UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For September 30, 2014
Commission File No. 001-33176
Fuwei Films
(Holdings) Co., Ltd.
No. 387 Dongming Road
Weifang Shandong
People’s Republic of China, Postal
Code: 261061
(ADDRESS OF PRINCIPAL
EXECUTIVE OFFICES)
Indicate by check mark whether the registrant
files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F x
Form 40-F ¨
Indicate by check mark if the registrant
is submitting the Form 6-K in paper as permitted by Regulation S-T Rule
101(b)(1): ¨
Indicate by check mark if the registrant
is submitting the Form 6-K in paper as permitted by Regulation S-T Rule
101(b)(7): ¨
Indicate by check mark whether the
registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant
to Rule 12g3-2(b) under the Securities Exchange Act of 1934:
Yes ¨ No
x
If “Yes” marked, indicate below
the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-________
EXPLANATORY NOTE
This Report of Foreign Private Issuer on
Form 6-K (this “Form 6-K”) contains forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, and Section 21E of the Securities Exchange Act of 1934. These statements relate to future events or the future financial
performance of Fuwei Films (Holdings) Co., Ltd. (the “Company”). The Company has attempted to identify forward-looking
statements by terminology, including, but not limited to, “anticipates”, “believes”, “expects”,
“can”, “continue”, “could”, “estimates”, “intends”, “may”,
“plans”, “potential”, “predicts”, “should” or “will” or the negative
of these terms or other comparable terminology.
The forward-looking
statements included in this Form 6-K are subject to risks, uncertainties and assumptions about the Company’s businesses and
business environments. These statements reflect the Company’s current views with respect to future events and are not a guarantee
of future results, operations, levels of activity, performance or achievements. Actual results of the Company’s results,
operations, levels of activity, performance or achievements may differ materially from information contained in the forward-looking
statements as a result of risk factors. They include, among other things, negative impacts of the slow economic recovery of
major economies on the Company, significant competition in the BOPET film industry, especially the significant oversupply of BOPET
films resulting from the rapid growth of the Chinese BOPET industry capacity, changes in the international market and trade barriers,
especially the adverse impact of the antidumping investigation and imposition of an anti-dumping duty on imports of the BOPET films
originating from the People’s Republic of China (“China”) conducted by certain main importing countries; fluctuations
of RMB exchange rate, the reduce in demand for the Company’s products or the loss of main customers which may result in the
decrease of sales, and negatively influencing the Company’s financial performance, uncertainty as to the future profitability,
uncertainty as to the Company’s ability to successfully obtain additional funds to meet the working capital needs of the
new BOPET production line, uncertainty as to the Company’s ability to continuously develop new BOPET film products to be
produced by the third production line and keep up with changes in BOPET film technology, risks associated with possible defects
and errors in its products including complaints and claims from clients, uncertainty as to its ability to protect and enforce its
intellectual property rights, uncertainty as to its ability to attract and retain qualified executives and personnel, and uncertainty
in acquiring raw materials on time and on acceptable terms, particularly in light of the volatility in the prices of petroleum
products in recent years, instability of power and energy supply, and the uncertainty regarding the future operation of the Company
in connection with the changes in the labor law in China, the measures
taken by the Chinese government to save energy and reduce emissions, and the complaints from nearby
residents and local government about the noise caused by our production as well as the uncertainty
of the impact of major shareholder transfer that have substantial influence over the Company and the Company’s business operation,
including possible overlap of our BOPET products, customers and market orientation with an BOPET film manufacturer which
is controlled by the same individual who has control over the shares of our major shareholder. The
Company’s expectations are as of the date of filing of this Form 6-K, and the Company does not intend to update any of the
forward-looking statements after the date this Form 6-K is filed to confirm these statements to actual results, unless required
by law.
On November 20, 2014, the Company announced
its unaudited consolidated financial results for the nine-month period ended September 30, 2014.
FUWEI FILMS (HOLDINGS) CO., LTD. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2014 AND DECEMBER
31, 2013
(amounts in thousands except share and per
share value)
(Unaudited)
| |
Notes | | |
September 30, 2014 | | |
December 31, 2013 | |
| |
| | |
RMB | | |
US$ | | |
RMB | |
ASSETS | |
| | |
| | |
| | |
| |
Current assets | |
| | |
| | |
| | |
| |
Cash and cash equivalents | |
| | | |
| 3,807 | | |
| 620 | | |
| 11,578 | |
Restricted cash | |
| | | |
| 56,698 | | |
| 9,237 | | |
| 41,422 | |
Accounts and bills receivable, net | |
| 3 | | |
| 9,194 | | |
| 1,498 | | |
| 8,373 | |
Inventories | |
| 4 | | |
| 30,753 | | |
| 5,010 | | |
| 38,454 | |
Advance to suppliers | |
| | | |
| 5,441 | | |
| 886 | | |
| 6,977 | |
Prepayments and other receivables | |
| 7 | | |
| 23,558 | | |
| 3,838 | | |
| 26,107 | |
Deferred tax assets - current | |
| | | |
| 1,726 | | |
| 281 | | |
| 1,702 | |
Total current assets | |
| | | |
| 131,177 | | |
| 21,370 | | |
| 134,613 | |
| |
| | | |
| | | |
| | | |
| | |
Property, plant and equipment, net | |
| 5 | | |
| 494,151 | | |
| 80,507 | | |
| 524,777 | |
Construction in progress | |
| 6 | | |
| 366 | | |
| 60 | | |
| 632 | |
Lease prepayments, net | |
| 7 | | |
| 18,536 | | |
| 3,020 | | |
| 18,999 | |
Advance to suppliers - long term, net | |
| | | |
| 1,197 | | |
| 195 | | |
| 2,134 | |
Long-term deposit | |
| 8 | | |
| 16,760 | | |
| 2,731 | | |
| 16,760 | |
Other Assets | |
| 9 | | |
| 12,723 | | |
| 2,073 | | |
| 13,244 | |
Deferred tax assets - non current | |
| | | |
| 20,782 | | |
| 3,386 | | |
| 20,888 | |
| |
| | | |
| | | |
| | | |
| | |
Total assets | |
| | | |
| 695,692 | | |
| 113,342 | | |
| 732,047 | |
| |
| | | |
| | | |
| | | |
| | |
LIABILITIES AND EQUITY | |
| | | |
| | | |
| | | |
| | |
Current liabilities | |
| | | |
| | | |
| | | |
| | |
Short-term borrowings | |
| 10 | | |
| - | | |
| - | | |
| 105,000 | |
Long-term loan, current portion | |
| 10 | | |
| 1,675 | | |
| 273 | | |
| - | |
Due to related parties | |
| 16 | | |
| 123,849 | | |
| 20,177 | | |
| - | |
Accounts payables | |
| | | |
| 25,151 | | |
| 4,098 | | |
| 33,454 | |
Notes payable | |
| 11 | | |
| 99,929 | | |
| 16,280 | | |
| 81,990 | |
Advance from customers | |
| | | |
| 10,371 | | |
| 1,690 | | |
| 14,665 | |
Accrued expenses and other payables | |
| | | |
| 6,672 | | |
| 1,087 | | |
| 6,777 | |
Obligations under capital leases-current | |
| 12 | | |
| 8,728 | | |
| 1,422 | | |
| 8,314 | |
Total current liabilities | |
| | | |
| 276,375 | | |
| 45,027 | | |
| 250,200 | |
| |
| | | |
| | | |
| | | |
| | |
Obligations under capital leases | |
| 12 | | |
| 1,964 | | |
| 320 | | |
| 8,563 | |
Long-term loan | |
| 10 | | |
| 8,325 | | |
| 1,356 | | |
| 10,000 | |
Deferred tax liabilities | |
| | | |
| 3,551 | | |
| 579 | | |
| 3,736 | |
| |
| | | |
| | | |
| | | |
| | |
Total liabilities | |
| | | |
| 290,215 | | |
| 47,282 | | |
| 272,499 | |
| |
| | | |
| | | |
| | | |
| | |
Equity | |
| | | |
| | | |
| | | |
| | |
Shareholders’ equity | |
| | | |
| | | |
| | | |
| | |
Registered capital (of US$0.129752 par value; 20,000,000 shares authorized; 13,062,500 issued and outstanding) | |
| | | |
| 13,323 | | |
| 2,171 | | |
| 13,323 | |
Additional paid-in capital | |
| | | |
| 311,907 | | |
| 50,816 | | |
| 311,907 | |
Statutory reserve | |
| | | |
| 37,441 | | |
| 6,100 | | |
| 37,441 | |
Retained earnings | |
| | | |
| 42,371 | | |
| 6,903 | | |
| 96,370 | |
Cumulative translation adjustment | |
| | | |
| 1,221 | | |
| 198 | | |
| 1,266 | |
Total shareholders’ equity | |
| | | |
| 406,263 | | |
| 66,188 | | |
| 460,307 | |
Non-controlling interest | |
| | | |
| (786 | ) | |
| (128 | ) | |
| (759 | ) |
Total equity | |
| | | |
| 405,477 | | |
| 66,060 | | |
| 459,548 | |
Total liabilities and equity | |
| | | |
| 695,692 | | |
| 113,342 | | |
| 732,047 | |
The accompanying notes are an integral
part of these unaudited condensed consolidated statements.
FUWEI FILMS (HOLDINGS) CO., LTD. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (LOSS)
FOR THE THREE- AND NINE-MONTH PERIODS
ENDED SEPTEMBER 30, 2014 AND 2013
(amounts in thousands except share and per
share value)
(Unaudited)
| |
| | |
The Three-Month Period Ended
September 30, | | |
The Nine-Month Period Ended
September 30, | |
| |
Notes | | |
2014 | | |
2013 | | |
2014 | | |
2013 | |
| |
| | |
RMB | | |
US$ | | |
RMB | | |
RMB | | |
US$ | | |
RMB | |
Net sales | |
| | |
69,217 | | |
11,277 | | |
75,890 | | |
209,906 | | |
34,198 | | |
229,868 | |
Cost of sales | |
| | | |
| 72,326 | | |
| 11,783 | | |
| 85,747 | | |
| 222,582 | | |
| 36,263 | | |
| 243,223 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Gross loss | |
| | | |
| (3,109 | ) | |
| (506 | ) | |
| (9,857 | ) | |
| (12,676 | ) | |
| (2,065 | ) | |
| (13,355 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Operating expenses | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Selling expenses | |
| | | |
| 4,119 | | |
| 671 | | |
| 3,991 | | |
| 10,908 | | |
| 1,777 | | |
| 11,961 | |
Administrative expenses | |
| | | |
| 7,979 | | |
| 1,300 | | |
| 5,635 | | |
| 22,037 | | |
| 3,590 | | |
| 24,926 | |
Total operating expenses | |
| | | |
| 12,098 | | |
| 1,971 | | |
| 9,626 | | |
| 32,945 | | |
| 5,367 | | |
| 36,887 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Operating loss | |
| | | |
| (15,207 | ) | |
| (2,477 | ) | |
| (19,483 | ) | |
| (45,621 | ) | |
| (7,432 | ) | |
| (50,242 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Other income (expense) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
- Interest income | |
| | | |
| 392 | | |
| 64 | | |
| 494 | | |
| 1,032 | | |
| 168 | | |
| 835 | |
- Interest expense | |
| | | |
| (3,140 | ) | |
| (512 | ) | |
| (3,566 | ) | |
| (9,564 | ) | |
| (1,558 | ) | |
| (9,447 | ) |
- Others income (expense), net | |
| | | |
| 98 | | |
| 16 | | |
| (265 | ) | |
| 35 | | |
| 6 | | |
| (393 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Total other expense | |
| | | |
| (2,650 | ) | |
| (432 | ) | |
| (3,337 | ) | |
| (8,497 | ) | |
| (1,384 | ) | |
| (9,005 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Loss before provision for income taxes | |
| | | |
| (17,857 | ) | |
| (2,909 | ) | |
| (22,820 | ) | |
| (54,118 | ) | |
| (8,816 | ) | |
| (59,247 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Income tax benefit (expense) | |
| 13 | | |
| 83 | | |
| 14 | | |
| (366 | ) | |
| 103 | | |
| 17 | | |
| (207 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net loss | |
| | | |
| (17,774 | ) | |
| (2,895 | ) | |
| (23,186 | ) | |
| (54,015 | ) | |
| (8,799 | ) | |
| (59,454 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net income (loss) attributable to noncontrolling interests | |
| | | |
| (15 | ) | |
| (2 | ) | |
| 17 | | |
| (16 | ) | |
| (3 | ) | |
| 16 | |
Net loss attributable to the Company | |
| | | |
| (17,759 | ) | |
| (2,893 | ) | |
| (23,203 | ) | |
| (53,999 | ) | |
| (8,796 | ) | |
| (59,470 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Other comprehensive income | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
- Foreign currency translation adjustments attributable to noncontrolling interest | |
| | | |
| 9 | | |
| 1 | | |
| 2 | | |
| (10 | ) | |
| (2 | ) | |
| 14 | |
- Foreign currency translation adjustments attributable to the Company | |
| | | |
| 10 | | |
| 2 | | |
| 1 | | |
| (45 | ) | |
| (7 | ) | |
| 31 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Comprehensive income (loss) attributable to non-controlling interest | |
| | | |
| (6 | ) | |
| (1 | ) | |
| 19 | | |
| (26 | ) | |
| (5 | ) | |
| 30 | |
Comprehensive loss attribute to the Company | |
| | | |
| (17,749 | ) | |
| (2,891 | ) | |
| (23,202 | ) | |
| (54,044 | ) | |
| (8,803 | ) | |
| (59,439 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Loss per share, Basic and diluted | |
| 14 | | |
| (1.36 | ) | |
| (0.22 | ) | |
| (1.78 | ) | |
| (4.13 | ) | |
| (0.67 | ) | |
| (4.55 | ) |
Weighted average number ordinary shares, Basic and diluted | |
| | | |
| 13,062,500 | | |
| 13,062,500 | | |
| 13,062,500 | | |
| 13,062,500 | | |
| 13,062,500 | | |
| 13,062,500 | |
The accompanying
notes are an integral part of these unaudited condensed consolidated statements.
