Fuwei Films Announces Its Unaudited Financial Results for the First Quarter of 2014 - Teleconference to be Held on Thursday, May 22, 2014 at 9:00 am EDT -

BEIJING, May 21, 2014 /PRNewswire/ -- Fuwei Films (Holdings) Co., Ltd. (Nasdaq: FFHL) ("Fuwei Films" or the "Company"), a manufacturer and distributor of high-quality BOPET plastic films in China, today announced its unaudited financial results for the first quarter of 2014 ended March 31, 2014.

Highlights

  • Revenues were RMB70.7 million or US$11.4 million, compared with RMB76.6 million in the same period of 2013.
  • A sample diffusion film (a type of TFT-LCD optical film) was delivered to clients and we are making improvements and modifications based on the client's initial positive feedback. We expect that it will be manufactured in small batches by the third production line in the near future. In addition, a sample base film for solar backsheet has been delivered to clients for testing.
  • On May 12, 2014, the Company issued a press release announcing that the Company has learned that the successful bidder, Shandong SNTON Optical Materials Technology Co., Ltd. ("SNTON") in the fifth public auction of 6,912,503 (or 52.9%) of the Company's outstanding ordinary shares (the "Apex Shares") held on March 25, 2014, was entrusted by Hongkong Ruishang International Trade Co., Ltd., a Hong Kong corporation ("Hongkong Ruishang"), to handle all the formalities and procedures in connection with the public auction. Weifang City State-Owned Assets Operation Administration Company (the "Administration Company") originally held the Apex Shares indirectly through an intermediate holding company, Apex Glory Holdings Limited, a British Virgin Islands corporation.
  • On May 14, 2014, the Company announced it had received a notification from its new shareholder, Shandong Fuhua Investment Company Limited ("Shandong Fuhua") with respect to an ownership transfer from Weifang- City State-Owned Assets Operation Administration Company (the "Administration Company") to Shandong Fuhua of the Company's 12.55% outstanding ordinary shares (the "Easebright Shares").  The Administration Company originally held the Shares indirectly through an intermediate holding company, Easebright Investments Limited ("Easebright"). As a result of this transfer, Shandong Fuhua indirectly owns Easebright Shares through Easebright.

Mr. Xiaoan He, Chairman and CEO of Fuwei Films, commented, "The first quarter financial results continue to reflect weakened market conditions due to intensified competition which caused oversupply and excess capacity in the marketplace. However, we continue to believe that our focus on innovation will enable the Company to weather the current down cycle while increasing the ratio of high-valued films. I am pleased to announce that the preliminary test of a sample diffusion film (a type of TFT-LCD optical film) was delivered demonstrating our ability to better serve our customers through expanded product offerings. I am also pleased to announce that our controlling shareholder, a government entity, has transferred its ownership to a private company which we believe will enable our management to realign its strategic goals and will allow the Company to obtain more effective support in the fierce marketplace."

First Quarter 2014 Results

Net sales during the first quarter ended March 31, 2014 were RMB70.7 million or US$11.4 million, compared to RMB76.6 million, during the same period in 2013, representing a decrease of RMB5.9 million or 7.7%, mainly due to the reduction of average sales price by 8% arising from stronger competition in China and reduced prices of main raw materials.

Overseas sales for the first quarter 2014 were RMB10.5 million or US$1.7 million, or 14.8% of total revenues, compared with RMB12.6 million or 16.5% of total revenues in the first quarter of 2013, representing a decrease of RMB2.1 million or 16.7%. The reduction of average sales price caused a decrease of RMB0.9 million and the decrease in sales volume resulted in a decrease of RMB1.2 million. The decrease in overseas sales was mainly due to the lower demand from international markets and enhanced competition as well as anti-dumping measures taken by the USA and South Korea, which led to a decrease in orders from the overseas markets compared to the same period of 2013.

The following is a breakdown of domestic versus overseas sales for the three-month periods ended March 31, 2014 and 2013 (amount in thousands except percentages):

 



Three-Month Period Ended



March 31, 2014

% of Total

March 31, 2013

% of Total



RMB

US$

RMB

Sales in China


60,238

9,690

85.2%

63,979

83.5%

Sales in other countries


10,467

1,684

14.8%

12,598

16.5%








Total


70,705

11,374

100.0%

76,577

100.0%

 

Our gross loss was RMB0.07 million or US$0.01 million for the first quarter ended March 31, 2014, representing a gross loss margin of 0.1%, as compared to a gross loss margin of 1.6% for the same period in 2013. Our average product sales prices decreased by 8.0% compared to the same period in 2013 while the average cost of goods sold decreased by 9.0% compared to the same period last year. Consequently, the decrease in cost of goods sold exceeded that in sales revenue during the first quarter ended March 31, 2014, which contributed to the slight improvement in our gross loss margin compared with the same period in 2013.

Operating expenses for the first quarter ended March 31, 2014 were RMB10.4 million or US$1.7 million, which was RMB3.3 million, or 24.1% lower than the same period in 2013. This decrease was mainly due to decreased R&D expenditures and transportation expenses in the first quarter of 2014.

