Fuwei Films Announces Fourth Quarter and Full Year 2021 Financial Results

BEIJING,April 29,2022 --Fuwei Films (Holdings) Co.,Ltd. (Nasdaq: FFHL) ("Fuwei Films" or the "Company"),a manufacturer and distributor of high-quality BOPET plastic films in China,today announced its financial results for the fourth quarter and full year ended December 31,2021.

4Q 2021 Highlights

Net revenues were RMB92.6 million or US$14.5 million

Sales of specialty films were RMB71.1 million or US$11.2 million,up 14.1% year-over-year

Gross margin was 30.8%,down from 42.2% a year ago

Net income attributable to the Company was RMB11.4 million or US$1.8 million

Basic and diluted earnings per share was RMB3.48 or US$0.55

Full Year 2021 Highlights

Net revenues were RMB396.8 million or US$62.3 million

Sales of specialty films were RMB277.3 million or US$43.5 million,up 35.5% year-over-year

Net income attributable to the Company was RMB89.2 million or US$14.0 million,up from a net income of RMB19.6 million in 2020

Basic and diluted earnings per share was RMB27.32 or US$4.29,up from a profit per share of RMB6.00 a year ago

Net cash provided by operating activities was RMB79.9 million or US$12.5 million,compared to RMB117.5 million a year ago

"In 2021,our revenues and gross margins continued to grow. Sales of specialty films increased by 35.5% year-over-year and accounted for 69.9% of our total revenues for the year. Our gross margin was 37.5% in 2021. We are encouraged by positive trends recorded in both revenues and gross margins,which we expect to enable us to better navigate the industrial and economic landscape ahead. We believe that our focus on innovation will allow the Company to expand end-user product applications,attract new clients,and expand relationships with existing customers," commented Mr. Lei Yan,CEO and Chairman of the Company.

Fourth Quarter 2021 Results

Revenues for the fourth quarter of 2021 were RMB92.6 million or US$14.5 million,compared with RMB86.4 million in the fourth quarter of 2020,an increase of RMB6.2 million,or 7.2%. Sales volume accounted for an increase of RMB0.6 million,while the increase in average sales price resulted in an increase of RMB5.6 million.

Sales of specialty films for the fourth quarter of 2021 were RMB71.1 million or US$11.2 million,accounting for 76.8% of total revenues,compared with RMB62.3 million or 72.1% of total revenue in the fourth quarter of 2020. Higher sales volume accounted for an increase of RMB5.5 million,while the rise in average sales price resulted in an increase of RMB3.3 million.

The following is a breakdown of commodity and specialty film sales for the three-month periods ended December 31,2021,and 2020 (amounts in thousands):

Three months period ended

December 31,2021

%ofTotal

December 31,2020

%ofTotal

RMB

US$

RMB

Stamping and transfer film

13,240

2,077

14.2%

15,193

17.6%

Printing film

3,752

589

4.1%

4,117

4.8%

Metallized film

802

126

0.9%

815

0.9%

Specialty film

71,064

11,151

76.8%

62,285

72.1%

Base film for other

applications

3,726

585

4.0%

3,940

4.6%

Total

92,584

14,528

100%

86,350

100%

Sales in China for the fourth quarter of 2021 were RMB86.6 million,or US$13.6 million,representing 93.6% of total revenues,compared with RMB80.5 million or 93.2% of total revenues recorded in the fourth quarter of 2020. Higher sales volume accounted for an increase of RMB0.3 million,while the rise in average sales price explained the increase of RMB5.8 million.

Overseas sales for the fourth quarter of 2021 amounted to RMB5.9 million or US$0.9 million,representing 6.4% of total revenues,compared with RMB5.9 million or 6.8% of total revenues in the fourth quarter of 2020.

The following is a breakdown of domestic versus overseas sales for the three-month periods ended December 31,and 2020 (amounts in thousands):

Three-month period ended

December 31,2021

%ofTotal

December 31,2020

%ofTotal

RMB

US$

RMB

Sales in China

86,636

13,595

93.6%

80,500

93.2%

Sales in other countries

5,948

933

6.4%

5,850

6.8%

Total

92,350

100%

Gross profit for the fourth quarter of 2021 was RMB28.5 million or US$4.5 million,representing a gross margin of 30.8%,compared with a gross profit of RMB36.5 million,or a gross margin of 42.2% in the fourth quarter of 2020.

