Upward Revision of Second Quarter of 2009 Revenue Guidance to
RMB400 Million to RMB420 Million, Representing a Year-over-Year
Increase of 114% to 125% Filing of Annual Report on Form 20-F for
the Year Ended December 31, 2008 SHENZHEN, China, June 30
/PRNewswire-Asia-FirstCall/ -- China GrenTech Corporation Limited
("China GrenTech" or the "Company") (NASDAQ:GRRF), a leading
China-based radio frequency ("RF") technology and product developer
and a leading wireless coverage products and services provider,
today announced that it has filed its annual report on Form 20-F
for the year ended December 31, 2008 with the U.S. Securities and
Exchange Commission and has posted this document on its investor
relations website at
http://www.grentech.com.cn/en/Annual_Reports.asp . China GrenTech
will provide a hard copy of its annual report on Form 20-F for the
year ended December 31, 2008, which contains its audited financial
statements, free of charge to holders of its ordinary shares and
American depositary shares ("ADSs") upon request. Requests should
be directed to Investor Relations at China GrenTech Corporation
Limited, 15th Floor, Block A, Guoren Building, Keji Central 3rd
Road, Hi-Tech Park, Nanshan District, Shenzhen 518057, People's
Republic of China (attention: Kent Lo), or by email to .
Reassessment of Goodwill Impairment for 2008 The Company also
announced today that it is making certain adjustments to its
consolidated statements of operations for the quarter and year
ended December 31, 2008 and consolidated balance sheet as of
December 31, 2008, which were previously announced by the Company
on April 14, 2009, as well as to its consolidated balance sheet as
of March 31, 2009, which was previously announced by the Company on
May 14, 2009. The foregoing announced financial results were
unaudited. Following the publication of those results, China
GrenTech reassessed the valuation of its goodwill associated with
the acquisition of Shenzhen Kaige Communication Technology Co.,
Ltd. in 2007 in the course of the completion of its audited
consolidated financial statements for the year ended December 31,
2008 and determined to recognize an impairment of goodwill of
RMB27.6 million (US$4.0 million). This non-cash impairment charge
resulted from the Company's determination that the relatively low
market value of the Company's ADSs at the end of 2008, resulting
from the economic slowdown in China and globally and other factors,
was other than temporary and, accordingly, an impairment charge had
become necessary under Statement of Financial Accounting Standards
No. 142. The effect of the impairment charge on China GrenTech's
fiscal year 2008 consolidated statement of operations is to
increase operating loss from RMB102.5 million (US$15.0 million) to
RMB130.1 million (US$19.1 million), increase net loss from RMB118.8
million (US$17.4 million) to RMB146.4 million (US$21.5 million) and
increase diluted loss per ADS from RMB4.87 (US$0.71) to RMB6.00
(US$0.88). The effect of the impairment charge on China GrenTech's
fourth quarter 2008 consolidated statement of operations is to
increase operating loss from RMB63.9 million (US$9.4 million) to
RMB91.5 million (US$13.4 million), increase net loss from RMB51.8
million (US$7.6 million) to RMB79.4 million (US$11.6 million) and
increase diluted loss per ADS from RMB2.14 (US$0.31) to RMB3.28
(US$0.48). Total assets and total shareholders' equity in the
Company's consolidated balance sheet as of December 31, 2008 and as
of March 31, 2009 were correspondingly reduced by the amount of
goodwill impairment. As a result of the foregoing, investors are
cautioned not to rely on the financial information included in the
Company's press release dated April 14, 2009 or on the consolidated
balance sheet as of March 31, 2009 contained in the Company's press
release dated May 14, 2009. The foregoing adjustments with respect
to 2008 are reflected in the Company's audited consolidated
financial statements included in its annual report on Form 20-F for
the year ended December 31, 2008. The effect of the reassessment is
also set out as follows: Company Statement of Operations Year Ended
December 31, 2008 (RMB and US$ expressed in thousands, except share
data) As Published Adjustment As Adjusted RMB US$ RMB US$ RMB US$
Impairment of goodwill -- -- (27,589) (4,044) (27,589) (4,044)
Total operating expenses (335,784) (49,216) (27,589) (4,044)
(363,373) (53,260) Operating loss (102,494) (15,022) (27,589)
(4,044) (130,083) (19,066) Net loss (118,778) (17,410) (27,589)
(4,044) (146,367) (21,454) Net loss available to ordinary
shareholders (118,778) (17,410) (27,589) (4,044) (146,367) (21,454)
Net loss per share: - Basic (0.19) (0.03) (0.05) (0.01) (0.24)
(0.04) - Diluted (0.19) (0.03) (0.05) (0.01) (0.24) (0.04) Net loss
per ADS: - Basic (4.87) (0.71) (1.13) (0.17) (6.00) (0.88) -
Diluted (4.87) (0.71) (1.13) (0.17) (6.00) (0.88) Company Statement
of Operations Fourth Quarter Ended December 31, 2008 (RMB and US$
expressed in thousands, except share data) As Published Adjustment
As Adjusted RMB US$ RMB US$ RMB US$ Impairment of goodwill -- --
(27,589) (4,044) (27,589) (4,044) Total operating Expenses
(150,300) (22,030) (27,589) (4,044) (177,889) (26,074) Operating
loss (63,947) (9,373) (27,589) (4,044) (91,536) (13,417) Net loss
(51,775) (7,588) (27,589) (4,044) (79,364) (11,632) Net loss
available to ordinary shareholders (51,775) (7,588) (27,589)
(4,044) (79,364) (11,632) Net loss per share: - Basic (0.09) (0.01)
