UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For March 31, 2015
Commission File No. 001-33176
Fuwei Films
(Holdings) Co., Ltd.
No. 387 Dongming Road
Weifang Shandong
People’s Republic of China, Postal
Code: 261061
(ADDRESS OF PRINCIPAL
EXECUTIVE OFFICES)
Indicate by check mark whether the registrant
files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F x
Form 40-F ¨
Indicate by check mark if the registrant
is submitting the Form 6-K in paper as permitted by Regulation S-T Rule
101(b)(1): ¨
Indicate by check mark if the registrant
is submitting the Form 6-K in paper as permitted by Regulation S-T Rule
101(b)(7): ¨
Indicate by check mark whether the
registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant
to Rule 12g3-2(b) under the Securities Exchange Act of 1934:
Yes ¨ No
x
If “Yes” marked, indicate below
the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-________
EXPLANATORY NOTE
This Report of Foreign Private Issuer on
Form 6-K (this “Form 6-K”) contains forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, and Section 21E of the Securities Exchange Act of 1934. These statements relate to future events or the future financial
performance of Fuwei Films (Holdings) Co., Ltd. (the “Company”). The Company has attempted to identify forward-looking
statements by terminology, including, but not limited to, “anticipates”, “believes”, “expects”,
“can”, “continue”, “could”, “estimates”, “intends”, “may”,
“plans”, “potential”, “predicts”, “should” or “will” or the negative
of these terms or other comparable terminology.
The forward-looking
statements included in this Form 6-K are subject to risks, uncertainties and assumptions about the Company’s businesses and
business environments. These statements reflect the Company’s current views with respect to future events and are not a guarantee
of future results, operations, levels of activity, performance or achievements. Actual results of the Company’s results,
operations, levels of activity, performance or achievements may differ materially from information contained in the forward-looking
statements as a result of risk factors. They include, among other things, negative impacts of the weak economic recovery of
major developed countries and Europe's deteriorating debt crisis on the Company, competition in the BOPET film industry, especially
the significant oversupply of BOPET films resulting from the rapid growth of the Chinese BOPET industry capacity, changes in the
international market and trade barriers, especially the uncertainty of the antidumping investigation and imposition of an anti-dumping
duty on imports of the BOPET films originating from the People’s Republic of China (“China”) conducted by certain
countries; fluctuations of RMB exchange rate, the reduce in demand for the Company’s products or the loss of main customers
which may result in the decrease of sales, and negatively influencing the Company’s financial performance, uncertainty as
to the future profitability and the Company’s ability to obtain adequate financing for its planned capital expenditure requirements,
uncertainty as to the Company’s ability to successfully obtain additional funds to meet the working capital needs of the
new BOPET production line, uncertainty as to the Company’s ability to continuously develop new BOPET film products especially
the thick films to be produced by the third production line and keep up with changes in BOPET film technology, risks associated
with possible defects and errors in its products, including complaints and claims from clients, uncertainty as to its ability to
protect and enforce its intellectual property rights, uncertainty as to its ability to attract and retain qualified executives
and personnel, and uncertainty in acquiring raw materials on time and on acceptable terms, particularly in light of the volatility
in the prices of petroleum products in recent years, instability of power and energy supply, and the uncertainty regarding the
future operation of the Company in connection with the measures taken by the Chinese government to save energy and reduce emissions,
and the changes in the labor law in China as well as the uncertainty of the impact of major shareholder transfer that have substantial
influence over the Company and the Company’s business operation including possible overlap of our BOPET products,
customers and market orientation with an BOPET film manufacturer, which is controlled by the same individual who has control over
the shares of our major shareholder. The Company’s expectations are as of the date of filing
of this Form 6-K, and the Company does not intend to update any of the forward-looking statements after the date this Form 6-K
is filed to confirm these statements to actual results, unless required by law.
On May 21, 2015, the Company announced
its unaudited consolidated financial results for the three-month period ended March 31, 2015.
FUWEI FILMS (HOLDINGS) CO., LTD. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2015 AND DECEMBER 31,
2014
(amounts in thousands except share and per
share value)
(Unaudited)
| |
Notes | |
March 31, 2015 | | |
December 31, 2014 | |
| |
| |
RMB | | |
US$ | | |
RMB | |
ASSETS | |
Current assets | |
| |
| | | |
| | | |
| | |
Cash and cash equivalents | |
| |
| 6,499 | | |
| 1,048 | | |
| 9,020 | |
Restricted cash | |
| |
| 31,001 | | |
| 5,001 | | |
| 48,085 | |
Accounts and bills receivable, net | |
3 | |
| 7,244 | | |
| 1,169 | | |
| 9,867 | |
Inventories | |
4 | |
| 26,671 | | |
| 4,302 | | |
| 24,034 | |
Advance to suppliers | |
| |
| 3,467 | | |
| 559 | | |
| 7,512 | |
Prepayments and other receivables | |
| |
| 20,846 | | |
| 3,363 | | |
| 18,772 | |
Deferred tax assets - current | |
| |
| 1,756 | | |
| 283 | | |
| 2,794 | |
Total current assets | |
| |
| 97,484 | | |
| 15,725 | | |
| 120,084 | |
| |
| |
| | | |
| | | |
| | |
Plant, properties and equipment, net | |
5 | |
| 470,619 | | |
| 75,919 | | |
| 482,534 | |
Construction in progress | |
6 | |
| 1,046 | | |
| 169 | | |
| 366 | |
Lease prepayments, net | |
7 | |
| 18,274 | | |
| 2,948 | | |
| 18,406 | |
Advance to suppliers - long term, net | |
| |
| 636 | | |
| 103 | | |
| 722 | |
Long-term deposit | |
8 | |
| - | | |
| - | | |
| 16,760 | |
Other Assets | |
9 | |
| 12,277 | | |
| 1,980 | | |
| 12,500 | |
Deferred tax assets - non current | |
| |
| 21,473 | | |
| 3,464 | | |
| 21,573 | |
| |
| |
| | | |
| | | |
| | |
Total assets | |
| |
| 621,809 | | |
| 100,308 | | |
| 672,945 | |
| |
| |
| | | |
| | | |
| | |
LIABILITIES AND EQUITY | |
Current liabilities | |
| |
| | | |
| | | |
| | |
Long-term loan, current portion | |
10 | |
| 3,350 | | |
| 540 | | |
| 3,350 | |
Due to related parties | |
11 | |
| 129,932 | | |
| 20,960 | | |
| 125,938 | |
Accounts payables | |
| |
| 24,521 | | |
| 3,956 | | |
| 29,484 | |
Notes payable | |
12 | |
| 61,380 | | |
| 9,902 | | |
| 95,539 | |
Advance from customers | |
| |
| 3,523 | | |
| 568 | | |
| 3,392 | |
Accrued expenses and other payables | |
| |
| 7,244 | | |
| 1,169 | | |
| 6,095 | |
Obligations under capital leases-current | |
13 | |
| 6,397 | | |
| 1,032 | | |
| 8,259 | |
Total current liabilities | |
| |
| 236,347 | | |
| 38,127 | | |
| 272,057 | |
| |
| |
| | | |
| | | |
| | |
Obligations under capital leases | |
13 | |
| - | | |
| - | | |
| 303 | |
Long-term loan | |
10 | |
| 6,650 | | |
| 1,073 | | |
| 6,650 | |
Deferred tax liabilities | |
| |
| 5,714 | | |
| 922 | | |
| 5,816 | |
| |
| |
| | | |
| | | |
| | |
Total liabilities | |
| |
| 248,711 | | |
| 40,122 | | |
| 284,826 | |
| |
| |
| | | |
| | | |
| | |
Equity | |
| |
| | | |
| | | |
| | |
Shareholders’ equity | |
| |
| | | |
| | | |
| | |
Registered capital(of US$0.129752 par value; 20,000,000 shares authorized; 13,062,500 issued and outstanding) | |
| |
| 13,323 | | |
| 2,149 | | |
| 13,323 | |
Additional paid-in capital | |
| |
| 311,907 | | |
| 50,316 | | |
| 311,907 | |
Statutory reserve | |
| |
| 37,441 | | |
| 6,040 | | |
| 37,441 | |
Retained earnings | |
| |
| 10,046 | | |
| 1,621 | | |
| 25,043 | |
Cumulative translation adjustment | |
| |
| 1,175 | | |
| 188 | | |
| 1,199 | |
Total shareholders’ equity | |
| |
| 373,892 | | |
| 60,314 | | |
| 388,913 | |
Non-controlling interest | |
| |
| (794 | ) | |
| (128 | ) | |
| (794 | ) |
Total equity | |
| |
| 373,098 | | |
| 60,186 | | |
| 388,119 | |
Total liabilities and equity | |
| |
| 621,809 | | |
| 100,308 | | |
| 672,945 | |
The accompanying notes are an integral part
of these unaudited condensed consolidated statements.
FUWEI FILMS (HOLDINGS) CO., LTD. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE LOSS
FOR THE THREE-MONTH PERIOD ENDED MARCH
31, 2015 AND 2014
(amounts in thousands except share and per
share value)
(Unaudited)
| |
| |
The Three-Month Period Ended March 31, | |
| |
Notes | |
2015 | | |
2014 | |
| |
| |
RMB | | |
US$ | | |
RMB | |
Net sales | |
| |
| 52,776 | | |
| 8,514 | | |
| 70,705 | |
Cost of sales | |
| |
| 60,601 | | |
| 9,776 | | |
| 70,774 | |
| |
| |
| | | |
| | | |
| | |
Gross loss | |
| |
| (7,825 | ) | |
| (1,262 | ) | |
| (69 | ) |
| |
| |
| | | |
| | | |
| | |
Operating expenses | |
| |
| | | |
| | | |
| | |
Selling expenses | |
| |
| 3,196 | | |
| 516 | | |
| 3,359 | |
Administrative expenses | |
| |
| 5,613 | | |
| 905 | | |
| 7,054 | |
Total operating expenses | |
| |
| 8,809 | | |
| 1,421 | | |
| 10,413 | |
| |
| |
| | | |
| | | |
| | |
Operating loss | |
| |
| (16,634 | ) | |
| (2,683 | ) | |
| (10,482 | ) |
| |
| |
| | | |
| | | |
| | |
Other income (expense) | |
| |
| | | |
| | | |
| | |
- Interest income | |
| |
| 520 | | |
| 84 | | |
| 380 | |
- Interest expense | |
| |
| (2,331 | ) | |
| (376 | ) | |
| (3,168 | ) |
- Others (expense) income, net | |
| |
| 4,484 | | |
| 723 | | |
| (88 | ) |
| |
| |
| | | |
| | | |
| | |
Total other income (expense) | |
| |
| 2,673 | | |
| 431 | | |
| (2,876 | ) |
| |
| |
| | | |
| | | |
| | |
Loss before provision for income taxes | |
| |
| (13,961 | ) | |
| (2,252 | ) | |
| (13,358 | ) |
| |
| |
| | | |
| | | |
| | |
Income tax benefit(expense) | |
14 | |
| (1,036 | ) | |
| (167 | ) | |
| 99 | |
| |
| |
| | | |
| | | |
| | |
Net loss | |
| |
| (14,997 | ) | |
| (2,419 | ) | |
| (13,259 | ) |
| |
| |
| | | |
| | | |
| | |
Net loss attributable to non-controlling interests | |
| |
| - | | |
| - | | |
| - | |
Net loss attributable to the Company | |
| |
| (14,997 | ) | |
| (2,419 | ) | |
| (13,259 | ) |
| |
| |
| | | |
| | | |
| | |
Other comprehensive income | |
| |
| | | |
| | | |
| | |
- Foreign currency translation adjustments attributable to non-controlling interest | |
| |
| - | | |
| - | | |
| (20 | ) |
- Foreign currency translation adjustments attributable to the Company | |
| |
| (24 | ) | |
| (4 | ) | |
| (48 | ) |
| |
| |
| | | |
| | | |
| | |
Comprehensive loss attributable to non-controlling interest | |
| |
| - | | |
| - | | |
| (20 | ) |
Comprehensive loss attributable to the Company | |
| |
| (15,021 | ) | |
| (2,423 | ) | |
| (13,307 | ) |
| |
| |
| | | |
| | | |
| | |
Loss per share, Basic and diluted | |
15 | |
| (1.15 | ) | |
| (0.19 | ) | |
| (1.02 | ) |
Weighted average number ordinary shares, Basic and diluted | |
| |
| 13,062,500 | | |
| 13,062,500 | | |
| 13,062,500 | |
The accompanying notes are an integral part
of these unaudited condensed consolidated statements.
