Roan Holdings Group Co., Ltd. Reports Full Year 2020 Financial Results

BEIJING and HANGZHOU, China, May 18, 2021 /PRNewswire/ — Roan Holdings Group Co., Ltd. ("Roan" or the "Company") (OTC Pink Sheets: RAHGF and RONWF), a financial, insurance and healthcare related solutions company serving individuals and micro-, small-, and medium-sized enterprises in China that also provides health management, asset management, insurance technology, healthcare, and consumer financing services to employees of large institutions, today reported its financial results for the twelve months ended December 31, 2020.

Fiscal Year 2020 Highlights:

Net revenues of services, including revenues from services and healthcare service package net of cost, increased by $1.50 million, or 238%, from $0.63 million for the year ended December 31, 2019 to $2.13 million for the year ended December 31, 2020.

Revenues from services increased by $1.49 million, or 233%, from $0.64 million for the year ended December 31, 2019, to $2.13 million for the year ended December 31, 2020.

  • Consulting services relating to debt collection reported significant increase of $1.61 million or 327%, due to the Company’s consolidation of the full year results of Lixin Financial Holdings Group Limited ("Lixin Cayman") and its subsidiaries (collectively "Lixin") operations in 2020. Roan completed the acquisition of Lixin on December 20, 2019.
  • For similar reasons, commissions and fees on financial guarantee services increased by $0.37 million, or 4168%, for the year ended December 31, 2020, as compared to the same period of 2019.

Interest expenses and fees on secured loans decreased by $2.22 million, or 100%, from the year ended December 31, 2019 to $Nil for the year ended December 31, 2020, as all secured loans were repaid during the year ended December 31, 2019. 

Operating income increased by $5.84 million, or 618%, to $4.90 million for the year ended December 31, 2020, as compared to a net operating loss of $0.95 million during the same period of 2019.

 

($ millions, except per share data, differences
due to rounding)

2020

2019

% Change

Net revenues of services

$2.13

$0.63

238%

 Total interest and fee income

$2.48

$2.88

(14%)

Operating (loss) income

$4.90

($0.95)

618%

Net loss from continuing operations

($0.85)

($2.56)

67%

Net income (loss)

($0.85)

$24.29

(104%)

Net earnings (loss) per share – Basic and
Diluted

($0.07)

$0.93

(108%)

Mr. Junfeng Wang, Chief Executive Officer of Roan, commented, "The Company’s business has experienced substantial changes in recent years. We have modified our business models and reduced direct loan business. The Company disposed of the entire direct lending business in September 2020. For fiscal year 2020, the Company was primarily engaged in asset management and financial services, financial guarantee and financial consulting business. Roan also set up subsidiaries in the healthcare industry and started to build long-term relationships with insurance and medical services partners, as well as big data technology partners to provide services in innovative insurance, intelligent diagnosis and treatment and data management. At the same time, the company is developing tumor prevention, tumor adjuvant treatment, postoperative nutritional supplement and rehabilitation related products for patients with cancers, and has obtained the total distribution right of three products."

Mr. Wang continued, "Roan also aims to provide one-stop solutions in customized insurance and health management as the Company continues to bolster innovative applications of technologies in healthcare, artificial intelligence and blockchain within integrated medical, health management and insurance use cases through leveraging the strength of Lixin in sales and marketing channels. The Company is confident that our new business focus will drive new growth as we expand our cooperation with more established companies in other industries and enhance our competitiveness in innovative insurance services, which are expected to generate meaningful financial returns for our shareholders and partners going forward."

Ms. Lifang Lou, Acting Chief Financial Officer, commented, "We were able to deliver stable development momentum as our net revenues reached $2.13 million in 2020, despite the fact that the Company was undergoing major changes of business operations and that the COVID-19 pandemic had an adverse impact on the economic activities in China and the world. The Company also repaid all external loans as we disposed of direct lending business. Looking ahead, we remain committed to maintaining the original scale of financial services, promoting new business development strategies, and further accelerating the integration of insurance and healthcare services, and we believe the above measures will lay a solid foundation for profitability in the long run." 

