EX-99.1 2 v085599_ex99-1.htm
Exhibit 99.1

GENERAL STEEL HOLDINGS, INC. ANNOUNCES RECORD FINANCIAL RESULTS FOR SECOND QUARTER 2007 &
SECOND QUARTER EARNINGS CALL

BEIJING, China, August 20, 2007 / Xinhua-PRNewswire/ -- General Steel Holdings, Inc. (“General Steel”), (OTC Bulletin Board: GSHO), China’s first publicly traded steel company in the US, reports record financial results for the second quarter ended on June 30, 2007.

Second Quarter 2007 Financial Highlights
 
 
·
Sales Revenue reached a record $121.3 million, up 312% from the second quarter of 2006
 
 
·
Gross Profits reached a record $8.11 million, up 410% from the second quarter of 2006
 
 
·
Net Income reached a record $1.9 million, up 2086% from the second quarter of 2006
 
 
·
Earning per share rose to $0.06 per share, up from $0.003 per share from the second quarter of 2006

Second Quarter 2007 Achievements
 
 
·
Signed 60% Joint Venture agreement with Shaanxi Longmen Iron and Steel Group, Co., Ltd. and began operations in June 2007
 
 
·
Finalized 80% ownership position in a Joint Venture agreement with Baotou Iron & Steel Group - Full production will begin in third quarter 2007
 
 
·
Purchased 30% remaining outstanding shares of Tianjin subsidiary
 
 
·
Increased aggregate production capacity from 400,000 tons to 3 million tons (650%)

“The second quarter was a pivotal point in the growth of General Steel,” stated Henry Yu, General Steel Chairman and CEO. “We executed our growth strategy by gaining controlling interest in two targeted joint ventures. This increased our production capacity from 400,000 tons to 3 million tons, widened our product mix and gave us a solid regional presence to better serve the rapidly developing western region. We are especially pleased with results from our new Long Men Joint Venture which started only in June and has already had a great impact on earnings. We look forward to the results we can deliver to investors in the third quarter when all three of our operating units will reflect a full three months of operation.”

New Businesses & Products

General Steel now operates three steel business units.
 
 
·
Tianjin Daqiuzhuang Metal Sheet Co., Ltd. operates ten production lines capable of producing 400,000 tons of hot-rolled carbon and silicon steel sheets used mainly in the agricultural vehicle market. It has an approximate 50% market share for steel sheets used in the production of light agricultural vehicles. General Steel owns 100% of this business unit

 
·
Baotou Steel - General Steel Special Steel Pipe Joint Venture Co., Ltd. received its business license in May 2007. It has four production lines capable of producing 100,000 tons of spiral-weld pipes used mainly in the energy sector to transport oil, natural gas and steam. General Steel owns 80% of this joint venture.

 
·
Shaanxi Long Men Iron & Steel Co., Ltd. began in June 2007. It is a joint venture between General Steel and the Shaanxi Long Men Iron and Steel Group Co., Ltd. The joint venture is a fully-integrated steel production facility capable of producing 2.5 million tons of crude steel. It produces a final product mix of rebar and infrastructure related steel products. General Steel owns 60% of this business unit.
 
 
 
 
 
Second Quarter 2007 Financial Results

Note: Financial results include the operations of Tianjin Daqiuzhuang Metal Co., Ltd. for the full three months and operations from Shaanxi Long Men Iron and Steel Co., Ltd for only one month. Baotou Steel - General Steel Special Steel Pipe Joint Venture Co., Ltd. was in production test mode for most of the quarter and had little impact on results of the quarter.

Net sales from operations increased to $121.3 million in the quarter, reflecting a 312% increase over the $29.4 million recorded in the second quarter last year. In a close corollary and for the same periods of comparison, shipment volume rose 360% to 304,954 tons from 66,359 tons. The company also saw its cost of sales march upward to $113.1 million, up from $27.8 million from the same quarter of 2006. Quarterly gross profit hit $8.1 million, registering a 410% increase above the $1.59 million recorded in the same period of 2006. General Steel witnessed selling general and administrative expenses rise to $2.84 million from $810,000 in the second quarter of the previous year. Accounts receivable was $20.7 million at the end of the second quarter compared to $17.1 million at the end of 2006. Most notably, net income for the quarter climbed 2086% to $1.9 million, up from $86,598 the same period the year before. This translated into a corresponding jump in earnings per share to $0.06 per share from $0.003 per share in the equivalent three months of 2006.

