year. The Company
noted that these increases in shipment volume helped to offset
lower selling prices and declines at its Daqiuzhuang Metal
subsidiary. The increase in total revenues was also attributable to
the Company's Maoming acquisition, which took place on June 25,
2008. Total revenues for the first half of 2009 reflect a full six
months of operations, whereas the subsidiary did not exist in the
same period last year. Cost of Sales Total cost of sales for the
second quarter of 2009 increased 6.1% year-over-year to $386.4
million from $364.2 million in the year-ago period. Total cost of
sales for the first half of 2009 increased 8.3% year-over-year to
$696.3 million from $642.7 million in the year-ago period. Cost of
sales principally consists of the cost of raw materials, labor,
utilities, manufacturing costs, manufacturing-related depreciation
and other fixed costs. The increase in cost of sales was mostly
attributable to an increase in shipment volumes at the Company's
Longmen JV in response to demand created by earthquake
reconstruction and stimulus measures, and at Baotou Steel Pipe JV,
which saw increased activity due to China's investment in
infrastructure-related stimulus projects. Gross Profit Gross profit
for the second quarter of 2009 decreased 1.6% year-over-year to
$22.5 million from $22.9 million in the year-ago period. Gross
profit for the first half of 2009 decreased 1.2% year-over-year to
$35.4 million from $35.9 million in the year-ago period. Gross
margin for the second quarter of 2009 was 5.5%, compared to 5.9% in
the year-ago period. Gross margin for the first half of 2009 was
4.8%, compared to 5.3% in the year-ago period. Operating Expenses
Selling, general and administrative expenses for the second quarter
of 2009 increased 0.6% to $9.6 million, compared to $9.5 million in
the year-ago period. Selling, general and administrative expenses
for the first half of 2009 increased 16.8% to $18.7 million from
$16.0 million in the year-ago period. Selling, general and
administrative expenses were 2.3% and 2.5% of total revenues in the
second quarter of 2009 and 2008, respectively, versus 2.6% and 2.4%
in the first half of 2009 and 2008, respectively. The Company noted
that the year-over-year increase in selling, general and
administrative expenses in the first of half of 2009 was
attributable to the addition of the Company's Maoming facility,
which did not exist in the year-ago period as well as the 51.3%
increase in shipment volume at the Company's Longmen JV. Finance
and interest expenses for the second quarter of 2009 were $4.9
million, compared to $6.3 million in the year-ago period. Finance
and interest expenses for the first half of 2009 were $7.8 million,
compared to $12.3 million in the year-ago period. The reductions in
finance and interest expenses were primarily due to make-whole
interest on the conversion of the convertible debt, interest paid
on bank loans and on early redemption of notes receivables and
various bank fees. Net Income Net loss for the second quarter of
2009 was $23.4 million, compared to net loss of $20.3 million in
the year-ago period. Net loss for the first half of 2009 was $12.1
million, compared to net loss of $16.6 million in the year-ago
period. Basic and diluted losses per share were $0.80 for second
quarter of 2009 and $0.69 in the year-ago period. Basic and diluted
losses per share were $0.65 in the first half of 2009, compared to
$0.63 in the year-ago period. The Company believes that the GAAP
net earnings before the impact of a derivative gain or loss and
make whole expense, which was $1.4 million or $0.04 per basic and
diluted share, based on 39.5 million basic and diluted shares, is a
better measurement of its performance. According to the conversion
feature and warrants associated with the $40.0 million Convertible
Bond ("CB') the Company obtained in December of 2007, generally
accepted accounting principles (GAAP) requires the Company to value
a portion of the CB and the warrants on its balance sheet as
financial derivative instruments that are "marked-to-market" each
quarter. This part of the CB and the warrants appear on the
Company's balance sheet as derivative liabilities. According to
accounting rules, the derivative instrument value and associated
gain or loss is linked to the Company's stock price. The gain or
loss of this instrument has no impact on cash-flaw. The Company's
CB has a 5-year term to maturity. At the end of 5 years, if the
holders of the CB have not converted the bond to equity, the
Company must pay back the principal of the bond in cash. The terms
of the Company's CB include a make whole incentive as an incentive
for the holders of the Company's CB to convert before maturity and
the Company accounts for this as an expense. Both the derivative
instrument gain or loss and the make whole expense are
non-operating, non-cash gain or loss related to the convertible
bond and warrants issued in December of 2007. Balance Sheet As of
June 30, 2009, General Steel had cash and restricted cash of $264.1
million, compared to $145.6 million as of December 31, 2008.
