UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of August 2017

 

Commission File Number: 001-33768

 

 

FANHUA INC.

 

 

27/F, Pearl River Tower
No.15 West Zhujiang Road
Tianhe District, Guangzhou 510623
People’s Republic of China
(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F ☒       Form 40-F ☐

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	Fanhua Inc.
	By:	/s/ Chunlin Wang
	Name: Title:	Chunlin Wang Chief Executive Officer

 

Date: August 22, 2017

 

 

Exhibit Index

 

Exhibit No.		Description.
Exhibit 99.1		Press Release

 

 

3

 

Exhibit 99.1

 

 

 

Fanhua Reports Second Quarter and First Half 2017 Unaudited Financial Results

 

— Quarterly Diluted Net Income Per ADS US$0.32, Up 328.1%

 

GUANGZHOU, August 21, 2017 (GLOBE NEWSWIRE) -- Fanhua Inc., (Nasdaq: FANH), (the “Company” or “Fanhua”), a leading independent online-to-offline (“O2O”) financial services provider in China, today announced its unaudited financial results for the second quarter ended June 30, 2017¹.

 

Financial Highlights for the Second quarter of 2017:

 

(In thousands, except per ADS)		2016 Q2 (RMB)				2017 Q2 (RMB)				2017 Q2 (US$)				Change %
Total net revenues			1,066,054				1,012,972				149,422				-5.0
Operating (loss) income			(8,182	)			71,208				10,504				N/A
Net income attributable to the Company’s shareholders			30,999				140,347				20,702				352.7
Diluted net income per ADS			0.51				2.20				0.32				328.1

 

Financial Highlights for the First half of 2017:

 

(In thousands, except per ADS)		First Half 2016 (RMB)				First Half 2017 (RMB)				First Half 2017 (US$)				Change %
Total net revenues			1,973,918				2,480,352				365,872				25.7
Operating (loss) income			(28,180	)			134,410				19,827				N/A
Net income attributable to the Company’s shareholders			50,359				210,087				30,989				317.2
Diluted net income per ADS			0.84				3.37				0.50				303.7

 

Driven by rapid growth in our life insurance business, we recorded RMB71.2 million in operating income for the second quarter of 2017, beating expectations. We also achieved RMB140.3 million in net income attributable to the Company’s shareholders, representing a year-on-year increase of 352.7%.” Commenting on the financial results of the second quarter of 2017, Mr. Chunlin Wang, Chief Executive Officer of Fanhua, stated, “In spite of the challenge of an industry-wide product adjustment, Fanhua still managed to grow its life insurance premiums 88.9% year-on-year, significantly outpacing the industry, among which first year premiums on term life insurance products and renewal premiums grew 131.3% and 56.8% on a year-on-year basis, respectively. Of particular note, we took pride in the fact that the 13-month persistency ratio of the term life insurance products that we distributed improved to 93.3% from 89% a year ago, reflecting the recognition of Fanhua’s high products and service quality by our customers.

 

1

This announcement contains currency conversions of certain Renminbi (RMB) amounts into U.S. dollars (US$) at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB 6.7793 to US$ 1.00, the effective noon buying rate as of June 30, 2017 in The City of New York for cable transfers of RMB as set forth in the H.10 weekly statistical release of the Federal Reserve Board.

 

 

 

 

“During the second quarter of 2017, as part of our efforts to develop our life insurance business through expanding and strengthening our sales force, we abandoned certain channels of our P&C business, which has been suffering from declining margins and devoted more resources to advancing our life insurance business. Despite a short-term negative impact on total net revenue brought about by this move, we believe that, from a long term perspective, it will further optimize our company’s business structure and improve our profitability.

 

“Building on the progress made in the first half of 2017, during the second half of 2017 we will channel more resources to building up our platform and operating capability. We will focus on the key areas of regional expansion, office setup, staff recruitment, assembling our sales team, sales agent management system development, as well as marketing and training, in order to set the stage for sustained and rapid growth of our life insurance business in the years to come.”

 

Financial Results for the Second Quarter of 2017

 

Total net revenues were RMB1.0 billion (US$149.4 million) for the second quarter of 2017, representing a decrease of 5.0% from RMB1.1 billion for the corresponding period in 2016.