Conference Call

Management will host a conference call at 9:00 a.m. Eastern Time on August 20, 2007, to discuss results of the second quarter ending June 30, 2007 and allow investors greater visibility into the new operations of the company. Joining Henry Yu, General Steel Holdings Chairman and 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.  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=41866 . 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 .

About General Steel Holdings, Inc.

General Steel Holdings, Inc., headquartered in Beijing, operates a diverse portfolio of Chinese steel companies. With 3 million ton aggregate production capacity, its companies serve various industries and produce a variety of steel products including reinforced bar (rebar), hot-rolled carbon and silicone sheet and spiral-weld pipe. The company has steel operations in Shaanxi province (central China), Inner Mongolia province (northwest China) and Tianjin municipality (northeast 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.
 
 
 
 
 
Contact:
Ross Warner
General Steel Holdings, Inc.
Tel: (Beijing) 86-10-5879-7346
Email: ross@gshi-steel.com
Skype: ross.warner.generalsteel

 
 
 
 

GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES
 
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2007 AND DECEMBER 31, 2006

   
June 30,
 
December 31,
 
 
 
2007
 
2006
 
 
 
(Unaudited)
 
 
  
ASSETS
          
CURRENT ASSETS:
          
Cash
  
$
44,304,703
  
$
6,831,549
  
Restricted cash
    
13,545,793
    
4,231,523
  
Accounts receivable, net of allowance for doubtful accounts of $140,662
              
and $137,132 as of June 30, 2007 and December 31, 2006, respectively
    
20,703,437
    
17,095,718
  
Notes receivable
    
6,784,263
    
537,946
  
Other receivables
    
436,317
    
268,784
  
Other receivables - related parties
    
1,682,400
    
850,400
  
Inventories
    
66,075,563
    
12,489,290
  
Advances on inventory purchases
    
8,934,047
    
2,318,344
  
Advances on inventory purchases - related parties
    
25,754,327
    
-
  
Advance on equipment purchases
    
1,968,418
    
-
  
Prepaid expenses - current
    
47,340
    
46,152
  
Total current assets
    
190,236,608
    
44,669,706
  
               
PLANT AND EQUIPMENT, net
    
191,305,061
    
26,606,594
  
               
OTHER ASSETS:
              
Prepaid expenses - non current
    
873,052
    
740,868
  
Intangible assets - land use right, net of accumulated amortization
    
21,197,244
    
1,804,440
  
Total other assets
    
22,070,296
    
2,545,308
  
               
Total assets
  
$
403,611,965
  
$
73,821,608
  
               
LIABILITIES AND SHAREHOLDERS' EQUITY
              
               
CURRENT LIABILITIES:
              
Accounts payable
  
$
19,788,769
  
$
3,001,775
  
Short term loans
    
113,834,289
    
30,284,686
  
Short term notes payable
    
43,421,300
    
8,153,520
  
Other payables
    
2,631,207
    
355,142
  
Other payable - related party
    
90,979,655
    
-
  
Accrued liabilities
    
9,350,456
    
1,064,012
  
Customer deposits
    
34,126,053
    
1,093,602
  
Customer deposits - related parties
    
7,347,109
        
Deposits due to sales representatives
    
1,743,690
    
2,051,200
  
Taxes payable
    
20,233,032
    
5,391,602
  
Investment payable
    
6,312,000
    
-
  
Shares subject to mandatory redemption
    
1,950,000
    
2,179,779
  
Total current liabilities
    
351,717,560
    
53,575,318
  
               
MINORITY INTEREST
    
28,313,565
    
6,185,797
  
               
SHAREHOLDERS' EQUITY:
              
Preferred stock, $0.001 par value, 50,000,000 shares authorized, 3,092,899 and 0 shares
              
issued and outstanding as of June 30, 2007 and December 31, 2006, respectively
    
3,093
    
-
  
Common Stock, $0.001 par value, 200,000,000 shares authorized, 32,444,665 and
              
32,426,665 shares issued and outstanding (including 1,000,000 and 1,176,665
              
redeemable shares) as of June 30, 2007 and December 31, 2006, respectively
    
31,445
    
31,250
  
Paid-in-capital
    
15,610,335
    
6,871,358
  
Retained earnings
    
5,154,150
    
4,974,187
  
Statutory reserves
    
1,107,010
    
1,107,010
  
Accumulated other comprehensive income
    
1,674,807
    
1,076,688
  
Total shareholders' equity
    
23,580,840
    
14,060,493
  
 
              
