Fanhua Reports Fourth Quarter and Fiscal Year 2020 Unaudited Financial Results
Fanhua (Nasdaq: FANH) reported Q4 2020 financial results, showing total net revenues of RMB 852 million (down 15.9% YoY) and an operating income of RMB 72 million (down 37.0% YoY). Net income attributable to shareholders was RMB 48 million, significantly improving from a net loss of RMB 225 million in Q4 2019. GWP exceeded RMB 10 billion in 2020, up 16.3% YoY, despite challenges from COVID-19. The company anticipates Q1 2021 operating income of at least RMB 120 million and plans a minimum annual dividend of $0.60 per ADS for 2021.
- Net income attributable to shareholders improved to RMB 48 million in Q4 2020, compared to a loss of RMB 225 million in Q4 2019.
- GWP on regular life insurance grew by 21.0% YoY to RMB 2.9 billion in Q4 2020.
- Company anticipates no less than RMB 120 million in operating income for Q1 2021.
- Total net revenues for Q4 2020 decreased by 15.9% YoY.
- Operating income dropped by 37.0% YoY.
- Annual total net revenues decreased by 11.8% YoY.
GUANGZHOU, China, March 16, 2021 (GLOBE NEWSWIRE) --
Fanhua Inc., (Nasdaq: FANH), (the “Company” or “Fanhua”), a leading independent financial services provider in China, today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 20201.
Financial Highlights for the fourth quarter of 2020:
| (In thousands, except per ADS) | 2019Q4 (RMB) | 2020Q4 (RMB) | 2020Q4 (US$) | Change % |
| Total net revenues | 1,012,579 | 851,974 | 130,571 | (15.9) |
| Operating income | 114,130 | 71,874 | 11,015 | (37.0) |
| Net (loss) income attributable to the Company’s shareholders | (224,677) | 47,826 | 7,330 | / |
| Non-GAAP net income attributable to the Company’s shareholders2 | 97,977 | 70,784 | 10,848 | (27.8) |
| Diluted net (loss) income per ADS | (4.18) | 0.89 | 0.14 | / |
| Non-GAAP diluted net income per ADS3 | 1.82 | 1.32 | 0.20 | (27.5) |
| Cash, cash equivalents and short- term investments (As of December, 31, 2019 and 2020) | 1,782,004 | 1,553,293 | 238,052 | (12.8) |
Financial Highlights for Year 2020:
| (In thousands, except per ADS) | 2019 (RMB) | 2020 (RMB) | 2020 (US$) | Change % |
| Total net revenues | 3,706,003 | 3,268,145 | 500,865 | (11.8) |
| Operating income | 469,363 | 302,186 | 46,312 | (35.6) |
| Net income attributable to the Company’s shareholders | 188,932 | 268,254 | 41,112 | 42.0 |
| Non-GAAP net income attributable to the Company’s shareholders2 | 511,586 | 291,212 | 44,630 | (43.1) |
| Diluted net income per ADS | 3.46 | 4.99 | 0.77 | 44.2 |
| Non-GAAP diluted net income per ADS3 | 9.36 | 5.42 | 0.83 | (42.1) |
Commenting on the fourth quarter and full year 2020 results, Mr. Chunlin Wang, chairman and chief executive officer said, “In 2020, despite the impact of COVID-19, through integrated offline-to-online operations, Fanhua maintained sound business development and achieved another major milestone in the Company’s history of development, with its total gross written premiums (“GWP”) on regular life insurance in 2020 exceeding RMB10 billion, up
“Throughout the fourth quarter of 2020, we’ve been making steady progress in implementing our ‘Professionalization, Digitalization and Open Platform’ strategy. As part of our plan to professionalize our sales force, we have established a Yuntong Business Division and approved the establishment of three city-level branches. For digitalization, we’ve established a Digital Business Division and put our digital marketing center in operation. As for open platform, we’ve established a Cloud Service Division which has so far formed partnership with six cooperative channels and started operating on a trial basis.
“As we embark on the journey of implementing our new strategic initiatives in 2021, we expect our regular life insurance GWP to be no less than RMB3.0 billion and operating income no less than RMB120 million in the first quarter of 2021. For the full year of 2021, we expect our regular life insurance GWP to be no less than RMB12 billion. The initial expenditure for the Company’s strategy upgrade in 2021 is expected to be approximately RMB100 millions. Taking this short-term cost pressure in consideration, our operating income is expected to be no less than RMB300 million in 2021. However, we believe that the new strategy will start to bear fruits in 2022, driving rapid growth in 2022 and beyond and generating higher value for our shareholders over the long run.