 

	●	Net revenues for the life insurance business were RMB590.3 million (US$87.1 million) for the second quarter of 2017, representing an increase of 187.9% from RMB205.0 million for the corresponding period in 2016. The increase was due to i) growth in sales agents; ii) implementation of our cross-selling strategy and iii) recognition of more performance bonuses in the second quarter of 2017. Revenues generated from our life insurance business accounted for 58.2% of our total net revenues.
	●	Net revenues for the P&C insurance business were RMB350.0 million (US$51.6 million) for the second quarter of 2017, representing a decrease of 55.1% from RMB780.3 million for the corresponding period in 2016. The decrease was primarily due to our efforts to abandon lower margin channel businesses starting from the second quarter of 2017 and the suspension of business cooperation with PICC Property and Casualty Company Limited (“PICC P&C”) starting from March 1, 2017. Revenues generated from the P&C insurance business accounted for 34.6% of our total net revenues in the second quarter of 2017.
	●	Net revenues for the claims adjusting business were RMB72.7 million (US$10.7 million) for the second quarter of 2017, representing a decrease of 10.0% from RMB80.8 million for the corresponding period in 2016. The decrease was primarily due to suspension of business cooperation with PICC P&C. Revenues generated from the claims adjusting business accounted for 7.2% of our total net revenues in the second quarter of 2017.

 

 

 

 

Total operating costs and expenses were RMB941.8 million (US$138.9 million) for the second quarter of 2017, representing a decrease of 12.3% from RMB1.1 billion for the corresponding period in 2016.

 

●

Commission costs were RMB743.9 million (US$109.7 million) for the second quarter of 2017, representing a decrease of 9.3% from RMB820.0 million for the corresponding period in 2016.

 

	u	Costs of the life insurance business were RMB375.3 million (US$55.4 million) for the second quarter of 2017, representing an increase of 174.2% from RMB136.9 million for the corresponding period in 2016. The increase was in line with the growth in sales. Costs incurred by the life insurance business accounted for 50.4% of our total commission costs in the second quarter of 2017.
	u	Costs of the P&C insurance business were RMB325.6 million (US$48.0 million) for the second quarter of 2017, representing a decrease of 48.9% from RMB637.7 million for the corresponding period in 2016. The decrease was primarily in line with the decline in sales, partially offset by the increased rate of commissions paid to sales agents. Costs incurred by the P&C insurance business accounted for 43.8% of our total commission costs in the second quarter of 2017.
	u	Costs of claims adjusting business were RMB43.0 million (US$6.3 million) for the second quarter of 2017, representing a decrease of 5.1% from RMB45.4 million for the corresponding period in 2016. Costs incurred by the claims adjusting business accounted for 5.8% of our total commission costs in the second quarter of 2017.

 

	●	Selling expenses were RMB53.7 million (US$7.9 million) for the second quarter of 2017, representing a decrease of 61.7% from RMB140.4 million for the corresponding period in 2016. The decrease was primarily because promotional marketing expenses were paid to sales agents in the second quarter of 2016 while no promotional marketing plan of such nature was launched in the year of 2017.
	●	General and administrative expenses were RMB144.1 million (US$21.3 million) for the second quarter of 2017, representing an increase of 26.6% from RMB113.9 million for the corresponding period in 2016. The increase was primarily due to an increase in expenses incurred by new office setup and staff recruitment as a result of regional expansion.

 

As a result of the preceding factors, we had an operating income of RMB71.2 million (US$10.5 million) for the second quarter of 2017, as compared to an operating loss of RMB8.2 million for the corresponding period in 2016.

 

Operating margin was 7.0% for the second quarter of 2017, compared to negative 0.8% for the corresponding period in 2016. The increase was primarily due to the increase in sales of regular term life insurance policies which have higher profit margins.

 

 

 

 

Investment income was RMB97.9 million (US$14.4 million) for the second quarter of 2017, representing an increase of 267.6% from RMB26.6 million for the corresponding period in 2016. The investment income represented yields from short-term investments in financial products which mainly consist of inter-bank deposits or collective trust products with terms ranging from half a year to two years and interest payable on a quarterly, semi-annual or annual basis. Our investment income fluctuates from quarter to quarter because investment income is recognized when received.