Operating expenses for the fourth quarter of 2021 totaled RMB17.9 million or US$2.8 million,compared with RMB60.6 million in the fourth quarter of 2020.

Net income attributable to the Company for the fourth quarter of 2021 was RMB11.4 million or US$1.8 million,compared with a net loss of RMB20.9 million in the fourth quarter of 2020.

Basic and diluted earningsper share was RMB3.48 or US$0.55,compared with basic and diluted loss per share of RMB6.39 in the fourth quarter of 2020.

2021 Full Year Results

During the fiscal year ended December 31,net revenues reached RMB396.8 million (US$62.3 million),compared to RMB336.8 million in 2020,representing an increase of RMB60.0 million,or 17.8%.

In 2021,sales of specialty films were RMB277.3 million (US$43.5 million),accounting for 69.9% of our total revenues as compared to RMB204.7 million,or 60.8% in 2020,representing an increase of RMB72.6 million,or 35.5% above those recorded in 2020. Higher sales volume led to an increase of RMB59.0 million,and an RMB13.6 million increase from the rise in average sales price.

Overseas sales were RMB39.4 million (US$6.2 million) or 9.9% of total revenues,compared with RMB27.0 million or 8.0% of total revenues in 2020. The rise in average sales price caused an increase of RMB2.5 million,and the higher sales volume explained the RMB9.9 million increase.

The following is a breakdown of domestic versus overseas sales for the years ended December 31,and 2020 (amounts in thousands):

For the year ended December 31,

2021

%ofTotal

2020

%ofTotal

RMB

US$

RMB

Sales in China

357,396

56,083

90.1%

309,801

92.0%

Sales in other countries

39,403

6,183

9.9%

26,954

8.0%

396,799

62,266

100.0%

336,755

100.0%

Our gross profit for the year ended December 31,was RMB148.9 million (US$23.4 million),up from RMB 136.7 million in 2020. Our average unit sales price rose 11.0% when compared to last year. The unit sales cost increased 16.7% due to the higher raw materials prices. Consequently,the increase in cost of goods sold per unit exceeded that of sales price during 2021 compared with 2020,contributing to the decrease in our gross margin. Our gross margin was 37.5% for the year 2021,compared to a gross margin of 40.6% in 2020.

Our operating expenses during the year ended December 31,were RMB54.1 million (US$8.5 million),a decrease of RMB61.2 million,or 53.1%,as compared to 2020. The decrease was mainly due to the reduction in loss on impairment of assets held for sale and depreciation of property,plant,and equipment.

Net income attributable to the Company for the full year of 2021 was RMB89.2 million or US$14.0 million,up from a net profit attributable to the Company of RMB19.6 million in 2020.

Basic and diluted earnings per share for the year ended December 31,was RMB27.32 or US$4.29,up from a profit per share of RMB6.00a year ago.

Net cash provided by operating activities was RMB79.9 million or US$12.5 million for the year ended December 31,as compared to net cash provided by operating activities of RMB117.5 million for the year ended December 31,2020.

Cash and cash equivalents on December 31,2021 amounted to RMB250.6 million or US$39.3 million,compared with RMB113.4 million as of December 31,2020.

About Fuwei Films

Fuwei Films conducts its business through its wholly-owned subsidiary,Fuwei Films (Shandong) Co.,Ltd. ("Fuwei Shandong"). Fuwei Shandong develops,manufactures,and distributes high-quality plastic films using the biaxial oriented stretch technique,otherwise known as BOPET film (biaxially-oriented polyethylene terephthalate). Fuwei's BOPET film is widely used for packaging food,medicine,cosmetics,tobacco,and alcohol,as well as in the imaging,electronics,and magnetic products industries.

