Sino-Global Announces Fiscal Third Quarter 2013 Financial Results

Sino-Global Shipping America, Ltd. (Nasdaq: SINO), a leading, non-state-owned provider of shipping agency services operating primarily in China, announced its selected financial results for its third fiscal quarter ended March 31, 2013.
Financial Highlights for the Third Fiscal Quarter Ended March 31, 2013
•    Total revenues decreased 74.32% to US$2.34 million, from US$9.11 millionin the third fiscal quarter ended March 31, 2013.
•    The devaluation of the US dollar against the Chinese Renminbi ("RMB") resulted in a very slight impact on gross margin, which expanded in the quarter to 14.76% up from 5.22% in the third fiscal quarter of 2012, due to providing more protective services, which carry higher margins.
•    Strong internal budget controls reduced general and administrative expenses in absolute amount by 53%.
•    Net loss improved to US$211,040from net loss of US$770,155in the third fiscal quarter of 2012.
•    Basic and diluted losses per share were US$0.06and US$0.16for the third fiscal quarters of 2013 and 2012, respectively.  Earnings and losses per share are adjusted for the non-controlling interest.
Mr. Cao Lei, Sino-Global's Chief Executive Officer, stated, "The difficult economic environment continued into the third quarter, stemming from the reduced volume of iron ore imports. As a result, we saw a reduction in the number of ships we service. In addition, one of our major customers, Beijing Shourong Forwarding Company ("Shourong"), has changed its service arrangement with us, to protective agency services versus the lump sum fixed rate discharging agency services. As a result of this change, our revenue base declined significantly. While this is extremely disappointing, we have managed to streamline our business in light of this change by cutting expenses, which limited our losses in the quarter. On a positive note, our gross margin improved to nearly 15% in the quarter as we provided protective agency services to more ships, which carries a higher gross margin compared to the loading and discharging services."
Mr. Cao added, "Subsequent to the third quarter's end, we managed to improve the Company's balance sheet as shareholders approved the issuance of 1.8 million shares for $3.078 million, or $1.71a share, to Mr. Zhang Zhong, who owns 90% of Tianjin Zhiyuan Investment Group. We are pleased to have Mr. Zhong as a shareholder and hope this transaction will provide us not only with the necessary capital to manage the business going forward, but also provide Sino Global with new opportunities in a wider service range including shipping agency, ship management, ship operating and forwarding."
Mr. Cao concluded, "Looking to the future, we will continue to emphasize expanding our international marketing effort to position us for strong growth as economies around the world improve. We also believe that our business relationship with Shourong will continue this year and we are working diligently in obtaining a favorable service arrangement with them. Our position has been strengthened by the actions that we have taken and Sino-Global will continue to seek additional international business from loading ports in Australia, Canada, South Africaand Brazilas well as other countries with which Chinahas major trading activities."
Select Financial Highlights for the Three and Nine Months Periods Ended March 31, 2013
Revenues
Total revenues decreased by 74.32% from $9,110,006for the three months ended March 31, 2012to $2,339,074in the comparable three months in 2013. The number of ships that generated revenues decreased from 129 for the three months ended March 31, 2012to 99 for the comparable quarter of fiscal 2013. Accordingly, revenues decreased. In addition, the Company provided protective services for more ships which generated significantly lower revenues per ship. For the three months ended March 31, 2013, the Company provided protective services to 81 ships, compared to 35 ships for the same quarter of 2012. The Company provided loading/discharging service to 18 and 94 ships for the three months ended March 31, 2013and 2012, respectively. Total revenues decreased by 35.27% from $25,725,311for the nine months ended March 31, 2012to $16,650,903in the comparable nine months in 2013. The number of ships that generated revenues for the Company decreased from 351 for the nine-month period of fiscal 2012 to 322 for the comparable period of fiscal 2013. Moreover, the Company provided protective services for more ships which generated significantly lower revenues per ship. For the nine months ended March 31, 2013, the Company provided protective services to 172 ships, compared to 68 ships for the nine-month period of 2012. In contrast, the Company provided loading/discharging service to 150 and 283 ships for the nine months ended March 31, 2013and 2012, respectively.
General and Administrative Expenses
General and administrative expenses decreased by 53.08% from $1,149,522for the three months ended March 31, 2012to $539,348for the three months ended March 31, 2013. This decrease was mainly due to (1) decreased salaries and benefits for our staff of $194,489, (2) a decrease of $184,388in business promotion, (3) decreased listing expense of $78,443. The Company will continue with its budget control efforts to reduce the general and administrative expenses as a percentage of total revenues. General and administrative expenses decreased by 36.02% from $3,976,137for the nine months ended March 31, 2012to $2,543,959for the nine months ended March 31, 2013. This mainly due to (1) decreased bad debts provision of $88,621, (2) a decrease of $552,750in business promotion, (3) decreased listing expense of $186,970, (4) decreased salaries and benefits for our staff of $235,145, (5) decreased travelling expense of $89,184. The Company will continue with its budget control efforts to reduce the general and administrative expenses as a percentage of total revenues.