FUWEI FILMS (HOLDINGS) CO., LTD. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
FOR THE THREE-MONTH PERIOD ENDED MARCH
31, 2015 AND 2014
(amounts in thousands except share and per
share value)
(Unaudited)
| |
The Three-Month Period Ended March 31, | |
| |
2015 | | |
2014 | |
| |
| | |
| | |
| |
| |
RMB | | |
US$ | | |
RMB | |
Cash flow from operating activities | |
| | | |
| | | |
| | |
Net loss | |
| (14,997 | ) | |
| (2,419 | ) | |
| (13,259 | ) |
Adjustments to reconcile net loss to net cash | |
| | | |
| | | |
| | |
used in operating activities | |
| | | |
| | | |
| | |
- Loss on disposal of property, plant and equipment | |
| 4 | | |
| 1 | | |
| - | |
- Depreciation of property, plant and equipment | |
| 11,888 | | |
| 1,918 | | |
| 12,069 | |
- Amortization of intangible assets | |
| 132 | | |
| 21 | | |
| 132 | |
- Deferred income taxes | |
| 1,036 | | |
| 167 | | |
| (99 | ) |
- Bad debt expense | |
| (4,319 | ) | |
| (697 | ) | |
| 477 | |
Changes in operating assets and liabilities | |
| | | |
| | | |
| | |
- Accounts and bills receivable | |
| 2,535 | | |
| 409 | | |
| (1,072 | ) |
- Inventories | |
| (2,637 | ) | |
| (425 | ) | |
| (355 | ) |
- Advance to suppliers | |
| 4,211 | | |
| 679 | | |
| (10 | ) |
- Prepaid expenses and other current assets | |
| (377 | ) | |
| (61 | ) | |
| (264 | ) |
- Accounts payable | |
| (4,962 | ) | |
| (800 | ) | |
| (82 | ) |
- Accrued expenses and other payables | |
| 1,155 | | |
| 186 | | |
| (219 | ) |
- Advance from customers | |
| 132 | | |
| 21 | | |
| (1,443 | ) |
- Tax payable | |
| (1,475 | ) | |
| (238 | ) | |
| 1,639 | |
| |
| | | |
| | | |
| | |
Net cash used in operating activities | |
| (7,674 | ) | |
| (1,238 | ) | |
| (2,486 | ) |
| |
| | | |
| | | |
| | |
Cash flow from investing activities | |
| | | |
| | | |
| | |
Purchases of property, plant and equipment | |
| 22 | | |
| 4 | | |
| (1,639 | ) |
Restricted cash related to trade finance | |
| 17,084 | | |
| 2,756 | | |
| 1,992 | |
Advanced to suppliers - non current | |
| 86 | | |
| 14 | | |
| (811 | ) |
Amount change in construction in progress | |
| (680 | ) | |
| (110 | ) | |
| 265 | |
Return of long-term deposit | |
| 21,000 | | |
| 3,388 | | |
| - | |
| |
| | | |
| | | |
| | |
Net cash used in investing activities | |
| 37,512 | | |
| 6,052 | | |
| (193 | ) |
| |
| | | |
| | | |
| | |
Cash flow from financing activities | |
| | | |
| | | |
| | |
Proceeds from related party | |
| 3,993 | | |
| 644 | | |
| - | |
Payment of capital lease obligation | |
| (2,165 | ) | |
| (349 | ) | |
| (2,028 | ) |
Change in notes payable | |
| (34,159 | ) | |
| (5,510 | ) | |
| (3,985 | ) |
Net cash (used in) provided by financing activities | |
| (32,331 | ) | |
| (5,215 | ) | |
| (6,013 | ) |
| |
| | | |
| | | |
| | |
Effect of foreign exchange rate changes | |
| (28 | ) | |
| (464 | ) | |
| (9 | ) |
| |
| | | |
| | | |
| | |
Net decrease in cash and cash equivalent | |
| (2,521 | ) | |
| (865 | ) | |
| (8,701 | ) |
| |
| | | |
| | | |
| | |
Cash and cash equivalent | |
| | | |
| | | |
| | |
At beginning of period/year | |
| 9,020 | | |
| 1,913 | | |
| 11,578 | |
At end of period/year | |
| 6,499 | | |
| 1,048 | | |
| 2,877 | |
| |
| | | |
| | | |
| | |
SUPPLEMENTARY DISCLOSURE: | |
| | | |
| | | |
| | |
Interest paid | |
| 2,331 | | |
| 376 | | |
| 3,168 | |
Income tax paid | |
| - | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | |
SUPPLEMENTARY SCHEDULE
OF NONCASH INVESTING AND FINANCIAL ACTIVITIES: |
|
Account payable for plant and equipment: | |
| 2,266 | | |
| 366 | | |
| 8,275 | |
Obligations for acquired equipment under capital lease: | |
| 6,397 | | |
| 1,032 | | |
| 14,848 | |
The accompanying notes are an integral part
of these unaudited condensed consolidated statements.
FUWEI FILMS (HOLDINGS) CO., LTD. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(amounts in thousands except share and per
share value)
(Unaudited)
NOTE 1 – BACKGROUND
Fuwei Films (Holdings) Co., Ltd. and its
subsidiaries (the “Company” or the “Group”) are principally engaged in the production and distribution
of BOPET film, a high quality plastic film widely used in packaging, imaging, electronics, electrical and magnetic products in
the People’s Republic of China (the “PRC”). The Company is a holding company incorporated in the Cayman Islands,
established on August 9, 2004 under the Cayman Islands Companies Law as an exempted company with limited liability. The Company
was established for the purpose of acquiring shares in Fuwei (BVI) Co., Ltd. (“Fuwei (BVI)”), an intermediate holding
company established for the purpose of acquiring all of the ownership interest in Fuwei Films (Shandong) Co., Ltd. (“Shandong
Fuwei”).
On August 20, 2004, the Company was allotted
and issued one ordinary share of US$1.00 in Fuwei (BVI) (being the entire issued share capital of Fuwei (BVI)), thereby establishing
Fuwei (BVI) as the intermediate investment holding company of the Company.
On April 23, 2009, Fuwei Films USA, LLC
was set up and co-invested by the Company and Newell Finance Management Co., Ltd. Fuwei Films USA, LLC has a registered capital
of US$10 and total investment amount of US$100. Fuwei Films (Holdings) Co., Ltd. and Newell Finance Management Co., Ltd. own 60%
and 40% of the total shares of Fuwei Films USA, LLC, respectively.
NOTE 2 - BASIS OF PRESENTATION AND SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Principles
The accompanying unaudited consolidated
financial statements have been prepared by the Company, pursuant to the rules and regulations of the U.S. Securities and Exchange
Commission (the “SEC”) as applicable to smaller reporting companies, and generally accepted accounting principles for
interim financial reporting. The information furnished herein reflects all adjustments (consisting of normal recurring accruals
and adjustments) which are, in the opinion of management, necessary to fairly present the operating results for the respective
periods. Certain information and footnote disclosures normally presented in annual consolidated financial statements prepared in
accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been omitted
pursuant to such rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction
with the audited consolidated financial statements and footnotes included in the Company’s Annual Report on Form 20-F for
the year ended December 31, 2014 filed on April 9, 2015, with the SEC. The results of the three-month period ended March 31, 2015
are not necessarily indicative of the results to be expected for the full year ended December 31, 2015.
Principles of Consolidation
The condensed consolidated financial statements
include the financial statements of the Company and its three subsidiaries. All significant inter-company balances and transactions
have been eliminated in consolidation.
FUWEI FILMS (HOLDINGS) CO., LTD. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(amounts in thousands except share and per
share value)
(Unaudited)
Use of Estimates
The preparation of the consolidated financial
statements in accordance with U.S. GAAP requires management of the Company to make a number of estimates and assumptions relating
to the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ
from those estimates. On an ongoing basis, management reviews its estimates and assumptions, including those related to the recoverability
of the carrying amount and the estimated useful lives of long-lived assets, valuation allowances for accounts receivable and realizable
values for inventories. Changes in facts and circumstances may result in revised estimates.
Foreign Currency Transactions
The Company’s reporting currency
is Chinese Yuan (Renminbi or “RMB”).
Fuwei Films (Holdings) Co., Ltd. and Fuwei
(BVI) operate in Hong Kong as investment holding companies and their financial records are maintained in Hong Kong dollars,
being the functional currency of these two entities. The financial records of Fuwei Films USA, LLC, a 60% owned subsidiary of the
Company, are maintained in US dollars. Assets and liabilities are translated into RMB at the exchange rates at the balance sheet
date, equity accounts are translated at historical exchange rates and income, expenses, and cash flow items are translated using
the average rate for the period. The translation adjustments are recorded in accumulated other comprehensive income in the statements
of equity. The changes in the translation adjustments for the current period were reported as the line items of other comprehensive
income in the consolidated statements of comprehensive income.
Transactions denominated in currencies
other than RMB are translated into RMB at the exchange rates quoted by the People’s Bank of China (the “PBOC”)
prevailing at the dates of transactions. Monetary assets and liabilities denominated in foreign currencies are translated into
RMB using the applicable exchange rates quoted by the PBOC at the balance sheet dates. The resulting exchange differences are recorded
in the consolidated statements of comprehensive income.
RMB is not fully convertible into foreign
currencies. All foreign exchange transactions involving RMB must take place either through the PBOC or other institutions authorized
to buy and sell foreign currency. The exchange rate adopted for the foreign exchange transactions are the rates of exchange quoted
by the PBOC which are determined largely by supply and demand.
Commencing from July 21, 2005, the PRC
government moved the RMB into a managed floating exchange rate regime based on market supply and demand with reference to a basket
of currencies.
For the convenience of the readers, the
first quarter of 2015 RMB amounts included in the accompanying consolidated financial statements in our quarterly report have been
translated into U.S. dollars at the rate of US$1.00 = RMB6.1990, on the last trading day of first quarter of 2015 (March 31, 2015)
as set forth in the H.10 statistical release of the U.S. Federal Reserve Board. No representation is made that the RMB amounts
could have been, or could be, converted into U.S. dollar at that rate or at any other certain rate on March 31, 2015, or at any
other date.
Cash and Cash Equivalents and Restricted
Cash
For statements of cash flow purposes, the
Company considers all cash on hand and in banks, including accounts in book overdraft positions, certificates of deposit and other
highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents.
FUWEI FILMS (HOLDINGS) CO., LTD. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(amounts in thousands except share and per
share value)
(Unaudited)
Restricted cash refers to the cash balance
held by bank as deposit for Letters of Credit and Bank Acceptance Bill. The Company has restricted cash of RMB31,001(US$5,001)
and RMB48,085 as of March 31, 2015 and December 31, 2014, respectively.
Trade Accounts Receivable
Trade accounts receivable are recorded
at the invoiced amount after deduction of trade discounts, value added taxes and allowances, if any, and do not bear interest.
The allowance for doubtful accounts is the Group’s best estimate of the amount of probable credit losses in the Group’s
existing accounts receivable. The Group determines the allowance based on historical write-off experience, customer specific facts
and economic conditions.
The Group reviews its allowance for doubtful
accounts monthly. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. All
other balances are reviewed on a pooled basis by aging of such balances. Account balances are charged off against the allowance
after all means of collection have been exhausted and the potential for recovery is considered remote.
Inventories
Inventories
are stated at the lower of cost or market value as of balance sheet date. Inventory valuation and cost-flow is determined using
Moving Weighted Average Method basis. The Group estimates excess and slow moving inventory based upon assumptions of future demands
and market conditions. If actual market conditions are less favorable than projected by management, additional inventory write-downs
may be required. Cost of work in progress and finished goods comprises direct material, direct production cost and an allocated
portion of production overheads based on normal operating capacity.
Property, Plant and Equipment
Property, plant and equipment are stated
at cost less accumulated depreciation and impairment. Depreciation on property, plant and equipment is calculated on the straight-line
method (after taking into account their respective estimated residual values) over the estimated useful lives of the assets. They
are as follows:
| |
Years |
Buildings and improvements | |
25 - 30 |
Plant and equipment | |
10 - 15 |
Computer equipment | |
5 |
Furniture and fixtures | |
5 |
Motor vehicles | |
5 |
Depreciation of property, plant and equipment
attributable to manufacturing activities is capitalized as part of the inventory, and expensed to cost of goods sold when inventory
is sold. Depreciation related to abnormal amounts from idle capacity is charged to cost of goods sold for the period incurred.
