CNinsure Inc, (Nasdaq:CISG), (the "Company" or "CNinsure"), a
leading independent online-to-offline ("O2O") financial services
provider in China, today announced its unaudited financial results
for the fourth quarter and fiscal year ended December 31, 20141.
Financial Highlights for Fourth
Quarter of 2014
- Total net revenues: RMB632.6 million (US$102.0
million), representing an increase of 25.6% from the corresponding
period in 2013.
- Operating loss: RMB1.9
million (US$0.3 million), compared with operating income of RMB14.4
million of the corresponding period in 2013.
- Adjusted operating income2: RMB29.0 million
(US$4.7 million), representing an increase of 46.5% from the
corresponding period in 2013. Total expenses incurred by online and
mobile initiatives was RMB30.9 million (US$5.0 million),
representing an increase of 471.0% from the corresponding period in
2013.
- Net income attributable to the Company's
shareholders: RMB27.1 million (US$4.3 million),
representing an increase of 9.6% from the corresponding period in
2013.
- Adjusted EBITDA3 was RMB22.3 million (US$3.6
million), representing a decrease of 38.6% from the corresponding
period in 2013.
- Basic and diluted net
income per ADS: RMB0.53 (US$0.09) and
RMB0.52 (US$0.09), respectively,representing an increase of 7.0%
and 5.6%, respectively from the corresponding period in 2013.
Financial Highlights for Fiscal
Year 2014
- Total net revenues: RMB2.2 billion (US$346.5
million), representing an increase of 22.4% from fiscal year 2013.
- Operating income: RMB30.9 million (US$5.0
million), representing an increase of 71.8% from fiscal year 2013.
- Adjusted operating income: RMB93.9 million
(US$15.1 million), representing an increase of 116.0% from fiscal
year 2013.Total expenses incurred by online and mobile initiatives
was RMB63.0 million (US$10.1 million), representing an increase of
147.1% from fiscal year 2013.
- Net income attributable to the Company's
shareholders: RMB161.8 million (US$26.1 million),
representing an increase of 69.1% from fiscal year 2013.
- Adjusted EBITDA was RMB132.5 million (US$21.4
million) for fiscal year 2014, representing an increase of 6.7%
from fiscal year 2013.
- Basic and diluted net
income per ADS: RMB3.22 (US$0.52) and
RMB3.19 (US$0.51), respectively,representing an increase of 68.0%
and 67.0% respectively from fiscal year 2013.
Business Highlights:
- CNpad Mobile App: As of December 31, 2014,
55,273 copies of our CNpad application ("CNpad App") had been
downloaded and activated, and there were 34,960 CNpad App users. In
2014, insurance premiums generated through CNpad App increased by
479.8% year-over-year to approximately RMB1.3 billion (US$202.6
million), representing the premiums of approximately 432,000
insurance policies, accounting for 15.4% of our total insurance
premiums in 2014.
- Baoxian.com: As of December 31, 2014,
Baoxian.com had 8,104 active customer accounts4 compared to 1,491
as of December 31, 2013. In 2014, transaction volume from
Baoxian.com increased 46.7% year-over-year to RMB16.7 million
(US$2.7 million).
- Chetong.net: As of December 31, 2014, the
total number of service representatives registered on
www.chetong.net was 11,800 and approximately 20,000 insurance
claims submitted to the platform were processed.
- eHuzhu: As of December 31, 2014, the total
number of registered members of eHuzhu reached 267,176.
Commenting on the fourth quarter financial results, Mr. Chunlin
Wang, CNinsure's chief executive officer, stated, "We are pleased
to wrap up the year with a solid performance. Both quarterly and
annual net revenue growth beat guidance with 25.6% and 22.4%
year-over-year growth, respectively, partially benefiting from the
growing contribution from our CNpad App. As we expanded investment
in our O2O strategy during the fourth quarter, all of our online
initiatives continued to gain momentum in the number of users,
customers or registered members. Online transaction also grew
rapidly, accounting for 15.4% of our total insurance premiums in
2014 as compared to 3.4% in 2013.
"In terms of our regulatory environment, we were excited to see
so many positive developments in 2014 and early 2015. The State
Council issued Opinions on the Development of the Modern Insurance
Industry in August 2014, which is seen by many as bringing new
vitality to the insurance industry and may mark the beginning of an
extended period of rapid development for the industry in China.
Deregulation of the life insurance pricing system appears to be
accelerating and the long-anticipated pilot program for
deregulating the pricing system of the auto insurance sector was
announced and will begin rolling out in May 2015, which we believe
will lead to more auto insurance product innovation and
differentiation. At the same time, because of advancing internet
technologies, especially the proliferation of mobile devices,
consumers are increasingly making online purchases, and online
insurance sales, in terms of premium payments, have increased by
over 39 times in just four years, from RMB2.1 billion in 2011 to
RMB85.8 billion in 2014, contributing 4.2% of the market share in
2014. We believe that there is still room for substantial growth in
online insurance sales in the next few years."
"Against this backdrop, we have embraced the opportunity to
establish our O2O business model by leveraging on the strength of
our offline network and set our strategic goals to build the
largest 1) transaction-enabled entry portal for insurance and
wealth management products; 2) third-party mobile insurance
transaction platform; 3) public service platform for the insurance
industry; 4) team of insurance advisors; and 5) mutual aid
organization. Based on these goals, in the next five to eight
years, we aspire to become a leading internet-based financial
services provider.
"To achieve these targets, in the next three years, we will
focus on the following three areas:
1. Our operational focus will shift towards gaining market share
by increasing investment in marketing and technology. These
investments will likely have a negative impact on our bottom line
over the near and medium term, and may even result in an operating
loss. However, we believe these investments are necessary for us to
accumulate customers and establish our market leadership.