Selling Expenses
Selling expenses decreased by 64.56% from $83,547for the three months ended March 31, 2012to $29,606for the three months ended March 31, 2013, mainly due to lower commission payments related to the sales decrease. Selling expenses primarily consist of commissions and traveling expenses for operating staff to the ports at which the Company provide services. In line with the decrease in revenues, selling expenses decreased in absolute amount and increased as a percentage of our total net revenues for the nine and three months ended March 31, 2013. Selling expenses decreased by 28.12% from $296,353for the nine months ended March 31, 2012to $213,032for the period ended March 31, 2013. Most selling expenses are commissions paid to business partners who refer shipping agency business to the Company
Operating Loss
The Company had an operating loss of $223,804for the three months ended March 31, 2013, compared to operating loss of $757,251for the comparable three months in 2012. The operating loss for the third quarter of fiscal 2013 was primarily due to the decrease in costs of revenues and general and administrative expenses. The Company reported an operating loss of $1,224,238for the nine months ended March 31, 2013, compared to an operating loss of $2,388,060for the comparable nine months in 2012. The operating loss for the nine-month period of fiscal 2013 decreased primarily due to the reduced costs of revenues and general and administrative expenses.
Financial Income, Net
The net financial expense was $7,060for the three months ended March 31, 2013, compared to the net financial income of $42,152for the three months ended March 31, 2012. The net financial income was derived largely from the foreign exchange gains recognized in the financial statement consolidation. Foreign exchange losses resulting from the settlement of foreign exchange transactions are recognized in the condensed consolidated statements of operations. The net financial income was $22,674for the nine months ended March 31, 2013, compared to our net financial income of $58,705for the nine months ended March 31, 2012. The net financial income was derived largely from the foreign exchange income recognized in the financial statement consolidation. Foreign exchange losses resulting from the settlement of foreign exchange transactions are recognized in the condensed consolidated statements of operations.
Taxation
Income tax benefits were $14,600for the three months ended March 31, 2013, compared to income tax benefits of $7,111for the three months ended March 31, 2012. As the Company had a tax benefit of $24,100and deferred tax expense of $9,500, the income tax benefits of the three months ended March 31, 2013was $14,600. Income tax expense was $64,500for the nine months ended March 31, 2013, compared to income tax benefits of $31,232for the nine months ended March 31, 2012. The income tax expense of $64,500was deferred tax expense resulted from an increase of valuation allowance of deferred tax assets.
Net Loss
As a result of the foregoing, the Company had a net loss of $211,040for the three months ended March 31, 2013, compared to net loss of $770,155for the three months ended March 31, 2012. After deduction of non-controlling interest in loss, net loss attributable to Sino-Global Shipping America, Ltd. was $166,510for the three months ended March 31, 2013, compared to net loss of $477,388for the three months ended March 31, 2012. With other comprehensive loss foreign currency translation, comprehensive loss was $151,175for the three months ended March 31, 2013, compared to comprehensive loss of $461,984for the three months ended March 31, 2012. The Company also had a net loss of $1,219,051for the nine months ended March 31, 2013, compared to net loss of $2,424,480for the nine months ended March 31, 2012. After deduction of non-controlling interest in loss, net loss attributable to Sino-Global Shipping America, Ltd. was $648,329for the nine months ended March 31, 2013, compared to net loss of $1,538,176for the nine months ended March 31, 2012. With other comprehensive loss foreign currency translation, comprehensive loss was $635,442for the nine months ended March 31, 2013, compared to comprehensive loss of $1,510,966for the nine months ended March 31, 2012.
Basic and diluted losses per share
Basic and diluted losses per share were US$0.06and US$0.16for the third fiscal quarter of 2013 and 2012, respectively. Basic and diluted losses per share for the nine months ended March 31, 2013and 2012 were US$0.22and US$0.53, respectively. Losses per share are adjusted for the non-controlling interest.
Other selected Data
The Company has financed its operations primarily through cash flows from operations. As of March 31, 2013, we had $331,020in cash and cash equivalents. Cash and cash equivalents primarily consist of cash on hand and cash in banks. Sino Global deposited approximately 80.66% of its cash in banks in the USA, Australiaand Hong Kong.
About Sino-Global Shipping America, Ltd.
Registered in the United Statesin 2001 and operating primarily in mainland China, Sino-Global is a leading, non-state-owned provider of high-quality shipping agency services. With local branches in most of China's main ports and contractual arrangements in all those where it does not have branch offices, Sino-Global is able to offer efficient, high-quality shipping agency services to shipping companies entering Chinese ports. With a subsidiary in Perth, Australia, where it has a contractual relationship with a local shipping agency, Sino-Global provides complete shipping agent services to companies involved in trades between Chinese and Australian ports. Sino-Global also cooperates with companies in Hong Kong, China, India, and South Africato offer comprehensive shipping agent services to vessels going to and from some of the world's busiest ports.
Sino-Global provides ship owners, operators and charters with comprehensive yet customized shipping agency services including intelligence, planning, real-time analysis and on-the-ground implementation and logistics support. Sino-Global has achieved both ISO9001 and UKAS certifications.
Source: Sino-Global Shipping America, Ltd.