FUWEI FILMS (HOLDINGS) CO., LTD. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(amounts in thousands except share and per
share value)
(Unaudited)
Construction in progress represents capital
expenditures in respect to the BOPET production line. No depreciation is provided in respect to construction in progress.
Leased Assets
An arrangement, comprising a transaction
or a series of transactions, is or contains a lease if the Group determines that the arrangement conveys a right to use a specific
asset or assets for an agreed period of time in return for a payment or a series of payments. Such a determination is made based
on an evaluation of the substance of the arrangement and is regardless of whether the arrangement takes the legal form of a lease.
Classification of assets leased to the
Group. Assets that are held by the Group under leases which transfer to the Group substantially all the risks and rewards of ownership
are classified as being held under capital leases. Leases which do not transfer substantially all the risks and rewards of ownership
to the Group are classified as operating leases.
Assets acquired under capital leases. Where
the Group acquires the use of assets under capital leases, the amounts representing the fair value of the leased asset, or, if
lower, the present value of the minimum lease payments, of such assets are included in property, plant and equipment and the corresponding
liabilities, net of finance charges, are recorded as obligations under capital leases. Depreciation is provided at rates which
write off the cost or valuation of the assets over the term of the relevant lease or, where it is likely the Group will obtain
ownership of the asset, the life of the asset. Finance charges implicit in the lease payments are charged to the consolidated income
statement over the period of the leases so as to produce an approximately constant periodic rate of charge on the remaining balance
of the obligations for each accounting period. Contingent rentals are charged to the consolidated income statement in the accounting
period in which they are incurred.
Operating lease charges. Where the Group
has the use of assets held under operating leases, payments made under the leases are charged to the consolidated income statement
in equal installments over the accounting periods covered by the lease term, except where an alternative basis is more representative
of the pattern of benefits to be derived from the leased asset. Lease incentives received are recognized in the consolidated income
statement as an integral part of the aggregate net lease payments made. Contingent rentals are charged to the consolidated income
statement in the accounting period in which they are incurred.
Sale and leaseback transactions. Gains
or losses on equipment sale and leaseback transactions which result in capital leases are deferred and amortized over the terms
of the related leases. Gains or losses on equipment sale and leaseback transactions which result in operating leases are recognized
immediately if the transactions are established at fair value. Any loss on the sale perceived to be a real economic loss is recognized
immediately. However, if a loss is compensated for by future rentals at a below-market price, then the artificial loss is deferred
and amortized over the period that the equipment is expected to be used. If the sale price is above fair value, then any gain is
deferred and amortized over the useful life of the assets.
Lease Prepayments
Lease prepayments represent the costs of
land use rights in the PRC. Land use rights are carried at cost and charged to expense on a straight-line basis over the respective
periods of rights of 30 years. The non-current portion and current portion of lease prepayments have been reported in Lease Prepayments,
Prepayments and Other Receivables in the balance sheets, respectively.
FUWEI FILMS (HOLDINGS) CO., LTD. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(amounts in thousands except share and per
share value)
(Unaudited)
Goodwill
Goodwill represents the excess of purchase
price and related costs over the value assigned to the net tangible and identifiable intangible assets of businesses acquired. Goodwill
is not amortized but is tested for impairment annually, or when circumstances indicate a possible impairment may exist. Impairment
testing is performed at a reporting unit level. An impairment loss generally would be recognized when the carrying amount
of the reporting unit exceeds the fair value of the reporting unit, with the fair value of the reporting unit determined using
a discounted cash flow (“DCF”) analysis. A number of significant assumptions and estimates are involved in the
application of the DCF analysis to forecast operating cash flows, including the discount rate, the internal rate of return, and
projections of realizations and costs to produce. Management considers historical experience and all available information
at the time the fair values of its reporting units are estimated. Goodwill was determined to be fully impaired during the year
ended December 31, 2012.
Impairment of Long-lived Assets
The Company recognizes an impairment loss
when circumstances indicate that the carrying value of long-lived assets with finite lives may not be recoverable. Management’s
policy in determining whether an impairment indicator exists, a triggering event, comprises measurable operating performance criteria
at an asset group level as well as qualitative measures. If an analysis is necessitated by the occurrence of a triggering event,
the Company uses assumptions, which are predominately identified from the Company’s strategic long-range plans, in determining
the impairment amount. In the calculation of the fair value of long-lived assets, the Company compares the carrying amount of the
asset group with the estimated future cash flows expected to result from the use of the assets. If the carrying amount of the asset
group exceeds the estimated expected undiscounted future cash flows, the Company measures the amount of the impairment by comparing
the carrying amount of the asset group with their estimated fair value. We estimate the fair value of assets based on market prices
(i.e., the amount for which the asset could be bought by or sold to a third party), when available. When market prices are not
available, we estimate the fair value of the asset group using discounted expected future cash flows at the Company’s weighted-average
cost of capital. Management believes its policy is reasonable and is consistently applied. Future expected cash flows are based
upon estimates that, if not achieved, may result in significantly different results.
Revenue Recognition
Sales of plastic films are reported, net
of value added taxes (“VAT”), sales returns, and trade discounts. The standard terms and conditions under which the
Company generally delivers allow a customer the right to return product for refund only if the product does not conform to product
specifications; the non-conforming product is identified by the customer; and the customer rejects the non-conforming product and
notifies the Company within 30 days of receipt for both PRC and overseas customers. The Company recognizes revenue when products
are delivered and the customer takes ownership and assumes risk of loss, collection of the relevant receivable is probable, persuasive
evidence of an arrangement exists and the sales price is fixed or determinable.
In the PRC, VAT of 17% on the invoice amount
is collected in respect to the sales of goods on behalf of tax authorities. The VAT collected is not revenue of the Company; instead,
the amount is recorded as a liability on the consolidated balance sheet until such VAT is paid to the authorities.
FUWEI FILMS (HOLDINGS) CO., LTD. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(amounts in thousands except share and per
share value)
(Unaudited)
Income Taxes
Income taxes are accounted for under the
asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases
and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected
to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment
date.
Earnings Per Share
Basic earnings per share is computed by
dividing net earnings by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share
is calculated by dividing net earnings by the weighted average number of ordinary and dilutive potential ordinary shares outstanding
during the year. Diluted potential ordinary shares consist of shares issuable pursuant to the Company’s stock option plan.
Share-Based Payments
The Company accounts for share based payments
under the modified-prospective transition method, which requires companies to measure and recognize the cost of employee services
received in exchange for an award of equity instruments based on the grant-date fair value.
Non-controlling interest
Non-controlling interest represents the
portion of equity that is not attributable to the Company. The net income (loss) attributable to non-controlling interests are
separately presented in the accompanying statements of income and other comprehensive income. Losses attributable to non-controlling
interests in a subsidiary may exceed the interest in the subsidiary’s equity. The related non-controlling interest continues
to be attributed its share of losses even if that attribution results in a deficit of the non-controlling interest balance.
Contingencies
In the normal course of business, the Company
is subject to contingencies, including legal proceedings and claims arising out of the business that relate to a wide range of
matters, including among others, product liability. The Company recognizes a liability for such contingency if it determines it
is probable that a loss has occurred and a reasonable estimate of the loss can be made. The Company may consider many factors in
making these assessments including past history and the specifics of each matter.
Reclassification
For comparative purposes, the prior year’s
consolidated financial statements have been reclassified to conform to reporting classifications of the current year periods. These
reclassifications had no effect on net loss or total net cash flows as previously reported.
FUWEI FILMS (HOLDINGS) CO., LTD. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(amounts in thousands except share and per
share value)
(Unaudited)
Going Concern Matters
The accompanying consolidated financial
statements have been prepared in conformity with generally accepted accounting principles which contemplate continuation of the
company as a going concern. However, as of March 31, 2015, the Company had a working capital deficiency of RMB138,863 (US$22,401)
and accumulated deficit of RMB14,997 (US$2,419) from net losses incurred during the first quarter of 2015. Confronted with the
fierce competition in the BOPET industry in China, the Company may still witness losses over the next twelve months. The ability
of the Company to operate as a going concern depends upon its ability to obtain outside sources of working capital and/or generate
positive cash flow from operations. The Company accordingly has developed an outside financing plan to meet the need of working
capital for our operation or debts. At the same time, the Company will continue implementing cost reductions on both manufacturing
costs and operating expenses to improve profit margins. The accompanying consolidated financial statements do not include any adjustments
relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that
might result should the Company be unable to continue as a going concern.
Recently Issued Accounting Standards
Income
Statement-Extraordinary and Unusual Items: In January 2015, the Financial Accounting Standards Board (FASB) issued Accounting
Standards Update No. 2015-01 about Income Statement-Extraordinary and Unusual Items (Subtopic 225-20). ASU 2015-01 addresses
the elimination from U.S. GAAP the concept of extraordinary items. Presently, an event or transaction is presumed to be an ordinary
and usual activity of the reporting entity unless evidence clearly supports its classification as an extraordinary item. If an
event or transaction meets the criteria for extraordinary classification, an entity is required to segregate the extraordinary
item from the results of ordinary operations and show the item separately in the income statement, net of tax, after income from
continuing operations. This amended guidance will prohibit separate disclosure of extraordinary items in the income statement.
This amendment is effective for years, and interim periods within those years, beginning after December 15, 2015. Entities
may apply the amendment prospectively or retrospectively to all prior periods presented in the financial statements. Early adoption
is permitted provided that the guidance is applied from the beginning of the year of adoption. The Company intends to adopt the
accounting standard during the first quarter of 2016, as required, with no material impact.
Disclosure
of Going Concern Uncertainties: In August 2014, the Financial Accounting Standards Board (FASB)
issued Accounting Standards Update No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue
as a Going Concern (ASU 2014-15), to provide guidance on management’s responsibility in evaluating whether there is
substantial doubt about a company’s ability to continue as a going concern and to provide related footnote disclosures. ASU
2014-15 is effective for us in our fourth quarter of fiscal 2017 with early adoption permitted. We do not believe the impact of
our pending adoption of ASU 2014-15 on the Company’s financial statements will be material.
Revenue
Recognition: In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue
from Contracts with Customers: Topic 606 (ASU 2014-09), to supersede nearly all existing revenue recognition guidance under
U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers
in an amount that reflects the consideration that is expected to be received for those goods or services. ASU 2014-09 defines a
five step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within
the revenue recognition process than are required under existing U.S. GAAP, including identifying performance obligations in the
contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price
to each separate performance obligation. ASU 2014-09 is effective for us in our first quarter of fiscal 2018 using either of two
methods: (i) retrospective to each prior reporting period presented with the option to elect certain practical expedients
as defined within ASU 2014-09; or (ii) retrospective with the cumulative effect of initially applying ASU 2014-09 recognized
at the date of initial application and providing certain additional disclosures as defined per ASU 2014-09. The adoption of this
ASU is not expected to have a material impact on the Company's consolidated financial statements.
FUWEI FILMS (HOLDINGS) CO., LTD. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(amounts in thousands except share and per
share value)
(Unaudited)
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.
NOTE 3 - ACCOUNTS AND BILLS RECEIVABLES
Accounts receivables consisted of the following:
| |
March 31, 2015 | | |
December 31, 2014 | |
| |
RMB | | |
US$ | | |
RMB | |
Accounts receivable | |
| 5,554 | | |
| 896 | | |
| 8,168 | |
Less: Allowance for doubtful accounts | |
| (913 | ) | |
| (147 | ) | |
| (825 | ) |
| |
| 4,641 | | |
| 749 | | |
| 7,343 | |
Bills receivable | |
| 2,603 | | |
| 420 | | |
| 2,524 | |
| |
| | | |
| | | |
| | |
| |
| 7,244 | | |
| 1,169 | | |
| 9,867 | |
The Group has a credit policy in place
and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers requiring credit
over a certain amount. These receivables are due within 7 to 90 days from the date of billing. Generally, the Group does not obtain
collateral from customers.
