BEIJING, Dec. 20, 2018 /PRNewswire/ -- China TechFaith
Wireless Communication Technology Limited (NASDAQ: CNTF)
("TechFaith" or the "Company") today provided a business update,
with unaudited condensed financial results for the first half
period ended June 30, 2018.
For the first half of 2018, TechFaith reported total net
revenues of US$13.6 million compared
to US$23.6 million in the same period
of last year. Gross profit for the first half of 2018 was
US$2.4 million compared to
US$3.9 million in the same period of
last year. Gross margin for the first half of 2018 was 17.3%
compared to 16.4% in the same period of last year.
Operating expenses for the first half of 2018 were US$47.7 million compared to US$9.2 million in the same period of last year.
Operating expenses for the first half of 2018 include bad debt
provisions of US$37.9 million,
comprised of approximately US$28.7
million related to a short-term loan that an unrelated third
party defaulted on, and approximately US$9.2
million for doubtful accounts receivable and other
receivables. Although the Company was able to collect, $20.7 million of the above mentioned short-term
loan through the reporting date, the Company determined that the
provision was necessary due to the default and the current credit
condition of the counterparty. Operating expenses for the first
half of 2018 also include impairment of long-lived assets of
US$5.4 million, which is related to
the write down in carrying value of real estate assets held by the
Company under the continued operations, for the properties and
constructions in progress in Shenyang,
China.
On July 12, 2018, the Company
announced an agreement to sell its 100% ownership in Charm Faith
Limited, a wholly-owned subsidiary of TechFaith. The Company has
transferred the 100% ownership to the buyer, and has already
received proceeds of approximately US$70
million (or RMB468 million),
as of November 30, 2018. The
purchase agreement provides a full consideration of approximately
US$104 million (or RMB710 million), which is subject to certain
price adjustment mechanisms and an installment payment schedule.
After the price adjustments, the final settlement price is expected
to be approximately US$90 million (or
RMB616 million), including a cash
consideration of US$78 million (or
RMB536 million) and assumption of
debt of about US$11.7 million (or
RMB80 million). As a result of the
lower transaction valuation, the Company wrote down the carrying
value of the assets held for sale to fair value less any cost to
sell as of June 30, 2018, and
recognized an impairment loss of US$62.2
million under net loss from discontinued operations for the
first half period ended on June 30,
2018.
Reflecting the adverse impact of the above noted charges,
provisions and write downs, net loss attributed to TechFaith for
the first half of 2018 was US$109.5
million, or US$10.3 per basic
and diluted weighted average outstanding ADS, compared to net loss
of US$2.6 million, or US$0.24 per basic and diluted weighted average
outstanding ADS, in the same period of last year.
Miss Ouyang Yuping, TechFaith's
Chief Financial Officer, said, "There has been a further weakening
of China's domestic property
market and valuations due macro-economic weakness, a tighter
domestic credit market and overall heightened
caution. Transactions have been challenged as buyer situations
have been negatively impacted and counterparties move to shore up
their financial resources under a more conservative financing
environment. We are seeing softness in our mobile solutions
due to the current trade tensions and tariffs. We are also seeing
uncertainty and lower visibility for our real estate rental
business and in additional financing from local banks after we
disposed of our major real estate projects. Understanding we cannot
control the broader environment, we remain focused on operational
efficiencies, further lowering costs where possible and working to
improve gross margin on a lower revenue base. We have also
taken steps to consolidate our balance sheet, including taking
provisions for doubtful accounts and bad debt as required under
standard accounting practices."
Mr. Deyou Dong, Chairman and
Chief Executive Officer of TechFaith, said, "The positive momentum
that was starting to build in our business earlier in the year
turned into headwinds in both our mobile solutions and real estate
areas. We had expected to see some improvement on the mobile
solutions area but the market has further weakened following
ongoing trade tension and tariffs. The situation is equally
challenging in the real estate area where valuations and demand
from buyers have been negatively impacted due to more restrictive
lending policies and greater uncertainty in the market. As
such, we are focused on further rationalizing our cost structure,
improving profitability on a lower revenue base, reducing asset
risk on our balance sheet and extracting value from our
portfolio. We have navigated many challenging market cycles
over the Company's history and are applying that experience as we
work to emerge in a stronger position."
About TechFaith
TechFaith (NASDAQ: CNTF) is a developer, owner and operator of
commercial real estate properties across China as well as a China-based mobile solutions provider for the
global mobile handsets market. TechFaith continues to maintain a
team of professional engineers focused on the development of
ruggedized smart devices for both its consumer and enterprise
segments, although it started investing in the construction of
buildings and facilities in 2009 as part of its growth and business
diversification strategy, gradually shifting away from its
traditional focus on the mobile solutions and handset markets. The
Company currently focuses on developing office space that can serve
as anchor bases in areas with developing economies, as it meets the
needs of both established businesses and innovative start-up
companies in China. For more information, please visit
www.techfaithwireless.com.
