HONG KONG, Aug. 19, 2020 /PRNewswire/ -- Lion Group Holding
Ltd. ("Lion" or "the Company") (NASDAQ: LGHL), operator of an
all-in-one trading platform that offers a wide spectrum of products
and services with a focus on Chinese investors, today announced its
unaudited financial results for the six months ended June 30, 2020.
First Half of 2020 Financial and Operating Highlights
All comparisons are made on a year-over-year ("yoy")
basis.
- Total revenues decreased by 19.7% to $6.4 million from $8.0
million.
- Net income decreased by 31.3% to $2.4
million from $3.5
million.
- Total number of revenue-generating customer accounts decreased
by 1.7% to 3,980 from 4,047 due to the decline in Lion's insurance
business.
- Total revenue-generating CFD (contract for difference) trading
client accounts increased by 25% to 2,295 from 1,843.
- CFD trading volume decreased by 67.1% to 111,418 lots from
338,873 lots.
- Futures brokerage trading volume decreased by 62.0% to 223,656
lots from 595,554 lots.
- TRS (total return swap) trading volume was $9.1 million in the first half of 2020 and
$11.3 million in July 2020.
Mr. Chunning (Wilson) Wang, CEO
of Lion, commented, "As the COVID-19 outbreak disrupted business
operations around the world in the first half of 2020, our
businesses were negatively affected by border closures in
particular. Travel restrictions in Hong
Kong caused cancellations and prevented management from
attending branding, business promotion, and exhibition activities,
which limited our opportunities to acquire new customers. In
addition, the economic impact of the pandemic negatively affected
our customers, as many are business owners. This caused a decrease
in both their willingness to trade and make investments as well as
their disposable income allocated making such transactions.
Furthermore, our customers' concerns about future unpredictability
due to COVID-19 and heightened geopolitical tensions also caused
their trading activity to decline, impacting our CFD trading
business in particular. Despite these challenges, we are seeing
signs of revenue recovery and believe our business is optimized for
improved performance as normal operations resume."
"We were also able to make progress towards new business
opportunities. We have entered into ISDA master agreements and
related supplementary agreements with CICC and Guotai Junan
Securities, two of the top five swap traders in China. In addition, we recently launched the
total return swap (TRS) trading services in an official capacity,
offering international investors the opportunity to invest in
China's stock market with higher
leverage compared to buying China's stocks directly. We are also pleased
to announce that Lion successfully completed its business
combination in June and is now trading on the NASDAQ under ticker
'LGHL'."
"Uncertainty surrounding the COVID-19 outbreak is a challenge
that our industry, and Lion will continue to navigate in the coming
months, especially with recent flare-ups in our operating
geographies. However, we will continue to closely monitor the
situation, and we remain committed to building and growing our
integrated trading platform to provide pioneering, world-class,
high-quality services to Chinese investors around the world,"
concluded Mr. Wang.
FINANCIAL RESULTS
For the Six Months Ended June 30,
2020:
Revenues
Total revenues were $6.4 million
in the first half of 2020, representing a decrease of 19.7% yoy
from $8.0 million in the first half
of 2019. The decrease was attributable to: (i) a decrease in market
marking commission income; (ii) a decrease in futures and
securities brokerage income; and (iii) a decrease in insurance
brokerage income, partially offset by an increase in CFD trading
profits.
- Revenues generated from CFD trading services were $5.1 million, representing an increase of 9.0%
yoy from $4.7 million in the prior
year period. The Company began offering CFD trading services in
May 2019. Such revenues are derived
from the commissions charged to clients who trade on Lion's
platform, as well as bid/offer spreads and trading profit. Trading
profit increased by $1.6 million,
partially offset by a decrease of $1.1
million in market making commission income. Market making
commission income decreased by 29.2% to $2.7
million for the six months ended June
30, 2020 from $3.8 million for
the six months ended June 30, 2019,
primarily due to the decrease in CFD trading volume to 111,418 lots
from 338,873 lots, which was mainly attributable to the economic
and financial challenges caused by the COVID-19 pandemic and our
customers' concerns about future uncertainty. In addition, travel
restrictions limited our opportunities to acquire new customers. As
a percentage of total revenues, revenues from CFD trading services
comprised of 79.7% of revenues compared to 58.7% in the prior year
period.