NOTE 4 - INVENTORIES
Inventories consisted of the following:
| |
March 31, 2015 | | |
December 31, 2014 | |
| |
RMB | | |
US$ | | |
RMB | |
Raw materials | |
| 17,114 | | |
| 2,761 | | |
| 13,221 | |
Work-in-progress | |
| 1,534 | | |
| 247 | | |
| 1,873 | |
Finished goods | |
| 13,512 | | |
| 2,180 | | |
| 14,429 | |
Consumables and spare parts | |
| 622 | | |
| 100 | | |
| 622 | |
Inventory--impairment | |
| (6,111 | ) | |
| (986 | ) | |
| (6,111 | ) |
| |
| 26,671 | | |
| 4,302 | | |
| 24,034 | |
NOTE 5 - PROPERTY, PLANT AND EQUIPMENT,
NET
Property, plant and equipment consisted
of the following:
| |
March 31, 2015 | | |
December 31, 2014 | |
| |
RMB | | |
US$ | | |
RMB | |
Buildings | |
| 78,063 | | |
| 12,593 | | |
| 77,828 | |
Plant and equipment | |
| 764,093 | | |
| 123,261 | | |
| 764,093 | |
Computer equipment | |
| 2,467 | | |
| 398 | | |
| 2,459 | |
Furniture and fixtures | |
| 13,411 | | |
| 2,163 | | |
| 13,444 | |
Motor vehicles | |
| 2,093 | | |
| 338 | | |
| 2,094 | |
| |
| 860,127 | | |
| 138,753 | | |
| 859,918 | |
Less: accumulated depreciation | |
| (389,508 | ) | |
| (62,834 | ) | |
| (377,384 | ) |
| |
| 470,619 | | |
| 75,919 | | |
| 482,534 | |
FUWEI FILMS (HOLDINGS) CO., LTD. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(amounts in thousands except share and per
share value)
(Unaudited)
For the three-month periods ended March
31, 2015 and 2014, depreciation expenses were RMB11,888 (US$1,918) and RMB12,069, respectively.
NOTE 6 - CONSTRUCTION IN PROGRESS
Construction-in-progress represents capital
expenditure in respect to the BOPET production line. Construction in progress was RMB1,046 (US$169) as of March 31, 2015, and RMB366
as of December 31, 2014, respectively.
NOTE 7 - LEASE PREPAYMENTS
Lease prepayments represent the costs of
land use rights in the PRC. Land use rights are carried at cost and charged to expense on a straight-line basis over the respective
periods of rights of 30 years. The current portion of lease prepayments has been included in prepayments and other receivables
in the balance sheet.
Lease prepayments consisted of the following:
| |
March 31, 2015 | | |
December 31, 2014 | |
| |
RMB | | |
US$ | | |
RMB | |
Lease prepayment - non current | |
| 18,274 | | |
| 2,948 | | |
| 18,406 | |
Lease prepayment – current | |
| 524 | | |
| 85 | | |
| 524 | |
| |
| 18,798 | | |
| 3,033 | | |
| 18,930 | |
Amortization of land use rights for the
three months ended March 31, 2015 and 2014 was RMB132 (US$21) and RMB132, respectively.
Estimated amortization expenses for the
next five years are as follows:
| |
RMB | | |
US$ | |
1 year after | |
| 524 | | |
| 85 | |
2 years after | |
| 524 | | |
| 85 | |
3 years after | |
| 524 | | |
| 85 | |
4 years after | |
| 524 | | |
| 85 | |
5 years after | |
| 524 | | |
| 85 | |
Thereafter | |
| 16,178 | | |
| 2,608 | |
As of March 31, 2015, the amount of RMB524
(US$85) will be charged into amortization expenses within one year, and is classified as current asset under the separate line
item captioned as Prepayments and Other Receivables on balance sheets.
FUWEI FILMS (HOLDINGS) CO., LTD. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(amounts in thousands except share and per
share value)
(Unaudited)
NOTE 8 – LONG-TERM DEPOSIT
On January 20, 2008, Shandong Fuwei signed
a “Letter of Intent of Joyinn Capital Increase and Share Expansion” (“LOI”) with Joyinn Hotel Investment
& Management Co., Ltd. (“Joyinn”) and shareholders of Joyinn. Joyinn is a legal company of limited liability that
registered on May 19, 2006 in Beijing, with registered capital of RMB50,000 (US$6,236).
Pursuant to the terms of the LOI, Shandong
Fuwei deposited RMB 26,000 (half of the would-be added registered capital of RMB52,000), to Joyinn as a prepayment as of June 30,
2008. The prepayment to Joyinn will be regarded as investment payment after all parties enter into the final capital increase and
shares expansion agreement during the effective term of this LOI. A share pledge agreement was entered into subsequently on April
9, 2008 between Shandong Fuwei and Shandong Xinmeng Investment Co., Ltd (“Pledger”), which holds 97.6% shares of Joyinn.
The Pledger agreed to pledge its 52% interest in Joyinn, as a guarantee to the prepayment on the newly increased register capital
made by Shandong Fuwei to Joyinn. Based on the mutual supplementary agreement signed in June 2008, the prepayment was decreased
by RMB5,000 and returned to the Company on June 18, 2008.
On June 23, 2009, Shandong Fuwei and the
Pledger, the major shareholder of Joyinn, agreed that the Pledger would pledge another 19% of its interest in Joyinn in addition
to the previous pledge of 52% interest in Joyinn as a guarantee to the prepayment on the newly increased register capital made
by Shandong Fuwei to Joyinn. As a result, the Pledger’s percentage of pledged interest in Joyinn increased from 52% to 71%.
In the year 2010, the Company impaired the deposit amount by RMB4,240 (US$681). The impairment was determined based on an independent
appraisal study.
On July 14, 2009, Shandong Fuwei and Joyinn
entered into a Supplementary Agreement of Letter of Intent of Joyinn Capital Increase and Share Expansion (the “Supplementary
Agreement”), which extends the duration of former agreement to two (2) years granting Shandong Fuwei the option to determine
whether to continue or withdraw the investment prior to January 14, 2010, the expiration date of the Supplementary Agreement.
Upon the expiration of the Supplementary
Agreement on January 14, 2010, Shandong Fuwei and the Pledger entered into an agreement pursuant to which the Pledger agreed to
transfer a 71% interest in Joyinn to Shandong Fuwei. The transaction is subject to the approval of the authority body of both parties.
On March 9, 2012, Shandong Fuwei and the
Pledger agreed that prior to the approval of the foregoing share transfer, all the related agreements and share pledge terms and
conditions will remain in full force and effect.
On November 8, 2012, the Pledger’s
ownership of Joyinn was transferred to Weifang State-Owned Assets Operation Administration Company (the “Administration Company”)
pursuant to a court order. On December 10, 2012, Shandong Fuwei entered into a Share Pledge Agreement with the Administration Company,
as the major shareholder of Joyinn, in which the Administration Company agreed to all the terms and conditions in the LOI and the
Supplementary Agreement. The Administration Company, as the new Pledger, agreed to increase the pledged interest by 16.8% to 87.8%.
On January 12, 2015, Shandong Fuwei received
a notice issued by the Administration Company and Joyinn stating that all the agreements previously entered into by the relevant
parties have been terminated. Joyinn agreed to return RMB21,000 to Shandong Fuwei which was a prepayment of capital increase invested
by Shandong Fuwei and Shandong Fuwei agreed to handle the relevant procedures with respect to terminating the related share pledge
agreement upon receipt of such prepayment. Upon consideration, the Board of Directors of Fuwei Films approved to carry out the
procedures as stipulated by the notice. On January 22, 2015, Shandong Fuwei received the refund of RMB21,000 from Joyinn.
FUWEI FILMS (HOLDINGS) CO., LTD. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(amounts in thousands except share and per
share value)
(Unaudited)
As of March 31, 2015 and December 31, 2014
the total amount of the deposit was zero and RMB16,760, respectively.
NOTE 9 – OTHER ASSETS
Other assets represent loss on sale-leaseback
arrangement with International Far Eastern Leasing Co., Ltd. The loss is treated as compensation for the future rentals paid by
Shandong Fuwei at a below-market price. The artificial loss should be deferred and amortized in proportion to the amortization
of the related leased assets. As of March 31, 2015 and December 31, 2014, the total amount of the other assets was RMB12,277 (US$1,980)
and RMB12,500, respectively.
NOTE 10 - LONG-TERM LOAN
Long-term loan consisted of the following:
Lender | |
Interest
rate per
annum | | |
March 31, 2015 | | |
December 31, 2014 | |
| |
| | |
RMB | | |
US$ | | |
RMB | |
BANK LOANS | |
| | |
| | |
| | |
| |
Weifang Dongfang State-owned Assets Management Co., Ltd. | |
| | | |
| | | |
| | | |
| | |
- October 19, 2009 to October 18, 2017 | |
| 5.535 | % | |
| 10,000 | | |
| 1,613 | | |
| 10,000 | |
| |
| | | |
| 10,000 | | |
| 1,613 | | |
| 10,000 | |
Less: long-term loan, current portion | |
| | | |
| (3,350 | ) | |
| (540 | ) | |
| (3,350 | ) |
Long-term Loan | |
| | | |
| 6,650 | | |
| 1,073 | | |
| 6,650 | |
On November 20, 2009, the Company signed
a long-term loan agreement in the amount of RMB10,000 (US$1,613) 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 RMB3,350 (US$540) per year with the remaining principal balance of RMB3,300 (US$533)
due in 2017. The annual interest rate for the loan is the benchmark interest rate for over five-year loans announced by the People’s
Bank of China reduced by 10% and the applicable annual interest rate for the period ended March 31, 2015 is 5.535%. The loan is
guaranteed by Shandong Deqin Investment& Guarantee Co., Ltd. and is used for the Company's projects.
Long-term bank loans maturity for the next
three years after March 31, 2015 are as follows:
| |
RMB | | |
US$ | |
1 year after | |
| 3,350 | | |
| 540 | |
2 years after | |
| 3,350 | | |
| 540 | |
3 years after | |
| 3,300 | | |
| 533 | |
FUWEI FILMS (HOLDINGS) CO., LTD. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(amounts in thousands except share and per
share value)
(Unaudited)
NOTE 11 - RELATED PARTY TRANSACTIONS
Due to related parties
In April 2014, the Company obtained a loan
for a total amount of RMB105,000 from Shandong SNTON Optical Materials Technology Co., Ltd. (the “Shandong SNTON”)
to pay off certain short-term loans due to Bank of Communications Co., Ltd. The interest shall be calculated at the benchmark rate,
plus an additional 20% of the said benchmark rate, for the loan of the same term announced by the People’s Bank of China.
The interest must be paid quarterly and settled in full at the end of the year. As of December 31, 2014, the principle of this
loan and the interest have not been paid. In March 2015, the Company entered into a supplemental agreement with Shandong SNTON
pursuant to which the parties agreed that the Company will pay off the principle of this loan plus interest upon availability of
new loans from banks or other financial institutions.
As of March 31, 2015, the principle of
this loan from Shandong SNTON was RMB104,802 and the interest was RMB7,213.
In May 2014, the Company borrowed RMB15,000
from Shandong SNTON Group Co., Ltd. (the “SNTON Group”) solely to purchase raw materials. The interest shall be calculated
at the benchmark rate, plus an additional 20% of the said benchmark rate, for the loan of the same term announced by the People’s
Bank of China. The interest shall be paid quarterly and settled in full at the end of the year. The Company has agreed to repay
this loan prior to December 31, 2014. As of December 31, 2014, the principle of this loan and the interest have not been paid.
In March 2015, the Company entered into a supplemental agreement with SNTON Group pursuant to which that the Company agreed to
pay off the principle of this loan plus interest upon availability of new loans from banks or other financial institutions. As
of March 31, 2015, the principle of this loan from SNTON Group was RMB15,000 and the interest was RMB917.
In March 2015, SNTON Group provided the
Company with a second loan of RMB2,000 which was returned in April 2015.
As of March 31, 2015, the total principle
of two loans from SNTON Group was RMB17,000 and the interest payable was RMB917.
As of March 31, 2015, the total principle
of loans from related party was RMB121,802 and the interest payable was RMB8,130.
NOTE 12 - NOTES PAYABLE
As of March 31, 2015, Shandong Fuwei had
banker’s acceptances opened with a maturity from three to six months totaling RMB61,380 (US$9,902) for payment in connection
with raw materials on a total deposits of RMB30,690 (US$4,951) at SPD Bank.
