EX-99.1 2 yuanf_ex991.htm PRESS RELEASE DATED JANUARY 23, 2018 Blueprint
  Exhibit 99.1
 
FOR IMMEDIATE RELEASE
 
Fincera Reports Third Quarter 2017 Financial Results
 
Shijiazhuang, Hebei Province, China – January 23, 2018 – Fincera Inc. (“Fincera” or the “Company”) (OTCQB: YUANF), a leading provider of web-based financing and ecommerce services for small and medium-sized businesses and individuals in China, today reported financial results for the third quarter ended September 30, 2017.
 
Third Quarter Financial Highlights
 
●
Income for the three months ended September 30, 2017, increased 15.9% to RMB293.7 million (US$44.1 million) compared to the prior year
●
Net income totaled RMB8.1 million (US$1.2 million) during the third quarter of 2017, compared to a net loss of RMB10.9 million in the prior year
 
Operational Highlights
 
Loan transaction volume across both CeraPay and CeraVest platforms for the third quarter of 2017 totaled approximately RMB6.2 billion (US$0.9 billion). Non-credit transactions, which are transactions utilizing existing cash balances without extension of credit from the Company conducted over the CeraPay platform, are not included in the charts below.
 
 
CeraPay (https://www.dianfubao.com)
 
CeraPay is the Company’s credit advance and online payment processing platform. CeraPay allows customers to pay for their everyday needs at participating merchants through the online CeraPay transaction network. With functionality similar to a credit card, the Company issues revolving credit lines to customers, which they can use to make purchase transactions via the CeraPay application. In addition to the 30-day revolving credit line service, CeraPay now offers short-term financing for products purchased through any of the Company’s ecommerce websites (TruShip, AutoChekk and Pingping). These “purchase” financing loans carry 12-month terms with amortized monthly payments. The customers can use the collateral to invest on the CeraVest marketplace until the final payment is due.
 
 
Fincera Inc.
January 23, 2018
 
CeraPay generated credit transactions totaling approximately RMB5.0 billion (US$751.5 million) during the third quarter of 2017, a decrease of approximately RMB322.5 million (US$48.5 million), or 6.0%, compared to the second quarter of 2017, and a 12.3% decrease compared to the third quarter of 2016. This decrease was primarily due to a lower frequency of customers using CeraPay to pay for their purchases when compared to prior periods. Beginning in the third quarter of 2017, the Company began requiring all CeraPay users to provide collateral to the Company, including two residential properties and one vehicle, prior to making a transaction. Fincera earns transaction fees through its CeraPay platform.
 
CeraVest (https://www.qingyidai.com)
 
Fincera created CeraVest as an online lending marketplace that provides a short-term operating capital platform for small and medium-sized businesses. CeraVest allows lenders to provide loans to borrowers that have been vetted by the Company. CeraVest also provides investors the opportunity to invest in loans facilitated from the CeraPay platform. From its inception in November 2014 through the third quarter of 2017, CeraVest facilitated over RMB11.3 billion (US$1.7 billion) in loans; the Company’s loan portfolio from CeraVest was approximately RMB3.1 billion (US$0.5 billion) at September 30, 2017.
 
Currently, customers may invest in three types of loans on the CeraVest platform: a 30-day loan with an annualized return of 8.1% if held to maturity, a 180-day loan with an annualized return of 8.62% if held to maturity, and a 12 month loan with an annualized return of 9.02% that returns principal and interest monthly. In addition, investors may trade the 30-day and 180-day loans on a secondary marketplace offered by CeraVest with pricing provided by the Company.
 
The Company also had a flexible investment product that yielded an annualized return of 8.03% to investors. This product was phased out by the end of 2017 to comply with recent government regulations and is no longer offered by the Company.
 
