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Financial Highlights for Second Quarter of 2014
Commenting on the second quarter financial results, Mr.
"While expanding our off-line sales and service capabilities, we are dedicated to embracing the internet by establishing online financial product and services vertical portals and an online-to-offline ("O2O") ecological circle to support our offline operations. With a clear vision of our strategic direction, our goal, and the path to achieving it, we have rolled out several customer acquisition and online transaction platforms, including CNpad App and eHuzhu program (www.ehuzhu.com), a non-profit mutual aid platform. In the meantime, we have completed the restructuring of our offline operations which boasts a well-established nationwide sales and services network to provide our clients with the highest
quality of financial products and services. Starting from the third quarter of 2014, we plan to push forward initiatives to strengthen our online customer acquisition and transaction platforms, and to seamlessly connect our offline sales and service capabilities with our online platforms. Several intensive marketing programs will also be initiated."
"We remain upbeat about our future and believe we have the right strategy and are on track to achieve strong sustainable growth over the long term."
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 mainly consists of providing agency services for property and casualty ("P&C") insurance products and life insurance products to individual clients,
(2) insurance brokerage business segment, which mainly consists of providing P&C and life insurance brokerage services to institutional clients,
(3) claims adjusting segment, which consists of providing 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.
Financial Results for the Second 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
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
Selling expenses were
General and administrative expenses were
(1) a 92.2% increase in research and development expenses, from
(2) a 18.0% increase in staff salary expenses, from
(3) a 34.1% decrease in share-based compensation expenses, from
As a result of the preceding factors, income from operations was
Operating margin was 3.7% for the second quarter of 2014, compared with 0.05% 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 10.9% for the second quarter of 2014 compared with 5.0% for the corresponding period in 2013.
Basic and diluted net income per ADS were
Adjusted EBITDA was
Adjusted EBITDA margin was 8.9% for the second quarter of 2014, compared with 6.8% for the corresponding period in 2013.
Diluted adjusted EBITDA per ADS was
As of
Business Highlights:
As of
Business Outlook
Conference Call
The Company will host a conference call to discuss the second quarter 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 |
Hong Kong | 800-903-737 |
The toll dial-in numbers: | |
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400-120-0654 |
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+65-6723-9385 |
A replay of the call will be available for 7 days by dialing the following number: +61-2-9003-4211
Conference ID #:87267961
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, 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 diluted 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 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 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 second 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.
1This announcement contains currency conversions of certain Renminbi (RMB) amounts into U.S. dollars (US$) at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB6.2036 to
