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Financial Highlights for Fourth Quarter of 2014
Financial Highlights for Fiscal Year 2014
Business Highlights:
Commenting on the fourth quarter financial results, Mr.
"In terms of our regulatory environment, we were excited to see so many positive developments in 2014 and early 2015.
"Against this backdrop, we have embraced the opportunity to establish our O2O business model by leveraging on the strength of our offline network and set our strategic goals to build the largest 1) transaction-enabled entry portal for insurance and wealth management products; 2) third-party mobile insurance transaction platform; 3) public service platform for the insurance industry; 4) team of insurance advisors; and 5) mutual aid organization. Based on these goals, in the next five to eight years, we aspire to become a leading internet-based financial services provider.
"To achieve these targets, in the next three years, we will focus on the following three areas:
1. Our operational focus will shift towards gaining market share by increasing investment in marketing and technology. These investments will likely have a negative impact on our bottom line over the near and medium term, and may even result in an operating loss. However, we believe these investments are necessary for us to accumulate customers and establish our market leadership.
2. We will resume our M&A strategy. Our M&A targets may include leading wealth management companies that have engaged in internet finance to broaden our product line, or companies that have innovative business models or leading internet finance technologies, to strengthen our O2O platform and solidify our market position.
3. We will accelerate our internal organizational restructuring and optimizeour business structure. Going forward, except for our insurance brokerage business and commercial line of claims adjustment business, all of our business transactions will move online. Our offline subsidiaries will become service support units to serve our customers and our sales people.
"Looking ahead to 2015, we expect to generate total insurance premiums of over
Changes in Segment Reporting
In the first quarter of 2014, the Company realigned its financial reporting structure into four business segments that more accurately reflect its organizational structure and changing business mix. Historical results reflecting the new business segments for the corresponding period of the previous year are also presented in the Company's interim financial statements. Under the realigned business structure, the four business segments are as follows:
(1) insurance agency business segment, which consists mainly of agency services for property and casualty ("P&C") insurance products and life insurance products provided to individual clients,
(2) insurance brokerage business segment, which consists mainly of P&C and life insurance brokerage services provided to institutional clients,
(3) claims adjusting segment, which consists of pre-underwriting survey, claim adjusting, disposal of residual value, loading and unloading supervision and consulting services, and
(4) other services, which include non-insurance related services, including wealth management products that we provided in 2013 but ceased to provide in 2014.
Financial Results for the Fourth Quarter of 2014
Total net revenues were
Net revenues for the insurance agency business were
Net revenues of insurance brokerage business were
Net revenues of claims adjusting business were
Net revenues of other services were nil for the fourth quarter of 2014, as compared with
Total operating costs and expenses were
Total operating costs were
Costs of insurance agency business were
Costs of insurance brokerage business were
Costs of claims adjusting business were
Costs of other services were nil for the fourth quarter of 2014, as compared with
Selling expenses were
General and administrative expenses were
As a result of the preceding factors, operating loss was
Operating margin was -0.3% for the fourth quarter of 2014, compared with 2.9% for the corresponding period in 2013.
Adjusted operating income was
Adjusted operating margin was 4.6%, as compared to 3.9% for the corresponding period in 2013.
Investment income was
Interest income was
Income tax expense was
Share of income of affiliates was
Net income attributable to the Company's shareholders was
Net margin was 4.3% for the fourth quarter of 2014 compared with 4.9% for the corresponding period in 2013.
Basic and diluted net income per ADS were
Adjusted EBITDA was
Adjusted EBITDA margin was 3.5% for the fourth quarter of 2014, compared with 7.2% for the corresponding period in 2013.