 
 
Fincera Inc.
January 23, 2018
 
 
CeraVest facilitated RMB1.1 billion (US$165.3 million) during the third quarter of 2017, a decrease of approximately RMB413.5 million (US$62.1 million), or 27.1%, compared to the second quarter of 2017 and a 12.7% decrease compared to the third quarter of 2016. The decrease was primarily a result of customers delaying truck purchases until after the third quarter of 2017 to meet new government-imposed emission standards that recently went into effect. CeraVest had a total loan portfolio unpaid principal balance of approximately RMB3.1 billion (US$463.3 million) at September 30, 2017. Fincera earns facilitation fees on CeraVest loans.
 
Operational Updates
 
Fincera is pleased to announce that it has made progress with certain corporate initiatives, including:
 
●
Implementing a four-pronged sales channel that consists of company-owned stores, employee-owned stores, franchise stores, and part-time individual sales agents;
●
Launching three new products through the CeraVest platform (Qingying, Yueying and Zhongying, referred to as the “new products” in this press release) and discontinuing certain products (Fixed, Flex and Chuangying, referred to as the “discontinued products” in this press release) to comply with the latest government regulations;
●
Moving forward with retaining China CITIC Bank as its custodian for all customer accounts;
●
Entering into a partnership with Sinoiov (a provider of information services to the road freight industry) to provide payment cards for customers of Sinopec (an operator of a network of service stations in China) ; and
●
Launching a new product that allows truck owners to use CeraPay to pay drivers’ wages.
 
Management Commentary
 
Mr. Yong Hui Li, Chairman and CEO of Fincera, stated, “We are pleased with the continued adoption of our CeraPay and CeraVest products in the third quarter of 2017. While we did see decreases in CeraPay transactions and CeraVest loans facilitated during the period, our top line improved by nearly 23% year over year primarily as a result of increased interest income earned on CeraVest loans and from facilitation fees. And despite increased operating expenses related to product development and sales and marketing, we remained profitable in the third quarter of 2017. With our recently expanded sales strategy and new partnerships and products, we expect small and medium-sized businesses in China will continue to see the value Fincera’s flagship CeraPay and CeraVest products, as well as our other offerings, can bring to their everyday processes. We remain committed to bringing our customers increased innovation, convenience, and quality, and are continually working to improve our products and services.”
 
Currency Conversion
 
This release contains approximate translations of certain RMB amounts into US$ for convenience. Unless otherwise noted, all translations from RMB to US$ are made at a rate of RMB6.6533 to US$1.00, the effective noon buying rate on September 30, 2017, as set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System.
 
Third Quarter 2017 Financial Results
Income (Revenues)
 
The table below sets forth certain line items from the Company’s Consolidated Statement of Income as a percentage of income:
 
(RMB in thousands)
 
Three months ended
September 30, 2017
 
 
Three months ended
September 30, 2016
 
 
 
 
 
 
Amount
 
 
% of Revenue
 
 
Amount
 
 
% of Revenue
 
 
% Change 
 
Facilitation fee
  95,505 
  32.52%
  - 
  - 
  N/A 
Interest income
  89,396 
  30.44%
  73,749 
  29.10%
  21.2%
Service charges
  33,909 
  11.55%
  129,205 
  50.99%
  -73.8%
Property lease and management and hotel revenue
  51,451 
  17.52%
  44,761 
  17.66%
  14.9%
Other income
  23,431 
  7.97%
  5,699 
  2.25%
  311.1%
Total income
  293,692 
  100.0%
  253,414 
  100.0%
  15.9%
 
●
Total income for the three months ended September 30, 2017, increased 15.9% to RMB293.7 million (US$44.1 million), from RMB253.4 million in the prior-year period, primarily due to growth in the aggregate amount of loans outstanding under the Company’s CeraVest product, which was partially offset by a decline in transaction fees for the CeraPay product due to a decrease in transaction volume.
 