Net loss attributable to the Company during the first quarter ended March 31, 2014 was RMB13.3 million or US$2.1 million, compared to net loss attributable to the Company of RMB18.1 million during the same period in 2013, representing a decrease of RMB4.8 million for the same period in 2013 due to the factors described above.

Basic and diluted net loss per share was RMB1.02 or US$0.16, compared with basic and diluted net loss per share of RMB1.38 in the first quarter of 2013.

Total shareholders' equity was RMB447.0 million or US$71.9 million as of March 31, 2014, compared with RMB460.3 million as of December 31, 2013.

As of March 31, 2014, the Company had 13,062,500 basic and diluted total ordinary shares outstanding.

Conference Call Information

The Company will host a teleconference on Thursday, May 22, 2014, at 9:00 a.m. EDT / 9:00 p.m. Beijing time to discuss the financial results. To participate in the call, please dial +1-877-407-9205 in North America, or +1-201-689-8054 internationally, approximately 10 minutes prior to the scheduled start time.

A replay of the call can also be accessed via telephone by calling +1-877-660-6853 in North America, or +1-201-612-7415 internationally, and entering the following Conference ID: 13582855. The replay will be available until June 22, 2014, at 11:59 p.m. EDT.

About Fuwei Films

Fuwei Films conducts its business through its wholly owned subsidiary, Fuwei Films (Shandong) Co., Ltd. ("Fuwei Shandong"). Fuwei Shandong develops, manufactures and distributes high-quality plastic films using the biaxial oriented stretch technique, otherwise known as BOPET film (biaxially oriented polyethylene terephthalate). Fuwei's BOPET film is widely used to package food, medicine, cosmetics, tobacco, and alcohol, as well as in the imaging, electronics, and magnetic products industries.

Safe Harbor

This press release contains information that constitutes forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are subject to risks. Risk factors that could contribute to such differences include those matters more fully disclosed in the Company's reports filed with the U.S. Securities and Exchange Commission which, among other things, include both the short and long-term effects of the global financial crisis on the Company and the BOPET film industry; competition in the BOPET film industry; growth of, and risks inherent in, the BOPET film industry in China; uncertainty as to future profitability and our ability to obtain adequate financing for our planned capital expenditure requirements; uncertainty as to our ability to continuously develop new BOPET film products and keep up with changes in BOPET film technology; risks associated with possible defects and errors in our products; uncertainty as to our ability to protect and enforce our intellectual property rights; uncertainty as to our ability to attract and retain qualified executives and personnel; and uncertainty in acquiring raw materials on time and on acceptable terms, particularly in view of the volatility in the prices of petroleum products in recent years. The forward-looking information provided herein represents the Company's estimates as of the date of the press release, and subsequent events and developments may cause the Company's estimates to change. The Company specifically disclaims any obligation to update the forward-looking information in the future. Therefore, this forward-looking information should not be relied upon as representing the Company's estimates of its future financial performance as of any date subsequent to the date of this press release. Actual results of our operations may differ materially from information contained in the forward-looking statements as a result of the risk factors.

For more information, please contact:

In China:

Ms Xiaoli Yu
Investor Relations Officer
Phone: +86-133-615-59266
Email: fuweiIR@fuweifilms.com

In the U.S.:

Ms. Vivian Chen
Investor Relations
Grayling
Phone: +1-646-284-9427
Email: vivian.chen@grayling.com

 

 

 


Financial Tables to Follow




FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2014 AND DECEMBER 31, 2013

(amounts in thousands except share and per share value)

(Unaudited)








March 31, 2014


December 31, 2013



RMB

US$


RMB

ASSETS

Current assets






Cash and cash equivalents


2,877

463


11,578

Restricted cash


39,438

6,344


41,422

Accounts and bills receivable, net


8,968

1,443


8,373

Inventories


38,810

6,243


38,454

Advance to suppliers


6,987

1,124


6,977

Prepayments and other receivables


24,806

3,990


26,107

Deferred tax assets - current


1,774

285


1,702

Total current assets


123,660

19,892


134,613







Plant, properties and equipment, net


514,346

82,740


524,777

Construction in progress


366

59


632

Lease prepayments, net


18,868

3,035


18,999

Advance to suppliers - long term, net


2,945

474


2,134

Long-term deposit


16,760

2,696


16,760

Other Assets


13,170

2,119


13,244

Deferred tax assets - non current


20,853

3,355


20,888







Total assets


710,968

114,370


732,047







LIABILITIES AND EQUITY

Current liabilities






Short-term borrowings


105,000

16,891


105,000

Accounts payables


33,372

5,368


33,454

Notes payable


78,005

12,548


81,990

Advance from customers


13,223

2,127


14,665

Accrued expenses and other payables

6,625

1,066


6,777

Obligations under capital leases-current


8,450

1,359


8,314

Total current liabilities


244,675

39,359


250,200







Obligations under capital leases


6,398

1,029


8,563

Long-term loan


10,000

1,609


10,000

Deferred tax liabilities


3,674

591


3,736







Total liabilities


264,747

42,588


272,499







Equity






Shareholders' equity






Registered capital (of US$0.129752 par value; 