FUWEI FILMS (HOLDINGS) CO., LTD. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(amounts in thousands except share and per
share value)
(Unaudited)
NOTE 13 – OBLIGATIONS UNDER CAPITAL
LEASES
The Group has commitments under capital
lease agreements as for a part of new third production line and associated equipment. The leases have terms of 3 years expiring
by the end of February 2016. As of March 31, 2015, future payments under these capital leases are as follows:
| |
March 31, 2015 | | |
December 31, 2014 | |
| |
RMB | | |
US$ | | |
RMB | | |
US$ | | |
RMB | | |
US$ | | |
RMB | | |
RMB | | |
RMB | |
| |
Present value of the minimum lease
payments | | |
Total minimum lease payments | | |
Interest | | |
Present value of the minimum lease
payments | | |
Total minimum lease payments | | |
Interest | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Within 1 year | |
| 6,397 | | |
| 1,032 | | |
| 6,557 | | |
| 1,058 | | |
| 160 | | |
| 26 | | |
| 8,259 | | |
| 8,555 | | |
| 296 | |
After 1 year but within 2 years | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 303 | | |
| 306 | | |
| 3 | |
After 2 years but within 3 years | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
After 3 years | |
| - | | |
| - | | |
| - | | |
| | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| |
| 6,397 | | |
| 1,032 | | |
| 6,557 | | |
| 1,058 | | |
| 160 | | |
| 26 | | |
| 8,562 | | |
| 8,861 | | |
| 299 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Less: balance due within one
year classified as current
liabilities | |
| (6,397 | ) | |
| (1,032 | ) | |
| | | |
| | | |
| | | |
| | | |
| (8,259 | ) | |
| | | |
| | |
| |
| - | | |
| - | | |
| | | |
| | | |
| | | |
| | | |
| 303 | | |
| | | |
| | |
Details of obligations under capital leases
are as follows:
| |
March 31, 2015 | | |
December 31, 2014 | |
| |
RMB | | |
RMB | |
| |
| | |
| |
RMB denominated obligations | |
| | | |
| | |
Fixed interest rate of 6.49% per annum | |
| 6,397 | | |
| 8,562 | |
| |
| | | |
| | |
| |
| 6,397 | | |
| 8,562 | |
Guarantee deposit of RMB800 (US$129) over
the capital leased assets concerned and relevant insurance policies were provided to the lessor as collateral and security. In
addition, as is customary in the case of capital leases, the Group’s obligations are guaranteed
by Weifang State-Owned Assets Operation Administration Company, Beijing Shiweitong Technology Development Co., Ltd., Fuwei Films
(Holdings) Co., Ltd., and Fuwei Films (BVI) Co., Ltd. In August 2014, Shandong SNTON Group Co., Ltd. accepted the responsibility
of guarantee for the Group's obligation from Beijing Shiweitong Technology Development Co., Ltd.
FUWEI FILMS (HOLDINGS) CO., LTD. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(amounts in thousands except share and per
share value)
(Unaudited)
NOTE 14 - INCOME TAX
Income tax expense was RMB1,036 (US$167)
and Income tax benefit RMB99 for the three months ended March 31, 2015 and 2014, respectively.
NOTE 15 - LOSS PER SHARE
Basic and diluted net loss per share was
RMB1.15 (US$0.19) and RMB1.02 for the three-month period ended March 31, 2015 and 2014, respectively.
NOTE 16 - MAJOR CUSTOMERS AND VENDORS
There were no major customers who accounted
for more than 10% of the total net revenue for the three-month periods ended March 31, 2015 and 2014.
One vendor provided approximately 63.1%
of the Company’s purchases of raw materials, supplies and equipment for the first three months ended March 31, 2015. The
Company had a RMB431 (US$70) advance to that vendor as of March 31, 2015. This vendor provided approximately 64.3% of the Company’s
raw materials for the first three months ended March 31, 2014. Another vendor provided approximately 14.2% of the Company’s
purchases of raw materials, supplies and equipment for the first three months ended March 31, 2015. This vendor provided approximately
11.5% of the Company’s purchases of raw materials, supplies and equipment for the first three months ended March 31, 2014.
NOTE 17 - SUBSEQUENT EVENT
In March 2015, the Company borrowed RMB2,000
from SNTON Group. In April 2015, the Company borrowed RMB18,000 from SNTON Group. In April 2015, the Company repaid a total amount
of RMB20,000 to SNTON Group.
As of April 30, 2015, the total principle
from SNTON Group was RMB15,000 and the interest payable was RMB997.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References to "dollars" and "US$"
are to United States Dollars. References to "we", "us", the "Company" or "Fuwei Films"
include Fuwei Films (Holdings) Co., Ltd. and its subsidiaries, except where the context requires otherwise.
In the first quarter of 2015, we continued
to be adversely affected by enhanced competition and increased supply over demand in China’s BOPET market. In addition, decrease
in demand from overseas as well as anti-dumping measures taken by USA and South Korea caused a decrease in orders from international
markets. Furthermore, prices of main raw materials reduced significantly. The foregoing factors have contributed to significant
decrease in sales prices, which resulted in reduced total revenue compared with the first quarter of 2014.
We believe that in the coming quarters
of 2015, there will be growing capacity of BOPET films in China and stronger competition in the market. Our ability to retain effective
control over the pricing of our products on a timely basis is limited due to the enhanced competition in the BOPET market. As a
result, we may continue to witness losses in the short to medium term.
On August 14, 2013, the Company announced
that it had received the first notice from the its controlling shareholder, the Weifang State-owned Assets Operation Administration
Company, a wholly-owned subsidiary of Weifang State-owned Asset Management and Supervision Committee (collectively, the “Administration
Company”) indicating that the Administration Company had determined to place control over 6,912,503 (or 52.9%) of its outstanding
ordinary shares up for sale at a public auction to be held in China. Four public auctions were held in Jinan, Shandong Province,
China. The Company learned that they failed due to a lack of bidders registered for the auction. On March 25, 2014, the fifth public
auction was held in Jinan, Shandong Province, China .The beneficial ownership of 6,912,503 ordinary shares of the Company previously
owned by the Administration Company through Apex Glory Holdings Limited, a British Virgin Islands corporation, was bid by Shandong
SNTON Optical Materials Technology Co., Ltd (“Shandong SNTON”) through the public auction. Shandong SNTON got 6,912,503
(or 52.9%) of the Company’s outstanding ordinary shares at a price of RMB101,800,000 (approximately US$16,572,787) or approximately
US$2.40 per ordinary share.
On May 12, 2014, the Company announced
that it had learned that the successful bidder, Shandong SNTON in the fifth public auction of 6,912,503 (or 52.9%) of the Company’s
outstanding ordinary shares (the “Shares”) held on March 25, 2014, was entrusted by Hongkong Ruishang International
Trade Co., Ltd., a Hong Kong corporation, (“Hongkong Ruishang”) to handle all the formalities and procedure in connection
with the public auction. As a result of the entrusted arrangement, the Company believes Hongkong Ruishang is the party controlling
the Shares acquired in the fifth public auction. According to publicly
available information in the People’s Republic of China, Shandong SNTON is a wholly owned subsidiary of Shandong SNTON Group
Co., Ltd. Mr. Xiusheng Wang, the chairman of the Board of Directors of Shandong SNTON Group Co., Ltd., is also Hongkong Ruishang’s
chairman.
On May 14, 2014, the Company announced
that it received a notification from Shandong Fuhua Investment Company Limited. (“Shandong Fuhua”) with respect to
an entire ownership transfer of the Company’s 12.55% outstanding ordinary shares from the Administration Company to Shandong
Fuhua. The Administration Company originally held these shares indirectly through an intermediate holding company, Easebright Investments
Limited (“Easebright”). As a result of this transfer, Shandong Fuhua indirectly owns 12.55% of the outstanding ordinary
shares of the Company through Easebright. Mr. Jingang Yang has been appointed as the director of Easebright.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of operations for the three months
ended March 31, 2015 and March 31, 2014
The table below sets forth certain line items
from our Statement of Operations as a percentage of revenue:
| |
Three-Month Period Ended | | |
Three-Month Period Ended | |
| |
March 31, 2015 | | |
March 31, 2014 | |
| |
(as % of Revenue) | |
Gross profit | |
| (14.8 | ) | |
| (0.1 | ) |
Operating expenses | |
| (16.7 | ) | |
| (14.7 | ) |
Operating income (loss) | |
| (31.5 | ) | |
| (14.8 | ) |
Other income (expense) | |
| 5.1 | | |
| (4.1 | ) |
Income tax benefit (expense) | |
| (2.0 | ) | |
| 0.14 | |
Net income (loss) | |
| (28.4 | ) | |
| (18.8 | ) |
Revenue
Net sales during the first quarter
ended March 31, 2015 were RMB52.8million (US$8.5 million), compared to RMB70.7million, during the same period in 2014,
representing a decrease of RMB17.9 million or 25.3%, mainly due to the reduction of average sales price and sales volume
arising from stronger competition in China and reduce in prices of main raw materials. The decrease of output caused by the
repair of the production lines from February 2015 to March 2015 also contributed to the reduction of sales volume.
In the first quarter of 2015, sales of
specialty films were RMB15.0 million (US$2.4 million) or 28.5% of our total revenues as compared to RMB19.8 million or 28.0% in
the same period of 2014. The decrease was largely attributable to the decrease in sales volume and sales prices for dry films and
heat shrinkable films due to the entrances of new competitors.
The following is a breakdown of commodity
and specialty film sales (amounts in thousands):
| |
Three-Month Period Ended March 31, 2015 | | |
% of Total | | |
Three-Month Period Ended March 31, 2014 | | |
% of Total | |
| |
RMB | | |
US$ | | |
| | |
RMB | | |
| |
Stamping and transfer film | |
| 20,839 | | |
| 3,362 | | |
| 39.5 | % | |
| 31,126 | | |
| 44.0 | % |
Printing film | |
| 7,225 | | |
| 1,165 | | |
| 13.7 | % | |
| 7,941 | | |
| 11.2 | % |
Metallization film | |
| 1,686 | | |
| 272 | | |
| 3.2 | % | |
| 1,631 | | |
| 2.3 | % |
Specialty film | |
| 15,043 | | |
| 2,427 | | |
| 28.5 | % | |
| 19,780 | | |
| 28.0 | % |
Base film for other application | |
| 7,983 | | |
| 1,288 | | |
| 15.1 | % | |
| 10,227 | | |
| 14.5 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| 52,776 | | |
| 8,514 | | |
| 100.0 | % | |
| 70,705 | | |
| 100.0 | % |
Overseas sales were RMB13.1 million or
US$2.1 million, or 24.8% of total revenues, compared with RMB10.5 million or 14.8% of total revenues in the first quarter of 2014,
representing an increase of RMB2.6 million or 24.8%. The reduction of average sales price caused a decrease of RMB3.1 million and
the increase in sales volume resulted in an increase of RMB5.7 million. The increase in overseas sales was mainly due to the increase
of sales volume.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is a breakdown of PRC domestic
and overseas sales (amounts in thousands except percentages):
| |
Three-Month Period Ended March 31, 2014 | | |
% of Total | | |
Three-Month Period Ended March 31, 2014 | | |
% of Total | |
| |
RMB | | |
US$ | | |
| | |
RMB | | |
| |
Sales in China | |
| 39,696 | | |
| 6,404 | | |
| 75.2 | % | |
| 60,238 | | |
| 85.2 | % |
Sales in other countries | |
| 13,080 | | |
| 2,110 | | |
| 24.8 | % | |
| 10,467 | | |
| 14.8 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| 52,776 | | |
| 8,514 | | |
| 100.0 | % | |
| 70,705 | | |
| 100.0 | % |
Cost of Goods Sold
Our cost of goods sold is mainly comprised
of material costs, factory overhead, power, packaging materials and direct labor. The breakdown of our cost of goods sold in percentage
is as follows:
| |
March 31, 2015 | | |
March 31, 2014 | |
| |
% of total | | |
% of total | |
Materials costs | |
| 58.8 | % | |
| 69.4 | % |
Factory overhead | |
| 21.7 | % | |
| 15.3 | % |
Energy expense | |
| 12.0 | % | |
| 9.6 | % |
Packaging materials | |
| 3.2 | % | |
| 2.7 | % |
Direct labor | |
| 4.3 | % | |
| 3.0 | % |
Cost of goods sold during the first
quarter of 2015 totaled RMB60.6 million (US$9.8 million) as compared to RMB70.8 million in the same period of 2014. This was
RMB10.2 million or 14.4% lower than the same period in 2014. The reduction of unit price and sales volume caused a decrease
of RMB5.0 million and 5.2 million, respectively. The decrease of cost of goods sold was mainly due to the price reduction
of main raw materials.
