Nam Tai Property Inc. Reports Q1 2019 Results

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SHENZHEN, China, April 29, 2019 /PRNewswire/ -- Nam Tai Property Inc. ("Nam Tai" or the "Company") (NYSE Symbol: NTP) today announced its unaudited results for the first quarter ended March 31, 2019.  

KEY HIGHLIGHTS

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





Quarterly Results









Q1 2019





Q1 2018





YoY(%)(a)





Operation income



$

581





$











Net operation income



$

345





$













Operating loss



$

(3,264)





$

(9,116)











% of operation income





(561.8)

%

















per share (diluted)



$

(0.09)





$

(0.24)











Net (loss) income



$

(1,791)





$

2,568











% of operation income





(308.3)

%

















Basic (loss) income per share



$

(0.05)





$

0.07











Diluted (loss) income per share



$

(0.05)





$

0.07











Weighted average number of shares ('000)



























Basic





38,192







37,669













Diluted





38,192







38,527















 ____________________  

Notes:

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

(b) This information presented here has been published on the Company's website

http://www.namtai.com/investors#investors/quarterly_earnings under the quarterly earnings report of
the first quarter of 2019 on page 6,

Condensed Consolidated Statements of Comprehensive Income

 

 





Financial Position







As of March 31,





As of December 31,





As of March 31,







2019





2018





2018



Cash and cash equivalents(a)



$

85,365





$

62,919





$

169,892



Short term investments(b)



$

12,273





$

46,952





$

3,344



Real estate properties under development, net



$

186,457





$

171,610





$

56,193



Property, plant and equipment, net



$

27,554





$

27,442





$

34,940



Total assets



$

322,150





$

318,107





$

272,264



Accounts payable



$

88,551





$

87,214





$

3,189



Deposits received



$

460





$





$



Total shareholders' equity



$

229,864





$

227,891





$

255,931



Total number of common shares issued





38,193







38,187







37,776





____________________  

Notes:

(a)  Cash and cash equivalents includes all cash balances and certificates of deposit having a maturity date of three months or less upon acquisition.

(b)  Short term investments include all highly liquid investments with original maturities of greater than three months and less than 12 months. Investments that are expected to be realized in cash during the next 12 months are also included in short term investments.

 

 





Financial Ratio







As of March 31,





As of December 31,





As of March 31,







2019





2018





2018



Ratio of cash(a) to current liabilities



1.06





1.22





10.61



Current ratio(b)



1.15





1.29





10.94



Ratio of total assets to total liabilities



3.49





3.53





16.67



Return on equity





(3.1)

%





(5.6)

%





4.1

%

Ratio of total liabilities to total equity





0.40





0.40





0.06





























____________________ 

Notes:

(a)     Cash in this financial ratio include cash, cash equivalents and short term investments.

(b)     Current ratio means all current assets, including prepaid expenses and other receivables, divided by all current liabilities.

 

FINANCIAL RESULTS

Net Operation Income

Net operation income for the first quarter of 2019 was $0.3 million compared to nil in the first quarter of 2018. Operation income for the first quarter of 2019 mainly consisted of rental income of $0.5 million from the existing factory buildings located on the site of Phase II of Nam Tai Inno City and Wuxi.

Operating Loss

Operating loss for the first quarter of 2019 was $3.3 million compared to an operating loss of $9.1 million in the first quarter of 2018. Operating loss for the first quarter of 2019 mainly consisted of general and administrative expenses of 2.9 million and selling and marketing expenses of $0.7 million; offset in part by our net operation income of $0.3 million for the period. Operating loss for the first quarter of 2018 mainly consisted of general and administrative expenses of $9.1 million that mainly included accrual of compensation for loss of office of $3.7 million for the retirement of a senior officer, stock option compensation expenses of $1.4 million for certain officers and employees, salary and benefits of $1.8 million, depreciation of $1.0 million and audit, legal and professional fees of $0.6 million.

