Fuwei Films Announces Its Unaudited Financial Results for the First Quarter of 2022

BEIJING,June 25,2022 -- 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 unaudited financial results for the first quarter of 2022 ended March 31,2022.

First quarter highlights

Net sales were RMB103.1 million (US$16.3 million),compared to RMB101.6 million,during the same period in 2021,representing an increase of RMB1.5 million,or 1.5% year-over-year

Sales of specialty films were RMB71.9 million (US$11.3 million),equivalent to 69.8% of our total revenues as compared to RMB65.0 million or 63.9% in the same period of 2021

Gross profit was RMB30.2 million (US$4.8 million),representing a gross margin of 29.3%

Net income attributable to the Company was RMB17.1 million (US$2.7 million)

Mr. Lei Yan,Chairman and CEO of Fuwei Films,commented,"Despite the oversupply in the marketplace and the ongoing coronavirus pandemic,we achieved positive trends in overall sales,especially sales of specialty films,including a base film for dry film,which accounted for 69.8% of our total revenues. The base film is a high value-added and differentiated product,which is used to produce dry films that are applied to printed circuit boards. The sales increase of base film for dry films demonstrates that our customers well-recognize the quality of our products. We believe the order growth also helps improve the Company's financial performance. For the future,we remain committed to innovation and differentiated marketing strategy while expanding the end-user applications of our film products. We will continue these efforts and expect them to enable the Company to capitalize on new opportunities despite challenging industry and economic conditions."

First Quarter 2022 Results

Net sales during the first quarter ended March 31,2022,were RMB103.1 million (US$16.3 million),or 1.5% on an annual base. The increase in sales volume accounted for an increase of RMB1.4 million,and a higher sales price resulted in a RMB0.1 million increase.

In the first quarter of 2022,sales of specialty films were RMB71.9 million (US$11.3 million),equivalent to 69.8% of our total revenues compared to RMB65.0 million or 63.9% in the same period of 2021. The increase was mainly due to higher sales volume.

The following is a breakdown of commodity and specialty film sales (amounts in thousands):

Three-Month Period

Ended

March 31,2022

%ofTotal

Three-Month Period

Ended

March 31,2021

%ofTotal

RMB

US$

RMB

Stamping and transfer film

22,110

3,489

21.4%

25,350

25.0%

Printing film

4,477

706

4.3%

5,482

5.4%

Metallization film

1,421

224

1.4%

1,643

1.6%

Specialty film

71,947

11,349

69.8%

64,963

63.9%

Base film for other

applications

3,178

501

3.1%

4,186

4.1%

103,133

16,269

100.0%

101,624

100.0%

Overseas sales were RMB10.2 million or US$1.6 million,representing 9.9% of total revenues,compared with RMB9.0 million or 8.9% of total revenues in the first quarter of 2021,an increase of RMB1.2 million or 13.3%. The growth in sales volume accounted for an increase of RMB0.3 million,while a higher sales price resulted in an increase of RMB0.9 million.

The following is a breakdown of PRC domestic and overseas sales (amounts in thousands except percentages):

Three-Month Period

Ended

March 31,2021

%ofTotal

RMB

US$

RMB

Sales in China

92,922

14,658

90.1%

92,596

91.1%

Sales in other countries

10,211

1,611

9.9%

9,028

8.9%

103,624

100.0%

Our gross profit was RMB30.2 million (US$4.8 million) for the first quarter ended March 31,representing a gross margin of 29.3%,compared to a gross profit of RMB42.5 million and gross margin of 41.8% for the same period of 2021. The increase in the average cost of goods sold during the first quarter ended March 31,explained the decrease in our gross profit during the period. For the quarter,our average product sales prices increased by 0.1%,while our average cost of goods sold rose 21.7% compared to the same period in 2021.