(0.04) (0.01) (0.13) (0.02) - Diluted (0.09) (0.01) (0.04) (0.01)
(0.13) (0.02) Net loss per ADS: - Basic (2.14) (0.31) (1.14) (0.17)
(3.28) (0.48) - Diluted (2.14) (0.31) (1.14) (0.17) (3.28) (0.48)
It should be noted that the above-referenced goodwill impairment
had no effect on China GrenTech's revenues or cost of revenues or
other operating expenses in its consolidated statements of
operations or on its cash flows. Upward Revision of Second Quarter
of 2009 Revenue Guidance As sales orders continue to exceed the
Company's internal estimation due to increasing investment in
network expansion by the telecommunication operators, management
has revised its revenue guidance for the second quarter of 2009
from the range of RMB340 million to RMB380 million, representing a
year-over-year increase of 83% to 104%, to the range of RMB400
million to RMB420 million, representing a year-over-year increase
of 114% to 125%, to better reflect the current business prospects
and performance. Commenting on these announcements, Mr. Yingjie
Gao, Chairman and Chief Executive Officer, said, "As we were
working with our independent auditors to complete our fiscal year
2008 audit, we reassessed our goodwill and determined that this
non-cash impairment charge was appropriate. This is a one-time
adjustment, and it will not impact the Company's 2009 business and
operational performance and future profitability. We believe that
the Company's fundamentals remain strong as we continue to leverage
on our competitive position to capture the ongoing large-scale
wireless network construction opportunities and enhance our
operational efficiency to optimize our financial performance. The
upward revision of our second quarter 2009 revenue guidance is a
strong testament to the significant growth prospects of our
industry as whole and of our Company in particular. Again, we
reiterate our strong commitment to increasing shareholder value and
are confident in the long-terms prospects of our industry." About
China GrenTech GrenTech is a leading developer of radio frequency
("RF") technology in China and a leading provider of wireless
coverage products and services in China. The Company uses RF
technology to design and manufacture wireless coverage products,
which enable telecommunication operators to expand the reach of
their wireless communication networks to indoor and outdoor areas,
such as buildings, highways, railways, tunnels and remote regions.
GrenTech's wireless coverage services include design, installation
and project warranty services. The Company also tailors the design
and configuration of its wireless coverage products to the specific
requirements of its customers. Based on its in-house RF technology
platform, the Company also develops and produces base station RF
parts and components sold to base station manufacturers. GrenTech
is a qualified supplier of RF parts and components to the global
and domestic major base station manufacturers including Huawei
Technologies and ZTE Corporation. For more information, please
visit http://www.grentech.com.cn/ . Forward-Looking Statements
Certain statements contained in this announcement may be viewed as
"forward-looking statements" within the meaning of Section 27A of
the U.S. Securities Act of 1933, as amended, and Section 21E of the
U.S. Securities Exchange Act of 1934, as amended. Such
forward-looking statements involve known and unknown risks,
uncertainties and other factors, which may cause the actual
performance, financial condition or results of operations of China
GrenTech to be materially different from any future performance,
financial condition or results of operations implied by such
forward-looking statements. The accuracy of these statements may be
impacted by a number of business risks and uncertainties that could
cause actual results to differ materially from those projected or
anticipated, including risks related to: the risk that the
Company's internal controls over financial reporting may not be
sufficient to ensure that the Company's financial results are
reported accurately and in a timely manner; the risk that the
Company may need to make other adjustments and restatements to
previously announced financial results for whatever reason; the
risk that the telecommunication operators will not continue their
investment in wireless coverage expansion at current levels or at
all and that the Company might not benefit from such investment due
to competition in the industry or other factors; and other risks
outlined in China GrenTech's filings with the SEC. China GrenTech
undertakes no ongoing obligation, other than that imposed by law,
to update these statements. For more information, please contact:
Investor Contact: Kent Lo, Investor Relations Manager China
GrenTech Corp Ltd. Tel: +86-755-2650-3007 Email: Investor Relations
(HK): Ruby Yim Taylor Rafferty Tel: +852-3196-3712 Email: Investor
Relations (US): Delia Cannan Taylor Rafferty Tel: +1-212-889-4350
Email: Media Contact: Jason Marshall Taylor Rafferty Tel:
+1-212-889-4350 Email: DATASOURCE: China GrenTech Corporation
Limited CONTACT: Investor Contact: Kent Lo, Investor Relations
Manager of China GrenTech Corp Ltd., +86-755-2650-3007, or ; Or
Investor Relations (US): Delia Cannan of Taylor Rafferty,
+1-212-889-4350, or ; Or Investor Relations (HK): Ruby Yim of
Taylor Rafferty, +852-3196-3712, or ; Or Media Contact: Jason
Marshall of Taylor Rafferty, +1-212-889-4350, or Web site:
http://www.grentech.com.cn/
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