Fiscal Year 2020 Financial Results

Revenues

Revenues from services increased by $1.49 million, or 233%, from $0.64 million for the year ended December 31, 2019, to $2.13 million for the year ended December 31, 2020. The following table sets forth a breakdown of our revenue by services offered for the years ended December 31, 2020 and 2019:

 

For the years ended
December 31,

Variance

($ millions, differences due to rounding)

2020

2019

Amount

%

Management and assessment services

$

0.02

$

0.14

$

(0.12)

-86%

Consulting services relating to debt collection

2.11

0.49

1.61

327%

Consulting services relating to financial guarantee
   services

0.01

(0.01)

-100%

Revenues from services

$

2.13

$

0.64

$

1.49

233%

 

Management and assessment services

Revenues from management and assessment services decreased by $0.12 million, or 86%. The primary reason of the decrease was due to a majority of revenues from the contracts obtained in 2018 were recognized in the year ended December 31, 2019. In the year ended December 31, 2020, we did not engage in much management and assessment services due to the change of our business focus.

Consulting services relating to debt collection

The Company provides consulting services relating to debt collection with certain factoring companies, through Lixin which were acquired in late December 2019. The significant increase of $1.61 million, or 327%, was because we consolidated a full year of Lixin’s operating results in 2020, whereas in 2019, we only consolidated Lixin’s results of operations from December 20, 2019 to December 31, 2019.

Commissions and fees on financial guarantee services

Commissions and fees on financial guarantee services increased by $0.37 million, or 4168%, for the year ended December 31, 2020, as compared to the same period of 2019. The reason for the increase was because we consolidated a full year of Lixin’s results of operations in 2020, whereas in 2019, we only consolidated Lixin’s results from December 20, 2019 to December 31, 2019.

Interest and fee income

Interest and fee income primarily consisted of interest and fee income generated from factoring business and from loans due from third parties. Interest and fee income decreased by $0.40 million, or 14%, for the year ended December 31, 2020, as compared to the same period of 2019. The reason for the decrease was mainly because Zhiyuan Commercial Factoring (Guangzhou) Co., Limited ("Zhiyuan"), a former subsidiary engaged in factoring business which we sold in September 2020, did not conduct any factoring business during fiscal 2020 due to the Company’s change of business plan. As a result, interest and fee income from factoring business decreased by $2.78 million. The decrease in interest income from factoring business was offset by the increase of $2.13 million in interest income from loans advanced to third parties through our Lixin’s operations after our acquisition of Lixin in December 2019.

Interest expenses and fees on secured loans

Interest expenses and fees on secured loans decreased by $2.22 million, or 100%, from the year ended December 31, 2019 to $Nil for the year ended December 31, 2020. The significant decrease of interest expenses and fees on secured loans was because all secured loans were repaid during the year ended December 31, 2019.

Provision for loan losses

The provisions for loan losses related to our direct loan and secured loan lending business conducted through Feng Hui Ding Xin (Beijing) Financial Consulting Co., Limited ("Ding Xin") before 2020. There were no new direct loans and secured loans issued in fiscal 2020 and we disposed of Ding Xing on September 30, 2020. Therefore, provisions for loan losses decreased by $2.24 million, or 100%, from the year ended December 31, 2019 to $Nil for the year ended December 31, 2020.

Operating expenses

Operating expenses in total increased by $2.74 million, or 200%, for year ended December 31, 2020, as compared to $1.37 million for the year ended December 31, 2019.  The increase was primarily attributable to the increase of $0.60 million in salaries and employee surcharges and an increase of 1.61 million in other operating expenses. The increases in both of these expenses were primarily due to the consolidation of Lixin’s operating expenses for the full year of 2020.

Income tax expenses

Total Income tax expense was a $0.23 million income tax recovery for the year ended December 31, 2020, compared to a  $0.24 million income tax expense for the year ended December 31, 2019, representing an overall decrease of $0.47 million in income tax expenses. The change was due to an increase of $0.58 million in current income tax expenses in fiscal 2020 compared to fiscal 2019. The increase in current income taxes was primarily attributable to the consolidation of Lixin’s results of operations in 2020, as compared to the consolidation of Lixin’s operating results for only a small stub period in 2019. The increase in current income tax expenses was offset by an increase in income tax recovery of $1.1 million in deferred income tax expense in fiscal 2020 compared to fiscal 2019.

Net income (loss) from discontinued operations, net of income tax

During the year ended December 31, 2020, the net income from discontinued corporation, net of income tax is $Nil. The Company, however, recorded a derecognition loss of $1.95 million from the disposition of Ding Xin in September 2020.

Net income

As a result of the foregoing, the Company had a net loss of $0.85 million for the year ended December 31, 2020, as compared to a net income of $24.29 million for the year ended December 31, 2019.