2. We will resume our M&A strategy. Our M&A targets may
include leading wealth management companies that have engaged in
internet finance to broaden our product line, or companies that
have innovative business models or leading internet finance
technologies, to strengthen our O2O platform and solidify our
market position.
3. We will accelerate our internal organizational restructuring
and optimizeour business structure. Going forward, except for our
insurance brokerage business and commercial line of claims
adjustment business, all of our business transactions will move
online. Our offline subsidiaries will become service support units
to serve our customers and our sales people.
"Looking ahead to 2015, we expect to generate total insurance
premiums of over RMB10 billion and that our top line will grow by
over 30%."
Mr. Wang added, "As our integrated O2O platform gets up and
running, our management and employees have full confidence in our
growth strategies and prospects. In November 2014, we decided to
issue and sell up to 10% of our outstanding share capital to our
employees. Due to overwhelming demand, as evidenced in that this
issuance was more than four times oversubscribed, we subsequently
issued and sold an additional 5% of our share capital to our
employees. Shortly afterwards, management purchased from CDH
Inservice its entire stake in CNinsure in January 2015. Upon
completion of that transaction, management's collective stake in
CNinsure will increase from 3.1% to 16.5%. All of these actions
demonstrate our confidence and commitment to achieving the
long-term success of our Company. "As our integrated O2O platform
gets up and running, our management and employees have full
confidence in our growth strategies and prospects. In November
2014, we decided to issue and sell up to 10% of our outstanding
share capital to our employees. Due to overwhelming demand, as
evidenced in that this issuance was more than four times
oversubscribed, we subsequently issued and sold an additional 5% of
our share capital to our employees. Shortly afterwards, management
purchased from CDH Inservice its entire stake in CNinsure in
January 2015. Upon completion of that transaction, management's
collective stake in CNinsure will increase from 3.1% to 16.5%. All
of these actions demonstrate our confidence and commitment to
achieving the long-term success of our Company."
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 consists mainly of
agency services for property and casualty ("P&C") insurance
products and life insurance products provided to individual
clients,
(2) insurance brokerage business segment, which consists mainly
of P&C and life insurance brokerage services provided to
institutional clients,
(3) claims adjusting segment, which consists of 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, including wealth management products that we provided in
2013 but ceased to provide in 2014.
Financial Results for the Fourth
Quarter of 2014
Total net revenues were RMB632.6 million
(US$102.0 million) for the fourth quarter of 2014, representing an
increase of 25.6% from RMB503.8 million for the corresponding
period in 2013.
Net revenues for the insurance agency business
were RMB488.7 million (US$78.8 million) for the fourth quarter of
2014, representing an increase of 26.3% from RMB386.9 million for
the corresponding period in 2013. The increase was primarily driven
by a 26.2% increase in net revenues derived from the P&C
insurance agency business and a 27.2% increase in net revenues
derived from the life insurance agency business. The growth of the
P&C insurance agency business was primarily due to the growth
of sale volume, attributable to both solid organic growth and
contributions from three insurance agencies acquired in the second
quarter of 2014, and an increase in the commission rates that the
Company received from the insurance companies for whom the Company
acts as their agents. The increase in net revenues derived from the
life insurance agency business was primarily due to a strong
increase in commissions derived from new long term life insurance
policy sales and resumed positive growth of renewal commission.
Revenues generated from the insurance agency business accounted for
77.3% of total net revenues in the fourth quarter of 2014.
Net revenues of insurance brokerage business
were RMB58.7 million (US$9.5 million) for the fourth quarter of
2014, representing an increase of 108.4% from RMB28.2 million for
the corresponding period in 2013. The increase was primarily
attributable to (1) an increase in the Company's customer base as a
result of efforts to expand sales channels, develop innovative
product offerings and cultivate markets in the past years and (2)
the low base in this segment during the fourth quarter of 2013.
Revenues generated from the insurance brokerage business accounted
for 9.3% of total net revenues in the fourth quarter of 2014.
Net revenues of claims adjusting business were
RMB85.2 million (US$13.7 million) for the fourth quarter of 2014,
representing an increase of 0.9% from RMB84.5 million for the
corresponding period in 2013. The slowdown of growth in claims
adjusting business was mainly the result of a 15.3% year-over-year
growth in auto insurance-related claims adjusting business offset
by an 11.4% year-over-year decline in non-auto insurance-related
claims adjusting business due to the relatively high base in the
latter during the fourth quarter of 2013. During the fourth quarter
of 2013, revenues from non-auto insurance-related claims adjusting
business grew significantly due to a catastrophic snowstorm in
Southern China. Revenues generated from the claims adjusting
business accounted for 13.4% of total net revenues in the fourth
quarter of 2014.
Net revenues of other services were nil for the
fourth quarter of 2014, as compared with RMB4.3 million for the
corresponding period in 2013.
Total operating costs and expenses were
RMB634.5 million (US$102.3 million) for the fourth quarter of 2014,
representing an increase of 29.6% from RMB489.4 million for the
corresponding period in 2013.
Total operating costs were RMB478.5 million
(US$77.1 million) for the fourth quarter of 2014, representing an
increase of 30.8% from RMB365.8 million for the corresponding
period in 2013. The increase was primarily due to sales growth.
Costs of insurance agency business were
RMB386.1 million (US$62.2 million) for the fourth quarter of 2014,
representing an increase of 28.8% from RMB299.8 million for the
corresponding period in 2013, primarily driven by a 29.7% increase
in costs for the P&C insurance agency business and a 20.4%
increase in costs for the life insurance agency business. The costs
for the P&C insurance agency business grew faster than net
revenues mainly because the Company offered more incentives to
sales agents who used CNpad App to purchase insurance policies for
their clients in order to encourage the migration of offline
business to mobile. Costs incurred by the insurance agency business
accounted for 80.7% of operating costs in the fourth quarter of
2014.
