UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F/A
(Amendment No. 1)
(Mark One)
| ¨ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
| x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2014
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ________________
to ___________________
OR
| ¨ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
Date of event requiring this shell company report _______________
Commission file number: 001-33176
Fuwei Films (Holdings) Co., Ltd.
(Exact name of Registrant
as specified in its charter)
(Translation of Registrant’s
name into English)
Cayman Islands
(Jurisdiction of incorporation or organization)
No. 387 Dongming Road
Weifang Shandong
People’s Republic of China, Postal
Code: 261061
(Address of principal executive offices)
Yong Jiang
Tel: +86 133 615
59266
fuweiir@fuweifilms.com
(Name, Telephone, E-mail and/or Facsimile
number and Address of Company Contact Person)
Securities registered or to be registered
pursuant to Section 12(b) of the Act.
Title of each class |
|
Name of each exchange on which
registered |
|
|
|
Ordinary Shares |
|
NASDAQ Global Market |
Securities registered or to be registered pursuant to Section
12(g) of the Act. None
Securities for which there is a reporting obligation pursuant
to Section 15(d) of the Act. None
As of December 31, 2014, there were 13,062,500 ordinary shares
outstanding.
Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act.
¨ Yes x No
If this report is an annual or transition report, indicate by
check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934.
¨ Yes x No
Note - Checking the box will not relieve any registrant required
to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
x Yes ¨ No
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer”
in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer x
Indicate by check mark which basis of accounting the registrant
has used to prepare the financial statements included in this filing:
U.S. GAAP |
x |
International Financial Reporting Standards as issued by
the International Accounting Standards Board |
¨ |
Other |
¨ |
If “Other” has been checked in response to the previous
question, indicate by check mark which financial statement item the registrant has elected to follow:
¨ Item
17 ¨ Item 18
If this is an annual report, indicate by check mark whether
the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
¨ Yes x No
Explanatory Note
This Annual Report on Form 20-F/A (“Form 20-F/A”)
is being filed as Amendment No. 1 to our Annual Report on Form 20-F for the year ended December 31, 2014 (“Form 20-F”),
which was originally filed with the Securities and Exchange Commission (the “SEC”) on April 9, 2015. This Form 20-F/A
amends and restates the following Items of the Form 20-F: Item 5. Operating and Financial Review and Prospects, Item 15. Controls
and Procedures and Item 19. Exhibits.
TABLE OF CONTENTS
Item 5. Operating
and Financial Review and Prospects
MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
You should read the following discussion
and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements included
in this Annual Report beginning on page F-1. The consolidated financial statements have been prepared in accordance with U.S. GAAP.
The following discussion and analysis contain forward-looking statements that involve risks and uncertainties.
Overview
We develop, manufacture and distribute
high quality plastic film using the biaxially oriented stretch technique, otherwise known as BOPET film. Since the establishment
of the Company, a substantial portion of our revenues has been derived from the sales of BOPET film. We sell majority of our BOPET
film products to domestic customers in China with minority of them sold to Europe, Asia, North America and other overseas markets.
Our Corporate Structure and Operating History
The diagram below illustrates our corporate structure:
Shandong Fuwei, our PRC operating subsidiary,
was formed on January 28, 2003, as a Sino-foreign equity joint venture under the name Weifang Fuwei Plastic Co., Ltd. In July 2003,
this company began production of BOPET film, initially renting the necessary fixed assets from Shandong Neo-Luck, a company involved
in BOPET film production in which Mr. Xiaoming Wang, our current executive officer, served as executive officer at the time.
Shandong Fuwei subsequently acquired these
fixed assets through two auction proceedings, the first in October of 2003 and the second in December 2004. At the first auction
proceeding in October 2003, Shandong Fuwei acquired assets related to the Brückner production line that it had been renting
from Shandong Neo-Luck. This line had been previously mortgaged by Shandong Neo-Luck to Bank of China, Weifang city branch as security
for several loans extended to Shandong Neo-Luck’s affiliates. When these loans went into default, Bank of China brought a
series of legal actions in Weifang Municipal People’s Court that resulted in the assets securing the loans being sold at
a public auction. Following its successful bid at an auction on October 9, 2003, Shandong Fuwei acquired the Brückner production
line and facilities (with an appraised value of approximately RMB169 million) for RMB156 million.
In November 2003, Shandong Fuwei’s
shares were sold to Shenghong Group Co., Ltd. (“Shenghong Group”) and Shandong Baorui for an aggregate consideration
of RMB98.2 million. Tongju Zhou, a former director of the Company, and Duo Wang each indirectly own 50% of Easebright Investments
Limited (“Easebright”), one of our principal shareholders, and are both officers and directors of Shandong Baorui.
Jun Yin and Duo Wang own 17.5% and 4.6%, respectively, of Shandong Baorui. In 2004, Messrs. Zhou and Wang, along with Jun Yin established
several offshore holding companies in the British Virgin Islands and the Cayman Islands to acquire and hold these shares. In October
2004, Fuwei (BVI) entered into a sale and purchase agreement with Shenghong Group and Shandong Baorui pursuant to which Fuwei (BVI)
acquired the respective equity interest of Shenghong Group and Shandong Baorui in Shandong Fuwei for an aggregate consideration
of RMB91 million. Shandong Fuwei thereafter became a wholly-owned subsidiary of Fuwei (BVI) and was converted into a wholly-foreign
owned enterprise pursuant to PRC law.
As a result of its ongoing financial difficulties,
Shandong Neo-Luck was declared bankrupt by the Weifang Municipal People’s Court in the PRC on September 24, 2004. Prior to
the bankruptcy, Shandong Neo-Luck’s then major operating asset, the DMT production line, had been pledged by Shandong Neo-Luck
to Weifang City Commercial Bank. When Shandong Neo-Luck was declared bankrupt, the Shandong Branch of Bank of China seized the
production line by order of the Qingdao Intermediate People’s Court and the Qingdao Southern District People’s Court
while the Weifang Branch of Bank of Communications did so through Weifang Intermediate People’s Court. As such, the effectiveness
of the pledge in favor of Weifang City Commercial Bank was under dispute. Subsequently, pursuant to the decision from Weifang Intermediate
People’s Court, Weifang City Commercial Bank ranked senior in terms of the right of claims.
The pledged DMT production line was put
up for public auction by the Shandong Neo-Luck Liquidation committee on October 22, 2004. In view of the above complexities, the
auction was deemed to be tremendously risky at that time, and therefore, our PRC operating subsidiary did not directly participate
in the first auction, which began with a bid price of approximately RMB53 million by reference to an independent valuation performed
on a forced sale basis. However, due to the potential tremendous risk involved, the auction had been withdrawn twice and the starting
bid price had been further reduced to approximately RMB34 million and was finally purchased by Beijing Baorui, a company indirectly
controlled by Shandong Baorui. When the DMT production line was put for public auction by Beijing Baorui three months later, our
PRC operating subsidiary purchased it for approximately RMB119 million, which was supported by an independent valuation performed
on a going concern basis. We understood that acquiring the DMT production line from Beijing Baorui through the first auction would
be an effective way to minimize the risk associated with the uncertainties arising from the bankruptcy of Shandong Neo-Luck. The
price difference of approximately RMB85 million represented a risk premium paid to Beijing Baorui, which bore the ultimate risks
of recourse from creditors of Shandong Neo-Luck.
Subsequent to the auction for several years,
the PRC government conducted an investigation into the conduct of certain individuals in connection with such transactions. In
March 2009, Messrs. Yin, Wang and Zhou committed the crime of corruption by verdict of the Jinan Intermediate People’s Court
in the city of Jinan, Shandong Province. In November 2009, the Company became aware of the final verdict issued by the Supreme
People's Court of Shandong Province. The Supreme People’s Court upheld the initial verdict issued by the Intermediate court
in March 2009. The March 2009 initial verdict sentenced Mr. Yin to death, with a stay of execution for two years, and the
other two defendants, Mr. Zhou and Mr. Wang, each received life imprisonment. All of the personal property of the three individuals
will be confiscated.
At the time of the Company’s initial
public offering, we had obtained an opinion of PRC counsel with respect to the validity of the auction proceedings under PRC law,
although you should read the description of the opinion and the subsequent development in March 2009 described under the title
“Risk Factors — The circumstances under which we acquired ownership of our main productive assets may jeopardize
our ability to continue as an operating business”. Certain of the assumptions relied upon in providing that opinion have
been called into question by the verdict referred to above.
