J and Friends Holdings Limited (JF) 2020 Q4 法說會逐字稿

Good day, and welcome to the PINTEC Full Year 2020 Financial Results Conference Call. (Operator Instructions) Please note, this event is being recorded.

大家好，歡迎參加品鈦2020年全年財務業績電話會議。（操作員指示）請注意，此事件正在記錄中。

I would now like to turn the conference over to Joyce Tang. Please go ahead.

現在我想將會議交給 Joyce Tang。請繼續。

Thank you, operator. Hello, everyone, and welcome to PINTEC's 2020 Full Year Earnings Conference Call. The company's financial and operational results were issued earlier today and are posted online. You can also view the earnings press release by visiting the IR website at ir.pintec.com. A replay of the call will be available on the IR website in a few hours.

謝謝您，接線生。大家好，歡迎參加品鈦2020年全年業績電話會議。該公司的財務和營運結果已於今天稍早發布並在網路上公佈。您也可以造訪 IR 網站 ir.pintec.com 查看收益新聞稿。通話重播將於幾個小時後在 IR 網站上提供。

Participants on today's call will be Mr. Huike Li, CEO of PINTEC; and Mr. Steven Sim, CFO of PINTEC. Management will begin with the prepared remarks, and the call will conclude with a Q&A session.

今天電話會議的參與者包括品鈦執行長李輝科先生；以及品鈦財務長Steven Sim先生。管理階層將以準備好的發言開始會議，最後以問答環節結束會議。

Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provision of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in the company's prospectus and other public filings as filed with the U.S. Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements, except as required under applicable law.

在我們繼續之前，請注意，今天的討論將包含根據 1995 年美國私人證券訴訟改革法案的安全港條款做出的前瞻性陳述。前瞻性陳述涉及固有風險和不確定性。因此，該公司的業績可能與今天表達的觀點有重大差異。有關這些和其他風險和不確定因素的更多資​​訊包含在公司向美國證券交易委員會提交的招股說明書和其他公開文件中。除適用法律要求外，該公司不承擔更新任何前瞻性聲明的義務。

Please also note that PINTEC's earnings press release and this conference call include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. PINTEC's press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures.

另請注意，PINTEC 的收益新聞稿和本次電話會議包括未經審計的 GAAP 財務資訊以及未經審計的非 GAAP 財務指標的討論。PINTEC 的新聞稿包含未經審計的非 GAAP 指標與未經審計的最直接可比較 GAAP 指標的對帳。

I will now turn the call over to our CEO. Mr. Huike Li, please go ahead okay.

現在我將把電話轉給我們的執行長。李慧科先生，請繼續，好嗎？

Okay. Thank you, Joyce. Hello, everyone, and thanks for joining today's call. Before I start, I wish you and your families are staying safe and healthy. In today's call, I will first review our 2020 performance. Then I'll discuss some updates on our strategic initiatives in delivering long-term value.

好的。謝謝你，喬伊斯。大家好，感謝您參加今天的電話會議。首先，我祝福您和您的家人平安健康。在今天的電話會議上，我將首先回顧我們2020年的表現。然後我將討論我們在實現長期價值方面的一些策略舉措的最新進展。

As expected, 2020 was probably the most challenging operating environment in the history of PINTEC as we were affected by the unprecedented global pandemic. However, 2020 was also a pivotal year in which we initiated our business transformation in eliminating legacy services, optimizing product mix and corporate structure, controlling operating expenses and reducing risky assets. As you may recall, in 2020, our business has been restructured into digital technical services and digital operation services. And our long-term strategy is to augment the revenue and the profitability of digital technical services by increasing recurring revenue, while stabilize digital operation services, by refining asset quality.

正如所料，由於受到前所未有的全球疫情的影響，2020 年可能是品鈦歷史上最具挑戰性的經營環境。然而，2020年也是我們啟動業務轉型的關鍵一年，包括淘汰老舊服務、優化產品組合和公司架構、控制營運費用和降低風險資產。大家可能還記得，2020年，我們的業務已重組為數位化技術服務和數位化營運服務。我們的長期策略是透過增加經常性收入來增加數位技術服務的收入和獲利能力，同時透過改善資產品質來穩定數位營運服務。

Given this backdrop for full year 2020, while our revenue has been significantly impacted by a decline of 71% comparing to 2019, we are in full speed executing a lot our defined strategy. And I would like to mention a few of our achievements and wins in demonstrating our technical advancement and business partnerships. Firstly, for digital technical services business, which includes digital retail credit management, corporate credit process management, intelligent wealth management, financial robotic process automation and digital banking transformation. We now have over 400 corporate clients and further diversifying our revenue sources.