 

Interest income was RMB2.0 million (US$0.3 million) for the second quarter of 2017, representing an increase of 6.6% from RMB1.8 million for the corresponding period in 2016.

 

Income tax expense was RMB50.8 million (US$7.5 million) for the second quarter of 2017, representing an increase of 29.2 times from RMB1.7 million for the corresponding period in 2016. The increase was primarily due to an increase in operating income and investment income. The effective tax rate for the second quarter of 2017 was 28.2% compared with 6.9% for the corresponding period in 2016. The increase in effective tax rate was primarily due to operating losses of some of our subsidiaries in the second quarter of 2017 which are not expected to be compensated by future profits, and therefore we reserved the full amount of provisions for the deferred corporate income tax assets resulted from these operating losses.

 

Share of income of affiliates was RMB12.0 million (US$1.8 million) for the second quarter of 2017, representing an increase of 6.8% from RMB11.2 million for the corresponding period in 2016, mainly attributable to an increase of profits from Sincere Fame International Limited, a company in which we own 20.6% of the equity interest.

 

Net income attributable to the Company’s shareholders was RMB140.3 million (US$20.7 million) for the second quarter of 2017, representing an increase of 352.7% from RMB31.0 million for the corresponding period in 2016.

 

Net margin was 13.9% for the second quarter of 2017 compared with 2.9% for the corresponding period in 2016.

 

Basic and diluted net income per ADS were RMB2.28 (US$0.34) and RMB2.20 (US$0.32) for the second quarter of 2017, respectively, representing increases of 326.1% and 328.1% from RMB0.53 and RMB0.51 for the corresponding period in 2016.

 

As of June 30, 2017, the Company had RMB3.0 billion (US$442.8 million) in cash, cash equivalents and short term investments.

 

 

 

 

Financial Results for the First Half of 2017

 

Total net revenues were RMB2.5 billion (US$365.9 million) for the first half of 2017, representing an increase of 25.7% from RMB2.0 billion for the corresponding period in 2016.

 

	●	Net revenues for the life insurance business were RMB1.2 billion (US$177.5 million) for the first half of 2017, representing an increase of 229.8% from RMB365.0 million for the corresponding period in 2016. The increase was due to growth in the number of sales agents, implementation of our cross-selling strategy and industry growth. Revenues generated from our life insurance business accounted for 48.5% of our total net revenues during the first half of 2017.
	●	Net revenues for the P&C insurance business were RMB1.1 billion (US$168.1 million) for the first half of 2017, representing a decrease of 22.0% from RMB1.5 billion for the corresponding period in 2016. The decrease was primarily due to our efforts to abandon lower margin channel businesses starting from the second quarter of 2017 and suspension of our business cooperation with PICC P&C since March 1, 2017. Revenues generated from the P&C insurance business accounted for 46.0% of our total net revenues in the first half of 2017.
	●	Net revenues for the claims adjusting business were RMB137.3 million (US$20.2 million) for the first half of 2017, representing a decrease of 7.3% from RMB148.1 million for the corresponding period in 2016. The decrease was primarily due to suspension of our business cooperation with PICC P&C. Revenues generated from the claims adjusting business accounted for 5.5% of our total net revenues in the first half of 2017.

 

Total operating costs and expenses were RMB2.3 billion (US$346.0 million) for the first half of 2017, representing an increase of 17.2% from RMB2.0 billion for the corresponding period in 2016.

 

●

Commission costs were RMB2.0 billion (US$289.3 million) for the first half of 2017, representing an increase of 28.3% from RMB1.5 billion for the corresponding period in 2016.

 

	u	Costs of the life insurance business were RMB810.4 million (US$119.5 million) for the first half of 2017, representing an increase of 229.1% from RMB246.2 million for the corresponding period in 2016. The increase was in line with the growth in sales. Costs incurred by the life insurance business accounted for 41.3% of our total commission costs in the first half of 2017.
	u	Costs of the P&C insurance business were RMB1.1 billion (US$156.0 million) for the first half of 2017, representing a decrease of 11.0% from RMB1.2 billion for the corresponding period in 2016. The decrease was primarily in line with the decline in sales, partially offset by an increased rate of commissions paid to sale agents. Costs incurred by the P&C insurance business accounted for 53.9% of our total commission costs in the first half of 2017.
	u	Costs of claims adjusting business were RMB93.3 million (US$13.8 million) for the first half of 2017, representing a decrease of 0.4% from RMB93.7 million for the corresponding period in 2016. Costs incurred by the claims adjusting business accounted for 4.8% of our total commission costs in the first half of 2017.