 
Fincera Inc. 
January 23, 2018
 
 
●
Facilitation fees, which represent upfront fees charged for the work Fincera performs through its platform, such as: loan information consultancy, credit and evaluations, and lender recommendation, totaled RMB95.5 million (US$14.4 million) in the three months ended September 30, 2017, due to the launch of new products in July 2017.
●
Interest income, which represents interest earned on CeraVest loans, increased 21% to RMB89.4 million (US$13.4 million) in the three months ended September 30, 2017, from RMB73.7 million in the prior-year period, mainly due to interest income from receivables on loans which were issued after the second quarter of 2017. The increment of interest income from new products was offset by a decline in interest income from old products.
●
Service charges, which represent CeraPay transaction fees, decreased 73.8% to RMB33.9 million (US$5.1 million) in the three months ended September 30, 2017, from RMB129.2 million in the prior-year period. This was a result of a decline in transactions processed through CeraPay. During the third quarter of 2017, RMB5.0 billion (US$751.5 million) of transactions were processed through CeraPay, a 12.3% decrease from the RMB5.7 billion transactions processed in the third quarter of 2016.
●
Property lease and management revenues increased 14.9% to RMB51.5 million (US$7.7 million) during the third quarter of 2017, compared to RMB44.8 million in the prior-year period. The occupancy rate of the Kai Yuan Finance Center during the three months ended September 30, 2017 increased to 82%, compared to 70% at September 30, 2016. Income from the Company’s hotel operation at the Kai Yuan Finance Center also increased during the period.
●
Other income is mainly comprised oflate payment fees (penalty income) from both CeraPay and CeraVest and cash incentives granted to investors. Other income increased 311.1% to RMB23.4 million (US$ 3.5 million) during the third quarter of 2017, compared to RMB5.7 million in the prior-year period due to the strengthening of collection efforts.
 
Operating Costs and Expenses
●
The Company’s operating costs and expenses increased 9.1% to RMB281.3 million (US$42.3 million) during the third quarter of 2017 from RMB257.9 million in the prior-year period, primarily due to increased interest expense, provision for credit losses, product development expense, selling and marketing expense, and general and administrative expenses to support the growth of the Company’s Internet-based business.
 
Income from Continuing Operations Before Income Taxes
●
Income from continuing operations before income taxes totaled RMB12.3 million (US$1.9 million) during the third quarter of 2017, compared to a loss of RMB4.4 million in the prior-year period, primarily as a result of the increased incomes mentioned above.
 
Income (Loss) from Discontinued Operations, Net of Taxes
●
Income from discontinued operations, net of taxes, totaled RMB2.3 million (US$0.34 million) during the third quarter of 2017, compared to a loss of RMB7.1 million in the prior-year period. The Company continues the winding down of its legacy truck-leasing business, which is classified as discontinued operations. The income during the current period was caused by the collection of overdue traditional leasing receivables and the reversal of the corresponding provision recorded against them on the Company’s financial statements. The loss in the prior-year period was primarily caused by the disposition of sales branches.
 
Net Income (Loss)
●
Net income totaled RMB8.1 million (US$1.2 million) during the third quarter of 2017, compared to a net loss of RMB10.9 million in the prior-year period.
 
Balance Sheet Highlights
 
At September 30, 2017, Fincera’s cash and cash equivalents (not including restricted cash) were RMB680.8 million, compared to RMB722.3 million at December 31, 2016. Total liabilities were RMB7.2 billion and stockholders’ equity was negative RMB155.0 million, compared to RMB7.0 billion and RMB157.1 million, respectively, at December 31, 2016. The reduction in stockholders’ equity was primarily a result of the US$2.00 per share cash dividend that the Company declared in September 2017.
 
About Fincera Inc.
 