Safe Harbor

This press release contains information that constitutes forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are subject to risks. Risk factors that could contribute to such differences include those matters more fully disclosed in the Company's reports filed with the U.S. Securities and Exchange Commission which,among other things,include significant competition in the BOPET film industry,especially the significant oversupply of BOPET films resulting from the rapid growth of the Chinese BOPET industry capacity,changes in the international market and trade barriers,especially the adverse impact of the antidumping investigation and imposition of an anti-dumping duty on imports of the BOPET films originating fromthe People's Republic of China("China") conducted by certain main importing countries; fluctuations of RMB exchange rate,the reduce in demand for the Company's products or the loss of main customers which may result in the decrease of sales,and negatively influencing the Company's financial performance,uncertainty as to the future profitability,uncertainty as to the Company's ability to successfully obtain additional funds to meet the working capital needs of the new BOPET production line,uncertainty as to the Company's ability to continuously develop new BOPET film products to be produced by the third production line and keep up with changes in BOPET film technology,risks associated with possible defects and errors in its products including complaints and claims from clients,uncertainty as to its ability to protect and enforce its intellectual property rights,uncertainty as to its ability to attract and retain qualified executives and personnel,and uncertainty in acquiring raw materials on time and on acceptable terms,particularly in light of the volatility in the prices of petroleum products in recent years,instability of power and energy supply,uncertainty around coronavirus (COVID-19) outbreak and the effects of government and other measures seeking to contain its spread; risks related to an economic downturn or recession in the United States and in other countries around the world; and changes in political,business,and economic conditions,and the uncertainty regarding the future operation of the Company in connection with the changes in the labor law inChina,the measures taken by the Chinese government to save energy and reduce emissions,and the complaints from nearby residents and local government about the noise caused by our production as well as the uncertainty of the impact of major shareholder transfer that have substantial influence over the Company and the Company's business operation including possible overlap of our BOPET products,customers and market orientation with an BOPET film manufacturer,which is controlled by the same individual who has control over the shares of our major shareholder. The forward-looking information provided herein represents the Company's estimates as of the date of the press release,and subsequent events and developments may cause the Company's estimates to change. The Company specifically disclaims any obligation to update the forward-looking information in the future. Therefore,this forward-looking information should not be relied upon as representing the Company's estimates of its future financial performance as of any date subsequent to the date of this press release. Actual results of our operations may differ materially from the information contained in the forward-looking statements as a result of the risk factors.

Financial Tables Follow

FUWEIFILMS (HOLDINGS) CO.,LTD,and SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

As of December31,and 2020

(amounts in thousands,except share and per share data)

December31,2021

December31,2020

RMB

US$

RMB

ASSETS

Current assets

Cash and cash equivalents

250,608

39,326

113,423

Restricted cash

28,294

4,440

7,500

Accounts and bills receivable,net

29,225

4,586

32,393

Inventories

35,456

5,564

25,436

Advance to suppliers

7,933

1,245

7,359

Prepayments and other receivables

1,199

188

1,103

Assets held for sale

122,919

Deferred tax assets – current

1,144

180

6,947

Total current assets

353,859

55,529

317,080

Property,plant and equipment,net

106,928

16,779

111,308

Construction in progress

—

Lease prepayments,net

14,685

2,304

15,219

Advance to suppliers - long term,net

1,542

Deferred tax assets - non-current

227

36

507

Total assets

475,699

74,648

445,656

LIABILITIES AND EQUITY

Current liabilities

Short-term loans

65,000

10,200

65,000

Due to related parties

73,571

Accounts payables

22,616

3,549

25,730

Notes payable

50,126

7,866

15,000

Advance from customers

7,672

1,204

9,297

Accrued expenses and other payables

11,479

1,801

27,400

Total current liabilities

156,893

24,620

215,998

Deferred tax liabilities

1,789

281

1,854

Total liabilities

158,682

24,901

217,852

Equity

Shareholders' equity

Registered capital(of US$0.519008 par value; 5,000,000 shares authorized; 3,265,837

issued and outstanding)

13,323

2,091

13,323

Additional paid-in capital

311,907

48,945

311,907

Statutory reserve

37,441

5,875

37,441

Retained earnings

(46,494)

(7,296)

(135,707)

Cumulative translation adjustment

840

132

840

Total shareholders' equity

317,017

49,747

227,804

Total equity

317,804

Total liabilities and equity

475,656

FUWEIFILMS (HOLDINGS) CO.,and SUBSIDIARIES

CONSOLIDATED STATEMENTS OFOPERATIONS AND COMPREHENSIVE INCOME (LOSS)

For theYears Ended December31,2020 and 2019

(amounts in thousands,except share and per share data)

TheYearEndedDecember31,

2021

2020

2019

RMB

US$

RMB

RMB

Net sales

396,799

62,266

336,755

335,620

Cost of sales

247,902

38,901

200,056

252,010

Gross profit

148,897

23,365

136,699

83,610

Operating expenses:

Selling expenses

20,706

3,249

17,483

13,721

Administrative expenses

33,424

5,245

59,865

46,794

Loss on assets held for sale

37,951

—

Total operating expenses

54,130

8,494

115,299

60,515

Operating income (loss)

94,767

14,871

21,400

23,095

Other income (expense):

- Interest income

5,128

805

2,145

1,106

- Interest expense

(5,054)

(793)

(8,490)

(8,892)

- Other income (expense),net

390

61

(1,560)

(1,621)

Total other income (expense)

464

73

(7,905)

(9,407)

Income (loss) before provision for income taxes

95,231

14,944

13,495

13,688

Income tax (expense) benefit

(6,018)

(944)

6,115

(2,325)

Net income (loss)

89,213

14,000

19,610

11,363

Netincome (loss) attributable to noncontrolling interests

—

—

Net income (loss) attributable to the Company

89,363

Other comprehensive income (loss):

- Foreign currency translation adjustments attributable to noncontrolling interest

—

—

- Foreign currency translation adjustments attributable to the Company

—

—

Comprehensive income (loss) attributable to non-controlling interest

—

—

Comprehensive income (loss) attribute to the Company

89,363

Net earnings (loss) per share,Basic and diluted

27.32

4.29

6.00

3.48

Weighted average number of ordinary shares,Basic and diluted

3,837

3,837

FUWEIFILMS (HOLDINGS) CO.,and SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For theYears Ended December31,2020 and 2019

(Amounts in thousands)

TheYearsEndedDecember31,

2021

2020

2019

RMB

US$

RMB

RMB

Cash flow from operating activities

Net income (loss)

89,363

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities

- Loss on assets held for sale impairment

37,951

—

- Depreciation of property,and equipment

12,365

1,940

41,722

41,451

- Amortization of intangible assets

534

84

534

534

- Deferred income taxes (benefit)

6,018

944

(6,115)

2,325

- Bad debt (recovery) expense

(1,230)

(193)

578

(1,014)

- Inventory provision

(431)

(68)

267

1,489

Changes in operating assets and liabilities

- Investment income recorded on Fuwei Holdings' book

—

—

- Accounts and bills receivable

3,470

545

(5,086)

(3,319)

- Inventories

(9,589)

(1,505)

(2,119)

(399)

- Advance to suppliers

352

55

(2,009)

(583)

- Prepaid expenses and other current assets

(96)

(15)

(35)

10

- Accounts payable

(3,114)

(489)

6,198

(1,217)

- Accrued expenses and other payables

(15,273)

(2,398)

21,938

(302)

- Advance from customers

(1,625)

(255)

4,093

3,344

- Tax payable

(645)

(101)

9

684

Net cash provided by (used in) operating activities

79,949

12,544

117,536

54,366

Cash flow from investing activities

Purchases of property,and equipment

(7,986)

(1,253)

(11,257)

(12,925)

Advanced to suppliers - non-current

1,542

242

—

—

Amount change in construction in progress

—

366

Proceeds from sale of property,and equipment

122,919

19,289

—

—

Deposit for purchase

—

—

Net cash used in (provided by) investing activities

116,475

18,278

(11,559)

Cash flow from financing activities

Principal payments of bank loans

—

—

Proceeds from short-term bank loans

—

50

Proceeds from related party

(73,571)

(11,545)

(45,726)

4,606

Payment of capital lease obligation

—

—

Change in notes payable

35,126

5,512

(26,000)

(7,000)

Net cash provided by (used in) financing activities

(38,445)

(6,033)

(71,726)

(2,344)

Effect of foreign exchange rate changes

445

(1)

—

Net increase (decrease) in cash and cash equivalent,restricted cash

157,979

25,234

34,552

39,463

Cash and cash equivalent,and restricted cash

At beginning of the period/year

120,923

18,532

86,371

46,908

At end of the period/year

278,902

43,766

120,923

86,371

SUPPLEMENTARY DISCLOSURE:

Interest paid

5,054

793

8,490

8,892

Income tax paid

—

—

SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND FINANCIAL ACTIVITIES:

Account payable for plant and equipment:

1,010

158

1,010

1,010

Obligations for acquired equipment under capital lease:

—

—

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