Puhui Wealth Investment Management Co. Ltd. Announces Financial Results for the Fiscal Year Ended June 30, 2020

UNTV News   •   October 31, 2020   •   70

BEIJING, Oct. 31, 2020 /PRNewswire/ — Puhui Wealth Investment Management Co., Ltd. (Nasdaq: PHCF) (“Puhui” or the “Company”), a third-party wealth management service provider with a focus on wealth management services for high net worth (“HNW”) individuals and corporate clients, today announced its financial results for the year ended June 30, 2020. The Company also filed these results on Form 20-F with the Securities and Exchange Commission, which can be viewed at www.sec.gov. All amounts in this press release are in USD unless otherwise noted.

Financial and Operating Highlights

  • Revenues for the year ended June 30, 2020 were approximately $2.2 million, compared to approximately $3.2 million in the prior year.
  • The Company continues to add incremental HNW clientele, with new HNW clients transacting with Puhui totaling 116 for the year ended June 30, 2020.
  • As of June 30, 2020, the Company’s subsidiary served as manager or general partner of five funds with an aggregate of approximately $21.6 million under management.
  • As of June 30, 2020, the Company maintained 7 offices based in Beijing (3), Shanghai, Suzhou, Qingdao and Hong Kong.
  • On December 3, 2019, Puhui acquired 100% of the shares of Granville Financial Services Company Limited (“Granville”) for HK$29,390,000, or approximately $3.8 million. The purpose of the acquisition of Granville is to expand the Company’s operations outside of Mainland China into Hong Kong and take advantage of financial qualifications and licenses to broaden the Company’s existing product portfolio.
  • Puhui had approximately $0.7 million of cash and approximately $2.3 million of working capital as of June 30, 2020, as compared to approximately $2.0 million of cash and approximately $7.4 million of working capital as of June 30, 2019.

Mr. Zhe Ji, the Chairman and CEO of the Company, stated, “There was a considerable impact from the COVID-19 pandemic on our business during the past fiscal year, as our offices remained closed between February and June 2020. Since that time, we have begun to see business return due to a combination of strong relationships with our customers along with demand for investment and financial planning expertise in China’s wealth management industry following the pandemic. While it was a challenging period, we did take the opportunity to focus on operational improvements through providing our workforce with the ability to service clients remotely. We are in a stronger position today to handle any potential challenges in the future than prior to the pandemic.”

Mr. Ji continued, “We believe that the fundamental aspects of our independent wealth management business have increased value in the current volatile market environment. HNW clientele across China are continuing to seek an independent advisor that provides access to several investment products without bias. At Puhui, we are solely focused on aligning our available products with whatever financial objectives our clients are seeking. Our acquisition of Granville in December 2019 represented our first entry into the international market, which increases our potential customer base over time. Our focus for the remainder of the year is to add new HNW customers that can take advantage of our product offering, and intend to be active in marketing as well as optimizing our branch network in the coming months.”

Financial Review for the Fiscal Year Ended June 30, 2020

Wealth Management

  • Since fiscal year ended June 30, 2017, Puhui’s core business has been the marketing of financial products to HNW clients and small and medium enterprises in China. As a growing independent wealth management service provider, the Company maintains a sizable client base, consisting of 1,106 clients as of June 30, 2020 (495 of which have purchased products the Company markets more than once). This compares to 990 clients as of June 30, 2019, with 282 purchasing products more than once.

Asset Management

  • Starting in June 2017, Puhui also launched its in-house asset management business. As of June 30, 2020, the Company’s subsidiaries served as manager or general partner of five funds with an aggregate of approximately $21.6 million under management, compared to approximately $23.0 million under management as of June 30, 2019.

Revenues

  • The Company categorizes revenues into third-party revenues and related-party revenues. Revenue mainly includes one-time commission, recurring services fees and recurring management fees. Related party revenues consist primarily of one-time commission fees we charged for our affiliates or management fees we received from fund/limited partnerships where the Company’s subsidiaries serves as manager or general partner.
  • Total revenues were approximately $2.2 million for the year ended June 30, 2020, compared to approximately $3.2 million in the prior year, a decrease of approximately $1.0 million. The overall decline was mainly due to the decrease in one-time commissions and recurring services fees as a result of the decrease in the aggregate value of wealth management products distributed. Puhui’s customers were negatively impacted by the COVID-19 pandemic, which reduced their budgets for investment in 2020.

Cost of Revenues

  • Puhui’s cost of revenues consists of compensation paid to financial product development team members along with benefits. The Company’s cost of revenues were $202,637 and $316,718 for the years ended June 30, 2020 and 2019 respectively, a decrease of $114,081.As the Company experienced slower revenue growth and product distribution, cost of revenue decreased accordingly.

Operating Expense

  • The Company’s operating expenses increased to approximately $6.7 million from approximately $5.7 million in the prior year, an increase of approximately $1.0 million, largely due to an increase in general and administrative expenses. The increase in general and administrative expenses was mainly due to additional consulting fees for business development including the acquisition of Granville. As the Company acquired Granville in December 2019, Granville’s general and administrative expenses and amortization of intangible assets were also included.

