NAM TAI PROPERTY INC. Reports Q3 2018 Results


    SHENZHEN, China, Oct. 29, 2018 /PRNewswire/ -- Nam Tai Property Inc. ("Nam Tai" or the "Company") (NYSE Symbol: NTP) today announced its unaudited results for the third quarter ended September 30, 2018.

    KEY HIGHLIGHTS




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






    Quarterly Results



    Nine Months Results





    Q3 2018



    Q3 2017



    YoY(%)(c)



    9M 2018



    9M 2017



    YoY(%)(c)


    Operation income


    $

    7



    $

    529




    (98.7)



    $

    7



    $

    1,664




    (99.6)


    Net operation income


    $

    7



    $

    529




    (98.7)



    $

    7



    $

    1,664




    (99.6)


    Operating loss


    $

    (3,974)



    $

    (1,627)






    $

    (17,245)



    $

    (5,354)





    per share (diluted)


    $

    (0.10)



    $

    (0.04)






    $

    (0.46)



    $

    (0.14)





    Net (loss) income (a) (b)


    $

    (3,697)



    $

    2,522






    $

    (6,974)



    $

    6,421





    Basic (loss) income per share


    $

    (0.10)



    $

    0.07






    $

    (0.18)



    $

    0.18





    Diluted (loss) income per share


    $

    (0.10)



    $

    0.07






    $

    (0.18)



    $

    0.17





    Weighted average number of shares ('000)

























    Basic



    38,159




    36,927








    37,756




    36,656






    Diluted



    38,159




    37,731








    37,756




    37,332







    Notes:

    (a)    Net loss for the three months ended September 30, 2018 mainly included general and administrative expenses of $4.0 million and exchange loss of $1.3 million, as a result of the depreciation of the Renminbi against the U.S. dollar during the three months ended September 30, 2018; offset in part by interest income of $1.5 million earned from time deposits.

    (b)    Net loss for the nine months ended September 30, 2018 mainly included general and administrative expenses of $17.3 million, which mainly included a compensation for loss of office of $3.9 million for the retirement of our former chairman, salary & benefits of $5.3 million, option expenses of $2.4 million for new directors, officers and employees, depreciation of $2.9 million, and audit, legal & professional fees of $1.2 million; offset in part by a gain of $6.8 million on disposal of property in Hong Kong and interest income of $4.6 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 $17.8 million for the third quarter of 2018, totaling $23.4 million for the nine months ended September 30, 2018, and our accumulated project investment was $72.4 million through September 30, 2018, which was recorded under the account of "real estate properties under development" in the balance sheet as of September 30, 2018.

    (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 the third quarter of 2018 on page 7, Condensed Consolidated Statements of Comprehensive Income.

     

    SUPPLEMENTARY INFORMATION (UNAUDITED) IN THE THIRD QUARTER OF 2018


    Key Highlights of Financial Position




    As of September 30,



    As of December 31,



    As of September 30,




    2018



    2017



    2017


    Cash, cash equivalents and short term

    investments


    $140.9 million(a)(b)



    $165.2 million



    $171.4 million


    Ratio of cash(c) to current liabilities


    6.16



    9.32



    13.81


    Current ratio


    6.44



    9.61



    15.72


    Ratio of total assets to total liabilities


    11.07



    14.79



    21.29


    Return on equity



    (3.9)%




    1.6%




    3.5%


    Ratio of total liabilities to total equity


    0.10



    0.07



    0.05



    Notes:

    (a)    Compared to December 31, 2017, the decrease of $24.3 million in cash, cash equivalents and short-term investments was mainly due to a decrease of $9.9 million used for land development projects that was recorded under the account "real estate properties under development" in the balance sheet as of September 30, 2018, decrease of $7.9 million for dividends and exchange loss of $8.6 million, as a result of the depreciation of the Renminbi against the U.S. dollar during the nine months ended September 30, 2018; offset in part by the proceeds of $9.7 million from disposal of an office property in Hong Kong.

    (b)    Compared to September 30, 2017, the decrease of $30.5 million in cash, cash equivalents and short-term investments was mainly due to $17.0 million used for land development projects that was recorded under the account "real estate properties under development" in the balance sheet as of September 30, 2018, payments of $10.5 million for dividends, and exchange loss of $7.1 million, as a result of the depreciation of the Renminbi against the U.S. dollar from September 30, 2017 to September 30, 2018; offset in part by the proceeds of $9.7 million from selling an office property in Hong Kong and proceeds of $4.6 million from shares issued upon the exercise of certain share options.

