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Ninetowns Reports Second Half and Full Year 2008 Financial Results
Second Half 2008 Financial Highlights
-- Total net revenues were RMB56.0 million (US$8.2 million), representing
a 3% decrease, as compared to RMB57.8 million (US$7.9 million) for the
second half of 2007.
-- Net loss was RMB140.9 million (US$20.6 million), representing a 33%
decrease as compared to a net loss of RMB211.4 million (US$29.0 million)
for the second half of 2007.
-- Both basic and diluted net loss per ADS (each ADS represents one
ordinary share) was RMB4.02 (US$0.59), compared to basic and diluted
net loss per ADS of RMB6.05 (US$0.83) for the second half of 2007.
Full Year 2008 Financial Highlights
-- Total net revenues were RMB107.0 million (US$15.7 million),
representing a 3% increase, as compared to RMB103.5 million (US$14.2
million) for the fiscal year of 2007.
-- Net loss was RMB169.6 million (US$24.9 million), representing a 26%
decrease as compared to net loss of RMB230.5 million (US$31.6 million)
for the fiscal year of 2007.
-- Both basic and diluted net loss per ADS was RMB4.85 (US$0.71), compared
to basic and diluted net loss per ADS of RMB6.59 (US$0.90) for the
fiscal year of 2007.
Second Half and Full Year 2008 Business Highlights
Enterprise software: Ninetowns continued to derive a significant portion
of its total net revenues from the sales and servicing of iDeclare packages,
Ninetowns' import/export enterprise software solution. During the second half
of 2008, the Company sold 1,100 iDeclare software packages and 16,400 iDeclare
service contracts. For the full year 2008, the Company sold 2,900 iDeclare
software packages and 40,500 iDeclare service contracts. As a result, the
installed customer base reached 140,900 and the percentage of iDeclare
customers who purchased software service renewals was approximately 29% as of
During the second half of 2008, Ninetowns continued to deploy iQM, the
professional version of iProcess, in
In addition, during the second half of 2008, Ninetowns sold 1,700 annual
maintenance service contracts to users who are currently using the free
software offered by the PRC Inspection Administration. For the full year 2008,
Ninetowns sold 2,800 such maintenance service contracts. These contracts
average approximately
Tootoo.com (business-to-business, or B2B): In
Mr.
Second, in addition to our core business achievements, we continued to explore long-term growth opportunities to expand the application of our management experience and expertise in quality control management. As we formally start our business-to-customer ("B2C") initiatives in the food industry in the second half of year 2009, we aim to focus our effort on enabling consumers to track quality and to improve the visibility of our operations in every stage of the food supply chain."
Mr.
Second Half 2008 Financial Results
Total Net Revenues. Total net revenues slightly decreased by 3% to
Net revenues from sales of enterprise software for this reporting period
were
For the second half of 2008, the Company recognized net revenues of
Gross Profit and Gross Margin. Gross profit was
Gross margin for this reporting period was 68%, representing a decrease from 74% in the second half of 2007. The gross margin decrease is primarily due to the gross loss incurred by the now-discontinued B2B business.
Operating Expenses. For the second half of 2008, total operating expenses,
including the long-lived assets and goodwill impairment charges as described
below, were
Research and development ("R&D") expenses were
Sales and marketing ("S&M") expenses were
General and administrative ("G&A") expenses were
Long-lived Assets and Goodwill Impairment Charges. Given the continuing
deterioration of the global economic environment and international trade
conditions, the Company thoroughly reviewed its overall B2B strategy and
announced the discontinuation of B2B services in
Operating Loss. As a result, the operating loss for the second half of
2008 was
Net Loss. Net loss for the second half of 2008 was
Full Year 2008 Financial Results
Total Net Revenues. Total net revenues for the full year 2008 were
For the full year 2008, the Company recognized net revenues of
Gross Margin. Gross margin for the full year 2008 was 70%, compared to 78% for the full year 2007. The year-on-year gross margin decrease was primarily due to the gross loss incurred by the now-discontinued B2B business.
