General Steel Reports First and Second Quarter 2012 Financial Results

BEIJING, June 11, 2013 /PRNewswire/ -- General Steel Holdings, Inc. ("General Steel" or the "Company") (NYSE: GSI), a leading non-state-owned steel producer in China, today announced financial results for the first quarter ended March 31, 2012 and the second quarter ended June 30, 2012. In conjunction with this announcement, the Company has filed the corresponding Quarterly Reports on Form 10-Q with the U.S. Securities & Exchange Commission (the "SEC").

"The completion of these financial reports is another big step forward in our march towards bringing the Company current in its reporting obligations. I would like to thank our finance team and auditor for their tireless efforts to complete these filings and our shareholders for their continued support of the Company," said Henry Yu, Chairman and Chief Executive Officer of General Steel.

"Statistics from China Iron and Steel Association and reports from other publicly-listed Chinese steel companies clearly showed that 2012 was a very tough year for the entire steel industry. However, benefiting from our favorable geographic advantage in Western China and close cooperation with the government and state-owned enterprises, I'm encouraged that General Steel was able to significantly grow gross profits and improve gross margin in the first six months of 2012. We remain focused on executing our business strategy."

General Steel is currently preparing its Quarterly Report on Form 10-Q for the period ended September 30, 2012 and Annual Report on Form 10-K ("Annual Report") for the year ended December 31, 2012 and intends to file on or before June 21, 2013. Filing the Annual Report will regain compliance with the New York Stock Exchange's continued listing standards.

First Six Months 2012 Financial Review

Revenue decreased 19.4% year-over-year to $1.4 billion in the first six months of 2012, from $1.8 billion in the first six months of 2011.
Sales volume totaled approximately 2.5 million metric tons, compared with 3.0 million metric tons in the first six months of 2011.
Gross profit increased 18.6% year-over-year to $33.7 million, or 2.4% of revenue, up from $28.4 million, or 1.6% of revenue in the first six months of 2011.
Operating loss for the quarter improved to $(5.1) million, compared with an operating loss of $(13.1) million in the first six months of 2011.
Net loss attributable to the Company was $(61.2) million, or $(1.11) per diluted share based on 55.2 million weighted average shares outstanding, compared with a net loss of $(31.8) million, or $(0.59) per diluted share based on 54.2 million weighted average shares outstanding in the first six months of 2011.

The increase in net loss for the first six months of 2012 was primarily attributable to a provision of inventory allowance of $16.9 million due to drop in market prices, and an increase of $65.1 million in finance expense. The increased in finance expense include an increase of $14.9 million in interest expense on capital lease, and $50.2 million in interest expense on bank borrowings, related parties borrowings, and discounted notes receivables.

First Quarter 2012 Financial Review

Revenue decreased 8.8% year-over-year to $648.0 million in the first quarter of 2012, from $710.5 million in the first quarter of 2011.
Sales volume totaled approximately 1.2 million metric tons, relatively unchanged from the first quarter of 2011.
Gross profit increased 11.5% year-over-year to $5.6 million, or 0.9% of revenue, up from $5.0 million, or 0.7% of revenue in the first quarter of 2011.
Operating loss for the quarter was $(13.0) million, compared with an operating loss of $(9.5) million in the first quarter of 2011.
Net loss attributable to the Company was $(34.8) million, or $(0.63) per diluted share based on 55.5 million weighted average shares outstanding, compared with a net loss of $(8.9) million, or $(0.16) per diluted share based on 54.8 million weighted average shares outstanding in the first quarter of 2011.

Second Quarter 2012 Financial Review

Revenue decreased 26.5% year-over-year to $780.7 million in the second quarter of 2012, from $1.1 billion in the second quarter of 2011.
Sales volume totaled approximately 1.3 million metric tons, compared with 1.8 million metric tons in the second quarter of 2011.
Gross profit increased 20.2% year-over-year to $28.0 million, or 3.6% of revenue, up from $23.3 million, or 2.2% of revenue in the second quarter of 2011.
Operating income for the quarter totaled $7.9 million, compared with an operating loss of $(3.7) million in the second quarter of 2011.
Net loss attributable to the Company was $(26.4) million, or $(0.48) per diluted share based on 54.9 million weighted average shares outstanding, compared with a net loss of $(22.9) million, or $(0.42) per diluted share based on 54.3 million weighted average shares outstanding in the second quarter of 2011.

