Weng Fine Art : ArtXX with good results in 1st half of 2022

• Sales increased by 21 % to EUR 3.4 million
• Trading margin rose further to 110 %
• Profit after taxes increased by 36 % to just over EUR 1 million
• Equity ratio remains at a comfortable 64 %

ArtXX AG ("Weng Contemporary"), the Swiss e-commerce subsidiary of Weng Fine Art AG, was able to increase its sales from EUR 2,825k to EUR 3,418k (+ 21%) in the first half of fiscal year 2022 compared to the same period in 2021. After a very good first quarter, the environment has successively darkened as a result of the Russian invasion of Ukraine and the resulting energy crisis, high inflation and rising interest rates, as well as supply chain issues that continue to persist. However, as ArtXX operates in the luxury segment, the current macroeconomic challenges have had a much smaller impact so far than in other areas of retail and e-commerce.

The margin (calculated as a markup rate) continued to improve from 82% to 110% - trading profit in own goods even went up from 102% to 160%. This was due to a value increase of many of the editions in ArtXX's inventory. The development of the US dollar exchange rate, on the basis of which the offered artworks are priced, also had a positive effect. As a result, trading profit increased by 40 %, which is almost twice as much as sales.

Costs increased by 53%, but are nevertheless only around 17% of sales. On one hand, the cost driver was the continuing appreciation of the Swiss Franc (impact: around EUR 40k). Personnel costs increased in particular due to the expansion of the team (EUR 50k). Costs associated with the development of the investor platform (personnel, consulting) also had an impact (EUR 60k).

In the currency segment, technical accounting losses in US Dollars are amounting to approximately EUR 90k, resulting from the hedge of sales prices calculated in USD. Lastly, transport costs for customer orders are now accounted for as costs at ArtXX (EUR 60k), but at the same time, revenues increased accordingly. Overall, margins and costs are therefore overstated by approximately EUR 150k compared to the previous year.

Earnings after taxes (period profit) increased by 36 % year-on-year from EUR 736k to EUR 1,001k in the first half of 2022. Return on sales remained at a very high level of 29.3 %.

The positive cash flow, which was also supported by the company's caution on the purchasing side, led to a significant decrease in liabilities to banks. As of the reporting date, the company had granted loans of approximately EUR 2.8 million, which are currently offset by own bank liabilities of only EUR 3.2 million. Due to this constellation, the financing expense of ArtXX, netted against interest income, was almost zero during the first half of 2022. Only about one third of the credit lines provided by four institutions were utilized at the end of the period. This gives the Company every possibility to take advantage of opportunities in the coming year.

The equity ratio was 64.0% as of June 30, 2022 (June 30, 2021 = 52.7 %). Due to the very sound balance sheet ratios as well as the broad financing base, the management considers ArtXX to be very well positioned for a potential recession, which is already indicated in various markets in the second half of 2022.

ArtXX's sales and profits are still above those of the previous year after the end of Q3 2022. However, the CEO does not expect the outstanding Q4 2021 to be repeated this year. The management currently sees its main task in strongly positioning itself for the improvement in the overall economic environment, that is currently expected by the end of 2023. The main focus is on the development of an investor website, for which the company will publish information later this year.

The half-year financial statements can be downloaded from Weng Fine Art AG's website at https://wengfineart.com/uploads/ArtXX-AG-Abschluss__300622.pdf

ABOUT ARTXX AG

ArtXX AG (formerly known as WFA Online AG) is based in Zug, Switzerland and operates the e-commerce platform WengContemporary.com. Founded in 2014, it was one of the first consumer-facing fine art online marketplaces, and specializes in limited editions by established contemporary artists including Jeff Koons, Damien Hirst, Alex Katz and Ai Weiwei. The core focus of ArtXX is to offer prime art editions that hold their investment capital and function as an asset class. In 2017, Giorgia Zardetto was appointed in the role of Managing Director. ArtXX AG is a subsidiary of Weng Fine Art AG; the only publicly listed art trading company in Europe.