Dunxin Financial Holdings Limited Reports Financial Results for the First Six Months of 2019

WUHAN, China, Dec. 19, 2019 /PRNewswire/ -- Dunxin Financial Holdings Limited ("Dunxin" or the "Company") (NYSE American: DXF), a leading licensed microfinance lender serving individuals and small and medium enterprises (SMEs) in Hubei Province, China, today announced its unaudited financial results for the first six months of 2019. The unaudited consolidated financial statements and other financial information included in this press release have been prepared in conformity with International Financial Reporting Standards ("IFRS") and stated in Renminbi ("RMB") unless otherwise indicated.

First Six Months 2019 Highlights

  • Total outstanding principal balance of loans reached RMB812.8 million (US$118.4 million) as of June 30, 2019, representing a decrease of 0.3% from RMB814.9 million as of June 30, 2018.
  • Total interest income reached RMB75.5 million (US$11.0 million) in the first six months of 2019, representing an increase of 49.2% from RMB50.6 million in the same period of the prior year.
  • Net interest income reached RMB65.5 million (US$9.5 million) in the first six months of 2019, representing an increase of 78.0% from RMB36.8 million in the same period of the prior year.
  • Net profit was RMB34.5 million (US$5.0 million) in the first six months of 2019, representing an increase of 155.6% from RMB13.5 million in the same period of the prior year.
  • Earnings per American Depositary Share ("ADS") was US$0.19 in the first six month of 2019, compared to US$0.08 in prior year period.

First Six Months 2019 Financial Results

Interest Income on Loans

Interest income on loans for the first six months of 2019 increased by 49.2% to RMB75.5 million (US$11.0 million) from RMB50.6 million in the same period of the prior year. The increase was primarily attributable to the accrued interest of Stage 3 credit-impaired loans. Accrued interest is the present value of the estimated future cash flows of credit-impaired loans expected to be recovered, discounted at the loan's original effective interest rate.

Interest expense

Interest expenses on loans decreased to RMB9.8 million (US$1.4 million) for the first six months of 2019 from RMB13.6 million in the same period of the prior year. The reduction was mainly due to the decrease in average outstanding borrowings from RMB240.2 million in the first six months of 2018 to RMB203.8 million (US$29.7 million) in the first six months of 2019, which resulted in a RMB1.9 million (US$0.3 million) decrease in the Company's interest expenses on loans. Also, the effective cost of borrowings decreased from 11.3% in the first six months of 2018 to 9.6% in the first six months of 2019, which resulted in a RMB1.9 million (US$0.3 million) decrease in the Company's interest expenses on loans.

Net interest income

Net interest income for the first six months of 2019 was RMB65.5 million (US$9.5 million), representing a 78.0% increase from RMB36.8 million in the same period of the prior year.

Credit impairment losses

Credit impairment losses for the first six months of 2019 decreased from RMB11.6 million to RMB11.3 million (US$1.6 million). The credit impairment losses were provided at a similar level last year.

Operation expenses

Sales and marketing expenses for the first six months of 2019 increased to RMB0.6 million (US$0.1 million) from RMB0.5 million in the same period of the prior year. The increase was primarily attributable to the cost incurred in developing the new supply chain finance cloud platform.

General and administrative expenses increased from RMB6.7 million for the first six months of 2018 to RMB7.5 million (US$1.1 million) for the first six months of 2019. The increase was primarily attributable to the increase in certain administrative and miscellaneous expenses.

Net Profit and Earnings per ADS

Net profit was RMB34.5 million (US$5.0 million) for the first six months of 2019, as compared to RMB13.5 million in the same period of the prior year.

Earnings per ADS for the first six months of 2019 was US$0.19, compared to US$0.08 in the same period of the prior year.

Balance Sheet

As of June 30, 2019, the Company had cash and cash equivalents of RMB0.1 million (US$0.02 million) compared to RMB3.2 million as of December 31, 2018.

