SHENZHEN, China, May 13, 2011 /PRNewswire-Asia-FirstCall/ -- Sino Assurance Inc. (OTCBB: SNAS) today reported solid first quarter 2011 financial result highlighted by strong earnings growth, an increase of 85% in net revenue and 180% in net income attributable with 90% gross margin.
Net revenue
Net revenue for the three months ended March 31, 2011, was $3,496,915 as compared to $1,894,270 for the same period in 2010. The increase of $1,602,645 or approximately 85% was due to significant year-over-year growth of our customer base in the tender and surety guarantee business and market share in China. The gross margin increased to 90% from 82% for the three months ended March 31, 2011, due to tightening of control of our cost of sales. As a result, the cost of sales decrease for the period and the percentage of the guarantee fee income substantially increased.
Net income before tax
Net income before tax for the three months ended March 31, 2011 was $2,157,647 compared to $765,942 for the same period in 2010, an increase in pre-tax income of $1,391,705, or approximately 182%. The increase in pre-tax net income was a result of the fact that we tightened control of our selling, general and administrative expenses during the period, and also employed more agents to promote our guarantee business which resulted in an increase in guarantee fee income from bank referrals.
Net income
Net income for the three months ended March 31, 2011 was $1,636,888 compared to $584,903 for the same period in 2010, an increase in net income of $1,051,985, or approximately 180%. GAAP earnings per diluted share for the first quarter of 2011 were $0.03, as compared to $0.01 for the first quarter of 2010.
Operating expenses
Total operating expenses were $1,001,997 for the three months ended March 31, 2011, as compared to $782,427 for the same period in 2010. The increase of $219,570 or 28% was primarily due to the increase in staff costs, provision for guarantee losses, rent and rate, audit fee and other professional fee.
LIQUIDITY
For the three months ended March 31, 2011, cash provided by operating activities totaled $2,279,066. This was primarily due to the net income for the period plus increase in deferred revenue and income tax payable, partially offset by the increase in guarantee fee receivables, prepayments and other receivable and decrease in accounts payable.
For the three months ended March 31, 2011, cash provided by investing activities amounted to $2,658,268. The receipt of funds was mainly due to the receipts from loans receivable, partially offset by the payment on loan receivable, purchase of plant and equipment and the change in restricted cash, net of customer collateral.
Financial Outlook
Management believes that the opportunities for sustained growth in revenue and earnings will be largely associated with the customer demand for the financial services provided by the Company, which primarily take the form of credit guaranty. Other elements expected to drive the growth in revenue include the potential impact of the regulatory governance of the credit guaranty market and development of the company's new personal credit products and services.
Management believes that for the year 2011, the company will generate earning per share $0.16 to $0.17, with revenue projection of $23 to $24 million.
Safe Harbor Statement
This press release may include certain statements that are not descriptions of historical facts, but are forward-looking statements. Forward-looking statements can be identified by the use of forward-looking terminology such as 'will,' 'believes,' 'expects' or similar expressions. Such information is based upon expectations of our management that were reasonable when made but may prove to be incorrect. All of such assumptions are inherently subject to uncertainties and contingencies beyond our control and based upon premises with respect to future business decisions, which are subject to change. We do not undertake to update the forward-looking statements contained in this press release. For a description of the risks and uncertainties that may cause actual results to differ from the forward-looking statements contained in this press release, see our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission ('SEC'), and our subsequent SEC filings. Copies of filings made with the SEC are available through the SEC's electronic data gathering analysis retrieval system at http://www.sec.gov .
