GUANGZHOU, Feb. 26 /Xinhua-PRNewswire-FirstCall/ -- CNinsure Inc.,
(Nasdaq: CISG), a leading independent insurance agency and brokerage company operating in China, today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2007.(1)
(1) This announcement contains translations 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 RMB7.2946 to US$1.00,
the effective noon buying rate as of December 31, 2007 in The City of
New York for cable transfers of RMB as certified for customs purposes
by the Federal Reserve Bank of New York.
Financial Highlights:
Highlights for Fourth Quarter 2007
-- Total net revenues: RMB158.7 million (US$21.8 million), representing an
increase of 35.8% quarter-over-quarter and an increase of 80.9% year-
over-year, exceeding the previous guidance of RMB135.0 million to
RMB150.0 million.
-- Net revenues from commissions and fees: RMB158.5 million (US$21.7
million), representing an increase of 36.4% quarter-over-quarter and an
increase of 81.3% year-over-year.
-- Net income: RMB53.8 million (US$7.4 million), representing an increase
of 26.8% quarter-over-quarter and representing an increase of 105.0%
year-over-year.
-- Basic and diluted net income per ADS: RMB1.284 (US$0.176) and RMB1.275
(US$ 0.175), respectively.
Highlights for Fiscal Year 2007
-- Total net revenues: RMB448.2 million (US$61.4 million), representing an
increase of 81.8% from 2006.
-- Net revenues from commissions and fees: RMB447.0 million (US$61.3
million), representing an increase of 81.9% from 2006.
-- Net income: RMB154.9 million (US$21.2 million), representing an
increase of 170.0% from 2006.
-- Basic and diluted net income per ADS: RMB4.396 (US$0.603) and RMB4.380
(US$0.600), respectively.
Commenting on the fourth quarter results, Yinan Hu, Chairman and CEO of CNinsure stated: “We are pleased to report strong financial results for the fourth quarter which exceeded our previous estimate. In 2007, the insurance market and insurance intermediary market in China continued to grow rapidly. By executing our existing growth strategy we believe that CNinsure, led by an experienced management team, is well positioned to capture the growth opportunities. “We will continue expanding our distribution network in China through selective acquisitions and our entrepreneurial agent program while enhancing our operating platform through IT system improvement. Meanwhile, we will further deepen relationships with insurance companies, by helping them launch customized products to be exclusively distributed through our network.”
Financial Results for the Fourth Quarter Ended December 31, 2007
Total net revenues for the fourth quarter ended December 31, 2007 were RMB158.7 million (US$21.8 million), representing an increase of 35.8% from RMB116.9 million for the previous quarter, and an 80.9% increase from RMB87.8 million for the fourth quarter in 2006, primarily reflecting the increase in net revenues from commissions and fees.
Net revenues from commissions and fees were RMB158.5 million (US$21.7 million) for the fourth quarter of 2007, representing an increase of 36.4% from RMB116.2 million for the previous quarter and an increase of 81.3% from RMB87.4 million for the fourth quarter of 2006. The quarter-over-quarter increase was primarily attributable to the seasonality of our business, which results largely from the insurance companies’ increased sales efforts in the fourth quarter of a year and increasing number of sales agents. The year-over-year increase was primarily due to an increase in commission rates, higher productivity of sales agents in the distribution of life insurance products and increasing number of sales agents.
Net revenues from other service fees were RMB0.3 million (US$0.03 million) for the fourth quarter of 2007.
Total operating costs and expenses were RMB112.5 million (US$15.4 million) for the fourth quarter of 2007, representing an increase of 45.9% from RMB77.1 million for the previous quarter and an increase of 75.2% from RMB 64.2 million for the fourth quarter of 2006.
Commissions and fees expenses were RMB83.2 million (US$11.4 million) for the fourth quarter of 2007, representing an increase of 33.8% from RMB62.2 million for the previous quarter and an increase of 71.8% from RMB48.4 million for the fourth quarter of 2006, primarily due to the increase in the distribution of insurance products and higher commissions and fees to sales agents.
Selling expenses were RMB2.8 million (US$0.4 million) for the fourth quarter of 2007, representing an increase of 21.9% from RMB2.3 million for the previous quarter and a decrease of 6.0% from RMB3.0 million for the fourth quarter of 2006. The quarter-over-quarter increase was due to the increase in the distribution of insurance products and the year-over-year decrease was primarily due to decreases in office expenses following further centralization of management functions.