On May 9, 2011, the Company received a
notification from the Weifang State-owned Assets Operation Administration Company, a wholly-owned subsidiary of Weifang State-owned
Asset Management and Supervision Committee (the “Administration Company”) regarding the transfer of the ownership of
controlling shareholders.
According to the notification, the former
controlling shareholders of the Company, Messrs. Jun Yin, Duo Wang and Tong Ju Zhou, had transferred their entire ownership in
several intermediate holding companies to the Administration Company, Ms. Qing Liu and Mr. Zhixin Han. As a result of the transfers,
and based on the information provided by the Administration Company, 52.90% of its outstanding ordinary shares are controlled indirectly
by the Administration Company and 12.55% of its outstanding ordinary shares are jointly controlled indirectly by Ms. Liu and Mr.
Han.
The Company received a second notification
dated May 17, 2011 (the “Second Notification”) from the Administration Company regarding the transfer of ownership
of Fuwei stock previously controlled by the Company’s major shareholders.
As discussed in the Second Notification,
Ms. Qing Liu and Mr. Zhixin Han transferred their entire ownership in the intermediate holding company, Easebright Investments
Limited, to the Administration Company. As a result of the transfer, and based on the information provided by the Administration
Company, 65.45% of its outstanding ordinary shares were controlled indirectly by the Administration Company and the sole director
of each of the intermediate holding companies, Mr. Zheng Min.
On August 14, 2013, the Company 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 and the Company became aware that the fifth public auction has resulted in the acceptance
of a successful bid. Shandong SNTON Optical Materials Technology Co., Ltd. (“Shandong SNTON”), the successful bidder
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, 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
(“SNTON Group”). Mr. Xiusheng Wang, the chairman of the Board of Directors of SNTON Group, is also Hongkong Ruishang’s
chairman.This disclosure is based solely on information contained in a Schedule 13D amendment filed by Hongkong Ruishang with the
SEC on November 12, 2014.
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.This disclosure is
based solely on information contained in a Schedule 13D filed by Shandong Fuhua with the SEC on December 30, 2014.
In November 2014,
certain of our directors and officers, namely, Messrs. Xiaoan He (our former chief executive officer), 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.
Key Factors Affecting Our Results of Operation
The following are key factors that affect our financial condition
and results of operations and we believe them to be important to the understanding of our business:
Raw Material Prices
For the years ended 2014, 2013 and 2012,
the total cost of raw materials made up approximately 67.8%, 71.4% and 73.0% of production cost, respectively. The primary raw
materials used in our production of BOPET film are polyethylene terephthalate (or PET) resin and additives, which made up approximately
80.0% and 20.0%, respectively, of our total cost of raw materials in 2014. PET resin trades as a commodity and its market price
is influenced significantly by global energy prices, including the price of crude oil. In addition, PET resin is mainly used in
textile industry and accordingly the demand from that industry will also affect the price of PET resin.
Although we try to pass on all increases
in our raw material costs to our customers, we can only pass on a portion of the increase to our customers due to the increased
supply than demand in the market. We obtain a significant amount of the PET resin used at our facilities from one supplier, who
has agreed to supply us fixed quantities of PET resin monthly at the prevailing market price. We have not engaged in any hedging
transactions to limit our exposure to fluctuations in the market prices of these raw materials or their components.
Prices of Our Products
Our BOPET film products generally fall
into two categories: commodity products and specialty products. The price of commodity products, such as printing films, stamping
and transfer films and metallized films, is typically driven by supply and demand conditions in the market. We have more control
over pricing for our specialty products, such as dry films.
As selling prices are generally higher
for those types of BOPET film products which require higher technical expertise, our revenue will be affected, to certain extent,
by our product mix. Our product mix is dependent on, among other things, our production facilities, R&D abilities and new product
commercialization.
Demand for Our Products
We have been able to expand our product
range and markets by introducing new products required by customers. We believe that our technical expertise is important in introducing
products that are in demand.
Our BOPET film products are mostly sold
to customers in the flexible packaging industry for consumer products such as food, pharmaceutical products, cosmetics, tobacco,
alcohol and beverage. Recently, the sales of the light-resistant dry film which is used in printed circuit board also significantly
increased. In the fiscal years ended December 31, 2014, 2013 and 2012, approximately 84.9%, 86.3% and 81.1%, respectively, of our
total revenue was derived from the PRC. The demand for our products is therefore, to a large extent, affected by the general economic
conditions in the PRC. A significant improvement in the economic environment in the PRC will likely improve consumer spending and
increase the demand for our products. However, the economic downturn of the PRC market will impact our customers’ demand
and will decrease the demand for our products.
Production Capacity and Utilization Rates
Our sales volume is limited by our operational annual production
capacity.
As we grow our business in the future,
our ability to fulfill more and larger orders will be dependent on our ability to increase our production capacity. As our business
is capital-intensive, our ability to expand our production capacity will depend on, inter alia, the availability of capital
to meet our needs of expansion or upgrading of production lines.
Competition
We believe that we are currently one of
the few producers of BOPET films in the PRC with research and development capability. Our past financial performance is attributable
to our market position in the industry. Over time, there may be new investors into our industry, and the current BOPET film manufacturers
may expand their production capacity. We believe that currently our major competitors in the BOPET manufacturing market in the
PRC include Dupont Hongji Films Foshan Co., Ltd., Yihua Toray Polyester Film Co., Ltd., and Ningbo Shunsu Film Co., Ltd.
Our ability to enhance existing products,
introduce new products to meet customers’ demand, deliver quality products to our customers and maintain our established
industry reputation will affect our competitiveness and market position.
Our ability to compete against new and
existing competitors to maintain or improve our market position and secure orders will affect our revenue and financial performance.
Description of Certain Statements of Income Line Items
Revenues
Revenue from the sale of our domestic BOPET
film products is recognized when significant risks and rewards of ownership have been transferred to the buyer. No revenue is recognized
if there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of
goods, or when the amount of revenue and costs incurred or to be incurred in respect of the transaction cannot be measured reliably.
In respect of our overseas sales, we ship directly to the destinations of our overseas customers and our revenue is recognized
at the time when we receive customs clearance of our exports. Most of our overseas sales are conducted on a Cost, Insurance and
Freight (or “CIF”) basis, meaning that we pay the costs and freight necessary to get the products to the port of destination,
and the risk of loss is transferred from us to the buyer when the goods pass the ship’s rail at the port of destination.
In addition, we have to procure marine insurance against the buyer’s risk of loss of damage to the goods during the carriage.
Most of our sales invoices are denominated in the Chinese Yuan (Renminbi), although certain of our overseas sales are denominated
in US dollars.
Cost of Goods Sold
Our cost of goods sold comprises mainly
of materials costs, energy expenses, factory overheads, packaging materials and direct labor. The breakdown of our cost of goods
sold in percentage is as follows:
| |
Year Ended December
31, 2014 | | |
Year Ended December
31, 2013 | | |
Year Ended December
31, 2012 | |
Materials costs | |
| 67.8 | % | |
| 71.4 | % | |
| 73.0 | % |
Energy expense | |
| 9.9 | % | |
| 9.0 | % | |
| 8.3 | % |
Factory overhead | |
| 16.4 | % | |
| 14.6 | % | |
| 13.9 | % |
Packaging materials | |
| 2.8 | % | |
| 2.7 | % | |
| 3.0 | % |
Direct labor | |
| 3.1 | % | |
| 2.3 | % | |
| 1.8 | % |
Material
Costs
As noted above, the raw materials used
in our BOPET film production are PET resin and additives, which made up approximately 80.0% and 20.0%, respectively of our total
materials costs in 2014.
Energy expense
Energy expense includes electricity, gas
and water costs, in which electricity is the main energy consumed.
Factory Overhead
Factory overhead comprises primarily of
depreciation, electricity and water charges, and repair and maintenance of our machinery and equipment, etc. In 2014, the depreciation
expense and repair and maintenance expenditure accounted for 79.9% and 13.7% of factory overhead, respectively.
Packaging Materials
Our packaging materials mainly comprise
of, among other things, packaging pallets and carton cores, used for the packaging of our BOPET film products for delivery to customers.
Generally, our unit cost of packaging materials does not fluctuate significantly and our total costs for packaging materials typically
vary in line with our sales volume.
Direct Labor
Direct labor cost includes salaries, wages,
bonuses and other payments to our employees in the PRC who are involved in the production of our products. The main factors affecting
our direct labor cost are CPI, the changes of any government policies or laws and the demand and supply of skilled labor.
Operating Expenses
Our operating expenses comprise of administrative expenses,
distribution expenses and other operating expense.