鑑於 2020 年全年的背景，雖然我們的收入與 2019 年相比下降了 71%，但我們仍在全速執行許多既定的策略。我想提及我們在展示技術進步和商業夥伴關係方面取得的一些成就和勝利。一是數位化技術服務業務，包括數位化零售信貸管理、企業信貸流程管理、智慧財富管理、金融機器人流程自動化、數位銀行轉型等。我們目前擁有超過400家企業客戶，收入來源也進一步多元化。

In addition, we are focused on revamping our revenue model from the traditional loan facilitation, transaction-driven nature to recurring revenue of software services and infrastructure sales. For 2020, we are pleased to report that this recurring revenue contribution has increased from RMB 5.6 million to RMB 21 million in 2020, increased close to 3x compared to 2019. Although it is still in early stage, but it showed a good momentum, and we believe it will continue to drive the growth.

此外，我們致力於轉變我們的收入模式，從傳統的貸款便利化、交易驅動轉變為軟體服務和基礎設施銷售的經常性收入。對於 2020 年，我們很高興地報告，這項經常性收入貢獻已從人民幣 560 萬元增加到 2020 年的 2,100 萬元，與 2019 年相比增長了近 3 倍。雖然還處於早期階段，但表現出了良好的勢頭，我們相信它將繼續推動成長。

As our revenue model evolves, our intention is to continue to deepen contractual services with the existing and large corporate partners while expanding our services to small and medium regional financial institutions. We are seeing some early success as we leverage our core AI capabilities and retail loan expertise in empowering clients in their digital transformation efforts and channel expansion. For example, for domestic clients such as China Telecom, Bestpay, who has been our long-term partner, we initially began our relationship in installment loan. Now we have significantly expanded our collaboration into risk analysis and management as well as various software model and system designs and implementation.

隨著我們的收入模式不斷發展，我們的目標是繼續深化與現有大型企業合作夥伴的合約服務，同時將我們的服務擴展到中小型區域金融機構。我們利用核心人工智慧能力和零售貸款專業知識幫助客戶進行數位轉型和通路擴展，並取得了一些早期成功。例如國內客戶，像是我們的長期合作夥伴中國電信、百思買，我們最初的合作就是從分期貸款開始的。現在我們已將合作範圍大大擴展到風險分析與管理以及各種軟體模型和系統的設計和實施領域。

We also gained a few new mandates from domestic companies in 2020, such that Industrial and Commercial Bank of China has accepted our SME risk and account management solutions for its micro and SME lending business. We partnered with Aspire, a subsidiary of China Mobile, in enabling its intelligent fintech solutions and digitization, especially for 5G applications. We also completed the Phase I digitization of the supply chain financing operation for China Dili Group, who is one of the largest agriculture product wholesalers in China.

2020年，我們也獲得了一些國內公司的新授權，例如中國工商銀行已接受了我們的中小企業風險和帳戶管理解決方案，用於其小微及中小企業貸款業務。我們與中國移動旗下Aspire合作，協助其實現智慧金融科技解決方案與數位化，尤其是5G應用。我們也完成了中國最大的農產品批發商之一中國地利集團供應鏈融資業務第一階段的數位化。

For overseas expansion, we successfully partnered with Janko and Wagepay respectively, in launching next-generation online lending platform, leveraging our end-to-end modularized digital lending capabilities to offer unsecured loans quickly and efficiently in Australia. Earlier in 2021, we also signed a strategic partnership with Judo Bank of Australia in order to provide cloud-based intelligent credit installment solutions with upgraded credit process management. Our other collaboration with Swiss Bank, UOB Bank and Toyota Finance continue to be on track as we expand throughout Europe, Oceania and Africa. This overseas market penetrations are strong testaments of our capabilities in competing and winning against global players.

在海外擴張方面，我們成功與Janko和Wagepay合作，推出了下一代線上借貸平台，利用我們端到端的模組化數位借貸能力在澳洲快速且有效率地提供無擔保貸款。早在2021年，我們也與澳洲Judo Bank簽署了策略合作夥伴關係，以提供基於雲端的智慧信貸分期解決方案和升級的信貸流程管理。隨著我們業務擴展到歐洲、大洋洲和非洲，我們與瑞士銀行、大華銀行和豐田金融的其他合作也繼續順利進行。這個海外市場滲透有力地證明了我們與全球競爭對手競爭並獲勝的能力。

Next for digital operations services business, which mainly includes our traditional license loan origination and facilitation. As we mentioned in the last call in 2020, we continue to actively prioritize asset quality over asset quantity, reduced risk-taking collaboration, enhanced profit sharing model, partner with high-caliber industry leaders and expand the market into -- and expand the market to incorporate more of our digital technical services and solutions.

接下來是數位營運服務業務，主要包括我們傳統的許可證貸款發放和協助。正如我們在 2020 年上次電話會議中提到的那樣，我們繼續積極優先考慮資產品質而不是資產數量，減少風險協作，增強利潤分享模式，與高素質的行業領導者合作並擴大市場——並擴大市場以納入更多的數位技術服務和解決方案。

This strategic decision has resulted in our total revenue decline for 2020, primarily because our total facilitated loan volume decreased by 83% year-over-year to CNY 1.8 billion. However, the risk-free loan facilitation has significantly increased to about 50% of the total loan volume in 2020 compared to 30% in 2019, which means we are on track in enhancing our risk profile. In the long term, we are confident that this will allow us to redeploy resources, strengthen our core digital technical services business and enhance the quality of revenue composition.