 

 

 

 

	●	Selling expenses were RMB106.1 million (US$15.7 million) for the first half of 2017, representing a decrease of 57.5% from RMB249.5 million for the corresponding period in 2016. The decrease was primarily because promotional marketing expenses were paid to sales agents in the first half of 2016 while no promotional marketing plan of such nature was launched in the year of 2017.
	●	General and administrative expenses were RMB278.3 million (US$41.1 million) for the first half of 2017, representing an increase of 24.4% from RMB223.8 million for the corresponding period in 2016. The increase was primarily due to an increase in expenses incurred by new office setup and staff recruitment as a result of regional expansion.

 

As a result of the preceding factors, we had an operating income of RMB134.4 million (US$19.8 million) for the first half of 2017, as compared to an operating loss of RMB28.2 million for the corresponding period in 2016.

 

Operating margin was 5.4% for the first half of 2017, compared to negative 1.4% for the corresponding period in 2016. The increase was primarily due to the increase in sales of regular term life insurance policies which have a higher profit margin.

 

Investment income was RMB108.2 million (US$16.0 million) for the first half of 2017, representing an increase of 151.1% from RMB43.1 million for the corresponding period in 2016. The investment income represented yields from short-term investments in financial products which mainly consist of inter-bank deposits or collective trust products with terms ranging from half a year to two years and interest payable on a quarterly, semi-annual or annual basis. Our investment income fluctuates from quarter to quarter because investment income is recognized when received.

 

Interest income was RMB2.5 million (US$0.4 million) for the first half of 2017, representing a decrease of 60.3% from RMB6.4 million for the corresponding period in 2016. The decrease in interest income was primarily due to decreases in term deposits as a result of increases in short-term investments.

 

Income tax expense was RMB79.3 million (US$11.7 million) for the first half of 2017, representing an increase of 37.2 times from RMB2.1 million for the corresponding period in 2016. The increase was primarily due to an increase in operating income and investment income. The effective tax rate for the first half of 2017 was 31.0% compared with 6.8% for the corresponding period in 2016. The increase in effective tax rate was primarily due to operating losses of some of our subsidiaries in the first half year of 2017 which are not expected to be compensated by future profits, and therefore we reserved the full amount of provisions for the deferred corporate income tax assets resulted from these operating losses.

 

Share of income of affiliates was RMB29.7 million (US$4.4 million) for the first half of 2017, representing an increase of 39.1% from RMB21.3 million for the corresponding period in 2016, mainly attributable to an increase of profits from Sincere Fame International Limited, in which the Company owns 20.6% of the equity interests.

 

 

 

 

Net income attributable to the Company’s shareholders was RMB210.1 million (US$31.0 million) for the first half of 2017, representing an increase of 317.2% from RMB50.4 million for the corresponding period in 2016.

 

Net margin was 8.5% for the first half of 2017 compared with 2.6% for the corresponding period in 2016.

 

Basic and diluted net income per ADS were RMB3.50 (US$0.52) and RMB3.37 (US$0.50) for the first half of 2017, respectively, representing increases of 302.7% and 303.7% from RMB0.87 and RMB0.84 for the corresponding period in 2016.

 

Key Operational Metrics for Fanhua’s Online Initiatives for the Second quarter of 2017:

 

●	CNpad Mobile Application (“CNpad App”) - Our proprietary mobile sales support system:

 

	Ø	CNpad App had been downloaded and activated 294,228 times as of June 30, 2017, representing an increase of 114.9% from 136,909 times as of June 30, 2016;
	Ø	The number of active users2 of CNpad App was 60,234 in the second quarter of 2017, representing an increase of 110.1% from 28,675 in the second quarter of 2016;
	Ø	Insurance premiums generated through CNpad App were RMB923.3 million (US$136.2 million) in the second quarter of 2017, representing an increase of 23.1% from RMB750.2 million for the corresponding period of 2016 and accounted for 44.3% of our total insurance premiums in the second quarter of 2017 as compared to 22.0% for the corresponding period of 2016.