    (c)     Cash in the financial ratio included cash, cash equivalents and short-term investments in the amount of $140.9 million, $165.2 million and $171.4 million as of September 30, 2018, December 31, 2017 and September 30, 2017, respectively.

    OPERATING RESULTS

    Operating loss for the third quarter of 2018 was $4.0 million, an increase of $2.4 million, compared to an operating loss of $1.6 million in the third quarter of 2017, when there was rental income derived from our land and buildings located in Gushu, Shenzhen, prior to the expiration of its lease agreement in October 2017, to offset the operating losses.

    Net loss for the third quarter of 2018 was $3.7 million compared to a net income of $2.5 million in the third quarter of 2017. Net loss for the third quarter of 2018 mainly consisted of general and administrative expenses of $4.0 million and exchange loss of $1.3 million, as a result of the depreciation of the Renminbi against the U.S. dollar in the third quarter of 2018; offset in part by interest income of $1.5 million earned from time deposits. Net income for the third quarter of 2017 mainly consisted of exchange gain of $2.6 million, as a result of the appreciation of the Renminbi against the U.S. dollar in the third quarter of 2017, and interest income of $1.7 million earned from time deposits; offset in part by general and administrative expenses of $2.2 million. Net loss per diluted share for the third quarter of 2018 was $0.10 compared to net income per diluted share of $0.07 for the third quarter of 2017.

    Net loss for the nine months ended September 30, 2018 was $7.0 million compared to a net income of $6.4 million for the nine months ended September 30, 2017. Net loss for the nine months ended September 30, 2018 mainly consisted of general and administrative expenses of $17.3 million and exchange loss of $1.4 million, as a result of the depreciation of the Renminbi against the U.S. dollar in the nine months ended September 30, 2018; offset in part by a gain of $6.8 million on disposal of an office property in Hong Kong and interest income of $4.6 million earned from time deposits. Net income for the nine months ended September 30, 2017 mainly consisted of interest income of $6.0 million earned from time deposits and an exchange gain of $6.2 million, as a result of the appreciation of the Renminbi against the U.S. dollar during the nine months ended September 30, 2017; offset in part by general and administrative expenses of $7.0 million. Net loss per diluted share for the nine months ended September 30, 2018 was $0.18 compared to net income per diluted share of $0.17 for the nine months ended September 30, 2017.

    As 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 in the third quarter of 2018. Due to the fluctuation of the exchange rate for the Renminbi against the U.S. dollar, the foreign exchange loss for the third quarter of 2018 was $1.3 million, or approximately 36% of the amount of our net loss for this period. 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 $17.8 million for the third quarter of 2018, totaling $23.4 million for the nine months ended September 30, 2018 and our accumulated project investment was $72.4 million as of September 30, 2018, which was recorded under the account of "real estate properties under development" in the balance sheet as of September 30, 2018.

    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 the third 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 have begun the main construction phase starting from June 2018. We endured a severe typhoon in September without material damage or delay. With the construction underway, management has turned the page and shifted our focus to strengthening the technology infrastructure that will be offered to attract and retain the optimum tenants.

    While many technology brands and manufacturers already have a presence in Guangming, Shenzhen, Nam Tai Inno Park will target enterprises of all sizes and stages of development to build a fuller ecosystem. We plan to build a general technology infrastructure that will be attractive to businesses of various sizes and also offer less tangible support and services to medium-sized and start-up enterprises. We are currently focusing on developing various platforms and services, including: (i) intelligent building management platform, which is expected to include security and various energy consumption and environmental monitoring systems; (ii) public amenities platform, which is expected to offer use of shared services such as meeting rooms, conference planning, and other physical public amenities; and (iii) industrial and business service platform, which is expected to offer government liaisons, and business and capital introduction services.

    For Phase I of Nam Tai Inno City, we are currently focusing our development efforts on designing the complex in a way so as to maximize its value based on the latest market outlooks. We will continue to follow our plan of development and expect to receive the relevant Land Use Right Certificate before March 2019.

    For Phase II of Nam Tai Inno City, we are continuing to subdivide and renovate the existing buildings for short-term leases targeting start-up companies. We have successfully leased out offices and workshops to tenants in smartphone optical components and drone manufacturing industries. 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. We also relocated a part of our headquarters from the future site of Phase II of Nam Tai Inno City to our Qianhai office on September 10, 2018.