Net Loss Attributable to Puhui Wealth

  • Net loss attributable to Puhui Wealth for the year ended June 30, 2020 was approximately $4.0 million, or $(0.35) per basic and diluted share based on 11.5 million weighted average number of ordinary shares, as compared to net loss of approximately $2.5 million, or $(0.23) per basic and diluted share based on 10.8 million weighted average number of ordinary shares for the year ended June 30, 2019.

Liquidity and Capital Resources

  • The Company historically financed its operations primarily through cash flows from operations, additional capital contributions from shareholders and short-term advances from related parties. Going forward, the Company will rely on its cash flows from operations and may have to consider supplementing its available sources of funds through additional borrowings either from financial institutions in China or from its major shareholders.
  • As of June 30, 2020, the Company had cash of approximately $0.7 million, as compared to approximately $2.0 million as of June 30, 2019.
  • As of June 30, 2020, the Company had approximately $2.3 million of working capital.

About Puhui Wealth Investment Management Co., Ltd.

Headquartered in Beijing, China and founded in 2013, Puhui is a third-party wealth management service provider focusing on marketing financial products (including private equity and other diversified products and services) to, and managing funds for, individuals and corporate clients in the PRC. On December 27, 2018, the Company’s ordinary shares were listed and began trading listed on the Nasdaq Capital Market (ticker: PHCF).

Additional information about Puhui can be found at the Company’s corporate website: www.puhuiwealth.com.

Additional Disclosure Concerning COVID-19

The impacts of COVID-19 on Puhui’s business, financial condition, and results of operations include, but are not limited to, the following:

  • The Company temporally closed its offices and implemented work-from-home policy beginning in February 2020, as required by relevant PRC regulatory authorities. We reopened our offices in June 2020 as the situation improved in China.

Forward Looking Statement

This news release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “anticipate”, “believe”, “expect”, “estimate”, “plan”, “outlook”, and “project” and other similar expressions that indicate future events or trends or are not statements of historical matters. These statements are based on our management’s current expectations and beliefs, as well as a number of assumptions concerning future events.

Such forward-looking statements are subject to known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside of our control and all of which could cause actual results to differ materially from the results discussed in the forward-looking statements. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. Factors that could cause actual results to differ materially from those expressed or implied in forward-looking statements can be found in our reports filed with the Securities and Exchange Commission, which are available, free of charge, on the SEC’s website at www.sec.gov.

Investor Relations:

The Equity Group Inc. 

In China

Adam Prior, Senior Vice President 

Lucy Ma, Associate

(212) 836-9606 

+86 10 5661 7012

aprior@equityny.com

lma@equityny.com

                    

                                                 

       

PUHUI WEALTH INVESTMENT MANAGEMENT CO., LTD AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

For the Years Ended June 30,

2020

2019

REVENUES

Revenues

$

1,481,980

$

3,052,371

Revenues – related parties

697,500

128,263

                         Total revenues

2,179,480

3,180,634

OPERATING EXPENSES

Cost of revenues

(202,637)

(316,718)

Selling expenses

(1,517,968)

(2,005,367)

General and administrative expenses

(4,977,537)

(3,427,040)

                         Total operating expenses

(6,698,142)

(5,749,125)

LOSS FROM OPERATIONS

(4,518,662)

(2,568,491)

OTHER INCOME (EXPENSES)

Interest income

74,824

62,967

Other finance expenses

(191,238)

(206,081)

Other income, net

126,858

808

                         Total other income (expenses), net

10,444

(142,306)

LOSS BEFORE INCOME TAXES 

(4,508,218)

(2,710,797)

PROVISION FOR INCOME TAXES

Current

11,803

Deferred

179,449

380,302

                         Total income tax provision

179,449

392,105

NET LOSS

(4,687,667)

(3,102,902)

Less: Net loss attributable to noncontrolling interest

(641,719)

(645,716)

NET LOSS ATTRIBUTABLE TO PUHUI WEALTH

$

(4,045,948)

$

(2,457,186)

NET LOSS

$

(4,687,667)

$

(3,102,902)

OTHER COMPREHENSIVE INCOME (LOSS)

Foreign currency translation adjustment

159,935

(271,194)

COMPREHENSIVE LOSS

$

(4,527,732)

$

(3,374,096)

Less: Comprehensive loss attributable to noncontrolling interest

(650,730)

(672,272)

COMPREHENSIVE LOSS ATTRIBUTABLE TO PUHUI WEALTH

$

(3,877,002)

$

(2,701,824)

WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES

Basic and diluted

11,507,558

10,793,017

EARNINGS PER SHARE 

Basic and diluted

$

(0.35)

$

(0.23)