FUWEI FILMS (HOLDINGS) CO., LTD. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER
30, 2014 AND 2013
(amounts in thousands except share and per
share value)
(Unaudited)
| |
The Nine-Month Period Ended September 30, | |
| |
2014 | | |
2013 | |
| |
RMB | | |
US$ | | |
RMB | |
Cash flow from operating activities | |
| | |
| | |
| |
Net loss | |
| (54,015 | ) | |
| (8,799 | ) | |
| (59,454 | ) |
Adjustments to reconcile net loss to net cash used in operating activities | |
| | | |
| | | |
| | |
- Depreciation of property, plant and equipment | |
| 36,021 | | |
| 5,869 | | |
| 36,401 | |
- Amortization of intangible assets | |
| 393 | | |
| 64 | | |
| 393 | |
- Deferred income taxes | |
| (103 | ) | |
| (17 | ) | |
| 207 | |
- Bad debt (recovery) expense | |
| 261 | | |
| 43 | | |
| (87 | ) |
Changes in operating assets and liabilities | |
| | | |
| | | |
| | |
- Accounts and bills receivable | |
| (1,083 | ) | |
| (176 | ) | |
| 12,218 | |
- Inventories | |
| 7,702 | | |
| 1,255 | | |
| (6,957 | ) |
- Advance to suppliers | |
| 1,536 | | |
| 250 | | |
| 7,094 | |
- Prepaid expenses and other current assets | |
| 112 | | |
| 18 | | |
| (303 | ) |
- Accounts payable | |
| (8,304 | ) | |
| (1,353 | ) | |
| 7,478 | |
- Accrued expenses and other payables | |
| (141 | ) | |
| (23 | ) | |
| 92 | |
- Advance from customers | |
| (4,294 | ) | |
| (700 | ) | |
| 2,205 | |
- Tax payable | |
| 3,028 | | |
| 493 | | |
| (2,663 | ) |
| |
| | | |
| | | |
| | |
Net cash used in operating activities | |
| (18,887 | ) | |
| (3,076 | ) | |
| (3,376 | ) |
| |
| | | |
| | | |
| | |
Cash flow from investing activities | |
| | | |
| | | |
| | |
Purchases of property, plant and equipment | |
| (5,396 | ) | |
| (879 | ) | |
| (328 | ) |
Restricted cash related to trade finance | |
| (15,272 | ) | |
| (2,488 | ) | |
| (18,115 | ) |
Advance to suppliers - non current | |
| 937 | | |
| 153 | | |
| 77 | |
Amount change in construction in progress | |
| 265 | | |
| 43 | | |
| (9,759 | ) |
Proceeds from sale of property, plant and equipment | |
| - | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | |
Net cash used in investing activities | |
| (19,466 | ) | |
| (3,171 | ) | |
| (28,125 | ) |
| |
| | | |
| | | |
| | |
Cash flow from financing activities | |
| | | |
| | | |
| | |
Principal payments of short-term bank loans | |
| (105,000 | ) | |
| (17,107 | ) | |
| (110,000 | ) |
Proceeds from short-term bank loans | |
| - | | |
| - | | |
| 106,432 | |
Proceeds from related party | |
| 123,849 | | |
| 20,177 | | |
| - | |
Payment of capital lease obligation | |
| (6,185 | ) | |
| (1,008 | ) | |
| (6,128 | ) |
Change in notes payable | |
| 17,939 | | |
| 2,923 | | |
| 35,094 | |
Proceeds from sale-leaseback equipment | |
| - | | |
| - | | |
| 5,000 | |
| |
| | | |
| | | |
| | |
Net cash provided by financing activities | |
| 30,603 | | |
| 4,985 | | |
| 30,398 | |
| |
| | | |
| | | |
| | |
Effect of foreign exchange rate changes | |
| (21 | ) | |
| (31 | ) | |
| (12 | ) |
| |
| | | |
| | | |
| | |
Net decrease in cash and cash equivalent | |
| (7,771 | ) | |
| (1,293 | ) | |
| (1,115 | ) |
| |
| | | |
| | | |
| | |
Cash and cash equivalent | |
| | | |
| | | |
| | |
At beginning of period/year | |
| 11,578 | | |
| 1,913 | | |
| 5,006 | |
At end of period/year | |
| 3,807 | | |
| 620 | | |
| 3,891 | |
| |
| | | |
| | | |
| | |
SUPPLEMENTARY DISCLOSURE: | |
| | | |
| | | |
| | |
Interest paid | |
| 9,564 | | |
| 1,558 | | |
| 9,447 | |
Income tax paid | |
| - | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | |
SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND FINANCIAL ACTIVITIES: | |
| | | |
| | | |
| | |
Account payable for plant and equipment: | |
| 5,886 | | |
| 959 | | |
| 8,445 | |
Obligations for acquired equipment under capital lease: | |
| 10,692 | | |
| 1,742 | | |
| 18,872 | |
The accompanying notes are an integral part
of these unaudited condensed consolidated statements.
FUWEI FILMS (HOLDINGS) CO., LTD. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(amounts in thousands except share and per
share value)
(Unaudited)
NOTE 1 – BACKGROUND
Fuwei Films (Holdings) Co., Ltd. and its
subsidiaries (the “Company” or the “Group”) are principally engaged in the production and distribution
of BOPET film, a high quality plastic film widely used in packaging, imaging, electronics, electrical and magnetic products in
the People’s Republic of China (the “PRC”). The Company is a holding company incorporated in the Cayman Islands,
established on August 9, 2004 under the Cayman Islands Companies Law as an exempted company with limited liability. The Company
was established for the purpose of acquiring shares in Fuwei (BVI) Co., Ltd. (“Fuwei (BVI)”), an intermediate holding
company established for the purpose of acquiring all of the ownership interest in Fuwei Films (Shandong) Co., Ltd. (“Shandong
Fuwei”).
On August 20, 2004, the Company was allotted
and issued one ordinary share of US$1.00 in Fuwei (BVI) (being the entire issued share capital of Fuwei (BVI)), thereby establishing
Fuwei (BVI) as the intermediate investment holding company of the Company.
On April 23, 2009, Fuwei Films USA, LLC
was set up and co-invested by Fuwei Films (Holdings) Co., Ltd. and Newell Finance Management Co., Ltd. Fuwei Films USA, LLC
has a registered capital of US$10 and total investment amount of US$100. Fuwei Films (Holdings) Co., Ltd. and Newell Finance Management
Co., Ltd. own 60% and 40% of the total shares of Fuwei Films USA, LLC, respectively.
NOTE 2 - BASIS OF PRESENTATION AND SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Principles
The accompanying unaudited condensed consolidated
financial statements have been prepared by the Company, pursuant to the rules and regulations of the U.S. Securities and Exchange
Commission (the “SEC”) as applicable to smaller reporting companies, and generally accepted accounting principles for
interim financial reporting. The information furnished herein reflects all adjustments (consisting of normal recurring accruals
and adjustments) which are, in the opinion of management, necessary to fairly present the operating results for the respective
periods. Certain information and footnote disclosures normally presented in annual consolidated financial statements prepared in
accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been omitted
pursuant to such rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction
with the audited consolidated financial statements and footnotes included in the Company’s Annual Report on Form 20-F for
the year ended December 31, 2013 filed on April 11, 2014 with the SEC. The results of the nine-month period ended September 30,
2014 are not necessarily indicative of the results to be expected for the full year ended December 31, 2014.
Principles of Consolidation
The condensed consolidated financial statements
include the financial statements of the Company and its three subsidiaries. All significant inter-company balances and transactions
have been eliminated in consolidation.
FUWEI FILMS (HOLDINGS) CO., LTD. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(amounts in thousands except share and per
share value)
(Unaudited)
Use of Estimates
The preparation of the condensed consolidated
financial statements in accordance with U.S. GAAP requires management of the Company to make a number of estimates and assumptions
relating to the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date
of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results
could differ from those estimates. On an ongoing basis, management reviews its estimates and assumptions, including those related
to the recoverability of the carrying amount and the estimated useful lives of long-lived assets, valuation allowances for accounts
receivable and realizable values for inventories. Changes in facts and circumstances may result in revised estimates.
Foreign Currency Transactions
The Company’s reporting currency
is Chinese Yuan (Renminbi or “RMB”).
Fuwei Films (Holdings) Co., Ltd. and Fuwei
(BVI) operate in Hong Kong as investment holding companies and their financial records are maintained in Hong Kong dollars,
being the functional currency of these two entities. The financial records of Fuwei Films USA, LLC, a 60% owned subsidiary of the
Company, are maintained in US dollars. Assets and liabilities are translated into RMB at the exchange rates at the balance sheet
date, equity accounts are translated at historical exchange rates and income, expenses, and cash flow items are translated using
the average rate for the period. The translation adjustments are recorded in accumulated other comprehensive income in the statements
of equity. The changes in the translation adjustments for the current period were reported as the line items of other comprehensive
income in the consolidated statements of comprehensive income.
Transactions denominated in currencies
other than RMB are translated into RMB at the exchange rates quoted by the People’s Bank of China (the “PBOC”)
prevailing at the dates of transactions. Monetary assets and liabilities denominated in foreign currencies are translated into
RMB using the applicable exchange rates quoted by the PBOC at the balance sheet dates. The resulting exchange differences are recorded
in the consolidated statements of comprehensive income.
RMB is not fully convertible into foreign
currencies. All foreign exchange transactions involving RMB must take place either through the PBOC or other institutions authorized
to buy and sell foreign currency. The exchange rate adopted for the foreign exchange transactions are the rates of exchange quoted
by the PBOC which are determined largely by supply and demand.
Commencing July 21, 2005, the PRC
government moved the RMB into a managed floating exchange rate regime based on market supply and demand with reference to a basket
of currencies.
For the convenience of the readers, the
third quarter of 2014 RMB amounts included in the accompanying condensed consolidated financial statements in our quarterly report
have been translated into U.S. dollars at the rate of US$1.00 = RMB6.1380, on the last trading day of the third quarter of 2014
(September 30, 2014) as set forth in the H.10 statistical release of the U.S. Federal Reserve Board. No representation is made
that the RMB amounts could have been, or could be, converted into U.S. dollar at that rate or at any other certain rate on September
30, 2014, or at any other date.
FUWEI FILMS (HOLDINGS) CO., LTD. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(amounts in thousands except share and per
share value)
(Unaudited)
Cash and Cash Equivalents and Restricted
Cash
For statements of cash flow purposes, the
Company considers all cash on hand and in banks, including accounts in book overdraft positions, certificates of deposit and other
highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents.
Restricted cash refers to the cash balance
held by bank as deposit for Letters of Credit and Banker’s Acceptance Bill. The Company has restricted cash of RMB56,698
(US$9,237) and RMB41,422 as of September 30, 2014 and December 31, 2013, respectively.
Trade Accounts Receivable
Trade accounts receivable are recorded
at the invoiced amount after deduction of trade discounts, value added taxes and allowances, if any, and do not bear interest.
The allowance for doubtful accounts is the Group’s best estimate of the amount of probable credit losses in the Group’s
existing accounts receivable. The Group determines the allowance based on historical write-off experience, customer specific facts
and economic conditions.
The Group reviews its allowance for doubtful
accounts monthly. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. All
other balances are reviewed on a pooled basis by aging of such balances. Account balances are charged off against the allowance
after all means of collection have been exhausted and the potential for recovery is considered remote.
Inventories
Inventories
are stated at the lower of cost or market value as of balance sheet date. Inventory valuation and cost-flow is determined using
Moving Weighted Average Method basis. The Group estimates excess and slow moving inventory based upon assumptions of future demands
and market conditions. If actual market conditions are less favorable than projected by management, additional inventory write-downs
may be required. Cost of work in progress and finished goods comprises direct material, direct production cost and an allocated
portion of production overheads based on normal operating capacity.
Property, Plant and Equipment
Property, plant and equipment are stated
at cost less accumulated depreciation and impairment. Depreciation on property, plant and equipment is calculated on the straight-line
method (after taking into account their respective estimated residual values) over the estimated useful lives of the assets. They
are as follows:
| |
Years | |
Buildings and improvements | |
| 25 - 30 | |
Plant and equipment | |
| 10 - 15 | |
Computer equipment | |
| 5 | |
Furniture and fixtures | |
| 5 | |
Motor vehicles | |
| 5 | |
Depreciation of property, plant and equipment
attributable to manufacturing activities is capitalized as part of the inventory, and expensed to cost of goods sold when inventory
is sold. Depreciation related to abnormal amounts from idle capacity is charged to cost of goods sold for the period incurred.
