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Nam Tai Property Inc. Reports Q2 2017 Results

2017-07-31 21:09
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SHENZHEN, China, July 31, 2017 /PRNewswire/ -- Nam Tai Property Inc. ("Nam Tai" or the "Company") (NYSE Symbol: NTP) today announced its unaudited results for the second quarter ended June 30, 2017.

KEY HIGHLIGHTS

(In thousands of US dollars, except per share data, percentages and as otherwise stated)



Quarterly Results



Half year Results




Q2 2017



Q2 2016



YoY(%)(d)



1H 2017



1H 2016



YoY(%)(d)


Operation income


$

541



$

637




(15)



$

1,135



$

1,291




(12)


Net operation income


$

541



$

347




56



$

1,135



$

551




106


of operation income



100

%



54.5

%







100

%



42.7

%





Operating loss


$

(2,337)



$

(1,506)






$

(3,727)



$

(3,525)





% of operation income



(432.0)

%



(236.4)

%







(328.4)

%



(273.0)

%





per share (diluted)


$

(0.06)



$

(0.04)






$

(0.10)



$

(0.10)





Net income (loss) (a) (b)


$

2,085



$

(2,643)






$

3,899



$

(2,984)





% of operation income



385.4

%



(414.9)

%







343.5

%



(231.1)

%





Basic income (loss) per share


$

0.06



$

(0.07)






$

0.11



$

(0.08)





Diluted income (loss) per share


$

0.06



$

(0.07)






$

0.10



$

(0.08)





Weighted average number of shares ('000)

























Basic



36,575




36,700








36,518




36,700






Diluted



37,210




36,700








37,138




36,700






 

Notes:

(a) Net income for the three months ended June 30, 2017 mainly included exchange gain of $2.7 million as a result of the appreciation of Renminbi against US dollars in Q2 2017, interest income of $1.8 million earned from time deposits and net operation income $0.5 million, but partly offset by general and administrative expenses of $2.9 million. 

(b) Net income for the six months ended June 30, 2017 mainly included interest income of $4.3 million earned from time deposits, exchange gain of $3.5 million as a result of the appreciation of Renminbi against US dollars during the six months ended June 30, 2017 and net operation income $1.1 million, but partly offset by general and administrative expenses of $4.9 million. 

(c) Capitalization on project investment was $3.5 million for Q2 2017, totaling $4.9 million for the first half of year 2017 and our accumulated project investment was $43.6 million up to June 30, 2017, which was recorded under the account of real estate properties under development in the balance sheet as at June 30, 2017.

(d)  Percentage change is not applicable if either of the two periods contains a loss.

(e)  This information has been published on the Company's website http://www.namtai.com/investors#investors/quarterly_earnings under the quarterly earnings report of Q2 2017 on page 7, Condensed Consolidated Statements of Comprehensive Income.

(f)   Attached please find the unaudited financial results cut off July 28, 2017 for additional reference.

 

 

SUPPLEMENTARY INFORMATION (UNAUDITED) IN THE SECOND QUARTER OF 2017
Key Highlights of Financial Position



As at
June 30,



As at December 31,



As at
June 30,




2017



2016



2016


Cash, cash equivalents and short term

   investments


$170.7 million(a)



$184.2 million



$199.7million


Ratio of cash(b) to current liabilities


16.34



14.79



52.60


Current ratio


18.56



16.63



58.69


Ratio of total assets to total liabilities


24.39



19.98



69.31


Return on equity


3.2

%


(3.8)

%


(2.3)

%

Ratio of total liabilities to total equity


0.04



0.05



0.01


Notes:

(a)         As compared with December 31, 2016, the decrease of $13.5 million in the cash, cash equivalents and short term investments was mainly due to the payments of $13.4 million for new office premises and $3.0 million being made for land development project and accordingly was recorded under the account of real estate properties under development in the balance sheet as at June 30, 2017, partly offset by the exchange gain of $3.2 million as a result of the appreciation of Renminbi against US dollars during the six months ended June 30, 2017.