    As for our Wuxi facilities, 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 (CFA)


    331,832



    188,180



    170,200




    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

    Mar 2019

    Feb 2022



    *



    #




    C

    Construction Planning Permit

    Obtained
    Aug 2017

    May 2019

    Feb 2023

    ^


    *




    #



    D1

    Early Construction Permit for Pile Foundation

    Obtained

    May 2017

    N/A

    N/A

    ^









    D2

    Construction Permit for the Main Structure

    Obtained

    May 2018

    Jul 2019

    Mar 2023


    ^

    *




    #



    D3

    Construction Acceptance Certificate for the Main Structure

    Dec 2019

    May 2021

    Jan 2025



    ^


    *




    #

    D4

    Construction Completion

    Dec 2020

    Feb 2022

    Nov 2025




    ^


    *



    #

    E

    Property Ownership Certificate

    Jun 2020

    Nov 2021

    Jul 2025




    ^

    *




    #


    Notes:

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

     

    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 is 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 and makes no adjustment for inflation or financing costs. If the developed properties are offered for sale, the costs would also have to include payment for additional land premium and 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

    Because our projects are mainly in the initial and development stages, we currently derive a majority of our income from interest 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 2018 and 2019. We expect to continue to incur operating losses in the fourth quarter of 2018 and beyond. With this lower interest rate environment and continued decrease in our level of deposits, 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 ensure our successful transformation, we have engaged external advisors and sought potential strategic partners and investors, including Kaisa Group Holdings Ltd., to support our projects. We cannot assure you that our restructuring plan can be carried out smoothly and our efforts will be sufficient enough to carry out a transformation of this magnitude. In addition, all of our land development related applications are subject to government policies and regulations in the real estate market. We may encounter industry-specific difficulties that result in losses as we progress with our projects in Shenzhen.

    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 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 the U.S. dollar against Renminbi. However, as a majority of our payments are 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.

    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 further accelerated the transformation of Shenzhen from an export-oriented economy to one that relies on domestic consumption. Such transformation has brought upon a level of uncertainty on the strength of China's economy and may also negatively impact the speed of Shenzhen's development. If uncertainty prolongs, we cannot assure you it would not negatively affect the sale or lease of our property upon completion.

    In order for the 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 the Nam Tai Inno Park project in part, there can be no assurance that changes in the macroeconomic environment or government policies in China would not restrict China Construction Bank's or any other state-owned Chinese bank's funding ability, or that we will 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 fourth quarter of 2018 is estimated to be $48.7 million, and project investment for the year of 2018 is estimated to be $72.1 million.

    As of September 30, 2018, we had a total cash balance of $140.9 million and no debt. With our current cash position and the credit line from China Construction Bank, which we have yet to draw on, we believe our financial position remains sufficient to fund the initial stage of the Nam Tai Inno Park project as currently planned.

    For more information on risks associated with our business, please refer to the Risk Factors section of our 2017 Annual Report on Form 20-F as filed with the SEC and on our website.

    PAYMENT OF QUARTERLY DIVIDENDS FOR 2018

    As announced on October 30, 2017, the Company set the payment schedule of quarterly dividends for 2018. The dividend for the third quarter of 2018 was paid on October 19, 2018.

    The following table updates the previously announced schedule for declaration and payment of quarterly dividends in 2018.

    Payment


    Record Date


    Payment Date


    Dividend

    (per share)



    Status

    Q1 2018


    December 31, 2017


    January 19, 2018


    $

    0.07



    Paid

    Q2 2018


    March 31, 2018


    April 20, 2018


    $

    0.07



    Paid

    Q3 2018


    June 30, 2018


    July 20, 2018


    $

    0.07



    Paid

    Q4 2018


    September 30, 2018


    October 19, 2018


    $

    0.07



    Paid

    Full Year 2018






    $

    0.28




    PAYMENT OF QUARTERLY DIVIDENDS WILL NOT CONTINUE IN 2019

    In 2019, the Nam Tai Inno Park project will be in the midst of its building phase, which will require significant cash usage. The trade disputes between the U.S. and China may also result in additional changes in China's monetary and industrial policy. Our Board of Directors considered these factors and decided against declaring any future dividends or setting a dividend schedule for 2019 at this time. As China's economy improves or the direction of its government policy is clarified, our Board of Directors may revisit this decision and make further determination at that time.