2Adjusted EBITDA is defined as net income before income tax expense, investment income, interest income, depreciation, amortization and compensation expenses associated with stock option.
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Condensed Consolidated Balance Sheets | |||
(In thousands) | |||
As of |
As of |
As of |
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RMB | RMB | US$ | |
(audited) | (unaudited) | (unaudited) | |
ASSETS: | |||
Current assets: | |||
Cash and cash equivalents | 2,288,623 | 2,008,608 | 323,781 |
Restricted cash | 11,100 | 10,618 | 1,712 |
Short term investments | 253,900 | 598,900 | 96,541 |
Accounts receivable, net | 199,482 | 191,551 | 30,877 |
Insurance premium receivables | 57 | 915 | 148 |
Other receivables | 254,776 | 208,796 | 33,657 |
Deferred tax assets | 4,858 | — | — |
Amounts due from related parties | 144,371 | 219,474 | 35,378 |
Other current assets | 20,634 | 25,554 | 4,119 |
Total current assets | 3,177,801 | 3,264,416 | 526,213 |
Non-current assets: | |||
Property, plant, and equipment, net | 69,562 | 57,500 | 9,269 |
Goodwill and intangible assets, net | 107,668 | 174,523 | 28,133 |
Deferred tax assets | 3,382 | 2,489 | 401 |
Investment in affiliates | 189,241 | 203,523 | 32,807 |
Other non-current assets | 13,076 | 12,676 | 2,043 |
Total non-current assets | 382,929 | 450,711 | 72,653 |
Total assets | 3,560,730 | 3,715,127 | 598,866 |
LIABILITIES AND EQUITY: | |||
Current liabilities: | |||
Accounts payable (including accounts payable of the consolidated variable interest entities ("VIEs") without recourse to |
92,324 | 101,082 | 16,294 |
Insurance premium payables (including insurance premium payables of the consolidated VIEs without recourse to |
4,066 | 4,408 | 711 |
Other payables and accrued expenses (including other payables and accrued expense of the consolidated VIEs without recourse to |
147,954 | 186,458 | 30,056 |
Accrued payroll (including accrued payroll of the consolidated VIEs without recourse to |
39,089 | 35,590 | 5,737 |
Income tax payable (including income tax payable of the consolidated of VIEs without recourse to |
55,992 | 54,068 | 8,716 |
Total current liabilities | 339,425 | 381,606 | 61,514 |
Non-current liabilities: | |||
Other tax liabilities | 50,735 | 46,829 | 7,549 |
Deferred tax liabilities | 23,808 | 26,998 | 4,352 |
Total non-current liabilities | 74,543 | 73,827 | 11,901 |
Total liabilities | 413,968 | 455,433 | 73,415 |
Ordinary shares | 7,624 | 7,634 | 1,231 |
Additional paid-in capital | 2,329,962 | 2,335,937 | 376,545 |
Statutory reserves | 182,740 | 182,740 | 29,457 |
Retained earnings | 618,885 | 718,789 | 115,866 |
Accumulated other comprehensive loss | (111,114) | (105,477) | (17,003) |
Total |
3,028,097 | 3,139,623 | 506,096 |
Non-controlling interests | 118,665 | 120,071 | 19,355 |
Total equity | 3,146,762 | 3,259,694 | 525,451 |
Total liabilities and equity | 3,560,730 | 3,715,127 | 598,866 |
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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 | For The Six Months Ended | |||||
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2013 | 2014 | 2014 | 2013 | 2014 | 2014 | |
RMB | RMB | US$ | RMB | RMB | US$ | |
(unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | |
Net revenues: | ||||||
Revenues of insurance agency business | 345,907 | 379,405 | 61,158 | 689,204 | 731,003 | 117,835 |
Revenues of insurance brokerage business | 10,575 | 55,124 | 8,886 | 13,790 | 106,187 | 17,117 |
Revenues of claims adjusting business | 60,645 | 74,324 | 11,981 | 112,866 | 137,867 | 22,224 |
Revenues of other services | 4,162 | — | — | 6,691 | — | — |