(b)         Cash in the financial ratio included cash, cash equivalents and short term investments in the amount of $170.7 million, $184.2 million and $199.7 million as at June 30, 2017, December 31, 2016 and June 30, 2016 respectively. As compared with June 30, 2016, the decrease of $29.0 million in the cash, cash equivalents and short term investments was mainly due to the payments of $13.4 million for new office premises, $6.6 million for dividend payment, $5.3 million being made for land development project and accordingly was recorded under the account of real estate properties under development in the balance sheet as at June 30, 2017, and the exchange loss of $0.8 million as a result of the depreciation of Renminbi against US dollars from June 30, 2016 to June 30, 2017.

OPERATING RESULTS

Operation income for the second quarter of 2017 and the same quarter of last year were mainly derived from properties and lands located in Shenzhen. Operating loss for the second quarter of 2017 was $2.3 million, an increase of $0.8 million, compared to operating loss of $1.5 million in the second quarter of 2016.

Net income for the second quarter of 2017 was $2.1 million mainly represented exchange gain of $2.7 million as a result of the appreciation of Renminbi against US dollars in the second quarter of 2017, interest income of $1.8 million earned from time deposits and net operation income of $0.5 million, but partly offset by general and administrative expenses of $2.9 million, or income of $0.06 per diluted share. Compared to the financial results for the same period in 2016, the net loss then of $2.6 million mainly represented exchange loss of $2.3 million as a result of the depreciation of Renminbi against US dollars in Q2 of 2016 and general and administrative expenses of $1.9 million, but partly offset by the interest income of $1.3 million earned from time deposits and net operation income of $0.3 million, or a loss of $0.07 per diluted share.

Net income for the six months ended June 30, 2017 was $3.9 million mainly represented interest income of $4.3 million earned from time deposits, exchange gain of $3.5 million as a result of the appreciation of Renminbi against US dollars during the six months ended June 30, 2017 and net operation income of $1.1 million, but partly offset by general and administrative expenses of $4.9 million, or income of $0.10 per diluted share. Compared to the financial results for the same period in 2016, the net loss then of $3.0 million mainly represented general and administrative expenses of $4.1 million and exchange loss of $2.3 million as a result of the depreciation of Renminbi against US dollars during the six months ended June 30, 2016, but partly offset by the interest income of $2.9 million earned from time deposits and net operation income of $0.6 million, or a loss of $0.08 per diluted share.

As the majority of our assets are denominated in Renminbi, the translation of Renminbi denominated assets to US dollars for reporting purposes has resulted in foreign exchange gain for the six months ended June 30, 2017. Due to the fluctuation of exchange rate for Renminbi against the US dollar, foreign exchange gain for the six months ended June 30, 2017 was $3.5 million, or approximately 91% of the amount of our net income for this period. However, since the majority of our payment obligations are also denominated in Renminbi, we do not expect the movement of Renminbi against the US dollar to materially and adversely impact our business. 

Capitalization on project investment was $3.5 million for Q2 2017, totaling $4.9 million for the first half of year 2017 and our accumulated project investment was $43.6 million up to June 30, 2017, which was recorded under the account of real estate properties under development in the balance sheet as at June 30, 2017.

Our business of land development is currently in the preparatory stage where it takes time to apply for the relevant licenses and permits from the PRC government. During this preparatory stage of the land development, our only sources of income are from limited deposit interest and rental income; therefore, we expect to continue to incur losses during this stage.

Please see page 7 of the Company's Condensed Consolidated Statements of Comprehensive Income for further details. This information has also been published on the Company's website at http://www.namtai.com/investors#investors/quarterly_earnings in the quarterly earnings report of Q2 2017 on page 7, Condensed Consolidated Statements of Comprehensive Income.

COMPANY OUTLOOK

With respect to the development of "Inno Park" and "Inno City" in Shenzhen, the construction permit application processes have been proceeding smoothly and every related step is on schedule and within the Company's expectations.

As part of our preparation for the development of "Inno Park", the Company is pleased to report that after our internal team has been working closely with the external project management company (WSP), quantity surveyor (Currie & Brown) and architectural design firm (Ronald Lu and Partners) on the construction drawing design and the tender for the general construction contractor, the main construction contractor will be selected in the second half of this year and commence work in the beginning of 2018. Since the construction work for the basement area started ahead of schedule, we held a groundbreaking ceremony for the construction of the basement area on May 5, 2017.