Balance Sheet

As of June 30, 2012, the Company had cash and restricted cash of approximately $465.8 million, compared to $518.2 million as of December 31, 2011. The Company had an inventory balance of approximately $323.3 million as of June 30, 2012, compared to $297.7 million as of December 31, 2011. As of June 30, 2012, the Company had total liabilities of approximately $3.1 billion.

About General Steel Holdings, Inc.

General Steel Holdings, Inc., headquartered in Beijing, China, produces a variety of steel products including rebar, high-speed wire and spiral-weld pipe. The Company has operations in China's Shaanxi and Guangdong provinces, Inner Mongolia Autonomous Region and Tianjin municipality with seven million metric tons of crude steel production capacity under management. For more information, please visit www.gshi-steel.com.

To be added to the General Steel email list to receive Company news, or to request a hard copy of the Company's Annual Report on Form 10-K, please send your request to generalsteel@asiabridgegroup.com.

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. Actual results could differ materially from those projected in the forward-looking statements as a result of inaccurate assumptions or a number of risks and uncertainties. These risks and uncertainties are set forth in the Company's filings under the Securities Act of 1933 and the Securities Exchange Act of 1934 under "Risk Factors" and elsewhere, and include: (a) those risks and uncertainties related to general economic conditions in China, including regulatory factors that may affect such economic conditions; (b) whether the Company is able to manage its planned growth efficiently and operate profitable operations, including whether its management will be able to identify, hire, train, retain, motivate and manage required personnel or that management will be able to successfully manage and exploit existing and potential market opportunities; (c) whether the Company is able to generate sufficient revenues or obtain financing to sustain and grow its operations; (d) whether the Company is able to successfully fulfill our primary requirements for cash; and (e) other risks, including those disclosed in the Company's Form 10-K, filed with the SEC. 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 Us

General Steel Holdings, Inc.
In China:
Jenny Wang
Tel: +86-10-5775-7691
Email: jenny.wang@gshi-steel.com

In the US:
Joyce Sung
Tel: +1-347-534-1435
Email: joyce.sung@gshi-steel.com

Asia Bridge Capital Limited
Carene Toh
Tel: +1-888-957-3362
Email: generalsteel@asiabridgegroup.com

GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands)


		June 30,		March 31,		December 31,
ASSETS		2012		2012		2011
CURRENT ASSETS:
	Cash	$	58,404	$	84,516	$	120,016
	Restricted cash		407,430		455,501		398,216
	Notes receivable		79,708		69,373		92,910
	Restricted notes receivable		225,490		608,917		584,241
	Loans receivable - related parties		67,239		63,199		-
	Accounts receivable, net		8,927		18,577		12,601
	Accounts receivable - related parties		87,373		53,056		20,593
	Other receivables, net		12,908		11,410		22,411
	Other receivables - related parties		54,400		76,052		87,679
	Inventories		323,301		360,064		297,729
	Advances on inventory purchase		97,822		97,321		63,585
	Advances on inventory purchase - related parties		52,773		76,849		20,244
	Prepaid expense and other		547		335		531
	Prepaid taxes		22,647		18,891		24,189
	Short-term investment		2,853		2,851		2,906
TOTAL CURRENT ASSETS			1,501,822		1,996,912		1,747,851

PLANT AND EQUIPMENT, net			1,216,493		1,228,772		1,257,236

OTHER ASSETS:
	Advances on equipment purchase		14,690		12,780		10,420
	Investment in unconsolidated entities		984		904		12,840
	Long-term loan receivable - related party		2,000		2,000		-
	Long-term deferred expense		506		549		631
	Intangible assets, net of accumulated amortization		24,623		24,908		25,143
TOTAL OTHER ASSETS			42,803		41,141		49,034