Net (Loss) Income

Net loss for the first quarter of 2019 was $1.8 million compared to net income of $2.6 million in the first quarter of 2018. Net loss for the first quarter of 2019 mainly consisted of operating loss of $3.3 million, offset in part by interest income of $0.8 million earned from time deposits and exchange gain of $0.6 million as a result of the appreciation of Renminbi against the US dollar in the first quarter of 2019. Net income for the first quarter of 2018 mainly consisted of a gain of $6.8 million on disposal of an office property in Hong Kong, exchange gain of $3.3 million as a result of the appreciation of Renminbi against the US dollar in the first quarter of 2018 and interest income of $1.5 million earned from time deposits, offset in part by operating loss of $9.1 million.

Cash, Cash Equivalents and Short-term Investments

Cash, cash equivalents and short-term investments decreased by $12.3 million in the first quarter of 2019 from $109.9 million as of December 31, 2018 to $97.6 million as of March 31, 2019. This decrease was mainly due to $11.9 million spent for Nam Tai Inno Park and Nam Tai Inno City – Phase I in the first quarter of 2019.

Real Estate Properties under Development, Net

Real estate properties under development increased by $14.9 million in the first quarter of 2019 from $171.6 million as of December 31, 2018 to $186.5 million as of March 31, 2019. This increase mainly consisted of $11.6 million for construction completed for both Nam Tai Inno Park and Nam Tai Inno City – Phase I, capitalized under percentage-of-completion method (before foreign currency translation adjustment).

Accounts Payable

Accounts payable increased by $1.4 million in the first quarter of 2019 from $87.2 million as of December 31, 2018 to $88.6 million as of March 31, 2019. This increase mainly consisted of accrued payable for construction completed for both Nam Tai Inno Park and Nam Tai Inno City – Phase I, accounted for under percentage-of-completion method.

Liquidity and Capital Resources

As of March 31, 2019, we had a total cash balance of $85.4 million and we have no material debt. According to our project development plan, project investment for the second quarter of 2019 is estimated to be $27.5 million. The total project investment for the year 2019 is estimated to be $167.0 million. We plan to seek additional borrowing facilities or alternative funding sources in 2019 for our various development projects.

Please see page 6 of the Company's Condensed Consolidated Statements of Comprehensive Income for further details. The information contained herein has also been published on the Company's website at http://www.namtai.com/investors#investors/quarterly_earnings in the quarterly earnings report of the first quarter of 2019 on page 6, Condensed Consolidated Statements of Comprehensive Income.

RECENT DEVELOPMENTS

The development of Nam Tai Inno Park in Guangming, Shenzhen, and Nam Tai Inno City in Gushu, Shenzhen, continues to proceed smoothly.

For Nam Tai Inno Park, our construction continued smoothly in the first quarter of 2019. After the opening of our industrial showroom at the end of December 2018, we held a number of industrial conferences including an Internet-of-Things industry conference on December 22, 2018, a discussion forum to commemorate the 20th anniversary of the Guangdong High-Tech Industry Chamber on March 15, 2019 and an academic & expert discussion forum on the development of Nam Tai Inno Park on March 20, 2019, as well as several technology park community building events. Our industrial showroom and the various forums and events it hosted were designed to attract potential tenants and promote our brand as an operator of technology parks. As a result of these conferences and events, we have established a number of contacts with potential tenants as well as the receipt of deposits for future leases for 156 dormitory units from potential tenants.

For Phase I of Nam Tai Inno City, we have obtained the early construction permit for the pile foundation in November 2018 and began pile driving and foundation laying in the first quarter of 2019. We aim to complete the foundation building process before the receipt of our construction permit for the main structure, which is expected to be obtained in the second half of 2019. We also plan to pay $49.8 million for additional land premium by mid 2019. Payment of the additional land premium is required by the land use right contract re-executed on October 25, 2018 between us and the urban planning, land and resources commission of Shenzhen municipality. Our payment of additional land premiums may be offset in part by the increased cost basis of our developed project when calculating land appreciation tax on sales of the subdivided units.

