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Nam Tai Property Inc. Reports Q4 2018 Results

SHENZHEN, China, Jan. 28, 2019 /PRNewswire/ -- Nam Tai Property Inc. ("Nam Tai", the "Company", "we" and "us") (NYSE Symbol: NTP) today announced its unaudited results for the fourth quarter ended December 31, 2018.

KEY HIGHLIGHTS

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



Quarterly Results


Twelve Months Results



Q4 2018


Q4 2017


YoY(%)(c)


12M 2018


12M 2017


YoY(%)(c)

Operation income


$

486


$

187



159.9


$

493


$

1,851



(73.4)

Net operation income


$

413


$

187



120.9


$

420


$

1,851



(77.3)

Operating loss


$

(3,550)


$

(2,245)




$

(20,795)


$

(7,599)



per share (diluted)


$

(0.09)


$

(0.06)




$

(0.55)


$

(0.20)



Net (loss) income (a) (b)


$

(6,280)


$

(2,477)




$

(13,254)


$

3,944



Basic (loss) income per share


$

(0.16)


$

(0.07)




$

(0.35)


$

0.11



Diluted (loss) income per share


$

(0.16)


$

(0.07)




$

(0.35)


$

0.11



Weighted average number of shares ('000)



















Basic



38,643



37,256






37,826



36,807




Diluted



38,643



37,256






37,826



37,492

























Notes:





















(a)    Net loss for the three months ended December 31, 2018 mainly consisted of general and administrative expenses of $3.5 million and a loss
of $4.1 million
related to the disposal of certain fixed assets in our Wuxi factory; offset in part by interest income of $1.0 million earned
from time deposits.
 

(b)    Net loss for the twelve months ended December 31, 2018 mainly consisted of general and administrative expenses of $20.4 million, which
primarily consisted of option expenses of $2.7 million incurred in connection with our grants of options to new directors, officers and
employees,
 a compensation for loss of office of $3.9 million incurred in connection with the retirement of our former chairman, salary and
benefits of $6.5 million, audit, legal and professional fees of $1.4 million, depreciation of $3.8 million, and a loss of $4.1 million
related to
the disposal of certain fixed assets
in our Wuxi factory; offset in part by a gain of $6.8 million on disposal of an office property in Hong
Kong and interest income of $5.6 million earned from time deposits.

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

(d)    Capitalization on project investment was $99.1 million for the fourth quarter of 2018, which mainly consisted of capitalizing the full
payment obligations of $71.2 million with respect to additional land premiums for the land underlying Phase I of Nam Tai Inno City and
totaled $12
1.8 million for the twelve months ended December 31, 2018. Our accumulated project investment was $171.6 million through
December 31, 2018, which was recorded under "real estate properties under development" on the Company's balance sheet as of
December 31, 2018.

(e)     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 fourth quarter of 2018 on page
7, Condensed Consolidated Statements of Comprehensive Income.

SUPPLEMENTARY INFORMATION (UNAUDITED) FOR THE FOURTH QUARTER OF 2018

Key Highlights of Financial Position



As of December 31,


As of December 31,



2018


2017

Cash, cash equivalents and short term

investments


$109.9 million(a)


$165.2 million

Ratio of cash(b) to current liabilities


1.22


9.32

Current ratio


1.29


9.61

Ratio of total assets to total liabilities


3.53


14.79

Return on equity



(5.6)%



1.6%

Ratio of total liabilities to total equity


0.40


0.07






Notes:





(a)    Compared to December 31, 2017, the decrease of $55.3 million in cash, cash equivalents and short-term investments was mainly due to
$39.6 million spent in connection with land development projects that was recorded as "real estate properties under development" on the
balance sheet as of December 31, 2018, $10.6 million
spent in dividends payments, exchange loss of $8.2 million as a result of the
depreciation of the Renminbi against the U.S. dollar during the twelve months ended December 31, 2018; offset in part by proceeds of
$9.8 million received from the disposal of an office property in Hong Kong.

(b)    Cash in the financial ratio included cash, cash equivalents and short-term investments in the amount of $109.9 million and $165.2 million
as of December 31, 2018 and 2017, respectively.  

OPERATING RESULTS

Net operation income for the fourth quarter of 2018 was $0.4 million, an increase of $0.2 million compared to an operation income of $0.2 million in the fourth quarter of 2017. Operation income for the fourth quarter of 2018 mainly consisted of rental income of $0.4 million from the existing factory buildings located on the site of Phase II of Nam Tai Inno City.