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For more information, please contact: |
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Company Contact: |
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Wei Wei, Assistant to CFO |
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Sino Assurance,Inc. |
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Tel: +86-755-8252-3518 |
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Email: wei_wei@snas.cc |
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Investor Contact: |
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Eric Tong, Chief Finance Officer |
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Tel: +86-755-8252-5568 |
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Email: tongmengyou@gmail.com |
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SINO ASSURANCE INC. CONDENSED CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2011 AND DECEMBER 31, 2010 (Currency expressed in United States Dollars ("US$"), except for number of shares) |
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March 31, 2011 |
December 31, 2010 |
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(Unaudited) |
(Audited) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ |
12,071,541 |
$ |
7,074,893 |
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Restricted cash |
14,374,397 |
13,050,117 |
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Guarantee fee receivable |
25,251 |
18,003 |
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Loans receivable, unsecured |
- |
2,842,001 |
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Prepayments and other receivable |
299,459 |
262,127 |
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Total current assets |
26,770,648 |
23,247,141 |
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Non-current assets: |
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Plant and equipment, net |
514,703 |
410,807 |
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TOTAL ASSETS |
$ |
27,285,351 |
$ |
23,657,948 |
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LIABILITIES AND STOCKHOLDER'S EQUITY |
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Current liabilities: |
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Accounts payable, trade |
$ |
28,639 |
$ |
130,209 |
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Customer collateral |
10,069,025 |
8,830,517 |
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Deferred revenue |
1,025,031 |
915,847 |
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Amount due to a related party |
62,004 |
61,614 |
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Income tax payable |
554,898 |
529,447 |
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Deferred tax liabilities |
1,864,774 |
1,422,843 |
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Accrued liabilities and other payable |
1,661,463 |
1,455,009 |
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Total current liabilities |
15,265,834 |
13,345,486 |
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Commitments and contingencies |
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Stockholders' equity: |
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Common stock, $0.001 par value; 200,000,000 shares authorized; 60,200,000 shares issued and outstanding as of March 31, 2011 and December 31, 2010 |
60,200 |
60,200 |
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Additional paid-in capital |
2,970,045 |
2,970,045 |
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Accumulated other comprehensive income |
539,004 |
468,837 |
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Statutory reserve |
332,153 |
332,153 |
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Retained earnings |
8,118,115 |
6,481,227 |
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Total stockholders' equity |
12.019,517 |
10,312,462 |
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ |
27,285,351 |
$ |
23,657,948 |
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SINO ASSURANCE INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010 (Currency expressed in United States Dollars ("US$")) (Unaudited) |
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Three months ended March 31, |
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2011 |
2010 |
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REVENUES, NET |
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Guarantee fee income |
$ |
3,466,370 |
$ |
1,871,679 |
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Interest income |
30,545 |
22,591 |
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Total revenues, net |
3,496,915 |
1,894,270 |
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COST OF REVENUE |
(337,271) |
(345,901) |
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GROSS PROFIT |
3,159,644 |
1,548,369 |
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Operating expenses: |
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Depreciation |
(26,577) |
(29,524) |
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Selling, general and administrative |
(785,186) |
(645,249) |
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Reserve for guarantee losses |
(190,234) |
(107,654) |
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(1,001,997) |
(782,427) |
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INCOME BEFORE INCOME TAXES |
2,157,647 |
765,942 |
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Income tax expense |
(520,759) |
(181,039) |
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NET INCOME |
$ |
1,636,888 |
$ |
584,903 |
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Other comprehensive income: |
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- Foreign currency translation gain |
70,167 |
794 |
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COMPREHENSIVE INCOME |
$ |
1,707,055 |
$ |
585,697 |
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Net income per share – Basic and diluted |
$ |
0.03 |
$ |
0.01 |
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Weighted average shares outstanding – Basic and diluted |
60,200,000 |
60,000,000 |
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SINO ASSURANCE INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010 (Currency expressed in United States Dollars ("US$")) (Unaudited) |
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Three months ended March 31, |
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2011 |
2010 |
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Cash flows from operating activities: |
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Net income |
$ |
1,636,888 |
$ |
584,903 |
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Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
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Depreciation |
33,377 |
29,524 |
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Loss on disposal of plant and equipment |
206 |
- |
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Reserve for guarantee losses |
190,234 |
107,654 |
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Unrealized interest income |
- |
(20,561) |
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Deferred tax expense |
431,632 |
114,180 |
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Changes in operating assets and liabilities: |
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Guarantee fee receivable |
(7,113) |
(103,666) |
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Prepayments and other receivable |
(35,564) |
(39,680) |
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Accounts payable, trade |
(102,096) |
2,074 |
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Deferred revenue |
103,069 |
113,308 |
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Income tax payable |
22,026 |
32,890 |
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Accrued liabilities and other payable |
6,407 |
(32,159) |
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Net cash provided by operating activities |
2,279,066 |
788,467 |
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Cash flows from investing activities: |
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Change in restricted cash, net of customer collateral |
(58,819) |
2,677 |
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Receipts from loans receivable |
7,946,208 |
- |
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Payment on loans receivable |
(5,094,546) |
(1,148,332) |
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Proceeds from disposal of plant and equipment |
137 |
- |
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Purchase of plant and equipment |
(134,712) |
(115,730) |
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Net cash provided by (used in) investing activities |
2,658,268 |
(1,261,385) |
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Effect of exchange rate changes in cash and cash equivalents |
59,314 |
97 |
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NET CHANGE IN CASH AND CASH EQUIVALENTS |
4,996,648 |
(472,821) |
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CASH AND CASH EQUIVALENT, BEGINNING OF PERIOD |
7,074,893 |
559,105 |
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CASH AND CASH EQUIVALENT, END OF PERIOD |
$ |
12,071,541 |
$ |
86,284 |
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
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Cash paid for income taxes |
$ |
35,241 |
$ |
29,118 |
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Cash paid for interest |
$ |
- |
$ |
- |
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