Full Year Revenues Increase 55% to US $33.6 million; Net Income Up 31% to US $6.0 million
BEIJING, March 24 /Xinhua-PRNewswire-FirstCall/ -- Telestone Technologies Corporation Ltd. ("Telestone") (Nasdaq: TSTC), a leading developer and provider of wireless communication coverage solutions based in the People's Republic of China, today announced its unaudited financial results for the fourth quarter and full year of 2007.
Fourth Quarter Highlights:
-- Revenue for the quarter increased to US $12.6 million, up 68% from the
same quarter in 2006.
-- Gross profit increased 46.3% year-over year to US $6.3 million.
-- Net income of US $2.3 million, up 43.8% from the same quarter in 2006.
Full Year 2007 Highlights:
-- Revenue for the year increased to US $33.6 million, up 55% from 2006.
-- Gross margins of 50.8%, flat when compared to the 50.8% in 2006.
-- Gross profit increased to US $17.0 million, up 54.7% from the US $11.0
million in 2006.
-- Net income of US $6.0 million, up 30.9% from 2006.
"I am extremely pleased that the fourth quarter brought a strong close to a successful year for Telestone, with our Company providing leading wireless communications coverage solutions to a diverse set of customers," commented Mr. Han Daqing, Chairman and Chief Executive Officer of Telestone. "Our WFDS product continues to receive positive feedback from potential clients, resulting in a growing revenue stream from that industry-leading product."
"After successful acquisition of Shandong Guolian in 2007, we will continue targeting domestic companies that can provide value-added products and solutions or occupy a leading market share in provincial markets. We will also ensure the necessary investments in our technology to ensure we continue to meet the needs of our future customers, who, due to our focused efforts during the year, are increasingly international."
Full Year 2007 Financial Results:
Telestone reported full year revenue of US $33.6 million, up 55% compared to US$21.7 million in 2006, largely due to an increase in demand for products and services from China Mobile and China Unicom. While the Company experienced a slight decline in revenues from China Netcom and China Telecom during the year, revenue from other customers rose over 300% to over US $1 million.
Gross profit of US $17.0 million was an increase of 55% from the US $11.0 million of 2006, with gross margin for the year of 50.8%, steady with the 50.8% reported in 2006. The gross profit increase during the year is primarily attributable to the Company's strong revenue growth during the year and the ability to maintain a strong gross margin level. Due to these factors, net income for 2007 rose significantly to US $6.0 million from US $4.6 million in the year ago period.
Recent Operational Highlights:
Recent accomplishments include:
-- The listing of the Company's Wireless Fiber Distribution System (WFDS),
a leading wireless indoor coverage solution, as a candidate on China
Mobile's annual purchase list. Listing Telestone's solutions and
products as candidates presents the opportunity for the Company's
products to be purchased on a large scale by China Mobile during the
coming year. This follows the positive responses received China Mobile
during the third quarter on their WFDS field tests, and demonstrates
the long term potential of the WFDS solution.
-- The Company announced winning license approvals and signing initial
sales agreements in Russia, which to date have a total value of
approximately US$150,000 for Telestone to supply RF equipment to
several Russian partners on a trial basis. Telestone also signed
initial sales agreements in both Brazil and Mexico during the fourth
quarter, and Telestone CDMA signal repeater products were approved for
licensing agreements by the Federal Communication Commission in the
United States. These agreements mark important steps taken by the
Company to expand into international markets, and come as a result of
efforts made by Telestone's recently formed overseas subsidiary, the
Beijing Telestone Communication Technology Corp.
-- The Company successfully incorporated Shandong Guolian, a leading
provider of wireless coverage services in Shandong province acquired in
the third quarter of 2007. The acquisition has been a positive
experience for Telestone and will provide strong long-term benefits,
regarding not only Shandong Guolian's performance and contribution to
Telestone but through the facilitation of the acquisition process for
the future.
Business Outlook
In May 2008, a significant re-organization of the Chinese telecom industry is scheduled to occur, resulting in additional telecom carriers and greater competition among them, with an expected increase in capital investment overall. While Telestone is confident of sustained revenue growth in 2008, due to the direct impact of this event on the demand for the Company's products and services, it will only be in a position to provide official and detailed outlook after fully assessing the post-reorganization market environment.
Conference Call
The Company's management team will conduct a conference call on Wednesday, March 25, 2008 at 5:00 am (Pacific)/8:00 am (Eastern)/8:00 pm (Beijing/Hong Kong).
U.S. callers please dial: +1 888 935 4577 (toll free)
European callers please dial: +44 (0) 20 7806 1957
Asian callers please dial: +852 3002 1356
Passcode: 8149391
A live audio webcast of the conference call will also be available through our new corporate website, please visit: http://www.telestone.com/english .
A replay will be available after the end of the call until March 29th.
U.S. callers please dial: +1 718 354 1112
European callers please dial: +44 (0)20 7806 1970
Asian callers please dial: +852 3002 1607
Passcode: 8149391
About Telestone Technologies Corporation
Telestone provides wireless communications coverage solutions primarily in the PRC. These solutions include products such as repeaters, antennas and radio accessories. Telestone also provides services that include project design, project management, installation, maintenance and other after-sales services. Telestone currently has approximately 800 employees. For more information please visit http://www.telestone.com .
For further information please contact:
Telestone Technologies Corporation Ltd.
