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Wins Finance Holdings Inc. Reports Unaudited Financial Results for the Six Months Ended December 31, 2017

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Wins Finance Holdings Inc. Reports Unaudited Financial Results for the Six Months Ended December 31, 2017

PR Newswire

BEIJING and NEW YORK, May 18, 2018 /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 financial results for the fiscal six months ended December 31, 2017.

Fiscal Six Months Financial and Operational Highlights

  • Gross revenue was $5.3 million, compared to $4.8 million for the corresponding period ended December 31, 2016.
  • Interest income on short-term investments was $7.5 million, compared to $6.8 million for the corresponding period ended December 31, 2016.
  • Net income attributable to Wins Finance was $9.2 million, compared to $11.0 million for the corresponding period ended December 31, 2016.

"Our gross revenue increased 10% for the first six months of fiscal 2018 as compared to same period a year ago as our financial advisory business increased by 227%, though this was offset by a 26% decrease in our financial guarantee business. However, our net income fell 17%, primarily due an increase in our expenses," said Renhui Mu, Chairman and Chief Executive Officer of Wins Finance.

"We continue to work to optimize the company's business and operating structure. The economic slowdown in Shanxi Province's economy, our main market for our guarantee business, could lead to an increased risk of potential loan default despite our extensive screening process, so we plan to make fewer loan guarantees. Instead, we plan to focus on growing our financing lease business, which we believe will continue to expand in the future."

"In order to plan for growth and reduce the cost of bank financing, we plan to increase our capital and strive to improve the Company's credit rating with our lenders. This could take the form of an issuance of securities as outlined in our registration statement on Form F-3," added Mr. Mu

Six Months Ended December 31, 2017 Financial Results

Gross revenue

Gross revenue for Wins Finance for the six months ended December 31, 2017 was $5.3 million, which was comprised of $1.2 million of commissions and fees generated from our financial guarantee services, $3.0 million of direct financing lease interest income and $1.2 million of financial advisory and lease agency income.

Commissions and fees from financial guarantee services decreased $0.4 million, or 26.4%, to $1.2 million for the six months ended December 31, 2017, compared to $1.6 million for the six months ended December 31, 2016. The decrease was primarily attributable to reduced lending activities due to the economic slowdown in Shanxi Province, where most of our existing SME clients are located, and, as a result, fewer potential clients were able to pass our screening process. Concurrent with a slowdown of China's economy, competition in our lending business has intensified 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 $0.1 million, or 3.6%, to $3.0 million for the six months ended December 31, 2017, compared to $2.9 million for the six months ended December 31, 2016.

Financial advisory and lease agency income increased by $0.8 million, or 226.8%, to $1.2 million for the six months ended December 31, 2017, compared to $0.4 million for the six months ended December 31, 2016. The increase was primarily attributable to new contracts secured under our financing advisory services.

Interest income on short-term investment

Interest income from short-term investments increased by $0.6 million to $7.5 million for the six months ended December 31, 2017, compared to $6.8 million for the six months ended December 31, 2016. The increase was primarily due to an increase in the average balance of our short-term investments.

Non-interest expenses

Non-interest expense was $2.1 million for the six months ended December 31, 2017, as compared to non-interest income of $0.06 million for the six months ended December 31, 2016. In connection with the grant of stock options to employees, we recorded share-based compensation charges of $nil and a gain of $1.5 million for the six months ended December 31, 2017 and 2016, respectively. The gain in 2016 resulted from the reversal of share-based compensation expense for our stock options that were cancelled in 2016 due to the termination of the holders' employment prior to vesting.

Income taxes

Income tax expense decreased by $0.6 million, to $0.6 million for the six months ended December 31, 2017, compared to $1.2 million for the six months ended December 31, 2016. The decrease was attributable to the decrease in taxable income, which excluded tax exempt interest income from short-term investments.

Net income

Net income decreased by $1.8 million, or 16.6%, to $9.2 million for the six months ended December 31, 2017, compared to $11.0 million for the six months ended December 31, 2016.

Current Outlook

Management continues to be cautious as to its operating results in future periods in view of the slowdown of the Chinese economy in those regions where the Company operates and which directly effects China's financial sector. The Company believes that its financial guarantee services business could especially be adversely affected since its 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 reduce the operation of this business in order to minimize the risks of the Company's exposure.

Conversely, we believe that the financial leasing business offers substantial growth opportunities as SMEs have become an indispensable driver of promoting economic and employment growth and continue to contribute to China's economic transformation. Many SMEs need to upgrade their equipment and adopt new technologies but have limited access to capital.  Although the Company's financial advisory and agency services are important as they focus on SMEs and have the potential to diversify the Company's client base, the period-to-period financial results of this sector is affected by the complexity, uncertainties and changes in China's economic conditions and the regulations governing the industry.

Other Significant Events

The Company's registration statement on Form F-3, which registers the issuance of ordinary shares, preferred shares, warrants, rights, debt securities and debentures by the Company, was declared effective by the SEC on March 30, 2018.  The Company may sell such securities from time to time pursuant to the registration statement.  As we have previously disclosed, we have advised NASDAQ that we will seek to increase the public float and potentially the liquidity of our ordinary shares in an attempt to limit the volatility in the trading price of our ordinary shares. If we undertake any offering under the registration statement, it will be, in part, an effort to increase the liquidity of our ordinary shares. However, we cannot guarantee that any actions we take will have the intended effect of reducing market volatility and improving liquidity, and such share issuances could result in significant dilution for current shareholders.

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 its 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, 2017 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.
1177 Avenue of the Americas

5th Floor
New York, NY 10036
Tel: 646-694-8538
E-mail: info@winsholdings.com

WINS FINANCE HOLDINGS INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS






As of



December 31, 2017


June 30, 2017



US$


US$

ASSETS





Cash


9,183,365


17,002,282

Restricted cash


23,482,118


24,282,208

Short-term investments


206,490,674


187,944,184

Accounts receivable


1,011,363


-

Guarantee paid on behalf of guarantee service customers


3,005,346


1,560,615

Net investment in direct financing leases


70,289,761


76,723,457

Interest receivable


10,726,006


3,514,075

Property and equipment, net


395,483


594,148

Deferred tax assets, net


164,580


327,137

Other assets


666,420


815,984

TOTAL ASSETS


325,415,116


312,764,090






LIABILITIES AND STOCKHOLDERS' EQUITY





Liabilities





Bank loans for capital lease business


21,801,814


28,281,541

Other loans for capital lease business


7,420,859


9,509,597

Interest payable


200,435


222,510

Income tax payable


2,784,517


2,772,631

Unearned income from financial guarantee services


361,974


538,215

Allowance on guarantee


672,202


673,147

Other liabilities


1,167,033


893,569

Deposit from direct financing leases


11,736,635


10,854,121   10,854,121

Due to related party


464,000


464,000

Deferred tax liabilities


899,223


746,884

Total Liabilities


47,508,692


54,956,215






Stockholders' Equity





Common stock (par value $0.0001 per share, 100,000,000 shares
    authorized; 19,837,642 issued and outstanding at December 31,
    2017 and June 30, 2017)


1,984


1,984

Additional paid-in capital


211,934,432


211,934,432

Statutory reserve


3,530,458


3,530,458

Retained earnings


71,627,391


62,427,622

Accumulated other comprehensive loss


(9,187,841)


(20,086,621)

Total Stockholders' Equity


277,906,424


257,807,875

TOTAL LIABILITIES AND EQUITY


325,415,116


312,764,090

 

WINS FINANCE HOLDINGS INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND

COMPREHENSIVE INCOME (LOSS)




Six months ended December 31,




2017


2016




US$


US$

 Guarantee service income






 Commissions and fees on financial guarantee services



1,159,002


1,575,208

 Reversal of provision on financial guarantee services



28,397


2,248,283

 Commission and fees on guarantee services, net



1,187,399


3,823,491







 Direct financing lease income






 Direct financing lease interest income 



2,959,175


2,857,051

 Interest expense for direct financing lease



(920,873)


(1,544,164)

 Reversal of provision (provision) for lease payment receivable



116,506


(120,587)

 Net direct financing lease interest income after provision for receivables 


2,154,808


1,192,300







 Financial advisory and lease agency income



1,163,776


356,137

 Net revenue



4,505,983


5,371,928







 Non-interest income






 Interest on short-term investment



7,451,918


6,838,031

 Total non-interest income



7,451,918


6,838,031







 Non-interest expense






 Business taxes and surcharge



(2,057)


(1,473)

 Salaries and employees surcharge



(387,959)


(612,926)

 Rental expenses



(127,027)


(115,187)

 Other operating expenses



(1,592,811)


788,790

 Total non-interest expense



(2,109,854)


59,204







 Income before taxes



9,848,047


12,269,163







 Income tax expense



(648,278)


(1,237,708)

 NET INCOME



9,199,769


11,031,455







 Other comprehensive income (loss)






 Foreign currency translation adjustment



10,898,780


(11,196,403)

 COMPREHENSIVE INCOME (LOSS) 



20,098,549


(164,948)







Weighted average ordinary shares outstanding:






    Basic



19,837,642


20,041,647

    Diluted



19,837,642


20,297,832

Earnings per share:






    Basic



0.46


0.55

    Diluted



0.46


0.54







Cision View original content:http://www.prnewswire.com/news-releases/wins-finance-holdings-inc-reports-unaudited-financial-results-for-the-six-months-ended-december-31-2017-300651072.html

SOURCE Wins Finance Holdings Inc.

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