20,000,000 shares authorized; 13,062,500 issued and

outstanding)


13,323

2,143


13,323

Additional paid-in capital


311,907

50,175


311,907

Statutory reserve


37,441

6,023


37,441

Retained earnings


83,111

13,370


96,370

Cumulative translation adjustment


1,218

196


1,266

Total shareholders' equity


447,000

71,907


460,307

Non-controlling interest


(779)

(125)


(759)

Total equity


446,221

71,782


459,548

Total liabilities and equity


710,968

114,370


732,047

 

 

 

FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2014 AND 2013

(amounts in thousands except share and per share value)

(Unaudited)






The Three-Month Period Ended March 31, 



2014


2013



RMB

US$


RMB

Net sales


70,705

11,374


76,577

Cost of sales


70,774

11,385


77,768







Gross loss


(69)

(11)


(1,191)







Operating expenses






Selling expenses


3,359

540


4,345

Administrative expenses


7,054

1,135


9,306

Total operating expenses


10,413

1,675


13,651







Operating loss 


(10,482)

(1,686)


(14,842)







Other income (expense)






- Interest income


380

61


61

- Interest expense


(3,168)

(510)


(3,217)

- Others (expense) income, net


(88)

(14)


(101)







Total other expense


(2,876)

(463)


(3,257)







Loss before provision for income taxes


(13,358)

(2,149)


(18,099)







Income tax benefit


99

16


23







Net loss 


(13,259)

(2,133)


(18,076)







Net loss attributable to non-controlling interests


-

-


-

Net loss attributable to the Company


(13,259)

(2,133)


(18,076)







Other comprehensive income






- Foreign currency translation adjustments attributable to

non-controlling interest


(20)

(3)


2

- Foreign currency translation adjustments attributable to the         

Company


(48)

(8)


11







Comprehensive (loss) income attributable to non-controlling

interest


(20)

(3)


2

Comprehensive loss attributable to the Company


(13,307)

(2,141)


(18,065)







Loss per share,

Basic and diluted


(1.02)

(0.16)


(1.38)

Weighted average number ordinary shares,

Basic and diluted 


13,062,500

13,062,500


13,062,500

 

 

 

FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2014 AND 2013

(amounts in thousands except share and per share value)

(Unaudited)






The Three-Month Period Ended March 31, 



2014


2013



RMB

US$


RMB

Cash flow from operating activities






Net loss


(13,259)

(2,133)


(18,076)

Adjustments to reconcile net loss to net cash






used in operating activities






- Depreciation of property, plant and equipment


12,069

1,941


12,197

- Amortization of intangible assets


132

21


131

- Deferred income taxes


(99)

(16)


(23)

- Bad debt expense


477

77


376

Changes in operating assets and liabilities 






- Accounts and bills receivable


(1,072)

(172)


7,035

- Inventories


(355)

(57)


(14,714)

- Advance to suppliers


(10)

(2)


8,850

- Prepaid expenses and other current assets


(264)

(42)


(1,379)

- Accounts payable


(82)

(13)


1,258

- Accrued expenses and other payables


(219)

(35)


264

- Advance from customers


(1,443)

(232)


3,385

- Tax payable


1,639

264


(2,605)







Net cash used in operating activities


(2,486)

(399)


(3,301)







Cash flow from investing activities






Purchases of property, plant and equipment


(1,639)

(264)


(213)

Restricted cash related to trade finance


1,992

320


(27,371)

Advanced to suppliers - non current


(811)

(130)


(1,034)

Amount change in construction in progress


265

43


(1,862)







Net cash used in investing activities


(193)

(31)


(30,480)







Cash flow from financing activities






Principal payments of short-term bank loans


-

-


-

Proceeds from short-term bank loans


-

-


2,032

Payment of capital lease obligation


(2,028)

(326)


(2,091)

Change in notes payable


(3,985)

(641)


53,773

Proceeds from sale-leaseback equipment


-

-


5,000







Net cash (used in) provided by financing activities


(6,013)

(967)


58,714







Effect of foreign exchange rate changes


(9)

(53)


(1)







Net (decrease) increase in cash and cash equivalent


(8,701)

(1,450)


24,932







Cash and cash equivalent






At beginning of period/year


11,578

1,913


5,006

At end of period/year


2,877

463


29,938







SUPPLEMENTARY DISCLOSURE:

Interest paid


3,168

510


3,217

Income tax paid


-

-


-







SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND FINANCIAL ACTIVITIES:

Account payable for plant and equipment:


8,275

1,331


5,053

Obligations for acquired equipment under capital lease:


14,848

2,389


22,909

 

 

 

SOURCE Fuwei Films (Holdings) Co., Ltd.



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