Nam Tai Property : NTP Reports Q4 2020 Results

FOURTH QUARTER NEWS RELEASE

NAM TAI PROPERTY INC.

Announces Fourth Quarter 2020 Results

SHENZHEN, PRC - January 29, 2021 - Nam Tai Property Inc. ("Nam Tai" or the "Company") (NYSE Symbol: NTP) today announced its unaudited financial results for the quarter ended December 31, 2020.

KEY HIGHLIGHTS

In the quarter ended December 31, 2020:

• Revenue was $68.6 million in the fourth quarter of 2020, an increase of $67.8 million or 8,076.0% year-on-year.
• Net income from operations was $34.9 million, increased from net loss from operations of $4.6 million year-on-year.
• Consolidated net income was $28.7 million in the fourth quarter of 2020, an increase of $30.4 million year-on-year.
• Real estate properties under development was $312.1 million as of December 31, 2020, an increase of $60.5 million or 24.0% year-on-year.
• Real estate properties held for lease, net increased by $61.8 million in the fourth quarter of 2020, mainly due to the transfer of Towers 2 and 4 of Nam Tai Inno Park from real estate properties under development.

The following tables set forth key highlights of the financial information for the periods indicated:

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

			Three months ended December 31,			Twelve months ended December 31,
			2020				2019		YoY(%)(a)			2020				2019		YoY(%)(a)
Revenue		$	68,597			$	839		8,076.0%		$	71,206			$	2,965		2,301.6%
Gross profit		$	43,342			$	367		11,709.8%		$	43,825			$	1,609		2,623.7%
Net income (loss) from operations		$	34,929			$	(4,596)		-		$	20,943			$	(17,335)		-
% of revenue			50.9%			(547.8)%	-			29.4	%			(584.7)%	-
per share (diluted)		$	0.61			$	(0.12)		-		$	0.48			$	(0.45)		-
Consolidated net income (loss)	$	28,695		$	(2,093)		- $	16,885		$	(13,191)		-
% of revenue			41.8%			(249.5	)%	-			23.7%			(444.9	)%	-
Basic earnings (loss) per share	$	0.50		$	(0.05)		- $	0.39		$	(0.34)		-
Diluted earnings (loss) per share		$	0.50			$	(0.05)		-		$	0.39			$	(0.34)		-
Weighted average number of shares ('000)
Basic			56,839				38,585					43,446				38,331
Diluted			56,860				38,585					43,479				38,331
Notes:

(a) Percentage change is not applicable if either of the two periods contains a loss or no amount.

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			As of December 31,			As of December 31,
			2020			2019
Cash and cash equivalents(a)		$	211,131		$	130,218
Restricted cash	$	2,064	$	-
Short-term investments(b)		$	-		$	2,166
Prepaid expenses and other receivables		$	7,141		$	9,338
Real estate properties held for sales type lease		$	31,558		$	-
Real estate properties under development, net		$	312,138		$	251,685
Property, plant and equipment, net		$	26,568		$	25,950
Real estate properties held for lease, net	$	92,207	$	-
Right of use assets		$	9,695		$	4,078
Deferred income tax assets		$	3,842		$	2,011
Total assets		$	700,851		$	430,410
Accounts payable		$	61,559		$	36,676
Advance from customers		$	69,722		$	67,642
Lease liabilities		$	10,308		$	4,171
Short-term bank loans		$	-		$	1,410
Long-term bank loans		$	122,883		$	95,942
Deferred income tax liabilities		$	7,395		$	-
Total shareholders' equity		$	420,777		$	214,738
Total number of common shares issued			57,853			38,632

Notes:

1. Cash and cash equivalents include all cash balances, time deposit with an original maturity of three months or less when purchased, and money market funds or instruments of similar nature.
2. Short-terminvestments include all highly liquid investments with original maturities of greater than 3 months and less than 12 months and investments that are expected to be realized in cash during the next 12 months.

SUPPLEMENTARY INFORMATION (UNAUDITED) IN THE FOURTH QUARTER OF 2020

Key Highlights of Financial Position

		As of December 31,				As of December 31,
2020			2019
Ratio of cash(a) to current liabilities			1.43			1.16
Current ratio(b)			2.57			1.25
Debt ratio(c)			40.0	%		50.1%
Return on equity			5.3%		(6.0)%
Ratio of total liabilities to total equity			0.67			1.00

Notes:

1. Cash in this financial ratio includes cash, cash equivalents and short-term investments.
2. Current ratio equals current assets, including prepaid expenses and other receivables, divided by current liabilities for the period.
3. Debt ratio equals total liabilities divided by total assets for the period.

FINANCIAL RESULTS

Revenue

Revenue for the fourth quarter of 2020 was $68.6 million compared to $0.8 million in the fourth quarter of 2019. Revenue for the fourth quarter of 2020 mainly consisted of sales type lease income of $66.7 million and operating lease income of $0.7 million from Nam Tai Inno Park recognized following the delivery of the dormitory units, and rental income of $0.8 million from existing factory buildings located on the sites of Inno Valley and Wuxi, and $0.3 million from Nam Tai•U-Creative Space (Lujiazui) and Nam Tai • Tang Xi Technology Park. Revenue for the fourth quarter of 2019 mainly consisted of rental income of $0.7 million from the existing factory buildings located on the sites of Inno Valley and Wuxi.