Gross Loss
Our gross loss was RMB7.8 million (US$1.3
million) for the first quarter ended March 31, 2015, representing a gross margin of negative 14.8%, as compared to a gross margin
of negative 0.1% for the same period in 2014. Correspondingly, gross loss rate increased by 14.7 percentage points compared to
the same period in 2014. Our average product sales prices decreased by 19.5% compared to the same period in 2014 while the average
cost of goods sold decreased by 7.7% compared to the same period last year. Consequently, the decrease in average product sales
prices was significantly higher than that in the average cost of goods sold during the first quarter ended March 31, 2015, which
contributed to the increase in our gross loss margin compared with the same period in 2014.
Operating Expenses
Operating expenses for the first quarter
ended March 31, 2015 were RMB8.8 million (US$1.4 million), which was RMB1.6 million, or 15.4% lower than the same period in 2014.
This decrease was mainly due to decreased general and administration expenses in the first quarter of 2015.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Other Income
(Expense)
Total other income is a combination result
of interest income, interest expense and others income (expense). Total other income during the first quarter ended March 31, 2015
was RMB2.7 million (US$0.4 million), RMB5.6 million higher than the same period in 2014. This is mainly attributed to the previously
recognized impairment losses relating to the long-term deposit are reversed as a result of the refund of total long-term deposit
from Joyinn.
Income Tax Benefit (Expense)
The income tax expense was RMB1.0 million
(US$0.2 million) during the first quarter ended March 31, 2015, compared to income tax benefit of RMB0.1 million during the same
period in 2014. This decrease of income tax benefit was due to changes in deferred tax.
Net Loss
Net loss attributable to the Company during
the first quarter ended March 31, 2015 was RMB15.0 million (US$2.4 million) compared to net loss attributable to the Company of
RMB13.3 million during the same period in 2014, representing an increase of RMB1.7 million.
Liquidity and Capital Resources
Our capital expenditures have been primarily
from cash generated from our operations and borrowings from related parties, financial institutions, including through sale-leaseback
transactions. The interest rates of borrowings from financial institutions during the period from the first quarter of 2014 to
the first quarter of 2015 ranged from 5.535% to 7.20%.
On December 21, 2012, Shandong Fuwei signed
a sale-leaseback contract with International Far Eastern Leasing Co., Ltd. (“Far Eastern Leasing”). Far Eastern Leasing
purchased certain equipment included in the third production line, and simultaneously leased them back to Shandong Fuwei. Shandong
Fuwei will pay rent totaling RMB21.94 million (including interest) to Far Eastern Leasing over the three years ended December 26,
2015. In March 2013, Shandong Fuwei signed another sale-leaseback contract with Far Eastern Leasing, pursuant to which it has agreed
to pay total rent of RMB5.48 million (including interest) to Far Eastern Leasing over the three years ended April 9, 2016. The
financed equipment mentioned above is covered by an insurance policy, the premium of which will be paid by Shandong Fuwei. The
contract was guaranteed by the following entities: Weifang State-owned Assets Operation Administration Company, Fuwei Films (Holdings)
Co., Ltd., Fuwei (BVI) Co., Ltd., and Beijing Shiweitong Science and Technology Co., Ltd. In August 2014, Shandong SNTON Group Co.,
Ltd. accepted the responsibility of guarantee for the Group's obligation from Beijing Shiweitong Technology Development Co., Ltd.
On November 20, 2009, we signed a long-term
loan agreement of RMB10.0 million (US$1.613 million) with Weifang Dongfang State-owned Assets Management Co., Ltd., with an eight-year
loan term, which became effective on October 19, 2009 and will expire on October 18, 2017. From 2015 to 2016, we will make principal
installment payments of RMB3.35 million (US$0.54 million) per year with the remaining principal balance of RMB3.30 million (US$0.533
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 March 31, 2014 is
5.535%. The loan is guaranteed by Shandong Deqin Investment& Guarantee Co., Ltd. and is used for our projects.
In April 2014, we obtained a loan for
a total amount of RMB105 million from Shandong SNTON Optical Materials Technology Co., Ltd. (the “Shandong
SNTON”) to pay off certain short-term loans due to Bank of Communications Co., Ltd. The interest shall be calculated at
the benchmark rate, plus an additional 20% of the said benchmark rate, for the loan of the same term announced by the
People’s Bank of China. The interest must be paid quarterly and settled in full at the end of the year. As of December
31, 2014, the principle of this loan and the interest have not been paid. In March 2015, the Company entered into a
supplemental agreement with Shandong SNTON pursuant to which the parties agreed that the Company will pay off the principle
of this loan plus interest upon availability of new loans from banks or other financial institutions.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
As of March 31, 2015, the principle of
this loan was RMB104.8 million and the interest was RMB7.21 million.
In May 2014, the Company borrowed RMB15
million from Shandong SNTON Group Co., Ltd. (the “SNTON Group”) solely to purchase raw materials. The interest shall
be calculated at the benchmark rate, plus an additional 20% of the said benchmark rate, for the loan of the same term announced
by the People’s Bank of China. The interest shall be paid quarterly and settled in full at the end of the year. The Company
has agreed to repay this loan prior to December 31, 2014. As of December 31, 2014, the principle of this loan and the interest
have not been paid. In March 2015, the Company entered into a supplemental agreement with SNTON Group pursuant to which that the
Company agreed to pay off the principle of this loan plus interest upon availability of new loans from banks or other financial
institutions. As of March 31, 2015, the principle of this loan from SNTON Group was RMB15 million and the interest was RMB0.92
million.
In March 2015, SNTON Group provided the
Company with a second loan of RMB2 million which was returned in April, 2015.
As of March 31, 2015, the total principle
of loans from related party was RMB121.8 million and the interest payable was RMB8.13 million.
We believe that, after taking into consideration
our present and potential future loans from related parties and banking facilities, existing cash and the expected cash flows to
be generated from our operations, we will have adequate sources of liquidity to meet our short-term obligations and our working
capital requirements.
Operating Activities
Net cash used in operating activities for
the three months ended March 31, 2015 was RMB7.7 million (US$1.2 million) compared to net cash used in operating activities of
RMB2.5 million for the three months ended March 31, 2014. This increase in net cash flows used in operating activities was primarily
attributable to the increase of loss.
Working Capital
As of March 31, 2015 and December 31, 2014,
we had a working capital deficit of RMB138.9 million (US$22.4 million) and RMB152.0 million, respectively. Working capital deficit
decreased by RMB13.1 million (US$2.1 million), or 8.6% compared to the amount as of December 31, 2014. Our current liability is
mainly loans from related parties.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Contractual Obligations
The following table is a summary of our contractual
obligations as of March 31, 2015 (in thousands RMB):
| |
Payments due by period | |
| |
| | |
Less than | | |
1-3 | | |
3-5 | | |
More than | |
Contractual obligations | |
Total | | |
1 year | | |
years | | |
years | | |
5 years | |
| |
| | |
| | |
| | |
| | |
| |
Rental obligations | |
| 516 | | |
| 372 | | |
| 144 | | |
| - | | |
| - | |
Purchase obligations | |
| 2,266 | | |
| 2,266 | | |
| - | | |
| - | | |
| - | |
Capital lease obligations | |
| 6,557 | | |
| 6,557 | | |
| - | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Total | |
| 9,339 | | |
| 9,195 | | |
| 144 | | |
| - | | |
| - | |
Third Production Line Update
The third production line has been put
into trial operation at the end of January 2013. As of September 2013, our third production line has been approved. A sample diffusion
film (a type of TFT-LCD optical film) was preliminarily accepted by four customers after being delivered to these four customers
for testing. We are supplying small batches of products according to one of the four customer’s purchase order. In addition,
a sample base film for solar backsheets has been delivered to a customer for initial testing. We received an initial feedback from
this customer and are taking measures in accordance to the feedback accordingly.
Legal Proceedings
From time to time, we may be subject to
legal actions and other claims arising in the ordinary course of business. Shandong Fuwei is currently a party to four legal proceedings
in China.
On July 9, 2012, a client filed a lawsuit
in Beijing Daxing District People’s Court against Shandong Fuwei claiming RMB953,113 plus interest over disputes arising
from a Procurement Contract between the parties. Shandong Fuwei raised a jurisdictional objection upon filing its plea, and Beijing
Daxing District People’s Court overruled the objection. Shandong Fuwei filed an appeal against the judgment in the First
Intermediate People’s Court of Beijing. The appeal was dismissed on January 23, 2013. On May 15, 2013, Beijing Daxing District
People’s Court heard the case and adjourned the hearing due to the fact that plaintiff failed to provide sufficient evidence.
On June 25, 2013, the case was heard in Beijing Daxing District People’s Court again and it was further adjourned due to
plaintiff’s failure to provide sufficient evidence. The case was then scheduled to be heard on August 7, 2013. However, on
the day prior to re-scheduled hearing, Shandong Fuwei was informed by Beijing Daxing District People’s Court that the hearing
was adjourned further for the same reason that plaintiff failed to provide sufficient evidence. On April 21, 2014, the case was
heard, and the plaintiff failed to provide sufficient evidence and the hearing was further adjourned. On May 28, 2014, the case
was heard and the plaintiff provided some evidence. On August 25, 2014, the case was heard again. On November 5, 2014, the court
accepted the withdrawal application from the plaintiff. On November 26, 2014, the plaintiff filed a second lawsuit in Beijing Daxing
District People’s Court against Shandong Fuwei over disputes arising from the Procurement Contract between the parties claiming
RMB618,230 plus interest as a result of non- payment. The case was heard on January 26, 2015, and March 3, 2015, where the two
parties testified over the relevant evidence. To date, the case has not been decided.
On January 21, 2014, Shandong Fuwei received
a complaint from Zeng Wenhong, a Hong Kong citizen, plaintiff against Shandong Fuwei with a claim for a refund of US$500,000 (approximately
RMB4,138,250) and related interest of RMB2,331,784. The plaintiff alleged that Shandong Fuwei has agreed to sell to the plaintiff
ordinary shares of the Company pursuant to an oral agreement between the plaintiff and Shandong Fuwei in June 2005, and as a result
the plaintiff transferred US$500,000 to Wellplus Investments (Hong Kong) Limited to be used for acquiring the ordinary shares of
the Company. However, the plaintiff never received such shares. The case was heard by the Intermediate People's Court of Weifang
on April 3, 2014. On October 28, 2014, the case was heard again and the plaintiff submitted additional evidence. The court is in
the process of reviewing the case and to date no judgment has been entered.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
On June 28, 2014, an equipment
supplier filed a lawsuit in Weifang High-Tech District People’s Court against Shandong Fuwei over disputes arising from
a Procurement Contract between the parties with a claim for RMB844,000 plus interest of RMB134,000. The case has been settled
between the two parties. Pursuant to the terms of the settlement, Shandong Fuwei shall pay the plaintiff RMB750,000 through
bank acceptance note prior to February 7, 2015. The remaining balance of RMB94,000 shall be paid within two days of reaching
resolution on the eight remaining disputes between the two parties. Thereafter, neither party will bear any further
liability. To date, Shandong Fuwei has made a payment to the plaintiff in the amount of RMB750,000.
On September 26, 2014, a client filed a
lawsuit in Beijing Daxing District People’s Court against Shandong Fuwei over disputes arising from a Procurement Contract
between the two parties for an amount of RMB99,702.88. Shandong Fuwei raised an objection upon filing its plea. On April 9, 2015,
the Beijing Daxing District People’s Court overruled the objection. Shandong Fuwei filed an appeal against the judgment in
the Second Intermediate People’s Court of Beijing. To date, the case has not been decided.