Accounts receivable was $16.0 million as of June 30, 2009, compared
to $8.3 million as of December 31, 2008. Convertible notes payable
decreased to $3.0 million as of June 30, 2009, compared to $7.2
million as of December 31, 2008. Because $21.7 million notes were
converted to 5,104,596 shares of common stock from May 7, 2009 to
June 30, 2009, total outstanding shares increased to 43.3 million
shares as of June 30, 2009. Conference Call General Steel
management will hold an earnings conference call at 8:00 a.m. U.S.
Eastern Time on August 10, 2009 (8:00 p.m. Beijing/Hong Kong Time
on August 10, 2009). Management will discuss results and highlights
from the quarter and answer questions. The dial-in number and
passcode for the conference call are as follows: U.S. Toll-free:
+1-800-860-2442 Passcode: General Steel Holdings The conference
call will be broadcast live over the Internet and can be accessed
by clicking the following link:
http://www.visualwebcaster.com/event.asp?id=61133 Additionally, an
archived Web cast of this call will be available on General Steel's
website at http://www.gshi-steel.com/ . About General Steel
Holdings, Inc. General Steel Holdings, Inc., (NYSE:GSI),
headquartered in Beijing, China, operates a diverse portfolio of
Chinese steel companies. With 6.3 million metric tons aggregate
production capacity, its companies serve various industries and
produce a variety of steel products including rebar, hot-rolled
carbon and silicon sheet, high-speed wire and spiral-weld pipe.
General Steel Holdings, Inc. has steel operations in Shaanxi and
Guangdong provinces, Inner Mongolia Autonomous Region and Tianjin
municipality. For more information, please visit
http://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 JUNE 30,
2009 AND DECEMBER 31, 2008 ASSETS June 30, December 31, 2009 2008
Unaudited CURRENT ASSETS: Cash $63,930,960 $14,895,442 Restricted
cash 200,216,250 130,700,335 Notes receivable 33,243,064 38,207,312
Accounts receivable, net of allowance for doubtful accounts of
$601,754 and $401,109 as of June 30, 2009 and December 31, 2008,
respectively 16,037,008 8,329,040 Other receivables, net of
allowance for doubtful accounts of $563,963 and $563,616 as of June
30, 2009 and December 31, 2008, respectively 5,551,193 5,099,469
Other receivables - related parties 15,467,140 523,024 Dividend
receivable 4,950,550 630,481 Inventories 143,713,281 59,548,915
Advances on inventory purchases 35,823,700 47,153,869 Advances on
inventory purchases - related parties 15,699,234 2,374,637 Prepaid
expenses - current 356,728 494,370 Deferred tax assets 5,312,504
7,487,380 540,301,612 315,444,274 PLANT AND EQUIPMENT, net
538,475,953 491,705,028 OTHER ASSETS: Advances on equipment
purchases 5,889,360 8,965,382 Investment in unconsolidated
subsidiaries 18,909,182 13,959,432 Prepaid expenses - non current
1,099,045 1,195,073 Prepaid expenses related party - non current
184,590 211,248 Long term other receivables 3,651,182 4,872,584
Intangible assets, net of accumulated amortization 24,216,780
24,555,655 Note issuance cost 1,449,664 4,217,974 Plant and
equipment to be disposed 1,244,461 586,508 Total other assets
56,644,264 58,563,856 Total assets $1,135,421,829 $865,713,158
LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Short
term notes payable $274,013,600 $206,040,150 Accounts payable