這項策略決策導致我們2020年的總收入下降，主要是因為我們的總貸款金額較去年同期下降83%至人民幣18億元。然而，無風險貸款便利化已大幅增加至 2020 年總貸款額的 50% 左右，而 2019 年僅為 30%，這意味著我們正在改善風險狀況。從長遠來看，我們相信這將使我們能夠重新部署資源，加強我們的核心數位技術服務業務並提高收入組成的品質。

For some updates. Our micro-lending company, Ganzhou Aixin, is now formally interfaced into Bank of China's credit data center, which with full-scale access to real-time credit data reports and inquiries. Ganzhou Aixin is a very first Internet micro-loan company in Jiangxi province to be linked directly into Bank of China. Toward the end of 2020, we have also started to focus on the expansion of our insurance brokerage business, leveraging our insurance brokerage license and exploring new channels.

獲取一些更新。我們旗下的小額貸款公司贛州愛信現已正式接入中國銀行徵信資料中心，全面開放即時信用資料報告及查詢。贛州愛信是江西省第一家與中國銀行直連的網路小額貸款公司。2020年末，我們也開始專注於拓展保險經紀業務，利用保險經紀牌照，探索新的通路。

Now let me provide some updates on our broader array of strategic initiatives and outlook into 2021. But please be reminded that there are still some uncertainties from a global pandemic. Firstly, on a macro level, the global pandemic and the increasingly stringent regulatory oversight from Chinese government are actually accelerating digitization from financial institutions in order to fulfill the demand from end customers. It is estimated that in 2020, fintech investment in China was about USD 30 billion, representing an annual growth of 14% compared to 2019 according to iResearch. Therefore, we see immense potential of digital transformation from these disruptions, which are our opportunities as we are all well positioned in this sector with long proven track records of all around innovation and execution.

現在，讓我為我們更廣泛的策略舉措和 2021 年展望提供一些最新資訊。但請記住，全球疫情仍存在一些不確定性。首先，從宏觀層面來看，全球疫情和中國政府日益嚴格的監管實際上正在加速金融機構的數位轉型，以滿足終端客戶的需求。根據艾瑞諮詢估計，2020年中國金融科技投資規模約300億美元，較2019年年增14%。因此，我們在這些顛覆性變革中看到了數位轉型的巨大潛力，這也是我們的機遇，因為我們在這個領域佔據著有利地位，並且在創新和執行方面擁有長期的成功經驗。

Secondly, we'll continue to invest into our technical talent and advancements, especially for AI, big data, machine learning in order to enhance our capabilities in digital transformation and stay at the forefront of the fintech industry. Our target is to better enable our partners in a more integrated, automated and fast operation with reduced cost and risks. This drives our focus on product and service advancement and optimization as well as further overseas expansion in order to capture global growth opportunities.

其次，我們將持續增加對技術人才和技術進步的投入，特別是人工智慧、大數據、機器學習等領域，以增強我們的數位轉型能力，維持我們在金融科技產業的領先地位。我們的目標是更好地幫助我們的合作夥伴實現更一體化、自動化和快速的運營，同時降低成本和風險。這促使我們專注於產品和服務的進步和優化以及進一步的海外擴張，以抓住全球成長機會。

Now specifically for digital technical services business, we'll continue to leverage our domain expertise and technical innovation in optimizing standardized modules and collaborating with partners for customized module development in order to provide end-to-end fully digitized solutions of retail SME loan origination, servicing, funding, collection, risk analysis and customer management for both existing and potential corporate clients.

具體到數位技術服務業務，我們將繼續利用我們的領域專業知識和技術創新來優化標準化模組，並與合作夥伴合作開發客製化模組，以便為現有和潛在的企業客戶提供零售中小企業貸款發放、服務、融資、收款、風險分析和客戶管理的端到端全數位化解決方案。

In terms of further business expansion, we are open to collaboration with local government entities in establishing big data platform in empowering SMEs for funding and risk management. We are also excited about duplicating our retail loan successes overseas as we deepen our partnership in order to upsell and cross-sell to our other services, such as wealth management.

在進一步業務擴展方面，我們願意與地方政府實體合作建立大數據平台，為中小企業提供融資和風險管理的支援。我們也很高興能夠在海外複製我們的零售貸款成功，同時深化我們的合作夥伴關係，以便對我們的其他服務（如財富管理）進行追加銷售和交叉銷售。

Next for digital operation services business, we'll continue to leverage our internet micro loan license to originate and facilitate retail loans in compliance to regulations and to our internally more stringent risk profile. We expect this business revenue to continue to stabilize. Our data analysts and engineers mined this data with cutting-edge AI techniques and machine learning to continuously refine and optimize risks and underwriting terms. So we will continue to leverage this business in building proprietary software and systems to deliver seamless, highly automated and broadened access to retail credit with unique customer experiences. In addition, we are extending this data and technology advantages into our insurance business for 2021.