Operating Expenses. For the fiscal year 2008, total operating expenses,
including the long-lived assets and goodwill impairment charges as described
above, decreased by 24% to
For the fiscal year 2008, research and development expenses decreased by
13% to
Sales and marketing expenses decreased by 26% to
General and administrative expenses increased slightly by 11% to
Operating Loss. As a result, operating loss for the full year 2008 was
Net Loss. Net loss for the full year 2008 was
Deferred Revenue. Deferred revenue as of
Cash, Cash Equivalents and Term Deposits. Cash, cash equivalents and term
deposits amounted to
Currency Convenience Translation
The conversion of Renminbi into U.S. dollars in this release, made solely
for the convenience of the reader, is based on the noon buying rate in the
Investor Conference Call / Webcast Details
A conference call has been scheduled for
The call may be accessed by dialing +1-617-213-8895 and the passcode is
14362080. A live webcast of the conference call will be available on our
website at http://www.ninetowns.com/english . A replay of the call will be
available from
About Ninetowns Internet Technology Group Company Limited
Ninetowns (Nasdaq: NINE) is a leading provider of online solutions for
international trade, with its key services in automating import/export
e-filing. Ninetowns has been listed on the NASDAQ Stock Exchange since
Forward-Looking Statements
Certain statements in this press release, including statements relating to the expected cash impairment charge, include forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the use of forward-looking terminology, such as "may," "will," "expect," "intend," "estimate," "anticipate," "believe," "project" or "continue" or the negative thereof or other similar words. All forward-looking statements involve risks and uncertainties, including, but not limited to, customer acceptance and market share gains; competition from companies that have greater financial resources; introduction of new products into the marketplace by competitors; successful product development; dependence on significant customers; the ability to recruit and retain quality employees as the Company grows; and economic and political conditions globally. Actual results may differ materially from those discussed in, or implied by, the forward-looking statements. The forward-looking statements speak only as of the date of this release and the Company assumes no duty to update them to reflect new, changing or unanticipated events or circumstances.
For more information, please contact:
Helen Wu
Investor Relations
Ninetowns Internet Technology Group
Company Limited
Tel: +86-10-6589-9287
Email: ir@ninetowns.com
Investor Relations (US):
Mahmoud Siddig, Director
Taylor Rafferty
Tel: +1-212-889-4350
Email: ninetowns@taylor-rafferty.com' target='_blank' title='ninetowns@taylor-rafferty.com'>ninetowns@taylor-rafferty.com
Investor Relations (HK):
Ruby Yim, Managing Director
Taylor Rafferty
Tel: +852-3196-3712
Email: ninetowns@taylor-rafferty.com' target='_blank' title='ninetowns@taylor-rafferty.com'>ninetowns@taylor-rafferty.com
NINETOWNS INTERNET TECHNOLOGY GROUP COMPANY LIMITED
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2007, JUNE 30, 2008 AND
DECEMBER 31, 2008
(In thousands, except share-related data)
For the six months ended
Dec. 31, Dec. 31, Jun. 30, Jun. 30, Dec. 31, Dec. 31,
2007 2007 2008 2008 2008 2008
RMB US$ RMB US$ RMB US$
(unaud- (unaud- (unaud- (unaud- (unaud- (unaud-
ited) ited) ited) ited) ited) ited)
Total net
revenues 57,787 7,922 51,004 7,436 56,009 8,209
Total cost of
revenues (15,285) (2,095) (14,347) (2,092) (17,859) (2,618)
______ ______ ______ ______ ______ ______
Gross profit 42,502 5,827 36,657 5,344 38,150 5,591
Selling and
marketing
expenses (23,645) (3,241) (20,742) (3,024) (9,596) (1,407)
General and
admini-
strative
expenses (49,100) (6,731) (44,372) (6,469) (51,264) (7,514)
Research and
development
expenses (17,054) (2,338) (16,026) (2,336) (11,673) (1,711)
Allowance for
doubtful
accounts (21,913) (3,004) (132) (19) (2,749) (403)
Impairment
of
goodwill (193,570) (26,536) -- -- (78,081) (11,445)
Impairment
of prop-
erty and
equipment -- -- -- -- (4,339) (636)
Impairment
of
intangible
assets -- -- -- -- (43,747) (6,412)
Other operating
income 640 88 -- -- -- --
______ ______ ______ ______ ______ ______
Loss from
oper-
ations (262,140) (35,935) (44,615) (6,504) (163,299) (23,937)
Interest
income 5,063 694 3,160 461 3,866 567
Gain on
sales of
marketable
equity
securities 39,650 5,436 7,410 1,080 2,456 360
Gain from
disposal of
investment
under cost
method -- -- -- -- 2,187 321
Other income -- -- 62 9 296 43