Safe Harbor Statement
This announcement contains forward-looking statements. These
statements are made under the "safe harbor" provisions of the U.S.
Private Securities Litigation Reform Act of 1995. These
forward-looking statements can be identified by terminology such as
"will," "expects," "anticipates," "future," "intends," "plans,"
"believes," "estimates," "confident," "outlook" and similar
statements. Among other things, the business outlook and
strategic and operational plans of TechFaith and management
quotations contain forward-looking statements. TechFaith may also
make written or oral forward-looking statements in its periodic
reports to the U.S. Securities and Exchange Commission on Forms
20-F and 6-K, among others, and in its annual report to
shareholders, in press releases and other written materials and in
oral statements made by its officers, directors or employees to
third parties. Statements that are not historical facts, including
statements about TechFaith's beliefs and expectations, are
forward-looking statements. Forward-looking statements involve
inherent risks and uncertainties. A number of important factors
could cause actual results to differ materially from those
contained in any forward-looking statement. Potential risks and
uncertainties include, but are not limited to, those risks outlined
in TechFaith's filings with the U.S. Securities and Exchange
Commission, including its annual report on Form 20-F. TechFaith
does not undertake any obligation to update any forward-looking
statement, except as required under applicable law.
CHINA TECHFAITH
WIRELESS COMMUNICATION TECHNOLOGY LIMITED
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)
|
(In Thousands of
U.S. Dollars, except share and per share/ADS data)
|
|
|
|
|
|
|
Six Months
Ended
|
|
June
30
|
|
|
2017
|
2018
|
|
|
|
|
Revenues:
|
|
|
|
Mobile phone
business
|
|
|
|
Third
parties
|
|
$23,249
|
$13,602
|
Related
party
|
|
190
|
-
|
Real
estate
|
|
165
|
-
|
Total net
revenues
|
|
$23,604
|
$13,602
|
|
|
|
|
Cost of
revenues:
|
|
|
|
Mobile phone
business
|
|
|
|
Third
parties
|
|
$19,478
|
$11,250
|
Related
party
|
|
149
|
-
|
Real
estate
|
|
97
|
-
|
Total cost of
revenues
|
|
$19,724
|
$11,250
|
|
|
|
|
Gross
Profit
|
|
$3,880
|
$2,352
|
|
|
|
|
Operating
expenses:
|
|
|
|
General and
administrative (including bad
debt expenses of $1,388 and $37,886 for six
months ended June 30, 2017 and June 30,
2018, respectively)
|
|
$3,180
|
$39,511
|
Research and
development
|
|
3,665
|
1,961
|
Selling and
marketing
|
|
649
|
790
|
Impairment of
long-lived assets
|
|
1,750
|
5,422
|
Total operating
expenses
|
|
$9,244
|
$47,684
|
|
|
|
|
Government subsidy
income
|
|
-
|
94
|
|
|
|
|
Loss from
operations
|
|
$(5,364)
|
$(45,238)
|
|
|
|
|
Interest
expense
|
|
(191)
|
(247)
|
Interest
income
|
|
23
|
2
|
Other expenses,
net
|
|
(16)
|
-
|
Change in fair value
of put option
|
|
(1,800)
|
(420)
|
Loss before income
taxes
|
|
$(7,348)
|
$(45,903)
|
Income tax
expenses
|
|
-
|
-
|
Net loss from
continuing operations
|
|
$(7,348)
|
$(45,903)
|
|
|
|
|
Net loss from
discontinued operations
|
|
$(39)
|
$(64,819)
|
|
|
|
|
Net income from operations disposed
|
|
$3,837
|
-
|
|
|
|
|
Net loss
|
|
$(3,550)
|
$(110,722)
|
Less: net loss
attributable to the
noncontrolling interest
|
|
(963)
|
(1,193)
|
Net loss attributable
to TechFaith
|
|
$(2,587)
|
$(109,529)
|
|
|
|
|
Net loss per share
attributable to China
Techfaith Wireless Communication
Technology Limited-Basic and Diluted:
|
|
|
|
Continuing
operations
|
|
$(0.01)
|
$(0.06)
|
Discontinued
operations
|
|
$0.00
|
$(0.08)
|
|
|
|
|
Net loss per share
attributable to China
Techfaith Wireless Communication
Technology Limited-Basic and Diluted
|
|
$(0.01)
|
$(0.14)
|
|
|
|
|
Net loss per ADS
attributable to China
Techfaith Wireless Communication
Technology Limited-Basic and Diluted:
|
|
|
|
Continuing
operations
|
|
$(0.60)
|
$(4.22)
|
Discontinued
operations
|
|
$0.36
|
$(6.12)
|
|
|
|
|
Net loss per ADS