接下來，對於數位營運服務業務，我們將繼續利用我們的網路小額貸款許可證來發放和促進零售貸款，以符合法規和我們內部更嚴格的風險狀況。我們預計該業務收入將持續穩定。我們的數據分析師和工程師利用尖端的人工智慧技術和機器學習挖掘這些數據，以不斷改進和優化風險和承保條款。因此，我們將繼續利用這項業務建立專有軟體和系統，以提供無縫、高度自動化和更廣泛的零售信貸管道以及獨特的客戶體驗。此外，我們將把這些數據和技術優勢延伸到2021年的保險業務。

Aside from organic growth execution for both of our business units, we are also actively engaged in mergers and acquisitions in order to accelerate our growth plan, especially under the current environment. Our M&A strategy to broaden our overall offerings, pioneer advanced technology, build deeper relationships in fulfilling client infrastructure and software needs as well as geographical expansion with complementary market penetration. So recently, as you can refer to our press releases, we are very excited to have added a new partner of talented teams with proven operating capabilities, product diversification and in-depth technology know-how. This will further accelerate our capabilities in servicing our corporate partners in order to drive growth and shareholder value.

除了實現兩個業務部門的有機成長外，我們還積極參與併購，以加速我們的成長計劃，尤其是在當前環境下。我們的併購策略旨在拓寬我們的整體產品範圍、開拓先進技術、建立更深層的關係以滿足客戶基礎設施和軟體需求，以及透過互補的市場滲透實現地域擴張。因此最近，正如您所參考的我們的新聞稿，我們非常高興地增加了一個新的合作夥伴，該合作夥伴擁有經過驗證的營運能力、產品多樣化和深入的技術知識的才華橫溢的團隊。這將進一步加速我們為企業合作夥伴提供服務的能力，以推動成長和股東價值。

Finally, having discussed all the strategic initiatives, well, I want to emphasize that we have and will continue to be very disciplined on our cost containment and liquidity protection in order to minimize the overall impact on our business fundamentals, which Steven will discuss further later.

最後，在討論了所有戰略舉措之後，我想強調的是，我們已經並將繼續嚴格控製成本和流動性保護，以盡量減少對我們業務基本面的整體影響，史蒂文稍後將進一步討論這一點。

So in summary, 2020 was a challenging year in many aspects. We worked very hard as a company in revamping business models, in realigning a stronger business foundation and in navigating those challenges to continue to deliver differentiated values to our clients. We now see great opportunities as people change the way they live, work and consume. We remain committed and focused on executing our clear strategy of innovation and scalability in order to deliver long-term shareholder value. We greatly appreciate the dedication from our employees as well as the continued trust and support from our partners and shareholders.

總而言之，2020 年在許多方面都是充滿挑戰的一年。作為一家公司，我們非常努力地重塑商業模式，重新調整更強大的業務基礎，並應對這些挑戰，以繼續為我們的客戶提供差異化的價值。隨著人們生活、工作和消費方式的改變，我們現在看到了巨大的機會。我們將繼續致力於並專注於執行明確的創新和可擴展性策略，以實現長期股東價值。我們非常感謝員工的奉獻精神以及合作夥伴和股東的持續信任和支持。

With that, I will turn the floor over to our CFO, Steven Sim, to review our financial results in more details.

接下來，我將把發言權交給我們的財務長史蒂文·西姆 (Steven Sim)，讓他更詳細地審查我們的財務結果。

Thank you, Victor. Hello, everyone. I'd like to begin by echoing Victor's sentiment that all of you and your families stay safe and healthy.

謝謝你，維克多。大家好。首先，我想與維克多一樣祝福大家和家人平安健康。

Before I start the full year 2020 financial discussion, I would like to make some comments. Firstly, as already mentioned by Victor, the unprecedented pandemic and our internal business transformation in 2020 significantly impacted our top and bottom lines. However, as we intensely review and lay out our business foundations, we believe these uncertainties are short term. Second, given the macroeconomic headwind and the domestic PRC regulatory tightening of the financial markets, we had to undertake several onetime write-offs, including impairments for goodwill, intangibles and investments, totaling RMB 85.3 million, which represents about 30% of our net losses for 2020. We do not expect any future financial impact from these items.

在開始2020年全年財務討論之前，我想發表一些評論。首先，正如 Victor 所提到的，2020 年前所未有的疫情和我們的內部業務轉型對我們的營收和利潤產生了重大影響。然而，當我們深入審查和規劃我們的業務基礎時，我們相信這些不確定性是短期的。其次，鑑於宏觀經濟逆風和中國國內金融市場監管收緊，我們不得不進行幾項一次性核銷，包括商譽、無形資產和投資減值，總額為人民幣 8,530 萬元，約占我們 2020 年淨虧損的 30%。我們預計這些項目不會對未來財務產生任何影響。

Thirdly, as part of our business transformation, we made a difficult decision to aggressively cut our expenses where necessary. So unfortunately, we had to reduce head count by 39% and all other associated costs in 2020. However, we will focus on continued investment into our core talents and capabilities, disciplined cost management as well as enhance our balance sheet and liquidity position, which can be demonstrated by our successful RMB 400 million financing in 2020.

第三，作為業務轉型的一部分，我們做出了一個艱難的決定，在必要時大幅削減開支。因此，很遺憾，我們不得不在 2020 年裁員 39%，並削減所有其他相關成本。然而，我們將專注於繼續投資於我們的核心人才和能力，嚴格的成本管理，以及改善我們的資產負債表和流動性狀況，這可以從我們在2020年成功獲得4億元人民幣的融資中得到證明。

Finally, mergers and acquisition will be another pillar of growth driver for future development as demonstrated by our recent announced acquisition of Riche Bright, which is a licensed security brokerage firm and Jishengtai, which is a securities technology firm, which is the core technological background of Riche Bright. We believe in the value that these 2 acquisitions will create going forward. They will lay the foundation of our wealth management business in the future. We are focused on long-term synergistic values in terms of business model, management philosophy, technical empowerment, team talents, while we are also very prudent in reviewing financial leverages and growth potentials.

最後，併購將成為未來發展的另一個成長動力支柱，正如我們最近宣布收購持牌證券經紀公司Riche Bright和證券技術公司吉盛泰（Riche Bright的核心技術背景）所證明的那樣。我們相信這兩次收購將在未來創造的價值。為我們未來的財富管理業務奠定了基礎。我們著重商業模式、管理理念、技術賦能、團隊人才等長期協同價值，同時也審慎檢視財務槓桿與成長潛力。

Now turning over to our financial results for 2020. And as usual, please note that all numbers stated in the following remarks are in RMB terms and all comparisons are for a year-over-year basis, unless otherwise specified. Total revenues for full year 2020 decreased by 70.6% and year-over-year to RMB 378.3 million. In terms of revenue breakdown, technical service fees for 2020 decreased by 69.3% to RMB 330.7 million, mainly due to the decrease in off-balance sheet loans facilitated during the period. As part of our business changes in actively minimizing our risk-bearing loans, the total loan volume facilitation was CNY 1.8 billion in 2020 compared with that of 1.1 -- sorry, compared with that of CNY 11 billion in 2019. However, the risk-free loans facilitator was increased from 30% in 2019 to 50% in 2020.

現在來看看我們 2020 年的財務表現。和往常一樣，請注意，除非另有說明，以下備註中顯示的所有數字均以人民幣計算，且所有比較均為同比計算。2020年全年總收入年減70.6%至人民幣3.783億元。從收入組成來看，2020年技術服務費收入減少69.3%至3.307億元，主要由於期內促成的表外貸款減少。作為我們積極減少風險貸款的業務變革的一部分，2020 年的總貸款額為人民幣 18 億元，而 2019 年為人民幣 110 億元——對不起，是人民幣 110 億元。不過，無風險貸款促進者的比例從 2019 年的 30% 增加到了 2020 年的 50%。

Revenues from installment services in 2020 declined by 77.2% to RMB 42.7 million. This decrease was mainly due to reduction of on-book installment loan volume due to the COVID-19 outbreak and was in line with our ongoing strategy to optimize our portfolio structure.

2020年分期服務收入下降77.2%至4,270萬元。這一下降主要是由於新冠疫情導致帳面分期貸款量減少，這符合我們優化投資組合結構的持續策略。

Lastly, revenues from wealth management service in 2020 decreased by 75.7% to RMB 4.9 million, primarily as a result of our insurance brokerage business growing slower than we previously expected. During this period, we implemented a series of optimization initiative to refine our insurance brokerage business model and terminated cross-selling with retail consumer finance products. However, towards the end of 2020, we completed the revamping of our insurance brokerage business, and we expect rapid growth of this business under the new market-oriented model in 2021.