Costs of insurance brokerage business were
RMB47.1 million (US$7.6 million) for the fourth quarter of 2014,
representing an increase of 125.9% from RMB20.9 million for the
corresponding period in 2013. The increase was primarily due to
sales growth. Costs incurred by the insurance brokerage business
accounted for 9.8% of operating costs in the fourth quarter of
2014.
Costs of claims adjusting business were RMB45.2
million (US$7.3 million) for the fourth quarter of 2014,
representing an increase of 6.0% from RMB42.7 million for the
corresponding period in 2013. The increase was primarily
attributable to sales growth and increased salaries for claims
adjustors. Costs incurred by the claims adjusting business
accounted for 9.5% of operating costs in the fourth quarter of
2014.
Costs of other services were nil for the fourth
quarter of 2014, as compared with RMB2.5 million for the
corresponding period in 2013.
Selling expenses were RMB31.7 million (US$5.1
million) for the fourth quarter of 2014, representing an increase
of 28.7% from RMB24.7 million for the corresponding period in 2013,
primarily attributable to increases in vehicle, office and
marketing expenses.
General and administrative expenses were
RMB124.3 million (US$20.0 million) for the fourth quarter of 2014,
representing an increase of 25.6% from RMB99.0 million for the
corresponding period in 2013.The increase was primarily due to: (1)
an increase of 316.9% in research and development expenses incurred
by CNpad and Baoxian.com from RMB5.4 million in the fourth quarter
of 2013 to RMB22.6 million (US$3.6 million) for the corresponding
period in 2014, and (2) expenses of RMB8.3 million(US$1.3 million)
incurred by eHuzhu and Chetong.net in the fourth quarter of 2014,
offset by a decrease of 68.1% in share-based compensation expenses
from RMB14.7 million for the fourth quarter of 2013 to RMB4.7
million (US$0.8 million) for the corresponding period of 2014.
Share-based compensation expenses were mainly associated with stock
options granted to certain employees in March 2012, which were
recognized on an accelerated basis and such expenses are expected
to decrease each year after the grant.
As a result of the preceding factors, operating
loss was RMB1.9 million (US$0.3 million) for the fourth
quarter of 2014, compared with operating income of RMB14.4 million
for the corresponding period in 2013.
Operating margin was -0.3% for the fourth
quarter of 2014, compared with 2.9% for the corresponding period in
2013.
Adjusted operating income was RMB29.0 million
(US$4.7 million) for the fourth quarter of 2014, representing an
increase of 46.5% from RMB19.8 million for the corresponding period
in 2013.
Adjusted operating margin was 4.6%, as compared
to 3.9% for the corresponding period in 2013.
Investment income was RMB11.2 million (US$1.8
million) for the fourth quarter of 2014, representing an increase
of 146.3% from RMB4.5 million for the corresponding period in 2013.
The increase was primarily attributable to an increase in short
term investment products.
Interest income was RMB18.8 million (US$3.0
million) for the fourth quarter of 2014, representing a decrease of
13.3% from RMB21.7 million for the corresponding period in 2013.
The decrease in interest income was primarily due to a decrease in
term deposits as a result of an increase in short-term
investment.
Income tax expense was RMB5.6 million (US$0.9
million) for the fourth quarter of 2014, representing a decrease of
46.4% from RMB10.4 million for the corresponding period in 2013.
The effective tax rate for the fourth quarter of 2014 was 19.4%
compared with 31.5% for the corresponding period in 2013. The
decrease in effective tax rate was primarily due to 1) a tax
exemption for two years and a 50% tax reduction for the succeeding
three years enjoyed by one of the Company's subsidiaries starting
from January 1, 2014; and 2) higher share-based compensation
expenses charged for the corresponding period in 2013 which were
non-tax deductible.
Share of income of affiliates was RMB8.2
million (US$1.3 million) for the fourth quarter of 2014,
representing an increase of 118.2% from RMB3.8 million for the
corresponding period in 2013, 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 RMB27.1 million (US$4.4 million) for the
fourth quarter of 2014, representing an increase of 9.6% from
RMB24.7 million for the corresponding period in 2013.
Net margin was 4.3% for the fourth quarter of
2014 compared with 4.9% for the corresponding period in 2013.
Basic and diluted net
income per ADS were RMB0.53 (US$0.09) and RMB0.52
(US$0.09)for the fourth quarter of 2014, respectively, representing
increases of 7.0% and 5.6% from RMB0.49 and RMB0.49 for the
corresponding period in 2013, respectively.
Adjusted EBITDA was RMB22.3 million (US$3.6
million) for the fourth quarter of 2014, representing a decrease of
38.6% from RMB36.4 million for the corresponding period in
2013.
Adjusted EBITDA margin was 3.5% for the fourth
quarter of 2014, compared with 7.2% for the corresponding period in
2013.
Diluted adjusted EBITDA per ADS was
RMB0.43 (US$0.07) for the fourth quarter of 2014, representing a
decrease of 40.8% from RMB0.73 for the corresponding period in
2013.
As of December 31, 2014, the Company had RMB2.1 billion
(US$339.0 million) in cash and cash
equivalents.
Financial Results for the Year Ended
December 31, 2014
Total net revenues were RMB2.2 billion
(US$346.5 million) for fiscal year 2014, representing an increase
of 22.4% from RMB1.8 billion in fiscal year 2013.
Net revenues of insurance agency business were
RMB1.6 billion (US$261.8 million) for fiscal year 2014,
representing an increase of 14.5% from RMB1.4 billion in fiscal
year 2013. The increase was primarily driven by a 17.1% increase in
net revenues derived from the P&C insurance agency business,
offset by a 1.1% decline in net revenues derived from the life
insurance agency business. The growth of the P&C insurance
agency business was primarily due to sales volume growth,
attributable to both solid organic growth and contributions from
three insurance agencies acquired in fiscal year 2014. The decrease
in net revenues derived from the life insurance agency business was
primarily due to a decline in renewal commissions resulting from a
continued decline in new policy sales in the past two years and a
decline in commissions derived from the sales of short term life
insurance products, though slightly offset by a moderate increase
in commissions derived from new long term life insurance policy
sales. Revenues generated from the insurance agency business
accounted for 75.6% of total net revenues in 2014.