“Fanhua is committed to maintaining a regular cash dividend policy. In view of our earnings expectation and the amount of investment required for enhancing our professional and digital capabilities for 2021, annual dividend for 2021 will be no less than US
Financial Results for the Fourth Quarter of 2020
Total net revenues were RMB852.0 million (US
- Net revenues for the life insurance business were RMB697.6 million (US
$106.9 million ) for the fourth quarter of 2020, representing a decrease of19.5% from RMB866.9 million for the corresponding period in 2019. The decrease was consistent with a year-over-year decrease of22.6% in first year premiums of our life insurance business from RMB934.5 million to RMB723.8 million, primarily reflecting the slow-down of business activities in the fourth quarter of 2020 as we focused on the preparation for the jumpstart sales season of the coming year, offset by the year-over-year growth of49.1% from RMB1,443.8 million to RMB2,152.6 million in renewal premiums. Revenues generated from our life insurance business accounted for81.9% of our total net revenues in the fourth quarter of 2020. - Net revenues for the P&C insurance business were RMB29.9 million (US
$4.6 million ) for the fourth quarter of 2020, representing an increase of2.0% from RMB29.3 million for the corresponding period in 2019. Revenues for the P&C insurance business in the fourth quarter of 2020 primarily consisted of commissions generated from Baowang (www.baoxian.com). The increase mainly reflected the growth of higher-commission insurance businesses such as short-term health insurance products sold via Baowang, offset by the decline in the sales of accident and travel insurance products as a result of significant reduction in travel activities due to the COVID-19 pandemic. Revenues generated from the P&C insurance business accounted for3.5% of our total net revenues in the fourth quarter of 2020. - Net revenues for the claims adjusting business were RMB124.5 million (US
$19.1 million ) for the fourth quarter of 2020, representing an increase of7.0% from RMB116.4 million for the corresponding period in 2019. The increase was mainly due to the strong growth of our medical insurance-related claims adjusting business. Revenues generated from the claims adjusting business accounted for14.6% of our total net revenues in the fourth quarter of 2020.
Total operating costs and expenses were RMB780.1 million (US
- Total operating costs were RMB581.9 million (US
$89.2 million ) for the fourth quarter of 2020, representing a decrease of16.1% from RMB693.5 million for the corresponding period in 2019.- Costs of the life insurance business were RMB484.3 million (US
$74.2 million ) for the fourth quarter of 2020, representing a decrease of19.5% from RMB601.3 million for the corresponding period in 2019. Costs incurred by the life insurance business accounted for83.2% of our total operating costs in the fourth quarter of 2020. - Costs of the P&C insurance business were RMB17.3 million (US
$2.7 million ) for the fourth quarter of 2020, representing a decrease of25.4% from RMB23.2 million for the corresponding period in 2019. Costs incurred by the P&C insurance business accounted for3.0% of our total operating costs in the fourth quarter of 2020. - Costs of claims adjusting business were RMB 80.2 million (US
$12.3 million ) for the fourth quarter of 2020, representing an increase of16.2% from RMB69.0 million for the corresponding period in 2019. Costs incurred by the claims adjusting business accounted for13.8% of our total operating costs in the fourth quarter of 2020.
- Costs of the life insurance business were RMB484.3 million (US
- Selling expenses were RMB78.6 million (US
$12.0 million ) for the fourth quarter of 2020, representing an increase of1.9% from RMB77.1 million for the corresponding period in 2019. The increase in selling expenses was mainly due to increased sales events in our claim adjusting segment and increased training activities in our life insurance segment. - General and administrative expenses were RMB119.6 million (US
$18.3 million ) for the fourth quarter of 2020, representing a decrease of6.4% from RMB127.8 million for the corresponding period in 2019.
