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Financial Highlights for First Quarter of 2014
Commenting on the first quarter financial results, Mr.
"We were also excited about the contributions from CNpad, the workstation of our proprietary mobile sales support system. Insurance premiums generated via CNpad reached
"As the first independent insurance intermediary that actively invests in mobile internet technology and offers one-stop comprehensive financial services and risk management solutions, we believe our first quarter results demonstrate the strengthen of our first-mover advantage and put us in a good position to fully capitalize on the opportunities in the internet finance market by executing on our strategies."
Changes in Segment Reporting
The Company has realigned its financial reporting structure into four business segments to reflect its organizational restructuring and changing business mix. Under the realigned business structure, the four business segments are as follows:
(1) insurance agency business segment, which mainly provides agency services of P&C insurance products and life insurance products to individual clients,
(2) insurance brokerage business segment, which mainly provides P&C and life insurance brokerage services to institutional clients,
(3) claims adjusting segment, which provides 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.
The Company will begin to report results under the new reporting segments starting the first quarter ended
Financial Results for the First quarter of 2014
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 the first quarter of 2014, representing a decrease of 100.0% from
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
Cost of other services were nil for the first quarter of 2014, representing a decrease of 100.0% from
Selling expenses were
General and administrative expenses were
(1) an 85.2% increase in research and development expenses from
(2) a 17.5% increases in staff salary expenses from
(3) a decrease of 40.5% in share-based compensation expenses, from
As a result of the preceding factors, income from operations was
Operating margin was 2.8% for the first quarter of 2014, compared with 0.4% 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 9.6% for the first quarter of 2014 compared with 5.2% for the corresponding period in 2013.
Basic and diluted net income per ADS were
Adjusted EBITDA was
Adjusted EBITDA margin was 8.3% for the first quarter of 2014, compared with 7.8% for the corresponding period in 2013.
Adjusted EBITDA per ADS was
As of
Business Highlights:
Business Outlook
Conference Call
The Company will host a conference call to discuss the first quarter 2014 results as per the following details.
Time: |
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or |
Regional toll free dial-in numbers are as follows: | |
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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 |
Hong Kong | 800-903-737 |
Regional toll dial-in numbers are as follows: | |
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400-120-0654 |
Singapore & Other Areas | +65-6723-9385 |
A replay of the call will be available for seven days by dialing the following number: +61 2 9003 4211
Conference ID #: 43135839
Additionally, a live and archived web cast of this call will be available at: http://ir.cninsure.net/events.cfm
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, the 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 EBITDA, adjusted EBITDA margin and adjusted EBITDA per ADS, which are non-GAAP financial measures. Adjusted EBITDA is defined as net income before income tax expense, investment income, interest income, depreciation, amortization and share-based compensation expenses. Adjusted EBITDA margin is defined as adjusted EBITDA divided by total net revenues. Adjusted EBITDA per ADS is defined as adjusted EBITDA divided by total number of diluted shares. 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 these non-GAAP measures exclude the items that were significant in the first quarter of 2014 and the corresponding period of 2013, 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" set forth at the end of this release.
1 This announcement contains currency conversions of certain Renminbi (RMB) amounts into U.S. dollars (US$) at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB6.2164 to
2 Adjusted EBITDA is defined as net income before income tax expense, investment income, interest income, depreciation, amortization and share-based compensation expenses.