Total liabilities and shareholders' equity
  
$
403,611,965
  
$
73,821,608
  
 
 
 
 
 
GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES
  
   
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
 
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006
  
(Unaudited)
  

   
Three months ended
 
Six months ended
 
   
June 30,
 
June 30,
 
   
2007
  
2006
  
2007
  
2006
  
   
 
              
REVENUES
  
$
121,254,744
  
$
29,398,358
  
$
158,862,715
  
$
50,040,860
  
                           
COST OF SALES
    
113,141,376
   
27,807,959
   
149,016,342
   
47,082,163
 
                           
GROSS PROFIT
   
8,113,368
   
1,590,399
   
9,846,373
   
2,958,697
 
                           
SELLING, GENERAL & ADMINISTRATIVE EXPENSES
   
2,844,411
   
807,633
   
3,474,611
   
1,549,811
 
                           
INCOME FROM OPERATIONS
    
5,268,957
   
782,766
   
6,371,762
   
1,408,886
 
                           
OTHER EXPENSE, NET
    
1,241,143
   
587,552
   
1,461,818
   
747,693
 
                           
INCOME BEFORE PROVISION FOR INCOME TAXES AND MINORITY INTEREST
    
4,027,814
   
195,214
   
4,909,944
   
661,193
 
 
                          
PROVISION FOR INCOME TAXES
    
1,206,613
   
-
   
1,333,882
   
-
 
                           
NET INCOME BEFORE MINORITY INTEREST
    
2,821,201
   
195,214
   
3,576,062
   
661,193
 
 
                          
LESS MINORITY INTEREST
    
927,902
   
108,616
   
1,207,896
   
322,190
 
                           
NET INCOME
    
1,893,299
   
86,598
   
2,368,166
   
339,003
 
                           
OTHER COMPREHENSIVE INCOME:
                          
Foreign currency translation adjustments
    
374,568
   
61,231
   
598,119
   
182,636
 
                           
COMPREHENSIVE INCOME
 
$
2,267,867
  
$
147,829
  
$
2,966,285
  
$
521,639
  
                           
WEIGHTED AVERAGE NUMBER OF SHARES
    
31,444,665
   
31,250,000
   
31,444,665
   
31,250,000
 
                           
EARNING PER SHARE, BASIC AND DILUTED
  
$
0.060
  
$
0.003
  
$
0.075
  
$
0.011
  

 
 
 

GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES
 
 
 
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
 
FOR THE SIXMONTHS ENDED JUNE 30, 2007 AND 2006
 
 
   
 
 
 
 
 
 
 
 
 
 
Retained earnings
 
Accumulated
 
 
 
 
 
Preferred stock
 
Common stock
 
Paid-in
 
Statutory
 
 
 
comprehensive
 
 
 
 
 
Shares
 
Par value
 
Shares
 
Par value
 
capital
 
reserves
 
Unrestricted
 
income
 
Totals
  
BALANCE, January 1, 2006
    
-
  
$
-
    
31,250,000
  
$
31,250
  
$
6,871,358
  
$
840,753
  
$
4,207,236
  
$
399,188
  
$
12,349,785
  
                                                         
Net income
                                        
339,003
          
339,003
  
Foreign currency translation adjustments
                                              
182,636
    
182,636
  
                                                         
BALANCE, June 30, 2006, unaudited
    
-
  
$
-
    
31,250,000
  
$
31,250
  
$
6,871,358
  
$
840,753
  
$
4,546,239
  
$
581,824
  
$
12,871,424
  
                                                         
Net income
                                        
694,205
          
694,205
  
Adjustment to statutory reserve
                                  
266,257
    
(266,257
)
        
-
  
Foreign currency translation adjustments
                                              
494,864
    
494,864
  
                                                         
BALANCE, December 31, 2006
    
-
  
$
-
    
31,250,000
  
$
31,250
  
$
6,871,358
  
$
1,107,010
  
$
4,974,187
  
$
1,076,688
  
$
14,060,493
  
                                                         
Net income
                                        
2,368,166
          
2,368,166
  
                                                   
-
  
Preferred stock issued for acquistion of minority interest , net of dividend distribution to Victory New
    