As a result of the preceding factors, we had an operating income of RMB71.9 million (US
Operating margin was
Investment income was RMB7.8 million (US
Interest income was RMB2.3 million (US
Income tax expense was RMB13.5 million (US
Share of loss of affiliates was RMB4.2 million (US
Net income was RMB47.4 million (US
Net income attributable to the Company’s shareholders was RMB47.8 million (US
Non-GAAP net income attributable to the Company’s shareholders3, which excluded impairment on investment in CNFinance, was RMB70.8 million (US
Net margin was
Non-GAAP net margin4 was
Basic and diluted net income per ADS were RMB0.89 (US
Non-GAAP basic5 and diluted net income per ADS3 were RMB1.32 (US
Financial Results for Year 2020
Total net revenues were RMB3,268.1 million (US
- Net revenues for the life insurance business were RMB2,703.6 million (US
$414.3 million ) for 2020, representing a decrease of15.3% from RMB3,193.6 million in 2019. The decrease was mainly caused by a22.9% year-over-year decline in first year premiums from RMB3,136.6 to RMB2,417.6 million primarily due to the adverse impact of COVID-19 pandemic, partially offset by the year-over-year growth of renewal commissions as a result of a38.7% year-over-year growth in renewal premiums from RMB5,473.6 million to RMB7,594.3 million. Revenues generated from our life insurance business accounted for82.7% of our total net revenues in 2020. - Net revenues for the P&C insurance business were RMB131.4 million (US
$20.1 million ) for 2020, representing a decrease of7.3% from RMB141.8 million in 2019. The decrease was primarily driven by the decline of commissions generated on Baowang (www.baoxian.com) due to the decline in accident and travel insurance products as a result of significant reduction in travel activities due to the COVID-19 pandemic, despite solid growth in the sales of short-term health insurance through Baowang. Revenue generated from our P&C insurance business accounted for4.0% of our total net revenue in 2020. - Net revenues for the claims adjusting business were RMB433.1 million (US
$66.4 million ) for 2020, representing an increase of16.9% from RMB370.6 million in 2019. The increase was mainly due to growth in our medical insurance-related claims adjusting business. Revenues generated from the claims adjusting business accounted for13.3% of our total net revenues in 2020.
Total operating costs and expenses were RMB2,966.0 million (US
- Total operating costs were RMB2,213.9 million (US
$339.3 million ) for 2020, representing a decrease of10.9% from RMB2,483.4 million in 2019.- Costs of the life insurance business were RMB1,866.2 million (US
$286.0 million ) for 2020, representing a decrease of13.8% from RMB2,166.1 million in 2019. Costs incurred by the life insurance business accounted for84.3% of our total operating costs in 2020. - Costs of the P&C insurance business were RMB87.5 million (US
$13.4 million ) for 2020, representing a decrease of10.5% from RMB97.8 million in 2019. Costs incurred by the P&C insurance business accounted for4.0% of our total operating costs in 2020. - Costs of claims adjusting business were RMB260.1 million (US
$39.9 million ) for 2020, representing an increase of18.5% from RMB219.5 million in 2019. Costs incurred by the claims adjusting business accounted for11.7% of our total operating costs in 2020.
- Costs of the life insurance business were RMB1,866.2 million (US
- Selling expenses were RMB288.5 million (US
$44.2 million ) for 2020, representing an increase of3.7% from RMB278.1 million in 2019. The increase was primarily due to increased sales events in our claim adjusting segment. - General and administrative expenses were RMB463.6 million (US
$71.1 million ) for 2020, representing a decrease of2.4% from RMB475.1 million in 2019.
As a result of the preceding factors, we had an operating income of RMB302.2 million (US
Operating margin was
Investment income was RMB34.8 million (US
Interest income was RMB13.4 million (US
Income tax expense was RMB83.4 million (US
Share of loss of affiliates was RMB2.7 million (US
Net income was RMB276.2 million (US
Net income attributable to the Company’s shareholders was RMB268.3 million (US
Non-GAAP net income attributable to the Company’s shareholders, which excluded impairment on investment in CNFinance, was RMB291.2 million (US
Net margin was
Non-GAAP net margin was
Basic and diluted net income per ADS were RMB5.00 (US
Non-GAAP basic and diluted net income per ADS were RMB5.42 (US
As of December 31, 2020, the Company had RMB1,553.3 million (US
Key Operational Metrics for Fanhua's Online Initiatives in 2020:
- Lan Zhanggui - Our one-stop insurance service platform that integrates the key functions of both the CNpad Auto Insurance and CNpad Life Insurance Apps.