As part of our preparation for the development of "Inno City", the PRC Government has verbally agreed and approved the construction of Phase I and II of "Inno City" to be combined together as one single project and the Company is currently waiting for the official approval from the PRC Government. This could significantly lower the costs and shorten the time of the construction. The Company is currently negotiating and finalizing its agreements with the selected architectural design firm, the project management company and quantity surveyor. They are expected to be engaged and commence work in the second half of this year. As the Inno City Project may commence ahead of schedule upon the receipt of the approval to combine the two phases, the Company plans to demolish all the old factory buildings between October to December 2017. The Company has also purchased new office premises for a total amount of $13.5 million in April 2017. The Company will move its headquarters to this new location and demolish the existing headquarters in the first half of 2018.

Our Chairman, Mr. M.K. Koo ("Mr. Koo"), announced on July 12, 2017 that he has entered into a share purchase agreement to dispose all of his shareholdings in the Company to Kaisa Group Holdings Ltd. (1638:Hong Kong) ("Kaisa"), a real estate developer listed on The Stock Exchange of Hong Kong Limited. The closing of which is scheduled no later than August 11, 2017, and subject to Kaisa's satisfaction of due diligence review and other customary closing conditions. Consistent with the Company's previously announced strategic plan to identify a strategic partner that can assist the Company in its various development projects, the Company is now pleased to introduce Kaisa, after a three year search, as the best candidate identified to become an investor and potential strategic partner.

Part I: Summary of gross floor areas for the two projects:



Inno Park

Shenzhen, Guangming

          (Approved)              


Inno City

Shenzhen, Gushu

            (Planned)         



(In square meters, except plot ratios)

Land area


103,739


52,625

Plot ratios


2.59


6.00



Office


175,406


Office + Soho


187,880



Apartment


61,000


Apartment


48,300

Gross floor area (GFA)


Commercial


28,594


Commercial


25,000



Other


4,159


Other


7,200





269,159




268,380

Underground floor area




62,673




80,000

Total construction floor area (CFA)




331,832




348,380

Remark


The above figures are subject to adjustment upon the final approval of the relevant authorities in China.




Part II: Timetable for the two projects:





Main Certificates


Estimated Completion Time







Inno Park


Inno City


2017


2018


2019


2020


2021

A


Land Use Permit


Obtained Jun 4, 2015


Mar. 2018





*











B


Land Certificate


Obtained Sep 21, 2015


Jun. 2018






*










C


Planning Permit for Construction Engineering


Aug. 2017


Jul. 2018



#



*










D


D1


Early Construction Permit for Pile Foundation


May. 2017


-----


#















D2


Construction Permit for Project


Nov. 2017


Nov. 2018



#



*











D3


Main Construction Acceptance


May. 2019


Sep. 2020








#




*





D4


Completion Time


Sep. 2019


Jan. 2021









#





*


E


Real Estate Certificate


Mar. 2020


Jul. 2021











#




*

Remark


1. Number signs # represent "Inno Park", while stars * are for "Inno City".


2. The construction of "Inno Park" has commenced from April 2017.


3. The construction of "Inno City" is expected to commence before December 2018.



Part III: Budgetary Estimate for the two projects:




Total Cost


Inno Park


Inno City









(In millions of US dollars)






Construction Cost



$   312



$    415






Operation Cost



69



43






Total



$   381



$    458






Remark


The $839 million Schematic Design Estimation was prepared by our quantity surveyor, Currie & Brown, based on a schematic design originally prepared by our architectural design firm. This estimate will be used by us for cost control purposes to monitor the costs of design, construction, and other operations.

 

This estimation does not include the costs of marketing and interior furnishing. If the developed properties are offered for sale, the costs would also have to include payment for land appreciation tax.


As for our Wuxi plant, the factory building continues to be listed for sale and we still expect it to be sold sometime within 2017. An auction is under preparation and we are currently looking for potential buyers. This auction is scheduled to complete in September 2017.

Potential Risks in our business

We currently derive a majority of our income from rental and interest income but please note that our rental income will cease after October 2017. Since 2016, we have seen a stabilizing trend on the benchmark interest rates in China. However, due to the current economic conditions in China, we expect the People's Bank of China ("PBOC") to keep Renminbi-denominated official time deposit interest rates in China at a low level throughout 2017. With this lower interest rate and rental income, we expect to continue to incur operating losses in 2017 and beyond.