3,092,899
    
3,093
                
8,370,907
          
(2,188,203
)
        
6,185,797
  
Common stock issued for conversion of redeemable
                                                    
-
  
stock, $1.95/share
                
176,665
    
177
    
344,328
                      
344,505
  
Common stock issued for service, $1.32/share
                
18,000
    
18
    
23,742
                      
23,760
  
Foreign currency translation adjustments
                                              
598,119
    
598,119
  
                                                         
BALANCE, June 30, 2007, unaudited
    
3,092,899
  
$
3,093
    
31,444,665
  
$
31,445
  
$
15,610,335
  
$
1,107,010
  
$
5,154,150
  
$
1,674,807
  
$
23,580,840
  

 
 
 
 
GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES
  
           
CONSOLIDATED STATEMENTS OF CASH FLOWS
  
FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006
  
(Unaudited)
  
           
   
2007
  
2006
  
           
CASH FLOWS FROM OPERATING ACTIVITIES:
          
Net income
 
$
2,368,166
  
$
339,003
  
Adjustments to reconcile net income to cash provided by
              
(used in) operating activities:
              
Minority interest
    
1,207,896
   
322,190
 
Depreciation
    
1,979,184
   
548,685
 
Amortization
    
194,830
   
147,839
 
Loss on disposal of equipment
    
118,528
   
28,859
 
Stock issued for services
    
23,760
   
-
 
Interest expense accrued on mandatory redeemable stock
    
114,726
   
229,452
 
(Increase) decrease in assets:
              
Accounts receivable
    
499,590
   
(3,236,194
)
Notes receivable
   
(212,753
)
  
(561,164
)
Notes receivable-related party
    
-
   
995,031
 
Other receivables
    
(152,646
)
  
18,777
 
Other receivables - related parties
    
(814,100
)
  
(970,000
)
Inventories
    
(843,369
)
  
(12,971,648
)
Advances on inventory purchases
    
248,632
   
3,939,998
 
Advances on inventory purchases - related parties
    
(25,403,755
)
  
-
 
Prepaid expenses - current
    
(111,573
)
  
(108,732
)
Increase (decrease) in liabilities:
              
Accounts payable
    
14,049,429
   
3,291,541
 
Other payables
    
808,677
   
242,167
 
Other payable - related party
    
(13,990,128
)
  
(980,000
)
Accrued liabilities
    
7,981,708
   
763,533
 
Customer deposits
    
771,354
   
674,434
 
Customer deposits -related parties
    
7,247,099
   
-
 
Taxes payable
    
14,610,931
   
910,544
 
 Net cash provided by (used in) operating activities
    
10,696,186
   
(6,375,685
)
               
CASH FLOWS FROM INVESTING ACTIVITIES:
              
Cash acquired from subsidiary
    
426,387
   
-
 
Increase in investment payable
    
6,226,080
   
-
 
Advances on equipment purchases
    
(1,941,624
)
  
1,058,435
 
Deposits due to sales representatives
    
(355,405
)
  
437,416
 
Cash proceeds from sale of equipment
    
39,442
   
-
 
Purchase of equipment
    
(1,350,225
)
  
(5,058,840
)
 Net cash provided by (used in) investing activities
    
3,044,655
   
(3,562,989
)
               
CASH FLOWS FROM FINANCING ACTIVITIES:
              
Restricted cash
    
(5,188,741
)
  
256,248
 
Cash contribution received from minority shareholders
    
778,260
   
-
 
Borrowings from related parties
    
25,942,000
   
-
 
Borrowings on short term loans - bank
    
25,727,979
   
14,125,677
 
Payments on short term loans - bank
    
(30,165,358
)
  
(10,156,530
)
Borrowings on short term notes payable
    
13,437,956
   
10,542,852
 
Payments on short term notes payable
    
(8,249,556
)
  
(11,041,332
)
 Net cash provided by financing activities
    
22,282,540
   
3,726,915
 
               
EFFECTS OF EXCHANGE RATE CHANGE IN CASH
    
1,449,773
   
69,449
 
               
INCREASE (DECREASE) IN CASH
    
37,473,154
   
(6,142,310
)
               
CASH, beginning of period
    
6,831,549
   
8,648,373
 
               
CASH, end of period
  
$
44,304,703
  
$
2,506,063