TOTAL ASSETS		$	2,761,118	$	3,266,825	$	3,054,121

LIABILITIES AND DEFICIENCY

CURRENT LIABILITIES:
	Short term notes payable	$	910,662	$	1,248,235	$	1,113,504
	Accounts payable		362,692		282,613		413,345
	Accounts payable - related parties		116,683		190,063		121,828
	Short term loans - bank		199,421		318,662		253,954
	Short term loans - others		240,125		299,707		246,657
	Short term loans - related parties		81,524		82,992		15,710
	Other payables and accrued liabilities		44,643		34,461		49,538
	Other payable - related parties		132,948		95,032		28,873
	Customer deposits		88,938		80,669		90,556
	Customer deposits - related parties		39,134		57,403		68,277
	Deposit due to sales representatives		30,602		33,534		22,890
	Deposit due to sales representatives - related parties		1,236		1,236		943
	Taxes payable		6,921		5,355		11,374
	Deferred lease income, current		2,117		2,116		2,099
	Derivative liabilities		3		23		10
	TOTAL CURRENT LIABILITIES		2,257,649		2,732,101		2,439,558

NON-CURRENT LIABILITIES:
	Long-term loans - related party		92,856		92,797		92,035
	Deferred lease income, noncurrent		76,043		76,524		76,425
	Capital lease obligations		319,446		314,080		306,350
	Profit sharing liability		317,174		311,358		303,233
	TOTAL NON-CURRENT LIABILITIES		805,519		794,759		778,043

TOTAL LIABILITIES			3,063,168		3,526,860		3,217,601

COMMITMENTS AND CONTINGENCIES

DEFICIENCY:
	Preferred stock, $0.001 par value, 50,000,000 shares authorized, 3,092,899 shares issued and outstanding as of June 30, March 31, 2012 and December 31, 2011		3		3		3
	Common stock, $0.001 par value, 200,000,000 shares authorized, 56,932,788, 56,767,388 and 56,601,988 shares issued, 54,460,482, 55,676,410, and 55,551,010 shares outstanding as of June 30, March 31, 2012 and December 31, 2011, respectively		57		56		56
	Treasury stock, at cost, 2,472,306, 1,090,978 and 1,090,978 shares as of June 30, March 31, 2012 and December 31, 2011		(4,199)		(2,795)		(2,795)
	Paid-in-capital		105,190		105,059		107,940
	Statutory reserves		6,106		6,227		6,388
	Accumulated deficits		(290,244)		(263,867)		(229,083)
	Accumulated other comprehensive income		9,982		8,751		10,200
	TOTAL GENERAL STEEL HOLDINGS, INC. DEFICIENCY		(173,105)		(146,566)		(107,291)

NONCONTROLLING INTERESTS			(128,945)		(113,469)		(56,189)
	TOTAL DEFICIENCY		(302,050)		(260,035)		(163,480)

TOTAL LIABILITIES AND DEFICIENCY		$	2,761,118	$	3,266,825	$	3,054,121




GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE THREE MONTHS ENDED MARCH 31, JUNE 30, 2012 AND 2011 AND SIX MONTHS ENDED JUNE 30, 2012 AND 2011
(UNAUDITED)
(In thousands, except per share data)

	For the three months ended March 31,				For the three months ended June 30,				For the six months ended June 30,
	2012		2011		2012		2011		2012		2011

SALES	$	383,797	$	501,479	$	538,986	$	814,599	$	922,783	$	1,316,078
SALES - RELATED PARTIES		264,244		208,985		241,697		247,132		505,941		456,117
TOTAL SALES		648,041		710,464		780,683		1,061,731		1,428,724		1,772,195

COST OF GOODS SOLD		381,726		497,915		516,277		793,298		898,003		1,291,213
COST OF GOODS SOLD - RELATED PARTIES		260,685		207,500		236,362		245,093		497,047		452,593
TOTAL COST OF GOODS SOLD		642,411		705,415		752,639		1,038,391		1,395,050		1,743,806
GROSS PROFIT		5,630		5,049		28,044		23,340		33,674		28,389
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		18,629		14,501		20,132		27,033		38,761		41,534