______ ______ ______ ______ ______ ______
Loss before
income tax
(provision)/
benefit and
minority
interest (217,427) (29,805) (33,983) (4,954) (154,494) (22,646)
Income tax
(provision)/
benefit (55) (8) 958 140 12,424 1,821
______ _____ ______ ______ ______ _____
Loss before
minority
interest (217,482) (29,813) (33,025) (4,814) (142,070) (20,825)
Minority
interest 6,053 830 4,269 622 1,214 178
______ ______ ______ ______ ______ ______
Net loss (211,429) (28,983) (28,756) (4,192) (140,856) (20,647)
______ ______ ______ ______ ______ ______
Net loss per
share:
Basic (RMB6.05) (US$0.83) (RMB0.82) (US$0.12) (RMB4.02) (US$0.59)
Diluted (RMB6.05) (US$0.83) (RMB0.82) (US$0.12) (RMB4.02) (US$0.59)
______ ______ ______ ______ ______ ______
Weighted
average
number
of shares
used in
computing
net loss
per share:
Basic 34,966,830 34,966,830 34,991,834 34,991,834 34,997,505 34,997,505
Diluted 34,966,830 34,966,830 34,991,834 34,991,834 34,997,505 34,997,505
______ ______ ______ ______ ______ ______
NINETOWNS INTERNET TECHNOLOGY GROUP COMPANY LIMITED
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2008
(In thousands, except share-related data)
For the years ended Dec. 31
2007 2007 2008 2008
RMB US$ RMB US$
(unaudited) (unaudited) (unaudited) (unaudited)
Total net revenues 103,458 14,183 107,013 15,686
Total cost of revenues (22,857) (3,133) (32,206) (4,721)
______ ______ ______ ______
Gross profit 80,601 11,050 74,807 10,965
Selling and marketing
expenses (41,086) (5,633) (30,338) (4,447)
General and
administrative
expenses (86,334) (11,835) (95,636) (14,018)
Research and
development expenses (32,003) (4,387) (27,699) (4,060)
Allowance for
doubtful accounts (22,395) (3,070) (2,881) (422)
Impairment of
goodwill (193,570) (26,536) (78,081) (11,445)
Impairment of
property and
equipment -- -- (4,339) (636)
Impairment of
intangible assets -- -- (43,747) (6,412)
Other operating income 1,015 139 -- --
______ ______ ______ ______
Loss from operations (293,772) (40,272) (207,914) (30,475)
Interest income 13,885 1,903 7,026 1,030
Gain on sales of
marketable
equity securities 43,546 5,970 9,866 1,446
Gain from disposal of
investment
under cost method -- -- 2,187 321
Other income -- -- 358 52
______ ______ ______ ______
Loss before income
tax (provision)/
benefit and
minority interest (236,341) (32,399) (188,477) (27,626)
Income tax
(provision)/benefit (243) (33) 13,382 1,961
______ _____ ______ _____
Loss before minority
interest (236,584) (32,432) (175,095) (25,665)
Minority interest 6,053 830 5,483 804
______ ______ ______ ______
Net loss (230,531) (31,602) (169,612) (24,861)
______ ______ ______ ______
Net loss per share:
Basic (RMB6.59) (US$0.90) (RMB4.85) (US$0.71)
Diluted (RMB6.59) (US$0.90) (RMB4.85) (US$0.71)
______ ______ ______ ______
Weighted average
number of shares used
in computing net loss
per share:
Basic 34,966,830 34,966,830 34,997,505 34,997,505
Diluted 34,966,830 34,966,830 34,997,505 34,997,505
______ ______ ______ ______
NINETOWNS INTERNET TECHNOLOGY GROUP COMPANY LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2007 AND 2008
(In thousands)
As of Dec. 31,
2007 2007 2008 2008
RMB US$ RMB US$
(note) (note) (unaudited) (unaudited)
ASSETS
Current assets:
Cash, cash
equivalents and
term deposits 675,863 92,652 604,642 88,625
Restricted cash 853 117 670 98
Investment in
available-for-sale
securities 10,962 1,503 10,024 1,469
Inventories 7,011 961 1,367 200
Trade receivable-net 37,446 5,134 33,943 4,975
Other current assets 18,359 2,517 7,119 1,043
_______ _______ _______ _______
Total current assets 750,494 102,884 657,765 96,410
_______ _______ _______ _______
Goodwill 78,081 10,705 -- --
Other non-current
assets 342,605 46,966 295,560 43,322
_______ _______ _______ _______
TOTAL ASSETS 1,171,180 160,555 953,325 139,732
_______ _______ _______ _______
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Deferred revenue 32,472 4,452 21,392 3,136
Other current
liabilities 44,111 6,047 29,946 4,389
_______ _______ _______ _______
Total current
liabilities 76,583 10,499 51,338 7,525
Non-current
liabilities:
Deferred tax
liabilities 16,210 2,222 1,807 265
_______ _______ _______ _______
Total liabilities 92,793 12,721 53,145 7,790
Minority interest 5,483 752 -- --
Total shareholders'
equity 1,072,904 147,082 900,180 131,942
_______ _______ _______ _______
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY 1,171,180 160,555 953,325 139,732
_______ _______ _______ _______
Note: The condensed balance sheet information is derived from the
Company's audited financial statements included in the annual report
on Form 20-F.
SOURCE Ninetowns Internet Technology Group Company Limited