Operating loss for the fourth quarter of 2018 was $3.6 million, an increase of $1.4 million compared to an operating loss of $2.2 million in the fourth quarter of 2017. This period to period increase was mainly due to an increase in expenses incurred in connection with our growing operations. Operating loss for the fourth quarter of 2018 mainly consisted of general and administrative expenses of $3.5 million and selling and marketing expenses of $0.5 million, which were offset in part by our net operation income of $0.4 million for the period, compared to general and administrative expenses of $2.4 million in the fourth quarter of 2017, which were offset in part by our net operation income of $0.2 million for that period.

Net loss for the fourth quarter of 2018 was $6.3 million, compared to net loss of $2.5 million in the fourth quarter of 2017. Net loss for the fourth quarter of 2018 mainly consisted of net operating loss of $3.6 million and a loss of $4.1 million related to the disposal of certain fixed assets in our Wuxi factory; offset in part by interest income of $1.0 million earned from time deposits. Net loss for the fourth quarter of 2017 mainly consisted of net operating loss of $2.2 million and a loss of $4.6 million related to the write down of our demolished factory buildings located on the site of Phase I of Nam Tai Inno City; offset in part by an exchange gain of $2.4 million as a result of the appreciation of Renminbi against the U.S. dollar in the fourth quarter of 2017 and interest income of $1.6 million earned from time deposits. Net loss per diluted share for the fourth quarter of 2018 was $0.16 compared to net loss per diluted share of $0.07 for the fourth quarter of 2017.

Net loss for the twelve months ended December 31, 2018 was $13.3 million compared to net income of $3.9 million for the twelve months ended December 31, 2017. Net loss for the twelve months ended December 31, 2018 mainly consisted of general and administrative expenses of $20.4 million, a loss of $4.1 million related to the disposal of certain fixed assets in our Wuxi factory and an exchange loss of $1.3 million as a result of the depreciation of the Renminbi against the U.S. dollar; offset in part by a gain of $6.8 million on disposal of an office property in Hong Kong, interest income of $5.6 million earned from time deposits and operation income of $0.4 million. Net income for the twelve months ended December 31, 2017 mainly consisted of an exchange gain of $8.6 million as a result of the appreciation of Renminbi against the U.S. dollar during the twelve months ended December 31, 2017, interest income of $7.6 million earned from time deposits and operation income of $1.9 million; offset in part by general and administrative expenses of $9.5 million and a loss of $4.6 million related to the write down of our demolished factory buildings located on the site of Phase I of Nam Tai Inno City. Net loss per diluted share for the twelve months ended December 31, 2018 was $0.35 compared to net income per diluted share of $0.11 for the twelve months ended December 31, 2017.

The majority of our assets are denominated in Renminbi. The translation of Renminbi-denominated assets to U.S. dollars for reporting purposes has resulted in a foreign exchange loss, due to fluctuations of the exchange rate for the Renminbi against the U.S. dollar. However, since the majority of our payment obligations are also denominated in Renminbi, we do not expect the movement of U.S. dollar against the Renminbi to materially and adversely impact our business.

Capitalization on project investment was $99.1 million for the fourth quarter of 2018, which mainly consisted of capitalizing payment obligations of $71.2 million in respect to additional land premiums for the land underlying Phase I of Nam Tai Inno City, and was $121.8 million for the twelve months ended December 31, 2018. Our accumulated project investment was $171.6 million as of December 31, 2018, which was recorded under "real estate properties under development" on our balance sheet as of December 31, 2018.

Please see page 7 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 fourth quarter of 2018 on page 7, Condensed Consolidated Statements of Comprehensive Income.

COMPANY OUTLOOK

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, we opened an industrial showroom on the first floor of future building A and held an Internet-of-Things industry conference on December 22, 2018. The showroom was constructed to facilitate discussions with potential tenants and business partners. It includes comprehensive models and a layout of Nam Tai Inno Park, meeting and conference rooms to negotiate the implementation of various technologies and features, a dedicated audio/video room to showcase the technology complex and various units, and a back office area for our staff. The industrial showroom is also designed to attract potential tenants and promote our brand as an operator of high-tech research and development centers. We plan to continuously renovate our industrial showroom by integrating our potential partners' technologies and latest commercial elements for technology parks to further strengthen our position in the market.