For Phase II of Nam Tai Inno City, as of March 31, 2019, we had leased out approximately 90% of the spaces in existing buildings to Medium-small or early stage companies. In line with our plan to maintain active operation of the facilities ahead of their redevelopment, we held several industrial events including an intellectual property law forum on March 17, 2019, where several policy makers and industry speakers discussed local policies and subsidies regarding the promotion of technology companies with valuable intellectual properties. We will continue to strengthen our brand as a technology park operator by providing our corporate tenants and Shenzhen's technology community with these value-added services.

As for our Wuxi facility, we rented and delivered the facilities to a third party for further renovation and development in February 2019.

 

OPERATING RESULTS







As of March 31,







2019







(in square meter)



Project under development



331,832



Project for Future Development



364,795



Total



696,627



 

 

Project Portfolio - As of March 31, 2019



Projects



Inno Park

Inno City – Phase I

Inno City – Phase II

Location



Shenzhen

Shenzhen

Shenzhen

Type(a)



Office and Dormitory

Office and Dormitory

Office and Dormitory

Site Area (sq.m.)



103,739

22,364

22,367

Total GFA (sq.m.)



331,832

194,595

170,200(b)

Total

GFA

Under Development (sq.m.)



331,832

Under Operation (sq. m.)



Future Development (sq. m.)



194,595

170,200

Interest attributable to us



100%

100%

100%

Address



Fenghuang Community, 

Guangming District, 

Shenzhen

Namtai Road, Baoan District, Shenzhen























Notes:

(a)     The types of our projects are based on our planning or certificates issued by the relevant authority and may be changed subject to the 

relevant authority's final approval.

(b)      The gross floor area and type are based on the assumption that we will receive M-0 zoning approval for the entire Phase II site prior to

its development. If we do not receive the M-0 zoning approval, we will be required to develop Phase II under
the M-1 zoning requirement. In that case, appropriate adjustments to our plan will have to be made.

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

 

Properties under Development

The table below sets forth certain information of our property projects or project phases under development as of March 31, 2019, comprising  properties for which the land use right certificate and construction permits have been obtained, construction is in progress but before construction acceptance certificates have be obtained.

Project







Inno Park

City







Shenzhen

(Estimated) Total GFA



 (sq. m.)



331,832

Leasable GFA or Estimated Total Leasable GFA



 (sq. m.)



265,000

Commencement Time







May 2017

Status of Pre-sale permit







Not eligible

Estimated Completion Time







2020 Q4

Interest Attributable to us







100%

 

Properties for Future Development

The table below sets forth certain information of our property projects held for future development as of March 31, 2019, comprising properties for which we have obtained the land use right certificate or we have entered into land grant contracts although the land use right certificate is not yet obtained, or the relevant lands and resources authority has confirmed our successful bidding in a public auction.

Project







Inno City – Phase I



Inno City – Phase II

Location







Shenzhen



Shenzhen

Estimated Total GFA(1)



 (sq. m.) 



194,595



170,200

Estimated Completion Time







2021



2025



Note:

(1) The estimated total GFA is based on our future planning and is subject to the relevant authority's final approval.



 

Potential Risks in Our Business

There are no material changes to the risk factors previously disclosed in our Annual Report on Form 20-F and in our Current Reports filed on Form 6-K from time to time.