Net revenues of insurance brokerage business
were RMB232.6 million (US$37.5 million) for fiscal year 2014,
representing an increase of 266.8% from RMB63.4 million in fiscal
year 2013. The increase was primarily attributable to (1) an
increase in the Company's customer base as a result of efforts to
expand sales channels, develop innovative product offerings and
cultivate markets in the past three years and (2) the low base in
this segment during the fiscal year 2013. Revenues generated from
the insurance brokerage business accounted for 10.8% of total net
revenues in 2014.
Net revenues of claims adjusting business were
RMB293.0 million (US$47.2 million) for fiscal year 2014,
representing an increase of 12.2% from RMB261.2 million in fiscal
year 2013. The increase was primarily attributable to a 15.0%
year-over-year increase of auto insurance-related claims adjusting
business and an 8.8% year-over-year increase of non-auto
insurance-related claims adjusting business for fiscal year 2014.
Revenues generated from the claims adjusting business accounted for
13.6% of total net revenues in 2014.
Net revenues of other services were nil for
fiscal year of 2014, as compared with RM13.9 million for fiscal
year of 2013.
Total operating costs and expenses were RMB2.1
billion (US$341.5 million) for fiscal year 2014, representing an
increase of 21.9% from RMB1.7 billion in fiscal year 2013.
Total operating costs were RMB1.6 billion
(US$260.3 million) for fiscal year 2014, representing an increase
of 24.9% from RMB1.3 billion in fiscal year 2013. The increase was
primarily due to sales growth.
Costs of insurance agency business were RMB1.3
billion (US$203.4 million) for fiscal year 2014, representing an
increase of 15.3% from RMB1.1 billion in fiscal year 2013,
primarily driven by an increase of 18.5% increase in costs for the
P&C insurance agency business, offset by a 6.9% decrease in
costs for the life insurance agency business. The growth in costs
for the P&C insurance agency business was largely in line with
the growth in net revenues of P&C insurance agency business
while the decline in costs for the life insurance business was
primarily attributable to a decline in costs associated with the
life insurance renewal business. Costs incurred by the insurance
agency business accounted for 78.1% of operating costs in 2014.
Costs of insurance brokerage business were
RMB185.6 million (US$29.9 million) for fiscal year 2014,
representing an increase of 292.0% from RMB47.4 million in fiscal
year 2013. The increase was primarily due to sales growth. Costs
incurred by the insurance brokerage business accounted for 11.5% of
operating costs in 2014.
Costs of claims adjusting business were
RMB167.7 million (US$27.0 million) for fiscal year 2014,
representing an increase of 17.9% from RMB142.2 million in fiscal
year 2013. The increase was primarily attributable to sales growth
and increased salaries for claims adjustors. Costs incurred by the
claims adjusting business accounted for 10.4% of operating
costs.
Costs of other services were nil for fiscal
year of 2014, as compared with RMB8.9 million for fiscal year of
2013.
Selling expenses were RMB107.3 million (US$17.3
million) for fiscal year 2014, representing an increase of 11.2%
from RMB96.5 million in fiscal year 2013, primarily due to
increases in vehicle, office and marketing expenses.
General and administrative expenses were
RMB396.7 million (US$63.9 million) for fiscal year 2014,
representing an increase of 13.6% from RMB349.2 million in fiscal
year 2013.The increase was primarily due to: (1) an increase of
80.3% in research and development expenses relating to CNpad and
Baoxian.com from RMB25.5 million in 2013 to RMB46.0 million (US$7.4
million) in 2014, and (2)expenses of RMB17.0 million (US$2.7
million) incurred by eHuzhu and Chetong.net in 2014, offset by a
decrease of 47.9% in share-based compensation expenses from RMB45.3
million in 2013 to RMB23.6 million (US$3.8 million) in 2014.
Share-based compensation expenses were mainly associated with stock
options granted to certain employees in March 2012, which were
recognized on an accelerated basis and are expected to decrease
each year after the grant.
As a result of the preceding factors, operating
income was RMB30.9 million (US$5.0 million) for fiscal
year 2014, representing an increase of 71.8% from RMB18.0 million
in fiscal year 2013.
Operating margin was 1.4% for fiscal year 2014,
compared with 1.0% in fiscal year 2013.
Adjusted operating income was RMB93.9 million
(US$15.1 million), representing an increase of 116.0% from RMB43.5
million in fiscal year 2013.
Adjusted operating margin was 4.4%, compared
with 2.5% in fiscal year 2013.
Investment income was RMB44.2 million (US$7.1
million) for fiscal year 2014, representing an increase of 397.9%
from RMB8.9 million in fiscal year 2013. The increase was primarily
attributable to an increase in short term investment products.
Interest income was RMB82.3 million (US$13.3
million) for fiscal year 2014, representing a decrease of 2.4% from
RMB84.3 million in fiscal year 2013. The decrease in interest
income was primarily due to a decrease in term deposits as a result
of the increased short-term investment.
Income tax expense was RMB24.3 million (US$3.9
million) for fiscal year 2014, representing a decrease of 10.6%
from RMB27.2 million in fiscal year 2013. The effective tax rate
for fiscal year 2014 was 15.2% compared with 25.5% in fiscal year
2013. The decrease in effective tax rate was primarily due to 1) a
tax exemption for two years and a 50% tax reduction for the
succeeding three years enjoyed by one of the Company's subsidiaries
starting from January 1, 2014; and 2) higher share-based
compensation expenses charged for fiscal year 2013 which were
non-tax deductible.
