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22.04.2016 14:05
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CNIT Cuts 2015 Net Loss to $7.5 Million from $29.2 Million in 2014; Gross Margin Rises to 37.96% from 27.15%
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PR Newswire
SHENZHEN, China, April 22, 2016
SHENZHEN, China, April 22, 2016 /PRNewswire/ -- China Information Technology, Inc. (Nasdaq:CNIT), a leading provider of internet-based platforms and digital advertising technologies and services in China, today said that, for the year ended December 31, 2015, the company had a net loss of ($7,504,262), or ($.22) per basic share, on revenue of $10,284,868 compared to a net loss of ($29,231,347), or ($.96) per basic share, on revenue of $38,634,747 for the year ended December 31, 2014.
These figures, said CNIT, are the result of the company's business transition, beginning in 2014, from an IT system integrations provider to the government sector to an internet-based solutions and services provider to private enterprises -- a role that enables higher sales margins and greater potential profitability. This transition included certain financial adjustments during 2015, including write-offs of receivables and intangible assets associated with the company's discontinued government business as well as the disposal of certain traditional IT businesses and real estate assets, in order to reduce debt and improve working capital.
The company's decrease in 2015 revenue was primarily due to a continued shifting of hardware production from its own factory over to OEM partners, resulting in hardware revenue decreasing to $4.95 million as compared to $22.63 million in 2014. Overall 2015 revenue was also reduced as a result of CNIT's strategic transformation from a traditional IT business to a cloud-based business, producing a decrease in revenue for software and system integration services to $3.20 million and $1.01 million, respectively, in 2015, from $10.37 million and $4.82 million, respectively, in 2014.
However, during 2015 CNIT increased its gross margin to 37.96%, from 27.15% in 2014. This increase primarily resulted from the company's aforementioned shift from a hardware to a cloud-based technology business model.
The company's net loss total for 2015 included a non-operating gain of $29,994,037 derived from the sale of Fuyong Industrial Park, a real estate property no longer vital to CNIT due to the company's shift away from hardware production. CNIT utilized the proceeds from this sale to significantly reduce its short-term debt to $15.27 million at year-end, down from $51.82 million at the end of 2014, as well as to improve its working capital.
In the fourth quarter of 2015, the company disposed of the equity interests in Geo and Zhongtian, two subsidiaries of CNIT's variable interest entity, iASPEC Geo Information Technology Company Limited. As a result, the operations of Geo and Zhongtian have been presented as discontinued operations for all periods in CNIT's consolidated financial statements.
"We believe our 2015 results provide ample evidence that our transition to a leading cloud-based digital advertising provider is well underway," said CNIT CEO and chairman, Mr. Jianghuai Lin. This transition, he said, has not only produced increased margins, reduced debt, eliminated unnecessary assets and increased working capital, but has also included several major agreements for sales of the company's elevator-based digital advertising terminals.
The latest such agreements, announced on April 12, called for the sale of a minimum of 8,500 terminals to be installed in elevators in 20 major cities across China and will net CNIT at least $5.2 million in 2016, said Mr. Lin.
In addition, he said, these terminals are now penetrating new markets including educational software and conference training, expected to contribute meaningful high-margin revenue for CNIT this year and beyond.
Not only does the company receive sales revenue from its terminals, said Mr. Lin, it also collects recurring monthly maintenance and safety service revenue for the life of each unit.
On top of this, he said, the company can receive additional terminal-related revenue through customers' use of CNIT's Yunfa Net advertising delivery system.
Yunfa Net enables advertisers -- usually smaller companies or their advertising agencies -- to design ads on their PC or mobile app and transmit them automatically to the digital ad terminals of their choice across China. The system, which has proven to both cut the cost of advertising by as much as 50 percent and enable these ads to be easily targeted to a customer's most likely customers, won the 2016 Golden Peacock Excellent Award as China's leading innovation in digital advertising technology.
"We believe Yunfa Net, now acknowledged as among our country's most efficient digital ad technologies, will continue to make a very important, high-margin revenue contribution for us -- and we expect this contribution to grow with each successive quarter."