- Revenues generated from insurance brokerage services were
$0.6 million, representing a decrease
of 64.9% yoy from $1.8 million in the
prior year period. The decrease was attributable to travel
restrictions in Hong Kong stemming
from the COVID-19 outbreak and the unstable political environment
in Hong Kong, which have
discouraged Chinese clients from purchasing insurance products in
Hong Kong. As a percentage of
total revenues, revenues from insurance brokerage services
comprised of 9.9% of revenues compared to 22.7% in the prior year
period.
- Revenues generated from futures and securities brokerage
services were $0.6 million,
representing a decrease of 57.8% yoy from $1.5 million in the prior year period. The
decrease was attributable to a significant decrease in trading
volume of futures products and securities, primarily caused by the
economic and financial challenges brought on by COVID-19. In
addition, travel restrictions limited our opportunities to acquire
new customers. As a percentage of total revenues, revenues from
futures and securities brokerage services comprised of 9.6% of
revenues compared to 18.3% in the prior year period.
- Revenues generated from other services were $0.05 million, representing an increase of 118.5%
yoy from $0.02 million in the prior
year period, primarily attributable to the increase in interest
income.
Operating expenses
Total operating expenses were $4.1
million in the first half of 2020, representing a decrease
of 9.8% yoy from $4.5 million in the
first half of 2019. The decrease was attributable to a decrease in
commission expenses, partially offset by increases in compensation
expenses, communication and technology, professional fees,
occupancy, and other expenses.
- Commission expenses decreased by 66.5% to $0.8 million from $2.3
million in the prior year period, primarily due to a
decrease in insurance brokerage commission expenses and futures and
securities brokerage commission expenses, which is in line with the
overall decreases in the insurance brokerage business as well as
futures and securities brokerage services.
- Compensation expenses increased by 46.0% to $1.5 million from $1.0
million in the prior year period, primarily due to the
growing number of employees, in line with business growth and an
increase in average compensation.
- Occupancy expenses increased by 36.6% to $0.3 million from $0.2
million in the prior year period, primarily due to the
rental of new office space.
- Communication and technology expenses increased by 28.5% to
$0.47 million from $0.37 million in the prior year period, primarily
due to an increase in trading systems service fees and market data
fees, which was in line with the growth of the Company's CFD
trading services and the launch of its TRS trading services.
- General and administrative expenses decreased by 8.6% to
$0.29 million from $0.32 million in the prior year period.
- Professional fees increased to $0.15
million from $0.06 million in
the prior year period, primarily due to legal and consulting
services fees in relation to the Company's operations in the
Cayman Islands.
- Services fees increased by 41.0% to $0.23 million from $0.16
million in the prior year period due to greater outside
services needed as a result of business growth.
- Interest expenses increased to $0.08
million from almost nil in the prior year period, primarily
due to interest on the outstanding balance from a one-off bridge
loan, as well as interest paid on loans borrowed from Lion's TRS
trading service business partners.
- Other expenses, which comprised of depreciation, marketing
expenses, payment service charges, and other operating expenses,
were $0.3 million compared to
$0.1 million in the prior year
period, mainly due to an increase of US$0.2
million in marketing expenses incurred for the promotion of
Lion's businesses.
Income tax expense
BC Wealth Management Limited, the Company's Hong Kong subsidiary engaging in the insurance
brokerage business, is the only entity within Lion that is subject
to income taxes. Income tax expenses decreased to approximately
$3,000 for the six months ended
June 30, 2020, from $0.06 million for the six months ended
June 30, 2019, primarily resulting
from a decrease in profit before income taxes in the current
period, due to a significant decrease in commission income for
insurance brokerage services.
Net income
As a result of the above, net income was $2.4 million in the first half of 2020 compared
to $3.5 million in the first half of
2019. Diluted net income per ADS was $0.32 in the first half of 2020 compared to
diluted net income per ADS of $0.49
in the first half of 2019.
In the first half of 2020, the Company's weighted average
number of ADSs used in calculating diluted net income per ADS, was
7,461,884 compared to 7,090,381 in the prior year period. As of
June 30, 2020, the Company had a
total of 17,399,176 Class A and B ordinary shares outstanding, or
the equivalent of 17,399,176 ADSs.
Liquidity
As of June 30, 2020, the Company's
cash and restricted cash were $9.6
million (including $1.5
million of restricted cash) compared to $8.6 million (including $2.2 million of restricted cash) as of
December 31, 2019. Net cash provided
by operating activities was $2.1
million. Net cash used in investing activities was
$0.4 million. Net cash used in
financing activities was $0.6
million. The effect of exchange rate changes on cash was
$0.02 million.