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Condensed Consolidated Balance Sheets | |||
(In thousands) | |||
As of |
As of |
As of |
|
2013 | 2014 | 2014 | |
RMB | RMB | US$ | |
(audited) | (unaudited) | (unaudited) | |
ASSETS: | |||
Current assets: | |||
Cash and cash equivalents | 2,288,623 | 2,217,629 | 356,738 |
Restricted cash | 11,100 | 18,785 | 3,022 |
Short term investments | 253,900 | 303,900 | 48,887 |
Accounts receivable, net | 199,482 | 207,576 | 33,392 |
Insurance premium receivables | 57 | 246 | 40 |
Other receivables | 254,776 | 290,995 | 46,811 |
Deferred tax assets | 4,858 | 5,179 | 833 |
Amounts due from related parties | 144,371 | 175,986 | 28,310 |
Other current assets | 20,634 | 21,378 | 3,439 |
Total current assets | 3,177,801 | 3,241,674 | 521,472 |
Non-current assets: | |||
Property, plant, and equipment, net | 69,562 | 63,303 | 10,183 |
Goodwill and intangible assets, net | 107,668 | 104,252 | 16,770 |
Deferred tax assets | 3,382 | 2,523 | 406 |
Investment in affiliates | 189,241 | 195,660 | 31,475 |
Other non-current assets | 13,076 | 12,676 | 2,039 |
Total non-current assets | 382,929 | 378,414 | 60,873 |
Total assets | 3,560,730 | 3,620,088 | 582,345 |
LIABILITIES AND EQUITY: | |||
Current liabilities: | |||
Accounts payable (including accounts payable of the consolidated variable interest entities ("VIEs") without recourse to |
92,324 | 99,426 | 15,994 |
Insurance premium payables (including insurance premium payables of the consolidated VIEs without recourse to |
4,066 | 11,633 | 1,871 |
Other payables and accrued expenses (including other payables and accrued expense of the consolidated VIEs without recourse to |
147,954 | 144,639 | 23,267 |
Accrued payroll (including accrued payroll of the consolidated VIEs without recourse to |
39,089 | 30,347 | 4,882 |
Income tax payable (including income tax payable of the consolidated of VIEs without recourse to |
55,992 | 53,566 | 8,617 |
Total current liabilities | 339,425 | 339,611 | 54,631 |
Non-current liabilities: | |||
Other tax liabilities | 50,735 | 52,638 | 8,468 |
Deferred tax liabilities | 23,808 | 23,071 | 3,711 |
Total non-current liabilities | 74,543 | 75,709 | 12,179 |
Total liabilities | 413,968 | 415,320 | 66,810 |
Ordinary shares | 7,624 | 7,631 | 1,228 |
Additional paid-in capital | 2,329,962 | 2,338,298 | 376,150 |
Statutory reserves | 182,740 | 182,740 | 29,396 |
Retained earnings | 618,885 | 663,586 | 106,748 |
Accumulated other comprehensive loss | (111,114) | (105,009) | (16,892) |
Total |
3,028,097 | 3,087,246 | 496,630 |
Non-controlling interests | 118,665 | 117,522 | 18,905 |
Total equity | 3,146,762 | 3,204,768 | 515,535 |
Total liabilities and equity | 3,560,730 | 3,620,088 | 582,345 |
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Condensed Consolidated Statements of Income and Comprehensive Income | |||
(In thousands, except for shares and per share data) | |||
For The Three Months Ended | |||
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2013 | 2014 | 2014 | |
RMB | RMB | US$ | |
(unaudited) | (unaudited) | (unaudited) | |
Net revenues: | |||
Revenues of insurance agency business | 343,297 | 351,598 | 56,560 |
Revenues of insurance brokerage business | 3,215 | 51,063 | 8,214 |
Revenues of claims adjusting business | 52,221 | 63,543 | 10,222 |
Revenues of other services | 2,529 | — | — |
Total net revenues | 401,262 | 466,204 | 74,996 |
Operating costs and expenses: | |||
Costs of insurance agency business | (264,717) | (265,189) | (42,659) |
Costs of insurance brokerage business | (2,481) | (39,790) | (6,401) |
Costs of claims adjusting Business | (27,927) | (37,520) | (6,036) |
Costs of other services | (2,044) | — | — |
Total operating costs | (297,169) | (342,499) | (55,096) |
Selling expenses | (20,103) | (24,206) | (3,894) |
General and administrative expenses | (82,381) | (86,289) | (13,881) |
Total operating costs and expenses | (399,653) | (452,994) | (72,871) |
Income from operations | 1,609 | 13,210 | 2,125 |
Other income, net: | |||
Investment income | — | 7,173 | 1,154 |
Interest income | 21,545 | 22,225 | 3,575 |
Others, net | 109 | 194 | 31 |
Income before income taxes and income of affiliates | 23,263 | 42,802 | 6,885 |