Founded in 2005, Fincera Inc. (OTCQB: YUANF) provides innovative web-based financing and ecommerce services for small and medium-sized businesses and individuals in China. The Company also operates a network of branch offices in 31 provinces, municipalities, and autonomous regions across China. Fincera’s primary service offerings include a credit advance/online payment-processing network and a web-based small business lending platform. The Company’s website is http://www.fincera.net. Fincera trades on the OTCQB venture stage marketplace for early stage and developing U.S. and international companies. OTCQB companies are current in their reporting and undergo an annual verification and management certification process.
 
 
Fincera Inc. 
January 23, 2018
 
 
Safe Harbor Statement
 
This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about the Company. Forward-looking statements are statements that are not historical facts. Such forward-looking statements, based upon the current beliefs and expectations of the Company's management, are subject to risks and uncertainties, which could cause actual results to differ from the forward-looking statements. The following factors, among others, could cause actual results to materially differ from those set forth in the forward-looking statements:
 
●
changing principles of generally accepted accounting principles;
 
●
outcomes of any government or government-related reviews, inquiries, investigations, and related litigation;
 
●
continued compliance with government regulations;
 
●
legislation or regulatory environments, requirements or changes adversely affecting the financial services industry in China;
 
●
fluctuations in consumer demand;
 
●
management of rapid growth;
 
●
general economic conditions;
 
●
changes in government policy;
 
●
fluctuations in sales of commercial vehicles in China;
 
●
China’s overall economic conditions and local market economic conditions;
 
●
the Company’s business strategy and plans, including its ability to expand through strategic acquisitions, the establishment of new locations, and the introduction of new products and services;
 
●
the Company’s ability to successfully integrate recent acquisitions;
 
●
credit risk affecting the Company’s revenue and profitability, including its ability to manage the default risk of customers;
 
●
the results of future financing efforts; and
 
●
geopolitical events.
 
The information set forth herein should be read in light of such risks. The Company does not assume any obligation to update the information, including forward looking statements, contained in this press release.
 
CONTACT
At the Company
Jason Wang
Chief Financial Officer
(858) 997-0680 / jcwang@fincera.net
Investor Relations
The Equity Group Inc.
Carolyne Y. Sohn
Senior Associate
(415) 568-2255 / csohn@equityny.com
 
Adam Prior
Senior Vice President
(212) 836-9606 / aprior@equityny.com
 
 
 
Fincera Inc. 
January 23, 2018
 
 
FINCERA INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE (LOSS) (Unaudited) 
(in thousands except share and per share data)
 
 
 
Three months ended September 30,
 
 
Nine months ended September 30,
 
 
 
2017
 
 
2017
 
 
2016
 
 
2017
 
 
2017
 
 
2016
 
 
 
US$
 
 
RMB
 
 
RMB
 
 
US$
 
 
RMB
 
 
RMB
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Facilitation fee
  14,355 
  95,505 
  - 
  14,355 
  95,505 
  - 
Interest income
  13,436 
  89,396 
  73,749 
  36,425 
  242,349 
  164,963 
Service charges
  5,097 
  33,909 
  129,205 
  37,613 
  250,248 
  324,513 
Property lease and management
  7,733 
  51,451 
  44,761 
  20,792 
  138,338 
  128,099 
Other income
  3,522 
  23,431 
  5,699 
  11,042 
  73,469 
  7,722 
Total income
  44,142 
  293,692 
  253,414 
  120,227 
  799,909 
  625,297 
 
    
    
    
    
    
    
Operating Costs and Expenses
    
    
    
    
    
    
Interest expense
  12,471 
  82,974 
  72,334 
  40,441 
  269,063 
  189,012 
Interest expense, related parties
  6,561 
  43,653 
  7,446 
  16,961 
  112,849 
  19,579 
Provision for credit losses
  1,012 
  6,735 
  60,746 
  5,664 
  37,687 
  121,115 
Product development expense
  3,168 
  21,076 
  15,784 
  9,359 
  62,269 
  43,238 
Property and management cost
  4,239 
  28,201 
  28,325 
  12,419 
  82,627 
  82,136 
Selling and marketing
  6,238 
  41,504 
  26,084 
  15,773 
  104,941 
  59,936 
General and administrative
  8,597 
  57,199 
  47,140 
  24,889 
  165,592 
  125,506 
Total operating costs and expenses
  42,286 
  281,342 
  257,859 
  125,506 
  835,028 
  640,522 
 