Exhibit Index
Exhibit No. |
|
Description |
4.1 |
|
Use of Capital Supplemental Agreement for an amount of RMB105,000,000 between Fuwei Films (Shandong) Co. Ltd. and Shandong SNTON Optical Materials Technology Co., Ltd. dated March 9, 2015. |
|
|
|
4.2 |
|
Use of Capital Supplemental Agreement for an amount of RMB15,000,000 between Fuwei Films (Shandong) Co. Ltd. and Shandong SNTON Group Co., Ltd. dated March 9, 2015. |
|
|
|
99.1 |
|
Press Release dated May 21, 2015. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
|
Fuwei Films (Holdings) Co., Ltd. |
|
|
By: |
/s/
Zengyong Wang |
|
|
Name: Zengyong Wang |
|
|
Title: Chairman and Chief Executive Officer |
Dated: May 21, 2015
Exhibit
4.1
Use of
Capital Supplemental Agreement
(Unofficial
English Translation Solely for Convenience)
Capital Lender: Shandong SNTON Optical
Materials Technology Co., Ltd. (the “Shandong SNTON”)
Capital Borrower: Fuwei Films (Shandong)
Co., Ltd. (the “Fuwei Shandong”)
On April 2, 2014, Fuwei Shandong entered
into a Use of Capital Agreement with Shandong SNTON pursuant to which the parties agreed that Shandong SNTON will provide Fuwei
Shandong with a loan for a total amount of RMB105,000,000 to pay off certain short-term loans due to Bank of Communications Co.,
Ltd. The interest shall be calculated at the benchmark rate, plus an additional 20% of the said benchmark rate, for the loan of
the same term announced by the People’s Bank of China. The interest must be paid quarterly and settled in full at the end
of the year. Fuwei Shandong has agreed to repay the said amount of RMB105,000,000 upon obtaining a loan from Bank of Communications
Co., Ltd. or through other financing means.
Considering the unavailability of obtaining
loans from banks or other financial institutions and the current financial status of Fuwei Shandong, the two parties entered into
a Supplemental Agreement as set forth below:
| 1. | As of December 31, 2014, Fuwei Shandong shall repay the principle of this loan plus interest at
a total amount of RMB110,476,600. |
| 2. | Fuwei Shandong shall pay Shandong SNTON interest which 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. |
| 3. | Fuwei Shandong has agreed to repay the principle of this loan plus interest upon obtaining a loan
from Bank of Communications Co., Ltd. or through other financing means. |
| 4. | This agreement is in duplicates and each party holds one copy. |
Shandong SNTON Optical Materials Technology
Co., Ltd. (chop)
Fuwei Films (Shandong) Co., Ltd. (chop)
Date: March 9, 2015.
Exhibit 4.2
Use of Capital Supplemental Agreement
(Unofficial
English Translation Solely for Convenience)
Capital Lender: Shandong SNTON Group
Co., Ltd. (the “SNTON Group”)
Capital Borrower: Fuwei Films (Shandong)
Co., Ltd. (the “Fuwei Shandong”)
On May 20, 2014, Fuwei Shandong entered
into a Use of Capital Agreement with SNTON Group pursuant to which the parties agreed that SNTON Group will provide Fuwei Shandong
with a loan for a total amount of RMB15,000,000 to solely to purchase raw materials. The interest shall be calculated at the benchmark
rate, plus an additional 20% of the said benchmark rate, for the loan of the same term announced by the People’s Bank of
China. Fuwei Shandong has agreed to repay the said amount of RMB15,000,000 plus interest before December 31, 2014.
Considering the current financial status
of Fuwei Shandong, the two parties enter into a Supplemental Agreement as set forth below:
| 1. | As of December 31, 2014, Fuwei Shandong shall repay the principle of this loan plus interest at
a total amount of RMB15,668,800. |
| 2. | Fuwei Shandong shall pay Shandong SNTON interest which 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. |
| 3. | Fuwei Shandong has agreed to repay the principle of this loan plus interest upon obtaining new
loans from financing institutions. |
| 4. | This agreement is in duplicates and each party holds one copy. |
Shandong SNTON Group Co., Ltd. (chop)
Fuwei Films (Shandong) Co., Ltd. (chop)
Date: March 9, 2015.
Exhibit
99.1
Fuwei Films
Announces Its Unaudited Financial
Results for the First Quarter of 2015
-Teleconference
to be Held on Friday, May 22, 2015 at 9:00 am EDT–
BEIJING, May 21, 2015 - Fuwei Films
(Holdings) Co., Ltd. (Nasdaq: FFHL) (“Fuwei Films” or the “Company”), a manufacturer and distributor of
high-quality BOPET plastic films in China, today announced its unaudited financial results for the first quarter of 2015 ended
March 31, 2015.
Highlights
| § | Net sales during the first quarter ended
March 31, 2015 were RMB52.8million or US$8.5 million, compared to RMB70.7million, during the same period in 2014, representing
a decrease of RMB17.9 million or 25.3%. |
| § | Net loss attributable to the Company during
the first quarter ended March 31, 2015 was RMB15.0 million or US$2.4 million compared to net loss attributable to the Company of
RMB13.3 million during the same period in 2014, representing an increase of RMB1.7 million. |
| § | Basic and diluted net loss per share was RMB1.15 or US$0.19 and RMB1.02
for the three-month period ended March 31, 2015and 2014, respectively. |
| § | Net cash used in operating activities
for the three months ended March 31, 2015 was RMB7.7 million or US$1.2 million compared to net cash used in operating activities
of RMB2.5 million for the three months ended March 31, 2014. This increase in net cash flows used in operating activities was primarily
attributable to the increase of loss. |
Mr. Zengyong Wang, Chairman and CEO of Fuwei
Films, commented, “The first quarter financial results continued to reflect weakened market conditions due to significant
competition which caused oversupply and excess capacity in the marketplace. However, we continue to believe that our focus on innovation
will enable the Company to better approach the current down cycle while increasing the ratio of high-valued films.”
First Quarter 2015Results
Net sales during the first quarter ended March
31, 2015 were RMB52.8million or US$8.5 million, compared to RMB70.7million, during the same period in 2014, representing a decrease
of RMB17.9 million or 25.3%, mainly due to the reduction of average sales price and sales volume arising from stronger competition
in China and a reduction in the prices of raw materials. The decrease of output caused by the repair of the production lines from
February 2015 to March 2015 also contributed to the reduction of sales volume.
Overseas sales were RMB13.1 million
or US$2.1 million, or 24.8% of total revenues, compared with RMB10.5 million or 14.8% of total revenues in the first quarter
of 2014, representing an increase of RMB2.6 million or 24.8%. The reduction of average sales price caused a decrease of
RMB3.1 million and the increase in sales volume resulted in an increase of RMB5.7 million. The increase in overseas sales was
mainly due to the increase of sales volume.
The following is a breakdown of PRC domestic
and overseas sales (amounts in thousands except percentages):
| |
Three-Month Period Ended March 31, 2014 | | |
% of Total | | |
Three-Month Period Ended March 31, 2014 | | |
% of Total | |
| |
RMB | | |
US$ | | |
| | |
RMB | | |
| |
Sales in China | |
| 39,696 | | |
| 6,404 | | |
| 75.2 | % | |
| 60,238 | | |
| 85.2 | % |
Sales in other countries | |
| 13,080 | | |
| 2,110 | | |
| 24.8 | % | |
| 10,467 | | |
| 14.8 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| 52,776 | | |
| 8,514 | | |
| 100.0 | % | |
| 70,705 | | |
| 100.0 | % |
Our gross loss was RMB7.8 million or US$1.3
million for the first quarter ended March 31, 2015, representing a gross loss margin of 14.8%, as compared to a gross loss margin
of 0.1% for the same period in 2014. Our average product sales prices decreased by 19.5% compared to the same period in 2014 while
the average cost of goods sold decreased by 7.7% compared to the same period last year. Consequently, the decrease in average product
sales prices was significantly higher than that in the average cost of goods sold during the first quarter ended March 31, 2015,
which contributed to the increase in gross loss margin compared with the same period in 2014.
Operating expenses for the first quarter ended
March 31, 2015 were RMB8.8 million or US$1.4 million, which was RMB1.6 million, or 15.4% lower than the same period in 2014. This
decrease was mainly due to decreased general and administration expenses in the first quarter of 2015.
Net loss attributable to the Company during
the first quarter ended March 31, 2015 was RMB15.0 million or US$2.4 million compared to net loss attributable to the Company of
RMB13.3 million during the same period in 2014, representing an increase of RMB1.7 million.
Basic and diluted net loss per share was RMB1.15
or US$0.19 and RMB1.02 for the three-month period ended March 31, 2015and 2014, respectively.
Total shareholders’ equity was RMB373.9
million or US$60.3 million as of March 31, 2015, compared with RMB388.9million as of December 31, 2014.
As of March 31, 2015, the Company had 13,062,500
basic and diluted ordinary shares outstanding.
Conference Call Information
The Company will host a teleconference on Friday, May 22, 2015,
at 9:00 a.m. EDT / 9:00 p.m. Beijing time to discuss the financial results. To participate in the call, please dial +1-877-407-9205
in North America, or +1-201-689-8054 internationally, approximately 10 minutes prior to the scheduled start time.
A replay of the call can also be accessed via telephone by calling
+1-877-660-6853 in North America, or +1-201-612-7415 internationally, and entering the following Conference ID: 13609782. The replay
will be available until June 22, 2015, at 11:59 p.m. EDT.
About Fuwei Films
Fuwei Films conducts its business through
its wholly owned subsidiary, Fuwei Films (Shandong) Co., Ltd. (“Fuwei Shandong”). Fuwei Shandong develops,
manufactures and distributes high-quality plastic films using the biaxial oriented stretch technique, otherwise known as
BOPET film (biaxially oriented polyethylene terephthalate). Fuwei's BOPET film is widely used to package food, medicine,
cosmetics, tobacco, and alcohol, as well as in the imaging, electronics, and magnetic products industries.
Safe Harbor
This press release contains
information that constitutes forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995 and are subject to risks. Risk factors that could contribute to such differences include those matters more
fully disclosed in the Company's reports filed with the U.S. Securities and Exchange Commission which, among other things, include;
significant competition in the BOPET film industry, especially the significant oversupply of BOPET films resulting from the rapid
growth of the Chinese BOPET industry capacity, changes in the international market and trade barriers, especially the adverse impact
of the antidumping investigation and imposition of an anti-dumping duty on imports of the BOPET films originating from the People's
Republic of China ("China") conducted by certain main importing countries; fluctuations of RMB exchange rate, the reduce
in demand for the Company's products or the loss of main customers which may result in the decrease of sales, and negatively influencing
the Company's financial performance, uncertainty as to the future profitability, uncertainty as to the Company's ability to successfully
obtain additional funds to meet the working capital needs of the new BOPET production line, uncertainty as to the Company's ability
to continuously develop new BOPET film products to be produced by the third production line and keep up with changes in BOPET film
technology, risks associated with possible defects and errors in its products including complaints and claims from clients, uncertainty
as to its ability to protect and enforce its intellectual property rights, uncertainty as to its ability to attract and retain
qualified executives and personnel, and uncertainty in acquiring raw materials on time and on acceptable terms, particularly in
light of the volatility in the prices of petroleum products in recent years, instability of power and energy supply, and the uncertainty
regarding the future operation of the Company in connection with the changes in the labor law in China, the measures taken by the
Chinese government to save energy and reduce emissions, and the complaints from nearby residents and local government about the
noise caused by our production as well as the uncertainty of the impact of major shareholder transfer that have substantial influence
over the Company and the Company's business operation including possible overlap of our BOPET products, customers and market orientation
with an BOPET film manufacturer, which is controlled by the same individual who has control over the shares of our major shareholder.
The forward-looking information provided herein represents the Company's estimates as of the date of the press release, and subsequent
events and developments may cause the Company's estimates to change. The Company specifically disclaims any obligation to update
the forward-looking information in the future. Therefore, this forward-looking information should not be relied upon as representing
the Company's estimates of its future financial performance as of any date subsequent to the date of this press release. Actual
results of our operations may differ materially from information contained in the forward-looking statements as a result of the
risk factors.