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

FORWARD-LOOKING STATEMENTS AND FACTORS THAT COULD CAUSE OUR SHARE PRICE TO DECLINE Certain statements included in this announcement, 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", "might", "can", "could", "will", "would", "anticipate", "believe", "continue", "estimate", "expect", "forecast", "intend", "plan", "seek", or "timetable". 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 and the industry in which we operate. These statements are only predictions based on our current expectations about future events. There are several factors, many beyond our control, which could cause results to differ materially from our expectation. These risk factors are described in our Annual Report on Form 20-F and in our Current Reports filed on Form 6-K from time to time and are incorporated herein by reference. Any of these factors could, by itself, or together with one or more other factors, adversely affect our business, results of operations or financial condition. There may also be other factors currently unknown to us, or have not been described by us, that could cause our results to differ from our expectations. Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels 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 announcement; 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 announcement or those that might reflect the occurrence of unanticipated events.

SCHEDULE FOR RELEASE OF QUARTERLY FINANCIAL RESULTS FOR 2019

To maintain the efficiency of delivering the Company's quarterly financial results to the market, the Company's management expects to release the quarterly financial results in accordance with the following schedule for 2019. Details of the expected quarterly release dates are as follows:

Announcements of Financial Results

Quarter



Date of release

Q1 2019



April 29, 2019 (Monday)

Q2 2019



July 29, 2019 (Monday)

Q3 2019



October 28, 2019 (Monday)

Q4 2019



January 27, 2020 (Monday)

ABOUT NAM TAI PROPERTY INC.

We are an owner, developer and operator of technology parks. 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"). 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.  

 

NAM TAI PROPERTY INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

FOR THE PERIODS ENDED MARCH 31, 2019 AND 2018

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









Three months ended March 31,









2019





2018





Operation income (1)



$

581





$





Operation expense





(236)











Net operation income





345











Costs and expenses



















General and administrative expenses





2,948







9,116





Selling and marketing expenses





661

















3,609







9,116





Operating loss





(3,264)







(9,116)





Other income, net (2)





639







3,449





Interest income





834







1,507





Gain on disposal of property











6,763





Write off of demolished building











(35)





(Loss) income before income tax





(1,791)







2,568





Consolidated (loss) income





(1,791)







2,568





Functional currency translation adjustment





3,601







6,038





Other comprehensive income (3)





3,601







6,038





Consolidated comprehensive income





1,810







8,606





(Loss) Earnings per share



















Basic



$

(0.05)





$

0.07





Diluted



$

(0.05)





$

0.07





Weighted average number of shares ('000)



















Basic





38,192







37,669





Diluted





38,192







38,527







Notes:

(1)     The property at Phase II in Gushu has been rented to several tenants since July 2018. The property at Wuxi has been rented to a third party lessee with a term of 12 years ending in October 2030.

(2)     Other income, net, includes an exchange gain of $0.6 million and $3.3 million for the three months ended March 31, 2019 and 2018 respectively.

(3)     Other comprehensive income is due to foreign exchange translation.



 

 

NAM TAI PROPERTY INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS AT MARCH 31, 2019 AND DECEMBER 31, 2018

(In Thousands of US dollars) 







March 31,





December 31,







2019





2018







(Unaudited)





(Audited)



ASSETS

















Current assets:

















Cash and cash equivalents(1)



$

85,365





$

62,919



Short term investments(1)





12,273







46,952



Accounts receivable





391







226



Prepaid expenses and other receivables





7,770







6,663



Total current assets





105,799







116,760



Long term investments





2,247







2,204



Real estate properties under development, net(2)





186,457







171,610



Property, plant and equipment, net





27,554







27,442



Other assets





93







91



Total assets



$

322,150





$

318,107



LIABILITIES AND SHAREHOLDERS' EQUITY

















Current liabilities:

















Accounts payable



$

88,551





$

87,214



Accrued expenses and other payables





2,781







2,993



Deposits received





460









Total current liabilities





91,792







90,207



Long term rental deposits





486









Financial lease payable





8







9



Total liabilities





92,286







90,216



EQUITY

















Shareholders' equity:

















Common shares





382







382



Additional paid-in capital





257,288







257,125



Accumulated losses





(15,120)







(13,329)



Accumulated other comprehensive loss(3)





(12,686)







(16,287)



Total shareholders' equity





229,864







227,891



Total liabilities and shareholders' equity



$

322,150





$

318,107





Notes:

(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 $
12.3 million and $39.4 million as at March 31, 2019 and December 31, 2018, 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 $11.6 million for the first quarter of 2019, our accumulated project investment was

$186.5 million up to March 31, 2019.

