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CNinsure Reports First Quarter 2013 Unaudited Financial Results

(2) an increase of 11.5% in payroll and social insurance expenses from RMB30.4 million for the first quarter of 2012 to RMB33.9 million (US$5.5 million) for the first quarter of 2013 primarily due to pay raises for our administrative staff; and

(3) an increase of 41.6% in depreciation expense from RMB4.3 million for the first quarter of 2012 to RMB6.2 million (US$1.0 million) for the first quarter of 2013 due to the purchase of more fixed assets for our e-commerce operation during 2012.

As a result of the foregoing factors, operating income was RMB1.6 million (US$0.3 million) for the first quarter of 2013, representing a decrease of 95.8% from RMB38.7 million for the corresponding period in 2012.

Non-GAAP operating income, which excludes share-based compensation expenses was RMB14.4 million (US$2.3 million) for the first quarter of 2013, representing a decrease of 66.3% from RMB42.8 million for the corresponding period in 2012.

Operating margin was 0.4% for the first quarter of 2013, compared with 11.5% for the corresponding period in 2012. Non-GAAP operating margin was 3.6% for the first quarter of 2013, compared with 12.7% for the corresponding period in 2012.

Interest income was RMB21.5 million (US$3.5 million) for the first quarter of 2013, representing a decrease of 4.1% from RMB22.5 million for the corresponding period in 2012. The slight decrease in interest income was primarily due to a decrease in the bank interest rate from the corresponding period in 2012.

Income tax expense was RMB6.2 million (US$1.0 million) for the first quarter of 2013, representing a decrease of 54.5% from RMB13.7 million for the corresponding period in 2012 due to the significant decrease in operating income. The effective tax rate for the first quarter of 2013 was 26.8% compared with 22.1% for the corresponding period in 2012. The increase in effective tax rate was mainly due to the increase in share-based compensation expenses which are non tax-deductible.

Net income attributable to the Company's shareholders was RMB21.0 million (US$3.4 million) for the first quarter of 2013, representing a decrease of 61.5% from RMB54.6 million for the corresponding period in 2012.

Net margin was 5.2% for the first quarter of 2013 compared with 16.2% for the corresponding period in 2012.

Non-GAAP net income attributable to the Company's shareholders, which excludes share-based compensation expense was RMB33.8 million (US$5.4 million) for the first quarter of 2013, representing a decrease of 42.4% from RMB58.7 million for the corresponding period in 2012.

Non-GAAP net margin was 8.4% for the first quarter of 2013 compared with 17.4% for the corresponding period in 2012.

Basic and diluted net income per ADS were RMB0.42 (US$0.07) and RMB0.42 (US$0.07) for the first quarter of 2013, respectively; representing decreases of 61.4% and 61.3% from RMB1.09 and RMB1.08 for the corresponding period in 2012, respectively.

Non-GAAP basic and diluted net income per ADS were RMB0.68 (US$0.11) and RMB0.67 (US$0.11) for the first quarter of 2013, respectively; representing decreases of 42.2% and 42.1% from RMB1.17 and RMB1.16 for the corresponding period in 2012, respectively.

As of March 31, 2013, the Company had RMB2.5 billion (US$395.8 million) in cash and cash equivalents.

Recent developments:

  • As of March 31, 2013, CNinsure's distribution and service network consisted of 481 sales and services outlets operating in 27 provinces, compared with 532 sales and service outlets operating in 26 provinces as of March 31, 2012. CNinsure had 47,312 sales agents and representatives, and 1,258 professional claims adjustors as of March 31, 2013, compared with 47,425 sales agents and representatives, and 1,337 professional claims adjustors as of March 31, 2012. The decrease in the number of sales outlets was primarily because we shut down some sales outlets which were less productive primarily during the second and third quarter of 2012.

Business Outlook

CNinsure expects its total net revenues to grow by over 5% for the second quarter of 2013 compared with the corresponding period in 2012. This forecast reflects CNinsure's current view, which is subject to change.

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