INCOME (LOSS) FROM OPERATIONS		(12,999)		(9,452)		7,912		(3,693)		(5,087)		(13,145)
OTHER INCOME (EXPENSE)
Interest income		5,556		1,063		3,146		816		8,702		1,879
Finance/interest expense		(48,366)		(14,119)		(53,948)		(23,117)		(102,314)		(37,236)
Change in fair value of derivative liabilities		(13)		3,552		20		1,839		7		5,391
Gain on debt settlement		-		-		-		3,430		-		3,430
Gain (loss) on disposal of equipment		(119)		(397)		3		387		(116)		(10)
Income from equity investments		(43)		1,655		79		1,856		36		3,511
Foreign currency transaction gain (loss)		385		619		(973)		1,030		(588)		1,649
Lease income		530		452		530		512		1,060		964
Other non-operating income (expense), net		(143)		305		1,145		(455)		1,002		(150)
Other expense, net		(42,213)		(6,870)		(49,998)		(13,702)		(92,211)		(20,572)
LOSS BEFORE PROVISION FOR INCOME TAXES
AND NONCONTROLLING INTEREST		(55,212)		(16,322)		(42,086)		(17,395)		(97,298)		(33,717)
PROVISION FOR INCOME TAXES
Current		367		750		43		-		410		207
Deferred		169		(3,501)		-		18,198		169		15,240
Provision for income taxes		536		(2,751)		43		18,198		579		15,447
NET LOSS		(55,748)		(13,571)		(42,129)		(35,593)		(97,877)		(49,164)
Less: Net loss attributable to noncontrolling interest		(20,964)		(4,654)		(15,752)		(12,678)		(36,716)		(17,332)
NET LOSS ATTRIBUTABLE TO GENERAL STEEL HOLDINGS, INC.	$	(34,784)	$	(8,917)	$	(26,377)	$	(22,915)	$	(61,161)	$	(31,832)
NET LOSS	$	(55,748)	$	(13,571)	$	(42,129)	$	(35,593)	$	(97,877)	$	(49,164)
OTHER COMPREHENSIVE LOSS
Foreign currency translation adjustments		(1,469)		1,687		1,590		(287)		121		1,400

COMPREHENSIVE LOSS		(57,217)		(11,884)		(40,539)		(35,880)		(97,756)		(47,764)
Less: Comprehensive loss attributable to noncontrolling interest		(21,440)		(4,412)		(15,393)		(12,858)		(36,833)		(17,270)

COMPREHENSIVE LOSS ATTRIBUTABLE TO GENERAL STEEL HOLDINGS, INC.	$	(35,777)	$	(7,472)	$	(25,146)	$	(23,022)	$	(60,923)	$	(30,494)

WEIGHTED AVERAGE NUMBER OF SHARES
Basic and Diluted		55,520		54,840		54,857		54,318		55,188		54,233
LOSS PER SHARE
Basic and Diluted	$	(0.63)	$	(0.16)	$	(0.48)	$	(0.42)	$	(1.11)	$	(0.59)




GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2012 AND 2011 AND SIX MONTHS ENDED JUNE 30, 2012 AND 2011
(UNAUDITED)
(In thousands)