Our administrative expenses comprise mainly
of administrative staff salaries and related welfare costs, research and development expenses, depreciation charges of office equipment,
furniture and fixtures, amortization charges relating to land use rights, allowance for doubtful trade receivables, professional
fees, government duties and fees, insurance expenses, rental expenses, travel expenses, entertainment expenses, office expenses
and miscellaneous expenses.
Our distribution expenses comprise mainly
of freight costs, travel expenses, marketing and promotion expenses as well as salaries and commission paid to our sales and marketing
personnel.
Other operating expenses comprise mainly
of loss on disposal of property, plant and equipment and miscellaneous expenses.
Finance Costs
Finance costs comprise mainly of interest
expense relating to our loans, capital lease obligations, exchange deficit and bank charge.
Income Tax Expense
For the period from January 28, 2003 to
December 31, 2004, Shandong Fuwei was granted certain tax relief under which it was exempted from PRC income tax. As of January
2005, Shandong Fuwei has been a wholly foreign-owned enterprise under the laws of the PRC. Accordingly, Shandong Fuwei is entitled
to tax concessions whereby the profit for the first two financial years beginning with the first profit-making year (after setting
off tax losses carried forward from prior years) is exempt from income tax in the PRC and the profit for each of the subsequent
three financial years is taxed at 50% of the prevailing tax rates set by the relevant tax authorities.
On March 16, 2007, the National People’s
Congress of the PRC passed the Enterprise Income Tax Law of the People’s Republic of China, which law took effect on January
1, 2008 (the “New Tax Law”). Under the New Tax Law, domestic enterprises and foreign-invested enterprises will generally
become subject to a unified enterprise income tax rate of 25%, except that enterprises incorporated prior to March 16, 2007 may
continue to enjoy existing preferential tax treatments until January 1, 2013. In addition, certain qualifying “High Technology
Enterprises” may still benefit from a preferential tax rate of 15% under the New Tax Law if they meet the definition of “Government
Advocated High Technology Enterprise” to be set forth in the more detailed implementing rules when they become adopted. Shandong
Fuwei was designated as a High-and-New Tech Enterprise in December 2008 and will retain its status as a high-tech enterprise for
three years commencing from 2011 enjoying a favorable corporate tax rate of 15% during the term from January 1, 2011 to December
31, 2013 pursuant to Enterprise Income Tax Law. In December 2014, Shandong Fuwei failed to be designated as a High Technology Enterprise
and it became subject to a standard enterprise income tax at a rate of 25%.
The US entity, Fuwei Films USA, LLC, is
headquartered in South Carolina. As of December 31, 2014, the income tax rate is 39%, including 34% of federal income tax rate
and 5% of state income tax rate.
Inflation
According to the National Bureau of Statistics
of China, the change in the consumer price index in China was 2.0%, 2.6% and 2.6% in 2014, 2013 and 2012, respectively.
Critical Accounting Policies
The SEC defines critical accounting policies
as those that are, in management's view, most important to the portrayal of our financial condition and results of operations and
those that require significant judgments and estimates. We prepare our financial statements in accordance with the U.S. GAAP, which
requires us to make estimates and assumptions that affect the reported amounts of our assets and liabilities, to disclose contingent
assets and liabilities on the date of the financial statements, and to disclose the reported amounts of revenues and expenses incurred
during the financial reporting period. We continue to evaluate these estimates and assumptions based on the most recently available
information, our own historical experience and various other assumptions that we believe to be reasonable under the circumstances.
We rely on these evaluations as the basis for making judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, actual
results could differ from those estimates. Some of our accounting policies require higher degrees of judgment than others in their
application. We consider the policies discussed below to be critical to an understanding of our financial statements as their application
assists management in making their business decisions.
Goodwill Impairment 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.
Collectibility of Accounts Receivable
Our management 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. Generally, we offer our customers in the PRC credit terms
of up to 30-45 days. Our international sales are settled through telegraphic transfer and letters of credit, which generally have
payment terms of between 30 and 60 days.
We offer different credit terms to our
customers based on criteria such as working relationship, payment history, creditworthiness and their financial position. All credit
terms are to be approved by our finance department, in consultation with our sales and marketing department. For extension of larger
credit limits, approvals have to be sought from our credit committee which is made up of members from our finance department, sales
department and CFO. Our finance department and sales department review our outstanding debt account on a monthly basis and follow
up with customers when payments are due. We do not impose interest charges on overdue account receivable.
As of December 31, 2014, our largest trade
debtor was Eternal Electronic Material (Guangzhou) Co., Ltd, a company based in China, The balance of trade receivables from Eternal
Electronic Material (Guangzhou) Co., Ltd, was RMB1.89 million.
We make specific allowance for doubtful
trade receivables when our management takes the view (taking into account the aging of trade receivables and in consultation with
our sales department) that we will not be able to collect the amounts due. Our customers pay by installments, creating long accounts
receivable cycles. We provide for an allowance for doubtful accounts based on our best estimate of the amount of losses that could
result from the inability or intention of our existing customers not to make the required payments. We generally review the allowance
by taking into account factors such as historical experience, age of the accounts receivable balances and economic conditions.
Specific write-off of trade receivables
is made when the outstanding trade receivables have been due for more than two years.
The analysis of the allowance for doubtful amounts for 2014,
2013 and 2012 is as follows (in thousands):
| |
December 31,2014 | | |
December 31,2013 | | |
December 31,2012 | |
| |
RMB | | |
US$ | | |
RMB | | |
RMB | |
Balance at beginning of year | |
| 795 | | |
| 128 | | |
| 1,196 | | |
| 1,785 | |
Bad debt expense (recovery) | |
| 30 | | |
| 5 | | |
| (401 | ) | |
| (589 | ) |
Write-offs | |
| - | | |
| - | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | |
Balance at end of year | |
| 825 | | |
| 133 | | |
| 795 | | |
| 1,196 | |
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.
Results of Operations
The following discussion of our results
of operations is based upon our audited consolidated financial statements beginning on page F-1 of this Annual Report.
The table below sets forth certain line items from our Statement
of Income as a percentage of revenues:
| |
For the year ended December 31, | |
| |
2014 | | |
2013 | | |
2012 | |
| |
(% of Total Revenue) | |
Gross profit | |
| (6.0 | ) | |
| (5.1 | ) | |
| (0.8 | ) |
Operating expenses | |
| (15.3 | ) | |
| (16.1 | ) | |
| (16.3 | ) |
Other expense | |
| (4.0 | ) | |
| (1.5 | ) | |
| 0.5 | |
Income tax benefit (loss) | |
| 0.3 | | |
| 3.3 | | |
| 2.1 | |
Net income (loss) | |
| (25.1 | ) | |
| (19.3 | ) | |
| (14.6 | ) |
Fiscal year ended 2014 compared to fiscal year ended 2013
Revenues
Our revenue can be analyzed as follows (in thousands):
| |
For the year ended December 31, | |
| |
2014 | | |
2013 | |
| |
RMB | | |
US$ | | |
% of Total | | |
RMB | | |
% of Total | |
Stamping and transfer film | |
| 118,560 | | |
| 19,108 | | |
| 41.7 | % | |
| 142,309 | | |
| 46.7 | % |
Printing film | |
| 32,987 | | |
| 5,317 | | |
| 11.6 | % | |
| 27,852 | | |
| 9.1 | % |
Metallized film | |
| 6,397 | | |
| 1,031 | | |
| 2.2 | % | |
| 17,686 | | |
| 5.8 | % |
Specialty film | |
| 79,609 | | |
| 12,830 | | |
| 28.0 | % | |
| 89,382 | | |
| 29.3 | % |
Base film for other applications | |
| 46,911 | | |
| 7,561 | | |
| 16.5 | % | |
| 27,721 | | |
| 9.1 | % |
| |
| 284,464 | | |
| 45,847 | | |
| 100 | % | |
| 304,950 | | |
| 100.0 | % |
During the fiscal year ended December 31,
2014, net revenues were RMB284.5 million (US$45.8 million), compared to RMB305.0 million during the same period in 2013, representing
a decrease of RMB20.5 million or 6.7%, mainly due to the reduction of average sales price by 8.8% caused by oversupply arising
from stronger competition in China and the decrease in the price of main raw materials.
In 2014, sales of specialty films were
RMB79.6 million (US$12.8 million) or 28.0% of our total revenues as compared to RMB89.4 million or 29.3% in 2013, which was a decrease
of RMB9.8 million, or 11.0%, as compared to the same period in 2013. For further analysis of the factors causing specialty films
revenue decrease, the reduction of average sales price caused a decrease of RMB4.6 million and sales volume factor made a decrease
of RMB5.2 million. The decrease was largely attributable to the decrease in sales volume and prices for dry films and heat shrinkable
films due to the entrances of new competitors.