Operating expenses for the first quarter ended March 31,were RMB13.7 million (US$2.2 million),30.5%,or RMB3.2 million above those in the same period of 2021. This increase was mainly due to higher salaries and employees' welfare,and expenditure on R&D.

Net income attributable to the Company during the first quarter ended March 31,was RMB17.1 million (US$2.7 million),compared to net income attributable to the Company of RMB31.4 million during the same period in 2021.

Basic and diluted net earnings per share was RMB5.24 (US$0.83) and RMB9.60 for the three-month period ended March 31,and 2021,respectively.

Total shareholders' equity was RMB334.1 million or US$52.7 million as of March 31,compared with RMB317.0 million as of December 31,2021.

As of March 31,the Company had 3,265,837 basic and diluted ordinary shares outstanding.

About Fuwei Films

Fuwei Films conducts its business through its wholly-owned subsidiary,Fuwei Films (Shandong) Co.,Ltd. ("Shandong Fuwei"). Shandong Fuwei 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 is 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 negative impacts of the determination of the U.S. Securities and Exchange Commission that the Public Company Accounting Oversight Board ("PCAOB") is currently unable to inspect our auditor in relation to their audit work and the potential that our ordinary shares will be prohibited from trading in the United States under the Holding Foreign Companies Accountable Act ("HFCAA") in 2024 if the PCAOB is unable to inspect or fully investigate auditors located in China,or 2023 if proposed changes to the law are enacted,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 uncertainty of the antidumping investigation and imposition of an anti-dumping duty on imports of the BOPET films originating from the People's Republic of China ("China") conducted by certain countries; uncertainty around coronavirus (COVID-19) outbreak and the effects of government and other measures seeking to contain its spread,potential delisting of our ordinary shares under the Holding Foreign Company Affordable Act if the US Public Company Accounting Oversight Board is unable to inspect our auditors located in China,uncertainty around U.S.-China trade war and its effect on the Company's operation,fluctuations of the RMB exchange rate,and our ability to obtain adequate financing for our planned capital expenditure requirements; uncertainty as to our ability to continuously develop new BOPET film products and keep up with changes in BOPET film technology; risks associated with possible defects and errors in our products; uncertainty as to our ability to protect and enforce our intellectual property rights; uncertainty as to our ability to attract and retain qualified executives and personnel; and uncertainty in acquiring raw materials on time and on acceptable terms,particularly in view of the volatility in the prices of petroleum products in recent years. 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 to Follow

FUWEIFILMS (HOLDINGS) CO.,LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31,AND DECEMBER 31,2021

(amounts in thousands except share and per share value)

(Unaudited)

March 31,2022

December 31,2021

RMB

US$

RMB

ASSETS

Current assets

Cash and cash equivalents

261,247

41,211

250,608

Restricted cash

19,294

3,044

28,294

Accounts and bills receivable,net

28,430

4,485

29,225

Inventories

37,462

5,909

35,456

Advance to suppliers

9,275

1,463

7,933

Prepayments and other receivables

1,243

196

1,199

Deferred tax assets - current

1,144

180

1,144

Total current assets

358,095

56,488

353,859

Plant,properties and equipment,net

104,173

16,433

106,928

Construction in progress

299

47

-

Lease prepayments,net

14,551

2,295

14,685

Deferred tax assets – non-current

192

30

227

Total assets

477,310

75,293

475,699

Current liabilities

Short-term borrowings

65,000

10,253

65,000

Accounts payables

27,267

4,301

22,616

Notes payable

38,588

6,087

50,126

Advance from customers

4,172

658

7,672

6,387

1,008

11,479

Total current liabilities

141,414

22,307

156,893

Deferred tax liabilities

1,772

280

1,789

Total liabilities

143,186

22,587

158,682

Equity

Shareholders' equity

Registered capital (of US$0.519008 par value;

5,000,000 shares authorized; 3,837 issued and

outstanding)

13,323

2,102

13,323

Additional paid-in capital

311,907

49,202

311,907

Statutory reserve

37,441

5,906

37,441

Accumulated deficit

(29,387)