attributable to China
Techfaith Wireless Communication
Technology Limited-Basic and Diluted
|
|
$(0.24)
|
$(10.34)
|
|
|
|
|
Net loss
|
|
$(3,550)
|
$(110,722)
|
Other comprehensive
income (loss), net of tax
|
|
|
|
Foreign currency
translation adjustment
|
|
3,827
|
(3,019)
|
Comprehensive (loss)
income
|
|
277
|
(113,741)
|
|
|
|
|
Less: Comprehensive
loss attributable to
noncontrolling interest
|
|
(1,527)
|
(1,376)
|
Comprehensive (loss)
income attributable to
TechFaith
|
|
$1,804
|
$(112,365)
|
|
|
|
|
Weighted average
shares
outstanding
|
|
|
|
Basic
|
|
794,003,193
|
794,003,193
|
Diluted
|
|
794,003,193
|
794,003,193
|
CHINA TECHFAITH
WIRELESS COMMUNICATION TECHNOLOGY LIMITED
|
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(In Thousands of
U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2017
|
|
June 30,
2018
|
|
|
|
|
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$667
|
|
$1,778
|
Accounts receivable,
net of allowances of
$3,649 and $5,505 as of December 31,
2017 and June 30, 2018, respectively
|
|
8,006
|
|
7,497
|
Accounts receivable
due from a related
party, net of allowances of $nil and $1,601
as of December 31, 2017 and June 30,
2018, respectively
|
|
1,601
|
|
-
|
|
|
|
|
|
Amount due from a
related party
|
|
1,104
|
|
724
|
|
|
|
|
|
Inventories,
net
|
|
212
|
|
-
|
Prepaid expenses and
other current
assets, net of allowances of $1,086 and
$6,536 as of December 31, 2017 and
June 30, 2018, respectively
|
|
24,024
|
|
17,268
|
Current receivable -
real estate disposition
|
|
35,983
|
|
36,497
|
Loan receivables, net
of allowances of $nil
and $27,585 as of December 31, 2017
and June 30, 2018, respectively
|
|
53,794
|
|
20,663
|
|
|
|
|
|
Current assets held
for sale
|
|
1,762
|
|
693
|
Total current
assets
|
|
$127,153
|
|
$85,120
|
|
|
|
|
|
Property, plant and
equipment, net of
impairment of $nil and $1,334 as of
December 31, 2017 and June 30, 2018,
respectively
|
|
$13,209
|
|
$16,392
|
Construction in
progress, net of
impairment of $nil and $3,581 as of
December 31, 2017 and June 30, 2018,
respectively
|
|
23,882
|
|
19,901
|
Land use rights, net
of impairment of $nil
and $302 as of December 31, 2017 and
June 30, 2018, respectively
|
|
2,042
|
|
1,678
|
Acquired intangible
assets, net
|
|
983
|
|
432
|
|
|
|
|
|
Other non-current
assets
|
|
7,030
|
|
6,913
|
Non-current
receivable - real estate
disposition
|
|
30,739
|
|
30,225
|
Other long-term
receivables and prepaid
expenses
|
|
1,933
|
|
1,426
|
|
|
|
|
|
Other assets held for
sale
|
|
142,496
|
|
78,098
|
Total
assets
|
|
$349,467
|
|
$240,185
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
1,826
|
|
2,091
|
Short-term
loans
|
|
3,809
|
|
11,269
|
Accrued expenses and
other current
liabilities
|
|
20,250
|
|
20,771
|
Advance from
customers
|
|
8,230
|
|
8,485
|
Deferred
revenue
|
|
2,520
|
|
1,484
|
Income tax
payable
|
|
952
|
|
937
|
Put option
liability
|
|
8,970
|
|
9,390
|
|
|
|
|
|
Liabilities held for
sale
|
|
1,577
|
|
3,046
|
Total current
liabilities
|
|
$48,134
|
|
$57,473
|
|
|
|
|
|
Long-term
loans
|
|
290
|
|
290
|
|
|
|
|
|
Non-current
liabilities held for sale
|
|
12,373
|
|
11,183
|
|
|
|
|
|
Total
liabilities
|
|
$60,797
|
|
$68,946
|
|
|
|
|
|
Equity
|
|
|
|
|
Ordinary shares
($0.00002 par value;
50,000,000,000,000 shares authorized;
794,003,193 and 794,003,193 shares
issued and outstanding as of December
31, 2017 and June 30, 2018, respectively)
|
|
$16
|
|
$16
|
Additional paid-in
capital
|
|
144,836
|
|
143,453
|
Accumulated other
comprehensive income
|
|
31,120
|
|
28,284
|
Statutory
reserves
|
|
21,567
|
|
21,567
|
Retained earnings
(accumulated deficit)
|
|
67,136
|
|
(42,393)
|
Total Techfaith
shareholders' equity
|
|
$264,675
|
|
$150,927
|
Noncontrolling
interest
|
|
$23,995
|
|
$20,312
|
Total
equity
|
|
$288,670
|
|
$171,239
|
Total liabilities
and equity
|
|
$349,467
|
|
$240,185
|
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SOURCE China TechFaith Wireless Communication Technology
Limited