Overseas sales were RMB43.0 million or
US$6.9 million, or 15.1% of total revenues, compared with RMB41.9 million or 13.7% of total revenues in 2013. For further analysis
of the factors causing overseas sales decrease, the decrease of average sales price caused a decrease of RMB6.6 million and sales
volume factor made an increase of RMB7.7 million.
The following is a breakdown of domestic
versus overseas sales for the periods ended December 31, 2014 and 2013 (amounts in thousands):
| |
For the year ended December 31, | |
| |
2014 | | |
| | |
2013 | | |
| |
| |
RMB | | |
US$ | | |
% of Total | | |
RMB | | |
% of Total | |
Sales in China | |
| 241,446 | | |
| 38,914 | | |
| 84.9 | % | |
| 263,076 | | |
| 86.3 | % |
Sales in other countries | |
| 43,018 | | |
| 6,933 | | |
| 15.1 | % | |
| 41,874 | | |
| 13.7 | % |
| |
| 284,464 | | |
| 45,847 | | |
| 100.0 | % | |
| 304,950 | | |
| 100.0 | % |
Cost of Goods Sold
Cost of goods sold during the year of 2014
totaled RMB301.6 million (US$48.6 million) as compared to RMB320.4 million in the prior year. This was RMB18.8 million or 5.9%
lower than the same period in 2013. For further analysis of the factors causing cost of goods sold decrease, the reduction of unit
cost of goods sold caused a decrease of RMB26.2 million and sales volume factor made an increase of RMB7.4 million. The decrease
of cost of goods was mainly due to the price reduction of raw materials.
Gross (Loss) Profit
Our gross loss was RMB17.2 million (US$2.8
million) for the year of 2014, representing a gross margin of (6.0) %, as compared to a gross margin of (5.1) % in 2013. Gross
margin decreased by 0.9 percentage points compared to the same period in 2013. Our average unit sales price decreased by 8.8% compared
to last year. The unit sales cost decreased by 8% due to the price reduction of main raw materials. Consequently, the decrease
in product sales price exceeded that in cost of goods sold per unit during 2014 compared with 2013, which contributed to the decrease
in our gross profit.
Operating Expenses
Our operating expenses during the year
ended December 31, 2014 were RMB43.5 million, a decrease of RMB5.5 million, or 11.2%, as compared to 2013. The sales expenses decreased
by RMB1.7 million mainly due to the reduction of freight. The administrative expense reduced by 3.8 million mainly attributable
to the decrease in research and development expenses.
Other Expense
Total other expense is a combination result
of interest income, interest expense and others income (expense). Total other expense during the year ended December 31, 2014 was
RMB11.4 million (US$1.8 million), compared to total other income of RMB4.6 million in 2013. Total other expense of 2014 increased
comparing to that of 2013, which mainly attributed to increased interest expense. Interest expense totaled RMB12.5 million (US$2.0
million) during 2014, RMB2.4 million or 23.8% higher than that in 2013, which was mainly due to higher interest payment associated
with increased loans from related party .
Income Tax Benefit (Expense)
Income tax benefit during the year ended
December 31, 2014 was RMB0.74 million (US$0.119 million) compared to an income tax benefit of RMB10.0 million during 2013, which
was mainly attributable to tax effect of changes in deferred tax during 2014. We did not recognize deferred tax assets for the
loss of 2014 after considering the possibility of realizing the benefits under the conservatism principle.
Fiscal year ended 2013 compared to fiscal year ended 2012
Revenues
Our revenue can be analyzed as follows (in thousands):
| |
For the year ended December 31, | |
| |
2013 | | |
| | |
2012 | | |
| |
| |
RMB | | |
US$ | | |
% of Total | | |
RMB | | |
% of Total | |
Stamping and transfer film | |
| 142,309 | | |
| 23,508 | | |
| 46.7 | % | |
| 202,029 | | |
| 54.2 | % |
Printing film | |
| 27,852 | | |
| 4,601 | | |
| 9.1 | % | |
| 42,449 | | |
| 11.3 | % |
Metallized film | |
| 17,686 | | |
| 2,922 | | |
| 5.8 | % | |
| 18,886 | | |
| 5.1 | % |
Specialty film | |
| 89,382 | | |
| 14,764 | | |
| 29.3 | % | |
| 92,536 | | |
| 24.8 | % |
Base film for other applications | |
| 27,721 | | |
| 4,579 | | |
| 9.1 | % | |
| 16,966 | | |
| 4.5 | % |
| |
| 304,950 | | |
| 50,374 | | |
| 100.0 | % | |
| 372,866 | | |
| 100 | % |
During the fiscal year ended December 31,
2013, net revenues were RMB305.0 million (US$50.3 million), compared to RMB372.9 million during the same period in 2012, representing
a decrease of RMB67.9 million or 18.2%, mainly due to the reduction of average sales price by 4.9% and total sales volumes by 14.0%.
For further analysis of the factors causing revenue decrease, the reduction of average sales price caused a decrease of RMB15.6
million and sales volume factor made a decrease of RMB52.3 million.
In 2013, sales of specialty films were
RMB89.4 million (US$14.8 million) or 29.3% of our total revenues as compared to RMB92.5 million or 24.8% in 2012, which was a decrease
of RMB3.1 million, or 3.4%, as compared to the same period in 2012. For further analysis of the factors causing specialty films
revenue decrease, the reduction of average sales price caused a decrease of RMB5.6 million and sales volume factor made an increase
of RMB2.5 million. The decrease was largely attributable to the decrease in sales prices for films in electronics and high-end
packaging.
Overseas sales were RMB41.9 million or
US$6.9 million, or 13.7% of total revenues, compared with RMB70.6 million or 18.9% of total revenues in 2012. For further analysis
of the factors causing overseas sales decrease, the increase of average sales price caused an increase of RMB1.6 million and sales
volume factor made a decrease of RMB30.3 million. The decrease in overseas sales was mainly due to the slow growth in demand from
enhanced competition as well as anti-dumping measures taken by the USA and South Korea, which led to decrease in orders from the
overseas market and a significant decrease of the sales prices compared to the same period of 2012.
The following
is a breakdown of domestic versus overseas sales for the periods ended December 31, 2013 and 2012 (amounts in thousands):
| |
For the year ended December 31, | |
| |
2013 | | |
| | |
2012 | | |
| |
| |
RMB | | |
US$ | | |
% of Total | | |
RMB | | |
% of Total | |
Sales in China | |
| 263,076 | | |
| 43,457 | | |
| 86.3 | % | |
| 302,290 | | |
| 81.1 | % |
Sales in other countries | |
| 41,874 | | |
| 6,917 | | |
| 13.7 | % | |
| 70,576 | | |
| 18.9 | % |
| |
| 304,950 | | |
| 50,374 | | |
| 100.0 | % | |
| 372,866 | | |
| 100.0 | % |
Cost of Goods Sold
Cost of goods sold during the year of 2013
totaled RMB320.4 million (US$52.9 million) as compared to RMB376.0 million in the prior year. This was RMB55.6 million or 14.8%
lower than the same period in 2012, mainly due to the decreased sales volume of 14.0% in 2013 compared to the same period in 2012.
Additional factors causing a decrease in cost of goods sold included, the reduction of unit cost of goods sold causing a decrease
of RMB2.9 million and a decrease of RMB52.7 million in sales volume
Gross (Loss) Profit
Our gross loss was RMB15.4 million (US$2.5
million) for the year of 2013, representing a gross margin of (5.0)%, as compared to a gross margin of (0.8)% in 2012. Gross margin
decreased by 4.2 percentage points compared to the same period in 2012. Our average unit sales price decreased by 4.9% compared
to last year due to the excess capacity and stronger competition in the market. In addition, the main raw materials used in our
production of BOPET films, polyethylene terephthalate (or PET) resin and additives, comprised approximately 71.4% of our total
costs of goods sold and their prices were greatly influenced by price fluctuation in crude oil. Our main raw material costs, PET
resin, were reduced by 3.0% compared to last year. Moreover, the remaining products sales costs, other than the costs of raw materials,
comprising approximately 28.6% of our total cost of goods sold, increased by 1.1% compared to that in 2012. Consequently, the decrease
in product sales price exceeded that in cost of goods sold per unit during 2013 compared with 2012, which contributed to the significant
decrease in our gross profit.