 

●	eHuzhu - Our online non-profit mutual aid platform:

 

Ø

The number of registered members was 1.8 million as of June 30, 2017, representing an increase of 111.5% from 872,922 as of June 30, 2016.

 

●	Baoxian.com - Our online insurance platform:

 

	Ø	The number of registered customer accounts was 1.0 million as of June 30, 2017, representing an increase of 189.3% from approximately 356,000 as of June 30, 2016.
	Ø	The number of active customer accounts3 was 45,520 in the second quarter of 2017, representing an increase of 84.1% from 24,724 in the corresponding period of 2016;
	Ø	Insurance premiums generated on or through Baoxian.com was RMB44.7 million (US$6.6 million) in the second quarter of 2017, representing an increase of 131.8% from RMB19.3 million in the corresponding period of 2016.

 

 

2	Active users are defined as users who made at least one purchase through CNpad App during the specified period.
3	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

 

 

 

 

Recent Development

 

●	On June 15, 2017, in recognition of its extraordinary performance in the internet insurance sector, Baoxian.com was awarded Outstanding Internet Insurance Platform for the Year 2016 during the 2017 China Internet Insurance Conference held by China’s Insurance Quote, one of the most authoritative insurance trade publications in China. Mr. Anlin Hu, CEO of Baoxian.com, was recognized as Internet Insurance Leader of the Year 2016 in the event.
●	On June 13, 2017, Fanhua Insurance Surveyors & Loss Adjustors Co., Ltd., or FISLA, a subsidiary of Fanhua, entered into a framework agreement with Jintai Property & Casualty Insurance Co., Ltd., or Jintai, for a long-term comprehensive strategic partnership. Both parties will reinforce their cooperative efforts at both the headquarters and branch level, in order to provide better service experience for Jintai’s customers.
●	On May 27, 2017, Fanhua signed a headquarter-to-headquarter agreement with Evergrande Life Insurance Co., Ltd., or Evergrande Life. Both parties will engage in comprehensive cooperation on product sales, product development and value-added services for their customers. Evergrande Life, a subsidiary of Evergrande Group, one of the largest real estate conglomerates in China, primarily focuses on the life insurance, health insurance and casualty insurance businesses.
●	Fanhua had 328,267 sales agents and 1,228 professional claims adjustors as of June 30, 2017, compared with 151,532 sales agents, and 1,352 professional claims adjustors as of June 30, 2016. As of June 30, 2017, Fanhua’s distribution network consisted of 856 sales outlets operating in 21 provinces, compared with 494 sales outlets operating in 19 provinces as of June 30, 2016. Its claims adjusting service network covered 29 provinces with 156 service outlets as of June 30, 2017, compared with 153 service outlets in 29 provinces as of June 30, 2016.

 

Business Outlook

 

Fanhua expects its operating income to be no less than RMB50.0 million for the third quarter of 2017. This forecast reflects Fanhua’s current view, which is subject to change.

 

Conference Call

 

The Company will host a conference call to discuss its second quarter and first half 2017 financial results as per the following details.

 

Time: 9:00 PM Eastern Daylight Time on August 21, 2017
    or 9:00 AM Beijing/Hong Kong Time on August 22, 2017

 

 

 

 

The toll free dial-in numbers:

 

United States	1-855-500-8701
United Kingdom	0800-015-9724
France	0800-918-648
Germany	0800-184-4876
Australia	1-300-713-759
Canada	1-855-757-1565
Taiwan	0080-665-1951
Hong Kong	800-906-606

 

The toll dial-in numbers:

 

China (Mainland)	400-120-0654
Singapore & Other Areas	+65-6713-5440

 

Conference ID #: 64223082

 

Additionally, a live and archived web cast of this call will be available at: http://ir.fanhuaholdings.com/events.cfm

 

About Fanhua Inc.