We have only become a real estate developer, after our electronic manufacturing businesses ceased in 2014. To ensure our successful transformation, we have engaged external advisors and sought potential strategic partners and investors to support our projects. We cannot assure you our efforts are sufficient in carrying out a transformation of this magnitude. Our Chairman, Mr. Koo, is 74 years old. Mr. Koo has begun his transition towards retirement in anticipation of age and health issues. We cannot assure you that our transition planning can be carried out smoothly, or that any successor will be able to manage our Company as effectively.

As the majority of our assets are denominated in Renminbi, the translation of Renminbi-denominated assets to US dollars for our reporting purposes has resulted in foreign exchange gain in this quarter. As such, we do expect to see fluctuations in the reporting of foreign exchange loss/gain in the financial statements due to the movement of Renminbi against the US dollar. Nevertheless, as a majority of our payments are in Renminbi, we also do not expect the movement of Renminbi against the US dollar to adversely impact our business.

In order for the projects to proceed smoothly and start ahead of the schedule, it is necessary for the Company to negotiate with banks for the implementation of funds needed to assist in future development of the projects.

As of end of June, 2017, we have a total cash balance of $170.7 million and no debt. With our current cash position, we believe our finances remain healthy to fund the initial stages of these property development projects within the coming year and half. All of our land development related applications are subject to government policies and regulations in the real estate market. As this is our first venture into the land development projects after the cessation of our LCM business, we may encounter industry-specific difficulties that result in losses as we progress with our projects in Shenzhen. As we are currently in the planning stage of our property projects, and can only generate limited income from deposit interest income and rental income, we will continue to record operating losses. Cash on hand is expected to drop continuously, but most of the incurred expenses related to construction will be for project development, which will be capitalized as real estate properties under development (non-current asset) on our balance sheet. For more information on risks in our business, please refer to the Risk Factors section of our 2016 Annual Report on Form 20-F as filed with the SEC and on our website.

According to our project development plan, project investment for Q3 2017 is estimated to be $11.0 million, and project investment for the year of 2017 is estimated to be $60 million.

The information contained in or that can be accessed through the website mentioned in this announcement does not form part of this announcement.

PAYMENT OF QUARTERLY DIVIDENDS FOR 2016 AND 2017

As announced on December 12, 2016, the Company set the payment schedule of quarterly dividends for 2017. The dividend for Q3 2017 was paid on July 20, 2017.

The following table updates the previously announced schedule for declaration and payment of quarterly dividends in 2017.

Payment


Record Date


Payment Date


Dividend

(per share)



Status

Q1 2017


December 31, 2016


January 20, 2017


$

0.07



Paid

Q2 2017


March 31, 2017


April 20, 2017


$

0.07



Paid

Q3 2017


June 30, 2017


July 20, 2017


$

0.07



Paid

Q4 2017


September 30, 2017


October 20, 2017


$

0.07




Full Year 2017






$

0.28




The Company's decision to continue making dividend payments in 2017 as set out and confirmed in the above table does not necessarily mean that cash dividend payments will continue thereafter or at the same amount. Whether future dividends after 2017 are to be declared will depend upon Company's future growth and earnings at each relevant period, of which there can be no assurance, and the Company's cash flow needs for business operations and transformation. Accordingly, there can be no assurance that cash dividends on the Company's common shares will be declared beyond those declared for 2017, and we also cannot assure you what the amounts of such dividends will be or whether such dividends, once declared for a specific period, will continue for any future period, or at all.

PROPOSED SCHEDULE OF RELEASE OF QUARTERLY FINANCIAL RESULTS FOR 2017

To maintain the efficiency of delivering the Company's quarterly financial results to the market, the Company's management has decided to follow approximately the same schedule of 2016 to release the quarterly financial results for 2017. Details of the expected quarterly release dates are as follows:

Announcements of Financial Results

Quarter


Date of release

Q1 2017


May 2, 2017 (Tuesday)

Q2 2017


July 31, 2017 (Monday)

Q3 2017


October 30, 2017 (Monday)

Q4 2017


January 29, 2018 (Monday)

