Sino Assurance Inc. (OTC: SNAS). Reports First Quarter 2011 Revenue and Earnings Growth

News provided by

Sino Assurance, Inc.

May 13, 2011, 12:30 ET

SHENZHEN, China, May 13, 2011 /PRNewswire-Asia-FirstCall/ -- Sino Assurance Inc. (OTCBB: SNAS) today reported solid first quarter 2011 financial result highlighted by strong earnings growth, an increase of 85% in net revenue and 180% in net income attributable with 90% gross margin.

Net revenue

Net revenue for the three months ended March 31, 2011, was $3,496,915 as compared to $1,894,270 for the same period in 2010. The increase of $1,602,645 or approximately 85% was due to significant year-over-year growth of our customer base in the tender and surety guarantee business and market share in China. The gross margin increased to 90% from 82% for the three months ended March 31, 2011, due to tightening of control of our cost of sales. As a result, the cost of sales decrease for the period and the percentage of the guarantee fee income substantially increased.

Net income before tax

Net income before tax for the three months ended March 31, 2011 was $2,157,647 compared to $765,942 for the same period in 2010, an increase in pre-tax income of $1,391,705, or approximately 182%. The increase in pre-tax net income was a result of the fact that we tightened control of our selling, general and administrative expenses during the period, and also employed more agents to promote our guarantee business which resulted in an increase in guarantee fee income from bank referrals.

Net income

Net income for the three months ended March 31, 2011 was $1,636,888 compared to $584,903 for the same period in 2010, an increase in net income of $1,051,985, or approximately 180%. GAAP earnings per diluted share for the first quarter of 2011 were $0.03, as compared to $0.01 for the first quarter of 2010.

Operating expenses

Total operating expenses were $1,001,997 for the three months ended March 31, 2011, as compared to $782,427 for the same period in 2010.  The increase of $219,570 or 28% was primarily due to the increase in staff costs, provision for guarantee losses, rent and rate, audit fee and other professional fee.

LIQUIDITY

For the three months ended March 31, 2011, cash provided by operating activities totaled $2,279,066. This was primarily due to the net income for the period plus increase in deferred revenue and income tax payable, partially offset by the increase in guarantee fee receivables, prepayments and other receivable and decrease in accounts payable.

For the three months ended March 31, 2011, cash provided by investing activities amounted to $2,658,268. The receipt of funds was mainly due to the receipts from loans receivable, partially offset by the payment on loan receivable, purchase of plant and equipment and the change in restricted cash, net of customer collateral.

Financial Outlook

Management believes that the opportunities for sustained growth in revenue and earnings will be largely associated with the customer demand for the financial services provided by the Company, which primarily take the form of credit guaranty. Other elements expected to drive the growth in revenue include the potential impact of the regulatory governance of the credit guaranty market and development of the company's new personal credit products and services.

Management believes that for the year 2011, the company will generate earning per share $0.16 to $0.17, with revenue projection of $23 to $24 million.

Safe Harbor Statement

This press release may include certain statements that are not descriptions of historical facts, but are forward-looking statements. Forward-looking statements can be identified by the use of forward-looking terminology such as 'will,' 'believes,' 'expects' or similar expressions. Such information is based upon expectations of our management that were reasonable when made but may prove to be incorrect. All of such assumptions are inherently subject to uncertainties and contingencies beyond our control and based upon premises with respect to future business decisions, which are subject to change. We do not undertake to update the forward-looking statements contained in this press release. For a description of the risks and uncertainties that may cause actual results to differ from the forward-looking statements contained in this press release, see our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission ('SEC'), and our subsequent SEC filings. Copies of filings made with the SEC are available through the SEC's electronic data gathering analysis retrieval system at http://www.sec.gov .

For more information, please contact:

Company Contact:

Wei Wei, Assistant to CFO

Sino Assurance,Inc.    