Construction in progress represents capital
expenditures in respect to the BOPET production line. No depreciation is provided in respect to construction in progress.
FUWEI FILMS (HOLDINGS) CO., LTD. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(amounts in thousands except share and per
share value)
(Unaudited)
Leased Assets
An arrangement, comprising a transaction
or a series of transactions, is or contains a lease if the Group determines that the arrangement conveys a right to use a specific
asset or assets for an agreed period of time in return for a payment or a series of payments. Such a determination is made based
on an evaluation of the substance of the arrangement and is regardless of whether the arrangement takes the legal form of a lease.
Classification of assets leased to the
Group. Assets that are held by the Group under leases which transfer to the Group substantially all the risks and rewards of
ownership are classified as being held under capital leases. Leases which do not transfer substantially all the risks and rewards
of ownership to the Group are classified as operating leases.
Assets acquired under capital leases.
Where the Group acquires the use of assets under capital leases, the amounts representing the fair value of the leased asset, or,
if lower, the present value of the minimum lease payments, of such assets are included in property, plant and equipment and the
corresponding liabilities, net of finance charges, are recorded as obligations under capital leases. Depreciation is provided at
rates which write off the cost or valuation of the assets over the term of the relevant lease or, where it is likely the Group
will obtain ownership of the asset, the life of the asset. Finance charges implicit in the lease payments are charged to the consolidated
income statement over the period of the leases so as to produce an approximately constant periodic rate of charge on the remaining
balance of the obligations for each accounting period. Contingent rentals are charged to the consolidated income statement in the
accounting period in which they are incurred.
Operating lease charges. Where the
Group has the use of assets held under operating leases, payments made under the leases are charged to the consolidated income
statement in equal installments over the accounting periods covered by the lease term, except where an alternative basis is more
representative of the pattern of benefits to be derived from the leased asset. Lease incentives received are recognized in the
consolidated income statement as an integral part of the aggregate net lease payments made. Contingent rentals are charged to the
consolidated income statement in the accounting period in which they are incurred.
Sale and leaseback transactions.
Gains or losses on equipment sale and leaseback transactions which result in capital leases are deferred and amortized over the
terms of the related leases. Gains or losses on equipment sale and leaseback transactions which result in operating leases are
recognized immediately if the transactions are established at fair value. Any loss on the sale perceived to be a real economic
loss is recognized immediately. However, if a loss is compensated for by future rentals at a below-market price, then the artificial
loss is deferred and amortized over the period that the equipment is expected to be used. If the sale price is above fair value,
then any gain is deferred and amortized over the useful life of the assets.
Lease Prepayments
Lease prepayments represent the costs of
land use rights in the PRC. Land use rights are carried at cost and charged to expense on a straight-line basis over the respective
periods of rights of 30 years. The non-current portion and current portion of lease prepayments have been reported in Lease Prepayments,
Prepayments and Other Receivables in the balance sheets, respectively.
FUWEI FILMS (HOLDINGS) CO., LTD. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(amounts in thousands except share and per
share value)
(Unaudited)
Goodwill
Goodwill represents the excess of purchase
price and related costs over the value assigned to the net tangible and identifiable intangible assets of businesses acquired. Goodwill
is not amortized but is tested for impairment annually, or when circumstances indicate a possible impairment may exist. Impairment
testing is performed at a reporting unit level. An impairment loss generally would be recognized when the carrying amount
of the reporting unit exceeds the fair value of the reporting unit, with the fair value of the reporting unit determined using
a discounted cash flow (“DCF”) analysis. A number of significant assumptions and estimates are involved in the
application of the DCF analysis to forecast operating cash flows, including the discount rate, the internal rate of return, and
projections of realizations and costs to produce. Management considers historical experience and all available information
at the time the fair values of its reporting units are estimated. Goodwill was determined to be fully impaired during the year
ended December 31, 2012.
Impairment of Long-lived Assets
The Company recognizes an impairment loss
when circumstances indicate that the carrying value of long-lived assets with finite lives may not be recoverable. Management’s
policy in determining whether an impairment indicator exists, a triggering event, comprises measurable operating performance criteria
at an asset group level as well as qualitative measures. If an analysis is necessitated by the occurrence of a triggering event,
the Company uses assumptions, which are predominately identified from the Company’s strategic long-range plans, in determining
the impairment amount. In the calculation of the fair value of long-lived assets, the Company compares the carrying amount of the
asset group with the estimated future cash flows expected to result from the use of the assets. If the carrying amount of the asset
group exceeds the estimated expected undiscounted future cash flows, the Company measures the amount of the impairment by comparing
the carrying amount of the asset group with their estimated fair value. We estimate the fair value of assets based on market prices
(i.e., the amount for which the asset could be bought by or sold to a third party), when available. When market prices are not
available, we estimate the fair value of the asset group using discounted expected future cash flows at the Company’s weighted-average
cost of capital. Management believes its policy is reasonable and is consistently applied. Future expected cash flows are based
upon estimates that, if not achieved, may result in significantly different results.
Revenue Recognition
Sales of plastic films are reported, net
of value added taxes (“VAT”), sales returns, and trade discounts. The standard terms and conditions under which the
Company generally delivers allow a customer the right to return product for refund only if the product does not conform to product
specifications; the non-conforming product is identified by the customer; and the customer rejects the non-conforming product and
notifies the Company within 30 days of receipt for both PRC and overseas customers. The Company recognizes revenue when products
are delivered and the customer takes ownership and assumes risk of loss, collection of the relevant receivable is probable, persuasive
evidence of an arrangement exists and the sales price is fixed or determinable.
In the PRC, VAT of 17% on the invoice amount
is collected in respect to the sales of goods on behalf of tax authorities. The VAT collected is not revenue of the Company, instead,
the amount is recorded as a liability on the consolidated balance sheet until such VAT is paid to the authorities.
FUWEI FILMS (HOLDINGS) CO., LTD. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(amounts in thousands except share and per
share value)
(Unaudited)
Income Taxes
Income taxes are accounted for under the
asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases
and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected
to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment
date.
(Loss) Earnings Per Share
Basic (loss) earnings per share is computed
by dividing net earnings by the weighted average number of ordinary shares outstanding during the year. Diluted (loss) earnings
per share is calculated by dividing net earnings by the weighted average number of ordinary and dilutive potential ordinary shares
outstanding during the year. Diluted potential ordinary shares consist of shares issuable pursuant to the Company’s stock
option plan.
Share-Based Payments
The Company accounts for share based payments
under the modified-prospective transition method, which requires companies to measure and recognize the cost of employee services
received in exchange for an award of equity instruments based on the grant-date fair value.
Non-controlling interest
Non-controlling interest represents the
portion of equity that is not attributable to the Company. The net income (loss) attributable to non-controlling interests are
separately presented in the accompanying statements of income and other comprehensive income. Losses attributable to non-controlling
interests in a subsidiary may exceed the interest in the subsidiary’s equity. The related non-controlling interest continues
to be attributed its share of losses even if that attribution results in a deficit of the non-controlling interest balance.
Contingencies
In the normal course of business, the Company
is subject to contingencies, including legal proceedings and claims arising out of the business that relate to a wide range of
matters, including among others, product liability. The Company recognizes a liability for such contingency if it determines it
is probable that a loss has occurred and a reasonable estimate of the loss can be made. The Company may consider many factors in
making these assessments including past history and the specifics of each matter. As of September 30, 2014 and December 31, 2013,
the balance of predicted liability was RMB100 (US$16) and RMB200 (US$32), respectively, which was estimated liability related to
our defective products and included in accrued expenses and other payables as current liabilities on balance sheets.
Reclassification
For comparative purposes, the prior year’s
consolidated financial statements have been reclassified to conform to reporting classifications of the current year periods. These
reclassifications had no effect on net loss or total net cash flows as previously reported.
FUWEI FILMS (HOLDINGS) CO., LTD. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(amounts in thousands except share and per
share value)
(Unaudited)
Going Concern Matters
The accompanying condensed consolidated
financial statements have been prepared in conformity with generally accepted accounting principles which contemplate continuation
of the company as a going concern. However, as of September 30, 2014 and 2013, the Company had a working capital deficiency of
RMB145,198 (US$23,656) and RMB113,559 and accumulated deficit of RMB53,999 (US$8,796) and RMB59,470 from net losses incurred during
the first nine months of 2014 and 2013. Confronted with the fierce competition in the BOPET industry in China, the Company may
still witness losses over the next twelve months. The ability of the Company to operate as a going concern depends upon its ability
to obtain outside sources of working capital and/or generate positive cash flow from operations. The Company accordingly has developed
an outside financing plan to meet the need of working capital for our operation or debts. At the same time, the Company will continue
implementing cost reductions on both manufacturing costs and operating expenses to improve profit margins. The accompanying consolidated
financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts
or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.
Recently Issued Accounting Standards
There have been no new accounting pronouncements
during the nine months ended September 30, 2014 that are of significance, or potential significance, to the Company.
NOTE 3 - ACCOUNTS AND BILLS RECEIVABLES
Accounts and bills receivables consisted of
the following:
| |
September 30, 2014 | | |
December 31, 2013 | |
| |
| RMB
| | |
| US$
| | |
| RMB
| |
Accounts receivable | |
| 10,250 | | |
| 1,670 | | |
| 6,868 | |
Less: Allowance for doubtful accounts | |
| (1,056 | ) | |
| (172 | ) | |
| (795 | ) |
| |
| 9,194 | | |
| 1,498 | | |
| 6,073 | |
Bills receivable | |
| - | | |
| - | | |
| 2,300 | |
| |
| 9,194 | | |
| 1,498 | | |
| 8,373 | |
The Group has a credit policy in place
and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers requiring credit
over a certain amount. These receivables are due within 7 to 90 days from the date of billing. Generally, the Group does not obtain
collateral from customers. Bills receivable are banker’s acceptance bills, which are guaranteed by the bank.
FUWEI FILMS (HOLDINGS) CO., LTD. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(amounts in thousands except share and per
share value)
(Unaudited)
NOTE 4-INVENTORIES
Inventories consisted
of the following:
| |
September 30, 2014 | | |
December 31, 2013 | |
| |
RMB | | |
US$ | | |
RMB | |
Raw materials | |
| 16,198 | | |
| 2,640 | | |
| 16,322 | |
Work-in-progress | |
| 2,230 | | |
| 363 | | |
| 3,436 | |
Finished goods | |
| 17,741 | | |
| 2,890 | | |
| 24,114 | |
Consumables and spare parts | |
| 695 | | |
| 113 | | |
| 693 | |
Inventory—impairment | |
| (6,111 | ) | |
| (996 | ) | |
| (6,111 | ) |
| |
| 30,753 | | |
| 5,010 | | |
| 38,454 | |
NOTE 5-PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment consisted
of the following:
| |
September 30, 2014 | | |
December 31, 2013 | |
| |
RMB | | |
US$ | | |
RMB | |
Buildings | |
| 85,303 | | |
| 13,898 | | |
| 101,027 | |
Plant and equipment | |
| 757,513 | | |
| 123,413 | | |
| 735,831 | |
Computer equipment | |
| 2,374 | | |
| 387 | | |
| 2,367 | |
Furniture and fixtures | |
| 12,337 | | |
| 2,010 | | |
| 12,201 | |
Motor vehicles | |
| 2,093 | | |
| 341 | | |
| 2,093 | |
| |
| 859,620 | | |
| 140,049 | | |
| 853,519 | |
Less: accumulated depreciation | |
| (365,469 | ) | |
| (59,542 | ) | |
| (328,742 | ) |
| |
| 494,151 | | |
| 80,507 | | |
| 524,777 | |
Total depreciation for the nine-month periods
ended September 30, 2014 and 2013 was RMB36,021 (US$5,869) and RMB36,401, respectively. For the three-month periods ended September
30, 2014 and 2013, depreciation expenses were RMB11,990 (US$1,953) and RMB12,048, respectively.
NOTE 6 - CONSTRUCTION IN PROGRESS
Construction-in-progress represents capital
expenditure in respect to the BOPET production line. Construction in progress was RMB366 (US$60) ended September 30, 2014, and
RMB632 ended December 31, 2013, respectively.
NOTE 7 - LEASE PREPAYMENTS
Lease prepayments represent the costs of
land use rights in the PRC. Land use rights are carried at cost and charged to expense on a straight-line basis over the respective
periods of rights of 30 years. The current portion of lease prepayments has been included in prepayments and other receivables
in the balance sheet.