Revenue for the twelve months of 2020 was $71.2 million, compared to $3.0 million in the twelve months of 2019. Revenue for the twelve months of 2020 mainly consisted of sales type lease income of $66.7 million and operating lease income of $0.7 million from Nam Tai Inno Park and rental income of $2.5 million from existing factory buildings located on the sites of Inno Valley and Wuxi, $0.6 million from Nam Tai•U-Creative Space (Lujiazui) and Nam Tai • Tang Xi Technology Park, and other income of $0.6 million which was mainly management service and utility fees collected from tenants. Revenue for the twelve months of 2019 mainly consisted of rental income of $2.5 million from

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the existing factory buildings located on the sites of Inno Valley and Wuxi, and other income of $0.5 million which was mainly management service and utility fees collected from tenants.

Gross Profit

Gross profit for the fourth quarter of 2020 was $43.3 million compared to $0.4 million in the fourth quarter of 2019. Gross profit for the fourth quarter of 2020 was primarily attributable to the revenue of $68.6 million, partially offset by cost of $25.3 million for the period, which was mainly for the land acquisition and construction costs of projects and leasing costs. Gross profit for the fourth quarter of 2019 was primarily attributable to the revenue of $0.8 million, partially offset by cost of $0.4 million for the period, which was mainly for leasing costs. The increase in gross profit for the fourth quarter of 2020, year-on-year, was primarily due to the delivery of the dormitory units of Nam Tai Inno Park.

Gross profit for the twelve months of 2020 was $43.8 million compared to $1.6 million in the twelve months of 2019. Gross profit for the twelve months of 2020 was primarily attributable to the revenue of $71.2 million, offset by cost of $27.4 million for the period, which was mainly for the land acquisition and construction costs of projects and leasing costs. Gross profit for the twelve months of 2019 was primarily attributable to the revenue of $3.0 million, partially offset by cost of $1.4 million for the period, which was mainly for leasing costs.

Net Income (Loss) from Operations

Net income from operations for the fourth quarter of 2020 was $34.9 million compared to net loss from operations of $4.6 million in the fourth quarter of 2019. Net income from operations for the fourth quarter of 2020 was primarily attributable to gross profit of $43.3 million, which was partially offset by general and administrative expenses of $6.5 million, and selling and marketing expenses of $1.9 million. Net loss from operations for the fourth quarter of 2019 was primarily attributable to general and administrative expenses of $3.9 million, and selling and marketing expenses of $1.1 million, which were partially offset by gross profit of $0.4 million. Compared with the fourth quarter of 2019, the increase of $2.6 million in general and administrative expenses for the fourth quarter of 2020 was primarily due to the increase of $3.7 million in agent and professional fees, partially offset by the decrease of $1.0 million in salary and staff welfare benefits. The increase in selling and marketing expenses of $0.8 million for the fourth quarter of 2020 was primarily due to the increase in marketing and commission fees of $0.2 million, salary and welfare benefits of $0.1 million and property management service fee of $0.3 million incurred by Nam Tai Inno Park and Nam Tai Technology Center.

Net income from operations for the twelve months of 2020 was $20.9 million compared to net loss from operations of $17.3 million in the twelve months of 2019. Net income from operations for the twelve months of 2020 was primarily attributable to gross profit of $43.8 million, which was partially offset by general and administrative expenses of $15.9 million, and selling and marketing expenses of $7.0 million. Net loss from operations for the twelve months of 2019 was primarily attributable to general and administrative expenses of $12.5 million and selling and marketing expenses of $6.5 million, which were partially offset by gross profit of $1.6 million for the period. Compared with the twelve months of 2019, the increase of $3.4 million in general and administrative expenses for the twelve months of 2020 was mainly due to the increase in agent and professional fees of $4.6 million, partially offset by the decrease in salary and staff welfare benefits of $1.3 million. The increase in selling and marketing expenses of $0.5 million for the twelve months of 2020 was mainly due to the increase in the salary and staff welfare benefits of $0.4 million and the increase in the property management expenses of $0.7 million, offset by the decrease in marketing and commission fees of $0.5 million.

Consolidated Net Income (Loss)

Consolidated net income for the fourth quarter of 2020 was $28.7 million compared to net loss of $2.1 million in the fourth quarter of 2019. Consolidated net income for the fourth quarter of 2020 was primarily attributable to net income from operations of $34.9 million, interest income of $0.3 million from time deposits and other income, net, of $0.06 million, partially offset by deferred income tax expenses of $6.6 million. Consolidated net loss for the fourth quarter of 2019 was primarily attributable to net loss from operations of $4.6 million, which was partially offset by interest income of $0.4 million from time deposits, other income, net, of $0.4 million and deferred income tax credit of $1.7 million.

