SOURCE: Fincera Inc.

Fincera Inc.

May 03, 2016 08:30 ET

Fincera Reports 2015 Year-End Financial Results

SHIJIAZHUANG, CHINA--(Marketwired - May 3, 2016) - Fincera Inc. ("Fincera" or the "Company") (OTCQB: AUTCF), 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 year ended December 31, 2015.

Operational Highlights

  • The Company continued the wind down of its legacy truck-leasing business, which is now classified as a discontinued operation, and expects to continue servicing and collecting payments on existing commercial vehicle leases until all obligations related to the individual leases are met.
  • The Company's Internet-based business segment, which was launched in November 2014 and consists of financial services, payment and settlement, and ecommerce offerings, continues to grow: the electronic payments platform CeraPay was used to make payment transactions totaling over RMB9.7 billion during 2015. The online marketplace lending platform CeraVest originated over RMB2.6 billion in loans during 2015, an increase of over twenty times the 2014 amount, and had a loan portfolio of approximately $251 million at December 31, 2015.

Full-year 2015 Financial Highlights (comparisons are year over year)

  • Total revenues of $56.3 million, compared to $5.4 million. Both 2015 and 2014 reported revenues no longer include the Company's legacy truck-leasing business, which is now treated as discontinued operations. 
  • Net income from continuing operations of $76,000, or $0.003 per diluted share, compared to a net loss of $16.3 million, or $0.68 per diluted share, primarily as a result of the reclassification of the legacy truck-leasing business as a discontinued operation while the Company's overhead is still included in continuing operations.

Management Comments
Mr. Yong Hui Li, Chairman and CEO of Fincera, stated, "We undertook a bold transition in the third quarter of 2015 with the decision to begin winding down our legacy truck-leasing business in order to focus all efforts on our Internet-based businesses. We are pleased with the rapid adoption of these business lines in the marketplace. CeraVest, CeraPay, TruShip, and the recently introduced AutoChekk reflect our long-term vision for the Company to be a leading provider of web-based financing and ecommerce service for small and medium-sized businesses and individuals in China. These platforms allow the Company to leverage its history in the heavy vehicle market by providing products and services which appeal to wide array of customers, while also yielding stronger margins for Fincera. We designed and built these products and applications to work harmoniously with each other in order to create a better user experience while also allowing the Company to take advantage of cross-selling opportunities. An example of this is the integration of CeraPay in the TruShip and AutoChekk products. Using this valuable tool, the Company is also able to gain important data which can then be used to enhance the underwriting metrics utilized by the CeraVest platform. We continue to explore ways in which we can help small businesses take advantage of technology to thrive in today's digital age."

Internet-based Business
From its inception in November 2014 through December 31, 2015, the Company's small business lending platform CeraVest (https://www.qingyidai.com/) has originated over RMB2.7 billion in loans. CeraVest had a loan portfolio of approximately $251 million at December 31, 2015. Fincera created CeraVest as an online lending marketplace that provides short-term operating capital for small and medium-sized businesses. CeraVest is also a platform through which Fincera can originate loans and then sell these loans to the public. Currently, individuals may invest on the CeraVest platform and earn an annual interest rate of up to approximately 8.6%. Fincera earns origination fees on CeraVest loans.

Also launched in November 2014, the Company's electronic payments platform CeraPay (https://www.dianfubao.com/) was used to make payment transactions totaling approximately RMB9.7 billion during 2015. Fincera developed CeraPay as a convenient platform through which customers could make electronic payments and the Company could make credit advances to its customers, allowing customers to pay for their everyday truck-operating needs at participating merchants within the CeraPay network. Fincera earns transaction fees through its CeraPay platform. The Company continues to actively market CeraPay to potential customers and merchants in an effort to increase the user base.

The Company continued to expand its ecommerce offerings with the introduction of TruShip in October 2015. Built for trucking industry merchants such as dealerships and leasing companies, TruShip allows users to establish an online store-front and seamlessly conduct sales transactions through CeraPay. It allows participants in China's fragmented long-haul trucking industry to publish, browse, and connect on shipping jobs across the country at no cost. Booked connections made on the platform accept CeraPay, which also facilitates the collection of data that Fincera can use to fine-tune its underwriting metrics for its CeraVest platform.