Share of income of affiliates was RMB30.6
million (US$4.9 million) for fiscal year 2014, representing an
increase of 48.6% from RMB20.6 million in fiscal year 2013, 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 RMB161.8 million (US$26.1 million) for
fiscal year 2014, representing an increase of 69.1% from RMB95.6
million in fiscal year 2013.
Net margin was 7.5% for fiscal year 2014
compared with 5.4% in fiscal year 2013.
Basic and diluted net
income per ADS were RMB3.22 (US$0.52) and RMB3.19
(US$0.51) for fiscal year 2014, respectively, representing
increases of 68.0% and 67.3% from RMB1.92 and RMB1.91 respectively
in fiscal year 2013.
Adjusted EBITDA was RMB132.5 million (US$21.4
million) for fiscal year 2014, representing an increase of 6.7%
from RMB124.2 million in fiscal year 2013.
Adjusted EBITDA margin was 6.2% for fiscal year
2014, compared with 7.1%in fiscal year 2013.
Diluted adjusted EBITDA per ADS was
RMB2.62 (US$0.42) for fiscal year 2014, representing an increase of
5.4% from RMB2.48 in fiscal year 2013.
Recent Developments:
- On January 5, 2015, certain members of management of CNinsure
agreed to purchase from CDH Inservice Limited, an affiliate of CDH
Investments, one of the largest private equity funds in China,
7,731,149 ADSs or its equivalent in ordinary shares of the Company
through Kingsford Resources Limited, at a price of US$7 per ADS, or
US$0.35 per ordinary share, totaling US$54,118,043, in a privately
negotiated transaction. Upon completion of the transaction,
management's stake in the Company will increase from approximately
3.1% to 16.6%.
- On December 25, 2014, CNinsure was awarded the Insurance
Intermediary of the Year 2014 at the 3rd annual ceremony of Leading
China Summit Forum. It was the third year in a row that CNinsure
won the award.
- As of December 17, 2014, CNinsure completed its issuance and
sale of 150,000,000 ordinary shares, equivalent to 7.5 million ADSs
of the Company, representing approximately 13% of the Company's
current total outstanding share capital, to its employees for an
aggregate purchase price of approximately $41.5 million. The
purchase price was determined using the average closing price for
the 20 trading days prior to the board approval.
- As of December 31, 2014, CNinsure's distribution and service
network consisted of 548 sales and services outlets operating in 27
provinces, compared with 480 sales and service outlets operating in
27 provinces as of December 31, 2013. CNinsure had 62,248 sales
agents and 1,372 professional claims adjustors as of December 31,
2014, compared with 51,583 sales agents and representatives, and
1,362 professional claims adjustors as of December 31, 2013.
Business Outlook
CNinsure expects its total net revenues to grow by more than 20%
for the first quarter of 2015 compared with the corresponding
period in 2014. This forecast reflects CNinsure's current view,
which is subject to change.
Conference Call
The Company will host a conference call to discuss the fourth
quarter and fiscal year 2014 results as per the following
details.
Time: 8:00 PM Eastern Standard
Time on March 2, 2015 |
or
9:00 AM Beijing/Hong Kong Time on March 3, 2015 |
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The toll free dial-in
numbers: |
United States |
1-855-500-8701 |
United Kingdom |
0800-015-9724 |
Canada |
1-855-757-1565 |
Taiwan |
0080-665-1951 |
Hong Kong |
800-906-606 |
|
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The toll dial-in numbers: |
China (Mainland) |
400-120-0654 |
Singapore & Other Areas |
+65-6723-9385 |
|
|
Conference ID #: 81440385 |
|
Additionally, a live and archived web cast of this call will be
available at: http://ir.cninsure.net/events.cfm
About CNinsure Inc.
CNinsure 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, as well
as value-added services, such as emergency vehicle roadside
assistance.
Our online platforms include (1) Baoxian.com, an online entry
portal for comparing and purchasing health, accident, travel and
homeowner insurance products; (2) CNpad, a mobile sales support
application; (3) Chetong.net, a public service platform for the
insurance industry and (4) eHuzhu (www.ehuzhu.com), the first
non-profit online mutual aid platform in China. Our extensive
distribution and service network covers 27 provinces in China,
including most economically developed regions and cities.
For more information about CNinsure Inc., please visit
http://ir.cninsure.net/.
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 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 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 CNinsure 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 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 annual report on Form 20-F.
About Non-GAAP Financial Measures
In addition to the Company's consolidated financial results
under GAAP, the Company also provides adjusted operating income,
adjusted operating income margin, adjusted EBITDA, adjusted EBITDA
margin and diluted adjusted EBITDA per ADS, which are non-GAAP
financial measures. Adjusted operating income is defined as
operating income before expenses associated with the Company's
online and mobile initiatives including expenses relating to the
development, implementation and support of CNpad, Baoxian.com,
eHuzhu and Chetong.net. Adjusted operating income margin is defined
as adjusted operating income divided by total net
revenues. 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 ADS on
a diluted basis. 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 such measures exclude items
that were significant in the fourth quarter of 2014 and the
corresponding period of 2013 as well as during the fiscal year of
2013 and 2014, 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" and "Reconciliations of Adjusted
Operating Income and Adjusted Operating Income 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 RMB6.2046 to US$1.00, the effective noon buying rate as of
December 31, 2014 in The City of New York for cable transfers of
RMB as set forth in H.10 weekly statistical release of the Federal
Reserve Board.
2 Adjusted operating income is defined as operating income
excluding expenses incurred by online and mobile initiatives
including expenses relating to the development, implementation and
support of CNpad, Baoxian.com, eHuzhu and Chetong.net.
3 Adjusted EBITDA is defined as net income before income
tax expense, investment income, interest income, depreciation,
amortization and compensation expenses associated with stock
options.