PUHUI WEALTH INVESTMENT MANAGEMENT CO., LTD AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

June 30,

June 30,

2020

2019

ASSETS

CURRENT ASSETS

Cash

$

744,436

$

2,004,625

Short-term investments

515,729

706,226

Accounts receivables

454,411

1,853,041

  Accounts receivables – related parties

1,138,498

1,013,135

Other receivables

100,302

213,252

Other receivables – related party

1,284,676

1,647,858

Prepaid expenses

1,122,164

1,278,133

Total current assets

5,360,216

8,716,270

PROPERTY AND EQUIPMENT, NET

436,325

223,385

OTHER ASSETS 

Long-term security deposits 

422,783

384,860

Acquisition prepayment

2,447,259

Right-of-use assets

1,285,145

Long-term prepaid expenses

1,599,647

2,247,872

Deferred tax assets, net

159,720

347,195

Intangible asset, net

918,787

10,241

Goodwill

1,864,053

Total other assets

6,250,135

5,437,427

                                        Total assets

$

12,046,676

$

14,377,082

LIABILITIES AND EQUITY

CURRENT LIABILITIES

Acquisition payable

$

368,439

$

Deferred revenue

1,061,162

227,622

Other payables and accrued liabilities

630,457

808,328

Other payables – related party

6,334

Operating lease liabilities – current

841,041

Financing lease liabilities – current

44,791

Taxes payable

86,656

10,512

Current portion of long-term debt

25,835

315,983

Total current liabilities

3,064,715

1,362,445

NON-CURRENT LIABILITIES

Operating lease liabilities – noncurrent

486,970

Financing lease liabilities – noncurrent

68,826

Long-term debt

1,145,825

1,206,565

Total non-current liabilities

1,701,621

1,206,565

                                        Total liabilities

4,766,336

2,569,010

 

 

PUHUI WEALTH INVESTMENT MANAGEMENT CO., LTD AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Continued)

June 30,

June 30,

2020

2019

COMMITMENTS AND CONTINGENCIES

EQUITY

Preferred shares, $0.001 par value, 1,000,000 shares authorized, 0 shares issued and

outstanding as of June 30, 2020 and June 30, 2019

Ordinary shares, $0.001 par value, 49,000,000 shares authorized,

11,508

11,508

11,507,558 shares issued and outstanding

 as of June 30, 2020 and June 30, 2019

Additional paid-in capital

21,911,045

21,911,045

Accumulated deficit

(13,267,289)

(9,221,341)

Accumulated other comprehensive loss

(83,012)

(251,958)

Total equity attributable to controlling shareholders

8,572,252

12,449,254

Noncontrolling interest

(1,291,912)

(641,182)

Total equity

7,280,340

11,808,072

Total liabilities and equity

$

12,046,676

$

14,377,082

 

 

 

PUHUI WEALTH INVESTMENT MANAGEMENT CO., LTD AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended June 30,

2020

2019

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss

$

(4,687,667)

$

(3,102,902)

Adjustments to reconcile net loss to net cash

used in operating activities:

Depreciation and amortization

269,812

135,939

Amortization of operating lease right-of-use assets

795,912

Loss on disposal of property and equipment

78

Impairment loss on equity securities

5,628

Loss from disposal of subsidiaries

32,641

Gain from disposal of marketable securities

(5,271)

Loss from equity method investment

3,547

Deferred tax provision

179,449

380,302

Change in operating assets and liabilities

Accounts receivables

1,356,454

(242,674)

Accounts receivables – related parties

(155,986)

Other receivables

93,383

(402,174)

Prepaid expenses

60,961

(932,928)

Long-term prepaid expenses

644,554

(2,248,912)

Accounts payable

(1,413)

Deferred revenue

847,265

(298,954)

Other payables and accrued liabilities

41,609

156,724

Other payables – related parties

6,384

(190,666)

Operating lease liabilities

(752,682)

Taxes payable

165,353

(426,597)

Net cash used in operating activities

(1,138,336)

(7,134,495)

CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from sales of short-term investments

178,237

365,462

Purchases of short-term investments

(1,425)

(24,347)

Loans receivable to related party

(1,661,514)

Repayment from related parties

318,194

Acquisition prepayment

(2,042,460)

Purchases of property and equipment

(288,372)

(159,514)

Proceeds from sale of property and equipment

990

Cash acquired from Granville, net of purchase price paid

125,365

Purchase of intangible asset

(12,644)

Net cash provided by (used in) investing activities

331,999

(3,534,027)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of ordinary shares through IPO, net

8,032,912

Financing lease liabilities

(24,984)

Principal payments of long-term debt

(309,450)

Net cash (used in) provided by financing activities

(334,434)

8,032,912

EFFECT OF EXCHANGE RATE ON CASH

(119,418)

(168,805)

INCREASE IN CASH

(1,260,189)

(2,804,415)

CASH, beginning of year

2,004,625

4,809,040

CASH, end of year

$

744,436

$

2,004,625

For the Years Ended June 30,

2020

2019

SUPPLEMENTAL CASH FLOW INFORMATION:

Cash paid for income tax

$

240,508

Cash paid for interest

$

192,312

197,999

NON-CASH TRANSACTIONS OF INVESTING AND FINANCING ACTIVITIES

Prepaid IPO costs to be net against IPO proceeds

$

733,478

Initial recognition of right-of-use assets and lease liabilities

$

2,091,977

Acquisition of Granville offset with prepayment

$

2,447,259

Acquisition of Granville with payables

$

368,439

Purchase of fixed asset with financing lease

$

139,566

 

Related Links :

http://www.puhuiwealth.com

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