Subsequent to year-end and as discussed in the Company's recent Q1 2016 business update, Fincera announced the launch of AutoChekk, an ecommerce platform for the passenger vehicle industry in China. Built for Chinese consumers, AutoChekk is designed to make researching and purchasing passenger cars or maintenance services convenient and affordable. The platform provides information regarding passenger cars that are available for sale and facilitates purchases. AutoChekk also provides consumers with search tools and a procurement platform for maintenance services. Similar to Fincera's TruShip Logistics feature, payment transactions resulting from connections made on AutoChekk can be completed with CeraPay, and the resulting data can be used to enhance underwriting metrics for CeraVest loans to small businesses.

Financial Review
The Company now classifies its legacy truck-leasing business as a discontinued operation for all periods presented below. Continuing operations consist of the Company's Internet-based business and its property lease and management business. The Company has also updated the classifications in its financial statements to provide more transparent and comprehensive information. The principal reclassifications are related to 1) the reclassification of overdue CeraVest and CeraPay receivables into the balances of loans and other financing receivables, respectively, from accounts receivable; 2) the reclassification of accounts payable and customer deposits into the balance of other payable and accrued liabilities; 3) the reclassification of accounts payable, related parties and due to related parties into financing payable, related parties; and 4) the separate presentation of provision for credit losses, which were previously included in general and administrative expenses.

Full-year 2015

Income (Revenues)

  • Total income for the year ended December 31, 2015, was $56.3 million, compared to $5.4 million in the prior-year period.
           
(in thousands) Year ended
December 31, 2015
    Year ended
December 31, 2014
 
  Amount   % of Revenue     Amount   % of Revenue  
Service charges $ 35,564   63.2 %   $ 301   5.6 %
Interest income   11,021   19.5 %     137   2.5 %
Property lease and management   9,726   17.3 %     4,937   91.9 %
Total income $ 56,311   100.0 %   $ 5,375   100.0 %
                       
  • Service charges, which represents CeraVest origination fees, CeraPay transaction fees, and penalty and late fees for both CeraVest and CeraPay, increased to $35.6 million from $301,000 in the prior-year period, primarily as a result of a significant increase in the amount of CeraPay loans facilitated along with an increase in the volume of CeraPay transactions processed.
  • Interest income, which represents interest earned on CeraVest loans and bank deposits, increased to $11.0 million, or 19.5% of total revenues, during the year ended December 31, 2015, compared to $137,000 in the prior-year period, as a result of the increase in the volume of CeraVest loans facilitated by the Company.
  • Property lease and management from the Company's office-leasing business increased 97.0% to $9.7 million during the period from $4.9 million in the prior-year period, due to a greater percentage of space in the Kai Yuan Finance Center being leased out to tenants.

Net Income

  • Net income from continuing operations for the year ended December 31, 2015, totaled $76,000, or $0.003 per share based on 24.1 million diluted weighted average shares outstanding, from a loss from continuing operations of $16.3 million, or $0.68 per share based on 23.8 million diluted weighted average shares outstanding, in the prior-year period. The swing to net income was primarily due to the ramp-up of the Company's Internet-based business segment.

Balance Sheet Highlights
At December 31, 2015, Fincera's cash and cash equivalents (not including restricted cash) were $62.0 million, working capital was $162.6 million, total liabilities were $494.2 million (including discontinued operations, due to affiliates and accounts payable, related parties), and stockholders' equity was $256.1 million, compared to $26.0 million, $132.7 million, $349.6 million, and $263.1 million, respectively, at December 31, 2014. 

About Fincera Inc.
Founded in 2005, Fincera Inc. (OTCQB: AUTCF) 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 current service offerings include a B2B payment network, a web-based small business lending platform, and a B2B ecommerce marketplace for the trucking industry. 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.