Basic and diluted net earnings (loss) per share

Basic and diluted net loss per share were $0.70 in 2020, compared to net earnings of $0.93 in the same period of 2019.

Cash and cash equivalents

As of December 31, 2020, the Company had cash and cash equivalents of $4.93 million, compared to $6.91 million as of December 31, 2019.

Working capital

The working capital was $48.67 million and $39.45 million, respectively, as of December 31, 2020 and December 31, 2019.

Recent developments

Between January 2020 and January 2021, the Company has established long-term partnerships in the fields of innovative insurance services, smart health medical services, data mining, and operations with a variety of insurance service partners, medical service partners, and technology and big data partners, including Kunlun Health Insurance Co., Ltd. (Zhejiang Branch), Qidi Blockchain Technology Development Corporation, Ruixin Insurance Technology (Ningbo) Co., Ltd, and Yunxin Internet Hospital (Yinchuan) Co., Ltd.

On April 30, 2020, the Company officially launched a one-stop internet insurance and health care service platform after nearly eight months of preparation and systems development. The platform aims to provide modern households with one-stop systematic "customized insurance + health management + family doctor + home medical testing" health management service solutions. This platform enables households and employees of medium to large-sized enterprises to access highly cost-effective, customized health care and insurance solutions, customized insurance products, as well as data management and operational services.

On September 30, 2020, the Company entered into an agreement with Urumqi Fengxunhui Management Consulting Co., Ltd ("Fengxunhui") pursuant to which Fengxuanhui acquired a 100% equity interest in Ding Xin, with a consideration of $15,325 (RMB100,000). Upon closing of the disposition, the Company released all equity interests to Fengxunhui’s shareholders.

About Roan Holdings Group Co., Ltd.

Founded in 2009, Roan Holdings Group Co., Ltd. ("Roan") is a financial, insurance and healthcare related solutions company serving individuals and micro-, small- and medium-sized enterprises ("MSMEs") in China. Roan provides health management, assets management, and insurance, healthcare and consumer financing services to employees of large institutions. Roan has offices in Hangzhou and Beijing and subsidiaries in Hangzhou, Ningbo, Guangzhou, Shaoxing, Urumqi and Tianjin. For more information, please visit: www.roanholdingsgroup.com

Safe Harbor Statement

This announcement 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 relate to, among others, the consummation of the proposed transaction, and can be identified by terminology such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to" or other similar expressions. Such statements are based upon management’s current expectations of the consummation of the proposed transaction, 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. 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.

IR Contact:

At the Company:
Katrina Wu
Email: xiaoqing.wu@roanholdingsgroup.com
Phone: +86-571-8662 1775

Investor Relations:
Janice Wang
EverGreen Consulting Inc.
Email: IR@changqingconsulting.com
Phone: +1 571-464-9470 (from U.S.)
+86 13811768559 (from China)

 

ROAN HOLDINGS GROUP CO., LTD.

CONSOLIDATED BALANCE SHEETS

As of December 31, 2020 and 2019

(Expressed in U.S. dollar, except for the number of shares)

December 31,
2020

December 31,
2019

ASSETS

Current Assets

Cash and cash equivalents

$

4,932,048

$

6,911,592

Restricted cash

25,875,556

15,233,933

Short-term investments

8,610,796

Accounts receivable, net

6,939,352

3,727,017

Inventory

30,348

Loan receivable due from third parties

17,670,652

5,952,223

Due from related parties

94,023

2,906

Other current assets

3,502,550

2,305,642

Other receivables

3,545,753

Total Current Assets

62,590,282

42,744,109

Pledged deposits

462,835

5,597,017

Property and equipment, net

65,073

852,525

Intangible assets, net

3,977,867

4,876,228

Right of use assets

346,017

400,720

Goodwill

261,087

Other noncurrent assets

918,683

Total Assets

$

67,703,161

$

55,389,282

LIABILITIES AND EQUITY

Current Liabilities

Customer pledged deposits

7,664

7,176

Unearned income

130,772

114,615

Reserve for financial guarantee losses

579,364

453,489

Dividends payable

480,000

480,000

Tax payable

1,767,214

1,122,155

Due to related parties

281,369

280,714

Warrant liabilities

13,977

19,938

Operating lease liabilities, current portion

191,643

106,136

Accrued expenses and other liabilities

1,642,060

710,865

Bank loans

8,826,054

Total Current Liabilities

13,920,117

3,295,088

Operating lease liabilities, noncurrent portion

102,767

265,797

Deferred tax liabilities

793,848

1,735,576

Total Liabilities

14,816,732

5,296,461

Commitments and Contingencies

Shareholders’ Equity

Ordinary Share (no par value, unlimited shares authorized; 25,287,851 and
   25,287,851 shares issued and outstanding as of December 31, 2020 and
   2019, respectively)