 

Fanhua Inc. is a leading independent online-to-offline financial services provider. Through our online platforms and offline sales and service network, we offer a wide variety of financial products and services to individuals and businesses, including property and casualty and life insurance products. We also provide insurance claims adjusting services, such as damage assessments, surveys, authentications and loss estimations.

 

Our online platforms include (1) CNpad, a mobile sales support application, (2) Baoxian.com, an online entry portal for comparing and purchasing health, accident, travel and homeowner insurance products; and (3) eHuzhu (www.ehuzhu.com), a non-profit online mutual aid platform in China.

 

As of June 30, 2017, our distribution and service network consisted of 328,267 sales agents and 1,228 professional claims adjustors with 1,012 sales and service outlets covering 29 provinces.

 

For more information about Fanhua Inc., please visit http://ir.fanhuaholdings.com/.

 

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 Fanhua and the industry. Potential risks and uncertainties include, but are not limited to, those relating to its ability to attract and retain productive agents, especially entrepreneurial agents, its ability to maintain existing and develop new business relationships with insurance companies, its ability to execute its growth strategy, its ability to adapt to the evolving regulatory environment in the Chinese insurance industry, its ability to compete effectively against its competitors, quarterly variations in its operating results caused by factors beyond its control and macroeconomic conditions in China and their potential impact on the sales of insurance products. All information provided in this press release is as of the date hereof, and Fanhua undertakes no obligation to update any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although Fanhua believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that its expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results. Further information regarding risks and uncertainties faced by Fanhua is included in Fanhua’s filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F.

 

 

 

 

FANHUA INC.
Unaudited Condensed Consolidated Balance Sheets
(In thousands)

 

		As of December 31,				As of June 30,				As of June 30,
		2016				2017				2017
		RMB				RMB				US$
ASSETS:
Current assets:
Cash and cash equivalents			240,242				621,303				91,647
Restricted cash			33,737				87,830				12,956
Short term investments			2,797,842				2,380,694				351,171
Accounts receivable, net			502,975				492,040				72,580
Insurance premium receivables			187				305				45
Other receivables			49,186				78,915				11,640
Amounts due from related parties			32,495				433,943				64,010
Other current assets			37,900				43,101				6,358
Total current assets			3,694,564				4,138,131				610,407
Non-current assets:
Property, plant, and equipment, net			31,414				31,651				4,669
Goodwill and intangible assets, net			181,549				164,533				24,270
Deferred tax assets			8,277				32,510				4,795
Investment in affiliates			294,576				323,723				47,752
Other non-current assets			28,188				28,188				4,158
Total non-current assets			544,004				580,605				85,644
Total assets			4,238,568				4,718,736				696,051

 

 

 

 

FANHUA INC.
Unaudited Condensed Consolidated Balance Sheets-(Continued)

(In thousands)

 

		As of December 31,				As of June 30,				As of June 30,
		2016				2017				2017
		RMB				RMB				US$
Current liabilities:
Accounts payable			278,188				369,825				54,552
Insurance premium payables			5,491				13,706				2,022
Other payables and accrued expenses			314,051				227,496				33,557
Accrued payroll			59,201				81,570				12,032
Income tax payable			90,188				135,591				20,001
Dividend payable			—				15,033				2,218
Total current liabilities			747,119				843,221				124,382
Non-current liabilities:
Other tax liabilities			72,778				72,612				10,711
Deferred tax liabilities			14,577				13,872				2,046
Total non-current liabilities			87,355				86,484				12,757
Total liabilities			834,474				929,705				137,139
Ordinary shares			8,658				9,174				1,353
Additional paid-in capital			2,301,655				2,461,774				363,131
Statutory reserves			311,590				301,590				44,487
Retained earnings			1,018,928				1,239,015				182,765
Accumulated other comprehensive loss			(65,844	)			(76,794	)			(11,328	)
Subscription receivables			(288,135	)			(259,153	)			(38,227	)
Total shareholders’ equity			3,286,852				3,675,606				542,181
Non-controlling interests			117,242				113,425				16,731
Total equity			3,404,094				3,789,031				558,912
Total liabilities and equity			4,238,568				4,718,736				696,051

 

 

 

 

FANHUA INC.