- The number of active users of Lan Zhanggui6 was 172,847 in 2020, as compared to 152,029 in 2019. The number of active users of Lan Zhanggui who have sold at least one life insurance policy was 79,012 in 2020, as compared to 131,326 in 2019, primarily because the sales activities of our sales agents were significantly hindered due to the impact of COVID-19;
- Insurance premiums generated through Lan Zhanggui were RMB2,738.5 million (US
$419.7 million ) in 2020, consisting of life insurance premiums of RMB2,186.7 million (US$335.1 million ), auto insurance premiums of RMB293.3 million (US$45.0 million ) and accidental & health (“A&H”) insurance premiums of RMB258.5 million (US$39.6 million ). Insurance premiums generated through Lan Zhanggui were RMB3,205.5 million in 2019, consisting of life insurance premiums of RMB3,110.7 million, auto insurance premiums of RMB89.4 million and A&H insurance premiums of RMB5.4 million.
- eHuzhu - Our online non-profit mutual aid platform:
- The number of paying members was 3.0 million as of December 31, 2020, as compared to 3.4 million as of December 31, 2019.
- Baowang (www.baoxian.com) - Our online insurance platform:
- The number of active customer accounts7 was 294,389 in 2020, representing a decrease of
13.8% from 341,657 in 2019, primarily due to fewer travel activities during COVID-19 which resulted in lower demand for travel and accident insurance products; - Insurance premiums generated through Baowang (www.baoxian.com) was RMB314.5 million (US
$48.2 million ) in 2020, representing a decrease of8.5% from RMB343.9 million in 2019.
- The number of active customer accounts7 was 294,389 in 2020, representing a decrease of
Distribution and Service Network
- As of December 31, 2020, Fanhua had 362,580 sales agents and 1,736 professional claims adjustors, as compared to 670,104 sales agents and 1,627 professional claims adjustors as of December 31, 2019. The number of performing agents8 was 222,203 in 2020, among which approximately 80,768 were performing agents who have sold life insurance products as compared to 394,327 performing agents and 131,326 performing agents for life insurance products in 2019. The decrease in the number of performing agents was primarily because the sales activities of our sales agents have been significantly hindered due to the difficulty to interact with prospective customers face-to-face as result of the restrictive measures to contain the spread of COVID-19 in the first half of 2020. As of December 31, 2020, Fanhua's distribution network consisted of 763 sales outlets in 23 provinces and 118 services outlets in 31 provinces, as compared to 758 sales outlets in 22 provinces and 159 services outlets in 31 provinces as of December 31, 2019.
Business Outlook
Fanhua expects its operating income to be no less than RMB120 million for the first quarter of 2021. This forecast reflects Fanhua’s current view, which is subject to change.
Conference Call
The Company will host a conference call to discuss its fourth quarter and fiscal year 2020 financial results as per the following details.
Time: 9:00 p.m. Eastern Daylight Time on March 16, 2021
or 9:00 a.m. Beijing/Hong Kong Time on March 17, 2021
Due to the outbreak of COVID-19, operator-assisted conference calls are not available at the moment. Please pre-register online in advance to join the conference call by navigating to the link provided below and dial-in 10 minutes before the call is scheduled to begin. Conference call details will be provided upon registration.
Conference Call Preregistration: http://apac.directeventreg.com/registration/event/6290486
Additionally, a live and archived webcast of the conference call will be available at Fanhua’s investor relations website https://edge.media-server.com/mmc/p/mkc7o8nk
About Fanhua Inc.
Fanhua Inc. is a leading independent 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, including life and property and casualty 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) Lan Zhanggui, an all-in-one platform which allows our agents to access and purchase a wide variety of insurance products, including life insurance, auto insurance, accident insurance, travel insurance and standard health insurance products from multiple insurance companies on their mobile devices; (2) Baowang (www.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 December 31, 2020, our distribution and service network consisted of 763 sales outlets covering 22 provinces and 118 service outlets covering 31 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, macroeconomic conditions in China and future development of COVID-19 epidemic 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.
About Non-GAAP Financial Measures
In addition to the Company’s consolidated financial results under GAAP, the Company also provides non-GAAP net income attributable to the Company’s shareholders, non-GAAP net margin and non-GAAP basic and diluted net income per ADS, all of which are non-GAAP financial measures. Non-GAAP net income attributable to the Company’s shareholders is defined as net income attributable to the Company’s shareholders before impairment on investment in CNFinance. Non-GAAP net margin is defined as non-GAAP net income attributable to the Company's shareholders3 as a percentage of net revenues. Non-GAAP basic net income per ADS is defined as non-GAAP net income attributable to the Company’s shareholders divided by total weighted average number of ADSs of the Company outstanding during the period. Non-GAAP diluted net income per ADS is defined as non-GAAP net income attributable to the Company’s shareholders divided by total weighted average number of diluted ADSs of the Company outstanding during the period. 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 and full year of 2020.