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



 

 

NAM TAI PROPERTY INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE PERIODS ENDED MARCH 31, 2019 AND 2018

(In Thousands of US dollars)







Three months ended March 31,









2019





2018





CASH FLOWS FROM OPERATING ACTIVITIES



















Consolidated net (loss) income



$

(1,791)





$

2,568





Adjustments to reconcile net (loss) income to net cash provided

   by operating activities:



















Depreciation and amortization of property, plant and equipment

     
and land use rights





430







1,015





Gain on disposal of property, plant and equipment











(6,956)





Write off demolished building











35





Share-based compensation expenses





129







1,366





Unrealized exchange gain





(602)







(3,124)





Changes in current assets and liabilities:



















Increase in account receivables





(165)











Increase in prepaid expenses and other receivables





(1,107)







(302)





Increase in accrued expenses and other payables





248







3,585





Increase in long term rental deposit





486











Total adjustments





(581)







(4,381)





Net cash used in operating activities



$

(2,372)





$

(1,813)





CASH FLOWS FROM INVESTING ACTIVITIES



















Payment of real estate properties under development



$

(11,916)





$

(4,329)





Purchase of property, plant & equipment





(247)







(501)





Decrease in deposits for real estate properties under development











19





Increase in deposits for purchase of property, plant and equipment











(61)





Proceeds from disposal of property, plant and equipment











9,706





Proceeds from disposal of demolished building











197





Proceeds from disposal of other asset











50





Decrease (increase) in short term investments





34,679







(3,344)





Net cash provided by investing activities



$

22,516





$

1,737





CASH FLOWS FROM FINANCING ACTIVITIES



















Cash dividends paid



$





$

(2,629)





Proceeds from shares issued for option exercise





34







1,384





Net cash provided by (used in) financing activities



$

34





$

(1,245)





Net increase (decrease) in cash and cash equivalents



$

20,178





$

(1,321)





Cash and cash equivalents at beginning of period





62,919







165,173





Effect of exchange rate changes on cash and cash equivalents





2,268







6,040





Cash and cash equivalents at end of period



$

85,365





$

169,892





 

 

NAM TAI PROPERTY INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIODS ENDED MARCH 31, 2019 AND 2018 

(In Thousands of US dollars)



1.     These financial statements, including the consolidated balance sheet as of December 31, 2018, 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, 2018.

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 ending December 31, 2019.

3.     Accumulated other comprehensive loss represents foreign currency translation adjustments. The consolidated comprehensive income was

$1,810 and $8,606 for the three months ended March 31, 2019 and 2018.

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









Three months ended March 31,









2019





2018





OPERATION INCOME WITHIN:



















-PRC, excluding Hong Kong



$

581





$





OTHER INCOME, NET:



















- Gain on exchange difference



$

602





$

3,254





- Others





37







195





Total other income, net



$

639





$

3,449





NET (LOSS) INCOME FROM OPERATIONS WITHIN:



















- PRC, excluding Hong Kong



$

(1,576)





$

(1,881)





- Hong Kong





(215)







4,449





Total net (loss) income



$

(1,791)





$

2,568





 

 





March 31, 2019





December 31, 2018



LONG-LIVED ASSETS WITHIN:

















- Real estate properties under development in PRC, excluding

     
Hong Kong



$

186,457





$

171,610



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





27,184







27,186



- Hong Kong





370







256



Total long-lived assets



$

214,011





$

199,052



 

 

Cision View original content:http://www.prnewswire.com/news-releases/nam-tai-property-inc-reports-q1-2019-results-300839645.html

SOURCE Nam Tai Property Inc.

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