    SCHEDULE FOR RELEASE OF QUARTERLY FINANCIAL RESULTS FOR 2018

    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 2017 to release the quarterly financial results for 2018. Details of the expected quarterly release dates are as follows:

    Announcements of Financial Results

    Quarter


    Date of Release

    Q1 2018


    April 30, 2018 (Monday)

    Q2 2018


    July 30, 2018 (Monday)

    Q3 2018


    October 29, 2018 (Monday)

    Q4 2018


    January 28, 2019 (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 SEPTEMBER 30, 2018 AND 2017

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




    Unaudited

    Three months ended September 30,



    Unaudited

    Nine months ended September 30,




    2018



    2017



    2018



    2017


    Operation income (1)


    $

    7



    $

    529



    $

    7



    $

    1,664


    Net operation income



    7




    529




    7




    1,664


    Costs and expenses

















    General and administrative expenses



    3,981




    2,156




    17,252




    7,018





    3,981




    2,156




    17,252




    7,018


    Operating loss



    (3,974)




    (1,627)




    (17,245)




    (5,354)


    Other (expenses) income, net (2)



    (1,208)




    2,472




    (1,015)




    5,774


    Interest income



    1,485




    1,677




    4,558




    6,001


    Gain on disposal of property









    6,763





    Write off of demolished building









    (35)





    (Loss) income before income tax



    (3,697)




    2,522




    (6,974)




    6,421


    Consolidated net (loss) income



    (3,697)




    2,522




    (6,974)




    6,421


    Functional currency translation adjustment



    (7,647)




    1,701




    (11,146)




    4,052


    Other comprehensive (loss) income (3)



    (7,647)




    1,701




    (11,146)




    4,052


    Consolidated comprehensive (loss) income(4)


    $

    (11,344)



    $

    4,223



    $

    (18,120)



    $

    10,473


    (Loss) income earnings per share

















    Basic


    $

    (0.10)



    $

    0.07



    $

    (0.18)



    $

    0.18


    Diluted


    $

    (0.10)



    $

    0.07



    $

    (0.18)



    $

    0.17


    Weighted average number of shares ('000)

















    Basic



    38,159




    36,927




    37,756




    36,656


    Diluted



    38,159




    37,731




    37,756




    37,332



    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.

    (2)         Other (expenses) income, net, include an exchange loss of $1.3 million for the three months ended September 30, 2018.

    (3)         An increase in other comprehensive loss due to foreign exchange translation.

    (4)       Consolidated net loss for the three months ended September 30, 2018 mainly include general and administrative expenses of $4.0 million and exchange loss of $1.3 million as a result of the depreciation of Renminbi against the US dollar in the third quarter of 2018; offset in part by interest income of $1.5 million earned from time deposits 

     

    NAM TAI PROPERTY INC.

    CONDENSED CONSOLIDATED BALANCE SHEETS

    AS AT SEPTEMBER 30, 2018 AND DECEMBER 31, 2017

    (In Thousands of US dollars)




    Unaudited

    September 30,



    Audited

    December 31,




    2018



    2017


    ASSETS









    Current assets:









    Cash and cash equivalents(1)


    $

    47,192



    $

    165,173


    Short term investments(1)



    93,750





    Prepaid expenses and other receivables



    6,495




    5,100


    Total current assets



    147,437




    170,273


    Long term investments



    2,198




    2,319


    Real estate properties under development, net(2)



    72,409




    52,460


    Property, plant and equipment, net



    31,417




    36,976


    Other assets






    49


    Total assets


    $

    253,461



    $

    262,077


    LIABILITIES AND SHAREHOLDERS' EQUITY









    Current liabilities:









    Accounts payable


    $

    17,613



    $

    5,705


    Accrued expenses and other payables



    2,624




    1,500


    Dividend payable



    2,646




    10,514


    Total current liabilities



    22,883




    17,719


    Financial lease payable


    $

    9





    Total liabilities



    22,892




    17,719


    EQUITY









    Shareholders' equity:









    Common shares



    378




    376


    Additional paid-in capital



    254,236




    249,856


    Retained earnings



    (7,049)




    (24)


    Accumulated other comprehensive loss(3)



    (16,996)




    (5,850)


    Total shareholders' equity



    230,569




    244,358


    Total liabilities and shareholders' equity


    $

    253,461



    $

    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 $93.8 million and nil as at September 30, 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 $17.8 million for third quarter of 2018, totaling $23.4 million for the nine months ended September 30, 2018 and our accumulated project investment was $72.4 million up to September 30, 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 SEPTEMBER 30, 2018 AND 2017

    (In Thousands of US dollars)