In light of these 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 GAAP Financial Measures to Non-GAAP Financial Measures” set forth at the end of this release.
FANHUA INC.
Unaudited Condensed Consolidated Balance Sheets
(In thousands)
| As of December 31, | As of December 31, | As of December 31, | |||
| 20199 | 2020 | 2020 | |||
| RMB | RMB | US$ | |||
| ASSETS: | |||||
| Current assets: | |||||
| Cash and cash equivalents | 169,653 | 245,428 | 37,613 | ||
| Restricted cash | 95,952 | 83,981 | 12,871 | ||
| Short term investments | 1,612,351 | 1,307,865 | 200,439 | ||
| Accounts receivable, net | 682,171 | 583,116 | 89,367 | ||
| Insurance premium receivables | 5,067 | — | — | ||
| Other receivables | 61,570 | 50,242 | 7,700 | ||
| Other current assets | 54,987 | 41,148 | 6,306 | ||
| Total current assets | 2,681,751 | 2,311,780 | 354,296 | ||
| Non-current assets: | |||||
| Restricted bank deposit - non current | — | 20,689 | 3,171 | ||
| Property, plant, and equipment, net | 40,806 | 36,778 | 5,637 | ||
| Goodwill and intangible assets, net | 110,191 | 109,913 | 16,845 | ||
| Deferred tax assets | 7,327 | 10,032 | 1,537 | ||
| Investment in affiliates | 363,414 | 357,661 | 54,814 | ||
| Other non-current assets | 46,917 | 33,743 | 5,171 | ||
| Right of use assets4 | 190,437 | 200,403 | 30,713 | ||
| Total non-current assets | 759,092 | 769,219 | 117,888 | ||
| Total assets | 3,440,843 | 3,080,999 | 472,184 |
| Current liabilities: | |||||
| Accounts payable | 382,882 | 377,386 | 57,837 | ||
| Insurance premium payables | 7,901 | 25,421 | 3,896 | ||
| Other payables and accrued expenses | 220,290 | 188,448 | 28,881 | ||
| Accrued payroll | 101,664 | 105,739 | 16,205 | ||
| Income tax payable | 155,251 | 145,983 | 22,373 | ||
| Current operating lease liability | 79,986 | 86,233 | 13,216 | ||
| Total current liabilities | 947,974 | 929,210 | 142,408 | ||
| Non-current liabilities: | |||||
| Refundable share rights deposits | 266,901 | — | — | ||
| Other tax liabilities | 70,350 | 67,219 | 10,302 | ||
| Deferred tax liabilities | 7,898 | 26,380 | 4,042 | ||
| Non-current operating lease liability | 103,252 | 103,526 | 15,866 | ||
| Total non-current liabilities | 448,401 | 197,125 | 30,210 | ||
| Total liabilities | 1,396,375 | 1,126,335 | 172,618 | ||
| Ordinary shares | 9,235 | 8,088 | 1,240 | ||
| Treasury stock | (1,146) | — | — | ||
| Additional paid-in capital | 393 | — | — | ||
| Statutory reserves | 508,739 | 553,911 | 84,891 | ||
| Retained earnings | 1,479,494 | 1,306,554 | 200,238 | ||
| Accumulated other comprehensive loss | (65,429) | (34,994) | (5,363) | ||
| Total shareholders’ equity | 1,931,286 | 1,833,559 | 281,006 | ||
| Non-controlling interests | 113,182 | 121,105 | 18,560 | ||
| Total equity | 2,044,468 | 1,954,664 | 299,566 | ||
| Total liabilities and equity | 3,440,843 | 3,080,999 | 472,184 | ||
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 Twelve Months Ended | |||||||||||
| December 31, | December 31, | |||||||||||
| 2019 | 2020 | 2020 | 2019 | 2020 | 2020 | |||||||
| RMB | RMB | US$ | RMB | RMB | US$ | |||||||
| Net revenues: | ||||||||||||
| Agency | 896,209 | 727,486 | 111,492 | 3,335,397 | 2,834,997 | 434,482 | ||||||
| Life insurance business | 866,879 | 697,554 | 106,905 | 3,193,625 | 2,703,584 | 414,342 | ||||||
| P&C insurance business | 29,330 | 29,932 | 4,587 | 141,772 | 131,413 | 20,140 | ||||||
| Claims adjusting | 116,370 | 124,488 | 19,079 | 370,606 | 433,148 | 66,383 | ||||||
