Funtalk China Holdings Limited Reports Fiscal 2010 Second Quarter Financial Results
-- 2Q FY2010 Revenues Increased 95% to $208 Million --
-- Operating Income Increased 110% to $12.4 Million --
-- Net Income Increased 20% to $4.6 Million --
-- Provides Financial Outlook for Second Half of FY2010 --
"We are pleased with the improved results in our second fiscal quarter," commented Mr. Fei Dongping, Chief Executive Officer of the Company. "Our retail business continues to drive the growth of the Company in generating strong organic growth and recurring revenue. We are making excellent progress in our efforts to build a vertically integrated, wireless communication products company with a strong retail and distribution network. The platform we have built in
Second Quarter Financial Results
The Company completed a share exchange with Pypo Digital Company Limited ("Pypo Digital") on
The Company reported revenues of
Distribution revenues for 2Q FY2010 were
Retail revenues for 2Q FY2010 were
Gross margin decreased to 13.5% from 14.4% for the corresponding period of FY2009. Gross margins for the distribution division and retail division were 13.5% and 13.4%, respectively, for 2Q FY2010. The decrease in gross margin was primarily due to the change in revenue mix where a substantial portion of revenues was generated from sales of lower margin mobile phones.
Selling and distribution expenses were
Operating income increased 109.7% to
Interest expense was
Income tax expense was
Net income attributable to non-controlling interests of the Company's partially-owned consolidated subsidiaries was
Net income attributable to the Company was
As of
2010 Second Quarter Business Development Initiatives
In
In
Share Repurchase Activity
In
Change of Name
On
Follow-on Offering
In
The Company plans to use the net proceeds from the offering for general corporate purposes, including establishment of new retail stores, investments in connection with arrangements with wireless operators and improvements in the Company's information management system.
Outlook for Second Half of FY2010
For the second half of the Company's 2010 fiscal year ending
"We look forward to solid performance in the second half of our fiscal year, which is traditionally a stronger period for our business. Our results are expected to improve compared to first half as we expect to receive a significant amount of vendor-rebates, recognize the full amount of net income contribution from both Shanghai Xieheng and Jiangsu Guanzhilin, and stronger seasonal sales trends. Our acquisition of Shanghai Xieheng has expanded our retail networks into new regions and will create a new source of recurring revenue for us, beginning in our next fiscal year. We believe this decisive move accelerates our strategy of integrating the mobile communication retail market and the consolidation makes it possible for the Company to broaden its revenue base, increase gross margins, strengthen our overall product offering and enhance its overall competitiveness. We are pleased to have completed our recent financing and are encouraged with our growth opportunities moving forward. We plan to provide frequent updates on our business and look forward to updating our investors on our third quarter performance towards the end of
Interim Financial Information
The unaudited condensed consolidated statements of income and balance sheets accompanying this press release have been prepared by management using U.S. GAAP. This interim financial information is not intended to fully comply with U.S. GAAP because they do not present all of the disclosures required by U.S. GAAP. The
About Funtalk China Holdings Limited
The Company is a retailer and distributor of wireless communications devices, accessories and content in 30 provinces in
Safe Harbor and Informational Statement
This press release includes forward-looking statements that involve risks and uncertainties. Forward-looking statements are statements that are not historical facts. The words "anticipate," "believe," "estimate," "expect," "intend," "may," "plan," "predict," "project," "will," "would" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. The Company may not actually achieve the plans, intentions or expectations disclosed in the forward-looking statements, and investors should not place undue reliance on the forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements made by the parties as a result of a number of factors, some of which may be beyond the Company's control. These factors include the risk that the Company will not use the proceeds from the offering in the manner contemplated or successfully integrate any acquisitions of retail chains, as well as the other risk factors detailed in the Company's filings with the Securities and Exchange Commission. Further, the forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, collaborations, dividends or investments made by the Company or other parties. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Financial Statements Following
FUNTALK CHINA HOLDINGS LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
Three Months Ended Six Months Ended
Sep. 30, Sep. 30, Sep. 30, Sep. 30,
2009 2008 2009 2008
Net revenues $207,721 $106,716 $405,451 $219,625
Cost of revenues -179,751 -91,312 -353,074 -188,505
Gross profit 27,970 15,404 52,377 31,120
Operating expenses:
Other operating
income 437 23 1,153 23
Selling and
distribution
expenses -11,015 -6,903 -21,117 -13,417
General and
administrative
expenses -5,028 -2,627 -8,846 -5,692
Impairment loss on
goodwill -- -- -- -71
Total operating
expenses -15,606 -9,507 -28,810 -19,157
Income from
operations 12,364 5,897 23,567 11,963
Others, net -1,117 32 -2,004 89
Interest income 101 141 132 248
Interest expense -2,159 -1,207 -4,119 -2,727
Income before income
tax, equity in
(loss) income of
affiliated companies
and non-controlling
interests 9,189 4,863 17,576 9,573
Income tax expense -2,874 -743 -5,744 -1,424
Equity in (loss)
income of
affiliated
companies -3 47 -- 83
Net income 6,312 4,167 11,832 8,232
Net income
attributable to
non-controlling
interests -1,739 -341 -3,156 -416
Net income
attributable to the
Company $4,573 $3,826 $8,676 $7,816
Basic net income per
share $0.094 $0.085 $0.185 $0.174
Diluted net income
per share $0.089 $0.085 $0.180 $0.174
Number of shares
used in computing
basic net income 48,598,314 45,000,000 46,808,989 45,000,000
Number of shares
used in computing
diluted net income 51,140,606 45,000,000 48,084,896 45,000,000
FUNTALK CHINA HOLDINGS LIMITED
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
As of Sep. As of Mar.
30, 2009 31, 2009
ASSETS
Current assets:
Cash and cash equivalents $14,172 $33,468
Restricted bank deposits 49,801 11,504
Accounts receivable (less allowance
for doubtful accounts of $555 for
September 30, 2009 and $735 for March
31, 2009 87,674 72,802
Inventories 88,315 54,701
Notes receivable 1,921 2,982
Value added tax receivable 5,359 2,857
Amounts due from related parties 24,156 42,308
Amount due from an affiliated company 6,766 27,946
Receivable from a vendor 3,336 21,355
Other receivable 88,351 44,180
Prepayment and other assets 9,998 8,314
Deferred tax assets 3,624 4,866
Total current assets 383,473 327,283
Non-current assets:
Investments in affiliated companies 358 1,479
Property and equipment, net 16,580 15,694
Intangible assets 18,957 19,188
Goodwill 21,344 1,977
Other assets 3,077 320
Total non-current assets 60,316 38,658
TOTAL ASSETS $443,789 $365,941
FUNTALK CHINA HOLDINGS LIMITED
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
As of Sep. 30, 2009 As of Mar. 31, 2009
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable $52,505 $28,290
Notes payable 63,124 23,513
Provision for rebates and price
protections 9,029 9,048
Advance payments from
customers 21,242 4,827
Other payables and accruals 46,642 20,611
Income taxes payable 3,727 8,086
Amounts due to related parties 300 20,300
Amounts due to an affiliated
company -- 790
Short term borrowings 83,378 79,457
Total current liabilities 279,947 194,922
Non current liabilities
Deferred tax liabilities 2,588 2,005
Total liabilities 282,535 196,927
Total shareholders' equity 152,513 154,561
Non-controlling interests 8,741 14,453
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $443,789 $365,941
For more information, please contact:
Bill Zima
ICR Inc. (US)
Phone: +1-203-682-8200
SOURCE Funtalk China Holdings Limited
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