Operating Expenses
Our operating expenses during the year
ended December 31, 2013 were RMB49.0 million, a decrease of RMB11.9 million, or 19.6%, as compared to 2012. The decrease was mainly
due to no goodwill impairment for the year ended December 31, 2013.
Other Expense
Total other expense is a combination result
of interest income, interest expense and others income (expense). Total other expense during the year ended December 31, 2013 was
RMB4.6 million (US$0.8 million), compared to total other income of RMB1.8 million in 2012. Total other expense of 2013 increased
comparing to that of 2012, which was mainly due to the fact that most of interests were expenses in current year while all interest
payments were capitalized in 2012. Interest payments totaled RMB12.2 million (US$2.0 million) during 2013, RMB1.0 million or 8.9%
higher than that in 2012, which was mainly due to higher interest payment associated with capital lease obligations.
Income Tax Benefit (Expense)
Income tax benefit during the year ended
December 31, 2013 was RMB10.0 million (US$1.7 million) compared to an income tax benefit of RMB7.7 million during 2012, which was
mainly attributable to tax effect of changes in deferred tax during 2013.
Liquidity and Capital Resources
Since inception, our sources of cash were
mainly from cash generated from our operations and borrowings from financial institutions and capital contributed by our shareholders.
Our capital expenditures in 2014 have been
primarily financed through short-term borrowings from financial institutions and related party. The interest rates of short-term
borrowings from financial institutions during the three-year period from 2012 to 2014 ranged from 0% to 7.87%, and these borrowings
may not be paid prior to maturity.
Since inception, we have utilized significant
amounts of secured short-term financing to fund our acquisition of Brückner, DMT and Dornier production lines and working
capital needs. As of December 31, 2014, we had borrowings of RMB10.0 million from Weifang Dongfang State-owned Assets Management
Co., Ltd. in the PRC.
Each of the related loan agreements contains
provisions regarding collateral, covenants prohibiting us from engaging in certain activities (including selling, mortgaging or
otherwise disposing of or encumbering all or substantially all of our assets or before any merger, acquisition, spin-off, or other
transaction resulting in a change in our corporate structure) without the lenders consent and acceleration (and setoff) provisions
in the event of default in payment or failure to comply with such covenants.
In April 2014, we 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, we 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, which was based on the same interest rate calculation method that was used by Bank of
Communications Co. Ltd. As of December 31, 2014, no payments have been made on the principal and interest of these two loans.
On November 20, 2009, we signed a long-term
loan agreement of RMB10.0 million (US$1.7 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, the Company will
make principal installment payments of RMB3.35 million (US$0.6 million) per year with the remaining principal balance of RMB3.3
million (US$0.5 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 December
31, 2014 is 5.9%. The loan is guaranteed by Shandong Deqin Investment& Guarantee Co., Ltd. and is used for our projects.
The credit line amounting to RMB50.0 million
(US$8.0 million) granted by SPD bank was secured by a pledge of property, plant, land use right and equipments. The credit line
was used for purchasing raw materials. The term of this credit line was from November 20, 2012 to November 17, 2015. As of December
31, 2014, the amount of credit line used was RMB47,769,500 with a remaining balance of RMB2,230,500.
In 2015, our main source of cash flows will be generated from
operating activities and loans from a related party, Shandong SNTON Group Co., Ltd. (“SNTON Group”), parent company
of our major shareholder. These capital resources will be mainly used to maintain our ordinary production and daily management,
obligations under capital lease, paying off bank loans as they become due and the payment of the remaining balance due on construction
capital expenditures.
The total amount due in respect of obligations under capital
lease for 2015 is expected to be RMB8,259,000 or US$1,331,000 and we believe the likelihood of an event of default is improbable.
The total amount due in respect of outstanding bank loans for
2015 is expected to be RMB3,350,000 or US$540,000 and we believe the likelihood of an event of default is improbable. Due to anticipated
significant pressure in future conditions in our target markets, we expect cash flows generated from operating activities will
not meet our needs to maintain our ordinary production and daily management. Due to current economic downturn in China, it is difficult
to obtain new bank loans.
Accordingly, we expect that loans from SNTON Group will be our
main source of cash flows to maintain our operations. As of the date of this Form 20-F/A, the total accumulated amount of loans
from SNTON Group and Shandong SNTON Optical Materials Technology Co., Ltd., a subsidiary of SNTON Group, (“Shandong SNTON”)
in 2015 is RMB130,000,000. As a result, we will not be able to maintain our operations without receiving loans from SNTON Group
and will not be able to pay off our obligations when they become due.
We believe that, after taking into consideration
our present and future banking facilities, borrowing from related party, existing cash and the expected cash flows to be generated
from our operations, we have adequate sources of liquidity to meet our short-term obligations and our working capital.
A summary of our cash flows for 2014,
2013 and 2012 is as follows (in thousands):
| |
2014 | | |
2013 | | |
2012 | |
| |
RMB | | |
US$ | | |
RMB | | |
RMB | |
Net cash provided by (used in) operating activities | |
| (18,161 | ) | |
| (2,929 | ) | |
| 3,090 | | |
| 46,451 | |
| |
| | | |
| | | |
| | | |
| | |
Net cash (used in) provided by investing activities | |
| (10,538 | ) | |
| (1,698 | ) | |
| (32,069 | ) | |
| (85,389 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net cash provided by (used in) financing activities | |
| 26,172 | | |
| 4,219 | | |
| 35,568 | | |
| (202 | ) |
| |
| | | |
| | | |
| | | |
| | |
Effect of foreign exchange rate changes | |
| (31 | ) | |
| (51 | ) | |
| (17 | ) | |
| (26 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net increase (decrease) in cash and cash equivalent | |
| (2,558 | ) | |
| (459 | ) | |
| 6,572 | | |
| (39,166 | ) |
| |
| | | |
| | | |
| | | |
| | |
Cash and cash equivalent | |
| | | |
| | | |
| | | |
| | |
At beginning of the year | |
| 11,578 | | |
| 1,913 | | |
| 5,006 | | |
| 44,172 | |
At end of the year | |
| 9,020 | | |
| 1,454 | | |
| 11,578 | | |
| 5,006 | |
Operating Activities
Net cash used in operating activities was
RMB18.2 million for the year ended December 31, 2014 as compared to net cash provided by operating activities of RMB3.1 million
for the year ended December 31, 2013. This decrease in cash flows from operating activities was attributable primarily to the increased
operating loss in current year.
Net cash provided by operating activities
was RMB3.1 million for the year ended December 31, 2013 as compared to net cash provided by operating activities of RMB46.5 million
for the year ended December 31, 2012. This decrease in cash flows from operating activities was attributable primarily to the increased
operating loss in current year.
Net cash provided by operating activities
was RMB46.5 million for the year ended December 31, 2012 as compared to net cash used in operating activities of RMB14.0 million
for the year ended December 31, 2011. This increase in cash flows from operating activities was attributable primarily to the decrease
in accounts receivables. We have started taking actions to collect overdue invoices from our customers, which resulted in an increase
in cash flows.
Investing Activities
Net cash used
in investing activities was RMB10.5 million in 2014 mainly due to investment in the third production line project.
Net cash used in investing activities was
RMB32.1 million in 2013 mainly due to investment in the third production line project.
Net cash used in investing activities was
RMB85.4 million in 2012 due to equipment purchase from Dornier.
Financing Activities
Net cash provided
by financing activities was RMB26.2 million for the year ended December 31, 2014, which was mainly due to increased borrowing from
related party..
Net cash provided by financing activities
was RMB35.6 million for the year ended December 31, 2013, which was mainly due to increase in Bank’s Acceptance Bill.
Net cash used in financing activities was
RMB0.2 million for the year ended December 31, 2012, which was mainly due to repayment of bank loans.
Foreign Exchange Exposure
Translations
Our reporting currency is RMB. The functional
currency of our operating subsidiary in the PRC is RMB and our operating subsidiary also maintains its books and records in RMB.
Accordingly, we are not exposed to any material foreign currency translation effects.
Transactions
We are, to a certain extent, exposed to
transaction foreign currency exposure arising from our operations in the PRC.
We began conducting part of our sales in
foreign currency in 2004 with the commencement of our overseas sales business. During 2014, 2013 and 2012, approximately 84.9%,
86.3%, and 81.1% respectively, of our revenue was denominated in RMB and the remainder was in US dollar. The proportion of raw
materials we purchased within the PRC during 2014, 2013 and 2012 were 100%, 98.0%, and 84.9%, respectively. The remainder was purchased
in US dollars.
Our foreign currency exchange risk arises
mainly from this mismatch between the currency of our sales, purchases and operating expenses. We may, therefore, be susceptible
to foreign exchange exposure.