    
    
    
    
    
    
Income (loss) from continuing operations before income taxes
  1,856 
  12,350 
  (4,445)
  (5,279)
  (35,119)
  (15,225)
Income tax provision (benefit)
  987 
  6,567 
  (654)
  (839)
  (5,583)
  (1,677)
Income (loss) from continuing operations
  869 
  5,783 
  (3,791)
  (4,440)
  (29,536)
  (13,548)
 
    
    
    
    
    
    
Income (loss) from discontinued operations, net of taxes
  343 
  2,286 
  (7,096)
  1,259 
  8,374 
  (14,972)
Net income (loss)
  1,212 
  8,069 
  (10,887)
  (3,181)
  (21,162)
  (28,520)
Foreign currency translation adjustment
  918 
  6,108 
  2,209 
  (167)
  (1,109)
  (760)
 
    
    
    
    
    
    
Comprehensive income (loss)
  2,130 
  14,177 
  (8,678)
  (3,348)
  (22,271)
  (29,280)
 
    
    
    
    
    
    
 
    
    
    
    
    
    
Earnings per share
    
    
    
    
    
    
Basic
    
    
    
    
    
    
Continuing operations
  0.02 
  0.12 
  (0.08)
  (0.09)
  (0.63)
  (0.29)
Discontinued operations
  0.01 
  0.05 
  (0.15)
  0.03 
  0.18 
  (0.32)
 
  0.03 
  0.17 
  (0.23)
  (0.06)
  (0.35)
  (0.61)
 
    
    
    
    
    
    
Diluted
    
    
    
    
    
    
Continuing operations
  0.02 
  0.12 
  (0.08)
  (0.09)
  (0.63)
  (0.29)
Discontinued operations
  0.01 
  0.05 
  (0.15)
  0.03
 
  0.18 
  (0.32)
 
  0.03 
  0.17 
  (0.23)
  (0.06)
  (0.35)
  (0.61)
 
    
    
    
    
    
    
Weighted average shares outstanding
    
    
    
    
    
    
Basic
  47,276,456 
  47,276,456 
  47,108,970 
  47,216,027 
  47,216,027 
  47,109,278 
Diluted
  49,043,297 
  49,043,297 
  47,108,970 
  47,216,027 
  47,216,027 
  47,109,278 
 
Note: For the three and nine months ended September 30, 2017, the figures are converted from RMB to USD at the spot rate of RMB 6.6533 to US$1.00 while U.S. GAAP requires such conversion to be made using average rates prevailing during each reporting period.
 
 
Fincera Inc. 
January 23, 2018
 
 
FINCERA INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS 
(in thousands except share and per share data)
 
 
 
As of September 30,
 
 
As of December 31,
 
 
 
2017
 
 
  2016
 
 
 
US$
(Unaudited)
 
 
RMB
(Unaudited)
 
 
    RMB  
 
ASSETS
 
 
 
 
 
 
 
 
 
Current assets
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
  102,329 
  680,828 
  722,301 
Restricted cash
  27,111 
  180,375 
  42,517 
Other financing receivables, net
  268,074 
  1,783,577 
  2,049,444 
Loans, net
  209,586 
  1,394,436 
  2,575,717 
Prepaid expenses and other current assets
  10,245 
  68,160 
  45,593 
Loans receivable
  108,718 
  723,334 
  — 
Loans held for transfer
  78,872 
  524,760 
  — 
Net investment receivable
  9,036 
  60,121 
  — 
Current assets of discontinued operations
  10,069 
  66,992 
  100,318 
Total current assets
  824,040 
  5,482,583 
  5,535,890 
 