FUWEI FILMS (HOLDINGS) CO., LTD. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(amounts in thousands except share and per
share value)
(Unaudited)
Lease prepayments consisted of the following:
| |
September 30, 2014 | | |
December 31, 2013 | |
| |
RMB | | |
US$ | | |
RMB | |
Lease prepayment - non current | |
| 18,536 | | |
| 3,020 | | |
| 18,999 | |
Lease prepayment - current | |
| 524 | | |
| 85 | | |
| 454 | |
| |
| 19,060 | | |
| 3,105 | | |
| 19,453 | |
Amortization of land use rights for the
nine months ended September 30, 2014 and 2013 was RMB393 (US$64) and RMB393, respectively. Amortization of land use rights for
the three months ended September 30, 2014 and 2013 was RMB131 (US$21) and RMB131, respectively.
Estimated amortization expenses for the
next five years after September 30, 2014 are as follows:
| |
RMB | | |
US$ | |
1 year after | |
| 524 | | |
| 85 | |
2 years after | |
| 524 | | |
| 85 | |
3 years after | |
| 524 | | |
| 85 | |
4 years after | |
| 524 | | |
| 85 | |
5 years after | |
| 524 | | |
| 85 | |
Thereafter | |
| 16,440 | | |
| 2,680 | |
As of September 30, 2014, the amount of RMB524
(US$85) will be charged into amortization expenses within one year, and is classified as current asset under the separate line
item captioned as Prepayments and Other Receivables on balance sheets.
NOTE 8 – LONG-TERM DEPOSIT
On January 20, 2008, Shandong Fuwei signed
a “Letter of Intent of Joyinn Capital Increase and Share Expansion” (“LOI”) with Joyinn Hotel Investment
& Management Co., Ltd. (“Joyinn”) and shareholders of Joyinn. Joyinn is a legal company of limited liability that
registered on May 19, 2006 in Beijing, with registered capital of RMB50,000 (US$6,236).
Pursuant to the terms of the LOI, Shandong
Fuwei deposited RMB26,000 (half of the would-be added registered capital of RMB52,000), to Joyinn as a prepayment as of June 30,
2008. The prepayment to Joyinn will be regarded as investment payment after all parties enter into the final capital increase and
shares expansion agreement during the effective term of this LOI. A share pledging agreement was entered into subsequently on April
9, 2008 between Shandong Fuwei and Shandong Xinmeng Investment Co., Ltd (“Pledger”), which holds 97.6% shares of Joyinn.
The Pledger agreed to pledge its 52% interest in Joyinn, as a guarantee to the prepayment on the newly increased register capital
made by Shandong Fuwei to Joyinn. Based on the mutual supplementary agreement signed in June 2008, the prepayment was decreased
by RMB5,000 and returned to the Company on June 18, 2008.
On June 23, 2009, Shandong Fuwei and the
Pledger, the major shareholder of Joyinn, agreed that the Pledger would pledge another 19% of its interest in Joyinn in addition
to the previous pledge of 52% interest in Joyinn as a guarantee to the prepayment on the newly increased register capital made
by Shandong Fuwei to Joyinn. As a result, the Pledger’s percentage of pledged interest in Joyinn increased from 52% to 71%.
In the year 2010, the Company impaired the deposit amount by RMB4,240 (US$681). The impairment was determined based on an independent
appraisal study.
FUWEI FILMS (HOLDINGS) CO., LTD. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(amounts in thousands except share and per
share value)
(Unaudited)
On July 14, 2009, Shandong Fuwei and Joyinn
entered into a “Supplementary Agreement of Letter of Intent of Joyinn Capital Increase and Share Expansion” (the “Supplementary
Agreement”), which extends the duration of former agreement to two (2) years granting Shandong Fuwei the option to determine
whether to continue or withdraw the investment prior to January 14, 2010, the expiration date of the Supplementary Agreement.
Upon the expiration of the Supplementary
Agreement on January 14, 2010, Shandong Fuwei and the Pledger entered into an agreement pursuant to which the Pledger agreed to
transfer a 71% interest in Joyinn to Shandong Fuwei. The transaction is subject to the approval of the authority body of both parties.
On March 9, 2012, Shandong Fuwei and the
Pledger agreed that prior to the approval of the foregoing share transfer, all the related agreements and share pledge terms and
conditions will remain in full force and effect.
On November 8, 2012, the Pledger’s
ownership of Joyinn was transferred to Weifang State-Owned Assets Operation Administration Company (the “Administration Company”)
pursuant to a court order. On December 10, 2012, Shandong Fuwei entered into a Share Pledge Agreement with the Administration Company,
as the major shareholder of Joyinn, in which the Administration Company agreed to all the terms and conditions in the LOI and the
Supplementary Agreement. The Administration Company, as the new Pledger, agreed to increase the pledged interest by 16.8% to 87.8%.
As of September 30, 2014 and December 31,
2013 the total amount of the deposit was RMB16,760 (US$2,731) and RMB16,760, respectively.
NOTE 9 – OTHER ASSETS
Other assets represent loss on sale-leaseback
arrangement with International Far Eastern Leasing Co., Ltd. The loss is treated as compensation for the future rentals paid by
Shandong Fuwei at a below-market price. The artificial loss should be deferred and amortized in proportion to the amortization
of the related leased assets. As of September 30, 2014 and December 31, 2013, the total amount of the other assets was RMB12,723
(US$2,073) and RMB13,244, respectively.
NOTE 10 - SHORT-TERM BORROWINGS AND LONG-TERM
LOAN
Lender | |
| | |
June 30, 2014 | | |
December 31, 2013 | |
| |
Interest rate per
annum | | |
RMB | | |
US$ | | |
RMB | |
BANK LOANS | |
| | |
| | |
| | |
| |
Bank of Communications Co., Ltd. | |
| | |
| | |
| | |
| |
- April 18, 2013 to April 2, 2014 | |
| - | | |
| - | | |
| - | | |
| 20,000 | |
- April 19, 2013 to April 11, 2014 | |
| - | | |
| - | | |
| - | | |
| 20,000 | |
- April 23, 2013 to April 16, 2014 | |
| - | | |
| - | | |
| - | | |
| 25,000 | |
- April 25, 2013 to April 18, 2014 | |
| - | | |
| - | | |
| - | | |
| 20,000 | |
- May 2, 2013 to April 24, 2014 | |
| - | | |
| - | | |
| - | | |
| 20,000 | |
| |
| | | |
| | | |
| | | |
| | |
LONG-TERM LOANS | |
| | |
| | |
| | |
| |
Weifang Dongfang State-owned Assets Management Co., Ltd. | |
| | |
| | |
| | |
| |
- October 19, 2009 to October 18, 2017 | |
| 5.895 | % | |
| 10,000 | | |
| 1,629 | | |
| 10,000 | |
| |
| | | |
| 10,000 | | |
| 1,629 | | |
| 115,000 | |
Less: amounts classified as short-term loan | |
| | | |
| - | | |
| - | | |
| (105,000 | ) |
Less: long-term loan, current portion | |
| | | |
| (1,675 | ) | |
| (273 | ) | |
| - | |
Long-term Loan | |
| | | |
| 8,325 | | |
| 1,356 | | |
| 10,000 | |
FUWEI FILMS (HOLDINGS) CO., LTD. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(amounts in thousands except share and per
share value)
(Unaudited)
The Company has entered into several loan
agreements with commercial banks and a related party, with terms ranging from one year to eight years to finance its working capital,
R&D investment and construction. The loans, secured by properties, equipment, and lease prepayments, should be paid when they
come due.
In April 2014, the Company obtained a loan
for a total amount of RMB105, 000 from a related party Shandong SNTON Optical Materials Technology Co., Ltd. (“Shandong SNTON”)
to pay off five short-term loans to Bank of Communications Co., Ltd. (see Note 16)
On November 20, 2009, the Company signed
a long-term loan agreement in the amount of RMB10,000 (US$1,629) with Weifang Dongfang State-owned Assets Management Co., Ltd.,
with an eight-year loan term, which became effective on October 19, 2009 and will expire on October 18, 2017. From 2015 to 2016,
the Company shall make principal installment payments of RMB3,350 (US$546) per year with the remaining principal balance of RMB3,300 (US$538)
due in 2017. The annual interest rate for the loan is the benchmark interest rate for over five-year loans announced by the People’s
Bank of China reduced by 10% and the applicable annual interest rate for the period ended September 30, 2014 is 5.895%. The loan
is guaranteed by Shandong Deqin Investment& Guarantee Co., Ltd. and is used for the Company's projects.
Long-term bank loans maturity for the next
five years after September 30, 2014 are as follows:
| |
RMB | | |
US$ | |
Within 1 year | |
| 1,675 | | |
| 273 | |
After 1 year but within 2 years | |
| 3,350 | | |
| 546 | |
After 2 years but within 3 years | |
| 3,350 | | |
| 546 | |
After 3 year but within 4 years | |
| 1,625 | | |
| 264 | |
After 4 years but within 5 years | |
| - | | |
| - | |
NOTE 11 - NOTES PAYABLE
As of September 30, 2014 and December 31,
2013, Shandong Fuwei had banker’s acceptances opened with a maturity from three to six months totaling RMB99,929 (US$16,280)
and RMB81,990 for payment in connection with raw materials on a total deposits of RMB49,965 (US$8,140) and RMB40,995 at SPD Bank.
Notes payable consisted of the following:
Issuing bank | |
September 30, 2014 | | |
December 31, 2013 | |
| |
RMB | | |
US$ | | |
RMB | |
SPD Bank | |
| 99,929 | | |
| 16,280 | | |
| 81,990 | |
| |
| | | |
| | | |
| | |
| |
| 99,929 | | |
| 16,280 | | |
| 81,990 | |
FUWEI FILMS (HOLDINGS) CO., LTD. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(amounts in thousands except share and per
share value)
(Unaudited)
NOTE 12 – OBLIGATIONS UNDER CAPITAL
LEASES
The Group has commitments under capital
lease agreements as for a part of new third production line and associated equipment. The leases have terms of 3 years expiring
by the end of February 2016. As of September 30, 2014, future payments under these capital leases are as follows:
| |
30-Sep-14 | | |
31-Dec-13 | |
| |
RMB | | |
US$ | | |
RMB | | |
US$ | | |
RMB | | |
US$ | | |
RMB | | |
RMB | | |
RMB | |
| |
Present value of the minimum lease payments | | |
Total minimum lease payments | | |
Interest | | |
Present value of the minimum lease payments | | |
Total minimum lease payments | | |
Interest | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Within 1 year | |
| 8,728 | | |
| 1,422 | | |
| 9,166 | | |
| 1,493 | | |
| 438 | | |
| 71 | | |
| 8,314 | | |
| 9,166 | | |
| 852 | |
After 1 year but within 2 years | |
| 1,964 | | |
| 320 | | |
| 1,986 | | |
| 324 | | |
| 22 | | |
| 4 | | |
| 8,259 | | |
| 8,555 | | |
| 296 | |
After 2 years but within 3 years | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 304 | | |
| 306 | | |
| 2 | |
After 3 years | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| |
| 10,692 | | |
| 1,742 | | |
| 11,152 | | |
| 1817 | | |
| 460 | | |
| 75 | | |
| 16,877 | | |
| 18,027 | | |
| 1,150 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Less: balance due within one year classified as current liabilities | |
| (8,728 | ) | |
| (1,422 | ) | |
| | | |
| | | |
| | | |
| | | |
| (8,314 | ) | |
| | | |
| | |
| |
| 1,964 | | |
| 320 | | |
| | | |
| | | |
| | | |
| | | |
| 8,563 | | |
| | | |
| | |
Details of obligations under capital leases
are as follows:
| |
September 30,2014 | | |
December 31,2013 | |
| |
RMB | | |
RMB | |
| |
| | |
| |
RMB denominated obligations | |
| | |
| |
Fixed interest rate of 6.49% per annum | |
| 10,692 | | |
| 16,877 | |
| |
| | | |
| | |
| |
| 10,692 | | |
| 16,877 | |
FUWEI FILMS (HOLDINGS) CO., LTD. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(amounts in thousands except share and per
share value)
(Unaudited)
Guarantee deposit of RMB800 (US$129) over
the capital leased assets concerned and relevant insurance policies were provided to the lessor as collateral and security. In
addition, as is customary in the case of capital leases, the Group’s obligations are guaranteed by Weifang State-Owned Assets
Operation Administration Company, Beijing Shiweitong Technology Development Co., Ltd., Fuwei Films (Holdings) Co., Ltd., and Fuwei
Films (BVI) Co., Ltd. In August 2014, Shandong SNTON Group Co., Ltd. accepted the responsibility of guarantee for the Group's obligation
from Beijing Shiweitong Technology Development Co., Ltd.
NOTE 13- INCOME TAX
Income tax benefit was RMB103 (US$17) and
income tax expense was RMB207 for the nine months ended September 30, 2014 and 2013, respectively.
Income tax benefit was RMB83 (US$14) and
income tax expense was RMB366 for the three months ended September 30, 2014 and 2013, respectively.
NOTE 14 - LOSS PER SHARE
Basic and diluted net loss per share was
RMB4.13 (US$0.67) and RMB4.55 for the nine-month period ended September 30, 2014 and 2013, respectively.
Basic and diluted net loss per share was
RMB1.36 (US$0.22) and RMB1.78 for the three-month period ended September 30, 2014 and 2013, respectively.
NOTE 15 - MAJOR CUSTOMERS AND VENDORS
There were no major customers who accounted
for more than 10% of the total net revenue for the nine-month periods ended September 30, 2014 and 2013.