Income tax expense | (6,233) | (7,268) | (1,169) |
Share of income of affiliates | 5,334 | 6,419 | 1,033 |
Net income | 22,364 | 41,953 | 6,749 |
Less: net income (loss) attributable to non-controlling interests | 1,336 | (2,748) | (442) |
Net income attributable to the Company's shareholders | 21,028 | 44,701 | 7,191 |
Net income per share: | |||
Basic | 0.02 | 0.04 | 0.01 |
Diluted | 0.02 | 0.04 | 0.01 |
Net income per ADS: | |||
Basic | 0.42 | 0.89 | 0.14 |
Diluted | 0.42 | 0.89 | 0.14 |
Shares used in calculating net income per share: | |||
Basic | 998,861,526 | 998,904,897 | 998,904,897 |
Diluted | 1,002,235,490 | 1,003,350,569 | 1,003,350,569 |
Net income | 22,364 | 41,953 | 6,749 |
Other comprehensive (loss) income, net of tax: Foreign currency translation adjustments | (755) | 6,105 | 982 |
Comprehensive income | 21,609 | 48,058 | 7,731 |
Less: Comprehensive income (loss) attributable to the non-controlling interests | 1,336 | (2,748) | (442) |
Comprehensive income attributable to the |
20,273 | 50,806 | 8,173 |
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Condensed Consolidated Statements of |
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(In thousands) | |||
For The Three Months Ended | |||
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2013 | 2014 | 2014 | |
RMB | RMB | US$ | |
(unaudited) | (unaudited) | (unaudited) | |
OPERATING ACTIVITIES | |||
Net income | 22,364 | 41,953 | 6,749 |
Adjustments to reconcile net income to net cash generated from operating activities: | |||
Depreciation | 7,936 | 7,692 | 1,237 |
Amortization of intangible assets | 3,416 | 3,416 | 550 |
Allowance for doubtful receivables | 749 | 1,709 | 275 |
Compensation expenses associated with stock option | 12,780 | 7,604 | 1,223 |
Loss (gain) on disposal of property, plant and equipment | — | (31) | (5) |
Share of income of affiliates | (5,334) | (6,419) | (1,033) |
Changes in operating assets and liabilities | (50,311) | (6,827) | (1,098) |
Net cash (used in) generated from operating activities | (8,400) | 49,097 | 7,898 |
Cash flows generated from (used in) investing activities: | |||
Purchase of property, plant and equipment | (5,498) | (1,452) | (234) |
Proceeds from disposal of property and equipment | 14 | 51 | 8 |
Purchase of short term investments | (95,000) | (50,000) | (8,043) |
Increase in restricted cash | (166) | (7,685) | (1,236) |
Increase in other receivable | — | (40,755) | (6,556) |
Return of investment in non-current assets | — | 400 | 64 |
Decrease (increase) in amounts due from related parties | 40,071 | (29,101) | (4,681) |
Net cash used in investing activities | (60,579) | (128,542) | (20,678) |
Cash flows generated from financing activities: | |||
|
2,450 | — | — |
Proceeds on exercise of stock options | — | 2,346 | 377 |
Net cash generated from financing activities | 2,450 | 2,346 | 377 |
Net decrease in cash and cash equivalents | (66,529) | (77,099) | (12,403) |
Cash and cash equivalents at beginning of period | 2,525,618 | 2,288,623 | 368,159 |
Effect of exchange rate changes on cash and cash equivalents | (755) | 6,105 | 982 |
Cash and cash equivalents at end of period | 2,458,334 | 2,217,629 | 356,738 |
Interest paid | — | — | — |
Income taxes paid | 9,497 | 7,971 | 1,282 |
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Reconciliations of Net Income to Adjusted EBITDA and Adjusted EBITDA Margin | |||
(In thousands) | |||
For The Three Months Ended | |||
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2013 | 2014 | 2014 | |
RMB | RMB | US$ | |
(unaudited) | (unaudited) | (unaudited) | |
Net income | 22,364 | 41,953 | 6,749 |
Income tax expense | 6,233 | 7,268 | 1,169 |
Investment income | — | (7,173) | (1,154) |
Interest income | (21,545) | (22,225) | (3,575) |
Depreciation | 7,936 | 7,692 | 1,237 |
Amortization of intangible assets | 3,416 | 3,416 | 550 |
Compensation expenses associated with stock option | 12,780 | 7,604 | 1,223 |
Adjusted EBITDA | 31,184 | 38,535 | 6,199 |
Total net revenues | 401,262 | 466,204 | 74,996 |
Adjusted EBITDA Margin | 7.8% | 8.3% | 8.3% |
CONTACT: For more information, please contact:Source:Oasis Qiu Investor Relations Manager Tel: +86 (20) 6122-2731 Email: qiusr@cninsure.net
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