BEIJING and NEW YORK, June 28,
2017 /PRNewswire/ -- Wins Finance Holdings Inc. ("Wins
Finance" or the "Company") (NASDAQ: WINS), a diversified investment
and asset management company that provides integrated financing
solutions to small and medium enterprises ("SMEs") in China, today announced its unaudited and
unreviewed financial results for the second fiscal quarter and six
months ended December 31, 2016.
Fiscal Second Quarter Financial and Operational
Highlights
- Gross revenue was $2.5 million,
compared to $2.6 million for the
corresponding period ended December 31,
2015.
- Interest income on short-term investments was $3.4 million, compared to $3.5 million for the corresponding period ended
December 31, 2015.
- Net income attributable to Wins Finance was $7.9 million for the quarter, compared to
$3.4 million for the corresponding
period ended December 31, 2015.
Fiscal Six Months Financial and Operational
Highlights
- Gross revenue was $4.8 million,
compared to $4.8 million for the
corresponding period ended December 31,
2015.
- Interest income on short-term investments was $6.8 million, compared to $7.1 million for the corresponding period ended
December 31, 2015.
- Net income attributable to Wins Finance was $11.0 million for the quarter, compared to
$7.9 million for the corresponding
period ended December 31, 2015.
"Our gross revenue was modestly down
for the second fiscal quarter year-over-year, and virtually
unchanged for the latest six months ended December 31, 2017 as compared to the year-ago
six-month period. However, we expect that the continuing
slowdown of the Chinese economy, which has adversely affected
financial services businesses in China, could substantially affect our
financial guarantee business in the coming quarters where this
business segment could become severely constrained," said
Renhui Mu, Chairman and Chief
Executive Officer of Wins Finance.
"To offset challenges in our financial guarantee business,
we plan upon widening our business development efforts to include
new sectors where we might find business opportunities in our
direct financing leasing business. We remain focused on developing
our leasing business in both the medical equipment and new energy
sectors, both of which continue to offer significant
opportunities."
"During the quarter ended December 31,
2016, we signed new contracts with an aggregate principal
amount of $18.1 million (RMB 126 million) in our direct leasing business
and we are also actively exploring expansion into the
infrastructure sector via governmental urban construction projects.
We are focused on growing this business and are actively seeking
new business in the leasing sector where we can leverage our core
competencies and expertise," concluded Mr. Mu.
Three and Six Months Ended December
31, 2016 Financial Results
Gross revenue
Gross revenue for Wins Finance for the three and six months
ended December 31, 2016 was
$2.5 million and $4.8 million, which was comprised of $0.7 million and $1.6
million of commissions and fees generated from its financial
guarantee services, $1.4 million and
$2.8 million of direct financing
lease interest income, and $0.4
million and $0.4 million of
financial advisory and lease agency income, respectively.
Commissions and fees from financial guarantee services decreased
$0.9 million and $1.8 million, or 55.6% and 53.9%, to $0.7 million and $1.6
million for the three and six months ended December 31, 2016, compared to $1.6 million and $3.4
million for the corresponding three and six months ended
December 31, 2015, respectively. The
decrease was primarily attributable to reduced lending activities
due to the economic recession in Shanxi
Province and, as a result, fewer potential clients were able
to pass our screening process. Concurrent with a slowing of
China's economy, there are signs
that competition has significantly increased in the region. These
factors are expected to negatively impact our guarantee business in
the foreseeable future.
Direct financing lease interest income generated from payments
under direct financing leases with customers increased by
$0.9 million and $1.8 million, or 180.5% and 194.1%, to
$1.4 million and $2.8 million for the three and six months ended
December 31, 2016, compared to
$0.5 million and $1.0 million for the corresponding three and six
months ended December 31, 2015,
respectively. The increase was primarily attributable to newly
added contracts in the medical
equipment and new energy sectors.
Financial advisory and lease agency income slightly decreased to
$0.36 million and $0.36 million for the three and six months ended
December 31, 2016, compared to
$0.40 million and $0.4 million for the corresponding three and six
months ended December 31, 2015,
respectively.
Interest income on short-term investment
Interest income from short-term investments decreased by
$0.1 million and $0.3 million to $3.4
million and $6.8 million for
the three and six months ended December 31,
2016, compared to $3.5 million
and $7.1 million for the
corresponding three and six months ended December 31, 2015, respectively. The decrease was
primarily due to a decreased
return on short-term investments in the local capital markets.