4 Active customer accounts are defined as customer accounts
that made at least one purchase directly through www.baoxian.com or
its mobile application during the specified period.
CNINSURE
INC. |
Unaudited Condensed
Consolidated Balance Sheets |
(In
thousands) |
|
|
|
|
|
As of December 31, |
As of December 31, |
As of December 31, |
|
2013 |
2014 |
2014 |
|
RMB |
RMB |
US$ |
ASSETS: |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
2,288,623 |
2,103,068 |
338,953 |
Restricted cash |
11,100 |
7,478 |
1,205 |
Short term investments |
253,900 |
688,900 |
111,031 |
Accounts receivable, net |
199,482 |
186,150 |
30,002 |
Insurance premium receivables |
57 |
472 |
76 |
Other receivables |
254,776 |
88,149 |
14,207 |
Deferred tax assets |
4,858 |
— |
— |
Amounts due from related parties |
144,371 |
209,601 |
33,782 |
Other current assets |
20,634 |
17,908 |
2,886 |
Total current assets |
3,177,801 |
3,301,726 |
532,142 |
|
|
|
|
Non-current assets: |
|
|
|
Property, plant, and equipment, net |
69,562 |
47,171 |
7,602 |
Goodwill and intangible assets, net |
107,668 |
165,072 |
26,605 |
Deferred tax assets |
3,382 |
2,638 |
425 |
Investment in affiliates |
189,241 |
219,703 |
35,410 |
Other non-current assets |
13,076 |
12,176 |
1,962 |
Total non-current
assets |
382,929 |
446,760 |
72,004 |
Total assets |
3,560,730 |
3,748,486 |
604,146 |
|
|
|
|
LIABILITIES AND EQUITY: |
|
|
|
Current liabilities: |
|
|
|
Accounts payable (including accounts payable
of the consolidated variable interest entities ("VIEs") without
recourse to CNinsure Inc. of RMB10,282 and RMB4,453 (US$718) as of
December 31, 2013 and 2014, respectively) |
92,324 |
128,765 |
20,753 |
Insurance premium payables (including
insurance premium payables of the consolidated VIEs without
recourse to CNinsure Inc. of RMB223 and RMB268 (US$43) as of
December 31, 2013 and 2014, respectively) |
4,066 |
2,942 |
474 |
Other payables and accrued expenses
(including other payables and accrued expense of the consolidated
VIEs without recourse to CNinsure Inc. of RMB21,129 and RMB7,099
(US$1,144) as of December 31, 2013 and 2014, respectively) |
147,954 |
109,412 |
17,634 |
Accrued payroll (including accrued payroll of
the consolidated VIEs without recourse to CNinsure Inc. of RMB2,172
and RMB1,083 (US$175) as of December 31, 2013 and 2014,
respectively) |
39,089 |
40,096 |
6,462 |
Income tax payable (including income tax
payable of the consolidated of VIEs without recourse to CNinsure
Inc. of RMB2,603 and RMB2,571 (US$414) as of December 31, 2013 and
2014, respectively) |
55,992 |
54,225 |
8,740 |
|
|
|
|
Total current
liabilities |
339,425 |
335,440 |
54,063 |
|
|
|
|
Non-current
liabilities: |
|
|
|
Other tax liabilities |
50,735 |
53,855 |
8,680 |
Deferred tax liabilities |
23,808 |
24,931 |
4,018 |
Total non-current
liabilities |
74,543 |
78,786 |
12,698 |
Total liabilities |
413,968 |
414,226 |
66,761 |
|
|
|
|
Ordinary shares |
7,624 |
8,563 |
1,380 |
Additional paid-in capital |
2,329,962 |
2,601,401 |
419,270 |
Statutory reserves |
182,740 |
198,422 |
31,980 |
Retained earnings |
618,885 |
764,963 |
123,289 |
Accumulated other comprehensive loss |
(111,114) |
(105,106) |
(16,940) |
Subscription receivables |
— |
(257,491) |
(41,500) |
Total CNinsure Inc. shareholders'
equity |
3,028,097 |
3,210,752 |
517,479 |
Non-controlling interests |
118,665 |
123,508 |
19,906 |
Total equity |
3,146,762 |
3,334,260 |
537,385 |
Total liabilities and
equity |
3,560,730 |
3,748,486 |
604,146 |
|
|
|
|
|
|
|
|
CNINSURE
INC. |
|
|
|
|
|
|
|
Unaudited Condensed
Consolidated Statements of Income and Comprehensive
Income |
(In thousands, except
for shares and per share data) |
|
|
|
|
|
|
|
|
For
The Three Months Ended |
For
The Twelve Months Ended |
|
December 31, |
December 31, |
|
2013 |
2014 |
2014 |
2013 |
2014 |
2014 |
|
RMB |
RMB |
US$ |
RMB |
RMB |
US$ |
Net revenues: |
|
|
|
|
|
|
Revenues of insurance agency business |
386,870 |
488,713 |
78,766 |
1,418,512 |
1,624,410 |
261,807 |
Revenues of insurance brokerage business |
28,159 |
58,672 |
9,457 |
63,418 |
232,620 |
37,492 |
Revenues of claims adjusting business |
84,494 |
85,234 |
13,737 |
261,206 |
292,981 |
47,220 |
Revenues of other services |
4,316 |
— |
— |
13,888 |
— |
— |
Total net revenues |
503,839 |
632,619 |
101,960 |
1,757,024 |
2,150,011 |
346,519 |
Operating costs and
expenses: |
|
|
|
|
|
|