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 Six Months Ended
		June 30,												June 30,
		2016				2017				2017				2016				2017				2017
		RMB				RMB				US$				RMB				RMB				US$
Net revenues:
Life insurance Business			205,020				590,258				87,068				364,951				1,203,649				177,548
P&C insurance Business			780,270				350,026				51,632				1,460,916				1,139,430				168,075
Claims adjusting Business			80,764				72,688				10,722				148,051				137,273				20,249
Total net revenues			1,066,054				1,012,972				149,422				1,973,918				2,480,352				365,872
Operating costs and expenses:
Life  insurance Business			(136,888	)			(375,282	)			(55,357	)			(246,245	)			(810,392	)			(119,539	)
P&C  insurance Business			(637,737	)			(325,615	)			(48,031	)			(1,188,816	)			(1,057,784	)			(156,032	)
Claims adjusting Business			(45,360	)			(43,033	)			(6,348	)			(93,699	)			(93,336	)			(13,768	)
Total operating costs			(819,985	)			(743,930	)			(109,736	)			(1,528,760	)			(1,961,512	)			(289,339	)
Selling expenses			(140,395	)			(53,710	)			(7,923	)			(249,527	)			(106,118	)			(15,653	)
General and administrative expenses			(113,856	)			(144,124	)			(21,259	)			(223,811	)			(278,312	)			(41,053	)
Total operating costs and expenses			(1,074,236	)			(941,764	)			(138,918	)			(2,002,098	)			(2,345,942	)			(346,045	)
Income (loss) from operations			(8,182	)			71,208				10,504				(28,180	)			134,410				19,827
Other income, net:
Investment income			26,626				97,890				14,440				43,086				108,178				15,957
Interest income			1,835				1,957				289				6,353				2,524				372
Others, net			4,241				9,190				1,355				9,482				10,801				1,593
Income before income taxes and income of affiliates			24,520				180,245				26,588				30,741				255,913				37,749
Income tax expense			(1,683	)			(50,811	)			(7,495	)			(2,077	)			(79,336	)			(11,703	)
Share of income of affiliates			11,249				12,024				1,773				21,339				29,693				4,380
Net income			34,086				141,458				20,866				50,003				206,270				30,426
less: net income (loss) attributable to noncontrolling interests			3,087				1,111				164				(356	)			(3,817	)			(563	)
Net income attributable to the Company’s shareholders			30,999				140,347				20,702				50,359				210,087				30,989

 

 

 

 

FANHUA INC.

Unaudited Condensed Consolidated Statements of Income and Comprehensive Income-(Continued)

(In thousands, except for shares and per share data)

 

		For The Three Months Ended												For The Six Months Ended
		June 30,												June 30,
		2016				2017				2017				2016				2017				2017
		RMB				RMB				US$				RMB				RMB				US$
Net income per share:
Basic			0.03				0.11				0.02				0.04				0.18				0.03
Diluted			0.03				0.11				0.02				0.04				0.17				0.02
Net income per ADS:
Basic			0.53				2.28				0.34				0.87				3.50				0.52
Diluted			0.51				2.20				0.32				0.84				3.37				0.50
Shares used in calculating net income per share:
Basic			1,159,471,268				1,231,971,654				1,231,971,654				1,157,270,347				1,198,884,443				1,198,884,443
Diluted			1,206,953,720				1,276,541,316				1,276,541,316				1,204,692,713				1,245,046,426				1,245,046,426
Net income			34,086				141,458				20,866				50,003				206,270				30,426
Other comprehensive income (loss), net of tax: Foreign currency translation adjustments			6,195				(2,820	)			(415	)			4,897				(2,979	)			(438	)
Fair value changes			—				(896	)			(132	)			—				(632	)			(93	)
Share of other comprehensive gain (loss) of affiliates			(8,718	)			911				134				(28,361	)			(546	)			(81	)
Comprehensive income			31,563				138,653				20,453				26,539				202,113				29,814
Less: Comprehensive income (loss) attributable to the noncontrolling interests			3,087				1,111				164				(356	)			(3,817	)			(563	)
Comprehensive income attributable to the Company’s shareholders			28,476				137,542				20,289				26,895				205,930				30,377

  

 

 

 

FANHUA INC.