BUSINESS OUTLOOK
Based on current market and operating conditions, the Company
expects revenues for the second half of 2020 to be between
$10 million and $13 million.
About Lion
Lion Group Holding Ltd. (NASDAQ: LGHL) operates an all-in-one
trading platform that offers a wide spectrum of products and
services with a focus on Chinese investors. Through its
state-of-the-art technology, Lion offers contract-for-difference
(CFD) trading, total return swap (TRS) trading, insurance
brokerage, futures brokerage, and securities brokerage on its
platform, which can be accessed through applications available on
the iOS, Android, Windows, and macOS systems. Lion's customers are
predominantly well-educated and affluent Chinese individual
investors residing both inside and outside the PRC as well as
institutional clients in Hong
Kong. Additional information may be found at
http://ir.liongrouphl.com.
Safe Harbor Statement
This press release contains "forward-looking statements" within
the meaning of the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995. Although the Company
believes that the expectations expressed in these forward-looking
statements are reasonable, Lion's actual results may differ from
their expectations, estimates and projections and consequently, you
should not rely on these forward-looking statements as predictions
of future events. These forward-looking statements involve known
and unknown risks and uncertainties and are based on current
expectations, assumptions, estimates and projections about the
Company, and the industry in which it operates. Words such as
"expect," "estimate," "project," "budget," "forecast,"
"anticipate," "intend," "plan," "may," "will," "could," "should,"
"believes," "predicts," "potential," "might" and "continues," and
similar expressions are intended to identify such forward-looking
statements. Lion cautions readers not to place undue reliance upon
any forward-looking statements, which speak only as of the date
made. Lion does not undertake or accept any obligation or
undertaking to release publicly any updates or revisions to any
forward-looking statements to reflect any change in its
expectations or any change in events, conditions or circumstances
on which any such statement is based, subject to applicable
law.
CONTACTS
Lion Group Holding Ltd.
Tel: +852 2820 9011
Email: ir@liongrouphl.com
ICR, LLC
William
Zima
Tel: +1 203 682 8233
Email: ir@liongrouphl.com
LION GROUP HOLDING
LTD
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE
GAIN/LOSS
|
(in dollar
amount)
|
|
|
Six months ended
June 30,
|
|
|
|
|
|
2020
|
|
2019
|
Revenue
|
|
|
|
CFD trading
services
|
$
5,126,239
|
|
$
4,703,195
|
Insurance brokerage
services
|
638,574
|
|
1,820,214
|
Futures and securities
brokerage services
|
617,242
|
|
1,461,652
|
Other
|
48,461
|
|
22,180
|
|
6,430,516
|
|
8,007,241
|
|
|
|
|
Expenses
|
|
|
|
Commission
|
762,061
|
|
2,275,430
|
Compensation
|
1,486,160
|
|
1,017,639
|
Occupancy
|
323,224
|
|
236,701
|
Communication and
technology
|
469,662
|
|
365,576
|
General and
administrative
|
292,788
|
|
320,507
|
Professional
fees
|
153,853
|
|
62,622
|
Services
fees
|
231,785
|
|
164,414
|
Interest
|
79,343
|
|
979
|
Other
expenses
|
254,442
|
|
48,246
|
Depreciation
|
21,992
|
|
24,312
|
Marketing
|
199,948
|
|
248
|
Payment service charge
|
19,309
|
|
-
|
Other
operating expenses
|
13,193
|
|
23,686
|
Total
Expenses
|
4,053,318
|
|
4,492,114
|
|
|
|
|
Income before
income taxes
|
2,377,198
|
|
3,515,127
|
|
|
|
|
Income tax
expense
|
(3,321)
|
|
(59,993)
|
Net
income
|
$
2,373,877
|
|
$
3,455,134
|
|
|
|
|
Other
comprehensive income
|
|
|
|
Foreign currency
translation adjustment
|
20,560
|
|
(39,839)
|
Comprehensive
income
|
$
2,394,437
|
|
$
3,415,295
|
|
|
|
|
Earnings per share -
basic and dilutive (i)
|
$
0.32
|
|
$
0.49
|
|
|
|
|
Weighted average
number of ordinary shares(i)
|
7,461,884
|
|
7,090,381
|
|
(i) Share and per
share data have been retroactively restated to give effect to the
business combination which was completed
on June 16, 2020 and accounted for as a reverse
recapitalization.