| Total net revenues | 1,012,579 | 851,974 | 130,571 | 3,706,003 | 3,268,145 | 500,865 | ||||||
| Operating costs and expenses: | ||||||||||||
| Agency | (624,496) | (501,667) | (76,884) | (2,263,952) | (1,953,744) | (299,425) | ||||||
| Life insurance business | (601,311) | (484,329) | (74,227) | (2,166,126) | (1,866,227) | (286,012) | ||||||
| P&C insurance business | (23,185) | (17,338) | (2,657) | (97,826) | (87,517) | (13,413) | ||||||
| Claims adjusting | (69,035) | (80,204) | (12,292) | (219,496) | (260,121) | (39,865) | ||||||
| Total operating costs | (693,531) | (581,871) | (89,176) | (2,483,448) | (2,213,865) | (339,290) | ||||||
| Selling expenses | (77,097) | (78,601) | (12,046) | (278,085) | (288,460) | (44,208) | ||||||
| General and administrative expenses | (127,821) | (119,628) | (18,334) | (475,107) | (463,634) | (71,055) | ||||||
| Total operating costs and expenses | (898,449) | (780,100) | (119,556) | (3,236,640) | (2,965,959) | (454,553) | ||||||
| Income from operations | 114,130 | 71,874 | 11,015 | 469,363 | 302,186 | 46,312 | ||||||
| Other income, net: | ||||||||||||
| Investment income | 9,386 | 7,750 | 1,188 | 79,070 | 34,789 | 5,332 | ||||||
| Interest income | 238 | 2,280 | 349 | 2,828 | 13,420 | 2,057 | ||||||
| Others, net | (1,202) | (16,840) | (2,581) | 9,664 | 11,907 | 1,825 | ||||||
| Income before income taxes and income of affiliates | 122,552 | 65,064 | 9,971 | 560,925 | 362,302 | 55,526 | ||||||
| Income tax expense | (33,847) | (13,477) | (2,065) | (143,816) | (83,387) | (12,780) | ||||||
| Share of income and impairment of affiliates, net | (311,394) | (4,165) | (638) | (224,555) | (2,738) | (420) | ||||||
| Net (loss) income | (222,689) | 47,422 | 7,268 | 192,554 | 276,177 | 42,326 | ||||||
| less: net (loss) income attributable to noncontrolling interests | 1,988 | (404) | (62) | 3,622 | 7,923 | 1,214 | ||||||
| Net (loss) income attributable to the Company’s shareholders | (224,677) | 47,826 | 7,330 | 188,932 | 268,254 | 41,112 | ||||||
| Net income (loss) per share: | ||||||||||||
| Basic | (0.21) | 0.04 | 0.01 | 0.17 | 0.25 | 0.04 | ||||||
| Diluted | (0.21) | 0.04 | 0.01 | 0.17 | 0.25 | 0.04 | ||||||
Net income (loss) per ADS: | ||||||||||||
| Basic | (4.18) | 0.89 | 0.14 | 3.46 | 5.00 | 0.77 | ||||||
| Diluted | (4.18) | 0.89 | 0.14 | 3.46 | 4.99 | 0.77 | ||||||
| Shares used in calculating net income per share: | ||||||||||||
| Basic | 1,073,891,784 | 1,073,891,784 | 1,073,891,784 | 1,092,601,338 | 1,073,891,784 | 1,073,891,784 | ||||||
| Diluted | 1,074,291,474 | 1,074,291,242 | 1,074,291,242 | 1,093,229,436 | 1,074,291,360 | 1,074,291,360 | ||||||
Net income (loss) | (222,689) | 47,422 | 7,268 | 192,554 | 276,177 | 42,326 | ||||||
| Other comprehensive income (loss), net of tax: Foreign currency translation adjustments | 4,157 | (520) | (80) | 10,178 | 9,639 | 1,477 | ||||||
| Share of other comprehensive gain (loss) of affiliates | (819) | (2,322) | (356) | 451 | (3,016) | (462) | ||||||
| Unrealized net gains on available-for-sale investments | 13,267 | 8,109 | 1,243 | 17,231 | 23,811 | 3,649 | ||||||
| Comprehensive income (loss) | (206,084) | 52,689 | 8,075 | 220,414 | 306,611 | 46,990 | ||||||
| Less: Comprehensive income (loss) attributable to the noncontrolling interests | 1,988 | (404) | (62) | 3,622 | 7,923 | 1,214 | ||||||
| Comprehensive income (loss) attributable to the Company’s shareholders | (208,072) | 53,093 | 8,137 | 216,792 | 298,688 | 45,776 | ||||||
FANHUA INC.