Class A convertible preferred shares, no par value, unlimited shares
   authorized; 715,000 shares issued and outstanding as of December 31,
   2020 and 2019, respectively

11,025,327

10,338,927

Class B convertible preferred shares, no par value, unlimited shares
   authorized; 291,795,150 and 291,795,150 shares issued and outstanding
   as of December 31, 2020 and 2019, respectively

31,087,732

31,087,732

Additional paid-in capital

3,312,189

3,312,189

Statutory reserve

202,592

658,662

Accumulated deficit

(14,330,288)

(12,407,304)

Accumulated other comprehensive income (loss)

2,310,369

(7,906)

Total Roan Holdings Group Co., Ltd.’s Shareholders’ Equity

33,607,921

32,982,300

Noncontrolling interests

19,278,508

17,110,521

Total Equity

52,886,429

50,092,821

Total Liabilities and Equity

$

67,703,161

$

55,389,282

 

ROAN HOLDINGS GROUP CO., LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

For the Years Ended December 31, 2020 and 2019

(Expressed in U.S. dollar, except for the number of shares)

For the Years Ended
December 31,

2020

2019

Revenues from services

$

2,128,153

$

639,220

Revenues from healthcare service packages

55,301

Cost of revenues

(50,774)

(8,080)

Net revenues of services

2,132,680

631,140

Commissions and fees on financial guarantee services

375,471

8,797

Provision for financial guarantee services

(89,865)

(5,008)

Commission and fee income on guarantee services, net

285,606

3,789

Interest and fees income

Interest and fees on direct loans

1,153

Interest income on loans due from third parties

2,131,447

34,707

Interest income from factoring business

2,782,332

Interest income on deposits with banks

348,389

64,636

Total interest and fee income

2,479,836

2,882,828

Interest expense

Interest expenses and fees on secured loans

(2,218,815)

Net interest income

2,479,836

664,013

Provision for loan losses

(2,244,601)

Net interest (loss) income after provision for loan losses

2,479,836

(1,580,588)

Operating (loss) income

4,898,122

(945,659)

Total operating expenses

Salaries and employee surcharges

(1,116,482)

(512,314)

Other operating expenses

(2,995,098)

(1,385,259)

Changes in fair value of warrant liabilities

5,961

530,863

Total operating expenses

(4,105,619)

(1,366,710)

Other income (expenses)

Deconsolidation loss

(1,953,248)

Other income (expense), net

76,406

Total operating expenses

(1,876,842)

Loss before income taxes

(1,084,339)

(2,312,369)

Total income tax recovery (expenses)

229,733

(244,741)

Net loss from continuing operations

(854,606)

(2,557,110)

Net income (loss) from discontinued operations, net of income tax

26,846,018

Net income (loss)

(854,606)

24,288,908

Dividend – convertible redeemable Class A preferred share

(686,400)

Net income attributable to noncontrolling interests

(838,048)

(76,108)

   Net income (loss) attributable to Roan Holding Group Co., Ltd.’s
   shareholders

$

(1,692,654)

$

23,526,400

Other comprehensive (loss) income

Foreign currency translation adjustment

3,461,980

1,435,262

Reclassified to net gain from discontinued operations

2,691,969

3,461,980

4,127,231

Comprehensive income (loss)

2,607,374

28,416,139

Other comprehensive income attributable to noncontrolling interests

(1,334,101)

(97,733)

Dividend – convertible redeemable Class A preferred share

(686,400)

Net income attributable to noncontrolling interests

(838,048)

(76,108)

   Total comprehensive income (loss) attributable to Roan Holdings
   Group Co., Ltd.’s shareholders

$

435,226

$

27,555,898

Weighted average number of ordinary share outstanding

Basic and Diluted*

25,287,887

25,287,887

Earnings (Loss) per share

Net earnings (loss) per share – Basic and Diluted

$

(0.07)

$

0.93

Net loss per share from continuing operations – Basic and Diluted

$

(0.07)

$

(0.13)

Net earnings (loss) per share from discontinued operations – Basic and
Diluted

$

$

1.06

 

ROAN HOLDINGS GROUP CO., LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2020 and 2019