For Phase I of Nam Tai Inno City, we re-executed our land use rights contract on October 25, 2018, with the urban planning, land and resources commission of Shenzhen municipality, which allows the 50-years term of our land use rights to restart from the date of re-execution. Upon the receipt of the completion acceptance certificate, we will be permitted to exchange our existing general property ownership certificate for the entire Phase I complex for new 50-year, individual property ownership certificates for each developed unit, thereby allowing us to sell individual units. As a part of re-executing the land use rights contract, we are required to pay, and have capitalized the entire payment of $71.2 million in, additional land premiums for the land underlying Phase I of Nam Tai Inno City, of which $21.4 million was paid on October 27, 2018 and the remainder will be paid by mid 2019. Our payment of additional land premiums may be offset in part by the increased cost basis of our development project when calculating land appreciation tax, if we choose to sell the developed units.

For Phase II of Nam Tai Inno City, we continued with our efforts to lease out offices and workshops to tenants in the technology sphere. As of December 31, 2018, we have successfully rented out the majority of the leasable office and workshop spaces. We decided to lease out our current spaces to early stage companies due to our demolition and construction schedule, which is planned to occur in a few short years, making the existing buildings less attractive to industrial tenants with scaled operations and longer time horizons. Our primary focus is not to generate significant revenue but to maintain the active operation of the facilities ahead of their redevelopment, which is expected to start in March 2023.

As for our Wuxi facility, we have rented it to a third party for further renovation and development commencing from October 2018.

Following below are summaries of our Nam Tai Inno Park and Nam Tai Inno City projects:

Part I: Gross Floor Areas for the Two Projects:



Inno Park


Inno City – Phase I


Inno City – Phase II





(In square meters, except plot ratios)

Land area


103,739



22,364



22,367

Plot ratios


2.59



6.00



6.00

Gross floor area (GFA)

Office

175,406


Office + Soho

93,930


Office + Soho

93,950

Apartment

61,000


Apartment

24,150


Apartment

24,150

Commercial

28,594


Commercial

12,500


Commercial

12,500

Other

4,159


Other

3,600


Other

3,600



269,159



134,180



134,200

Underground floor area (GFA)


62,673



54,000



36,000

Total construction floor area 


331,832



188,180



170,200

(CFA)


















Note:


The plot ratio for Inno City – Phase II has not been approved yet. The
figures only represent the current plan. All figures above are also 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

Phase I

Inno City

Phase II

2017

2018

2019

2020

2021

2022

2023

2024

2025

A

Land Use Permit

Obtained

Jun 2015

Obtained

May 2018

Nov 2021


*




#





B

Land Use Right Certificate

Obtained

Sep 2015

June 2019

Feb 2022



*



#




C

Construction Planning Permit

Obtained

Aug 2017

May 2019

Feb 2023

^


*




#




D1

Early Construction Permit for Pile
Foundation

Obtained

May 2017

Obtained

Nov 2018

N/A

^

*








D2

Construction Permit for the Main

Structure

Obtained

May 2018

July 2019

Mar 2023


^

*




#




D3

Construction Acceptance
Certificate for the Main Structure

Dec 2019

Nov 2021

Jan 2025



^


*




#

D4

Construction

Completion

Dec 2020

Feb 2022

Nov 2025




^


*




#

E

Property Ownership Certificate

Jun 2020

Nov 2021

Jul 2025




^

*




#















Notes:













1.      ^ represents "Inno Park", while * represents "Inno City – Phase I" and # represents "Inno City – Phase II".

2.       This timetable is subject to adjustment depending on the specific timing of our receipt of approvals from the relevant authorities in
China and the progress of our construction.

Part III: Budgetary Estimate for the Two Projects:



Inno Park


Inno City – Phase I


Inno City – Phase II



(US$ in million)

1.

Planned Development Costs(1)

312


203


212

2.

Planned Operating Costs(2)

34


37


41








Notes:

1. Our planned development costs of $727 million are based on our schematic design estimations. This estimate is used by us for cost
control purposes to monitor design and construction costs. This estimate does not include the costs of interior furnishing for the
apartments, makes no adjustment for inflation or financing costs and does not include payment for additional land premiums or
land appreciation tax.