In addition, said Mr. Lin, the company will continue in 2016 to emphasize four other strategies, including tightly controlling company costs, reinforcing cash collection policies to shorten the company's days of sales outstanding, streamlining purchase order management in order to reduce inventory, and obtaining new government subsidies to be used for developing and marketing additional high-margin cloud-based software solutions.
These measures, he said, combined with the company's steadily increasing sales, should enable CNIT to become profitable by the fourth quarter of 2016.
Mr. Lin added that he believes the company's current cash and cash equivalents, anticipated cash flows from operations in 2016, and additional availability under its borrowing facilities will be sufficient to meet CNIT's operating and financial obligations for the remainder of the calendar year.
About China Information Technology, Inc.
China Information Technology, Inc. (NASDAQ: CNIT) is a leading Internet service company that provides integrated cloud-based solutions enabling innovation and smart living in the fields of new media, city safety management, education, etc. Through continuous innovation, CNIT is aiming to leverage its proprietary Cloud-Application-Terminal technology to level the competitive landscape in the new media industry and deliver value for its shareholders, employees, customers, and the community. To learn more, please visit http://www.en.chinacnit.com.
Safe Harbor Statement
This press release may contain certain "forward-looking statements" relating to the business of China Information Technology, Inc., and its subsidiaries and other consolidated entities. All statements, other than statements of historical fact included herein, are "forward-looking statements" in nature within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, often identified by the use of forward-looking terminologies such as "believes", "expects" or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov). All forward-looking statements attributable to the Company and its subsidiaries and other consolidated entities or persons acting on their behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
For further information, please contact:
China Information Technology, Inc.
Iris Yan
Tel: +86-755-8370-4767
Email: IR@chinacnit.com
http://www.en.chinacnit.com
or
Asia IR-PR
Jimmy Caplan
Tel: +512-329-9505
Email: jimmy@asia-irpr.com
or
Media Relations: Asia IR-PR
Rick Eisenberg
Tel: +212-496-6828
Email: rick@asia-irpr.com
| CHINA INFORMATION TECHNOLOGY, INC. | ||||
| CONSOLIDATED BALANCE SHEETS (UNAUDITED) | ||||
| DECEMBER 31, 2015 AND 2014 | ||||
| Expressed in U.S. dollars (Except for share amounts) | ||||
| | ||||
| | | December 31 | | December 31 |
| | | 2015 | | 2014 |
| ASSETS | | | | |
| | | | | |
| CURRENT ASSETS | | | | |
| Cash and cash equivalents | $ | 3,786,846 | $ | 6,689,848 |
| Restricted cash | | 868,317 | | 11,153,170 |
| Accounts receivable, net | | 3,180,138 | | 6,786,596 |
| Bills receivable | | - | | 358,273 |
| Advances to suppliers | | 2,526,607 | | 1,174,148 |
| Inventories | | 2,141,093 | | 3,959,031 |
| Other current assets | | 5,412,720 | | 10,773,310 |
| Assets held for sale-current | | - | | 13,032,000 |
| Current assets from discontinued operations | | 13,272,186 | | 30,349,676 |
| TOTAL CURRENT ASSETS | | 31,187,907 | | 84,276,052 |
| | | | | |
| Assets held for sale-noncurrent | | - | | 20,270,434 |
| Deposit for purchase of land use rights | | 14,020,901 | | 14,799,874 |
| Property, plant and equipment, net | | 8,372,961 | | 8,921,397 |
| Intangible assets, net | | 2,530,103 | | 3,494,014 |
| Goodwill | | 4,753,454 | | 12,118,817 |
| Deferred tax assets | | 460,237 | | 4,270,042 |
| Other non-current assets | | 4,766,141 | | - |
| Non-current assets from discontinued operations | | - | | 31,255,179 |
| TOTAL ASSETS | $ | 66,091,704 | $ | 179,405,809 |
| | | | | |
| LIABILITIES AND EQUITY | | | | |
| | | | | |
| CURRENT LIABILITIES | | | | |
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