One vendor provided approximately 62.2%
and 55.3% of the Company’s purchases of raw materials, supplies and equipment for the nine months ended September 30, 2014
and 2013, respectively. The Company had a RMB3,460 (US$564) advance to that vendor as of September 30, 2014. Another vendor provided
approximately 11.5% of the Company’s purchases of raw materials, supplies and equipment for the nine months ended September
30, 2014.
FUWEI FILMS (HOLDINGS) CO., LTD. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(amounts in thousands except share and per
share value)
(Unaudited)
NOTE 16 – RELATED PARTY TRANSACTIONS
In April 2014, the Company borrowed RMB105,000
from Shandong SNTON Optical Materials Technology Co., Ltd. (the “Shandong SNTON”) to pay off certain short-term loans
due to Bank of Communications Co., Ltd. The interest shall be calculated at the benchmark rate, plus an additional 20% of the said
benchmark rate, for the loan of the same term announced by the People’s Bank of China. The interest must be paid quarterly
and settled in full at the end of the year.
In May 2014, the Company borrowed RMB15,000
from Shandong SNTON Group Co., Ltd. (the “SNTON Group”) solely for the purpose of purchasing raw materials. The interest
shall be calculated at the benchmark rate, plus an additional 20% of the said benchmark rate, for the loan of the same term announced
by the People’s Bank of China. The interest shall be paid quarterly and settled in full at the end of the year. The Company
has agreed to return the borrowing prior to December 31, 2014.
Shandong SNTON was entrusted to acquire
6,912,503 Ordinary Shares of the Company representing 52.9% beneficial ownership on behalf of Hongkong Ruishang International Trade
Co., Ltd. (“Hongkong Ruishang”) in a public auction. Hongkong Ruishang became the beneficial owner of 6,912,503 Ordinary
Shares of the Company. Hongkong Ruishang and Mr. Xiusheng Wang, who is the Chairman of the board of director of both Hongkong Ruishang
and SNTON Group, control the power to vote and dispose of 6,912,503 ordinary shares of the Company. In addition, Shandong SNTON
is a wholly-owned subsidiary of SNTON Group.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References to "dollars" and "US$"
are to United States Dollars. References to "we", "us", the "Company" or "Fuwei Films"
include Fuwei Films (Holdings) Co., Ltd. and its subsidiaries, except where the context requires otherwise.
In the third quarter of 2014,
we continued to be adversely affected by enhanced competition and increased supply over demand in China’s BOPET market.
In addition, fierce competition from overseas as well as anti-dumping measures taken by USA and South Korea caused a
continued downturn in orders from international markets. The foregoing factors have contributed to
significant decreases in sales prices, which resulted in reduced total revenue compared with the third quarter of 2013.
We believe that in the remaining
quarter of 2014, there will be growing capacity of BOPET films in China and stronger competition in the market. Our ability
to retain effective control over the pricing of our products on a timely basis is limited due to the enhanced competition in
the BOPET market. As a result, we may continue to witness losses in the short to medium term.
On August 14, 2013, the Company
announced that it had received the first notice from the its controlling shareholder, the Weifang State-owned Assets
Operation Administration Company, a wholly-owned subsidiary of Weifang State-owned Asset Management and Supervision Committee
(collectively, the “Administration Company”) indicating that the Administration Company had determined to place
control over 6,912,503 (or 52.9%) of its outstanding ordinary shares up for sale at a public auction to be held in China.
Four public auctions were held in Jinan, Shandong Province, China. The Company learned that they failed due to a lack of
bidders registered for the auction. On March 25, 2014, the fifth public auction was held in Jinan, Shandong Province, China.
The beneficial ownership of 6,912,503 ordinary shares of the Company previously owned by the Administration Company through
Apex Glory Holdings Limited, a British Virgin Islands corporation, was bid by Shandong SNTON Optical Materials Technology
Co., Ltd (“Shandong SNTON”) through the public auction. Shandong SNTON got 6,912,503 (or 52.9%) of the
Company’s outstanding ordinary shares at a price of RMB101,800,000 (approximately US$16,572,787) or
approximately US$2.40 per ordinary share.
On May 12, 2014, the Company announced
that it had learned that the successful bidder, Shandong SNTON in the fifth public auction of 6,912,503 (or 52.9%) of the Company’s
outstanding ordinary shares (the “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 procedure in connection
with the public auction. As a result of the entrusted arrangement, the Company believes Hongkong Ruishang is the party controlling
the Shares acquired in the fifth public auction. According to publicly
available information in the People’s Republic of China, Shandong SNTON is a wholly owned subsidiary of Shandong SNTON Group
Co., Ltd. (the “SNTON Group”). Mr. Xiusheng Wang, the chairman of the Board of Directors of Shandong SNTON Group Co.,
Ltd., is also Hongkong Ruishang’s chairman.
On May 14, 2014, the Company
announced that it received a notification from Shandong Fuhua Investment Company Limited. (“Shandong Fuhua”) with
respect to an entire ownership transfer of the Company’s 12.55% outstanding ordinary shares from the Administration
Company to Shandong Fuhua. The Administration Company originally held these shares indirectly through an intermediate holding
company, Easebright Investments Limited (“Easebright”). As a result of this transfer, Shandong Fuhua indirectly
owns 12.55% of the outstanding ordinary shares of the Company through Easebright. Mr. Jingang Yang has been appointed as the
director of Easebright.
In
November 2014, certain of our directors and officers, namely, Messrs. Xiaoan He, Xiuyong Zhang, Yong Jiang, and Xiaoming Wang,
and Mr. Xuehua Li (who was appointed as the Vice President of Fuwei
Films (Shandong) Co., Ltd. in July 2014) caused the transfer of an aggregate of 187,200 ordinary shares
of the Company that they collectively own through Everise Investment Management Co., Ltd., a Hong Kong corporation (“Everise
Investment”), to Ms. Guo Jing, who is currently the sole director of Everise Investment.
Results of operations for the nine-month
periods ended September 30, 2014 compared to September 30, 2013
The table below sets forth certain line items
from our Statement of Income as a percentage of revenue:
| |
Nine-Month Period Ended | | |
Nine-Month Period Ended | |
| |
September 30, 2014 | | |
September 30, 2013 | |
| |
(as % of Revenue) | |
Gross loss | |
| (6.0 | ) | |
| (5.8 | ) |
Operating expenses | |
| (15.7 | ) | |
| (16.0 | ) |
Operating loss | |
| (21.7 | ) | |
| (21.9 | ) |
Other expense | |
| (4.0 | ) | |
| (3.9 | ) |
Income tax expense | |
| 0.05 | | |
| (0.1 | ) |
Net loss | |
| (25.7 | ) | |
| (25.9 | ) |
Revenue
Our revenue is primarily derived from the
manufacture and sale of plastic films.
Net sales during the nine-month period
ended September 30, 2014 were RMB209.9 million (US$34.2 million), compared to RMB229.9 million, during the same period in 2013,
representing a decrease of RMB20.0 million or 8.7%, mainly due to the reduction of average sales price by 7.8% arising from stronger
competition in China and decrease of total sales volumes by 0.9%. The reduction of average sales price caused a decrease of RMB17.9
million and the sales volume caused a decrease of RMB2.1 million.
In the nine-month period ended September
30, 2014, sales of specialty films were RMB57.1 million (US$9.3million) or 27.2% of our total revenues as compared to RMB70.3 million
or 30.6% in the same period of 2013, which was a decrease of RMB13.2 million, or 18.8% as compared to the same period in 2013.
The reduction of average sales price caused a decrease of RMB1.2 million and the decrease in the sales volume caused a decrease
of RMB12.0 million. The decrease was largely attributable to the decrease in sales volume for dry films and heat shrinkable films
due to the entrances of new competitors.
The following is a breakdown of commodity
and specialty film sales (amounts in thousands):
| |
Nine-Month Period Ended
September 30, 2014 | | |
% of Total | | |
Nine-Month Period Ended
September 30, 2013 | | |
% of Total | |
| |
RMB | | |
US$ | | |
| | |
RMB | | |
| |
Stamping and transfer film | |
| 87,099 | | |
| 14,190 | | |
| 41.5 | % | |
| 107,144 | | |
| 46.6 | % |
Printing film | |
| 25,614 | | |
| 4,173 | | |
| 12.2 | % | |
| 19,513 | | |
| 8.5 | % |
Metallization film | |
| 5,463 | | |
| 890 | | |
| 2.6 | % | |
| 13,822 | | |
| 6.0 | % |
Specialty film | |
| 57,110 | | |
| 9,304 | | |
| 27.2 | % | |
| 70,254 | | |
| 30.6 | % |
Base film for other applications | |
| 34,620 | | |
| 5,641 | | |
| 16.5 | % | |
| 19,135 | | |
| 8.3 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| 209,906 | | |
| 34,198 | | |
| 100.0 | % | |
| 229,868 | | |
| 100.0 | % |
Overseas sales during the nine months ended
September 30, 2014 were RMB33.4 million or US$5.4 million, or 15.9% of total revenues, compared with RMB34.9 million or 15.2% of
total revenues in the same period in 2013. The decrease of average sales price caused a decrease of RMB4.6 million and the increase
in sales volume resulted in an increase of RMB3.1 million. The decrease in overseas sales was mainly due to decrease in sales prices.
The following is a breakdown of PRC domestic
and overseas sales (amounts in thousands):
| |
Nine-Month Period Ended
September 30, 2014 | | |
| | |
Nine-Month Period Ended
September 30, 2013 | | |
| |
| |
RMB | | |
US$ | | |
% of Total | | |
RMB | | |
% of Total | |
Sales in China | |
| 176,516 | | |
| 28,757 | | |
| 84.1 | % | |
| 194,950 | | |
| 84.8 | % |
Sales in other countries | |
| 33,390 | | |
| 5,441 | | |
| 15.9 | % | |
| 34,918 | | |
| 15.2 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| 209,906 | | |
| 34,198 | | |
| 100.0 | % | |
| 229,868 | | |
| 100.0 | % |
Cost of Goods Sold
Our cost of goods sold comprises mainly
of material costs, factory overhead, power, packaging materials and direct labor. The breakdown of our cost of goods sold in percentage
is as follows:
| |
Nine-Month Period Ended
September 30, 2014 | | |
Nine-Month Period Ended
September 30, 2013 | |
| |
% of total | | |
% of total | |
Materials costs | |
| 68.2 | % | |
| 71.8 | % |
Factory overhead | |
| 16.0 | % | |
| 14.3 | % |
Energy expense | |
| 10.1 | % | |
| 9.0 | % |
Packaging materials | |
| 2.7 | % | |
| 2.7 | % |
Direct labor | |
| 3.0 | % | |
| 2.2 | % |
Cost of goods sold during the first nine
months of 2014 totaled RMB222.6 million (US$36.3 million) as compared to RMB243.2 million in the same period of 2013. This was
RMB20.6 million or 8.5% lower than the same period in 2013. The decrease of unit cost of goods sold caused a decrease of RMB 18.4
million and the decrease in sales volumes caused a decrease of RMB2.2 million. The decrease of cost of goods sold was mainly due
to the decrease in sales volumes by 0.9% and decrease in unit cost by 7.6%.
Gross Loss
Our gross loss was RMB12.7 million (US$2.1
million) for the first nine months ended September 30, 2014, representing a gross loss rate of 6.0%, as compared to a gross loss
rate of 5.8% for the same period in 2013. Correspondingly, gross loss rate increased by 0.2 percentage. Our average product sales
prices decreased by 7.8% compared to the same period last year while the average cost of goods sold decreased by 7.6% compared
to the same period last year. Consequently, the amount of decrease in sales revenue was higher than that in cost of goods sold
during the nine months ended September 30, 2014 compared with the same period in 2013, which resulted in an increase in our gross
loss.
Operating Expenses
Operating expenses for the nine months
ended September 30, 2014 were RMB32.9 million (US$5.4 million), compared to RMB36.9 million in the same period in 2013, which was
RMB4.0 million or 10.8% lower than the same period in 2013. This decrease is mainly due to decreased R&D expenditure for the
first nine-months of 2014.
Other Expense
Total other expense is a combination result
of interest income, interest expense and others income (expense). Total other expense during the first nine months of 2014 was
RMB8.5 million (US$1.4 million), RMB0.5 million lower than the same period in 2013, which mainly attributed to the increased interest
income and others income in 2014.
Income Tax Expense
The income tax benefit was RMB0.1 million
(US$0.02 million) during the nine months ended September 30, 2014, compared to income tax expense of RMB0.2 million during the
same period in 2013. This decrease was due to changes in deferred tax for the nine months ended September 30, 2014.
Net Loss
Net loss attributable to the Company during
the first nine-month period of 2014 was RMB54.0 million (US$8.9 million) compared to net loss attributable to the Company of RMB59.5
million during the same period in 2013, representing a decrease of RMB5.5 million from the same period in 2013 due to the factors
described above.