For more information, please
contact:
In China:
Ms. Xiaoli Yu
Investor Relations Manager
Phone: +86-133-615-59266
Email: fuweiIR@fuweifilms.com
In the U.S.:
Vivian Chen
Investor Relations
Grayling
Phone: +1-646-284-9427
Email: vivian.chen@grayling.com
Financial Tables to Follow
FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2015 AND DECEMBER 31, 2014
(amounts in thousands except share and per share
value)
(Unaudited)
| |
March 31, 2015 | | |
December 31, 2014 | |
| |
RMB | | |
US$ | | |
RMB | |
ASSETS |
Current assets | |
| | | |
| | | |
| | |
Cash and cash equivalents | |
| 6,499 | | |
| 1,048 | | |
| 9,020 | |
Restricted cash | |
| 31,001 | | |
| 5,001 | | |
| 48,085 | |
Accounts and bills receivable, net | |
| 7,244 | | |
| 1,169 | | |
| 9,867 | |
Inventories | |
| 26,671 | | |
| 4,302 | | |
| 24,034 | |
Advance to suppliers | |
| 3,467 | | |
| 559 | | |
| 7,512 | |
Prepayments and other receivables | |
| 20,846 | | |
| 3,363 | | |
| 18,772 | |
Deferred tax assets – current | |
| 1,756 | | |
| 283 | | |
| 2,794 | |
Total current assets | |
| 97,484 | | |
| 15,725 | | |
| 120,084 | |
| |
| | | |
| | | |
| | |
Plant, properties and equipment, net | |
| 470,619 | | |
| 75,919 | | |
| 482,534 | |
Construction in progress | |
| 1,046 | | |
| 169 | | |
| 366 | |
Lease prepayments, net | |
| 18,274 | | |
| 2,948 | | |
| 18,406 | |
Advance to suppliers - long term, net | |
| 636 | | |
| 103 | | |
| 722 | |
Long-term deposit | |
| - | | |
| - | | |
| 16,760 | |
Other Assets | |
| 12,277 | | |
| 1,980 | | |
| 12,500 | |
Deferred tax assets - non current | |
| 21,473 | | |
| 3,464 | | |
| 21,573 | |
| |
| | | |
| | | |
| | |
Total assets | |
| 621,809 | | |
| 100,308 | | |
| 672,945 | |
| |
| | | |
| | | |
| | |
LIABILITIES AND EQUITY |
Current liabilities | |
| | | |
| | | |
| | |
Long-term loan, current portion | |
| 3,350 | | |
| 540 | | |
| 3,350 | |
Due to related parties | |
| 129,932 | | |
| 20,960 | | |
| 125,938 | |
Accounts payables | |
| 24,521 | | |
| 3,956 | | |
| 29,484 | |
Notes payable | |
| 61,380 | | |
| 9,902 | | |
| 95,539 | |
Advance from customers | |
| 3,523 | | |
| 568 | | |
| 3,392 | |
Accrued expenses and other payables | |
| 7,244 | | |
| 1,169 | | |
| 6,095 | |
Obligations under capital leases-current | |
| 6,397 | | |
| 1,032 | | |
| 8,259 | |
Total current liabilities | |
| 236,347 | | |
| 38,127 | | |
| 272,057 | |
| |
| | | |
| | | |
| | |
Obligations under capital leases | |
| - | | |
| - | | |
| 303 | |
Long-term loan | |
| 6,650 | | |
| 1,073 | | |
| 6,650 | |
Deferred tax liabilities | |
| 5,714 | | |
| 922 | | |
| 5,816 | |
| |
| | | |
| | | |
| | |
Total liabilities | |
| 248,711 | | |
| 40,122 | | |
| 284,826 | |
| |
| | | |
| | | |
| | |
Equity | |
| | | |
| | | |
| | |
Shareholders’ equity | |
| | | |
| | | |
| | |
Registered capital(of US$0.129752 par value; 20,000,000 shares authorized; 13,062,500 issued and outstanding) | |
| 13,323 | | |
| 2,149 | | |
| 13,323 | |
Additional paid-in capital | |
| 311,907 | | |
| 50,316 | | |
| 311,907 | |
Statutory reserve | |
| 37,441 | | |
| 6,040 | | |
| 37,441 | |
Retained earnings | |
| 10,046 | | |
| 1,621 | | |
| 25,043 | |
Cumulative translation adjustment | |
| 1,175 | | |
| 188 | | |
| 1,199 | |
Total shareholders’ equity | |
| 373,892 | | |
| 60,314 | | |
| 388,913 | |
Non-controlling interest | |
| (794 | ) | |
| (128 | ) | |
| (794 | ) |
Total equity | |
| 373,098 | | |
| 60,186 | | |
| 388,119 | |
Total liabilities and equity | |
| 621,809 | | |
| 100,308 | | |
| 672,945 | |
FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
FOR THE THREE-MONTH PERIOD ENDED MARCH 31,
2015 AND 2014
(amounts in thousands except share and per share
value)
(Unaudited)
| |
The Three-Month Period Ended March 31, | |
| |
2015 | | |
2014 | |
| |
RMB | | |
US$ | | |
RMB | |
Net sales | |
| 52,776 | | |
| 8,514 | | |
| 70,705 | |
Cost of sales | |
| 60,601 | | |
| 9,776 | | |
| 70,774 | |
| |
| | | |
| | | |
| | |
Gross loss | |
| (7,825 | ) | |
| (1,262 | ) | |
| (69 | ) |
| |
| | | |
| | | |
| | |
Operating expenses | |
| | | |
| | | |
| | |
Selling expenses | |
| 3,196 | | |
| 516 | | |
| 3,359 | |
Administrative expenses | |
| 5,613 | | |
| 905 | | |
| 7,054 | |
Total operating expenses | |
| 8,809 | | |
| 1,421 | | |
| 10,413 | |
| |
| | | |
| | | |
| | |
Operating loss | |
| (16,634 | ) | |
| (2,683 | ) | |
| (10,482 | ) |
| |
| | | |
| | | |
| | |
Other income (expense) | |
| | | |
| | | |
| | |
- Interest income | |
| 520 | | |
| 84 | | |
| 380 | |
- Interest expense | |
| (2,331 | ) | |
| (376 | ) | |
| (3,168 | ) |
- Others (expense) income, net | |
| 4,484 | | |
| 723 | | |
| (88 | ) |
| |
| | | |
| | | |
| | |
Total other income (expense) | |
| 2,673 | | |
| 431 | | |
| (2,876 | ) |
| |
| | | |
| | | |
| | |
Loss before provision for income taxes | |
| (13,961 | ) | |
| (2,252 | ) | |
| (13,358 | ) |
| |
| | | |
| | | |
| | |
Income tax benefit(expense) | |
| (1,036 | ) | |
| (167 | ) | |
| 99 | |
| |
| | | |
| | | |
| | |
Net loss | |
| (14,997 | ) | |
| (2,419 | ) | |
| (13,259 | ) |
| |
| | | |
| | | |
| | |
Net loss attributable to non-controlling interests | |
| - | | |
| - | | |
| - | |
Net loss attributable to the Company | |
| (14,997 | ) | |
| (2,419 | ) | |
| (13,259 | ) |
| |
| | | |
| | | |
| | |
Other comprehensive income | |
| | | |
| | | |
| | |
- Foreign currency translation adjustments attributable to non-controlling interest | |
| - | | |
| - | | |
| (20 | ) |
- Foreign currency translation adjustments attributable to the Company | |
| (24 | ) | |
| (4 | ) | |
| (48 | ) |
| |
| | | |
| | | |
| | |
Comprehensive loss attributable to non-controlling interest | |
| - | | |
| - | | |
| (20 | ) |
Comprehensive loss attributable to the Company | |
| (15,021 | ) | |
| (2,423 | ) | |
| (13,307 | ) |
| |
| | | |
| | | |
| | |
Loss per share, Basic and diluted | |
| (1.15 | ) | |
| (0.19 | ) | |
| (1.02 | ) |
Weighted average number ordinary shares, Basic and diluted | |
| 13,062,500 | | |
| 13,062,500 | | |
| 13,062,500 | |
FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
FOR THE THREE-MONTH PERIOD ENDED MARCH 31,
2015 AND 2014
(amounts in thousands except share and per share
value)
(Unaudited)
| |
The Three-Month Period Ended March 31, | |
| |
2015 | | |
2014 | |
| |
| RMB | | |
| US$ | | |
| RMB | |
Cash flow from operating activities | |
| | | |
| | | |
| | |
Net loss | |
| (14,997 | ) | |
| (2,419 | ) | |
| (13,259 | ) |
Adjustments to reconcile net loss to net cash used in operating activities | |
| | | |
| | | |
| | |
- Loss on disposal of property, plant and equipment | |
| 4 | | |
| 1 | | |
| - | |
- Depreciation of property, plant and equipment | |
| 11,888 | | |
| 1,918 | | |
| 12,069 | |
- Amortization of intangible assets | |
| 132 | | |
| 21 | | |
| 132 | |
- Deferred income taxes | |
| 1,036 | | |
| 167 | | |
| (99 | ) |
- Bad debt expense | |
| (4,319 | ) | |
| (697 | ) | |
| 477 | |
Changes in operating assets and liabilities | |
| | | |
| | | |
| | |
- Accounts and bills receivable | |
| 2,535 | | |
| 409 | | |
| (1,072 | ) |
- Inventories | |
| (2,637 | ) | |
| (425 | ) | |
| (355 | ) |
- Advance to suppliers | |
| 4,211 | | |
| 679 | | |
| (10 | ) |
- Prepaid expenses and other current assets | |
| (377 | ) | |
| (61 | ) | |
| (264 | ) |
- Accounts payable | |
| (4,962 | ) | |
| (800 | ) | |
| (82 | ) |
- Accrued expenses and other payables | |
| 1,155 | | |
| 186 | | |
| (219 | ) |
- Advance from customers | |
| 132 | | |
| 21 | | |
| (1,443 | ) |
- Tax payable | |
| (1,475 | ) | |
| (238 | ) | |
| 1,639 | |
| |
| | | |
| | | |
| | |
Net cash used in operating activities | |
| (7,674 | ) | |
| (1,238 | ) | |
| (2,486 | ) |
| |
| | | |
| | | |
| | |
Cash flow from investing activities | |
| | | |
| | | |
| | |
Purchases of property, plant and equipment | |
| 22 | | |
| 4 | | |
| (1,639 | ) |
Restricted cash related to trade finance | |
| 17,084 | | |
| 2,756 | | |
| 1,992 | |
Advanced to suppliers - non current | |
| 86 | | |
| 14 | | |
| (811 | ) |
Amount change in construction in progress | |
| (680 | ) | |
| (110 | ) | |
| 265 | |
Return of long-term deposit | |
| 21,000 | | |
| 3,388 | | |
| - | |
| |
| | | |
| | | |
| | |
Net cash used in investing activities | |
| 37,512 | | |
| 6,052 | | |
| (193 | ) |
| |
| | | |
| | | |
| | |
Cash flow from financing activities | |
| | | |
| | | |
| | |
Proceeds from related party | |
| 3,993 | | |
| 644 | | |
| - | |
Payment of capital lease obligation | |
| (2,165 | ) | |
| (349 | ) | |
| (2,028 | ) |
Change in notes payable | |
| (34,159 | ) | |
| (5,510 | ) | |
| (3,985 | ) |
Net cash (used in) provided by financing activities | |
| (32,331 | ) | |
| (5,215 | ) | |
| (6,013 | ) |
| |
| | | |
| | | |
| | |
Effect of foreign exchange rate changes | |
| (28 | ) | |
| (464 | ) | |
| (9 | ) |
| |
| | | |
| | | |
| | |
Net decrease in cash and cash equivalent | |
| (2,521 | ) | |
| (865 | ) | |
| (8,701 | ) |
| |
| | | |
| | | |
| | |
Cash and cash equivalent | |
| | | |
| | | |
| | |
At beginning of period/year | |
| 9,020 | | |
| 1,913 | | |
| 11,578 | |
At end of period/year | |
| 6,499 | | |
| 1,048 | | |
| 2,877 | |
| |
| | | |
| | | |
| | |
SUPPLEMENTARY DISCLOSURE: | |
| | | |
| | | |
| | |
Interest paid | |
| 2,331 | | |
| 376 | | |
| 3,168 | |
Income tax paid | |
| - | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | |
SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND FINANCIAL ACTIVITIES: | |
| | | |
| | | |
| | |
Account payable for plant and equipment: | |
| 2,266 | | |
| 366 | | |
| 8,275 | |
Obligations for acquired equipment under capital lease: | |
| 6,397 | | |
| 1,032 | | |
| 14,848 | |
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