208,631,197 149,239,317 Accounts payable - related parties
30,583,551 15,326,524 Short term loans - bank 97,196,890 67,840,256
Short term loans - others 101,360,240 87,833,706 Short term loans -
related parties 7,339,650 7,349,670 Other payables 19,715,682
3,182,661 Other payables - related parties 16,419,308 677,013
Accrued liabilities 10,854,900 7,779,488 Customer deposits
157,061,121 141,101,584 Customer deposits - related parties
3,946,437 7,216,319 Deposits due to sales representatives
40,056,218 8,149,279 Taxes payable 1,149,824 13,916,636
Distribution payable to former shareholders 19,193,149 18,765,209
Total current liabilities 987,521,767 734,417,812 CONVERTIBLE NOTES
PAYABLE, net of debt discount of $8,500,381 and $26,094,942 as of
June 30, 2009 and December 31, 2008, respectively 3,049,619
7,155,058 DERIVATIVE LIABILITIES 11,053,276 9,903,010 COMMITMENT
AND CONTINGENCIES Total liabilities 1,001,624,662 751,475,880
EQUITY: Preferred stock, $0.001 par value, 50,000,000 shares
authorized, 3,092,899 shares issued and outstanding 3,093 3,093
Common Stock, $0.001 par value, 200,000,000 shares authorized,
43,301,428 and 36,128,833 shares issued and outstanding as of June
30, 2009 and December 31, 2008, respectively 43,301 36,129
Paid-in-capital 69,812,604 37,128,641 Retained earnings (deficits)
(14,622,511) 10,091,829 Statutory reserves 5,162,401 4,902,641
Contribution receivable -- (959,700) Accumulated other
comprehensive income 8,393,270 8,407,359 Total equity 68,792,158
59,609,992 NONCONTROLLING INTERESTS 65,005,009 54,627,286 Total
equity 133,797,167 114,237,278 Total liabilities and equity
$1,135,421,829 $865,713,158 GENERAL STEEL HOLDINGS, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND OTHER
COMPREHENSIVE INCOME (UNAUDITED) Three months ended June 30, Six
months ended June 30, 2009 2008 2009 2008 REVENUES $324,460,829
$277,514,917 $586,875,245 $456,007,084 REVENUES - RELATED PARTIES
84,486,318 109,514,019 144,865,798 222,587,851 TOTAL REVENUES
408,947,147 387,028,936 731,741,043 678,594,935 COST OF SALES
301,849,136 259,734,698 553,851,240 426,449,361 COST OF SALES -
RELATED PARTIES 84,599,318 104,425,433 142,468,991 216,294,654
TOTAL COST OF SALES 386,448,454 364,160,131 696,320,231 642,744,015
GROSS PROFIT 22,498,693 22,868,805 35,420,812 35,850,920 SELLING,
GENERAL AND ADMINISTRATIVE EXPENSES 9,564,057 9,503,221 18,732,318
16,036,042 INCOME FROM OPERATIONS 12,934,636 13,365,584 16,688,494
19,814,878 OTHER EXPENSE, NET Interest income 763,764 877,099
1,642,397 1,457,417 Finance/interest expense (4,854,138)
(6,289,868) (7,792,916) (12,276,375) Convertible note make whole
interest (6,454,683) -- (6,454,683) -- Change in fair value of
derivative liabilities (26,726,167) (27,786,632) (22,611,599)
(25,115,869) Gain from debt Extinguishment -- -- 2,930,200 --
Government grant -- -- 3,519,890 -- Income from equity investments
2,752,664 -- 2,698,032 -- Other non- operating income, net 142,348
649,871 652,564 1,019,142 Total other expense, net (34,376,212)
(32,549,530) (25,416,115) (34,915,685) LOSS BEFORE PROVISION FOR
INCOME TAXES AND NONCONTROLLING INTEREST (21,441,576) (19,183,946)
(8,727,621) (15,100,807) PROVISION FOR INCOME TAXES Current
3,229,810 1,292,890 3,394,031 1,959,246 Deferred (1,221,850)
(206,100) -- (422,633) Total provision for income taxes 2,007,960