				Three months ended March 31,				Six months ended June 30,
				2012		2011		2012		2011
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net loss			$	(55,748)	$	(13,571)	$	(97,877)	$	(49,164)
	Adjustments to reconcile net loss to cash provided by (used in) operating activities:
		Depreciation, amortization and depletion			20,559		8,922		41,329		22,022
		Impairment of plant and equipment			-		-		-		5,361
		Change in fair value of derivative liabilities			13		(3,552)		(7)		(5,391)
		Gain on debt settlement			-		-		-		(3,430)
		Loss on disposal of equipment			119		397		74		10
		Bad debt allowance			5		5		5		-
		Reservation of mine maintenance fee			254		-		50		-
		Stock issued for services and compensation			262		647		394		994
		Amortization of deferred financing cost on capital lease			10,839		-		21,627		6,698
		Income from equity investments			43		(1,655)		(36)		(3,511)
		Foreign currency transaction (gain) loss			(385)		(619)		588		(1,649)
		Deferred tax assets			169		(2,730)		169		15,240
		Deferred lease income			(530)		6,220		(1,060)		5,746
	Changes in operating assets and liabilities
		Notes receivable			22,048		(68,315)		11,728		(43,854)
		Accounts receivable			(5,887)		(7,269)		3,789		(32,086)
		Accounts receivable - related parties			(32,374)		3,591		(66,664)		(38,750)
		Other receivables			3,371		3,686		2,403		(1,947)
		Other receivables - related parties			(5,999)		17,436		15,729		(54,657)
		Inventories			(61,814)		(41,747)		(24,713)		(10,460)
		Advances on inventory purchases			(36,580)		(7,451)		(36,985)		(25,304)
		Advances on inventory purchases - related parties			(68,061)		(3,137)		(54,790)		(6,745)
		Prepaid expense and other			32		-		(181)		4,753
		Long-term deferred expense			88		-		131		723
		Prepaid taxes			5,513		-		1,760		22,256
		Accounts payable			(104,700)		27,484		(49,095)		79,242
		Accounts payable - related parties			103,918		34,958		54,720		45,926
		Other payables and accrued liabilities			(5,924)		8,246		4,254		5,258
		Other payables - related parties			72,220		(14,732)		110,061		(354)
		Customer deposits			(10,653)		103,096		(2,418)		38,685
		Customer deposits - related parties			(11,467)		(14,583)		(29,781)		9,671
		Taxes payable			(6,355)		18,791		(4,785)		6,248
			Net cash provided by (used in) operating activities		(167,024)		54,118		(99,581)		(8,469)

CASH FLOWS FROM INVESTING ACTIVITIES:
	Restricted cash				(54,126)		(4,516)		(5,671)		15,017
	Loans to related parties				(65,359)		-		(69,303)		-
	Cash proceeds from short term investment				79		-		79		-
	Cash proceeds from sales of equipment				-		328		4		258
	Cash proceeds from investment in future contracts				-		-		-		410
	Advance on equipment purchases				(2,280)		(190)		(4,182)		-
	Equipment purchase and intangible assets				(8,449)		(10,912)		(16,368)		(31,097)
	Effect on cash due to deconsolidating of a subsidiary				(2,977)		-		(2,975)		-
			Net cash used in investing activities		(133,112)		(15,290)		(98,416)		(15,412)

CASH FLOWS FINANCING ACTIVITIES:
	Payments made for treasury stock acquired				-		(1,128)		(1,404)		(1,924)
	Notes receivable - restricted				(19,891)		(81,509)		364,325		63,055
	Borrowings on short term notes payable				467,269		243,985		921,101		400,543
	Payments on short term notes payable				(341,435)		(169,105)		(1,134,080)		(542,672)
	Borrowings on short term loans - bank				150,252		85,312		184,477		235,006
	Payments on short term loans - bank				(87,102)		(59,876)		(241,919)		(212,768)
	Borrowings on short term loan - others				119,089		36,128		155,936		186,183
	Payments on short term loans - others				(65,486)		(44,664)		(162,212)		(112,199)
	Borrowings on short term loan - related parties				85,197		-		178,454		5,662
	Payments on short term loans - related parties				(54,453)		-		(138,320)		-
	Deposits due to sales representatives				10,481		(23,771)		7,515		(29,068)
	Deposit due to sales representatives - related parties				286		-		286		-
	Borrowings on long term loan - related party				-		-		-		76,350
	Payments on long term loan - related party				-		-		-		(35,144)
			Net cash provided by (used in) financing activities		264,207		(14,628)		134,159		33,024
EFFECTS OF EXCHANGE RATE CHANGE IN CASH					429		(161)		2,226		903
INCREASE (DECREASE) IN CASH					(35,500)		24,039		(61,612)		10,046
CASH, beginning of period					120,016		65,271		120,016		65,271
CASH, end of period				$	84,516	$	89,310	$	58,404	$	75,317