General and administrative expenses were RMB26.4 million (US$3.6 million) for the fourth quarter of 2007, representing an increase of 110.4% from RMB12.6 million for the previous quarter and an increase of 107.5% from RMB12.7 million for the fourth quarter of 2006. The quarter-over-quarter and year-over-year increases were primarily due to the recognition of additional share-based compensation expenses for options granted in October, 2007, certain IPO-related expenses, and exchange losses in connection with the payment of previous declared dividends in the fourth quarter of 2007.
Operating margin was 29.1% for the fourth quarter of 2007 as compared with 34.0% for the previous quarter and 26.8% for the fourth quarter of 2006.
Interest income for the fourth quarter of 2007 was RMB10.9 million (US$1.5 million), representing an increase of 307.6% from RMB2.7 million for the previous quarter and an increase of 505.3% from RMB1.8 million for the fourth quarter of 2006, primarily attributable to the proceeds generated by our initial public offering in October 2007.
Net income was RMB53.8 million (US$7.4 million) for the fourth quarter of 2007, representing an increase of 26.8% from RMB42.4 million for the previous quarter, and an increase of 105.0% from RMB26.2 million for the fourth quarter of 2006. Net margin was 33.9% for the fourth quarter of 2007 as compared with 36.3% for the previous quarter and 29.9% for the fourth quarter of 2006.
Fully diluted net income per ADS was RMB1.275 (US$0.175) for the fourth quarter of 2007, compared with RMB1.244 for the third quarter of 2007 and RMB0.800 for the fourth quarter of 2006.
As of December 31, 2007, the Company had RMB1,545.5 million (US$211.9 million) in cash and cash equivalents.
Financial Results for the Year Ended December 31, 2007
Total net revenues for fiscal year 2007 were RMB448.2 million (US$61.4 million), representing an 81.8% increase from RMB246.6 million for fiscal year 2006.
Net revenues from commissions and fees for fiscal year 2007 were RMB447.0 million (US$61.3 million), representing an increase of 81.9% from RMB245.7 million in fiscal year 2006, primarily driven by the growth in the number of sales agents, an increase in commission rates and higher productivity of sales agents in the distribution of life insurance products.
Net revenues from other service fees for fiscal year 2007 were RMB1.2 million (US$0.2 million), representing an increase of 37.5% from RMB0.9 million in fiscal year 2006.
For fiscal year 2007, total operating costs and expenses were RMB307.0 million (US$42.1 million), representing an increase of 56.2% from RMB196.5 million in fiscal year 2006.
Commissions and fees expenses for fiscal year 2007 were RMB232.7 million (US$31.9 million), representing an increase of 74.9% from RMB133.1 million in fiscal year 2006. The increase was primarily due to the increase in the distribution of insurance products.
Selling expenses for fiscal year 2007 were RMB9.4 million (US$1.3 million), a decrease of 17.0 % from RMB11.3 million in fiscal year 2006. The decrease of selling expense was primarily due to the centralization of management functions and stricter budget control.
General and administrative expenses for fiscal year 2007 were RMB64.9 million (US$8.9 million), representing an increase of 24.5% from RMB52.1 million in fiscal year 2006, primarily as a result of the recognition of additional share-based compensation expenses for options granted in October, 2007, IPO-related expenses, and exchange losses in connection with the payment of previous declared dividends in the fiscal year 2007.
For fiscal year 2007, operating margin was 31.5% as compared with 20.3% for fiscal year 2006, primarily reflecting the growth of commission rates outpacing that of the commissions and fees expenses.
For fiscal year 2007, total interest income were RMB15.6 million (US$2.1 million), representing an increase of 190.4% from RMB5.4 million in fiscal year 2006, primarily attributable to an increase in cash as a result of our initial public offering and increases in interest rates in China.
For the fiscal year 2007, net income was RMB154.9 million (US$21.2 million), representing an increase of 170.0% from RMB57.4 million for the fiscal year 2006. Net margin was 34.6% for the fiscal year 2007, as compared with 23.3 % for the fiscal year 2006.