Loans receivable, net of credit impairment losses of RMB405.6 million (US$59.1 million), was RMB620.1 million (US$90.3 million) as of June 30, 2019, representing an increase of 7.0% from RMB579.7 million as of December 31, 2018, primarily due to the accrued interest of Stage 3 credit-impaired loans. Accrued interest is the present value of the estimated future cash flows of credit-impaired loans expected to be recovered, discounted at the loan's original effective interest rate.

Cash Flow

Net cash generated by operating activities for the first six months of 2019 was RMB2.5 million (US$0.4 million) compared to RMB12.7 million net cash used in operating activities in the same period of prior year.

Safe Harbor Statement

This news release contains forward-looking statements within the meaning of 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," "target," "going forward," "outlook" and similar statements. Such statements are based upon management's current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the Company's control, which may cause the Company's actual results, performance or achievements to differ materially from those in the forward-looking statements. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the U.S. Securities and Exchange Commission. The Company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under law.

Exchange Rate Information

The United States dollar (US$) amounts disclosed in this press release are presented solely for the convenience of the reader. Translations of amounts from Renminbi ("RMB") into United States dollars for the convenience of the reader were calculated at the certified exchange rate of US$1.00 = RMB6.8650 on June 30, 2019 as set forth in the H.10 weekly statistical release of the Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted into US$ at that rate on June 30, 2019, or at any other date. The percentages stated are calculated based on RMB amounts.

About Dunxin Financial Holdings Limited

Dunxin Financial Holdings Limited ("DXF") is one of the leading licensed microfinance lenders in Hubei Province, China. We have been granted a microfinance license by the Financial Affairs Office of the Hubei Provincial People's Government to provide loans to individuals, small and medium-sized enterprises. We were awarded as the Vice President Unit of China Micro-credit Companies Association under the China Banking Regulatory Commission in January 2017 and the President Unit of Hubei Micro-credit Company Association in December 2017. In 2016, we were recognized as a "National Excellent Microfinance Company" by China Micro-credit Companies Association. We have been named one of the "Top 100 Most Competitive Microfinance Companies in China" by China Microfinance Institution Association for four consecutive years since 2013, an "AA- Credit Rating Enterprise" by China Credit Management Co., Ltd in August 2017, and a "Top 10 Private Enterprises in Wuchang District, Wuhan City" by the People's Government of Wuchang District in July 2017. The Group has a strong capital base and professional credit business experience in microfinance industry. For more information, please visit the Company's website at www.dunxin.us.

DUNXIN FINANCIAL HOLDINGS LIMITED

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Expressed in Thousands of Chinese Renminbi Yuan, except per share and per ADS amounts)



For the six months ended June 30


2018

RMB


2019

RMB

2019

US$






Interest income on loans

50,606


75,472

10,994






Interest expense:





Interest expenses on loans

(13,619)


(9,766)

(1,422)

Business related taxes and surcharges

(198)


(217)

(32)

Total interest expense

(13,817)


(9,983)

(1,454)






Net interest income

36,789


65,489

9,540

Credit impairment losses

(11,606)


(11,338)

(1,652)

Net interest income after credit impairment losses

25,183


54,151

7,888






Non-interest and other income

174


3

-






Operating costs and expenses





Sales and marketing

(509)


(642)

(94)

General and administrative

(6,720)


(7,505)

(1,093)

Total operating costs and expenses

(7,229)


(8,147)

(1,187)






Profit before income taxes

18,128


46,007

6,701

Income tax expense

(4,580)


(11,502)

(1,675)

Net profit

13,548


34,505

5,026






Other comprehensive income for the period:





Exchange differences on translation of financial
     statements of entities outside the mainland of the
     People's Republic of China

 

 

29


 

 

(398)

 

 

(58)

Total comprehensive income for the period

13,577


34,107

4,968






Net profit attributable to:





Equity holders of the Company

10,838


27,604

4,021

Non-controlling interests

2,710


6,901

1,005

Net profit

13,548


34,505

5,026






Total comprehensive income attributable to:





Equity holders of the Company

10,862


27,286

3,975

Non-controlling interests

2,715


6,821

993

Total comprehensive income

13,577


34,107

4,968






Earnings per share - basic and diluted (in RMB)

0.01


0.03


Earnings per ADS - basic and diluted (in US$)

0.08


0.19







Weighted average shares outstanding in the period ('000)

1,000,000


1,000,862


Weighted average ADS outstanding in the period ('000)

20,833


20,851







One ADS represents 48 ordinary shares.