FORWARD-LOOKING STATEMENTS AND FACTORS THAT COULD CAUSE OUR SHARE PRICE TO DECLINE

Certain statements included in this press release, other than statements of historical fact, are forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "estimate", "anticipate", "plan", "seek" or "believe". These forward-looking statements, which are subject to risks, uncertainties, and assumptions, may include projections of our future financial performance based on our growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations about future events. There are important factors that could cause our actual results, level of activity, performance, or achievements to differ materially from the results, level of activities, performance, or achievements expressed or implied by the forward-looking statements, including, but not limited to, delay in the Company's ability to obtain all requisite permits and approvals from relevant government authorities in relation to the redevelopment of two parcels of properties in Guangming, Shenzhen, and Gushu, Shenzhen, respectively, and the successful redevelopment of the two parcels of properties into Nam Tai Inno Park and Nam Tai Inno City; the sufficiency of the Company's cash position and other sources of liquidity to fund its property developments; continued inflation and appreciation of the Renminbi against the US dollar; rising labor costs in China and changes in the labor supply and labor relations. In particular, you should consider the risks outlined under the heading "Risk Factors" in our most recent Annual Report on Form 20-F and in our Current Report filed from time to time on Form 6-K. The Company's decision to continue dividend payments in 2017 does not necessarily mean that dividend payments will continue thereafter. Whether future dividends will be declared depends upon the Company's future growth and earnings, of which there can be no assurance, as well as the Company's cash flow needs for further expansion. Accordingly, there can be no assurance that cash dividends on the Company's common shares will be declared beyond those declared for 2017, what amount those dividends may be or whether such dividends, once declared for a specific period, will continue for any future period, or at all; and whether we will purchase any of our shares in the open markets or otherwise. Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements. You should not rely upon forward-looking statements as predictions of future events. These forward-looking statements apply only as of the date of this press release; as such, they should not be unduly relied upon as circumstances change. Except as required by law, we are not obligated, and we undertake no obligation, to release publicly any revisions to these forward-looking statements that might reflect events or circumstance occurring after the date of this release or those that might reflect the occurrence of unanticipated events.

ABOUT NAM TAI PROPERTY INC.

We are a real estate developer. We hold two parcels of land located in Guangming and Gushu, Shenzhen, China. We are converting these two parcels of land that formerly housed the manufacturing facilities of our prior businesses into high-tech research and development centers, Nam Tai Inno Park and Nam Tai Inno City. We expect our principal income in the future will be derived from rental income from these research and development centers. Nam Tai Property Inc. is a corporation registered in the British Virgin Islands and listed on the New York Stock Exchange (Symbol: "NTP").

NAM TAI PROPERTY INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE PERIODS ENDED JUNE 30, 2017 AND 2016

(In Thousands of US dollars except share and per share data)



Unaudited

Three months ended June 30,



Unaudited

Six months ended June 30,




2017



2016



2017



2016


Operation income (1)


$

541



$

637



$

1,135



$

1,291


Operation expense






290







740


Net operation income



541




347




1,135




551


Costs and expenses

















General and administrative expenses



2,878




1,853




4,862




4,076





2,878




1,853




4,862




4,076


Operating loss



(2,337)




(1,506)




(3,727)




(3,525)


Other income (expenses), net (2)



2,574




(2,432)




3,302




(2,349)


Interest income



1,848




1,295




4,324




2,890


Income (loss) before income tax



2,085




(2,643)




3,899




(2,984)


Consolidated net income (loss)



2,085




(2,643)




3,899




(2,984)


Other comprehensive income













Consolidated comprehensive income (loss) (3)


$

2,085



$

(2,643)



$

3,899



$

(2,984)


Earnings (loss) per share

















Basic


$

0.06



$

(0.07)



$

0.11



$

(0.08)


Diluted


$

0.06



$

(0.07)



$

0.10



$

(0.08)


Weighted average number of share ('000)

















Basic



36,575




36,700




36,518




36,700


Diluted



37,210




36,700




37,138




36,700


Notes:

(1)  The property at phase 2 in Gushu has been rented to a third party lessee with a term of three and a half years since May 2014.

(2)  Other income (expenses), net, included exchange gain of $2.7 million, partly offset by loss from Wuxi operations of $0.1 million for the three months ended June 30, 2017.