最後，2020年財富管理服務收入下降75.7%至人民幣490萬元，主要由於我們的保險經紀業務成長低於我們先前的預期。在此期間，我們實施了一系列優化舉措，完善了保險經紀業務模式，終止了與零售消費金融產品的交叉銷售。然而，2020年底，我們完成了保險經紀業務的轉型，我們預計2021年該業務將在新的市場化模式下快速成長。

Cost of revenue for the full year of 2020 decreased by 62.9% to RMB 285.8 million from RMB 769.7 million in the same period of 2019. This decrease was mainly attributable to several factors, including the decrease in origination and service fee from reduced user acquisition costs as a result, loan volume facilitation declined; also, the decreased cost on guarantee liability for off-balance sheet loans as we purposely and gradually stopped providing any guarantee in 2020 in order to significantly enhance our asset quality; and lastly, the decrease in service costs charged by the related party because the company ceased original cooperation model under which the related party used to provide credit enhancement for the borrowers since the beginning of 2019, resulting to a further decrease of the loan balance and related costs under such model in 2020. All these efforts led to the significant improvement of the delinquency rate since the second quarter of 2020.

2020年全年營業成本為人民幣2.858億元，較2019年同期的人民幣7.697億元下降62.9%。下降主要由於多種因素，包括用戶獲取成本降低導致發起費和服務費下降，貸款量便利化下降；此外，由於我們在 2020 年有意逐步停止提供任何擔保，以大幅提高我們的資產質量，因此表外貸款的擔保責任成本下降；最後，由於公司自2019年初起停止了原有關聯方為借款人提供增信的合作模式，導致2020年該模式下的貸款餘額及相關成本進一步減少，導致關聯方收取的服務費用減少。這些努力使得2020年第二季以來的違約率顯著改善。

We will continue to reduce our risk-bearing loan business in 2020 as cost on guarantee liabilities and service costs, mainly related to the legacy business. There was almost no new loans facilitated under the guarantee of risk-sharing model. In fact, we only provide guarantees for our financial services, which we operate with our own licenses. While all other loans that we facilitate will gradually switch to a profit-sharing model without any guarantee services, minimizing the overall volatility and profitability in the future.

2020 年，我們將繼續減少風險貸款業務，因為擔保責任和服務成本主要與傳統業務有關。採用風險共擔模式擔保的新增貸款幾乎沒有。事實上，我們只為我們的金融服務提供擔保，我們憑藉自己的牌照來經營。而我們所促成的所有其他貸款將逐步轉向不提供任何擔保服務的利潤分享模式，從而最大限度地降低未來的整體波動性和盈利能力。

Gross profit in 2020 decreased to CNY 92.5 million. This represents a gross margin for the full year of 2020 of 24.5% compared to 40.1% in the same period of 2019. This is a reflection of the lower margin, higher quality, less risk-bearing business. Going forward, as we focus on the SaaS-based digital technology services, we expect gross margin to improve in 2020 -- sorry, in 2021.

2020年毛利下降至9,250萬元。這意味著 2020 年全年毛利率為 24.5%，而 2019 年同期為 40.1%。這體現了利潤率較低、品質較高、風險較小的業務。展望未來，由於我們專注於基於 SaaS 的數位技術服務，我們預計毛利率將在 2020 年（抱歉，是 2021 年）提高。

Total operating business in the full year of 2020 decreased by 75.9% to RMB 299.3 million from RMB 1.2 billion in the same period of 2019. We have continued to optimize and refine our organization structure, marketing strategies and product portfolio since the beginning of 2020.

2020年全年總營業收入較2019年同期的12億元下降75.9%至2.993億元。自2020年起，我們不斷優化和完善組織結構、行銷策略和產品組合。

Let's now review the specific operating expenses, and I'm pleased to report that we have aggressively reduced every cost category. Sales and marketing expenses in 2020 decreased by 35.8% to CNY 44.7 million from CNY 69.6 million in the same period of 2019, primarily driven by the decrease of promotional expenses from the reduction of online advertisement and a decrease in staff costs from corporate structure.

現在讓我們來回顧一下具體的營運費用，我很高興地報告，我們已經大幅削減了每個成本類別。2020年銷售及行銷費用為4,470萬元，較2019年同期的6,960萬元減少35.8%，主要由於網路廣告減少導致的促銷費用減少以及公司架構導致的員工成本減少。

General and administrative expense in the full year of 2020 declined by 86.5% to CNY 147.8 million from CNY 1.1 billion in the same period of 2019. This decrease was primarily driven by decreases in the reduction of bad debt provision expenses related to loans under the related party agreement from CNY 890.7 million in 2019 to CNY 7.8 million in 2020, due to the decrease in loans and also staff costs and professional expenses decreased by approximately CNY 31.9 million due to personnel structure, optimization and reduction in consulting expenses.

2020年全年一般及行政開支由2019年同期的11億元下降86.5%至1.478億元。減少的主因是關聯協議下貸款相關壞帳準備費用從2019年的8.907億元減少至2020年的780萬元人民幣，原因是貸款減少，同時由於人員結構優化及諮詢費用減少，員工成本及專業費用減少約3,190萬元人民幣。

Research and development expenses in 2020 decreased by 52.6% to CNY 37.5 million from CNY 79.1 million in the same period of 2019, primarily driven by the decrease in staff costs from personnel structure optimization and as part of our business transformation.

