Puhui Wealth Investment Management Co. Ltd. Announces Financial Results for the Fiscal Year Ended June 30, 2019

BEIJING, October 31, 2019 /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, 2019. The Company will file these results today 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

• Total revenues for the year ended June 30, 2019 were $3.2 million, a decrease from the prior year due to lower one-time fees. The Company implemented a proactively conservative investment strategy on behalf of its clients in the first half of calendar 2019 due to uncertainty in the macroeconomic outlook for the year.
• The Company continues to maintain a sizable client base.  As of June 30, 2019, 990  high-net worth individuals ("HNW") have transacted with the company. 
• As of June 30, 2019, the Company's subsidiary served as manager or general partner of four funds with an aggregate of approximately $23.0 million under management.
• Current financial products consist of 25 financial products, four of which are self-developed and 21 are issued by third-party institutions.
• Continued to expand its strategic cooperation with a well-known investment manager, Yingke Innovation Asset Management Co., Ltd. ("Yingke").
• Puhui had 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, "Puhui continued to service a greater total number of high net worth clientele despite challenges in the macro-economic environment that impacted our financial results for the year, particularly in the first half of calendar 2019. This uncertainty was due to a variety of factors, including a slowdown in growth, rising deflationary pressure, and trade concerns driven by geo-political concerns. This led to general credit tightening throughout the domestic China market, however we have seen this alleviate in recent months as credit growth has accelerated. Our service is predicated on providing prudent financial counsel to individual clients and building a loyal client base with long-term relationships. During uncertain times in the market, we feel that this represents an opportunity for Puhui to distinguish itself from competitors. With access to global markets as a public company, we believe Puhui is well-positioned to diversify its product offering for HNW clientele. We remain focused on utilizing our existing partnerships, such as with Yingke, to provide access to a broader base of investors where we can prove that our long-term investment philosophy can gain traction over time."

Market Commentary

Mr. Ji continued, "We remain very bullish on the long-term indicators surrounding China's wealth management industry, along with Puhui's position as a versatile manager able to provide comprehensive products and services at a competitive rate for a broad audience. According to Credit Suisse's Global Wealth Report 2019, the world's wealthiest 10% hold assets over USD $109,400, with over 100 million individuals who make that threshold residing in China (and is the fastest growing globally). Our target customer base are HNW individuals averaging over USD $200,000. We believe the long-term drivers remain strong and our focus on middle-class family investment through diversified products leave the Company well positioned."

Financial Review

Wealth Management

• Since fiscal year 2017, Puhui's core business has been the marketing of financial products to high-net-worth 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 990 clients as of June 30, 2019 (282 of which have purchased products the Company markets more than once).

Asset Management

• Starting in June 2017, Puhui also launched its in-house asset management business. As of June 30, 2019, the Company's subsidiary served as manager or general partner of four funds with an aggregate of approximately US$23.0 million under management.

Revenues

• The Company categorizes revenues into third party revenues and related party revenues. Related party revenues consist primarily of recurring management fees paid by limited partnership funds where the Company serves as general partner.
• Overall, total revenues were $3.2 million for the year ended June 30, 2019, compared to $4.1 million in the prior year. The overall decrease was mainly due to a decrease in one-time commissions driven by the Company maintaining a cautious approach with its HNW clients due to uncertainty in the macroeconomic outlook in fiscal year 2019.

Cost of Revenues

• Puhui's cost of revenues consist of compensation paid to financial product development team members along with benefits. The Company's cost of revenues were $316,718 and $367,548 for the years ended June 30, 2019 and 2018, respectively. Cost of revenues remained largely consistent from year to year.

Operating Expense

• The Company's operating expense increased to $5.7 million from $3.8 million in the prior year, largely due to an increase in salaries, rent and professional fees associated with public company costs, business expansion, and consulting fees.

Net Loss

• Net loss for the year ended June 30, 2019 was $3.1 million, as compared to net income of $125,827 for the prior year, largely due to the higher operating expenses detailed above.

Liquidity and Capital Resources

• The Company has historically financed its operations primarily through cash flows from operations, additional capital contributions from shareholders and short-term advances from related parties.
• For the year ended June 30, 2019, the Company received approximately $8.0 million, net of expenses, from issuance of ordinary shares from its Nasdaq IPO.
• The Company had approximately $2.0 million of cash and approximately $7.4 million of working capital as of June 30, 2019 and believes its current working capital is sufficient to support operations for the next twelve months.

About Puhui Wealth Investment Management Co., Ltd.

Headquartered in Beijing, China, 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.

Forward Looking Statements

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.