 

 

DUNXIN FINANCIAL HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Expressed in Thousands of Chinese Renminbi Yuan)



As of


December 31,


June 30,

June 30,


2018


2019

2019


RMB


RMB

US$




Unaudited

Unaudited






Assets





Current assets





Cash and cash equivalents

3,188


139

20

Interest receivables, net of credit impairment losses

7,057


19,298

2,811

Loans receivable, net of credit impairment losses

579,654


620,088

90,326

Prepaid expenses and others

1,038


794

116

Total current assets

590,937


640,319

93,273






Non-current assets





Property and equipment, net

50,824


49,639

7,231

Intangible asset

9


8

1

Total non-current assets

50,833


49,647

7,232






Total assets

641,770


689,966

100,505






Liabilities





Loans payable

200,417


195,608

28,494

Salary and benefit payable

1,411


3,228

470

Income taxes payable

32,477


43,979

6,406

Interest payable

5,139


10,982

1,600

Other payable

35,260


34,200

4,982

Total current liabilities

274,704


287,997

41,952






Shareholders' equity





Capital and reserve attributable to equity holders of
the Company





Share capital

326


326

47

Additional paid-in capital

383,174


383,174

55,816

Statutory reserve

14,017


14,017

2,042

General risk reserve

9,885


9,885

1,440

Foreign currency translation reserve

(493)


(174)

(25)

Accumulated losses

(113,257)


(85,652)

(12,477)

Non-controlling interests in equity

73,414


80,393

11,710

Total shareholders' equity

367,066


401,969

58,553






Total equity and liabilities

641,770


689,966

100,505


 

 

DUNXIN FINANCIAL HOLDINGS LIMITED

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in Thousands of Chinese Renminbi Yuan)



For the six months ended June 30,


2018


2019

2019


RMB


RMB

US$

Cash flows from operating activities:





Profit before income taxes

18,128


46,007

6,701

Adjustments for:





Depreciation of property and equipment

202


1,455

212

Amortization of intangible asset

-


1

-

Credit impairment losses

11,606


11,338

1,652

Share-based compensation

297


-

-

Operating profit before working capital changes

30,233


58,801

8,565

Interest receivables

(14,028)


(15,228)

(2,218)

Loan receivables

(23,890)


(48,785)

(7,106)

Prepaid expenses and others

(500)


244

35

Advance from customers

(112)


-

-

Salary and benefit payable

(2,378)


1,817

265

Interest payable

1,450


5,843

851

Other payable

(2,927)


(217)

(32)

Cash (used in)/generated by operating activities

(12,152)


2,475

360

Income tax paid

(509)


-

-

Net cash (used in)/generated by operating activities

(12,661)


2,475

360






Cash flows from investing activities:





Purchase of property and equipment

(18)


(270)

(39)

Prepayment for property

(11,654)


-

-

Net cash used in investing activities

(11,672)


(270)

(39)






Cash flows from financing activities:





Proceeds received from related party loans

-


17,350

2,527

Repayment of loans to related party

-


(11,800)

(1,719)

Proceeds received from shareholders loans

-


13,000

1,894

Repayment of shareholders loans

-


(3,000)

(437)

Proceeds received from loan payable

200,180


47,300

6,890

Repayments of loan payable

(196,960)


(68,502)

(9,978)

Net cash generated by/(used in) financing activities

3,220


(5,652)

(823)






Net decrease in cash and cash equivalents

(21,113)


(3,447)

(502)

Cash and cash equivalents at beginning of the period

21,717


3,188

464

Exchange (losses)/gains on cash and cash equivalents

(29)


398

58

Cash and cash equivalents at end of the period

575


139

20

 

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SOURCE Dunxin Financial Holdings Limited

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