|
LION GROUP HOLDING
LTD
|
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(in dollar
amount)
|
|
|
|
|
|
June
30,
|
|
December
31,
|
|
|
|
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
8,111,409
|
|
$
6,388,978
|
|
|
|
Restricted cash -
Bank balances held on behalf of customers
|
1,470,486
|
|
2,192,201
|
|
|
Securities owned, at
fair value
|
|
9,424
|
|
180,201
|
|
|
|
Derivatives, at fair
value
|
|
11,069
|
|
194,110
|
|
|
|
Receivables from
broker-dealers and clearing organizations
|
18,703
|
|
20,409
|
|
|
Receivables from
broker-dealers and clearing
|
|
|
|
|
|
|
|
organizations -
customer accounts
|
|
2,182,623
|
|
1,664,552
|
|
|
|
Commissions
receivable
|
|
60,839
|
|
88,560
|
|
|
|
Short-term loans
receivable
|
|
2,087,593
|
|
1,637,310
|
|
|
|
Other
receivable
|
|
306,368
|
|
166,064
|
|
|
|
Prepaids, deposits
and other
|
|
452,385
|
|
510,291
|
|
|
|
Fixed assets,
net
|
|
53,186
|
|
73,688
|
|
|
|
Intangible
asset
|
|
86,762
|
|
67,964
|
|
|
|
Other
assets
|
|
219,558
|
|
233,343
|
|
|
|
Deferred
taxes
|
|
198
|
|
677
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
15,070,603
|
|
$
13,418,348
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Payables to
customers
|
|
$
3,044,689
|
|
$
3,853,693
|
|
|
|
Payable to
broker-dealers
|
|
607,132
|
|
-
|
|
|
|
Commissions
payable
|
|
16,953
|
|
29,439
|
|
|
|
Dividends
payable
|
|
-
|
|
385,901
|
|
|
|
Other
payables
|
|
1,149,637
|
|
417,445
|
|
|
|
Short-term
borrowings
|
|
621,101
|
|
1,412,570
|
|
|
|
Short-term borrowings
from related party
|
|
-
|
|
128,415
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
5,439,512
|
|
6,227,463
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and
Contingencies
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
Preferred shares,
$0.0001 par value, 50,000,000 shares authorized,
|
|
|
|
|
none issued and
outstanding as of June 30, 2020 and
|
|
$
-
|
|
$
-
|
|
|
|
December 31, 2019,
respectively
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A ordinary
shares, $0.0001 par value, 300,000,000 shares
|
|
|
|
|
|
authorized, 7,647,962
and 3,140,388 shares issued and outstanding
|
|
|
|
|
|
at June 30, 2020 and
December 31, 2019, respectively (i)
|
|
765
|
|
314
|
|
|
|
|
|
|
|
|
|
|
|
|
Class B ordinary
shares, $0.0001 par value, 150,000,000 shares
|
|
|
|
|
|
authorized, 9,751,214
and 3,949,993 shares issued and outstanding
|
|
|
|
|
|
at June 30, 2020 and
December 31, 2019, respectively (i)
|
|
975
|
|
395
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional paid in
capital (i)
|
|
7,649,772
|
|
7,605,034
|
|
|
Retained earnings
(accumulated deficit)
|
|
1,996,974
|
|
(376,903)
|
|
|
Accumulated other
comprehensive income (losses)
|
|
(17,395)
|
|
(37,955)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
equity
|
|
9,631,091
|
|
7,190,885
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
and equity
|
|
$
15,070,603
|
|
$
13,418,348
|
|
|
|
(i) Par value of
ordinary shares, additional paid-in capital and share data have
been retroactively restated to give effect to the
reverse recapitalization.
|
LION GROUP HOLDING
LTD
|
UNAUDITED SUMMARY
OF CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
DATA
|
(in dollar
amount)
|
|
|
Six months ended
June 30,
|
|
2020
|
2019
|
|
|
|
Net cash provided by
operating activities
|
$
2,061,335
|
$
4,189,410
|
Net cash used in
investing activities
|
(447,673)
|
(9,832)
|
Net cash used in
financing activities
|
(631,692)
|
(4,432,953)
|
Effect of exchange
rate changes on cash
|
18,746
|
(39,997)
|
Net increase
(decrease) in cash
|
1,000,716
|
(293,372)
|
Cash and restricted
cash at beginning of period
|
8,581,179
|
7,108,158
|
Cash and
restricted cash at end of period
|
$
9,581,895
|
$
6,814,786
|
View original
content:http://www.prnewswire.com/news-releases/lion-announces-unaudited-first-half-of-2020-financial-results-301114550.html
SOURCE Lion Group Holding Ltd.