Unaudited Condensed Consolidated Statements of Cash Flow
(In thousands)
| For The Three Months Ended | For The Twelve Months Ended | |||||||||||
| December 31, | December 31, | |||||||||||
| 2019 | 2020 | 2020 | 2019 | 2020 | 2020 | |||||||
| RMB | RMB | US$ | RMB | RMB | US$ | |||||||
| OPERATING ACTIVITIES | ||||||||||||
| Net income (loss) | (222,689) | 47,422 | 7,268 | 192,554 | 276,177 | 42,326 | ||||||
| Adjustments to reconcile net income to net cash generated from operating activities: | ||||||||||||
| Investment income | (8,961) | (1,188) | (180) | (65,616) | (14,321) | (2,195) | ||||||
| Share of income and impairment of affiliates, net | 311,394 | 4,165 | 638 | 224,555 | 2,738 | 420 | ||||||
| Other non-cash adjustments | 8,383 | 46,788 | 7,171 | 106,328 | 148,878 | 22,816 | ||||||
| Changes in operating assets and liabilities: | 36,587 | 3,292 | 504 | (279,497) | (11,172) | (1,713) | ||||||
| Net cash generated from operating activities | 124,714 | 100,479 | 15,401 | 178,324 | 402,300 | 61,654 | ||||||
| Purchase of short term investments | (1,549,800) | (1,012,700) | (155,203) | (7,498,701) | (7,947,662) | (1,218,032) | ||||||
| Proceeds from disposal of short term investments | 1,560,651 | 1,209,294 | 185,332 | 7,523,257 | 8,287,924 | 1,270,180 | ||||||
| Cash paid for loan receivables to a third party | — | — | — | — | (90,000) | (13,793) | ||||||
| Cash received for loan receivables to a third party | — | 90,000 | 13,793 | — | 90,000 | 13,793 | ||||||
| Others | (5,548) | (5,351) | (821) | (12,597) | (14,926) | (2,287) | ||||||
| Net cash generated from investing activities | 5,303 | 281,243 | 43,101 | 11,959 | 325,336 | 49,861 | ||||||
| Dividends paid | (113,252) | (87,804) | (13,457) | (435,072) | (388,499) | (59,540) | ||||||
| Repayment of refundable share rights deposits | — | (250,312) | (38,362) | — | (250,312) | (38,362) | ||||||
| Others | — | — | — | (357,034) | — | — | ||||||
| Net cash used in financing activities | (113,252) | (338,116) | (51,819) | (792,106) | (638,811) | (97,902) | ||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | 16,765 | 43,606 | 6,683 | (601,823) | 88,825 | 13,613 | ||||||
| Cash, cash equivalents and restricted cash at beginning of period | 252,033 | 318,160 | 48,760 | 848,166 | 265,605 | 40,706 | ||||||
| Effect of exchange rate changes on cash and cash equivalents | (3,193) | (11,668) | (1,788) | 19,262 | (4,332) | (664) | ||||||
| Cash, cash equivalents and restricted cash at end of period | 265,605 | 350,098 | 53,655 | 265,605 | 350,098 | 53,655 | ||||||
FANHUA INC.
Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures
(In RMB in thousands, except shares and per share data)
| For The Three Months Ended December 31 | ||||||||||||||
| 2019 | 2020 | |||||||||||||
| GAAP | Impairment on investment in affiliates | Non-GAAP | GAAP | Impairment on investment in affiliates | Non-GAAP | Change% | ||||||||
| Net revenues | 1,012,579 | — | 1,012,579 | 851,974 | — | 851,974 | (15.9) | |||||||
| Income from operations | 114,130 | — | 114,130 | 71,874 | — | 71,874 | (37.0) | |||||||
| Operating margin | — | — | (25.7) | |||||||||||
| Share of income and impairment of affiliates, net | (311,394) | (322,654) | 11,260 | (4,165) | (22,958) | 18,793 | 66.9 | |||||||
| Net (loss) income attributable to the Company’s shareholders | (224,677) | (322,654) | 97,977 | 47,826 | (22,958) | 70,784 | (27.8) | |||||||
| Net margin | ( | — | (14.4) | |||||||||||
| Net (loss) income per share | ||||||||||||||
| Basic | (0.21) | — | 0.09 | 0.04 | — | 0.07 | (22.2) | |||||||
| Diluted | (0.21) | — | 0.09 | 0.04 | — | 0.07 | (22.2) | |||||||
| Net (loss) income per ADS : | ||||||||||||||
| Basic | (4.18) | — | 1.82 | 0.89 | — | 1.32 | (27.5) | |||||||
| Diluted | (4.18) | — | 1.82 | 0.89 | — | 1.32 | (27.5) | |||||||
| Shares used in calculating net income per share : | ||||||||||||||
| Basic | 1,073,891,784 | — | 1,073,891,784 | 1,073,891,784 | — | 1,073,891,784 | ||||||||
| Diluted | 1,074,291,474 | — | 1,074,291,474 | 1,074,291,242 | — | 1,074,291,242 | ||||||||
| For The Twelve Months Ended December 31 | ||||||||||||||
| 2019 | 2020 | |||||||||||||
| GAAP | Impairment on investment in affiliates | Non-GAAP | GAAP | Impairment on investment in affiliates | Non-GAAP | Change% | ||||||||
| Net revenues | 3,706,003 | — | 3,706,003 | 3,268,145 | — | 3,268,145 | (11.8) | |||||||
| Income from operations | 469,363 | — | 469,363 | 302,186 | — | 302,186 | (35.6) | |||||||
| Operating margin | — | — | (27.6) | |||||||||||
| Share of income and impairment of affiliates, net | (224,555) | (322,654) | 98,099 | (2,738) | (22,958) | 20,220 | (79.4) | |||||||
| Net (loss) income attributable to the Company’s shareholders | 188,932 | (322,654) | 511,586 | 268,254 | (22,958) | 291,212 | (43.1) | |||||||
| Net margin | — | — | (35.5) | |||||||||||
| Net income per share | ||||||||||||||
| Basic | 0.17 | — | 0.47 | 0.25 | — | 0.27 | (42.6) | |||||||
| Diluted | 0.17 | — | 0.47 | 0.25 | — | 0.27 | (42.6) | |||||||
| Net income per ADS ： | — | |||||||||||||
| Basic | 3.46 | — | 9.36 | 5.00 | — | 5.42 | (42.1) | |||||||
| Diluted | 3.46 | — | 9.36 | 4.99 | — | 5.42 | (42.1) | |||||||
| Shares used in calculating net income per share ： | ||||||||||||||
| Basic | 1,092,601,338 | — | 1,092,601,338 | 1,073,891,784 | — | 1,073,891,784 | ||||||||
| Diluted | 1,093,229,436 | — | 1,093,229,436 | 1,074,291,360 | — | 1,074,291,360 | ||||||||
| 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 RMB6.5250 to US |
| 2 | Non-GAAP net income attributable to the Company’s shareholders is defined as net income attributable to the Company’s shareholders before impairment on investment in an affiliate. |
| 3 | Non-GAAP diluted net income per ADS is defined as non-GAAP net income attributable to the Company’s shareholders divided by total weighted average number of diluted ADSs of the Company outstanding during the period. |
| 4 | Non-GAAP net margin is defined as non-GAAP net income attributable to the Company's shareholders as a percentage of net revenues. |
| 5 | Non-GAAP basic net income per ADS is defined as non-GAAP net income attributable to the Company’s shareholders divided by total weighted average number of ADSs of the Company outstanding during the period. |
| 6 | Active users of Lan Zhanggui included users who sold at least one insurance policy through Lan Zhanggui (through either its mobile application or WeChat public account) during the specified period. |
| 7 | Active customer accounts of Baowang are defined as customer accounts that made at least one purchase directly through www.baoxian.com, its mobile application, or WeChat public account during the specified period. |
| 8 | Performing agents are defined as agents who have sold at least one insurance policy during the specified period. |
| 9 | In June 2016, FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. This standard requires entities to measure all expected credit losses of financial assets held at a reporting date based on historical experience, current conditions, and reasonable and supportable forecasts in order to record credit losses in a timelier manner. ASU 2016-13 also amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. ASU 2016-13 adds to U.S. GAAP an impairment model (known as the current expected credit loss (CECL) model) that is based on expected losses rather than incurred losses. The Company adopted the ASU No. 2016-13 on a modified-retrospective basis, the cumulative-effect adjustment reduce opening retained earnings balance by approximately RMB7.5 million in the statement of financial position as of January 1, 2020. |
Source: Fanhua Inc.
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