    
    
    
Noncurrent assets
    
    
    
Property, equipment and leasehold improvements, net
  205,250 
  1,365,592 
  1,401,780 
Deferred income tax assets – non-current
  27,116 
  180,411 
  163,209 
Non-current assets of discontinued operations
  6,708 
  44,632 
  51,147 
Total assets
  1,063,114 
  7,073,218 
  7,152,026 
 
    
    
    
LIABILITIES AND STOCKHOLDERS’ EQUITY
    
    
    
Current liabilities
    
    
    
Dividends payable
  30,204 
  200,957 
  — 
Short-term bank borrowings (including short-term bank borrowings of the consolidated VIEs without recourse to Fincera of 680,000 and 520,000 as of September 30, 2017 and December 31, 2016, respectively)
  102,205 
  680,000 
  580,000 
Long-term bank borrowings, current portion
  10,559 
  70,250 
  62,000 
Borrowed funds from CeraVest loan investors, related party (including borrowed funds from CeraVest loan investors, related party of the consolidated VIEs without recourse to Fincera of RMB 330 and 930 as of September 30, 2017 and December 31, 2016, respectively)
  618 
  4,111 
  30,171 
Borrowed funds from CeraVest loan investors (including borrowed funds from CeraVest loan investors of the consolidated VIEs without recourse to Fincera of RMB 1,550,139 and 1,583,564 as of September 30, 2017 and December 31, 2016, respectively)
  369,016 
  2,455,176 
  3,035,586 
Financing payables, related parties (including financing payables, related parties of the consolidated VIEs without recourse to Fincera of RMB 2,360,168 and 1,392,400 as of September 30, 2017 and December 31, 2016, respectively)
  368,631 
  2,452,612 
  1,900,533 
Other payables and accrued liabilities (including other payables and accrued liabilities of the consolidated VIEs without recourse to Fincera of RMB 335,732 and 201,596 as of September 30, 2017 and December 31, 2016, respectively)
  92,426 
  614,939 
  424,567 
Income tax payable (including income tax payable of the consolidated VIEs without recourse to Fincera of 18,216 and 25,951 as of September 30, 2017 and December 31, 2016, respectively)
  4,647 
  30,921 
  37,986 
Current liabilities of discontinued operations (including current liabilities of discontinued operations of the consolidated VIEs without recourse to Fincera of RMB 1,012 and 5,591 as of September 30, 2017 and December 31, 2016, respectively)
  3,583 
  23,835 
  31,012 
Total current liabilities
  981,889 
  6,532,801 
  6,101,855 
 
    
    
    
Non-current liabilities:
    
    
    
 Long-term bank borrowings
  91,946 
  611,749 
  664,000 
Long-term payables, related parties
  12,568 
  83,617 
  229,118 
Total liabilities
  1,086,403 
  7,228,167 
  6,994,973 
 
    
    
    
Stockholders’ (deficiency) equity
    
    
    
Preferred shares, $0.001 par value, 1,000,000 shares authorized; -no shares issued or outstanding at September 30, 2017 and December 31,2016
  — 
  — 
  — 
Common stock - $0.001 par value, 1,000,000,000 shares authorized, 47,284,620 and 47,123,898 shares outstanding as of 9/30/2017 and 12/31/2016, respectively
  49 
  327 
  327 
Additional paid-in capital
  101,069 
  672,441 
  962,173 
Statutory reserves
  23,440 
  155,954 
  159,801 
Accumulated losses
  (150,679)
  (1,002,511)
  (985,196)
Accumulated other comprehensive income
  2,832 
  18,839 
  19,948 
Total stockholders’ (deficiency) equity
  (23,289)
  (154,950)
  157,053 
 
    
    
    
Total liabilities and stockholders’ (deficiency) equity
  1,063,114 
  7,073,217 
  7,152,026