(4,636)

(46,494)

Cumulative translation adjustment

840

132

840

Total shareholders' equity

334,124

52,706

317,017

Total equity

334,017

Total liabilities and equity

477,699

FUWEIFILMS (HOLDINGS) CO.,LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

FOR THE THREE-MONTH PERIOD ENDED MARCH 31,2022 AND 2021

(amounts in thousands except share and per share value)

(Unaudited)

The Three-Month Period Ended March 31,

2022

2021

RMB

US$

RMB

Net sales

103,269

101,624

Cost of sales

72,963

11,510

59,174

Gross Profit

30,170

4,759

42,450

Operating expenses

Selling expenses

5,141

811

4,114

Administrative expenses

8,575

1,353

6,355

Total operating expenses

13,716

2,164

10,469

Operating income

16,454

2,595

31,981

Other income (expense)

- Interest income

1,860

293

856

- Interest expense

(1,058)

(167)

(1,575)

- Other income (expense),net

(131)

(21)

122

Total other expense

671

105

(597)

Income before provision for income taxes

17,125

2,700

31,384

Income tax benefit (expense)

(18)

(3)

(19)

Net income

17,107

2,697

31,365

Net loss attributable to non-controlling interests

-

-

-

Net income attributable to the Company

17,365

Other comprehensive income

- Foreign currency translation adjustments attributable to non-controlling

interest

-

-

-

- Foreign currency translation adjustments attributable to the Company

-

-

-

Comprehensive loss attributable to non-controlling interest

-

-

-

Comprehensive income attributable to the Company

17,365

Earnings per share,

Basic and diluted

5.24

0.83

9.60

Weighted average number of ordinary shares,

Basic and diluted

3,837

3,837

3,837

FUWEIFILMS (HOLDINGS) CO.,LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE-MONTH PERIOD ENDED MARCH 31,

2022

2021

RMB

US$

RMB

Cash flow from operating activities

Net income

17,365

Adjustments to reconcile net loss to net cash

used in operating activities

- Depreciation of property,plant,and equipment

3,263

515

3,162

- Amortization of intangible assets

133

21

134

- Deferred income taxes

18

3

19

- Bad debt expense

(1)

-

(2)

-Inventory provision

-

-

-

Changes in operating assets and liabilities

- Accounts and bills receivable

796

126

(12,934)

- Inventories

(2,006)

(316)

3,209

- Advance to suppliers

(1,342)

(212)

(5,049)

- Prepaid expenses and other current assets

(44)

(7)

(69)

- Accounts payable

4,650

734

(5,542)

- Accrued expenses and other payables

(5,646)

(892)

(21,259)

- Advance from customers

(3,500)

(552)

11,607

- Tax payable

556

88

177

Net cash provided by operating activities

13,984

2,205

4,818

Cash flow from investing activities

Purchases of property,plant and equipment

(508)

(80)

(734)

Amount change in construction in progress

(299)

(47)

-

Advanced to suppliers – non-current

-

-

616

Proceeds from sale of property,plant and equipment

-

-

118,208

Net cash provided by investing activities

(807)

(127)

118,090

Cash flow from financing activities

Proceeds from related party

-

-

(23,052)

Payment of capital lease obligation

-

-

-

Change in notes payable

(11,538)

(1,820)

10,000

Net cash used in financing activities

(11,820)

(13,052)

Effect of foreign exchange rate changes

-

231

-

Net decrease in cash and cash equivalent

1,639

489

109,856

Cash and cash equivalent

At beginning of period/year

278,902

43,766

120,923

At end of period/year

280,541

44,255

230,779

SUPPLEMENTARY DISCLOSURE:

Interest paid

1,058

167

1,575

Income tax paid

-

-

-

SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND FINANCIAL ACTIVITIES:

Account payable for plant and equipment:

1,010

159

1,010

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