2. Our planned operating costs of $112 million include project related overhead from the commencement of each project until its
scheduled construction completion and do not include other non-project related operating expenses of our company. This estimate
does not include the costs of marketing and interior furnishing for the apartments and makes no adjustment for inflation or
financing costs.

Potential Risks in Our Business

The recent trade disputes between the U.S. and China and the imposition of higher tariffs by the U.S. government for the importation of goods manufactured in China have brought upon a level of uncertainty for many companies in Shenzhen concerning the strength of China's economy in the next few years. The design and timing of our projects are based in part on certain projected development in Shenzhen city and its economy. Prolong uncertainty concerning the direction of Shenzhen's economy may negatively affect companies' willingness for large capital expenditure, including relocating to an upgraded environment such as our technology parks. If uncertainty persists, we cannot assure you it would not negatively affect the sale or lease of our property upon completion.

Because our projects are mainly in the initial and development stages, we currently derive a majority of our income from interest income and rental income. 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 (the "PBOC") to keep Renminbi-denominated official time deposit interest rates in China at a low level throughout 2019. We expect to continue to incur operating losses in the first quarter of 2019 and beyond. With this lower interest rate environment and continued decrease in our level of deposits as we continue to develop our projects, we expect our income offset against operating losses to materially decrease in future periods, which will accelerate our decline of cash and cash equivalents and other short-term investments.

We only became a real estate developer after our electronic manufacturing businesses ceased in 2014. To aid us in our successful transformation to this new business, we have engaged external advisors and sought potential strategic partners and investors, including Kaisa Group Holdings Ltd., to support our projects. Our likelihood of success must be considered in light of challenges, uncertainties, expenses, difficulties, complications and delays frequently encountered in connection with entering a new industry. We cannot assure you that our transition to the real estate development business can be carried out smoothly and our efforts will be sufficient enough to achieve a successful transformation.

As the majority of our assets are denominated in Renminbi, the translation of Renminbi-denominated assets to U.S. dollars for our reporting purposes has resulted in a foreign exchange loss for the twelve months ended December 31, 2018 in the amount of $1.3 million. As such, we expect to see fluctuations in the reporting of foreign exchange loss/gain in our financial statements due to the movement of the U.S. dollar against the Renminbi. However, as a majority of our payments is in Renminbi, we also do not expect the movement of the U.S. dollar against Renminbi to adversely impact our business. Nevertheless, investors should consider that the purchasing power of U.S. dollar figures for cash and cash equivalents and other short-term investments is not identical from period to period.

In order for our projects to proceed smoothly and the transformation of our business to succeed, we will need to access additional funding. To do so, we will negotiate loans and credit lines with banks to source funds needed to assist in the future development of our projects. These loan agreements and debt instruments often contain covenants limiting our flexibility in operating our business and can contain requirements that we meet certain milestones in our projects' developments. While we have obtained a credit facility from China Construction Bank to support our financing of Nam Tai Inno Park, we will need to obtain additional funding. Changes in the macroeconomic environment or government policies in China could restrict China Construction Bank's or any other state-owned Chinese bank's funding ability, or that we may not be able to continue to enter into agreements and instruments with other financial institutions successfully. Furthermore, failure to comply with any terms required by the funding agreements or instruments may delay our developments as we seek alternative sources of funding or prevent us from completing the developments.

According to our project development plan, project investment for the first quarter of 2019 is estimated to be $24.7 million, and project investment for the year of 2019 is estimated to be $167.0 million.

As of December 31, 2018, we had a total cash balance of $109.9 million. We have a credit line of $184 million from China Construction Bank for the Nam Tai Inno Park project, which has yet to be drawn down. As we plan to begin the development of Phase I of Nam Tai Inno City, we plan to seek addition borrowing facilities or alternative funding sources in 2019.

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

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)

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 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 our 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 our cash position and other sources of liquidity to fund our property developments; continued inflation and appreciation of the Renminbi against the U.S. dollar; and 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 Reports filed on Form 6-K from time to time. Whether dividends will be declared in the future depends upon our future growth and earnings, of which there can be no assurance, as well as our cash flow needs for further expansion. Accordingly, there can be no assurance that cash dividends on our common shares will be declared beyond those declared in 2018, 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, 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.

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").