(Expressed in U.S. dollar, except for the number of shares)

For the Years Ended
December 31,

2020

2019

Cash Flows from Operating Activities:

Net income (loss)

$

(854,606)

$

24,288,908

Less: Net income (loss) from discontinued operations

26,846,018

Net loss from continuing operations

(854,606)

(2,557,110)

Adjustments to reconcile net income to net cash used in operating
activities:

Depreciation and amortization expenses

1,102,298

55,498

Provision for credit losses

316,014

Provision for loan losses

2,244,601

Provision for financial guarantee losses

89,865

5,008

Deferred tax expenses

(1,001,372)

57,674

Changes in fair value of warrant liabilities

(5,961)

(530,863)

Share-based compensation expenses

Net (gain)/loss from disposal of fixed assets

(136,682)

Gain from lease modification

22,257

Accretion of finance leases

14,757

Loss from deconsolidation of subsidiaries

1,953,248

Changes in operating assets and liabilities:

Accounts receivable

(3,116,533)

(206,442)

Inventory

(30,348)

Interest and fees receivable

(149,013)

Other current assets

(3,215,702)

(289,694)

Other receivables

(3,268,571)

Pledged deposits and other non-current assets

359,202

Advances from customers

7,915

(6,702)

Tax payable

1,029,919

273,589

Accrued expenses and other liabilities

352,600

28,875

Other liabilities

(1,079,811)

Net Cash Used in Operating Activities from Continuing Operations

(7,461,511)

(1,074,579)

Net Cash (Used in) Provided by Operating Activities from
Discontinued Operations

(26,564)

Net Cash (Used in) Provided by Operating Activities

(7,461,511)

(1,101,143)

Cash Flows from Investing Activities:

Loans disbursement to factoring customers

(43,422,881)

Repayment of loans from factoring customers

107,833,488

Loans disbursement to third parties

(3,467,607)

Repayment of loans from third parties

Purchases of property and equipment

(833)

Acquisition of a subsidiary

(427,318)

Acquisition of cash from acquired subsidiary

21,442,122

Proceeds from disposal of discontinued operations

504,713

Net inflow related to deconsolidation of subsidiaries

61,121

Investment (redemption) of short-term investment

8,690,374

Due from related party

210,774

Proceeds from sale of property and equipment

837,969

Net Cash Provided by (Used in) Investing Activities from Continuing
Operations

6,332,631

85,929,291

Net Cash Provided by (Used in) Investing Activities from
Discontinued Operations

35,765

Net Cash Provided by (Used in) Investing Activities

6,332,631

85,965,056

Cash Flows from Financing Activities:

Proceeds from private placement, net of issuance costs

Proceeds from private placements, deposited in escrow account

Proceeds from exercise of Series B Warrants

Borrowing from a related party

279,020

Proceeds from bank loans

8,341,311

Proceeds from secured loans

43,422,881

Repayment of secured loans

(107,833,488)

Repayment of third-party loans

(280,268)

Repayment of lease liabilities

(207,891)

Net Cash (Used in) Provided by Financing Activities from Continuing
Operations

7,853,152

(64,131,587)

Net Cash (Used in) Provided by Financing Activities from
Discontinued Operations

(7,251)

Net Cash (Used in) Provided by Financing Activities

7,853,152

(64,138,838)

Effect of exchange rate changes on cash, cash equivalents, and restricted
cash in banks

1,937,807

119,326

Net increase (decrease) in cash, cash equivalents, and restricted cash in
banks

8,662,079

20,844,401

Cash, cash equivalents, and restricted cash in banks at beginning of year

22,145,525

1,301,124

Cash, cash equivalents, and restricted cash in banks at end of year

$

30,807,604

$

22,145,525

Supplemental Cash Flow Information

Cash paid for interest expense

$

$

Cash paid for income tax

$

$

Noncash investing activities

Acquisition of a subsidiary by issuance of Class B Preferred Shares

$

$

31,087,732

Receivable from disposal of discontinued operations

$

$

940,829

Right of use assets obtained in exchange for operating lease obligations

$

$

615,000

 

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the statement of financial position that sum to the total of the same amounts shown in the consolidated statements of cash flows:

December 31,
2020

December 31,
2019

Cash and cash equivalents

$

4,932,048

$

6,911,592

Restricted cash in banks

25,875,556

15,233,933

Total cash, cash equivalents and restricted cash

$

30,807,604

$

22,145,525

 

%d bloggers like this: