Dunxin Financial Holdings Limited Reports Financial Results for the First Six Months of 2019

WUHAN,China,Dec.19,2019 -- Dunxin Financial Holdings Limited ("Dunxin" or the "Company") (NYSE American: DXF),a leading licensed microfinance lender serving individuals and small and medium enterprises (SMEs) in Hubei Province,today announced its unaudited financial results for the first six months of 2019. The unaudited consolidated financial statements and other financial information included in this press release have been prepared in conformity with International Financial Reporting Standards ("IFRS") and stated in Renminbi ("RMB") unless otherwise indicated.

FirstSix Months2019 Highlights

Total outstanding principal balance of loans reached RMB812.8 million (US$118.4 million) as of June 30,2019,representing a decrease of 0.3% from RMB814.9 million as of June 30,2018.

Total interest income reached RMB75.5 million (US$11.0 million) in the first six months of 2019,representing an increase of 49.2% from RMB50.6 million in the same period of the prior year.

Net interest income reached RMB65.5 million (US$9.5 million) in the first six months of 2019,representing an increase of 78.0% from RMB36.8 million in the same period of the prior year.

Net profit was RMB34.5 million (US$5.0 million) in the first six months of 2019,representing an increase of 155.6% from RMB13.5 million in the same period of the prior year.

Earnings per American Depositary Share ("ADS") was US$0.19 in the first six month of 2019,compared to US$0.08 in prior year period.

First Six Months 2019FinancialResults

Interest Income on Loans

Interest income on loans for the first six months of 2019 increased by 49.2% to RMB75.5 million (US$11.0 million)from RMB50.6 million in the same period of the prior year.The increase was primarily attributable to the accrued interest of Stage 3 credit-impaired loans.Accrued interest is the present value of the estimated future cash flows of credit-impaired loans expected to be recovered,discounted at the loan's original effective interest rate.

Interest expense

Interest expenses on loans decreased to RMB9.8 million (US$1.4 million) for the first six months of 2019 from RMB13.6 million in the same period of the prior year. The reduction was mainly due to the decrease in average outstanding borrowings from RMB240.2 million in the first six months of 2018 to RMB203.8 million (US$29.7 million) in the first six months of 2019,which resulted in a RMB1.9 million (US$0.3 million) decrease in the Company's interest expenses on loans. Also,the effective cost of borrowings decreased from 11.3% in the first six months of 2018 to 9.6% in the first six months of 2019,which resulted in a RMB1.9 million (US$0.3 million) decrease in the Company's interest expenses on loans.

Net interest income

Net interest income for the first six months of 2019was RMB65.5 million(US$9.5 million),representing a 78.0% increase from RMB36.8 million in the same period of the prior year.

Credit impairment losses

Credit impairment losses for the first six months of 2019 decreased from RMB11.6 million to RMB11.3 million(US$1.6 million). The credit impairment losses were provided at a similar level last year.

Operation expenses

Sales and marketing expenses for the first six months of 2019 increased to RMB0.6 million (US$0.1 million) from RMB0.5 million in the same period of the prior year. The increase was primarily attributable to the cost incurred in developing the new supply chain finance cloud platform.

General and administrative expenses increased from RMB6.7 million for the first six months of 2018 to RMB7.5 million (US$1.1 million) for the first six months of 2019. The increase was primarily attributable to the increase in certain administrative and miscellaneous expenses.

Net Profit and Earnings per ADS

Net profit was RMB34.5 million (US$5.0 million) for the first six months of 2019,as compared to RMB13.5 million in the same period of the prior year.

Earnings per ADS for the first six months of 2019wasUS$0.19,compared to US$0.08 in the same period of the prior year.

Balance Sheet

As of June 30,the Company had cash and cash equivalents of RMB0.1 million (US$0.02 million) compared to RMB3.2 million as of December 31,2018.

Loans receivable,net of credit impairment losses of RMB405.6 million (US$59.1 million),was RMB620.1 million (US$90.3 million) as of June 30,representing an increase of 7.0% from RMB579.7 million as of December 31,2018,primarily due to the accrued interest of Stage 3 credit-impaired loans. Accrued interest is the present value of the estimated future cash flows of credit-impaired loans expected to be recovered,discounted at the loan's original effective interest rate.

Cash Flow

Net cash generated by operating activities for the first six months of 2019 was RMB2.5 million (US$0.4 million) compared to RMB12.7 million net cash used in operating activities in the same period of prior year.

Safe Harbor Statement

This news release 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 can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "target," "going forward," "outlook" and similar statements. Such statements are based upon management's current expectations and current market and operating conditions,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,which may cause the Company's actual results,performance or achievements to differ materially from those in the forward-looking statements. 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.

Exchange Rate Information

The United States dollar (US$) amounts disclosed in this press release are presented solely for the convenience of the reader. Translations of amounts from Renminbi ("RMB") into United States dollars for the convenience of the reader were calculated at the certified exchange rate of US$1.00 = RMB6.8650 on June 30,2019 as set forth in the H.10 weekly statistical release of the Federal Reserve Board. No representation is made that the RMB amounts could have been,or could be,converted into US$ at that rate on June 30,or at any other date. The percentages stated are calculated based on RMB amounts.

About Dunxin Financial Holdings Limited

Dunxin Financial Holdings Limited ("DXF") is one of the leading licensed microfinance lenders in Hubei Province,China. We have been granted a microfinance license by the Financial Affairs Office of the Hubei Provincial People's Government to provide loans to individuals,small and medium-sized enterprises. We were awarded as the Vice President Unit of China Micro-credit Companies Association under the China Banking Regulatory Commission in January 2017 and the President Unit of Hubei Micro-credit Company Association in December 2017.In 2016,we were recognized as a "National Excellent Microfinance Company" by China Micro-credit Companies Association. We have been named one of the "Top 100 Most Competitive Microfinance Companies in China" by China Microfinance Institution Association for four consecutive years since 2013,an "AA- Credit Rating Enterprise" by China Credit Management Co.,Ltd in August 2017,and a "Top 10 Private Enterprises in Wuchang District,Wuhan City" by the People's Government of Wuchang District in July 2017. The Group has a strong capital base and professional credit business experience in microfinance industry. For more information,please visit the Company's website at www.dunxin.us.

DUNXIN FINANCIAL HOLDINGSLIMITED

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Expressed in Thousands of Chinese Renminbi Yuan,except per share and per ADS amounts)

For the six months ended June 30

2018

RMB

2019

RMB

2019

US$

Interest income on loans

50,606

75,472

10,994

Interest expense:

Interest expenses on loans

(13,619)

(9,766)

(1,422)

Business related taxes and surcharges

(198)

(217)

(32)

Total interest expense

(13,817)

(9,983)

(1,454)

Net interest income

36,789

65,489

9,540

Credit impairment losses

(11,606)

(11,338)

(1,652)

Net interest income after credit impairment losses

25,183

54,151

7,888

Non-interest and other income

174

3

-

Operating costs and expenses

Sales and marketing

(509)

(642)

(94)

General and administrative

(6,720)

(7,505)

(1,093)

Total operating costs and expenses

(7,229)

(8,147)

(1,187)

Profit before income taxes

18,128

46,007

6,701

Income tax expense

(4,580)

(11,502)

(1,675)

Net profit

13,548

34,505

5,026

Other comprehensiveincomefor the period:

Exchange differences on translation of financial

statements of entities outside the mainland of the

People's Republic of China

29

(398)

(58)

Total comprehensiveincome for the period

13,577

34,107

4,968

Netprofit attributable to:

Equity holders of the Company

10,838

27,604

4,021

Non-controlling interests

2,710

6,901

1,005

Net profit

13,026

Total comprehensive income attributable to:

Equity holders of the Company

10,862

27,286

3,975

Non-controlling interests

2,715

6,821

993

Total comprehensive income

13,968

Earningsper share - basic and diluted (in RMB)

0.01

0.03

Earningsper ADS -basic and diluted (in US$)

0.08

0.19

Weighted average shares outstanding in the period('000)

1,000,000

1,862

Weighted average ADS outstanding in the period('000)

20,833

20,851

One ADS represents 48ordinary shares.