Results of operations for the three-month
periods ended September 30, 2014 compared to September 30, 2013
The table below sets forth certain line items
from our Statement of Income as a percentage of revenue:
| |
Three-Month Period Ended | | |
Three-Month Period Ended | |
| |
September 30, 2014 | | |
September 30, 2013 | |
| |
(as % of Revenue) | |
Gross profit (loss) | |
| (4.5 | ) | |
| (13.0 | ) |
Operating expenses | |
| (17.5 | ) | |
| (12.7 | ) |
Operating loss | |
| (22.0 | ) | |
| (25.7 | ) |
Other expense | |
| (3.8 | ) | |
| (4.4 | ) |
Income tax expense | |
| 0.12 | | |
| (0.5 | ) |
Net loss | |
| (25.7 | ) | |
| (30.6 | ) |
Revenue
Net sales during the third quarter
ended September 30, 2014 were RMB69.2 million (US$11.3 million), compared to RMB75.9 million during the same period in 2013,
representing a decrease of RMB6.7 million or 8.8%, mainly due to the reduction of average sales price by 0.9% arising from
stronger competition in China and a decrease in total sales volumes by 8.0%. The reduction in average sales price caused a
decrease of RMB0.6 million and the lower sales volume caused a decrease of RMB6.1 million.
In the third quarter of 2014, sales of
specialty films were RMB20.7 million (US$3.4 million) or 30.0% of our total revenues as compared to RMB20.6 million or 27.2% in
the same period of 2013, which was an increase of RMB0.1 million, or 0.5% as compared to the same period in 2013. The increase
in average sales price caused an increase of RMB0.5 million and the decrease in the sales volume caused a decrease of RMB0.4 million.
The following is a breakdown of commodity
and specialty film sales (amounts in thousands):
| |
Three-Month Period Ended
September 30, 2014 | | |
% of
Total | | |
Three-Month Period
Ended September 30, 2013 | | |
% of
Total | |
| |
RMB | | |
US$ | | |
| | |
RMB | | |
| |
Stamping and transfer film | |
| 27,177 | | |
| 4,427 | | |
| 39.2 | % | |
| 35,649 | | |
| 47.0 | % |
Printing film | |
| 8,434 | | |
| 1,374 | | |
| 12.2 | % | |
| 7,956 | | |
| 10.5 | % |
Metallization film | |
| 1,776 | | |
| 289 | | |
| 2.6 | % | |
| 3,800 | | |
| 5.0 | % |
Specialty film | |
| 20,740 | | |
| 3,379 | | |
| 30.0 | % | |
| 20,606 | | |
| 27.2 | % |
Base film for other application | |
| 11,090 | | |
| 1,808 | | |
| 16.0 | % | |
| 7,879 | | |
| 10.4 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| 69,217 | | |
| 11,277 | | |
| 100.0 | % | |
| 75,890 | | |
| 100.0 | % |
Overseas sales were RMB11.8 million or
US$1.9 million, or 17.1% of total revenues, compared with RMB12.8 million or 16.9% of total revenues in the third quarter of 2013.
The decrease in average sales price caused a decrease of RMB2.0 million and the increase in sales volume resulted in an increase
of RMB1.0 million. The decrease in overseas sales was mainly due to the decrease in average sales price.
The following is a breakdown of PRC domestic
and overseas sales (amounts in thousands):
| |
Three-Month Period Ended September 30, 2014 | | |
% of Total | | |
Three-Month
Period Ended September 30, 2013 | | |
% of Total | |
| |
RMB | | |
US$ | | |
| | |
RMB | | |
| |
Sales in China | |
| 57,405 | | |
| 9,353 | | |
| 82.9 | % | |
| 63,064 | | |
| 83.1 | % |
Sales in other countries | |
| 11,812 | | |
| 1,924 | | |
| 17.1 | % | |
| 12,826 | | |
| 16.9 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| 69,217 | | |
| 11,277 | | |
| 100.0 | % | |
| 75,890 | | |
| 100.0 | % |
Cost of Goods Sold
Our cost of goods sold comprises mainly
of material costs, factory overhead, power, packaging materials and direct labor. The breakdown of our cost of goods sold in percentage
is as follows:
| |
Three-Month Period Ended September 30, 2014 | | |
Three-Month Period Ended September 30, 2013 | |
| |
% of total | | |
% of total | |
Materials costs | |
| 67.3 | % | |
| 71.0 | % |
Factory overhead | |
| 16.2 | % | |
| 14.2 | % |
Energy expense | |
| 10.2 | % | |
| 10.0 | % |
Packaging materials | |
| 2.9 | % | |
| 2.5 | % |
Direct labor | |
| 3.4 | % | |
| 2.3 | % |
Cost of goods sold during the third quarter
of 2014 totaled RMB72.3 million (US$11.8 million) as compared to RMB85.7 million in the same period of 2013. This was RMB13.4 million
or 15.6% lower than the same period in 2013. The reduction in unit cost of goods sold caused a decrease of RMB6.6 million and the
decrease in sales volume caused a decrease of RMB6.8 million. The reduction was mainly due to the decrease in unit cost of goods
sold by 8.3% and decrease in sales volume by 8.0%.
Gross Profit (Loss)
Our gross loss was RMB3.1 million (US$0.5
million) for the third quarter ended September 30, 2014, representing a gross loss rate of 4.5%, as compared to a gross loss rate
of 13.0% for the same period in 2013. Correspondingly, gross loss rate decreased by 8.5 percentage point compared to the same period
in 2013. Our average product sales prices decreased by 0.9% compared to the same period last year and the average cost of goods
sold decreased by 8.3% compared to the same period last year. Consequently, the amount of decrease in cost of goods sold was higher
than that in the average sales prices, which resulted in a decrease in our gross loss.
Operating Expenses
Operating expenses for the third quarter
ended September 30, 2014 were RMB12.1 million (US$2.0 million), which was RMB2.5 million, or 26.0% higher than the same period
in 2013. This increase was mainly due to the increase in general and administration expenses in the third quarter of 2014.
Other Expense
Total other expense is a combination result
of interest income, interest expense and others income (expense). Total other expense during the third quarter ended September
30, 2014 was RMB2.7 million (US$0.4 million), RMB0.6 million lower than the same period in 2013, which mainly attributed to decreased
interest expense.
Income Tax Expense
The income tax benefit was RMB0.1 million
(US$0.01 million) during the third quarter ended September 30, 2014, compared to income tax expense of RMB0.4 million during the
same period in 2013. This decrease was due to changes in deferred tax for the third quarter ended September 30, 2014.
Net Loss
Net loss attributable to the Company during
the third quarter ended September 30, 2014 was RMB17.8 million (US$2.9 million) compared to net loss attributable to the Company
of RMB23.2 million during the same period in 2013, representing a decrease of RMB5.4 million for the same period in 2013 due to
the factors described above.
Liquidity and Capital Resources
Our capital expenditures have been
financed primarily from cash generated from our operations and borrowings from financial institutions, including through
sale-leaseback transactions. The interest rates of borrowings from financial institutions during the period from the third
quarter of 2013 to the third quarter of 2014 ranged from 5.895% to 7.20%.
In April 2014, the Company obtained a loan
for a total amount of RMB105 million from Shandong SNTON Optical Materials Technology Co., Ltd (“Shandong SNTON”) to
pay off five short-term loans to Bank of Communications Co., Ltd. In May, 2014, the Company obtained another loan for the amount
of RMB15 million from SNTON Group solely for the purpose of purchasing raw materials. The interest rate of both loans shall be
calculated at the benchmark rate, plus an additional 20% of the said benchmark rate, for the loan of the same term announced by
the People’s Bank of China.
On December 21, 2012, Shandong Fuwei signed
a sale-leaseback contract with International Far Eastern Leasing Co., Ltd. (“Far Eastern Leasing”). Far Eastern Leasing
purchased certain equipment included in the third production line, and simultaneously leased them back to Shandong Fuwei. Shandong
Fuwei will pay rent totaling RMB21.95 million (including interest) to Far Eastern Leasing over the three years ended December 26,
2015. In March 2013, Shandong Fuwei signed another sale-leaseback contract with Far Eastern Leasing, pursuant to which it has agreed
to pay total rent of RMB5.49 million (including interest) to Far Eastern Leasing over the three years ended March 27, 2016. The
financed equipment mentioned above is covered by an insurance policy, the premium of which will be paid by Shandong Fuwei. The
contract was guaranteed by the following entities: Weifang State-owned Assets Operation Administration Company, Fuwei Films (Holdings)
Co., Ltd, Fuwei (BVI) Co., Ltd., and Beijing Shiweitong Science and Technology Co., Ltd. In August 2014, Shandong SNTON Group Co.,
Ltd. accepted the responsibility of guarantee for the Group's obligation from Beijing Shiweitong Technology Development Co., Ltd.
On November 20, 2009, we signed a long-term
loan agreement of RMB10.0 million (US$1.629 million) with Weifang Dongfang State-owned Assets Management Co., Ltd., with an eight-year
loan term, which became effective on October 19, 2009 and will expire on October 18, 2017. From 2015 to 2016, we will make principal
installment payments of RMB3.35 million (US$0.546 million) per year with the remaining principal balance of RMB3.30 million (US$0.538
million) due in 2017. The annual interest rate for the loan is the benchmark interest rate for over five-year loans announced by
the People’s Bank of China reduced by 10% and the applicable annual interest rate for the period ended September 30, 2014
is 5.895%. The loan is guaranteed by Shandong Deqin Investment & Guarantee Co., Ltd. and is used for our projects.
We believe that, after taking into consideration
our present and potential future banking facilities, existing cash and the expected cash flows to be generated from our operations,
we will have adequate sources of liquidity to meet our short-term obligations and our working capital requirements.
Operating Activities
Net cash used in operating activities for
the nine months ended September 30, 2014 was RMB18.9 million (US$3.1 million) compared to net cash used in operating activities
of RMB3.4 million for the nine months ended September 30, 2013. This increase in cash flows used in operating activities was primarily
attributable to the increase in cash outflows from accounts payables.
Investing Activities
Net cash used in investing activities for
the nine months ended September 30, 2014 was RMB19.5 million (US$3.2 million) compared to net cash used in investing activities
of RMB28.1 million for the nine months ended September 30, 2013, which is a decrease of RMB8.6 million (US$1.4 million). This decrease
in cash flows used in investing activities was attributable primarily to the interaction effect of decreased outflows related to
construction in progress compared to the same period of 2013.
Financing Activities
Net cash provided by financing activities
for the nine months ended September 30, 2014 was RMB30.6 million (US$5.0 million) compared to net cash provided by financing activities
of RMB30.4 million for the nine months ended September 30, 2013, which is an increase of RMB0.2 million (US$0.033 million).
Working Capital
As of September 30, 2014 and December 31,
2013, we had a working capital deficit of RMB145.2 million (US$23.7 million) and RMB115.6 million, respectively. Working capital
deficit increased by RMB29.6 million (US$4.822 million), or 25.6% compared to the amount as of December 31, 2013. Our main current
liability was loan with interest from related party totaling RMB123.8 million (US$20.2 million).
Contractual Obligations
The following table is a summary of our contractual
obligations as of September 30, 2014 (in thousands RMB):
| |
Payments due by period | |
| |
| | |
Less than | | |
1-3 | | |
3-5 | | |
More than | |
Contractual obligations | |
Total | | |
1 year | | |
years | | |
years | | |
5 years | |
| |
| | |
| | |
| | |
| | |
| |
Rental obligations | |
| 172 | | |
| 151 | | |
| 21 | | |
| - | | |
| - | |
Purchase commitment | |
| 5,886 | | |
| 5,886 | | |
| - | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Total | |
| 6,058 | | |
| 6,037 | | |
| 21 | | |
| - | | |
| - | |
Third Production Line Update
The third production line has been put into trial operation
at the end of January 2013. As of September 2013, our third production line has been approved. A sample diffusion film (a type
of TFT-LCD optical film) was preliminarily accepted by a new customer after being delivered for testing. We are supplying small
batches of products according to this customer’s purchase order. In addition, a sample base film for solar backsheets has
been delivered to a customer for initial testing.
Legal Proceedings
From time to time, we may be subject to
legal actions and other claims arising in the ordinary course of business. Shandong Fuwei is currently a party to six legal proceedings
in China.
On July 9, 2012, a client filed a
lawsuit against Shandong Fuwei over the execution of the Procurement Contract between them in Beijing Daxing District
People’s Court. Shandong Fuwei raised a jurisdictional objection when filing the pleading and Beijing Daxing District
People’s Court overruled the objection. Shandong Fuwei filed an appeal against the judgment in the First Intermediate
People’s Court of Beijing. The appeal was then dismissed on January 23, 2013 and the lawsuit will be heard by Beijing
Daxing District People’s Court with a claim at RMB953, 113 plus its interest. On May 15, 2013, Beijing Daxing District
People’s Court heard the case and then adjourned the hearing due to the fact that plaintiff failed to provide
sufficient evidence. On June 25, 2013, the case was heard in Beijing Daxing District again but it was also adjourned due to
plaintiff’s failure to provide sufficient evidence. The case was then scheduled to be heard on August 7, 2013. However,
on the day prior to reopening, Shandong Fuwei was informed by Beijing Daxing District People’s Court that the hearing
was adjourned one more time for the same reason that plaintiff failed to provide sufficient evidence. On April 21, 2014, the
case was heard. The plaintiff again failed to provide sufficient evidence and the hearing was adjourned. On May 28, 2014, the
case was heard. The plaintiff provided some new evidence. On August 25, 2014, the case was heard. On November 5, 2014, the court accepted the withdrawal application from the plaintiff.