Total net revenues | 421,289 | 508,853 | 82,025 | 822,551 | 975,057 | 157,176 |
Operating costs and expenses: | ||||||
Costs of insurance agency business | (268,876) | (291,744) | (47,028) | (533,593) | (556,933) | (89,776) |
Costs of insurance brokerage business | (7,988) | (44,346) | (7,148) | (10,469) | (84,136) | (13,562) |
Costs of claims adjusting business | (34,110) | (40,013) | (6,450) | (62,037) | (77,533) | (12,498) |
Costs of other services | (2,070) | — | — | (4,114) | — | — |
Total operating costs | (313,044) | (376,103) | (60,626) | (610,213) | (718,602) | (115,836) |
Selling expenses | (24,364) | (24,362) | (3,927) | (44,467) | (48,568) | (7,829) |
General and administrative expenses | (83,686) | (89,671) | (14,455) | (166,067) | (175,960) | (28,364) |
Total operating costs and expenses | (421,094) | (490,136) | (79,008) | (820,747) | (943,130) | (152,029) |
Income from operations | 195 | 18,717 | 3,017 | 1,804 | 31,927 | 5,147 |
Other income, net: | ||||||
Investment income | 1,320 | 17,078 | 2,753 | 1,320 | 24,251 | 3,909 |
Interest income | 20,323 | 21,791 | 3,513 | 41,868 | 44,016 | 7,095 |
Others, net | 1,533 | 466 | 75 | 1,642 | 660 | 106 |
Income before income taxes and income of affiliates | 23,371 | 58,052 | 9,358 | 46,634 | 100,854 | 16,257 |
Income tax expense | (5,802) | (7,268) | (1,172) | (12,035) | (14,536) | (2,343) |
Share of income of affiliates | 5,310 | 8,050 | 1,298 | 10,644 | 14,469 | 2,332 |
Net income | 22,879 | 58,834 | 9,484 | 45,243 | 100,787 | 16,246 |
Less: net gain attributable to noncontrolling interests | 1,953 | 3,631 | 585 | 3,289 | 883 | 142 |
Net income attributable to the Company's shareholders | 20,926 | 55,203 | 8,899 | 41,954 | 99,904 | 16,104 |
Net income per share: | 0.02 | 0.06 | 0.01 | 0.04 | 0.10 | 0.02 |
Basic | ||||||
Diluted | 0.02 | 0.05 | 0.01 | 0.04 | 0.10 | 0.02 |
Net income per ADS: | ||||||
Basic | 0.42 | 1.10 | 0.18 | 0.84 | 2.00 | 0.32 |
Diluted | 0.42 | 1.10 | 0.18 | 0.84 | 1.99 | 0.32 |
Shares used in calculating net income per share: | 998,861,526 | 1,000,294,943 | 1,000,294,943 | 998,861,526 | 999,603,760 | 999,603,760 |
Basic | ||||||
Diluted | 1,002,321,530 | 1,006,066,521 | 1,006,066,521 | 1,002,278,510 | 1,004,712,385 | 1,004,712,385 |
22,879 | 58,834 | 9,484 | 45,243 | 100,787 | 16,246 | |
Net income | ||||||
Other comprehensive (loss) income, net of tax: Foreign currency translation adjustments | (2,931) | (468) | (75) | (3,686) | 5,637 | 909 |
Comprehensive income | 19,948 | 58,366 | 9,409 | 41,557 | 106,424 | 17,155 |
Less: Comprehensive income attributable to the noncontrolling interests | 1,953 | 3,631 | 585 | 3,289 | 883 | 142 |
Comprehensive income attributable to the |
17,995 | 54,735 | 8,824 | 38,268 | 105,541 | 17,013 |
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Condensed Consolidated Statements of Cash Flow | ||||||
(In thousands) | ||||||
For The Three Months Ended | For The Six Months Ended | |||||
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2013 | 2014 | 2014 | 2013 | 2014 | 2014 | |
RMB | RMB | US$ | RMB | RMB | US$ | |
(unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | |
OPERATING ACTIVITIES | ||||||
Net income | 22,879 | 58,834 | 9,484 | 45,243 | 100,787 | 16,246 |
Adjustments to reconcile net income to net cash generated from operating activities: | ||||||
Depreciation | 8,073 | 7,447 | 1,200 | 16,009 | 15,139 | 2,440 |
Amortization of intangible assets | 3,416 | 3,818 | 615 | 6,832 | 7,234 | 1,166 |
Allowance for doubtful receivables | 447 | 1,419 | 229 | 1,196 | 3,128 | 504 |
Compensation expenses associated with stock option | 10,202 | 6,722 | 1,084 | 22,982 | 14,326 | 2,309 |
Gain on disposal of property, plant and equipment | (16) | (54) | (9) | (16) | (85) | (14) |