(3)   Consolidated comprehensive income for the three months ended June 30, 2017 mainly included exchange gain of $2.7 million as a result of the appreciation of Renminbi against US dollar in the second quarter of 2017, interest income of $1.8 million earned from time deposits and net operation income of $0.5 million, partly offset by general and administrative expenses of $2.9 million.

 

NAM TAI PROPERTY INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS AT JUNE 30, 2017 AND DECEMBER 31, 2016

(In Thousands of US dollars)



Unaudited

June 30,



Audited

December 31,




2017



2016


ASSETS









Current assets:









Cash and cash equivalents(1)


$

115,985



$

94,558


Short term investments(1)



54,711




89,624


Prepaid expenses and other receivables



3,775




4,034


Assets held for sale



19,419




18,970


Total current assets



193,890




207,186


Real estate properties under development, net(2)



43,606




37,779


Property, plant and equipment, net



17,099




3,735


Other assets



104




101


Total assets


$

254,699



$

248,801


LIABILITIES AND SHAREHOLDERS' EQUITY









Current liabilities:









Accounts payable


$

2,443



$

845


Accrued expenses and other payables



2,877




1,405


Dividend payable



5,124




10,205


Total current liabilities



10,444




12,455


EQUITY









Shareholders' equity:









Common shares



366




364


Additional paid-in capital



243,220




241,536


Retained earnings



10,479




6,607


Accumulated other comprehensive loss(3)



(9,810)




(12,161)


Total shareholders' equity



244,255




236,346


Total liabilities and shareholders' equity


$

254,699



$

248,801


 

Note:

(1) According to the definition of "Balance Sheet" under the Financial Accounting Standard Board ("FASB") Accounting Standards Codification ("ASC") 210-10-20, cash equivalents are short-term, highly liquid investments that are readily convertible to cash. Only investments with original maturities of three months or less when purchased qualify under that definition. Therefore, the fixed deposits maturing over three months in amount of $54.7 million and $89.6 million as at June 30, 2017 and December 31, 2016, respectively, are not classified as cash and cash equivalents but are separately disclosed as short term investments in the balance sheet.

(2) Capitalization on project investment was $3.5 million for Q2 2017, totaling $4.9 million for the first half of year and our accumulated project investment was $43.6 million up to June 30, 2017.

(3)  Accumulated other comprehensive loss represented foreign currency translation adjustment.

 

 

NAM TAI PROPERTY INC.

CONSENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE PERIODS ENDED JUNE 30, 2017 AND 2016

(In Thousands of US dollars)



Unaudited

Three months ended June 30,



Unaudited

Six months ended June 30,




2017



2016



2017



2016


CASH FLOWS FROM OPERATING ACTIVITIES

















Consolidated net income (loss)


$

2,085



$

(2,643)



$

3,899



$

(2,984)


Adjustments to reconcile consolidated net income (loss) to net cash provided by operating activities:

















Depreciation and amortization of property, plant and equipment,
   land use rights and other assets



83




665




159




1,669


Gain on disposal of property, plant and equipment



(22)




(7)




(41)




(7)


Share-based compensation expenses



363




266




603




266


Unrealized exchange (gain) loss



(2,029)




1,373




(2,250)




1,373


Changes in current assets and liabilities:

















Decrease in prepaid expenses and other receivables



515




376




273




145


(Decrease) increase in accounts payable






(427)







287


Increase (decrease) in accrued expenses and other payables



1,159




(458)




1,435




(1,183)


Total adjustments



69




1,788




179




2,550


Net cash provided by (used in) operating activities


$

2,154



$

(855)



$

4,078



$

(434)


CASH FLOWS FROM INVESTING ACTIVITIES

















Payment of real estate properties under development


$

(1,566)



$

(2,208)



$

(2,971)



$

(3,255)


Purchase of property, plant & equipment



(13)




(364)




(129)




(416)


(Increase) decrease in deposits for real estate properties under
   development



(186)




(200)




(166)




276


Increase in deposits for purchase of property, plant and equipment



(13,166)




(118)




(13,383)




(113)


Proceeds from disposal of property, plant and equipment



48




7




67




7


Cash received from finance lease receivable






323







1,371


Decrease (increase) in short term investments



54,835




6,788




34,944




(3,894)