Non-interest expenses
Non-interest expenses were a positive
$1.7 million and $0.6 million for the three and six months ended
December 31, 2016, as compared to
negative expense items of $2.1
million and $3.0 million for
the corresponding three and six months ended December 31, 2015, respectively. The decrease was
mostly attributable to the Management initiative to cancel the
share-based compensation plan, which totaled an expense of
approximately $2.5 million and
$1.7 million for the three and six
months ended December 31, 2016 due to
cancellation of the 920,000 share options granted on December 16, 2015 to Jianming Hao and Jingxiao Zhang as reported in the Form 6K filed
on February 14, 2017.
Income taxes
Income tax expense increased by $0.6
million and $0.5 million, to
$1.0 million and $1.2 million for the three and six months ended
December 31, 2016, compared to
$0.4 million and $0.7 million for the corresponding three and six
months ended December 31, 2015,
respectively. The increase was attributable to the increase in
taxable income, other than tax exempted interest income, from
short-term investments.
Net income
Net income increased by $4.5
million and $3.1 million, or
132.5% and 39.9%, to $7.9 million and
$11.0 million for the three and six
months ended December 31, 2016,
compared to $3.4 million and
$7.9 million for the corresponding
three and six months ended December 31,
2015, respectively.
Current Outlook
Management is not confident that the
Company's operating results will continue to improve in the
foreseeable future in view of the slowdown of the Chinese economy
which directly effects China's
financial sector. Therefore, the Company's business could be
adversely affected, especially its financial guarantee services
business. The Company's exposure to defaulted loans is expected to
increase and counter guarantees or collateral provided may become
insufficient to cover repayments. Management is undergoing a review
of the risk controls for the Company's financial guarantee business
and may take measures as appropriate including, but not limited to,
restructuring or disposing of this business in order to minimize
the risks of the Company's exposure.
Despite the macroeconomic slowdown in China, Management plans upon focusing upon
growing the Company's financing lease business. The Company's
strategy is to enter new verticals and enlarge the footprint of its
domestic base of operations. The Company plans to continue to
employ its expertise and high standards of business opportunity and
risk assessment to service and support the under-serviced market of
small and medium enterprises in China.
We note that certain subsidiaries of the Company in China may be required from time to time to
report information on operational and/or financial matters to
relevant governmental regulatory bodies in China for statistical purposes. Such
information may not be prepared in accordance with US GAAP and
therefore not consistent with the information the Company reports
in its filings with the SEC.
Other Significant Events
As previously reported, on December 13,
2016, Appelo and Wits entered into an agreement for the
sales of aggregately 13,440,000 ordinary shares of the Company
beneficially held by Appelo and Wits (approximately 67% of the
Company's outstanding ordinary shares), to Spectacular Bid Limited,
a wholly owned subsidiary of Freeman FinTech Corporation Limited, a
company listed on the Hong Kong Stock Exchange (collectively, the
"Purchaser"). To the knowledge of the Company, the Purchaser does
not own any of the Company's ordinary shares and does not have any
plan to acquire the Company's remaining outstanding ordinary
shares.
The transaction has not yet been closed and the Company will
file a Form 6-K to advise the public when the closing takes
place.
On May 9, 2017, Mr. Jianming Hao resigned from his position as
President of Wins Finance Holdings Inc. Mr. Hao indicated that his
resignation was not the result of any disagreement with the Company
on any matter relating to the Company's operations, polices or
practices.
On April 3, 2017, Mr. Jianming Hao resigned from his position as
Co-Chief Executive Officer, Director and Chairman of the Board of
Directors of the Company and he was appointed President of the
Company. Concurrently therewith, the Company's Board of Directors
named Mr. Renhui Mu the Company's
Chief Executive Officer, Chief Operating Officer and Chairman of
the Board (he was previously Co-Chief Executive Officer, Chief
Operating Officer and a director) and appointed Mr. Junfeng Zhao, the Company's Chief Financial
Officer, to the Board of Directors to fill the vacancy created by
the resignation of Mr. Hao.
On February 14, 2017, Wins Finance
Holdings Inc. entered into agreements with each of the employees
listed below to terminate the option agreements with such employees
for no consideration.
Name of
Employee
|
|
Number of Option
Shares Canceled
|
Jianming
Hao
|
|
900,000
|
Renhui Mu
|
|
40,000
|
Junfeng
Zhao
|
|
40,000
|
Jingxiao
Zhang
|
|
20,000
|
As a result of the termination of such options and the automatic
termination of options upon the previously announced departures of
executive officers and directors of the Company, as of the date of
this press release, the Company did not have any options
outstanding.