DUNXIN FINANCIAL HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Expressed in Thousands of Chinese Renminbi Yuan)

As of

December 31,

June 30,

June 30,

2018

2019

2019

RMB

RMB

US$

Unaudited

Unaudited

Assets

Current assets

Cash and cash equivalents

3,188

139

20

Interest receivables,net of credit impairment losses

7,057

19,298

2,811

Loans receivable,net of credit impairment losses

579,654

620,088

90,326

Prepaid expenses and others

1,038

794

116

Total current assets

590,937

640,319

93,273

Non-current assets

Property and equipment,net

50,824

49,639

7,231

Intangible asset

9

8

1

Total non-current assets

50,833

49,647

7,232

Total assets

641,770

689,966

100,505

Liabilities

Loans payable

200,417

195,608

28,494

Salary and benefit payable

1,411

3,228

470

Income taxes payable

32,477

43,979

6,406

Interest payable

5,139

10,982

1,600

Other payable

35,260

34,200

4,982

Totalcurrent liabilities

274,704

287,997

41,952

Shareholders' equity

Capital and reserve attributable to equity holders of

the Company

Share capital

326

326

47

Additional paid-in capital

383,174

383,174

55,816

Statutory reserve

14,017

14,017

2,042

General risk reserve

9,885

9,885

1,440

Foreign currency translation reserve

(493)

(174)

(25)

Accumulated losses

(113,257)

(85,652)

(12,477)

Non-controlling interests in equity

73,414

80,393

11,710

Total shareholders' equity

367,066

401,969

58,553

Total equity and liabilities

641,505

DUNXIN FINANCIAL HOLDINGSLIMITED

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in Thousands of Chinese Renminbi Yuan)

For the six months ended June 30,

2018

2019

2019

RMB

RMB

US$

Cash flows from operating activities:

Profit before income taxes

18,701

Adjustments for:

Depreciation of property and equipment

202

1,455

212

Amortization of intangible asset

-

1

-

Credit impairment losses

11,606

11,338

1,652

Share-based compensation

297

-

-

Operating profitbefore working capital changes

30,233

58,801

8,565

Interest receivables

(14,028)

(15,228)

(2,218)

Loan receivables

(23,890)

(48,785)

(7,106)

Prepaid expenses and others

(500)

244

35

Advance from customers

(112)

-

-

Salary and benefit payable

(2,378)

1,817

265

Interestpayable

1,450

5,843

851

Other payable

(2,927)

(217)

(32)

Cash (used in)/generated by operating activities

(12,152)

2,475

360

Income tax paid

(509)

-

-

Net cash (used in)/generated byoperating activities

(12,661)

2,475

360

Cash flows from investing activities:

Purchase of property and equipment

(18)

(270)

(39)

Prepayment for property

(11,654)

-

-

Net cash used ininvesting activities

(11,672)

(270)

(39)

Cash flows from financingactivities:

Proceeds received from related party loans

-

17,350

2,527

Repayment of loans to related party

-

(11,800)

(1,719)

Proceeds received from shareholders loans

-

13,000

1,894

Repayment of shareholders loans

-

(3,000)

(437)

Proceeds received from loan payable

200,180

47,300

6,890

Repayments of loan payable

(196,960)

(68,502)

(9,978)

Net cash generated by/(used in) financing activities

3,220

(5,652)

(823)

Net decrease in cash and cash equivalents

(21,113)

(3,447)

(502)

Cash and cash equivalents at beginning of the period

21,717

3,188

464

Exchange (losses)/gains on cash and cash equivalents

(29)

398

58

Cash and cash equivalents at end of the period

575

139

20

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