Costs of insurance agency business |
(299,833) |
(386,149) |
(62,236) |
(1,094,843) |
(1,261,888) |
(203,379) |
Costs of insurance brokerage business |
(20,851) |
(47,093) |
(7,590) |
(47,351) |
(185,593) |
(29,912) |
Costs of claims adjusting business |
(42,671) |
(45,245) |
(7,292) |
(142,245) |
(167,676) |
(27,025) |
Costs of other services |
(2,474) |
— |
— |
(8,933) |
— |
— |
Total operating costs |
(365,829) |
(478,487) |
(77,118) |
(1,293,372) |
(1,615,157) |
(260,316) |
Selling expenses |
(24,657) |
(31,740) |
(5,116) |
(96,461) |
(107,263) |
(17,288) |
General and administrative expenses |
(98,957) |
(124,303) |
(20,034) |
(349,205) |
(396,692) |
(63,935) |
Total operating costs and
expenses |
(489,443) |
(634,530) |
(102,268) |
(1,739,038) |
(2,119,112) |
(341,539) |
Income (loss) from
operations |
14,396 |
(1,911) |
(308) |
17,986 |
30,899 |
4,980 |
Other income, net: |
|
|
|
|
|
|
Investment income |
4,538 |
11,178 |
1,802 |
8,886 |
44,240 |
7,130 |
Interest income |
21,661 |
18,789 |
3,028 |
84,250 |
82,251 |
13,256 |
Others, net |
(7,640) |
595 |
96 |
(4,601) |
2,330 |
376 |
Income before income taxes and income
of affiliates |
32,955 |
28,651 |
4,618 |
106,521 |
159,720 |
25,742 |
Income tax expense |
(10,380) |
(5,563) |
(897) |
(27,158) |
(24,289) |
(3,915) |
Share of income of affiliates |
3,770 |
8,228 |
1,326 |
20,621 |
30,649 |
4,940 |
Net income |
26,345 |
31,316 |
5,047 |
99,984 |
166,080 |
26,767 |
less: net income attributable to
noncontrolling interests |
1,644 |
4,248 |
685 |
4,341 |
4,320 |
696 |
Net income attributable to the
Company's shareholders |
24,701 |
27,068 |
4,362 |
95,643 |
161,760 |
26,071 |
|
|
|
|
|
|
|
Net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
0.02 |
0.03 |
0.00 |
0.10 |
0.16 |
0.03 |
Diluted |
0.02 |
0.03 |
0.00 |
0.10 |
0.16 |
0.03 |
|
|
|
|
|
|
|
Net income per ADS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
0.49 |
0.53 |
0.09 |
1.92 |
3.22 |
0.52 |
Diluted |
0.49 |
0.52 |
0.09 |
1.91 |
3.19 |
0.51 |
|
|
|
|
|
|
|
Shares used in calculating net income
per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
998,861,526 |
1,023,391,993 |
1,023,391,993 |
998,861,526 |
1,005,842,212 |
1,005,842,212 |
Diluted |
998,861,526 |
1,036,069,705 |
1,036,069,705 |
1,000,570,018 |
1,012,591,387 |
1,012,591,387 |
|
|
|
|
|
|
|
Net income |
26,345 |
31,316 |
5,047 |
99,984 |
166,080 |
26,767 |
Other comprehensive (loss)
income, net of tax: Foreign currency translation adjustments |
(2,603) |
2,805 |
452 |
(6,982) |
6,008 |
968 |
Comprehensive income |
23,742 |
34,121 |
5,499 |
93,002 |
172,088 |
27,735 |
Less: Comprehensive (loss)
income attributable to the noncontrolling interests |
1,644 |
4,248 |
685 |
4,341 |
4,320 |
696 |
Comprehensive income attributable to
the CNinsure Inc's shareholders |
22,098 |
29,873 |
4,814 |
88,661 |
167,768 |
27,039 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CNINSURE
INC. |
Unaudited Condensed
Consolidated Statements of Cash Flow |
(In
thousands) |
|
|
|
|
|
|
|
|
For
The Three Months Ended |
For
The Twelve Months Ended |
|
December 31, |
December 31, |
|
2013 |
2014 |
2014 |
2013 |
2014 |
2014 |
|
RMB |
RMB |
US$ |
RMB |
RMB |
US$ |
OPERATING ACTIVITIES |
|
|
|
|
|
|
Net income |
26,345 |
31,316 |
5,047 |
99,984 |
166,080 |
26,767 |
Adjustments to reconcile net income
to net cash generated from operating activities: |
|
|
|
|
|
|
Depreciation |
7,732 |
6,008 |
968 |
31,253 |
28,235 |
4,551 |
Amortization of intangible assets |
3,417 |
4,728 |
762 |
13,665 |
16,826 |
2,712 |
Allowance for doubtful receivables |
2,661 |
2,148 |
346 |
5,303 |
6,060 |
977 |
Compensation expenses associated with stock
option |
14,702 |
4,684 |
755 |
45,317 |
23,598 |
3,803 |
Loss (gain) on disposal of property, plant
and equipment |
(16) |
243 |
39 |
(17) |
292 |
47 |
Write down of dividend receivables |
7,561 |
— |
— |
7,561 |
— |
— |
Investment income |
(2,700) |
(766) |
(123) |
(2,700) |
(15,419) |
(2,485) |
Share of income of affiliates |
(3,770) |
(8,228) |
(1,326) |
(20,621) |
(30,649) |
(4,940) |
Changes in operating assets and
liabilities |
40,964 |
33,310 |
5,369 |
6,200 |
66,626 |
10,738 |
Net cash generated from operating
activities |
96,896 |
73,443 |
11,837 |
185,945 |
261,649 |
42,170 |
Cash flows (used in) generated from
investing activities: |
|
|
|
|
|
|
Purchase of property, plant and
equipment |
(1,731) |