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 meaningfully differ from those set forth in the forward-looking statements:

  • Changing principles of generally accepted accounting principles;
  • Continued compliance with government regulations;
  • Legislation or regulatory environments, requirements or changes adversely affecting the transportation or financial services industry in China;
  • Fluctuations in consumer demand in the transportation industry;
  • Management of rapid growth;
  • General economic conditions;
  • Changes in government policy;
  • China's overall economic conditions and local market economic conditions;
  • The Company's ability to expand through strategic acquisitions;
  • The Company's business strategy and plans, including whether its new financial services products are accepted by consumers;
  • 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 contained in this press release.

   
FINCERA INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE (LOSS) INCOME  
(in thousands except share and per share data)  
   
  Years ended December 31,  
  2015     2014  
               
Income              
Service charges $ 35,564     $ 301  
Interest income   11,021       137  
Property lease and management   9,726       4,937  
Total income   56,311       5,375  
               
Operating Costs and Expenses              
Interest expense   16,694       7,292  
Interest expense, related parties   7,006       1,409  
Provision for credit losses   10,021       209  
Property and management cost   2,063       2,532  
Selling and marketing   3,038       493  
General and administrative   17,139       8,810  
Litigation expense   --       4,350  
Total operating costs and expenses   55,961       25,095  
               
               
Income (loss) from continuing operations before income taxes   350       (19,720 )
Income tax provision (benefit)   274       (3,398 )
Income (loss) from continuing operations   76       (16,322 )
               
Income from discontinued operations, net of taxes   8,205       26,488  
Net income $ 8,281     $ 10,166  
Foreign currency translation adjustment   (15,656 )     (1,172 )
               
Comprehensive (loss) income $ (7,375 )   $ 8,994  
Earnings per share              
Basic              
Continuing operations $ 0.003     $ (0.69 )
Discontinued operations   0.35       1.12  
  $ 0.35     $ 0.43  
               
Diluted              
Continuing operations $ 0.003     $ (0.68 )
Discontinued operations   0.34       1.11  
  $ 0.34     $ 0.43  
               
Weighted average shares outstanding              
Basic   23,550,145       23,549,112  
Diluted   24,080,249       23,840,644  
               
               
               
FINCERA INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands except share and per share data)
 
  December 31,   December 31,
  2015   2014
           
ASSETS          
Current assets          
  Cash and cash equivalents $ 61,957   $ 26,027
  Restricted cash   157     988
  Other financing receivables, net   235,349     12,832
  Loans, net, related party   --     782
  Loans, net   250,659     19,105
  Prepaid expenses, related party   --     50
  Prepaid expenses and other current assets   1,520     645
  Current assets of discontinued operations   104,595     398,062
    Total current assets   654,237     458,491
           
Noncurrent assets          
Property, equipment and leasehold improvements, net   73,817     80,152
Deferred income tax assets   7,011     4,919
Non-current assets of discontinued operations   15,250     69,083
           
Total assets $ 750,315   $ 612,645
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
Current liabilities          
  Short-term bank borrowings (including short-term bank borrowings of the consolidated VIEs without recourse to Fincera of $56,363 and $138,912 as of December 31, 2015 and 2014, respectively) $ 75,921   $ 155,254
  Long-term bank borrowings, current portion (including long-term bank borrowings, current portion of the consolidated VIEs without recourse to Fincera of nil and nil as of December 31, 2015 and 2014, respectively)   13,860     2,451
  Borrowed funds from CeraVest investors, related party (including borrowed funds from CeraVest investors, related party of the consolidated VIEs without recourse to Fincera of $2,716 and nil as of December 31, 2015 and 2014, respectively)   2,716     --
  Borrowed funds from CeraVest investors (including borrowed funds from CeraVest investors of the consolidated VIEs without recourse to Fincera of $202,725 and $88 as of December 31, 2015 and 2014, respectively)   202,725     88
  Financing payables, related parties (including financing payables, related parties of the consolidated VIEs without recourse to Fincera of $58,620 and $9,799 as of December 31, 2015 and 2014, respectively)   106,869     34,072
  Other payables and accrued liabilities (including other payables and accrued liabilities of the consolidated VIEs without recourse to Fincera of $14,334 and $5,501 as of December 31, 2015 and 2014, respectively)   35,806     14,924
  Income tax payable (including income tax payable of the consolidated VIEs without recourse to Fincera of $2,562 and $1,559 as of December 31, 2015 and 2014, respectively)   3,317     1,582
  Current liabilities of discontinued operations (including current liabilities of discontinued operations of the consolidated VIEs without recourse to Fincera of 9,868 and 106,879 as of December 31, 2015 and 2014, respectively)   50,445     117,412
  Total current liabilities   491,659     325,783
           