2020年研發費用為3,750萬元，較2019年同期的7,910萬元下降52.6%，主要由於人員結構優化及業務轉型導致的員工成本減少。

Impairment of goodwill and intangible assets in 2020 increased by -- increased to CNY 69.4 million from nil in the same period of 2019, primarily due to CNY 37.6 million impairment for goodwill and CNY 31.8 million impairment loss for intangible assets associated with the license to operate the small loan business owned by Ganzhou Aixin Network Microfinance Company considering the tightening regulation and changing market environment. However, the company expects no future impact. As a result, operating loss in the full year of 2020 was CNY 206.8 million.

2020年商譽及無形資產減損損失較2019年同期的零增加--至6,940萬元，主要由於考慮到監管趨嚴及市場環境變化，提列商譽減損損失3,760萬元、提列與贛州愛信網路小額貸款公司旗下小額貸款業務經營許可相關的無形資產減損不過，該公司預計未來不會產生影響。因此，2020年全年經營虧損為2.068億元。

Tax expense increased to CNY 49 million compared to only CNY 2 million in the same period of 2019, primarily due to the deferred tax expense of CNY 46.9 million caused by the increase in the valuation allowance for a deferred tax expense of CNY 87.3 million in the year 2020 as management determined that the deferred tax asset will less likely be utilized in the future while it was deferred tax benefit of CNY 17.3 million in the year 2019.

所得稅費用由2019年同期的200萬元增至4,900萬元，主要由於2020年遞延所得稅費用增加4,690萬元，原因是管理層認為未來使用該遞延所得稅資產的可能性較小，因此增加了2020年度8,730萬元的遞延所得稅費用的遞延收入，從而增加了2020年度8,730萬元的遞延收入費用的遞延收入，從而遞延收入為20302萬元的遞延收入費用的遞延收入，從而遞延收入為20302萬元的遞延收入費用。

Therefore, net loss and adjusted net loss for 2020 were CNY 296.1 million and CNY 284.2 million, respectively. However, excluding the above-mentioned one-time write-offs and the impact of the decrease in deferred tax asset balance, our net loss and adjusted net loss for the full year of 2020 should be CNY 147.2 million and CNY 135.3 million, respectively. The net loss was mainly due to the legacy business, and it was well decreased -- it has well decreased in the second half of 2020 as compared with the first half of 2020.

因此，2020年淨虧損和調整後淨虧損分別為2.961億元和2.842億元。然而，剔除上述一次性核銷以及遞延所得稅資產餘額減少的影響，我們2020年全年的淨虧損和調整後淨虧損分別為人民幣1.472億元和人民幣1.353億元。淨虧損主要因遺留業務造成，且較上半年相比，2020 年下半年的淨虧損大幅減少。

Diluted GAAP and diluted non-GAAP adjustment -- adjusted net loss for ordinary shares in 2020 were RMB 0.99 and RMB 0.96, respectively.

稀釋GAAP和稀釋非GAAP調整－2020年普通股調整後淨虧損分別為人民幣0.99元和人民幣0.96元。

Now let's turn over to our balance sheet. As of December 31, 2020, we had combined cash and cash equivalents, short-term and long-term restricted cash of CNY 522.3 million as compared to CNY 580.9 million as of December 31, 2019. Total net financing receivable, including short-term and long-term receivable, decreased by 83.6% to CNY 73.6 million as of December 31, 2020 from CNY 449.5 million as of December 31, 2019, mainly due to the lower volume of our on-book loan business.

現在讓我們來看看資產負債表。截至 2020 年 12 月 31 日，我們的現金及現金等價物、短期及長期受限現金合計為人民幣 5.223 億元，而截至 2019 年 12 月 31 日為人民幣 5.809 億元。截至 2020 年 12 月 31 日，包括短期應收款和長期應收款在內的淨融資應收款總額為人民幣 7,360 萬元，較截至 2019 年 12 月 31 日的人民幣 4.495 億元減少 83.6%，主要由於我們賬面貸款業務量減少。

In conclusion, we are very proud of what the team has collectively achieved during the transition period under COVID-19 outbreak, and we are very excited about what we could achieve in the years to come. Looking ahead, we will focus on ramping up revenues in our digital and technical service business, which we expect to be our key revenue driver in the long term. We also continue to refine our asset quality for digital operating services as well as our license financial services in order to optimize our risk profile. Despite these short-term impacts, we are confident that these changes will bring solid foundation and sustainable development for the future.

總而言之，我們為團隊在 COVID-19 疫情過渡期間所取得的共同成就感到非常自豪，並且對未來幾年能夠取得的成就感到非常興奮。展望未來，我們將專注於提高數位和技術服務業務的收入，我們預計這將成為我們長期的主要收入驅動力。我們也將繼續改善數位營運服務以及授權金融服務的資產質量，以優化我們的風險狀況。儘管這些影響是短期的，但我們相信這些變化將為未來帶來堅實的基礎和永續發展。

This concludes our prepared remarks for today. Operator, we are now ready to take questions.