1,086,790 3,394,031 1,536,613 NET LOSS BEFORE NONCONTROLLING
INTEREST (23,449,536) (20,270,736) (12,121,652) (16,637,420) Less:
Net income attributable to noncontrolling interest 8,339,676
4,000,490 12,332,928 5,445,346 NET LOSS ATTRIBUTABLE TO CONTROLLING
INTEREST (31,789,212) (24,271,226) (24,454,580) (22,082,766) OTHER
COMPREHENSIVE INCOME (LOSS): Foreign currency translation
adjustments 162,842 4,841,277 (14,089) 6,457,227 Comprehensive
(loss) income attributable to noncontrolling interest (1,031,639)
1,498,426 (1,106,385) 4,205,415 COMPREHENSIVE LOSS $(32,658,009)
$(17,931,523) $(25,575,054) $(11,420,124) WEIGHTED AVERAGE NUMBER
OF SHARES Basic 39,533,099 34,928,576 37,918,177 34,883,740 Diluted
39,533,099 34,928,576 37,918,177 34,883,740 LOSS PER SHARE Basic
$(0.804) $(0.69) $(0.645) $(0.63) Diluted $(0.804) $(0.69) $(0.645)
$(0.63) GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF CHANGES IN EQUITY Preferred stock Common stock Shares
Par value Shares Par value BALANCE, January 1, 2008 3,092,899
$3,093 34,634,765 $34,635 Net loss Acquired noncontrolling interest
Adjustment to statutory reserve Common stock issued for
compensation, $7.16 76,600 77 Common stock issued for compensation,
$10.43 150,000 150 Common stock issued for compensation, $6.66
87,400 87 Common stock transferred by CEO for compensation, $6.91
Foreign currency translation adjustments BALANCE, June 30, 2008,
Unaudited 3,092,899 $3,093 34,948,765 $34,949 Net income Acquired
noncontrolling interest Adjustment to statutory reserve Common
stock issued for compensation, $10.29 90,254 90 Common stock issued
for consulting fee, $3.6 100,000 100 Common stock issued for public
relations, $3.6 25,000 25 Common stock issued for compensation,
$3.5 87,550 88 Common stock transferred by CEO for compensation,
$6.91 Common stock issued at $5/share 140,000 140 Notes converted
to common stock 541,299 541 Make whole shares issued on notes
conversion 195,965 196 Foreign currency translation adjustments
BALANCE, December 31, 2008 3,092,899 $3,093 36,128,833 $36,129 Net
Loss Disposal of subsidiaries Distribution of dividend to
noncontrolling shareholders Adjustment to statutory reserve Common
stock issued for compensation, $1.85 109,250 109 Common stock
issued for compensation, $2.77 106,750 107 Common stock issued for
interest payment, $3.66 152,240 152 Common stock issued for
repayment of debt, $6.00 300,000 300 Notes converted to common
stock 5,104,596 5,105 Make whole shares issued on notes conversion
1,399,759 1,399 Common stock transferred by CEO for compensation,
$6.91 Reduction of Registered Capital Foreign currency translation
adjustments BALANCE, June 30, 2009, unaudited 3,092,899 $3,093
43,301,428 $43,301 Retained earnings Paid-in Statutory capital
reserves Unrestricted BALANCE, January 1, 2008 $23,429,153
$3,632,325 $22,686,590 Net loss (22,082,766) Acquired
noncontrolling interest Adjustment to statutory reserve 648,363
(648,363) Common stock issued for compensation, $7.16 548,379
Common stock issued for compensation, $10.43 1,564,350 Common stock
issued for compensation, $6.66 581,997 Common stock transferred by
CEO for compensation, $6.91 69,100 Foreign currency translation
adjustments BALANCE, June 30, 2008, unaudited $26,192,979
$4,280,688 $(44,539) Net income 10,758,321 Acquired noncontrolling
interest Adjustment to statutory reserve 621,953 (621,953) Common
