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

SHENZHEN, China, Aug. 10, 2011 /PRNewswire-Asia-FirstCall/ -- Sino Assurance Inc. (OTCBB: SNAS) today reported solid second quarter 2011 financial result highlighted by earnings growth, an increase of 30% in net revenue and 86% gross margin.

Net revenue

Net revenue for the six months ended June 30, 2011, was $5,589,853 as compared to $4,309,302 for the same period in 2010. The increase of $1,280,551 or approximately 30% 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 86% from 82% for the six months ended June 30, 2011, due to tightening of control of our cost of sales. As a result, the cost of sales decreased for the period and the percentage of the guarantee fee income substantially increased.

Net revenue for the three months ended June 30, 2011, was $2,092,938 as compared to $2,415,032 for the same period in 2010. The decrease of $322,094 or approximately 13% was due to the tightening control of bank loan supply in China during this period and as a result reduce the demand of tender and surety guarantee business. The gross margin decreased to 78% from 83% for the three months ended June 30, 2011, due to the percentage of the guarantee fee income that without cost was decreased and the percentage of guarantee fee income that with cost was increased.

Net income before tax

Net income before tax for the six months ended June 30, 2011 was $2,732,175 compared to $2,000,122 for the same period in 2010, an increase in pre-tax income of $732,053, or approximately 37%. 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 before tax for the three months ended June 30, 2011 was $574,528 compared to $1,234,181 for the same period in 2010, a decrease in pre-tax income of $659,653, or approximately 53%. The decrease in pre-tax net income was due the decrease in net revenue and gross margin during this period, as well as the increase in selling, general and administrative expenses.

Operating expenses

Total operating expenses were $2,057,022 for the six months ended June 30, 2011, as compared to $1,541,376 for the same period in 2010. The increase of $515,646 or 33% was primarily due to the increase in staff costs, provision for guarantee losses, rent and rate, audit fee and other professional fee.

Total operating expenses were $1,055,025 for the three months ended June 30, 2011, as compared to $758,948 for the same period in 2010. The increase of $296,077 or 39% 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 six months ended June 30, 2011, cash provided by operating activities totaled $2,510,752. This was primarily due to the net income for the period plus increase in deferred revenue, partially offset by the increase in guarantee fee receivables, prepayments and other receivable and decrease in income tax payable, accounts payable and accrued liability and other payable.

For the six months ended June 30, 2011, cash used in investing activities amounted to $2,045,666. The use of funds was mainly due to the payment on loan receivable and purchase of plant and equipment, partially offset by the receipts from loans receivable and the change in restricted cash, net of customer collateral.

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.

SOURCE Sino Assurance, Inc.