Diluted adjusted EBITDA per ADS was
As of
Financial Results for the Year Ended
Total net revenues were
Net revenues of insurance agency business were
Net revenues of insurance brokerage business were
Net revenues of claims adjusting business were
Net revenues of other services were nil for fiscal year of 2014, as compared with
Total operating costs and expenses were
Total operating costs were
Costs of insurance agency business were
Costs of insurance brokerage business were
Costs of claims adjusting business were
Costs of other services were nil for fiscal year of 2014, as compared with
Selling expenses were
General and administrative expenses were
As a result of the preceding factors, operating income was
Operating margin was 1.4% for fiscal year 2014, compared with 1.0% in fiscal year 2013.
Adjusted operating income was
Adjusted operating margin was 4.4%, compared with 2.5% in fiscal year 2013.
Investment income was
Interest income was
Income tax expense was
Share of income of affiliates was
Net income attributable to the Company's shareholders was
Net margin was 7.5% for fiscal year 2014 compared with 5.4% in fiscal year 2013.
Basic and diluted net income per ADS were
Adjusted EBITDA was
Adjusted EBITDA margin was 6.2% for fiscal year 2014, compared with 7.1%in fiscal year 2013.
Diluted adjusted EBITDA per ADS was
Recent Developments:
Business Outlook
Conference Call
The Company will host a conference call to discuss the fourth quarter and fiscal year 2014 results as per the following details.
Time: |
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or |
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The toll free dial-in numbers: | |
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1-855-500-8701 |
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0800-015-9724 |
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1-855-757-1565 |
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0080-665-1951 |
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800-906-606 |
The toll dial-in numbers: | |
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400-120-0654 |
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+65-6723-9385 |
Conference ID #: 81440385 |
Additionally, a live and archived web cast of this call will be available at: http://ir.cninsure.net/events.cfm
About
Our online platforms include (1) Baoxian.com, an online entry portal for comparing and purchasing health, accident, travel and homeowner insurance products; (2) CNpad, a mobile sales support application; (3) Chetong.net, a public service platform for the insurance industry and (4) eHuzhu (www.ehuzhu.com), the first non-profit online mutual aid platform in
For more information about
Forward-looking Statements
This press release contains statements of a forward-looking nature. These statements, including the statements relating to the Company's future financial and operating results, are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as "will," "expects," "believes," "anticipates," "intends," "estimates" and similar statements. Among other things, management's quotations and the Business Outlook section contain forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about
About Non-GAAP Financial Measures
In addition to the Company's consolidated financial results under GAAP, the Company also provides adjusted operating income, adjusted operating income margin, adjusted EBITDA, adjusted EBITDA margin and diluted adjusted EBITDA per ADS, which are non-GAAP financial measures. Adjusted operating income is defined as operating income before expenses associated with the Company's online and mobile initiatives including expenses relating to the development, implementation and support of CNpad, Baoxian.com, eHuzhu and Chetong.net. Adjusted operating income margin is defined as adjusted operating income divided by total net revenues. Adjusted EBITDA is defined as net income before income tax expense, investment income, interest income, depreciation, amortization and compensation expenses associated with stock option. Adjusted EBITDA margin is defined as adjusted EBITDA divided by total net revenues. Diluted adjusted EBITDA per ADS is defined as adjusted EBITDA divided by total number of ADS on a diluted basis. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing the Company's performance and when planning and forecasting future periods. One limitation of using these non-GAAP financial measures is that such measures exclude items that were significant in the fourth quarter of 2014 and the corresponding period of 2013 as well as during the fiscal year of 2013 and 2014, and these items have been, and will continue to be, a significant recurring factor in our business.
In light of the limitations, the presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. We encourage investors and other interested persons to review our financial information in its entirety and not rely on a single financial measure. For more information on these non-GAAP financial measures, please see the tables captioned "Reconciliations of Net Income to Adjusted EBITDA and Adjusted EBITDA Margin" and "Reconciliations of Adjusted Operating Income and Adjusted Operating Income Margin" set forth at the end of this release.
1 This announcement contains currency conversions of certain Renminbi (RMB) amounts into U.S. dollars (US$) at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB6.2046 to
2 Adjusted operating income is defined as operating income excluding expenses incurred by online and mobile initiatives including expenses relating to the development, implementation and support of CNpad, Baoxian.com, eHuzhu and Chetong.net.
3 Adjusted EBITDA is defined as net income before income tax expense, investment income, interest income, depreciation, amortization and compensation expenses associated with stock options.
4 Active customer accounts are defined as customer accounts that made at least one purchase directly through www.baoxian.com or its mobile application during the specified period.
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Unaudited Condensed Consolidated Balance Sheets | |||
(In thousands) | |||
As of |
As of |
As of |
|
2013 | 2014 | 2014 | |
RMB | RMB | US$ | |
ASSETS: | |||
Current assets: | |||
Cash and cash equivalents | 2,288,623 | 2,103,068 | 338,953 |
Restricted cash | 11,100 | 7,478 | 1,205 |
Short term investments | 253,900 | 688,900 | 111,031 |
Accounts receivable, net | 199,482 | 186,150 | 30,002 |
Insurance premium receivables | 57 | 472 | 76 |
Other receivables | 254,776 | 88,149 | 14,207 |
Deferred tax assets | 4,858 | — | — |
Amounts due from related parties | 144,371 | 209,601 | 33,782 |
Other current assets | 20,634 | 17,908 | 2,886 |
Total current assets | 3,177,801 | 3,301,726 | 532,142 |
Non-current assets: | |||
Property, plant, and equipment, net | 69,562 | 47,171 | 7,602 |
Goodwill and intangible assets, net | 107,668 | 165,072 | 26,605 |
Deferred tax assets | 3,382 | 2,638 | 425 |
Investment in affiliates | 189,241 | 219,703 | 35,410 |
Other non-current assets | 13,076 | 12,176 | 1,962 |
Total non-current assets | 382,929 | 446,760 | 72,004 |
Total assets | 3,560,730 | 3,748,486 | 604,146 |
LIABILITIES AND EQUITY: | |||
Current liabilities: | |||
Accounts payable (including accounts payable of the consolidated variable interest entities ("VIEs") without recourse to |
92,324 | 128,765 | 20,753 |
Insurance premium payables (including insurance premium payables of the consolidated VIEs without recourse to |
4,066 | 2,942 | 474 |
Other payables and accrued expenses (including other payables and accrued expense of the consolidated VIEs without recourse to |
147,954 | 109,412 | 17,634 |
Accrued payroll (including accrued payroll of the consolidated VIEs without recourse to |
39,089 | 40,096 | 6,462 |
Income tax payable (including income tax payable of the consolidated of VIEs without recourse to |
55,992 | 54,225 | 8,740 |
Total current liabilities | 339,425 | 335,440 | 54,063 |
Non-current liabilities: | |||
Other tax liabilities | 50,735 | 53,855 | 8,680 |
Deferred tax liabilities | 23,808 | 24,931 | 4,018 |
Total non-current liabilities | 74,543 | 78,786 | 12,698 |
Total liabilities | 413,968 | 414,226 | 66,761 |
Ordinary shares | 7,624 | 8,563 | 1,380 |
Additional paid-in capital | 2,329,962 | 2,601,401 | 419,270 |
Statutory reserves | 182,740 | 198,422 | 31,980 |
Retained earnings | 618,885 | 764,963 | 123,289 |
Accumulated other comprehensive loss | (111,114) | (105,106) | (16,940) |
Subscription receivables | — | (257,491) | (41,500) |
Total |
3,028,097 | 3,210,752 | 517,479 |
Non-controlling interests | 118,665 | 123,508 | 19,906 |
Total equity | 3,146,762 | 3,334,260 | 537,385 |
Total liabilities and equity | 3,560,730 | 3,748,486 | 604,146 |
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Unaudited Condensed Consolidated Statements of Income and Comprehensive Income | ||||||
(In thousands, except for shares and per share data) | ||||||
For The Three Months Ended | For The Twelve Months Ended | |||||
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2013 | 2014 | 2014 | 2013 | 2014 | 2014 | |
RMB | RMB | US$ | RMB | RMB | US$ | |
Net revenues: | ||||||
Revenues of insurance agency business | 386,870 | 488,713 | 78,766 | 1,418,512 | 1,624,410 | 261,807 |
Revenues of insurance brokerage business | 28,159 | 58,672 | 9,457 | 63,418 | 232,620 | 37,492 |
Revenues of claims adjusting business | 84,494 | 85,234 | 13,737 | 261,206 | 292,981 | 47,220 |
Revenues of other services | 4,316 | — | — | 13,888 | — | — |
Total net revenues | 503,839 | 632,619 | 101,960 | 1,757,024 | 2,150,011 | 346,519 |
Operating costs and expenses: | ||||||
Costs of insurance agency business | (299,833) | (386,149) | (62,236) | (1,094,843) | (1,261,888) | (203,379) |
Costs of insurance brokerage business | (20,851) | (47,093) | (7,590) | (47,351) | (185,593) | (29,912) |
Costs of claims adjusting business | (42,671) | (45,245) | (7,292) | (142,245) | (167,676) | (27,025) |
Costs of other services | (2,474) | — | — | (8,933) | — | — |
Total operating costs | (365,829) | (478,487) | (77,118) | (1,293,372) | (1,615,157) | (260,316) |
Selling expenses | (24,657) | (31,740) | (5,116) | (96,461) | (107,263) | (17,288) |
General and administrative expenses | (98,957) | (124,303) | (20,034) | (349,205) | (396,692) | (63,935) |
Total operating costs and expenses | (489,443) | (634,530) | (102,268) | (1,739,038) | (2,119,112) | (341,539) |
Income (loss) from operations | 14,396 | (1,911) | (308) | 17,986 | 30,899 | 4,980 |
Other income, net: | ||||||
Investment income | 4,538 | 11,178 | 1,802 | 8,886 | 44,240 | 7,130 |
Interest income | 21,661 | 18,789 | 3,028 | 84,250 | 82,251 | 13,256 |
Others, net | (7,640) | 595 | 96 | (4,601) | 2,330 | 376 |
Income before income taxes and income of affiliates | 32,955 | 28,651 | 4,618 | 106,521 | 159,720 | 25,742 |
Income tax expense | (10,380) | (5,563) | (897) | (27,158) | (24,289) | (3,915) |
Share of income of affiliates | 3,770 | 8,228 | 1,326 | 20,621 | 30,649 | 4,940 |
Net income | 26,345 | 31,316 | 5,047 | 99,984 | 166,080 | 26,767 |
less: net income attributable to noncontrolling interests | 1,644 | 4,248 | 685 | 4,341 | 4,320 | 696 |
Net income attributable to the Company's shareholders | 24,701 | 27,068 | 4,362 | 95,643 | 161,760 | 26,071 |
Net income per share: | ||||||
Basic | 0.02 | 0.03 | 0.00 | 0.10 | 0.16 | 0.03 |
Diluted | 0.02 | 0.03 | 0.00 | 0.10 | 0.16 | 0.03 |
Net income per ADS: | ||||||
Basic | 0.49 | 0.53 | 0.09 | 1.92 | 3.22 | 0.52 |
Diluted | 0.49 | 0.52 | 0.09 | 1.91 | 3.19 | 0.51 |
Shares used in calculating net income per share: | ||||||
Basic | 998,861,526 | 1,023,391,993 | 1,023,391,993 | 998,861,526 | 1,005,842,212 | 1,005,842,212 |
Diluted | 998,861,526 | 1,036,069,705 | 1,036,069,705 | 1,000,570,018 | 1,012,591,387 | 1,012,591,387 |
Net income | 26,345 | 31,316 | 5,047 | 99,984 | 166,080 | 26,767 |
Other comprehensive (loss) income, net of tax: Foreign currency translation adjustments | (2,603) | 2,805 | 452 | (6,982) | 6,008 | 968 |
Comprehensive income | 23,742 | 34,121 | 5,499 | 93,002 | 172,088 | 27,735 |
Less: Comprehensive (loss) income attributable to the noncontrolling interests | 1,644 | 4,248 | 685 | 4,341 | 4,320 | 696 |
Comprehensive income attributable to the |
22,098 | 29,873 | 4,814 | 88,661 | 167,768 | 27,039 |
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Unaudited Condensed Consolidated Statements of Cash Flow | ||||||
(In thousands) | ||||||
For The Three Months Ended | For The Twelve Months Ended | |||||
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2013 | 2014 | 2014 | 2013 | 2014 | 2014 | |
RMB | RMB | US$ | RMB | RMB | US$ | |
OPERATING ACTIVITIES | ||||||
Net income | 26,345 | 31,316 | 5,047 | 99,984 | 166,080 | 26,767 |
Adjustments to reconcile net income to net cash generated from operating activities: | ||||||
Depreciation | 7,732 | 6,008 | 968 | 31,253 | 28,235 | 4,551 |
Amortization of intangible assets | 3,417 | 4,728 | 762 | 13,665 | 16,826 | 2,712 |
Allowance for doubtful receivables | 2,661 | 2,148 | 346 | 5,303 | 6,060 | 977 |
Compensation expenses associated with stock option | 14,702 | 4,684 | 755 | 45,317 | 23,598 | 3,803 |
Loss (gain) on disposal of property, plant and equipment | (16) | 243 | 39 | (17) | 292 | 47 |
Write down of dividend receivables | 7,561 | — | — | 7,561 | — | — |
Investment income | (2,700) | (766) | (123) | (2,700) | (15,419) | (2,485) |
Share of income of affiliates | (3,770) | (8,228) | (1,326) | (20,621) | (30,649) | (4,940) |
Changes in operating assets and liabilities | 40,964 | 33,310 | 5,369 | 6,200 | 66,626 | 10,738 |
Net cash generated from operating activities | 96,896 | 73,443 | 11,837 | 185,945 | 261,649 | 42,170 |
Cash flows (used in) generated from investing activities: | ||||||
Purchase of property, plant and equipment | (1,731) | (1,626) | (262) | (36,181) | (6,209) | (1,001) |
Proceeds from disposal of property and equipment | 92 | 248 | 40 | 249 | 613 | 99 |
Proceeds from disposal of short term investments | 1,691 | 47,366 | 7,634 | 32,291 | 118,208 | 19,052 |
Purchase of short term investments | (30,000) | (16,600) | (2,675) | (283,900) | (546,600) | (88,096) |
Acquisition of subsidiaries, net of cash | — | — | — | — | (62,709) | (10,107) |
Disposal of subsidiaries, net of cash | (1,532) | — | — | (1,532) | — | — |
Decrease (increase) in restricted cash | 1,170 | 2,677 | 431 | (229) | 3,622 | 584 |
(Increase) decrease in other receivables | (67,706) | (9,000) | (1,451) | (67,706) | 113,632 | 18,314 |
Purchase of intangible assets | — | — | — | — | (118) | (19) |
Return of investment in non-current assets | — | — | — | — | 3,900 | 629 |
Addition in investment in non-current assets | — | — | — | — | (7,019) | (1,131) |
Decrease (increase) in amounts due from related parties | 22,666 | (3,866) | (623) | (62,300) | (62,716) | (10,108) |
Net cash (used in) generated from investing activities | (75,350) | 19,199 | 3,094 | (419,308) | (445,395) | (71,784) |
Cash flows generated from (used in )financing activities: | ||||||
Acquisition of additional interest in subsidiaries | — | — | — | — | (11,000) | (1,773) |
Capital injection by noncontrolling interests | — | — | — | 3,350 | — | — |
Proceeds on exercise of stock options res | — | — | — | — | 3,183 | 513 |
Net cash generated from(used in) financing activities | — | — | — | 3,350 | (7,817) | (1,260) |
Net increase (decrease) in cash and cash equivalents | 21,546 | 92,642 | 14,931 | (230,013) | (191,563) | (30,874) |
Cash and cash equivalents at beginning of period | 2,269,680 | 2,007,621 | 323,570 | 2,525,618 | 2,288,623 | 368,859 |
Effect of exchange rate changes on cash and cash equivalents | (2,603) | 2,805 | 452 | (6,982) | 6,008 | 968 |
Cash and cash equivalents at end of period | 2,288,623 | 2,103,068 | 338,953 | 2,288,623 | 2,103,068 | 338,953 |
Interest paid | — | — | — | — | — | — |
Income taxes paid | 6,911 | 1,265 | 204 | 27,153 | 19,135 | 3,084 |
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Reconciliations of Net Income to Adjusted EBITDA and Adjusted EBITDA Margin | ||||||
(In thousands, unaudited) | ||||||
For The Three Months Ended | For The Twelve Months Ended | |||||
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2013 | 2014 | 2014 | 2013 | 2014 | 2014 | |
RMB | RMB | US$ | RMB | RMB | US$ | |
Net income | 26,345 | 31,316 | 5,047 | 99,984 | 166,080 | 26,767 |
Income tax expense | 10,380 | 5,563 | 897 | 27,158 | 24,289 | 3,915 |
Investment income | (4,538) | (11,178) | (1,802) | (8,886) | (44,240) | (7,130) |
Interest income | (21,661) | (18,789) | (3,028) | (84,250) | (82,251) | (13,256) |
Depreciation | 7,732 | 6,008 | 968 | 31,253 | 28,235 | 4,551 |
Amortization of intangible assets | 3,417 | 4,728 | 762 | 13,665 | 16,826 | 2,712 |
Compensation expenses associated with stock option | 14,702 | 4,684 | 755 | 45,317 | 23,598 | 3,803 |
Adjusted EBITDA | 36,377 | 22,332 | 3,599 | 124,241 | 132,537 | 21,362 |
Total net revenues | 503,839 | 632,619 | 101,960 | 1,757,024 | 2,150,011 | 346,519 |
Adjusted EBITDA Margin | 7.2% | 3.5% | 3.5% | 7.1% | 6.2% | 6.2% |
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Reconciliations of Adjusted Operating Income and Adjusted Operating income Margin | ||||||
(In thousands, unaudited) | ||||||
For The Three Months Ended | For The Twelve Months Ended | |||||
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2013 | 2014 | 2014 | 2013 | 2014 | 2014 | |
RMB | RMB | US$ | RMB | RMB | US$ | |
Operating income (loss) | 14,396 | (1,911) | (308) | 17,986 | 30,899 | 4,980 |
CNpad's R&D and promotion expenses | 5,418 | 22,589 | 3,640 | 25,480 | 45,952 | 7,406 |
Chetong.net's R&D and promotion expenses | — | 1,298 | 209 | — | 2,358 | 380 |
eHuzhu's expenses | — | 7,048 | 1,136 | — | 14,633 | 2,359 |
Adjusted Operating Income | 19,814 | 29,024 | 4,677 | 43,466 | 93,842 | 15,125 |
Total net revenues | 503,839 | 632,619 | 101,960 | 1,757,024 | 2,150,011 | 346,519 |
Adjusted Operating Income Margin | 3.9% | 4.6% | 4.6% | 2.5% | 4.4% | 4.4% |
CONTACT: For more information, please contact: Oasis Qiu Investor Relations Manager Tel: +86 (20) 6122-2731 Email: qiusr@cninsure.net
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