In addition, we also maintain US dollar
accounts with financial institutions for our US dollar receipts and US dollar payments. We may also incur foreign exchange gains
or losses when we convert the US dollar balances into RMB.
Currently, we do not have a formal foreign
currency hedging policy as our foreign exchange gains and losses in 2014, 2013 and 2012 were insignificant. Our management believes
that it is more efficient for us to assess the hedging need of each transaction on a case-by-case basis. We will continue to monitor
our foreign exchange exposure in the future and will consider hedging any material foreign exchange exposure should such need arise.
Capital Expenditures and Contractual
Commitments
Capital Expenditures
Our capital expenditures in 2014, 2013 and 2012 were as follows
(in thousands):
| |
For the year ended December 31, | |
| |
2014 | | |
2013 | | |
2012 | |
| |
| RMB | | |
| RMB | | |
| RMB | |
Buildings | |
| - | | |
| - | | |
| - | |
Plant and equipment | |
| 5,353 | | |
| 1,667 | | |
| 6,106 | |
Motor vehicles | |
| - | | |
| - | | |
| - | |
Assets under construction | |
| 366 | | |
| 10,172 | | |
| 138,811 | |
Others (computer and furniture fittings) | |
| 285 | | |
| 356 | | |
| 70 | |
Total | |
| 6,004 | | |
| 12,195 | | |
| 144,987 | |
The following table summarizes our contractual
commitments as of December 31, 2014 and the effects caused by those commitments are expected to have on our liquidity and cash
flow in future periods:
Contractual Commitments | |
Total | | |
Less than 1
Total Year | | |
1-3 Years | | |
3-5 Years | | |
More than
5 Years | |
| |
(RMB in thousands) | |
Equipment Purchase Contract(i) | |
| 3,311 | | |
| 3,311 | | |
| - | | |
| - | | |
| - | |
Due to related parties | |
| | | |
| | | |
| | | |
| | | |
| | |
-Principal | |
| 120,000 | | |
| 120,000 | | |
| | | |
| | | |
| | |
-Interest(iii) | |
| 8,064 | | |
| 8,064 | | |
| | | |
| | | |
| | |
Bank loans(ii) | |
| | | |
| | | |
| | | |
| | | |
| | |
-Principal | |
| 10,000 | | |
| 3,350 | | |
| 6,650 | | |
| | | |
| | |
-Interest(iii) | |
| 827 | | |
| 461 | | |
| 366 | | |
| | | |
| - | |
Obligations under capital lease(iv) | |
| | | |
| | | |
| | | |
| | | |
| | |
-Carrying amount of lease obligation | |
| 8,562 | | |
| 8,259 | | |
| 303 | | |
| | | |
| | |
-Interest on unpaid obligation | |
| 299 | | |
| 296 | | |
| 3 | | |
| | | |
| | |
Operating leases(v) | |
| 442 | | |
| 442 | | |
| - | | |
| - | | |
| - | |
Total | |
| 151,505 | | |
| 144,183 | | |
| 7,322 | | |
| - | | |
| - | |
| (i) | The purchase of equipment will be financed by the sale of our ordinary shares or by bank borrowings
or by funds generated from business operations. |
| (ii) | We have a secured long-term loan of RMB10.0 million as for December 31, 2014. We also have long-term
loans for RMB10.0 million. Our obligations under our existing loans have been mainly met through the cash flow from our operations
and financing activities. In the past, cash flow from operations has been sufficient to meet payment obligations and/or we have
been able to extend our borrowings. In the event that our cash flows are insufficient to satisfy these obligations, we may consider
additional bank loans, issuing bonds, or other forms of financing to satisfy our capital requirements. December 31, 2014, our principle
of loans from related parties was RMB120 million and the interest was RMB6,145,400. |
| (iii) | The interest expenses are estimated based on the interest rate of borrowings adopted by the People’s
Bank of China on December 31, 2014 plus an estimated risk premium on borrowing. |
| (iv) | The Group has commitments under capital lease agreements as for a part of new third production
line and related equipment. The lease has terms of 3 years expiring by the end of December 2015. |
| (v) | The operating leases mainly relate to our rental of staff dorms and offices. The term of these
leases typically ranges from 1 year to two years, and are renewable subject to renegotiation of terms upon expiration. We intend
to finance these operating leases from our cash flows from operations. |
Off-Balance Sheet Arrangements and Contingent Liabilities
We do not have any off-balance sheet guarantees,
any outstanding derivative financial instruments, interest rate swap transactions or foreign currency forward contracts.
Inflation
According to the National Bureau of Statistics
of China, the change in the consumer price index in China was 2.0%, 2.6% and 2.6% in 2014, 2013 and 2012 respectively.
Recent Accounting Pronouncements
In
July 2013, the Financial Accounting Standards Board, or FASB, issued a new accounting standard which will require the presentation
of certain unrecognized tax benefits as reductions to deferred tax assets rather than as liabilities in the consolidated balance
sheets when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The new standard requires
adoption on a prospective basis in the first quarter of 2015; however, early adoption is permitted. We do not expect the
adoption will have a significant impact on our consolidated financial statements.
In February 2013, the Financial Accounting
Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2013-02, which requires entities to present
information about significant items reclassified out of accumulated other comprehensive income (loss) by component either on the
face of the statement where net income is presented or as a separate disclosure in the notes to the financial statements. This
ASU is effective for the Company in the first quarter of fiscal 2014. We do not expect the adoption will have a significant impact
on our consolidated financial statements
In July 2012, the FASB issued ASU 2012-02,
which amends how companies test for impairment of indefinite-lived intangible assets. The new guidance permits a company to assess
qualitative factors to determine whether it is more likely than not that the fair value of an indefinite-lived intangible asset
is less than its carrying amount as a basis for determining whether it is necessary to perform the annual impairment test. The
ASU is effective for the Company in the first quarter of fiscal 2014. We do not expect the adoption will have a significant impact
on our consolidated financial statements
Other pronouncements issued
by the FASB or other authoritative accounting standards group with future effective dates are either not applicable or not significant
to the consolidated financial statements of the Company.
Research and Development, Patents and Licenses
We rely on copyright, patent, trademark
and other intellectual property law, nondisclosure agreement and technical know-how to protect our intellectual property and proprietary
rights. We enter into confidentiality and licensing agreements with the relevant employees. Our senior employees and employees
who work in our research and development department and other technical departments have signed agreements acknowledging that we
own the rights to all technology, inventions, trade secrets, works of authorship, developments and other processes generated in
connection with their employment with us or their use of our resources or relating to our business or our property and that they
must assign any ownership rights that they may claim in those works to us. As most of our business is currently conducted in mainland
China, we have not taken any action outside mainland China to protect our intellectual property.
As of the date of this Annual Report, we
have received 21 patents from, and have 3 patent applications pending with the PRC authorities.
We currently sell our products in the PRC
with the registered trademark of “Fuwei Films”. Our ability to compete in our markets and to achieve future revenue
growth will depend, in significant part, on our ability to protect our proprietary technology and operate without infringing upon
the intellectual property rights of others. An infringement upon these rights may reduce or eliminate any competitive advantage
we have developed, causing us to lose sales or otherwise harm our business. We are not aware of any infringement or unauthorized
use of our intellectual property rights. We will take appropriate legal actions to protect our rights if there is any unauthorized
use or infringement of our rights in the future. To date, we have not been sued for infringement of intellectual property rights
by any third party.
Trend Information
Since the second half of 2011, the international
capacity of BOPET films surged especially in countries such as India and China which attributed to more supply than demand and
reduced prices in the market. We expect this trend to continue in 2015, which will result in fierce price competition. We expect
that in the next two to three years, the global BOPET production capacity will continue to increase while supply will continue
to surpass demand in the market.
In addition, aiming at the rapidly developed
thick films market (with applications in high value-added electronics, electrical, solar energy and other industries), giants including
Mitsubishi Plastics, Inc., SKC, Inc. and China Lucky Film Corporation invested in and built production lines in China, which
will bring challenges and fiercer competition to our thick film project.
Other than as disclosed elsewhere in this
Annual Report, we are not aware of any trends, uncertainties, demands, commitments or events that are reasonably likely to have
a material effect on our net sales, profitability, liquidity or capital resources, or that caused the disclosed financial information
to not necessarily be indicative of future operating results or financial conditions.
Item 15. Controls and Procedures
(a) Disclosure
Controls and Procedures.