On January 21, 2014, a Hong Kong citizen
filed a lawsuit against Shandong Fuwei in the Intermediate People's Court of Weifang to claim a refund
of US$500,000 (approximately RMB4,138,250) and related interest of RMB2,331,784 alleging that in accordance to an oral agreement
between the plaintiff and Shandong Fuwei in June 2005, to purchase ordinary shares of the Company, the plaintiff transferred US$500,000
to Wellplus Investments Limited, a company registered in Hong Kong, for acquiring the ordinary shares of the Company. The plaintiff
has filed a lawsuit for non-performance. Shandong Fuwei believes that no agreement was reached between Shandong Fuwei and the plaintiff.
The case was heard by the Intermediate People's Court of Weifang on April 3, 2014. On October 28, 2014, the case was heard again
and the plaintiff submitted some new evidence. The case is in the process of hearing and has not been decided yet.
On June 28,
2014, an equipment supplier filed a lawsuit against Shandong Fuwei over the execution of the Procurement
Contract between them in Weifang High-Tech District People’s Court with a claim at RMB844,000 plus interest of RMB134,000.
The case is under settlement negotiation.
On September 26, 2014, a client
filed a lawsuit against Shandong Fuwei over the execution of the Procurement Contract between them in Beijing Daxing District People’s
Court with a claim at RMB99,702.88. Shandong Fuwei raised a jurisdictional objection when filing the pleading and Beijing Daxing
District People’s Court has not made a judgment yet.
On October
24, 2014, an equipment supplier filed a lawsuit against Shandong Fuwei over the execution of the
Procurement Contract between them in Weifang High-Tech District People’s Court with a claim at RMB38,000. The case is under
settlement negotiation.
On October
24, 2014, an equipment supplier filed a lawsuit against Shandong Fuwei over the execution of the
Procurement Contract between them in Weifang High-Tech District People’s Court with a claim at RMB1,088,341.91 plus deferred
payment penalty of RMB770,000. The case is under settlement negotiation.
Exhibit Index
Exhibit No. |
|
Description |
99.1 |
|
Press Release dated November 20, 2014. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
|
|
Fuwei Films (Holdings) Co., Ltd. |
|
|
|
|
By: |
/s/ Xiaoan He |
|
|
|
|
|
Name: Xiaoan He |
|
|
Title: Chairman and Chief Executive Officer |
Dated: November 20, 2014
Exhibit 99.1
Fuwei Films Announces Its Unaudited Financial
Results for the Third Quarter of 2014
-Teleconference to be Held on Friday,
November 21, 2014 at 8:00 am EST-
BEIJING, November 20, 2014 - 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 three and nine months ended
September 30, 2014.
Highlights
| § | Net sales during the third quarter ended
September 30, 2014 were RMB69.2 million or US$11.3 million, compared to RMB75.9 million during the same period in 2013, representing
a decrease of RMB6.7 million or 8.8%. |
| § | Net loss attributable to the Company during
the third quarter ended September 30, 2014 was RMB17.8 million or US$2.9 million compared to net loss attributable to the Company
of RMB23.2 million during the same period in 2013, representing a decrease of RMB5.4 million or 23.3%. |
| § | Basic and diluted net loss per share was
RMB1.36 or US$0.22 and RMB1.78 for the three-month period ended September 30, 2014 and 2013, respectively. |
| § | Net cash used in operating activities
for the nine months ended September 30, 2014 was RMB18.9 million or US$3.1 million compared to net cash used in operating activities
of RMB3.4 million for the nine months ended September 30, 2013. |
“While our financial results remain
challenged, I am pleased to announce that we continue to gain progress in new product as a sample diffusion film (a type of TFT-LCD
optical film) was preliminarily accepted by a new customer after being delivered for testing,” commented Mr. Xiaoan He, Chairman
and Chief Executive Officer of Fuwei Films. “We are supplying small batches of products according to this customer’s
purchase order. In addition, a sample base film for solar backsheets has been delivered to a customer for initial testing. This
production line is also expected to be utilized to produce other thick films, including high performance electrical insulation
film, base film for solar back sheets and other films where we may see an opportunity to gain a significant presence in high-technology
industries. “We will continue to focus our efforts on R&D, mainly in the area of development of higher quality and more
value-added TFT-LCD optical film, factors that will enable the Company to distinguish our competitive advantages and eventually
improve earnings performance in the market,” concluded Mr. He.
Third Quarter 2014 Results
Net sales during the third quarter ended
September 30, 2014 were RMB69.2 million or US$11.3 million, compared to RMB75.9 million during the same period in 2013, representing
a decrease of RMB6.7 million or 8.8%, mainly due to the reduction in average sales price by 0.9% arising from stronger competition
in China and decrease of total sales volumes by 8.0%. The reduction of average sales price caused a decrease of RMB0.6 million
and the sales volume caused a decrease of RMB6.1 million.
In the third quarter of 2014, sales of
specialty films were RMB20.7 million or US$3.4 million, representing 30.0% of the Company’s total revenues as compared to
RMB20.6 million or 27.2% in the same period of 2013, which was an increase of RMB0.1 million, or 0.5% as compared to the same period
in 2013. The increase in average sales price caused an increase of RMB0.5 million and the decrease in the sales volume caused a
decrease of RMB0.4 million.
Overseas sales were RMB11.8 million or
US$1.9 million, or 17.1% of total revenues, compared with RMB12.8 million or 16.9% of total revenues in the third quarter of 2013.
The decrease in average sales price caused a decrease of RMB2.0 million and the increase in sales volume resulted in an increase
of RMB1.0 million. The decrease in overseas sales was mainly due to the decrease in average sales price.
The following is a breakdown of PRC domestic
and overseas sales (amounts in thousands):
| |
Nine-Month Period Ended September 30, 2014 | | |
| | |
Nine-Month Period Ended September 30, 2013 | | |
| |
| |
US$ | | |
RMB | | |
% of Total | | |
RMB | | |
% of Total | |
Sales in China | |
| 176,516 | | |
| 28,757 | | |
| 84.1 | % | |
| 194,950 | | |
| 84.8 | % |
Sales in other countries | |
| 33,390 | | |
| 5,441 | | |
| 15.9 | % | |
| 34,918 | | |
| 15.2 | % |
| |
| 209,906 | | |
| 34,198 | | |
| 100.0 | % | |
| 229,868 | | |
| 100.0 | % |
Our gross loss was RMB3.1 million or US$0.5
million for the third quarter ended September 30, 2014, representing a gross loss rate of 4.5%, as compared to a gross loss rate
of 13.0% for the same period in 2013. Correspondingly, gross loss rate decreased by 8.5 percentage points compared to the same
period in 2013. Our average product sales prices decreased by 0.9% compared to the same period last year and the average cost of
goods sold decreased by 8.3% compared to the same period last year. Consequently, the amount of decrease in cost of goods sold
was higher than that in sales prices, which resulted in a decrease in our gross loss.
Operating expenses for the third quarter
ended September 30, 2014 were RMB12.1 million or US$2.0 million, which was RMB2.5 million, or 26.0% higher than the same period
in 2013. This increase was mainly due to the increase in R&D expenditure in the third quarter of 2014.
Net loss attributable to the Company during
the third quarter ended September 30, 2014 was RMB17.8 million or US$2.9 million compared to net loss attributable to the Company
of RMB23.2 million during the same period in 2013, representing a decrease of RMB5.4 million for the same period in 2013.
Nine Months 2014 Results
Net sales during the nine-month period
ended September 30, 2014 were RMB209.9 million or US$34.2 million, compared to RMB229.9 million, during the same period in 2013,
representing a decrease of RMB20.0 million or 8.7%, mainly due to the reduction of average sales price by 7.8% arising from stronger
competition in China and decrease of total sales volumes by 0.9%. The reduction of average sales price caused a decrease of RMB17.9
million and the sales volume caused a decrease of RMB2.1 million.
In the nine-month period ended September
30, 2014, sales of specialty films were RMB57.1 million or US$9.3million or 27.2% of our total revenues as compared to RMB70.3
million or 30.6% in the same period of 2013, which was a decrease of RMB13.2 million, or 18.8% as compared to the same period in
2013. The reduction of average sales price caused a decrease of RMB1.2 million and the decrease in the sales volume caused a decrease
of RMB12.0 million. The decrease was largely attributable to the decrease in sales volume for dry films and heat shrinkable films
due to the entrances of new competitors.
Overseas sales during the nine months ended
September 30, 2014 were RMB33.4 million or US$5.4 million, or 15.9% of total revenues, compared with RMB34.9 million or 15.2% of
total revenues in the same period in 2013. The decrease of average sales price caused a decrease of RMB4.6 million and the increase
in sales volume resulted in an increase of RMB3.1 million. The decrease in overseas sales was mainly due to decrease in sales prices.
Our gross loss was RMB12.7 million or US$2.1
million for the first nine months ended September 30, 2014, representing a gross loss rate of 6.0%, as compared to a gross loss
rate of 5.8% for the same period in 2013. Correspondingly, gross loss rate increased by 0.2 percentage points. Our average product
sales prices decreased by 7.8% compared to the same period last year while the average cost of goods sold decreased by 7.6% compared
to the same period last year. Consequently, the amount of decrease in sales revenue was higher than that in cost of goods sold
during the nine months ended September 30, 2014 compared with the same period in 2013, which resulted in an increase in the Company’s
gross loss.
Operating expenses for the nine months
ended September 30, 2014 were RMB32.9 million or US$5.4 million, compared to RMB36.9 million in the same period in 2013, which
was RMB4.0 million or 10.8% lower than the same period in 2013. This decrease is mainly due to decreased R&D expenditure for
the first nine-months of 2014.
Basic and diluted net loss per share was
RMB1.36 or US$0.22 and RMB1.78 for the three-month period ended September 30, 2014 and 2013, respectively.
Total shareholders’ equity was RMB406.3
million or US$66.2 million as of September 30, 2014, compared with RMB460.3 million as of December 31, 2013.
As of September 30, 2014, the Company had
13,062,500 basic and diluted total ordinary shares outstanding.
Conference Call Information
The Company will host a teleconference on Friday, November 21,
2014, at 8:00 a.m. EST / 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: 13595551. The replay
will be available until December 21, 2014, at 11:59 p.m. EST.