Nick Li
Secretary of the Board
Tel: +86-10-8367-0088 x1201
Email: nickl@telestone.com
Fang Cui
Tel: +86-10-8367-0088 x1202
Email: cuifang@telestone.com
FD Beijing
Julian Wilson
Tel: +86-10-8591-1951
Email: Julian.Wilson@fd.com
FD New York
Peter Schmidt
Tel: +86-10-8591-1953
Email: Peter.Schmidt@fd.com
Safe Harbor Statement
Statements about the Company's future expectations, including future revenue and earnings and all other statements in this press release, other than historical facts, are "forward-looking" statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve risks and uncertainties and are subject to change at any time. The Company's actual results could differ materially from expected results. In reflecting subsequent events or circumstances, the Company undertakes no obligation to update forward-looking statements.
Appendix: Financial Statements of Telestone Technology Corporation Ltd.
Consolidated Statements of Operations and Other Comprehensive Income
(Dollars in thousands except share data and per share amounts)
Years ended December 31,
2007 2006
US$'000 US$'000
Operating revenues:
Net sales of equipment 24,456 16,769
Service income 9,122 4,939
33,578 21,708
Operating expenses:
Equipment and services 16,534 10,691
Sales and marketing 4,614 2,917
General and administrative 3,911 1,674
Research and development 822 605
Depreciation and amortization 288 241
Total operating expenses 26,169 16,128
Operating income 7,409 5,580
Interest expense (100) (55)
Other income, net 727 442
Income before income taxes 8,036 5,967
Income taxes (1,998) (1,353)
Net income 6,038 4,614
Other comprehensive income
Foreign currency translation adjustment 2,002 650
Comprehensive income 8,040 5,264
Earnings per share:
Weighted average number of shares
outstanding
Basic 9,578,956 8,682,736
Dilutive effect of warrants 108,141 52,879
Diluted 9,687,097 8,735,615
Net income per share of common stock US$ US$
Basic (US$) 0.63 0.53
Diluted (US$) 0.62 0.53
Consolidated Balance Sheets
(Dollars in thousands except share data and per share amounts)
As of December 31,
2007 2006
ASSETS US$'000 US$'000
Current assets:
Cash and cash equivalents 5,473 3,380
Accounts receivable, net of allowance 45,013 29,777
Due from related parties 1,792 1,409
Inventories 8,023 5,048
Prepayment 1,169 315
Other current assets 1,332 373
Total current assets 62,802 40,302
Goodwill 3,119 --
Property, plant and equipment, net 1,170 821
4,289 821
Total assets 67,091 41,123
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long term loan from
related parties 28 --
Short-term bank loans 2,051 1,279
Accounts payable - Trade 7,614 6,314
Customer deposits for sales of equipment 262 20
Due to related parties 2,318 2,001
Taxes payable 4,741 2,571
Accrued expenses and other accrued
liabilities 7,221 4,668
Total current liabilities 24,235 16,853
Long term loan from related parties 30 --
Commitments and contingencies 24,265 16,853
Stockholders' equity:
Preferred stock, US$0.001 par value,
10,000,000 shares authorized, no
shares issued -- --
Common stock and paid-in-capital, US$0.001
par value:
Authorized - 100,000,000 shares as of
December 31, 2007 -- --
Issued and outstanding - 10,404,550 shares
as of December 31, 2007 and 8,935,106
shares as of December 31, 2006 11 9
Dedicated reserves 3,199 2,619
Additional paid-in capital 18,989 8,475
Other comprehensive income 3,017 1,015
Retained earnings 17,610 12,152
Total stockholders' equity 42,826 24,270
Total liabilities and stockholders' equity 67,091 41,123
Consolidated Statement of Cash Flow
(Dollars in thousands except share data and per share amounts)
Years ended December 31,
2007 2006
US$'000 US$'000
Cash flows from operating activities
Net income 6,038 4,614
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization 260 240
Provision for doubtful accounts 1,512 383
Write-off of property, plant and
equipment 56 --
Profit on disposal of property, plant and
equipment -- (239)
Changes in assets and liabilities:
Accounts receivable (10,088) (6,896)
Inventories, net (1,629) (2,686)
Due from related parties 154 (44)
Prepayment 56 237
Other current assets (527) (125)
Accounts payable (1,362) 1,953
Due to related parties 113 (202)
Customer deposits for sales of equipment (195) 16
Taxes payable 143 (3,166)
Accrued expenses and other accrued
liabilities 1,594 2,910
Net cash used in operating activities (3,875) (3,005)
Cash flows from investing activities
Purchase of property, plant and equipment (270) (148)
Proceeds from disposal of property, plant and
equipment -- 391
Acquisition of subsidiary, net of cash
disbursed (186) --
Net cash (used in) provided by investing
activities (456) 243
Cash flows from financing activities
Proceeds from issuance of common stock 5,454 1,075
Proceeds from short-term bank loan 2,051 1,279
Repayment of short-term bank loan (1,630) --
Repayment of long-term loan (12) --
Net cash provided by financing activities 5,863 2,354
Net increase (decrease) in cash and cash
equivalents 1,532 (408)
Cash and cash equivalents, beginning of year 3,380 3,605
Effect on exchange rate changes 561 183
Cash and cash equivalents, end of year 5,473 3,380
Supplemental disclosure of cash flow
information
Interest received 37 20
Interest paid (100) (55)
Tax paid (1,237) (1,154)
Non-cash investing activity
Issuance of common stock arising from
acquisition of a subsidiary 5,062 --
SOURCE Telestone Technologies Corporation Ltd.
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