Under the supervision and with the
participation of our management, including the principal executive officer and the principal accounting officer, we conducted
an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as of the end of the period covered by this report (the
“Evaluation Date”). Based on this evaluation, our principal executive officer and principal accounting officer
concluded as of the Evaluation Date that our disclosure controls and procedures were ineffective due to the deficiencies
described below in “Management’s annual report on internal control over financial reporting.” The material
information required to be included in our Securities and Exchange Commission (“SEC”) reports is accumulated and
communicated to management (including such officers) as appropriate to allow timely decisions regarding required disclosure
and recorded, processed, summarized and reported within the time periods specified in SEC rules and forms relating to us,
including our consolidated subsidiaries.
(b) Management’s annual report on
internal control over financial reporting.
Our management is responsible for establishing and maintaining
adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under
the supervision and with the participation of our management, including our principal executive officer and principal financial
officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting. In making its assessment
of the effectiveness of the Company’s internal control over financial reporting, management used the criteria issued by the
Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework. Based on our evaluation,
our principal executive officer and principal financial officer have concluded as of the Evaluation Date, our internal controls
over financial reporting were ineffective as of December 31, 2014 due to the material weakness described below.
The Public Company Accounting Oversight
Board defines a material weakness as a deficiency, or combination of deficiencies, in internal control over financial reporting
such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not
be prevented or detected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal
control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those
responsible for oversight of our financial reporting. A control deficiency exists when the design or operation of a control does
not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements
on a timely basis. A deficiency in design exists when:
• a control necessary to meet the
control objective is missing; or
• an existing control is not properly
designed such that, even if the control operates as designed, the control objective is not always met.
A deficiency in operation exists when a
properly designed control does not operate as designed, or when the person performing the control does not possess the necessary
authority or qualifications to perform the control effectively.
The material weaknesses identified result
from inadequate technical accounting staff with knowledge of and experience with US generally accepted accounting principles, pursuant
to which we prepare our consolidated financial statements, to support stand-alone external financial reporting under public company
or SEC requirements.
We are in the process of developing and
implementing a remediation plan to address the deficiencies in the areas of personnel with knowledge of and experience with US
generally accepted accounting principles. However, additional measures may be necessary, and the measures we expect to take to
improve our internal controls may not be sufficient to address the issues identified, to ensure that our internal controls are
effective or to ensure that such material weakness or other material weaknesses would not result in a material misstatement of
our annual or interim financial statements. In addition, other material weaknesses or significant deficiencies may be identified
in the future. If we are unable to correct deficiencies in internal controls in a timely manner, our ability to record, process,
summarize and report financial information accurately and within the time periods specified in the rules and forms of the SEC will
be adversely affected. This failure could negatively affect the market price and trading liquidity of our common stock, cause investors
to lose confidence in our reported financial information, subject us to civil and criminal investigations and penalties, and generally
materially and adversely impact our business and financial condition.
All internal control systems, no matter
how well designed, have inherent limitations. Therefore, even those systems determined to be effective can only provide reasonable
assurances with respect to financial statement preparation and presentation. In addition, any evaluation of effectiveness for future
periods is subject to the risk that controls may become inadequate because of changes in conditions in the future.
The Company’s independent auditor,
Kabani & Company, Inc., has audited the consolidated financial statements of the Company for the fiscal year ended December
31, 2014.
(c) Attestation
report of the registered public accounting firm.
This Annual Report on Form 20-F does not
include an attestation report of the Company’s registered public accounting firm regarding internal control over financial
reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant
to the rules of the Securities and Exchange Commission that permit the company to provide only management’s report in this
Annual Report.
(d) Changes
in internal control over financial reporting.
There were no changes in our internal control
over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the year ended December 31, 2014
that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. It
should be noted that while our management believes that our disclosure controls and procedures provide a reasonable level of assurance;
our management does not expect that our disclosure controls and procedures or internal financial controls will prevent all errors
or fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that
the objectives of the control system are met.
Part III
Item 19. Exhibits.
The following exhibits are filed
as part of this Annual Report:
No. |
|
Description |
|
|
|
1.2 |
|
Form of Amended Memorandum of Association of Fuwei Films (Holdings) Co., Ltd. (2) |
|
|
|
1.3 |
|
Articles of Association Fuwei Films (Holdings) Co., Ltd. (3) |
|
|
|
4.1 |
|
Form of Underwriting Agreement. (1) |
|
|
|
4.2 |
|
Loan Agreement between Bank of Communications and Fuwei Films (Shandong) Co., Ltd. dated January 15, 2007(3) |
|
|
|
4.3 |
|
Loan Agreement between Bank of Communications and Fuwei Films (Shandong) Co., Ltd. dated January 15, 2007(3) |
|
|
|
4.4 |
|
Asset Purchase Agreement between Fuwei Plastics and Shandong Weifang Auction Firm dated October 9, 2003 (2) |
|
|
|
4.5 |
|
Purchase Agreement between Beijing Baorui and Weifang Jing Cheng Auction Co., Ltd. dated December 17, 2004 (2) |
|
|
|
4.6 |
|
Service Agreement between Fuwei Films (Holdings) Co., Ltd. and Xiaoan He(2) |
|
|
|
4.7 |
|
Employment Agreement between Fuwei Films (Holdings) Co., Ltd. and Xiaoan He (2) |
|
|
|
4.8 |
|
Employment Agreement between Fuwei Films (Holdings) Co., Ltd. and Xiaoming Wang (2) |
|
|
|
4.9 |
|
Employment Agreement between Fuwei Films (Holdings) Co., Ltd. and Xiuyong Zhang (2) |
|
|
|
4.10 |
|
Equipment Contract between Fuwei Films (Holdings) Co., Ltd. and Brückner dated as of June 2005(2) |
|
|
|
4.11 |
|
Credit Letter from Communication Bank of China dated May 8, 2006 (2) |
|
|
|
4.12 |
|
Contract between Fuwei Films (Shandong) Co., Ltd. and Lindauer Dornier GmbH, dated January 20, 2007(4) |
|
|
|
4.13 |
|
Amendment to the Contract of January 20, 2007 between Fuwei Films (Shandong) Co., Ltd. and Lindauer Dornier GmbH, dated February 2, 2007 (4) |
|
|
|
4.14 |
|
Loan Contract between Fuwei Films (Shandong) Co., Ltd. and Bank of Communications, dated July 16, 2008 (4) |
|
|
|
4.15 |
|
Loan Contract between Fuwei Films (Shandong) Co., Ltd. and Weifang City Commercial Bank, dated July 18, 2008(4) |
|
|
|
4.16 |
|
Loan Contract between Fuwei Films (Shandong) Co., Ltd. and Weifang City Commercial Bank, dated December 2, 2008 (4) |
4.17 |
|
Loan Contract between Fuwei Films (Shandong) Co., Ltd. and Weifang City Commercial Bank, dated January 13, 2009 (4) |
|
|
|
4.18 |
|
Loan Contract between Fuwei Films (Shandong) Co., Ltd. and Weifang City Commercial Bank, dated January 16, 2009 (4) |
|
|
|
4.19 |
|
Loan Contract between Fuwei Films (Shandong) Co., Ltd. and Bank of Communications, dated June 9, 2009 (5) |
|
|
|
4.20 |
|
Loan Contract between Fuwei Films (Shandong) Co., Ltd. and Bank of Communications, dated June 9, 2009 (5) |
|
|
|
4.21 |
|
Loan Contract between Fuwei Films (Shandong) Co., Ltd. and the Weifang Dongfang State-owned Assets Management Co., Ltd., dated November 20, 2009 (5) |
|
|
|
4.22 |
|
Loan Contract between Fuwei Films (Shandong) Co., Ltd. and Bank of Weifang, dated January 13, 2010 (5) |
|
|
|
4.23 |
|
Loan Contract between Fuwei Films (Shandong) Co., Ltd. and Bank of Communications, dated June 7, 2010 (6) |
|
|
|