Net cash provided by (used in) investing activities


$

39,952



$

4,228



$

18,362



$

(6,024)


CASH FLOWS FROM FINANCING ACTIVITIES

















Cash dividends paid


$

(2,557)



$

(734)



$

(5,108)



$

(1,468)


Proceeds from share issued for option exercise



471







874





Net cash used in financing activities


$

(2,086)



$

(734)



$

(4,234)



$

(1,468)


Net increase (decrease) in cash and cash equivalents


$

40,020



$

2,639



$

18,206



$

(7,926)


Cash and cash equivalents at beginning of period



73,184




146,797




94,558




157,371


Effect of exchange rate changes on cash and cash equivalents and short term investments



2,781




(3,549)




3,221




(3,558)


Cash and cash equivalents at end of period


$

115,985



$

145,887



$

115,985



$

145,887


 

NAM TAI PROPERTY INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIODS ENDED JUNE 30, 2017 AND 2016

 

(In Thousands of US dollars)

1. These financial statements, including the consolidated balance sheet as of December 31, 2016, which was derived from audited financial statements, do not include all of the information and notes required by U.S. generally accepted accounting principles for complete financial statements and should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company's annual report on Form 20-F for the fiscal year ended December 31, 2016.

2. In the opinion of management, all adjustments (consisting of normal, recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the full year.

3. Accumulated other comprehensive loss represents foreign currency translation adjustments. The consolidated comprehensive income (loss) was $2,085 and $(2,643) for the three months ended June 30, 2017 and 2016, respectively.

4. A summary of the operation income, other income, net, net income (loss) and long-lived assets by geographical areas is as follows:

 



Three months ended June 30,



Six months ended June 30,




2017



2016



2017



2016


OPERATION INCOME WITHIN:

















-PRC, excluding Hong Kong


$

541



$

637



$

1,135



$

1,291


OTHER INCOME (EXPENSES), NET:

















- Gain (loss) on exchange difference


$

2,692



$

(2,318)



$

3,539



$

(2,317)


- Interest income from finance lease receivable












16


- Loss from Wuxi operations



(130)




(131)




(296)




(304)


- Others



12




17




59




256


Total other income (expenses), net


$

2,574



$

(2,432)



$

3,302



$

(2,349)


NET INCOME (LOSS) FROM OPERATIONS WITHIN:

















- PRC, excluding Hong Kong


$

(504)



$

(673)



$

(832)



$

(1,598)


- Hong Kong



2,589




(1,970)




4,731




(1,386)


Total net income (loss)


$

2,085



$

(2,643)



$

3,899



$

(2,984)


 



June 30, 2017



December 31, 2016


LONG-LIVED ASSETS WITHIN:









- Real estate properties under development in PRC, excluding Hong Kong


$

43,606



$

37,779


- Property, plant and equipment in PRC, excluding Hong Kong



13,891




507


- Hong Kong



3,208




3,228


Total long-lived assets


$

60,705



$

41,514


 

NAM TAI PROPERTY INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE PERIODS ENDED JULY 28, 2017

(In Thousands of US dollars except share and per share data)



  Unaudited

One month ended July 28, 2017



Unaudited

Seven months ended July 28, 2017


Operation income (1)


$

175



$

1,310



Operation expense








Net operation income



175




1,310



Costs and expenses










General and administrative expenses



660




5,522






660




5,522



Operating loss



(485)




(4,212)



Other income, net (2)



388




3,690



Interest income



571




4,895



Income before income tax



474




4,373



Consolidated net income



474




4,373



Other comprehensive income








Consolidated comprehensive income (3)


$

474



$

4,373



Earnings per share










Basic


$

0.01



$

0.12



Diluted


$

0.01



$

0.12



Weighted average number of shares ('000)










Basic



36,738




36,550



Diluted



37,516




37,185



 

Notes:

(1)     The property at phase 2 in Gushu has been rented to a third party lessee with a term of three and a half years since May 2014.

(2)     Other income, net, included exchange gain of $0.4 million, partly offset by loss from Wuxi operations of $0.1 million for the one month ended July 28, 2017.