On November 2, 2016, the Company
repurchased 204,005 of its ordinary shares from Richard Xu, a former officer of the Company, for
nominal consideration. As of December 31,
2016, there were 19,837,642 shares of Common Stock issued
and outstanding.
As of December 31, 2016, the
guarantee contract amounts represent credit risk of $80.0 million (RMB 555.7
million), and $0.2 million
(RMB 1.6 million) is classified by
the Company as a "concern", meaning that there is an element of
doubt regarding default. In response to business that has been
classified as a "concern", the Company has requested and received
$0.3 million (RMB 2.4 million) in collateral in the form of
property.
As of June 28, 2017, there is one lawsuit pending in
China against the Company, and
management believes that resolution of this matter will not result
in any payment that, in the aggregate, would be material to the
financial position or results of operations of the Company. Two
class action lawsuits were been filed in the United States against the Company. The
plaintiff in one of the class actions filed a notice of voluntary
discontinuance. The impact of the proceedings on the Company is
currently unclear.
Going forward, the Company plans to release financial
information on a semi-annual basis, for the six months ending
December 31st and the
twelve months ending June
30th of each year.
About Wins Finance
Wins Finance is a diversified investment and asset management
company listed on NASDAQ. The Company is focused on identifying
value accretive investment opportunities and assets in China and the United
States that can be enhanced through the strategic
involvement of Wins' established management team and its
familiarity with the Chinese investment community to help generate
long-term value for shareholders. Wins Finance is well positioned
to leverage its expertise and existing operations in China to build a comprehensive platform for
the provision of lending and other financing solutions to the
under-served small and medium enterprise segment. For more
information, please visit www.winsholdings.com.
Forward Looking Statements
This news release contains "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of
1934, as amended, and as defined in the U.S. Private Securities
Litigation Reform Act of 1995. These forward-looking statements can
be identified by terminology such as "will," "expects,"
"anticipates," "future," "intends," "plans," "believes,"
"estimates" and similar statements. All statements other than
statements of historical fact in this press release are
forward-looking statements and involve certain risks and
uncertainties that could cause actual results to differ materially
from those in the forward-looking statements. These forward-looking
statements are based on management's current expectations,
assumptions, estimates and projections about the Company and the
industry in which the Company operates, but involve a number of
unknown risks and uncertainties. Further information regarding
these and other risks are described in the Company's Annual Report
on Form 20-F for the year ended June 30,
2016 and in the Company's other filings with the U.S.
Securities and Exchange Commission. The Company undertakes no
obligation to update forward-looking statements to reflect
subsequent occurring events or circumstances, or changes in its
expectations, except as may be required by law. Although the
Company believes that the expectations expressed in these forward
looking statements are reasonable, it cannot assure you that such
expectations will turn out to be correct, and actual results may
differ materially from the anticipated results. You are urged to
consider these factors carefully in evaluating the forward-looking
statements contained herein and are cautioned not to place undue
reliance on such forward-looking statements, which are qualified in
their entirety by these cautionary statements.
Company Contacts:
Wins Finance Holdings Inc.
641 Lexington Ave, 29th FL
New York, NY 10022
Tel: 212-488-4974
E-mail: info@winsholdings.com
WINS FINANCE
HOLDINGS INC.