4.24 |
|
Loan Contract between Fuwei Films (Shandong) Co., Ltd. and Bank of Communications, dated June 7, 2010 (6) |
|
|
|
4.25 |
|
Loan Contract between Fuwei Films (Shandong) Co., Ltd. and Bank of Communications, dated June 7, 2010 (6) |
|
|
|
4.26 |
|
Contract between Fuwei Films (Shandong) Co., Ltd. and Lindauer Dornier GmbH, dated March 30, 2011(7) |
|
|
|
4.27 |
|
Loan Contract between Fuwei Films (Shandong) Co., Ltd. and Bank of Communications, dated May 25, 2011 (8) |
|
|
|
4.28 |
|
Loan Contract between Fuwei Films (Shandong) Co., Ltd. and Bank of Communications, dated May 25, 2011 (8) |
|
|
|
4.29 |
|
Loan Contract between Fuwei Films (Shandong) Co., Ltd. and Bank of Communications, dated May 25, 2011(8) |
|
|
|
4.30 |
|
Loan Contract between Fuwei Films (Shandong) Co., Ltd. and Bank of Communications, dated May 30, 2011 (8) |
|
|
|
4.31 |
|
Loan Contract between Fuwei Films (Shandong) Co., Ltd. and Bank of Communications, dated April 26, 2011 (8) |
|
|
|
4.32 |
|
Amendment No. 1 to the Contract between Fuwei Films (Shandong) Co., Ltd. and Lindauer Dornier GmbH, dated July 22, 2011 (9) |
|
|
|
4.33 |
|
Entrusted Loan Contract between Fuwei Films (Shandong) Co., Ltd. and Weifang High-Tech Investment Co., Ltd. dated October 28, 2011 (10) |
|
|
|
4.34 |
|
Loan Contract between Fuwei Films (Shandong) Co. Ltd. and Bank of Communications Co., Ltd. dated April 18, 2013. (11) |
|
|
|
4.35 |
|
Loan Contract between Fuwei Films (Shandong) Co. Ltd. and Bank of Communications Co., Ltd. dated April 19, 2013. (11) |
|
|
|
4.36 |
|
Loan Contract between Fuwei Films (Shandong) Co. Ltd. and Bank of Communications Co., Ltd. dated April 25, 2013.(11) |
|
|
|
4.37 |
|
Loan Contract between Fuwei Films (Shandong) Co. Ltd. and Bank of Communications Co., Ltd. dated May 2, 2013. (11) |
4.38 |
|
Loan Contract between Fuwei Films (Shandong) Co. Ltd. and Bank of Communications Co., Ltd. dated April 23, 2013. (11) |
|
|
|
4.39 |
|
Letter of Commitment between Fuwei Films (Shandong) Co. Ltd. and Shandong SNTON Optical Materials Technology Co., Ltd. dated April 1, 2014. (12) |
|
|
|
4.40 |
|
Use of Capital Agreement between Fuwei Films (Shandong) Co. Ltd. and Shandong SNTON Optical Materials Technology Co., Ltd. dated April 2, 2014. (12) |
|
|
|
4.41 |
|
Use of Capital Agreement between Fuwei Films (Shandong) Co. Ltd. and Shandong SNTON Group Co., Ltd. dated May 20, 2014. (12) |
|
|
|
8.1 |
|
List of the Company’s significant subsidiaries, their jurisdiction of incorporation and the names under which they operate business, if different from their name. (3) |
|
|
|
11.1 |
|
Code of Ethics for CEO and Senior Financial Officers. (3) |
|
|
|
12.1 |
|
Certification of Chief Executive Officer required by Section 302 of the Sarbanes-Oxley Act of 2002. * |
|
|
|
12.2 |
|
Certification of Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of 2002. * |
|
|
|
13.1 |
|
Certification of Chief Executive Officer and Chief Financial Officer required by Section 906 of the Sarbanes-Oxley Act of 2002. * |
|
(1) |
Filed with the Company’s amendment to Registration Statement on Form F-1/A filed with the SEC on December 12, 2006. |
|
|
|
|
(2) |
Filed with the Company’s Registration Statement on Form F-1 filed with the SEC on November 24, 2006. |
|
|
|
|
(3) |
Filed with the Company’s Annual Report on Form 20-F for the year ended December 31, 2006 filed with the SEC on April 2, 2007. |
|
|
|
|
(4) |
Filed with the Company’s Annual Report on Form 20-F for the year December 31, 2008 filed with the SEC on March 30, 2009. |
|
|
|
|
(5) |
Filed with the Company’s Annual Report on Form 20-F for the year ended December 31, 2009 filed with the SEC on April 21, 2010. |
|
|
|
|
(6) |
Filed with the Company’s Quarterly Report on Form 6-K for the quarter ended June 30, 2010 filed with the SEC on August 16, 2010. |
|
|
|
|
(7) |
Filed with the Company’s Quarterly Report on Form 6-K for the quarter ended March 31, 2011 filed with the SEC on May 10, 2011. |
|
|
|
|
(8) |
Filed with the Company’s Quarterly Report on Form 6-K for the quarter ended June 30, 2011 filed with the SEC on August 10, 2011. |
|
|
|
|
(9) |
Filed with the Amendment No. 2 to the Company’s Annual Report on Form 20-F/A for the year ended December 31, 2011 filed with the SEC on September 4, 2012. Certain portions of this Exhibit were omitted based upon a request for confidential treatment and the omitted portions have been separately filed with the Securities and Exchange Commission. |
|
|
|
|
(10) |
Filed with the Company’s Annual Report on Form 20-F for the year December 31, 2011 filed with the SEC on April 12, 2012. |
|
|
|
|
(11) |
Filed with the Company’s Quarterly Report on Form 6-K for the quarter ended June 30, 2013 filed with the SEC on August 22, 2013. |
|
|
|
|
(12) |
Filed with the Company’s Quarterly Report on Form 6-K for the quarter ended June 30, 2014 filed with the SEC on August 21, 2014. |
|
|
|
|
* |
Filed herewith. |
SIGNATURES
The registrant hereby certifies that it meets all of the requirements
for filing Form 20-F/A and has duly caused and authorized the undersigned to sign this Annual Report on its behalf.
|
Fuwei Films (Holdings) Co., Ltd. |
|
|
|
|
|
|
By: |
/s/ Zengyong Wang |
|
|
|
Name: Zengyong Wang |
|
|
|
Title: Chairman, Chief Executive Officer |
|
|
|
|
|
|
By: |
/s/ Xiuyong Zhang |
|
|
|
Name: Xiuyong Zhang |
|
|
|
Title: Chief Financial Officer |
|
Dated: July 10, 2015
EXHIBIT 12.1
CERTIFICATION BY PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO RULES 13a-14 and 15d-14
OF THE SECURITIES EXCHANGE ACT OF 1934
I, Zengyong Wang, certify that:
1. |
I have reviewed this annual report on Form 20-F/A for the fiscal year ended December 31, 2014 of Fuwei Films (Holdings) Co., Ltd. (the “Registrant”); |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial
statements and other financial information included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this
report; |
4. |
The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: |
(a) |
designed such disclosure controls and procedures , or caused such disclosure control and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) |
evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) |
disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the period covered by the report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
5. |
The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent function): |
(a) |
all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial data and have identified for the Registrant’s auditors any material weaknesses in internal controls information; and |
(b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal controls over financial reporting. |
Date: July 10, 2015
/s/ Zengyong Wang |
|
Name: Zengyong Wang |
|
Title: Chief Executive Officer |
|
EXHIBIT 12.2
CERTIFICATION BY PRINCIPAL FINANCIAL OFFICER
PURSUANT TO RULES 13a-14 and 15d-14
OF THE SECURITIES EXCHANGE ACT OF 1934
I, Xiuyong Zhang, certify that:
1. |
I have reviewed this annual report on Form 20-F/A for the fiscal year ended December 31, 2014 of Fuwei Films (Holdings) Co., Ltd. (the “Registrant”); |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; |
4. |
The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: |
(a) |
designed such disclosure controls and procedures , or caused such disclosure control and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) |
evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) |
disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the period covered by the report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
5. |
The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent function): |
(a) |
all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial data and have identified for the Registrant’s auditors any material weaknesses in internal controls information; and |
(b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal controls over financial reporting. |
Date: July 10, 2015
/s/ Xiuyong Zhang |
|
Name: Xiuyong Zhang |
|
Title: Chief Financial Officer |
|
EXHIBIT 13.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTIONS
1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of
Fuwei Films (Holdings) Co., Ltd. (the “Company”) on Form 20-F/A for the year ended December 31, 2014, as filed with the
Securities and Exchange Commission on the date hereof (the “Report”), we, Zengyong Wang and Xiuyong Zhang, the Chief
Executive Officer and Chief Financial Officer of the Company, respectively certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that, to the best of our knowledge:
(1) |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) |
The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Pursuant to the rules and regulations of
the Securities and Exchange Commission, this certification is being furnished and not deemed filed.
July 10, 2015
/s/ Zengyong Wang |
|
Zengyong Wang |
|
Chief Executive Officer |
|
/s/ Xiuyong Zhang |
|
Xiuyong Zhang |
|
Chief Financial Officer |
|
A signed original of this written statement
required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and
Exchange Commission or its staff upon request.
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