今天的準備發言到此結束。接線員，我們現在可以回答問題了。

(Operator Instructions) Our first question is from Ling Tan from ICBC International.

（操作員指示）我們的第一個問題來自工銀國際的 Ling Tan。

I have 2 questions regarding the Riche Bright and Jishengtai acquisition. My first question is what revenue contribution do you foresee from this acquisition? And what's the margin profile changes from this acquisition?

我有兩個關於 Riche Bright 和 Jishengtai 收購的問題。我的第一個問題是，您預計此次收購將帶來多少收入貢獻？此次收購將為利潤率帶來哪些變化？

And the second question is, how will you integrate this acquisition into your wealth management services? And could management give us some color on the wealth management revenue growth target for the next 3 to 5 years?

第二個問題是，您將如何將此次收購融入您的財富管理服務？管理階層能否透露一下未來3至5年的財富管理收入成長目標？

Thank you, Ling. This is Steven. I'll take the second part of the question first. I think in terms of the integration into the current wealth management, as mentioned in today's remarks and also in our press release, the wealth management has not met its target in the past, whereas we expect for 2021, in line with the insurance brokerage business, we'll have significant growth organically and potentially also looking at opportunities in the market for potential M&As.

謝謝你，凌。這是史蒂文。我先回答問題的第二部分。我認為就與當前財富管理的整合而言，正如我們在今天的發言以及新聞稿中所提到的，財富管理過去未能達到其目標，而我們預計 2021 年，與保險經紀業務一致，我們將實現顯著的有機增長，並且也可能尋找市場上潛在的併購機會。

And in terms with Riche Bright, we expect that it will be collectively integrated into our technological innovation in terms of not just operating license brokerage business, which it is licensed in Hong Kong. We think that -- we feel that it has a significant technological advantage and difference in terms of how it's able to penetrate the B2B market that differentiates itself from what's the current offering out there. And we feel that this digital brokerage business is already well understood and well received by investors in the market. We feel that it will add a very good part of our portfolio. And we've known the team for some time before completing the acquisition, so we think in terms of the business and other aspects of integration, it should go smoothly.

就 Riche Bright 而言，我們預計它將被集體融入我們的技術創新中，而不僅僅是經營許可經紀業務，它在香港獲得了許可。我們認為——我們認為它在如何滲透 B2B 市場方面具有顯著的技術優勢和差異，與目前市場上的產品有所區別。而且我們覺得這個數位經紀業務已經被市場投資者很好地理解和接受了。我們認為它將為我們的投資組合增添很大一部分。我們在完成收購之前已經認識團隊一段時間了，因此我們認為從業務和整合的其他方面來看，它應該會順利進行。

Now in terms of the first part of your question, I think we expect Riche Bright to be contributing in the normal cost of our business, normal margins. And in fact, we believe that since it is not operating on a purely B2C-type business model, where it's more of a B2B2C business model, it should have a higher traditional take rate as compared to other businesses in the market. As an example, we understand that potentially you have certain players in the market that we have to factor in cost of traffic acquisition, whereas in our case, our business will be mainly driven by large corporate customers, in which case, in targeting the users and the players that are customers of this corporate, we think the cost of traffic acquisition will be much lower and therefore, giving us a better take rate. At the same time, we feel that its also able to offer other nontraditional brokerage business to other business -- other corporates as well. In that way, it will increase our opportunities to have more income from these sources.

現在就您問題的第一部分而言，我認為我們預計 Riche Bright 將為我們業務的正常成本和正常利潤做出貢獻。事實上，我們認為，由於它不是採用純 B2C 型商業模式，而是 B2B2C 商業模式，因此與市場上的其他企業相比，它應該具有更高的傳統盈利率。舉個例子，我們知道市場上可能有某些參與者，我們必須考慮流量獲取成本，而在我們的案例中，我們的業務主要由大型企業客戶推動，在這種情況下，在瞄準該企業的用戶和客戶時，我們認為流量獲取的成本會低得多，因此，我們可以獲得更好的接受率。同時，我們認為它也能夠向其他企業（其他公司）提供其他非傳統經紀業務。這樣，我們從這些來源獲得更多收入的機會就會增加。

(Operator Instructions) There are no more questions in the queue. This concludes our question-and-answer session. I would like to turn the conference back over to Victor Li for any closing remarks.

（操作員指示）隊列中沒有其他問題。我們的問答環節到此結束。我想將會議交還給 Victor Li 做結束語。

Okay. Thanks, operator. And again, thanks, everyone, for joining today's call. We wish you a good day, and we'll see you next time. Thank you.

好的。謝謝，接線生。再次感謝大家參加今天的電話會議。祝您有個愉快的一天，我們下次再見。謝謝。

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

會議現已結束。感謝您參加今天的演講。您現在可以斷開連線。