stock issued for compensation, $10.29 928,582 Common stock issued
for consulting fee, $3.6 359,900 Common stock issued for public
relations, $3.6 89,975 Common stock issued for compensation, $3.5
306,337 Common stock transferred by CEO for compensation, $6.91
138,200 Common stock issued at $5/share 699,860 Notes converted to
common stock 6,102,691 Make whole shares issued on notes conversion
2,310,117 Foreign currency translation adjustments BALANCE,
December 31, 2008 $37,128,641 $4,902,641 $10,091,829 Net Loss
(24,454,580) Disposal of subsidiaries Distribution of dividend to
noncontrolling shareholders Adjustment to statutory reserve 259,760
(259,760) Common stock issued for compensation, $1.85 202,003
Common stock issued for compensation, $2.77 295,591 Common stock
issued for interest payment, $3.66 557,709 Common stock issued for
repayment of debt, $6.00 1,799,700 Notes converted to common stock
24,125,324 Make whole shares issued on notes conversion 5,565,436
Common stock transferred by CEO for compensation, $6.91 138,200
Reduction of Registered Capital Foreign currency translation
adjustments BALANCE, June 30, 2009, unaudited $69,812,604
$5,162,401 $(14,622,511) Accumulated other Non- Contribution
comprehensive controlling receivable income interest Totals
BALANCE, January 1, 2008 $(959,700) $3,285,278 $43,322,066
$95,433,440 Net loss 5,445,346 (16,637,420) Acquired noncontrolling
interest 15,767,571 15,767,571 Adjustment to statutory reserve --
Common stock issued for compensation, $7.16 548,456 Common stock
issued for compensation, $10.43 1,564,500 Common stock issued for
compensation, $6.66 582,084 Common stock transferred by CEO for
compensation, $6.91 69,100 Foreign currency translation adjustments
6,457,227 4,205,415 10,662,642 BALANCE, June 30, 2008, unaudited
$(959,700) $9,742,505 $68,740,398 $107,990,373 Net income
(13,987,183) (3,228,862) Acquired noncontrolling interest 127,915
127,915 Adjustment to statutory reserve -- Common stock issued for
compensation, $10.29 928,672 Common stock issued for consulting
fee, $3.6 360,000 Common stock issued for public relations, $3.6
90,000 Common stock issued for compensation, $3.5 306,425 Common
stock transferred by CEO for compensation, $6.91 138,200 Common
stock issued at $5/share 700,000 Notes converted to common stock
6,103,232 Make whole shares issued on notes conversion 2,310,313
Foreign currency translation adjustments (1,335,146) (253,844)
(1,588,990) BALANCE, December 31, 2008 $(959,700) $8,407,359
$54,627,286 $114,237,278 Net Loss 12,332,928 (12,121,652) Disposal
of subsidiaries (292,820) (292,820) Distribution of dividend to
noncontrolling shareholders (556,000) (556,000) Adjustment to
statutory reserve -- Common stock issued for compensation, $1.85
202,112 Common stock issued for compensation, $2.77 295,698 Common
stock issued for interest payment, $3.66 557,861 Common stock
issued for repayment of debt, $6.00 1,800,000 Notes converted to
common stock 24,130,429 Make whole shares issued on notes
conversion 5,566,835 Common stock transferred by CEO for
compensation, $6.91 138,200 Reduction of Registered Capital 959,700
959,700 Foreign currency translation adjustments (14,089)
(1,106,385) (1,120,474) BALANCE, June 30, 2009, unaudited $--
$8,393,270 $65,005,009 $133,797,167 GENERAL STEEL HOLDINGS, INC.
AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX
MONTHS ENDED JUNE 30 (UNAUDITED) 2009 2008 CASH FLOWS FROM
OPERATING ACTIVITIES: Net income attributable to controlling
interest $ (24,454,580) $ (22,082,766) Net income attributable to
noncontrolling interest 12,332,928 5,445,346 Consolidated net
income (12,121,652) (16,637,420) Adjustments to reconcile net
income to cash provided by (used in) operating activities:
Depreciation 13,073,512 8,868,941 Amortization 404,564 444,670 Debt
waiver (2,930,200) -- (Gain) Loss on disposal of equipment
(3,431,337) -- Stock issued for services and compensation 636,010
1,199,640 Income from investment (2,698,500) -- Amortization of
deferred note issuance cost 43,282 20,429 Amortization of discount
on convertible notes -- 1,626,184 Change in fair value of
derivative instrument 22,611,599 25,115,869 Convertible note make
whole interest 6,454,683 -- Deferred tax assets 2,165,702 (422,633)
Changes in operating assets and liabilities Accounts receivable
(7,924,301) (13,657,403) Accounts receivable - related parties --
(21,068,625) Notes receivable 4,914,506 (13,961,703) Notes
receivable - restricted -- -- Other receivables (618,596)
(1,219,841) Other receivables - related parties (14,992,788)
1,471,397 Loan receivable -- 1,276,560 Inventories (84,204,445)
(44,931,442) Advances on inventory purchases 11,271,266 33,110,981
Advances on inventory purchases - related parties (13,021,451)
(8,517,117) Prepaid expense - current 126,940 (245,115) Prepaid
expense - non current 91,871 11,443 Prepaid expense - non current -
related parties 38,207 (82,388) Accounts payable 59,067,210
1,188,213 Accounts payable - related parties 15,283,470 1,440,412
Other payables 16,545,247 (2,250,089) Other payable - related
parties 15,748,520 (1,208,217) Dividend payable 440,230 (391,165)
Accrued liabilities 2,198,275 2,598,366 Customer deposits
16,159,621 90,831,063 Customer deposits - related parties
(3,574,353) (3,998,027) Taxes payable (12,768,702) (4,147,173) Net
cash provided by operating activities 28,988,390 36,465,810 CASH
FLOWS FROM INVESTING ACTIVITIES: Acquired long term investment
(6,592,500) -- Cash acquired from subsidiary -- 1,256,385 Deposits
due to sales representatives 31,933,299 (1,053,871) Proceeds from
short term investment -- 2,340,360 Long term other receivables
1,215,339 -- Advance on equipment purchases 3,065,263 674,550 Cash
proceeds from sale of equipment 4,413,964 -- Equipment purchases
(60,289,090) (93,010,998) Intangible assets purchases (99,020)
(186,623) Payment to original shareholders -- (7,092,000) Net cash
used in investing activities (26,352,745) (97,072,197) CASH FLOWS
FROM FINANCING ACTIVITIES: Restricted cash (69,727,403)
(55,759,041) Notes receivable - restricted -- 12,947,333 Borrowings
on short term loans - bank 72,815,976 27,141,084 Payments on short
term loans - bank (43,352,782) (41,610,454) Borrowings on short
term loans - related parties -- 7,106,184 Payments on short term
loans - related parties 2,931,400 -- Borrowings on short term loan
- others 79,354,464 42,641,359 Payments on short term loans -
others (63,899,468) (33,772,944) Borrowings on short term notes
payable 371,613,578 109,642,320 Payments on short term notes
payable (303,326,615) (26,325,504) Net cash provided by financing
activities 46,409,150 42,010,337 EFFECTS OF EXCHANGE RATE CHANGE IN
CASH (9,277) 1,792,862 INCREASE (DECREASE) IN CASH 49,035,518
(16,803,188) CASH, beginning of period 14,895,442 43,713,346 CASH,
end of period $ 63,930,960 $ 26,910,158 For investor and media
inquiries, please contact: In China: Ms. Jing Ou-Yang General Steel
Holdings, Inc. Tel: +86-10-5879-7346 Email: Mr. Justin Knapp Ogilvy
Financial, Beijing Tel: +86-10-8520-6556 Email: In the United
States: Ms. Jessica Barist Cohen Ogilvy Financial, New York Tel:
+1-646-460-9989 Email: DATASOURCE: General Steel Holdings, Inc.
CONTACT: In China: Ms. Jing Ou-Yang of General Steel Holdings,
Inc., +86-10-5879-7346, or ; Mr. Justin Knapp, Ogilvy Financial,
Beijing, +86-10-8520-6556, or ; In the United States: Ms. Jessica
Barist Cohen, Ogilvy Financial, New York, +1-646-460-9989, or Web
Site: http://www.gshi-steel.com/
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