Investment income | — | (10,670) | (1,720) | — | (10,670) | (1,720) |
Share of income of affiliates | (5,310) | (8,050) | (1,298) | (10,644) | (14,469) | (2,332) |
Changes in operating assets and liabilities | 11,900 | 24,195 | 3,901 | (38,411) | 17,368 | 2,800 |
Net cash generated from operating activities | 51,591 | 83,661 | 13,486 | 43,191 | 132,758 | 21,399 |
Cash flows generated from(used in) investing activities: | ||||||
Purchase of property, plant and equipment | (27,221) | (1,493) | (241) | (32,719) | (2,945) | (475) |
Proceeds from disposal of property and equipment | 16 | 307 | 49 | 30 | 358 | 58 |
Proceeds from disposal of short term investments | 600 | 16,859 | 2,718 | 600 | 16,859 | 2,718 |
Purchase of short term investments | (138,900) | (310,000) | (49,971) | (233,900) | (360,000) | (58,031) |
Acquisition of subsidiaries, net of cash | — | 1,015 | 164 | — | 1,015 | 164 |
(Increase) decrease in restricted cash | (1,013) | 8,167 | 1,316 | (1,179) | 482 | 78 |
Decrease (increase) in other receivables | — | 35,700 | 5,755 | — | (5,055) | (815) |
Purchase of intangible assets | — | (118) | (19) | — | (118) | (19) |
Return of investment in non-current assets | — | — | — | — | 400 | 65 |
(Increase) decrease in amounts due from related parties | (24,931) | (43,488) | (7,010) | 15,140 | (72,589) | (11,701) |
Net cash used in investing activities | (191,449) | (293,051) | (47,239) | (252,028) | (421,593) | (67,958) |
Cash flows generated from financing activities: | ||||||
Capital injection by noncontrolling interests | — | — | — | 2,450 | — | — |
Proceeds on exercise of stock options | — | 837 | 135 | — | 3,183 | 513 |
Net cash generated from financing activities | — | 837 | 135 | 2,450 | 3,183 | 513 |
Net decrease in cash and cash equivalents | (139,858) | (208,553) | (33,618) | (206,387) | (285,652) | (46,046) |
Cash and cash equivalents at beginning of period | 2,458,334 | 2,217,629 | 357,474 | 2,525,618 | 2,288,623 | 368,918 |
Effect of exchange rate changes on cash and cash equivalents | (2,931) | (468) | (75) | (3,686) | 5,637 | 909 |
Cash and cash equivalents at end of period | 2,315,545 | 2,008,608 | 323,781 | 2,315,545 | 2,008,608 | 323,781 |
Interest paid | — | — | — | — | — | — |
Income taxes paid | 5,275 | 6,419 | 1,035 | 14,772 | 14,390 | 2,320 |
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Reconciliations of Net Income to Adjusted EBITDA and Adjusted EBITDA Margin | ||||||
(In thousands) | ||||||
For The Three Months Ended | For The Six Months Ended | |||||
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2013 | 2014 | 2014 | 2013 | 2014 | 2014 | |
RMB | RMB | US$ | RMB | RMB | US$ | |
(unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | |
Net income | 22,879 | 58,834 | 9,484 | 45,243 | 100,787 | 16,246 |
Income tax expense | 5,802 | 7,268 | 1,172 | 12,035 | 14,536 | 2,343 |
Investment income | (1,320) | (17,078) | (2,753) | (1,320) | (24,251) | (3,909) |
Interest income | (20,323) | (21,791) | (3,513) | (41,868) | (44,016) | (7,095) |
Depreciation | 8,073 | 7,447 | 1,200 | 16,009 | 15,139 | 2,440 |
Amortization of intangible assets | 3,416 | 3,818 | 615 | 6,832 | 7,234 | 1,166 |
Compensation expenses associated with stock option | 10,202 | 6,722 | 1,084 | 22,982 | 14,326 | 2,309 |
Adjusted EBITDA | 28,729 | 45,220 | 7,289 | 59,913 | 83,755 | 13,500 |
Total net revenues | 421,289 | 508,853 | 82,025 | 822,551 | 975,057 | 157,176 |
Adjusted EBITDA Margin | 6.8% | 8.9% | 8.9% | 7.3% | 8.6% | 8.6% |
CONTACT: For more information, please contact: Oasis Qiu Investor Relations Manager Tel: +86 (20) 6122-2731 Email: qiusr@cninsure.netSource:
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