(3)     Consolidated comprehensive income for the one month ended July 28, 2017 mainly included exchange gain of $0.4 million as a result of the appreciation of Renminbi against US dollar, interest income of $0.6 million earned from time deposits and net operation income of $0.2 million, partly offset by general and administrative expenses of $0.7 million.

 

NAM TAI PROPERTY INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS AT JULY 28, 2017
(In Thousands of US dollars)



Unaudited

July 28,




2017


ASSETS





Current assets:





Cash and cash equivalents(1)


$

107,025


Short term investments(1)



62,147


Prepaid expenses and other receivables



4,841


Assets held for sale



19,476


Total current assets



193,489


Real estate properties under development, net(2)



46,098


Property, plant and equipment, net



17,112


Other assets



104


Total assets


$

256,803


LIABILITIES AND SHAREHOLDERS' EQUITY





Current liabilities:





Accounts payable


$

4,534


Accrued expenses and other payables



2,619


Dividend payable



2,562


Total current liabilities



9,715


EQUITY





Shareholders' equity:





Common shares



370


Additional paid-in capital



245,295


Retained earnings



10,953


Accumulated other comprehensive loss(3)



(9,530)


Total shareholders' equity



247,088


Total liabilities and shareholders' equity


$

256,803


 

Note:

(1)     According to the definition of "Balance Sheet" under the Financial Accounting Standard Board ("FASB") Accounting Standards Codification ("ASC") 210-10-20, cash equivalents are short-term, highly liquid investments that are readily convertible to cash. Only investments with original maturities of three months or less when purchased qualify under that definition. Therefore, the fixed deposits maturing over three months in amount of $62 million as at July 28, 2017 are not classified as cash and cash equivalents but are separately disclosed as short term investments in the balance sheet.

(2)     Capitalization on project investment was $2.5million for July 2017, totaling $7.4 million for seven months ended July 28, 2017and our accumulated project investment was $46.1 million up to July 28, 2017.

(3)     Accumulated other comprehensive loss represented foreign currency translation adjustment.

 

 

NAM TAI PROPERTY INC.

CONSENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE PERIODS ENDED JULY 28, 2017

(In Thousands of US dollars)



Unaudited

One month ended July 28,

2017


Unaudited

Seven months ended July 28,

 2017



CASH FLOWS FROM OPERATING ACTIVITIES









Consolidated net income


$

474


$

4,373



Adjustments to reconcile consolidated net income to net cash provided by operating activities:









Depreciation and amortization of property, plant and equipment,
   land use rights and other assets



28



187



Loss on disposal of property, plant and equipment



90



49



Share-based compensation expenses



55



658



Unrealized exchange gain



(286)



(2,536)



Changes in current assets and liabilities:









Increase in prepaid expenses and other receivables



(1,060)



(787)



(Decrease) increase in accrued expenses and other payables



(263)



1,172



Total adjustments



(1,436)



(1,257)



Net cash (used in) provided by operating activities


$

(962)


$

3,116



CASH FLOWS FROM INVESTING ACTIVITIES









Payment of real estate properties under development


$

(373)


$

(3,344)



Purchase of property, plant & equipment



(3)



(132)



Decrease (increase) in deposits for real estate properties under development



6



(160)



Increase in deposits for purchase of property, plant and equipment



(39)



(13,422)



Proceeds from disposal of property, plant and equipment



1



68



(Increase) decrease in short term investments



(7,433)



27,511



Net cash (used in) provided by investing activities


$

(7,841)


$

10,521



CASH FLOWS FROM FINANCING ACTIVITIES









Cash dividends paid


$

(2,562)


$

(7,670)



Proceeds from share issued for option exercise



2,008



2,882



Net cash used in financing activities


$

(554)


$

(4,788)



Net (decrease) increase in cash and cash equivalents


$

(9,357)


$

8,849



Cash and cash equivalents at beginning of period



115,985



94,558



Effect of exchange rate changes on cash and cash equivalents and short term investments



397



3,618



Cash and cash equivalents at end of period


$

107,025


$

107,025



Please refer to the Nam Tai website (www.namtai.com) or the SEC website (www.sec.gov) for Nam Tai press releases and financial statements.

View original content:http://www.prnewswire.com/news-releases/nam-tai-property-inc-reports-q2-2017-results-300496524.html

Source: Nam Tai Property Inc.

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