(1,626) |
(262) |
(36,181) |
(6,209) |
(1,001) |
Proceeds from disposal of property and
equipment |
92 |
248 |
40 |
249 |
613 |
99 |
Proceeds from disposal of short term
investments |
1,691 |
47,366 |
7,634 |
32,291 |
118,208 |
19,052 |
Purchase of short term investments |
(30,000) |
(16,600) |
(2,675) |
(283,900) |
(546,600) |
(88,096) |
Acquisition of subsidiaries, net of cash |
— |
— |
— |
— |
(62,709) |
(10,107) |
Disposal of subsidiaries, net of cash |
(1,532) |
— |
— |
(1,532) |
— |
— |
Decrease (increase) in restricted cash |
1,170 |
2,677 |
431 |
(229) |
3,622 |
584 |
(Increase) decrease in other receivables |
(67,706) |
(9,000) |
(1,451) |
(67,706) |
113,632 |
18,314 |
Purchase of intangible assets |
— |
— |
— |
— |
(118) |
(19) |
Return of investment in non-current
assets |
— |
— |
— |
— |
3,900 |
629 |
Addition in investment in non-current
assets |
— |
— |
— |
— |
(7,019) |
(1,131) |
Decrease (increase) in amounts due from
related parties |
22,666 |
(3,866) |
(623) |
(62,300) |
(62,716) |
(10,108) |
Net cash (used in) generated from
investing activities |
(75,350) |
19,199 |
3,094 |
(419,308) |
(445,395) |
(71,784) |
|
|
|
|
|
|
|
Cash flows generated from (used in
)financing activities: |
|
|
|
|
|
|
Acquisition of additional interest in
subsidiaries |
— |
— |
— |
— |
(11,000) |
(1,773) |
Capital injection by noncontrolling
interests |
— |
— |
— |
3,350 |
— |
— |
Proceeds on exercise of stock options
res |
— |
— |
— |
— |
3,183 |
513 |
Net cash generated from(used in)
financing activities |
— |
— |
— |
3,350 |
(7,817) |
(1,260) |
|
|
|
|
|
|
|
Net increase (decrease) in cash and
cash equivalents |
21,546 |
92,642 |
14,931 |
(230,013) |
(191,563) |
(30,874) |
Cash and cash equivalents at
beginning of period |
2,269,680 |
2,007,621 |
323,570 |
2,525,618 |
2,288,623 |
368,859 |
Effect of exchange rate changes on cash and
cash equivalents |
(2,603) |
2,805 |
452 |
(6,982) |
6,008 |
968 |
Cash and cash equivalents at end of
period |
2,288,623 |
2,103,068 |
338,953 |
2,288,623 |
2,103,068 |
338,953 |
|
|
|
|
|
|
|
Interest paid |
— |
— |
— |
— |
— |
— |
Income taxes paid |
6,911 |
1,265 |
204 |
27,153 |
19,135 |
3,084 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CNINSURE
INC. |
Reconciliations of Net
Income to Adjusted EBITDA and Adjusted EBITDA Margin |
(In thousands,
unaudited) |
|
|
|
|
|
|
|
|
For
The Three Months Ended |
For
The Twelve Months Ended |
|
December 31, |
December 31, |
|
2013 |
2014 |
2014 |
2013 |
2014 |
2014 |
|
RMB |
RMB |
US$ |
RMB |
RMB |
US$ |
Net income |
26,345 |
31,316 |
5,047 |
99,984 |
166,080 |
26,767 |
Income tax expense |
10,380 |
5,563 |
897 |
27,158 |
24,289 |
3,915 |
Investment income |
(4,538) |
(11,178) |
(1,802) |
(8,886) |
(44,240) |
(7,130) |
Interest income |
(21,661) |
(18,789) |
(3,028) |
(84,250) |
(82,251) |
(13,256) |
Depreciation |
7,732 |
6,008 |
968 |
31,253 |
28,235 |
4,551 |
Amortization of intangible assets |
3,417 |
4,728 |
762 |
13,665 |
16,826 |
2,712 |
Compensation expenses associated with stock
option |
14,702 |
4,684 |
755 |
45,317 |
23,598 |
3,803 |
Adjusted EBITDA |
36,377 |
22,332 |
3,599 |
124,241 |
132,537 |
21,362 |
Total net revenues |
503,839 |
632,619 |
101,960 |
1,757,024 |
2,150,011 |
346,519 |
Adjusted EBITDA Margin |
7.2% |
3.5% |
3.5% |
7.1% |
6.2% |
6.2% |
|
|
|
|
|
|
|
|
CNINSURE
INC. |
Reconciliations of
Adjusted Operating Income and Adjusted Operating income
Margin |
(In thousands,
unaudited) |
|
|
|
|
|
|
|
|
For
The Three Months Ended |
For
The Twelve Months Ended |
|
December 31, |
December 31, |
|
2013 |
2014 |
2014 |
2013 |
2014 |
2014 |
|
RMB |
RMB |
US$ |
RMB |
RMB |
US$ |
Operating income (loss) |
14,396 |
(1,911) |
(308) |
17,986 |
30,899 |
4,980 |
CNpad's R&D and promotion expenses |
5,418 |
22,589 |
3,640 |
25,480 |
45,952 |
7,406 |
Chetong.net's R&D and promotion
expenses |
— |
1,298 |
209 |
— |
2,358 |
380 |
eHuzhu's expenses |
— |
7,048 |
1,136 |
— |
14,633 |
2,359 |
Adjusted Operating
Income |
19,814 |
29,024 |
4,677 |
43,466 |
93,842 |
15,125 |
Total net revenues |
503,839 |
632,619 |
101,960 |
1,757,024 |
2,150,011 |
346,519 |
Adjusted Operating Income
Margin |
3.9% |
4.6% |
4.6% |
2.5% |
4.4% |
4.4% |
|
|
|
|
|
|
|
CONTACT: For more information, please contact:
Oasis Qiu
Investor Relations Manager
Tel: +86 (20) 6122-2731
Email: qiusr@cninsure.net
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