About Fuwei Films
Fuwei Films conducts its business through
its wholly owned subsidiary, Fuwei Films (Shandong) Co., Ltd. (“Shandong Fuwei”). Shandong Fuwei 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 possible delisting of the Company’s ordinary shares from the NASDAQ Global Market;
significant competition in the BOPET film industry, especially the significant oversupply of BOPET films resulting from the
rapid growth of the Chinese BOPET industry capacity, changes in the international market and trade barriers, especially the
adverse impact of the antidumping investigation and imposition of an anti-dumping duty on imports of the BOPET films
originating from the People’s Republic of China (“China”) conducted by certain main importing countries;
fluctuations of RMB exchange rate, the reduce in demand for the Company’s products or the loss of main customers which
may result in the decrease of sales, and negatively influencing the Company’s financial performance, uncertainty as to
the future profitability, uncertainty as to the Company’s ability to successfully obtain additional funds to meet the
working capital needs of the new BOPET production line, uncertainty as to the Company’s ability to continuously develop
new BOPET film products to be produced by the third production line and keep up with changes in BOPET film technology, risks
associated with possible defects and errors in its products including complaints and claims from clients, uncertainty as to
its ability to protect and enforce its intellectual property rights, uncertainty as to its ability to attract and retain
qualified executives and personnel, and uncertainty in acquiring raw materials on time and on acceptable terms, particularly
in light of the volatility in the prices of petroleum products in recent years, instability of power and energy supply, and
the uncertainty regarding the future operation of the Company in connection with the changes
in the labor law in China, the measures taken by the Chinese government to save energy and
reduce emissions, and the complaints from nearby residents and local government about
the noise caused by our production as well as the uncertainty of the impact of major
shareholder transfer that have substantial influence over the Company and the Company’s business operation including
possible overlap of our BOPET products, customers and market orientation with an BOPET film manufacturer, which is controlled
by the same individual who has control over the shares of our major shareholder. 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 SEPTEMBER 30, 2014 AND DECEMBER
31, 2013
(amounts in thousands except share
and per share value)
(Unaudited)
| |
September 30, 2014 | | |
December 31, 2013 | |
| |
RMB | | |
US$ | | |
RMB | |
ASSETS | |
| | |
| | |
| |
Current assets | |
| | | |
| | | |
| | |
Cash and cash equivalents | |
| 3,807 | | |
| 620 | | |
| 11,578 | |
Restricted cash | |
| 56,698 | | |
| 9,237 | | |
| 41,422 | |
Accounts and bills receivable, net | |
| 9,194 | | |
| 1,498 | | |
| 8,373 | |
Inventories | |
| 30,753 | | |
| 5,010 | | |
| 38,454 | |
Advance to suppliers | |
| 5,441 | | |
| 886 | | |
| 6,977 | |
Prepayments and other receivables | |
| 23,558 | | |
| 3,838 | | |
| 26,107 | |
Deferred tax assets - current | |
| 1,726 | | |
| 281 | | |
| 1,702 | |
Total current assets | |
| 131,177 | | |
| 21,370 | | |
| 134,613 | |
Property, plant and equipment, net | |
| 494,151 | | |
| 80,507 | | |
| 524,777 | |
Construction in progress | |
| 366 | | |
| 60 | | |
| 632 | |
Lease prepayments, net | |
| 18,536 | | |
| 3,020 | | |
| 18,999 | |
Advance to suppliers - long term, net | |
| 1,197 | | |
| 195 | | |
| 2,134 | |
Long-term deposit | |
| 16,760 | | |
| 2,731 | | |
| 16,760 | |
Other Assets | |
| 12,723 | | |
| 2,073 | | |
| 13,244 | |
Deferred tax assets - non current | |
| 20,782 | | |
| 3,386 | | |
| 20,888 | |
Total assets | |
| 695,692 | | |
| 113,342 | | |
| 732,047 | |
| |
| | | |
| | | |
| | |
LIABILITIES AND EQUITY | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | |
Current liabilities | |
| | | |
| | | |
| | |
Short-term borrowings | |
| - | | |
| - | | |
| 105,000 | |
Long-term loan, current portion | |
| 1,675 | | |
| 273 | | |
| - | |
Due to related parties | |
| 123,849 | | |
| 20,177 | | |
| - | |
Accounts payables | |
| 25,151 | | |
| 4,098 | | |
| 33,454 | |
Notes payable | |
| 99,929 | | |
| 16,280 | | |
| 81,990 | |
Advance from customers | |
| 10,371 | | |
| 1,690 | | |
| 14,665 | |
Accrued expenses and other payables | |
| 6,672 | | |
| 1,087 | | |
| 6,777 | |
Obligations under capital leases-current | |
| 8,728 | | |
| 1,422 | | |
| 8,314 | |
Total current liabilities | |
| 276,375 | | |
| 45,027 | | |
| 250,200 | |
| |
| | | |
| | | |
| | |
Obligations under capital leases | |
| 1,964 | | |
| 320 | | |
| 8,563 | |
Long-term loan | |
| 8,325 | | |
| 1,356 | | |
| 10,000 | |
Deferred tax liabilities | |
| 3,551 | | |
| 579 | | |
| 3,736 | |
Total liabilities | |
| 290,215 | | |
| 47,282 | | |
| 272,499 | |
| |
| | | |
| | | |
| | |
Equity | |
| | | |
| | | |
| | |
Shareholders’ equity | |
| | | |
| | | |
| | |
Registered capital (of US$0.129752 par value; 20,000,000 shares authorized;
13,062,500 issued and outstanding) | |
| 13,323 | | |
| 2,171 | | |
| 13,323 | |
Additional paid-in capital | |
| 311,907 | | |
| 50,816 | | |
| 311,907 | |
Statutory reserve | |
| 37,441 | | |
| 6,100 | | |
| 37,441 | |
Retained earnings | |
| 42,371 | | |
| 6,903 | | |
| 96,370 | |
Cumulative translation adjustment | |
| 1,221 | | |
| 198 | | |
| 1,266 | |
Total shareholders’ equity | |
| 406,263 | | |
| 66,188 | | |
| 460,307 | |
Non-controlling interest | |
| (786 | ) | |
| (128 | ) | |
| (759 | ) |
Total equity | |
| 405,477 | | |
| 66,060 | | |
| 459,548 | |
Total liabilities and equity | |
| 695,692 | | |
| 113,342 | | |
| 732,047 | |
FUWEI FILMS (HOLDINGS) CO., LTD. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS
OF COMPREHENSIVE INCOME (LOSS)
FOR THE THREE- AND NINE-MONTH PERIODS
ENDED SEPTEMBER 30, 2014 AND 2013
(amounts in thousands except share
and per share value)
(Unaudited)
| |
The Three-Month Period Ended
September 30, | | |
The Nine-Month Period Ended
September 30, | |
| |
2014 | | |
2013 | | 2014 | | |
2013 | |
| |
RMB | | |
US$ | | |
RMB | | |
RMB | | |
US$ | | |
RMB | |
Net sales | |
| 69,217 | | |
| 11,277 | | |
| 75,890 | | |
| 209,906 | | |
| 34,198 | | |
| 229,868 | |
Cost of sales | |
| 72,326 | | |
| 11,783 | | |
| 85,747 | | |
| 222,582 | | |
| 36,263 | | |
| 243,223 | |
Gross (loss) profit | |
| (3,109 | ) | |
| (506 | ) | |
| (9,857 | ) | |
| (12,676 | ) | |
| (2,065 | ) | |
| (13,355 | ) |
Operating expenses | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Selling expenses | |
| 4,119 | | |
| 671 | | |
| 3,991 | | |
| 10,908 | | |
| 1,777 | | |
| 11,961 | |
Administrative expenses | |
| 7,979 | | |
| 1,300 | | |
| 5,635 | | |
| 22,037 | | |
| 3,590 | | |
| 24,926 | |
Total operating expenses | |
| 12,098 | | |
| 1,971 | | |
| 9,626 | | |
| 32,945 | | |
| 5,367 | | |
| 36,887 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Operating loss | |
| (15,207 | ) | |
| (2,477 | ) | |
| (19,483 | ) | |
| (45,621 | ) | |
| (7,432 | ) | |
| (50,242 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Other income (expense) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
- Interest income | |
| 392 | | |
| 64 | | |
| 494 | | |
| 1,032 | | |
| 168 | | |
| 835 | |
- Interest expense | |
| (3,140 | ) | |
| (512 | ) | |
| (3,566 | ) | |
| (9,564 | ) | |
| (1,558 | ) | |
| (9,447 | ) |
- Others income (expense), net | |
| 98 | | |
| 16 | | |
| (265 | ) | |
| 35 | | |
| 6 | | |
| (393 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Total other income (expense) | |
| (2,650 | ) | |
| (432 | ) | |
| (3,337 | ) | |
| (8,497 | ) | |
| (1,384 | ) | |
| (9,005 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Loss before provision for income taxes | |
| (17,857 | ) | |
| (2,909 | ) | |
| (22,820 | ) | |
| (54,118 | ) | |
| (8,816 | ) | |
| (59,247 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Income tax benefit (expense) | |
| 83 | | |
| 14 | | |
| (366 | ) | |
| 103 | | |
| 17 | | |
| (207 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net loss | |
| (17,774 | ) | |
| (2,895 | ) | |
| (23,186 | ) | |
| (54,015 | ) | |
| (8,799 | ) | |
| (59,454 | ) |
Net income (loss) attributable to noncontrolling
interests | |
| (15 | ) | |
| (2 | ) | |
| 17 | | |
| (16 | ) | |
| (3 | ) | |
| 16 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net loss attributable to the Company | |
| (17,759 | ) | |
| (2,893 | ) | |
| (23,203 | ) | |
| (53,999 | ) | |
| (8,796 | ) | |
| (59,470 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Other comprehensive income | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
- Foreign currency translation adjustments attributable to noncontrolling interest | |
| 9 | | |
| 1 | | |
| 2 | | |
| (10 | ) | |
| (2 | ) | |
| 14 | |
- Foreign currency translation adjustments attributable to the Company | |
| 10 | | |
| 2 | | |
| 1 | | |
| (45 | ) | |
| (7 | ) | |
| 31 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Comprehensive income (loss) attributable to
non-controlling interest | |
| (6 | ) | |
| (1 | ) | |
| 19 | | |
| (26 | ) | |
| (5 | ) | |
| 30 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Comprehensive loss attribute to the Company | |
| (17,749 | ) | |
| (2,891 | ) | |
| (23,202 | ) | |
| (54,044 | ) | |
| (8.803 | ) | |
| (59,439 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Loss per share, Basic and diluted | |
| (1.36 | ) | |
| (0.22 | ) | |
| (1.78 | ) | |
| (4.13 | ) | |
| (0.67 | ) | |
| (4.55 | ) |
Weighted average number ordinary shares,
Basic and diluted | |
| 13,062,500 | | |
| 13,062,500 | | |
| 13,062,500 | | |
| 13,062,500 | | |
| 13,062,500 | | |
| 13,062,500 | |
FUWEI FILMS (HOLDINGS) CO., LTD. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER
30, 2014 AND 2013
(amounts in thousands except share
and per share value)
(Unaudited)
| |
The Nine-Month Period Ended September 30, | |
| |
2014 | | |
2013 | |
| |
| RMB | | |
| US$ | | |
| RMB | |
Cash flow from operating activities | |
| | | |
| | | |
| | |
Net loss | |
| (54,015 | ) | |
| (8,799 | ) | |
| (59,454 | ) |
Adjustments to reconcile net (loss) income to net cash (used in) provided
by operating activities | |
| | | |
| | | |
| | |
- Loss/(Gain) on disposal of property, plant and equipment | |
| - | | |
| - | | |
| - | |
- Depreciation of property, plant and equipment | |
| 36,021 | | |
| 5,869 | | |
| 36,401 | |
- Amortization of intangible assets | |
| 393 | | |
| 64 | | |
| 393 | |
- Deferred income taxes | |
| (103 | ) | |
| (17 | ) | |
| 207 | |
- Bad debt (recovery) expense | |
| 261 | | |
| 43 | | |
| (87 | ) |
Changes in operating assets and liabilities | |
| | | |
| | | |
| | |
- Accounts and bills receivable | |
| (1,083 | ) | |
| (176 | ) | |
| 12,218 | |
- Inventories | |
| 7,702 | | |
| 1,255 | | |
| (6,957 | ) |
- Advance to suppliers | |
| 1,536 | | |
| 250 | | |
| 7,094 | |
- Prepaid expenses and other current assets | |
| 112 | | |
| 18 | | |
| (303 | ) |
- Accounts payable | |
| (8,304 | ) | |
| (1,353 | ) | |
| 7,478 | |
- Accrued expenses and other payables | |
| (141 | ) | |
| (23 | ) | |
| 92 | |
- Advance from customers | |
| (4,294 | ) | |
| (700 | ) | |
| 2,205 | |
- Tax payable | |
| 3,028 | | |
| 493 | | |
| (2,663 | ) |
| |
| | | |
| | | |
| | |
Net cash (used in) provided by operating activities | |
| (18,887 | ) | |
| (3,076 | ) | |
| (3,376 | ) |
| |
| | | |
| | | |
| | |
Cash flow from investing activities | |
| | | |
| | | |
| | |
Purchases of property, plant and equipment | |
| (5,396 | ) | |
| (879 | ) | |
| (328 | ) |
Restricted cash related to trade finance | |
| (15,272 | ) | |
| (2,488 | ) | |
| (18,115 | ) |
Advance to suppliers - non current | |
| 937 | | |
| 153 | | |
| 77 | |
Amount change in construction in progress | |
| 265 | | |
| 43 | | |
| (9,759 | ) |
Proceeds from sale of property, plant and equipment | |
| - | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | |
Net cash used in investing activities | |
| (19,466 | ) | |
| (3,171 | ) | |
| (28,125 | ) |
| |
| | | |
| | | |
| | |
Cash flow from financing activities | |
| | | |
| | | |
| | |
Principal payments of short-term bank loans | |
| (105,000 | ) | |
| (17,107 | ) | |
| (110,000 | ) |
Proceeds from short-term bank loans | |
| - | | |
| - | | |
| 106,432 | |
Proceeds from related party | |
| 123,849 | | |
| 20,177 | | |
| - | |
Payment of capital lease obligation | |
| (6,185 | ) | |
| (1,008 | ) | |
| (6,128 | ) |
Change in notes payable | |
| 17,939 | | |
| 2,923 | | |
| 35,094 | |
Proceeds from sale-leaseback equipment | |
| - | | |
| - | | |
| 5,000 | |
| |
| | | |
| | | |
| | |
Net cash provided by financing activities | |
| 30,603 | | |
| 4,985 | | |
| 30,398 | |
| |
| | | |
| | | |
| | |
Effect of foreign exchange rate changes | |
| (21 | ) | |
| (31 | ) | |
| (12 | ) |
| |
| | | |
| | | |
| | |
Net decrease in cash and cash equivalent | |
| (7,771 | ) | |
| (1,293 | ) | |
| (1,115 | ) |
| |
| | | |
| | | |
| | |
Cash and cash equivalent | |
| | | |
| | | |
| | |
At beginning of period/year | |
| 11,578 | | |
| 1,913 | | |
| 5,006 | |
At end of period/year | |
| 3,807 | | |
| 620 | | |
| 3,891 | |
| |
| | | |
| | | |
| | |
SUPPLEMENTARY DISCLOSURE: | |
| | | |
| | | |
| | |
Interest paid | |
| 9,564 | | |
| 1,558 | | |
| 9,447 | |
Income tax paid | |
| - | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | |
SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND FINANCIAL ACTIVITIES: | | | |
| | |
Account payable for plant and equipment: | |
| 5,886 | | |
| 959 | | |
| 8,445 | |
Obligations for acquired equipment under capital lease: | |
| 10,692 | | |
| 1,742 | | |
| 18,872 | |
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