Fully diluted net income per ADS was RMB4.380 (US$0.600) for the fiscal year 2007, compared with RMB1.750 for the fiscal year 2006.
Business Highlights
CNinsure continued executing its strategy of expanding our business, with the following highlights for the fourth quarter ended December 31, 2007:
-- On November 5, 2007, CNinsure successfully completed its initial public
offering and listing on the Nasdaq Global Market of 13,526,773 American
Depositary Shares ("ADSs") after the underwriters fully exercised their
over-allotment options. The total offering size was approximately
US$216 million. Each ADS represents twenty ordinary shares.
-- In November 2007, CNinsure appointed Mr. Feng Jin as Chief Information
Officer to help the company upgrade the IT infrastructure.
-- In December 2007, CNinsure acquired a 60% equity interest in Guangdong
Fangzhong Insurance Surveyors & Loss Adjusters Co. Ltd., an insurance
adjusting company based in Guangzhou and enter China’s insurance
adjusting sector.
-- In December 2007, CNinsure acquired the remaining 45% stake in Fujian
Xinheng Insurance Agency Co., Ltd. in order to further increase
investment of resources and expand penetration in the Fujian market.
-- As of December 31, 2007, CNinsure had approximately 13,830 sales
professionals and 195 sales and service outlets.
-- According to the Insurance Intermediary Market Development Report 2007
published by the China Insurance Regulatory Commission, six of
CNinsure’s affiliated insurance agencies ranked Nos.1, 5, 8, 17, 18 and
19, respectively, among China’s top 20 insurance agencies in terms of
revenue in 2007.
Business Outlook
For the first quarter 2008, CNinsure expects its total net revenues to be between RMB125.0 million (US$17.1 million) and RMB 135.0 million (US$18.5 million), which reflect the seasonality of our business as result of the Chinese New Year and the impact of the recent snow storms in central and southern China. This forecast reflects CNinsure’s current and preliminary view, which is subject to change.
Conference Call
The Company will host a conference call to discuss the fourth quarter and fiscal year 2007 results at
Time: 8:00 pm Eastern Standard Time on February 25, 2008
or 9:00 am Beijing/Hong Kong Time on February 26, 2008
The Toll Free dial-in number: US: 1866-549-1292
UK: 0808-234-6305
CA: 1866-8691-825
Singapore: 800-852-3576
Taiwan: 0080-185-6004
Hong Kong: 3005-2050
China (Mainland): 800-869-7678
China (Mainland)
local dial-in number: 400-733-1511
Password: 566597 #
A replay of the call will be available for three days as follows:
3005-2020 (Hong Kong)
+852-3005-2020 (International)
PIN number: 134074#
Additionally, a live and archived web cast of this call will be available at:
http://www.corpasia.net/us/CISG/irwebsite/index.php?mod=event .
About CNinsure Inc.
CNinsure is a leading independent insurance agency and brokerage company operating in China. CNinsure’s distribution network reaches many of China’s most economically developed regions and affluent cities. The Company distributes a wide variety of property and casualty and life insurance products underwritten by domestic and foreign insurance companies operating in China, as well as other insurance-related services.
Forward-looking Statements
This press release contains statements of a forward-looking nature. These statements 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 “Business Outlook” 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 CNinsure and the industry. Potential risks and uncertainties include, but are not limited to, those relating to CNinsure’s limited operating history, especially its limited experience in selling life insurance products, 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 Chinese insurance industry, and its ability to compete effectively against its competitors. All information provided in this press release is as of February 25, 2008, and CNinsure undertakes no obligation to update any forward looking statements to reflect subsequent occurring events or circumstances, or to changes in its expectations, except as may be required by law. Although CNinsure 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 CNinsure is included in CNinsure’s filings with the U.S. Securities and Exchange Commission, including its registration statement on Form F-1.
CNinsure Inc.