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

FOR THE PERIODS ENDED DECEMBER 31, 2018 AND 2017

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










Three months ended December 31,



Twelve months ended December 31,




2018



2017



2018



2017




(Unaudited)



(Unaudited)



(Unaudited)



(Audited)


Operation income (1)


$

486



$

187



$

493



$

1,851


Operation expenses



73







73





Net operation income



413




187




420




1,851



















Cost and expenses

















General and administrative expenses



3,484




2,432




20,402




9,450


Selling and marketing expenses



479







813








3,963




2,432




21,215




9,450


Operating loss



(3,550)




(2,245)




(20,795)




(7,599)


Other income (expenses), net



301




2,721




(714)




8,495


Interest income



1,043




1,620




5,601




7,621


Loss on demolished building facilities



(4,074)







(4,074)





Gain on disposal of property









6,763





Write off of demolished building






(4,573)




(35)




(4,573)


(Loss) income before income tax



(6,280)




(2,477)




(13,254)




3,944


Consolidated net (loss) income



(6,280)




(2,477)




(13,254)




3,944


Functional currency translation adjustment



709




2,259




(10,437)




6,311


Other comprehensive income (loss) (2)



709




2,259




(10,437)




6,311


Consolidated comprehensive (loss) income(3)


$

(5,571)



$

(218)



$

(23,691)



$

10,255


(Loss) income earnings per share

















Basic


$

(0.16)



$

(0.07)



$

(0.35)



$

0.11


Diluted


$

(0.16)



$

(0.07)



$

(0.35)



$

0.11


Weighted average number of shares ('000)

















Basic



38,643




37,256




37,826




36,807


Diluted



38,643




37,256




37,826




37,492



















Notes:

















(1)       The property at the site of Inno City - Phase II in Gushu was rented to a third party lessee with a term that ended in October 2017 and
re-rented to other tenants beginning in July 2018.

(2)       Represents an increase in other comprehensive loss due to foreign exchange translation.

(3)       Consolidated net loss for the three months ended December 31, 2018 mainly included general and administrative expenses of $3.5
million and a loss
 of $4.1 million related to disposal of certain fixed assets located on the site of Wuxi factory, offset in part by interest
income of $1.0 million earned from time deposits.  

 

NAM TAI PROPERTY INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS AT DECEMBER 31, 2018 AND 2017

(In Thousands of US dollars)










Unaudited

December 31,



Audited

December 31,




2018



2017


ASSETS









Current assets:









Cash and cash equivalents(1)


$

62,919



$

165,173


Short term investments(1)



46,952





Account receivable



226





Prepaid expenses and other receivables



6,663




5,100


Total current assets



116,760




170,273


Long term investments



2,204




2,319


Real estate properties under development, net(2)



171,610




52,460


Property, plant and equipment, net



27,442




36,976


Other assets



91




49


Total assets


$

318,107



$

262,077


LIABILITIES AND SHAREHOLDERS' EQUITY









Current liabilities:









Accounts payable


$

87,214



$

5,705


Accrued expenses and other payables



2,993




1,500


Dividend payable






10,514


Total current liabilities



90,207




17,719


Financial lease payable


$

9





Total liabilities



90,216




17,719


EQUITY









Shareholders' equity:









Common shares



382




376


Additional paid-in capital



257,125




249,856


Retained earnings



(13,329)




(24)


Accumulated other comprehensive loss(3)



(16,287)




(5,850)


Total shareholders' equity



227,891




244,358


Total liabilities and shareholders' equity


$

318,107



$

262,077











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 $
47.0 million and nil as at December 31, 2018 and December 31, 2017, 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 $99.1 million for the fourth quarter of 2018, which mainly consisted of capitalizing payment
obligations of $71.2 million with respect to additional land premium for the land underlying Phase I of Nam Tai Inno
City, and totaled
$12
1.8 million for the twelve months ended December 31, 2018, and our accumulated project investment was $171.6 million through
December 31, 2018, which was recorded under "real estate properties under development" on the Company's balance sheet as of
December 31, 2018.

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









 

NAM TAI PROPERTY INC.

CONSENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE PERIODS ENDED DECEMBER 31, 2018 AND 2017

(In Thousands of US dollars)



Three months ended December 31,



Twelve months ended December 31,



2018


2017



2018



2017



(Unaudited)


(Unaudited)



(Unaudited)



(Audited)

CASH FLOWS FROM OPERATING ACTIVITIES















Consolidated net (loss) income


$

(6,280)


$

(2,477)



$

(13,254)


$

3,944

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














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



867



84




3,801



328

Loss (gain) on disposal of property, plant and equipment



4,089



16




(2,867)



(25)

Unrealized gain of marketable securities



(13)






(13)



Write off demolished building





4,573




35



4,573

Impairment on other assets





57






57

Share-based compensation expenses



554



303




2,925



1,126

Unrealized exchange (gain) loss



(69)



(526)




1,670



(6,712)

Changes in current assets and liabilities:














(Increase) decrease in prepaid expenses and other receivables



(309)



(1,202)




(1,901)



(1,035)

(Decrease) increase in accrued expenses and other payables



225



(420)




871



3

Total adjustments



5,344



2,885




4,521



(1,685)

Net cash (used in) provided by operating activities


$

(936)


$

408



$

(8,733)


$

2,259

CASH FLOWS FROM INVESTING ACTIVITIES














Payment for real estate properties under development


$

(29,619)


$

(7,065)



$

(39,575)


$

(11,935)

Purchase of property, plant & equipment



(676)



(13,242)




(2,107)



(13,377)

Purchase of marketable securities



(7,580)






(7,580)



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



20



81




37



(74)

(Increase) decrease  in deposits for purchase of property, plant
and equipment



(71)



13,383




(82)



Proceeds from disposal of property, plant and equipment



85






9,791



67

Proceeds from disposal of demolished building



(17)



550




180



550

Proceeds from disposal of other asset



(4)






46



(Increase) in refundable bank deposit



(91)






(91)



Decrease (increase) in short term investments



54,391



7,725




(39,359)



87,384

Net cash provided by (used in) investing activities


$

16,438


$

1,432



$

(78,740)


$

62,615

CASH FLOWS FROM FINANCING ACTIVITIES














Cash dividends paid


$

(2,647)


$

(2,596)



$

(10,566)


$

(10,266)

Proceeds from shares issued for option exercise



2,411



3,023




3,955



6,908

Net cash (used in) provided by financing activities


$

(236)


$

427



$

(6,611)


$

(3,358)

Net increase (decrease) in cash and cash equivalents


$

15,266


$

2,267



$

(94,084)


$

61,516

Cash and cash equivalents at beginning of period



47,192



161,407




165,173



94,558

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



461



1,499




(8,170)



9,099

Cash and cash equivalents at end of period


$

62,919


$

165,173



$

62,919


$

165,173

















 

NAM TAI PROPERTY INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIODS ENDED DECEMBER 31, 2018 AND 2017

(In Thousands of US dollars)

1.            These financial statements, including the consolidated balance sheet as of December 31, 2017, 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, 2017.

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 ended December 31, 2018.

3.       Accumulated other comprehensive (loss) income represents foreign currency translation adjustments. The consolidated comprehensive
(loss) income was $(5,571) and $(218) for the three months ended December 31, 2018 and 2017, respectively, and was $(23,691) and
$10,255 for the twelve months ended December 31, 2018 and 2017, respectively (each number in the thousands)..

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

















Three months ended December 31,



Twelve months ended December 31,




2018



2017



2018



2017


NET OPERATION INCOME WITHIN:

















-PRC, excluding Hong Kong


$

413



$

187



$

420



$

1,851


OTHER INCOME (EXPENSES), NET:

















- Gain (loss) on exchange difference


$

89



$

2,419



$

(1,297)



$

8,582


- Gain on disposal of idle property, plant, and equipment






529







529


- Loss from Wuxi operations






(230)







(693)


- Others



212




3




583




77


Total other income (expenses), net


$

301



$

2,721



$

(714)



$

8,495


NET (LOSS) INCOME FROM OPERATIONS WITHIN:

















- PRC, excluding Hong Kong


$

(5,526)



$

(5,292)



$

(10,590)



$

(6,759)


- Hong Kong



(754)




2,815




(2,664)




10,703


Total net (loss) income


$

(6,280)



$

(2,477)



$

(13,254)



$

3,944


 



December 31, 2018



December 31, 2017


LONG-LIVED ASSETS WITHIN:









- Real estate properties under development in PRC, excluding
  H
ong Kong


$

171,610



$

52,460


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



27,186




33,894


- Hong Kong



256




3,082


Total long-lived assets


$

199,052



$

89,436













 

 

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