|
UNAUDITED AND
UNREVIEWED CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
|
|
As
of
|
|
|
December 31,
2016
|
|
June 30,
2016
|
|
|
US$
|
|
US$
|
ASSETS
|
|
|
|
|
Cash
|
|
8,979,948
|
|
47,163,965
|
Restricted
cash
|
|
24,234,070
|
|
27,962,846
|
Short-term
investment
|
|
179,119,650
|
|
149,841,838
|
Guarantee paid on
behalf of guarantee service customers
|
|
3,763,841
|
|
2,039,684
|
Interest
receivable
|
|
2,375,418
|
|
1,021,306
|
Net investment in
direct financing leases
|
|
81,428,723
|
|
74,705,647
|
Deferred tax assets,
net
|
|
337,853
|
|
428,524
|
Property and
equipment, net
|
|
693,984
|
|
854,719
|
Other
assets
|
|
519,039
|
|
608,751
|
TOTAL
ASSETS
|
|
301,452,526
|
|
304,627,280
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Liabilities
|
|
|
|
|
Bank loan for capital
lease business
|
|
34,571,185
|
|
43,308,617
|
Loans
payable
|
|
7,175,775
|
|
-
|
Interest
payable
|
|
239,284
|
|
208,947
|
Income tax
payable
|
|
2,746,781
|
|
2,510,847
|
Unearned income from
financial guarantee services
|
|
705,727
|
|
423,801
|
Other
liabilities
|
|
902,198
|
|
964,109
|
Deposit from direct
financing leases
|
|
10,592,573
|
|
9,134,946
|
Due to related
party
|
|
464,000
|
|
464,000
|
Allowance on
guarantee
|
|
800,228
|
|
3,079,684
|
Deferred income tax
liability
|
|
830,693
|
|
477,398
|
Total
Liabilities
|
|
59,028,444
|
|
60,572,349
|
|
|
|
|
|
Shareholders'
Equity
|
|
|
|
|
Common stock (par
value $0.0001 per share, 100,000,000
shares authorized; 19,837,642 and 20,041,647 shares issued
and outstanding at December 31, 2016 and June 30, 2016,
respectively)
|
|
1,984
|
|
2,004
|
Additional paid-in
capital
|
|
211,934,415
|
|
213,400,296
|
Statutory
reserve
|
|
2,364,245
|
|
2,364,245
|
Retained
Earnings
|
|
54,275,499
|
|
43,244,044
|
Accumulated other
comprehensive loss
|
|
(26,152,061)
|
|
(14,955,658)
|
Total
Equity
|
|
242,424,082
|
|
244,054,931
|
TOTAL LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|
301,452,526
|
|
304,627,280
|
WINS FINANCE
HOLDINGS INC.
|
UNAUDITED AND
UNREVIEWED CONDENSED CONSOLIDATED STATEMENTS OF
|
INCOME
AND
|
COMPREHENSIVE
LOSS
|
|
|
|
Three months
ended
|
|
Six months
ended
|
|
|
December 31,
2016
|
|
December 31,
2015
|
|
December 31,
2016
|
|
December 31,
2015
|
|
|
US$
|
|
US$
|
|
US$
|
|
US$
|
Guarantee service
income
|
|
|
|
|
|
|
|
|
Commissions and fees
on financial guarantee services
|
|
739,445
|
|
1,664,116
|
|
1,575,208
|
|
3,415,695
|
Reversal/(Provision)
of provision on financial guarantee services
|
|
2,242,439
|
|
(74,014)
|
|
2,248,283
|
|
(73,695)
|
Commission and
fees on guarantee services, net
|
|
2,981,884
|
|
1,590,102
|
|
3,823,491
|
|
3,342,000
|
|
|
|
|
|
|
|
|
|
Direct financing
lease income
|
|
|
|
|
|
|
|
|
Direct financing
lease interest income
|
|
1,395,837
|
|
497,613
|
|
2,857,051
|
|
971,365
|
Interest expense for
direct financing lease
|
|
(729,043)
|
|
(19,590)
|
|
(1,544,164)
|
|
(24,940)
|
Provision for lease
payment receivable
|
|
(146,171)
|
|
(180,275)
|
|
(120,587)
|
|
(184,412)
|
Net direct
financing lease interest income after provision for
receivables
|
520,623
|
|
297,748
|
|
1,192,300
|
|
762,013
|
|
|
|
|
|
|
|
|
|
Financial advisory
and lease agency income
|
|
356,137
|
|
405,603
|
|
356,137
|
|
405,603
|
Net
revenue
|
|
3,858,644
|
|
2,293,453
|
|
5,371,928
|
|
4,509,616
|
|
|
|
|
|
|
|
|
|
Non-interest
income
|
|
|
|
|
|
|
|
|
Interest on
short-term investment
|
|
3,374,595
|
|
3,522,153
|
|
6,838,031
|
|
7,109,293
|
Total non-interest
income
|
|
3,374,595
|
|
3,522,153
|
|
6,838,031
|
|
7,109,293
|
|
|
|
|
|
|
|
|
|
Non-interest
expense
|
|
|
|
|
|
|
|
|
Business taxes and