Unaudited Condensed Consolidated Statements of Cash Flow

(In thousands)

 

		For The Three Months Ended												For The Six Months Ended
		June 30,												June 30,
		2016				2017				2017				2016				2017				2017
		RMB				RMB				US$				RMB				RMB				US$
OPERATING ACTIVITIES
Net income			34,086				141,458				20,866				50,003				206,270				30,426
Adjustments to reconcile net income to net cash (used in) generated from operating activities:
Depreciation			3,331				4,025				594				6,675				7,728				1,140
Amortization of intangible assets			1,309				8,453				1,247				2,626				17,016				2,510
Allowance for doubtful receivables			(345	)			1,237				182				(1,035	)			8,906				1,314
Compensation expenses associated with stock option			2,042				—				—				4,937				—				—
Investment income			(11,839	)			(93,649	)			(13,814	)			(20,937	)			(99,913	)			(14,738	)
Gain on disposal of subsidiaries			(52	)			—				—				(3,082	)			(1,302	)			(192	)
Loss (gain) on disposal of property, plant and equipment			—				32				5				2				(2	)			0
Share of income of affiliates			(11,249	)			(12,024	)			(1,773	)			(21,339	)			(29,693	)			(4,380	)
Changes in operating assets and liabilities			(95,256	)			59,326				8,751				(73,116	)			8,943				1,319
Net cash (used in) generated from operating activities			(77,973	)			108,858				16,058				(55,266	)			117,953				17,399
Cash flows (used in) generated from investing activities:
Purchase of property, plant and equipment			(2,384	)			(5,333	)			(787	)			(4,017	)			(8,205	)			(1,210	)
Proceeds from disposal of property and equipment			24				18				3				48				56				8
Purchase of short term investments			(2,647,300	)			(3,159,000	)			(465,977	)			(4,852,300	)			(4,278,194	)			(631,067	)
Proceeds from disposal of short term investments			2,575,794				3,518,149				518,954				4,243,393				4,794,413				707,213
Disposal of subsidiaries, net of cash			22,890				20,867				3,078				29,326				14,350				2,117
Purchase of intangible assets			(20,000	)			—				—				(20,000	)			—				—
Increase in amounts due from related parties			—				(370,000	)			(54,578	)			—				(400,000	)			(59,003	)
Net cash (used in) generated from investing activities			(70,976	)			4,701				693				(603,550	)			122,420				18,058

 

 

 

 

FANHUA INC.

Unaudited Condensed Consolidated Statements of Cash Flow-(Continued)

(In thousands)

 

		For the Three Months Ended												For the Six Months Ended
		June 30,												June 30,
		2016				2017				2017				2016				2017				2017
		RMB				RMB				US$				RMB				RMB				US$
Cash flows (used in) generated from financing activities:
Acquisition of additional interest in subsidiaries			(73,560	)			—				—				(74,760	)			—				—
Proceeds on exercise of stock options			1				6,866				1,013				2				10,702				1,578
Proceeds of employee subscriptions			—				22,187				3,273				—				22,187				3,273
Proceeds of issuance of ordinary shares upon private placement			—				201,087				29,662				—				201,087				29,662
Dividends paid			—				(36,121	)			(5,328	)			—				(36,121	)			(5,328	)
Net cash (used in) generated from financing activities			(73,559	)			194,019				28,620				(74,758	)			197,855				29,185
Net (decrease) increase in cash, cash equivalents and restricted cash			(222,508	)			307,578				45,371				(733,574	)			438,228				64,642
Cash, cash equivalents and restricted cash at beginning of period			621,724				404,435				59,657				1,132,851				273,979				40,414
Effect of exchange rate changes on cash and cash equivalents			(1,903	)			(2,880	)			(425	)			(1,964	)			(3,074	)			(453	)
Cash, cash equivalents and restricted cash at end of period			397,313				709,133				104,603				397,313				709,133				104,603
Interest paid			—				—				—				—				—				—
Income taxes paid			721				48,033				7,085				3,328				55,162				8,137

 

For more information, please contact:

 

Oasis Qiu

Investor Relations Manager

Tel: +86 (20) 8388-3191

Email: qiusr@fanhuaholdings.com

Source: Fanhua Inc.

 

 

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