    Unaudited

    Three months ended September 30,



    Unaudited

    Nine months ended September 30,





    2018



    2017



    2018



    2017


    CASH FLOWS FROM OPERATING ACTIVITIES

















    Consolidated net (loss) income


    $

    (3,697)



    $

    2,522



    $

    (6,974)



    $

    6,421


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

















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



    959




    85




    2,934




    244


    Gain on disposal of property, plant and equipment









    (6,956)




    (41)


    Write off demolished building









    35





    Share-based compensation expenses



    370




    220




    2,371




    823


    Unrealized exchange loss(gain)



    450




    (3,936)




    1,739




    (6,186)


    Changes in current assets and liabilities:

















    (Increase) decrease in prepaid expenses and other receivables



    (1,190)




    (106)




    (1,592)




    167


    (Decrease) increase in accrued expenses and other payables



    (3,018)




    (1,012)




    646




    423


    Total adjustments



    (2,429)




    (4,749)




    (823)




    (4,5700


    Net cash (used in) provided by operating activities


    $

    (6,126)



    $

    (2,227)



    $

    (7,797)



    $

    1,851


    CASH FLOWS FROM INVESTING ACTIVITIES

















    Payment for real estate properties under development


    $

    (4,432)



    $

    (1,899)



    $

    (9,956)



    $

    (4,870)


    Purchase of property, plant & equipment



    (835)




    (6)




    (1,431)




    (135)


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



    (99)




    11




    17




    (155)


    Decrease (increase) in deposits for purchase of property, plant and equipment



    137




     




    (11)




    (13,383)


    Proceeds from disposal of property, plant and equipment









    9,706




    67


    Proceeds from disposal of demolished building









    197





    Proceeds from disposal of other asset









    50





    (Increase) decrease in short term investments



    (91,839)




    44,715




    (93,750)




    79,659


    Net cash (used in) provided by investing activities


    $

    (97,068)



    $

    42,821



    $

    (95,178)



    $

    61,183


    CASH FLOWS FROM FINANCING ACTIVITIES

















    Cash dividends paid


    $

    (2,646)



    $

    (2,562)



    $

    (7,919)



    $

    (7,670)


    Proceeds from shares issued for option exercise






    3,011




    1,544




    3,885


    Net cash (used in) provided by financing activities


    $

    (2,646)



    $

    449



    $

    (6,375)



    $

    (3,785)


    Net (decrease) increase in cash and cash equivalents


    $

    (105,840)



    $

    41,043



    $

    (109,350)



    $

    59,249


    Cash and cash equivalents at beginning of period



    158,091




    115,985




    165,173




    94,558


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



    (5,059)




    4,379




    (8,631)




    7,600


    Cash and cash equivalents at end of period


    $

    47,192



    $

    161,407



    $

    47,192



    $

    161,407
























    NAM TAI PROPERTY INC.
    NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    FOR THE PERIODS ENDED SEPTEMBER 30, 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 $(11,344) and $4,223 for the three months ended September 30, 2018 and 2017, respectively, and was $(18,120) and $10,473 for the nine months ended September 30, 2018 and 2017, respectively.
    4. A summary of the operation income, other (expenses) income, net, net (loss) income and long-lived assets by geographical areas is as follows:


    Three months ended September 30,



    Nine months ended September 30,




    2018



    2017



    2018



    2017


    OPERATION INCOME WITHIN:

















    -PRC, excluding Hong Kong


    $

    7



    $

    529



    $

    7



    $

    1,664


    OTHER (EXPENSES) INCOME, NET:

















    - (Loss) gain on exchange difference


    $

    (1,328)



    $

    2,624



    $

    (1,386)



    $

    6,163


    - Loss from Wuxi operations






    (167)







    (463)


    - Others



    120




    15




    371




    74


    Total other (expenses) income, net


    $

    (1,208)



    $

    2,472



    $

    (1,015)



    $

    5,774


    NET (LOSS) INCOME FROM OPERATIONS WITHIN:

















    - PRC, excluding Hong Kong


    $

    (1,361)



    $

    (635)



    $

    (5,064)



    $

    (1,467)


    - Hong Kong



    (2,336)




    3,157




    (1,910)




    7,888


    Total net (loss) income


    $

    (3,697)



    $

    2,522



    $

    (6,974)



    $

    6,421


     



    September 30, 2018



    December 31, 2017


    LONG-LIVED ASSETS WITHIN:









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


    $

    72,409



    $

    52,460


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



    31,275




    33,894


    - Hong Kong



    142




    3,082


    Total long-lived assets


    $

    103,826



    $

    89,436


     

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