surcharge
|
|
(625)
|
|
(45,876)
|
|
(1,473)
|
|
(172,837)
|
Salaries and
employees surcharge
|
|
(320,635)
|
|
(363,376)
|
|
(612,926)
|
|
(544,695)
|
Rental
expenses
|
|
(56,908)
|
|
(68,048)
|
|
(115,187)
|
|
(132,483)
|
Other operating
expenses
|
|
2,074,528
|
|
(1,573,216)
|
|
788,790
|
|
(2,143,720)
|
Total non-interest
expense
|
|
1,696,360
|
|
(2,050,516)
|
|
59,204
|
|
(2,993,735)
|
|
|
|
|
|
|
|
|
|
Income before
taxes
|
|
8,929,599
|
|
3,765,090
|
|
12,269,163
|
|
8,625,174
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
(101,645)
|
|
(267,364)
|
|
(794,964)
|
|
(1,378,508)
|
Deferred tax
(expense)/benefit
|
|
(895,094)
|
|
(85,253)
|
|
(442,744)
|
|
641,314
|
NET
INCOME
|
|
7,932,860
|
|
3,412,473
|
|
11,031,455
|
|
7,887,980
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustment
|
|
(9,810,806)
|
|
(4,663,119)
|
|
(11,196,403)
|
|
(14,240,489)
|
COMPREHENSIVE
LOSS
|
|
(1,877,946)
|
|
(1,250,646)
|
|
(164,948)
|
|
(6,352,509)
|
|
|
|
|
|
|
|
|
|
Weighted
average shares used in computation:
|
|
|
|
|
|
|
|
|
Basic -
Common
|
|
19,986,211
|
|
21,526,747
|
|
20,041,647
|
|
21,526,747
|
Diluted -
Common
|
|
20,274,028
|
|
21,526,747
|
|
20,297,832
|
|
21,526,747
|
Net income per
share:
|
|
|
|
|
|
|
|
|
Basic -
Common
|
|
0.40
|
|
0.16
|
|
0.55
|
|
0.37
|
Diluted -
Common
|
|
0.39
|
|
0.16
|
|
0.54
|
|
0.37
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-GAAP FINANCIAL MEASURES
The non-GAAP financial measures below are provided to enhance
investors' overall understanding of the company current financial
performance and prospects for the future. A limitation of using
non-GAAP other operating expenses and net income, excluding
share-based compensation expenses, is that these items have been
and may continue to be a significant expense in the Company's
business for the foreseeable future. In order to mitigate these
limitation, the Company has provided specific information regarding
the GAAP amounts excluded from each non-GAAP measure. The
accompanying tables include details on the reconciliation between
GAAP financial measures that are most directly comparable to the
non-GAAP financial measures the Company has presented.
WINS FINANCE
HOLDINGS INC.
|
NON-GAAP FINANCIAL
MEASURE RECONCILIATIONS
|
|
|
|
Three months
ended
|
|
Six months
ended
|
|
|
December 31,
2016
|
|
December 31,
2015
|
|
December 31,
2016
|
|
December 31,
2015
|
|
|
US$
|
|
|
|
|
|
|
Other operating
expenses under GAAP
|
|
2,074,528
|
|
(1,573,216)
|
|
788,790
|
|
(2,143,720)
|
Adjustment (Note
(a))
|
|
(2,286,919)
|
|
204,042
|
|
(2,100,966)
|
|
204,042
|
|
|
|
|
|
|
|
|
|
Non-GAAP Other
operating expenses
|
|
(212,391)
|
|
(1,369,174)
|
|
(1,312,176)
|
|
(1,939,678)
|
|
|
|
|
|
|
|
|
|
Net income under
GAAP
|
|
7,932,860
|
|
3,412,473
|
|
11,031,455
|
|
7,887,980
|
Adjustment
(a)
|
|
(2,286,919)
|
|
204,042
|
|
(2,100,966)
|
|
204,042
|
|
|
|
|
|
|
|
|
|
Non-GAAP net
income
|
|
5,645,941
|
|
3,616,515
|
|
8,930,489
|
|
8,092,022
|
|
|
|
|
|
|
|
|
|
Weighted average
shares used in
computation:
|
|
|
|
|
|
|
|
|
Basic -
Common
|
|
19,986,211
|
|
21,526,747
|
|
20,041,647
|
|
21,526,747
|
Diluted -
Common
|
|
20,274,028
|
|
21,526,747
|
|
20,297,832
|
|
21,526,747
|
Non-GAAP earnings
per share
|
|
|
|
|
|
|
|
|
Basic -
Common
|
|
0.28
|
|
0.17
|
|
0.45
|
|
0.38
|
Diluted -
Common
|
|
0.28
|
|
0.17
|
|
0.44
|
|
0.38
|
|
Note (a): Adjusted exclusion
on share-based compensation expenses
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/wins-finance-holdings-inc-reports-unaudited-and-unreviewed-fiscal-second-quarter-2017-financial-results-300480498.html
SOURCE Wins Finance Holdings Inc.