Tel:  +86-755-8252-3518

Email: [email protected]


Investor Contact:

Eric Tong, Chief Finance Officer

Tel:  +86-755-8252-5568

Email: [email protected]

SINO ASSURANCE INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2011 AND DECEMBER 31, 2010

(Currency expressed in United States Dollars ("US$"), except for number of shares)

March 31, 2011

December 31, 2010

(Unaudited)

(Audited)

ASSETS




Current assets:




Cash and cash equivalents

$

12,071,541

$

7,074,893

Restricted cash


14,374,397

13,050,117

Guarantee fee receivable

25,251

18,003

Loans receivable, unsecured

-

2,842,001

Prepayments and other receivable

299,459

262,127

Total current assets

26,770,648

23,247,141






Non-current assets:




Plant and equipment, net

514,703

410,807

TOTAL ASSETS

$

27,285,351

$

23,657,948






LIABILITIES AND STOCKHOLDER'S EQUITY




Current liabilities:




Accounts payable, trade

$

28,639

$

130,209

Customer collateral

10,069,025

8,830,517

Deferred revenue

1,025,031

915,847

Amount due to a related party

62,004

61,614

Income tax payable

554,898

529,447

Deferred tax liabilities

1,864,774

1,422,843

Accrued liabilities and other payable

1,661,463

1,455,009

Total current liabilities

15,265,834

13,345,486






Commitments and contingencies










Stockholders' equity:




Common stock, $0.001 par value; 200,000,000 shares authorized; 60,200,000 shares issued and outstanding as of March 31, 2011 and December 31, 2010

60,200

60,200

Additional paid-in capital

2,970,045

2,970,045

Accumulated other comprehensive income

539,004

468,837

Statutory reserve

332,153

332,153

Retained earnings


8,118,115

6,481,227

Total stockholders' equity

12.019,517

10,312,462

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

27,285,351

$

23,657,948

SINO ASSURANCE INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010

(Currency expressed in United States Dollars ("US$"))

(Unaudited)


Three months ended March 31,


2011

2010

REVENUES, NET





Guarantee fee income

$

3,466,370

$

1,871,679

Interest income

30,545

22,591







Total revenues, net

3,496,915

1,894,270







COST OF REVENUE

(337,271)

(345,901)







GROSS PROFIT

3,159,644

1,548,369







Operating expenses:





Depreciation



(26,577)

(29,524)

Selling, general and administrative

(785,186)

(645,249)

Reserve for guarantee losses

(190,234)

(107,654)


Total operating expenses

(1,001,997)

(782,427)







INCOME BEFORE INCOME TAXES

2,157,647

765,942







Income tax expense

(520,759)

(181,039)







NET INCOME


$

1,636,888

$

584,903







Other comprehensive income:





- Foreign currency translation gain

70,167

794







COMPREHENSIVE INCOME

$

1,707,055

$

585,697







Net income per share – Basic and diluted

$

0.03

$

0.01







Weighted average shares outstanding – Basic and diluted

60,200,000

60,000,000

SINO ASSURANCE INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010

(Currency expressed in United States Dollars ("US$"))

(Unaudited)


Three months ended March 31,


2011

2010

Cash flows from operating activities:





Net income

$

1,636,888

$

584,903

Adjustments to reconcile net income to net cash provided by (used in) operating activities:





Depreciation

33,377

29,524

Loss on disposal of plant and equipment

206

-

Reserve for guarantee losses

190,234

107,654

Unrealized interest income

-

(20,561)

Deferred tax expense

431,632

114,180

Changes in operating assets and liabilities:





Guarantee fee receivable

(7,113)

(103,666)

Prepayments and other receivable

(35,564)

(39,680)

Accounts payable, trade

(102,096)

2,074

Deferred revenue

103,069

113,308

Income tax payable

22,026

32,890

Accrued liabilities and other payable

6,407

(32,159)







Net cash provided by operating activities

2,279,066

788,467







Cash flows from investing activities:





Change in restricted cash, net of customer collateral

(58,819)

2,677

Receipts from loans receivable

7,946,208

-

Payment on loans receivable

(5,094,546)

(1,148,332)

Proceeds from disposal of plant and equipment

137

-

Purchase of plant and equipment

(134,712)

(115,730)







Net cash provided by (used in) investing activities

2,658,268

(1,261,385)







Effect of exchange rate changes in cash and cash equivalents

59,314

97







NET CHANGE IN CASH AND CASH EQUIVALENTS

4,996,648

(472,821)







CASH AND CASH EQUIVALENT, BEGINNING OF PERIOD



7,074,893

559,105







CASH AND CASH EQUIVALENT, END OF PERIOD

$

12,071,541

$

86,284







SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:


Cash paid for income taxes

$

35,241

$

29,118

Cash paid for interest

$

-

$

-

SOURCE Sino Assurance, Inc.

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