           
           
FINCERA INC. AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS - Continued  
(in thousands except share and per share data)  
   
  December 31,     December 31,  
  2015     2014  
               
Noncurrent liabilities              
Long-term bank borrowings (including long-term bank borrowings of the consolidated VIEs without recourse to Fincera of nil and nil as of December 31, 2015 and 2014, respectively)   --       14,708  
Non-current liabilities of discontinued operations (including non-current liabilities of discontinued operations of the consolidated VIEs without recourse to Fincera of nil and nil as of December 31, 2015 and 2014, respectively)   2,587       9,102  
Total liabilities   494,246       349,593  
               
Commitments and Contingencies   --       --  
               
Stockholders' equity              
  Preferred shares, $0.001 par value authorized - 1,000,000 shares; issued - none   --       --  
  Ordinary shares - $0.001 par value authorized - 1,000,000,000 shares; issued and outstanding - 23,550,993 shares at December 31, 2015; and $0.001 par value authorized - 100,000,000 shares; issued and outstanding - 23,549,644 shares at December 31, 2014   24       24  
  Additional paid-in capital   329,276       328,884  
  Statutory reserves   27,014       26,222  
  Accumulated deficit   (115,229 )     (122,718 )
  Accumulated other comprehensive income   14,984       30,640  
  Total stockholders' equity   256,069       263,052  
               
    Total liabilities and stockholders' equity $ 750,315     $ 612,645  
                 
                 
                 
FINCERA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
  December 31,  
  2015     2014  
               
Cash flow from operating activities:              
Net Income $ 8,281     $ 10,166  
               
Adjustments to reconcile net income to net cash provided by (used in) operating activities:              
Depreciation and amortization   3,671       3,926  
Provision for credit losses   19,373       13,599  
Deferred income taxes   (5,402 )     (5,203 )
Stock-based compensation expenses   392       1,253  
Changes in operating assets and liabilities, net of acquisitions and divestitures:              
Restricted cash   808       251  
Accounts receivable   (11,111 )     (13,121 )
Other financing receivables from peer store, net   16,513       (12,953 )
Short term net investment in sales-type leases   50,052       (57,328 )
Long-term net investment in direct financing and sales-type leases   270,923       42,984  
Inventories   143       568  
Prepaid expense and other current assets   645       (329 )
Other payables and accrued liabilities   22,085       7,151  
Income tax payable   1,100       (1,070 )
Long-term payable   (6,260 )     147  
Net cash provided by (used in) operating activities   371,213       (9,959 )
               
Cash flow from investing activities:              
  Change in loans   (244,092 )     (20,004 )
  Change in other financing receivables   (239,673 )     (16,716 )
  Purchase of property, equipment and leasehold improvements   (4,433 )     (7,389 )
               
Net cash (used in) investing activities   (488,198 )     (44,109 )
               
Cash flow from financing activities:              
  Changes in borrowed funds from CeraVest investors   213,868       87  
  Proceeds from financing payables, related parties   269,550       761,773  
  Repayment to financing payables, related parties   (288,008 )     (723,508 )
  Proceeds from bank borrowings   149,314       244,089  
  Repayment to bank borrowings   (188,048 )     (233,273 )
               
Net cash provided by financing activities   156,676       49,168  
               
Effect of exchange rate fluctuation on cash and cash equivalents   (3,761 )     (443 )
               
Net increase (decrease) in cash and cash equivalents   35,930       (5,343 )
               
Cash and cash equivalents, beginning of the year   26,027       31,370  
               
Cash and cash equivalents, end of the year $ 61,957     $ 26,027  
               
Supplemental disclosure of cash flow information:              
Interest paid $ 12,759     $ 13,587  
Income taxes paid $ 6,517     $ 11,818  
               

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