Consolidated net income for the twelve months of 2020 was $16.9 million compared to net loss of $13.2 million in the twelve months of 2019. Consolidated net income for the twelve months of 2020 was primarily attributable to net income from operations of $20.9 million, interest income of $1.3 million from time deposits and other income, net, of $0.04 million, offset in part by deferred income tax expenses of $5.4 million. Consolidated net loss for the twelve months of 2019 was primarily attributable to net loss from operations of $17.3 million and other expenses, net, of $0.3 million, offset in part by interest income of $2.4 million and deferred income tax credit of $2.0 million.

Cash and Cash Equivalents and Short-term Investments

Cash and cash equivalents, and short-term investments increased by $78.7 million in the twelve months of 2020 from $132.4 million as of December 31, 2019 to $211.1 million as of December 31, 2020, including $150.0 million in a secure, insured cash management fund that can be subscribed and redeemed weekly. The increase was primarily attributable to net cash provided by financing activities of $193.0 million, partially offset by net cash used in operating activities of $53.9 million and investing activities of $51.7 million, and an exchange rate effect of $4.4 million in the twelve months of 2020. The net cash provided by financing activities was primarily attributable to proceeds from a private placement and shares option exercise of $174.5 million.

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Restricted Cash

Restricted cash increased by $2.1 million in the twelve months of 2020. No restricted cash existed at the end of 2019. The increase consisted of a security cash deposit of $1.2 million due to a guarantee to the bank for the repayment of the loans of our long-term rental customers, which will be gradually released as the loans are repaid, and a security cash deposit of $0.9 million for our bank loan from Bank of China. We expect that there will be no significant risk to the deposits.

Prepaid Expenses and Other Receivables

Prepaid expenses and other receivables decreased by $2.2 million in the twelve months of 2020 from $9.3 million as of December 31, 2019 to $7.1 million as of December 31, 2020. The decline was primarily due to the decrease of $0.4 million in other current assets, $0.2 million in interest receivable, $0.3 million in other receivables and $1.3 million in prepayments.

Real Estate Properties Held for Sales Type Lease

Real estate properties held for sales type lease amounted to $31.6 million as of December 31, 2020, which was primarily due to the transfer of Towers 8, 9 and 10 of Nam Tai Inno Park from real estate properties under development in 2020.

Real Estate Properties under Development, Net

Real estate properties under development increased by $60.5 million in the twelve months of 2020 from $251.7 million as of December 31, 2019 to $312.1 million as of December 31, 2020, primarily attributable to the increase of $35.3 million for the construction of Nam Tai Technology Center, $27.4 million for the construction of Nam Tai Inno Park and $121.6 million for the land price and construction of Nam Tai

• Longxi, which were partially offset by the net decrease of $123.7 million in Nam Tai Inno Park driven mainly by the transfer of Towers 1, 2, 4, 6, and 7 to real estate properties held for lease, net and 8, 9 and 10 to real estate properties held for sales type lease.

Real Estate Properties Held for Lease, Net

Real estate properties held for lease, net increased by $92.2 million in the twelve months of 2020, which was primarily attributable to the transfer of Towers 1, 2, 4, 6, and 7 of Nam Tai Inno Park from real estate properties under development in 2020. We did not have real estate properties held for lease, net as of December 31, 2019.

Right of Use Assets

Right of use assets increased by $5.6 million in the twelve months of 2020 from $4.1 million as of December 31, 2019 to $9.7 million as of December 31, 2020. The increase was primarily due to the recognition of right of use assets of $5.9 million for Nam Tai • U-Creative Space (Lujiazui). In addition, the recognition of right of use assets for Nam Tai • Tang Xi Technology Park and Hong Kong office decreased by a total of $0.3 million, in accordance with Accounting Standards Codification ("ASC") 842 Leases which became effective on January 1, 2019.

Deferred Income Tax Assets

Deferred income tax assets increased by $1.8 million in the twelve months of 2020 from $2.0 million as of December 31, 2019 to $3.8 million as of December 31, 2020. The increase was primarily due to the loss of $6.6 million incurred during the construction of Nam Tai Technology Center in the twelve months of 2020, which was expected to be utilized in the next five years.

Accounts Payable

Accounts payable increased by $24.9 million in the twelve months of 2020 from $36.7 million as of December 31, 2019 to $61.6 million as of December 31, 2020. The increase was primarily attributable to project payables for Nam Tai Technology Center, Nam Tai Inno Park and Nam Tai • Longxi of $11.9 million, $6.5 million and $6.4 million, respectively.

Advance from Customers

Advance from customers increased slightly by $2.1 million in the twelve months of 2020 from $67.6 million as of December 31, 2019 to $69.7 million as of December 31, 2020, which was primarily attributable to an increase of $67.7 million in prepaid rent received from customers of Nam Tai Inno Park offset by recognition of revenue of $64.7 million from the prepaid rent for the units delivered to the customers in the period.

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