Unaudited Condensed Consolidated Balance Sheets
As of As of As of
December 31, December 31, December 31,
2006 2007 2007
RMB RMB USD
(In thousands, except for shares
and per share data)
ASSETS:
Current assets：
Cash and cash equivalents 223,926 1,545,501 211,869
Restricted cash 7,413 12,863 1,763
Accounts receivable 26,569 18,701 2,564
Insurance premium
receivable 994 655 90
Other receivables, net 16,988 30,510 4,183
Amounts due from related
parties 78,957 0 0
Other current assets 856 6,136 841
Total current assets 355,703 1,614,366 221,310
Non-current assets：
Property, plant, and
equipment, net 9,741 11,117 1,524
Goodwill 7,042 9,329 1,279
Intangibles 4,471 4,271 585
Deferred tax assets 2,365 2,265 311
Other 300 500 69
Total assets 379,622 1,641,848 225,078
LIABILITIES AND
SHAREHOLDERS’ EQUITY:
Current liabilities:
Accounts payables 14,275 10,122 1,388
Insurance premium payable 7,413 12,863 1,763
Other payables and accrued
expenses 12,139 17,033 2,335
Accrued payroll 4,902 7,722 1,059
Income tax payable 798 1,966 270
Amounts due to related
parties 3,679 369 51
Dividend payable 32,000 0 0
Current portion of
long-term borrowings 318 103 14
Total current liabilities 75,524 50,178 6,880
Non-current liabilities:
Long-term borrowings 237 57 8
Deferred tax liabilities 560 3,195 438
Total liabilities 76,321 53,430 7,326
Commitments and
contingencies
Minority interests 13,717 18,248 2,502
Common stock 5,073 7,036 964
Additional paid-in capital 369,781 1,621,064 222,228
Accumulated deficit (85,091) (38,458) (5,272)
Accumulated other
comprehensive Loss (179) (19,472) (2,670)
Total owners’ equity 289,584 1,570,170 215,250
Total liabilities and
owners’ equity 379,622 1,641,848 225,078
CNinsure Inc.
Unaudited Condensed Consolidated Statements of Operations
For The Three Months Ended December 31,
2006 2007 2007
RMB RMB USD
(In thousands, except for shares
and per share data)
Net revenues:
Commissions and fees 87,409 158,480 21,726
Other service fees 344 251 34
Total net revenues 87,753 158,731 21,760
Operating costs and expenses:
Commissions and fees (48,440) (83,224) (11,409)
Selling expenses (3,027) (2,844) (390)
General and administrative
expenses (12,741) (26,434) (3,624)
Total operating costs and
expenses (64,208) (112,502) (15,423)
Income from operations 23,545 46,229 6,337
Other income (expense), net:
Interest income 1,804 10,920 1,497
Interest expense (4) (5) (1)
Others, net 0 9 1
Income before income taxes 25,345 57,153 7,835
Income tax benefit (expense) 461 (3,242) (444)
Net income before minority
interest 25,806 53,911 7,391
Minority interest 439 (104) (14)
Net income 26,245 53,807 7,376
Net Income per share:
Basic 0.040 0.064 0.009
Diluted 0.040 0.064 0.009
Net Income per ADS:
Basic 0.808 1.284 0.176
Diluted 0.800 1.275 0.175
Shares used in calculating net
income per share
Basic 650,000,000 838,056,274 838,056,274
Diluted 656,120,811 843,711,077 843,711,077
For The Twelve Months Ended December 31,
2006 2007 2007
RMB RMB USD
(In thousands, except for shares
and per share data)
Net revenues:
Commissions and fees 245,652 446,957 61,272
Other service fees 897 1,234 169
Total net revenues 246,549 448,191 61,441
Operating costs and expenses:
Commissions and fees (133,076) (232,704) (31,901)
Selling expenses (11,288) (9,373) (1,285)
General and administrative
expenses (52,119) (64,911) (8,898)
Total operating costs and
expenses (196,483) (306,988) (42,084)
Income from operations 50,066 141,203 19,357
Other income (expense), net:
Interest income 5,364 15,579 2,136
Interest expense (34) (75) (10)
Others, net 5 (38) (5)
Income before income taxes 55,401 156,669 21,478
Income tax benefit (expense) 573 (4,230) (580)
Net income before minority
interest 55,974 152,439 20,898
Minority interest 1,421 2,499 342
Net income 57,395 154,938 21,240
Net Income per share:
Basic 0.088 0.220 0.030
Diluted 0.087 0.219 0.030
Net Income per ADS:
Basic 1.766 4.396 0.603
Diluted 1.750 4.380 0.600
Shares used in calculating net
income per share
Basic 650,000,000 704,898,683 704,898,683
Diluted 655,970,000 707,437,509 707,437,509
