SHANGHAI, August 12, 2014 /PRNewswire/ -- Noah Holdings Limited ("Noah" or the "Company") (NYSE: NOAH), a leading wealth management service provider focusing on distributing wealth management products to the high net worth population in China, today announced its unaudited financial results for the second quarter of 2014.
SECOND QUARTER 2014 FINANCIAL HIGHLIGHTS
SECOND QUARTER 2014 OPERATIONAL HIGHLIGHTS
Ms. Jingbo Wang, Co-founder, Chairwoman of the Board of Directors and Chief Executive Officer, commented, "Despite the overall challenge economic environment, we have achieved solid performance in the second quarter. Our asset management and core risk control capability continues to strength and gain market recognition which provide a solid foundation for future development."
Ms. Theresa Teng, Chief Financial Officer, said, "It was a strong quarter, with both quarterly transaction value and revenues reaching a record high in the Company's history. We are also glad to see that profitability remained at a health level as we further expend our business."
SECOND QUARTER 2014 FINANCIAL RESULTS
Net Revenues
Net revenues for the second quarter of 2014 were US$71.4 million, a 61.4% increase from the corresponding period in 2013, due to increases in both one-time commission revenues and recurring service fees and contribution of performance fees for the second quarter of 2014.
Net revenues from one-time commissions for the second quarter of 2014 were US$22.9 million, a 0.4% increase from the corresponding period in 2013. The year-over-year increase for the second quarter of 2014 was primarily due to an increase in transaction value, despite a decrease in average commission rate.
Net revenues from recurring service fees for the second quarter of 2014 were US$35.8 million, a 76.4% increase from the corresponding period in 2013. The year-over-year increase for the second quarter of 2014 was mainly due to the cumulative effect of private equity funds previously distributed by the Company and an increase in assets under management by the Company since the second half of 2013.
Net revenues from performance fees for the second quarter of 2014 were US$11.4 million, due to full realization of two real estate funds managed by the Company in the second quarter.
Operating Margin
Operating margin for the second quarter of 2014 was 39.6%, as compared to 41.6% for the corresponding period in 2013. The year-over-year decrease for the second quarter of 2014 was primarily due to the expansion of the company in the second quarter.
Operating Cost and Expenses
Operating cost and expenses for the second quarter of 2014, including cost of revenues, selling expenses, G&A expenses and other operating income, were US$ 43.2million, a 66.9% increase from the corresponding period in 2013.
Cost of revenues for the second quarter of 2014 totaled US$18.0 million, a 95.2% increase from the corresponding period in 2013. The year-over-year increase for the second quarter of 2014 was primarily due to increases in compensation expenses as result of the increase in transaction value and number of relationship managers. In addition, the year-over-year increase for the second quarter of 2014 was caused by increases in compensation expenses for two fully realized real estate funds managed by the Company in the second quarter. Cost of revenues as a percentage of net revenues for the second quarter of 2014 was 25.2%, as compared to 20.8% for the corresponding period in 2013.
Selling expenses for the second quarter of 2014 were US$12.0 million, a 34.3% increase from the corresponding period in 2013. The year-over-year increase for the second quarter of 2014 was primarily due to increases in personnel expenses, general marketing activities and rental expenses. Selling expenses as a percentage of net revenues for the second quarter of 2014 was 16.7%, as compared to 20.1% for the corresponding period in 2013.
G&A expenses for the second quarter of 2014 were US$14.1 million, a 57.7% increase from the corresponding period in 2013. The year-over-year increase for the second quarter of 2014 was primarily due to increases in personnel expenses, share-based compensation and professional fee. G&A expenses as a percentage of net revenues for the second quarter of 2014 was 19.7%, slight decrease from 20.2% for the corresponding period in 2013.
Other operating income for the second quarter of 2014 was US$0.9 million, as compared to US$1.2 million for the corresponding period in 2013. Other operating income is government subsidies received in the PRC from local governments for general corporate purposes.
Income Tax Expenses
Income tax expenses for the second quarter of 2014 were US$7.7 million, a 42.9% increase from the corresponding period in 2013. The year-over-year increase for the second quarter of 2014 was primarily due to increase in taxable income.
Net Income
Net income attributable to Noah shareholders for the second quarter of 2014 was US$ 22.9 million, a 58.3% increase from the corresponding period in 2013. Net margin for the second quarter of 2014 was 33.6%, as compared to 33.3% for the corresponding period in 2013. Net income per basic and diluted ADS for the second quarter of 2014 were both US$0.41, as compared to US$0.26 for the corresponding period in 2013.
Non-GAAP net income attributable to Noah shareholders for the second quarter of 2014 was US$24.6 million, a 52.8% increase from the corresponding period in 2013. Non-GAAP net margin for the second quarter of 2014 was 34.5%, as compared to 36.4% for the corresponding period in 2013. Non-GAAP net income per diluted ADS for the second quarter of 2014 was US$0.44, as compared to US$0.29 for the corresponding period in 2013.
Balance Sheet and Cash Flow
As of June 30, 2014, the Company had US$ 214.7 million in cash and cash equivalents, an increase of US$54.6million from US$160.0 million as of March 31, 2014. In the second quarter of 2014, the Company generated US$43.5 million cash inflow from its operating activities and a net US$10.6 million cash inflow from its investing activities.
2014 FORECAST
The Company estimates that non-GAAP net income attributable to Noah shareholders for the full year 2014 is expected to be in a range of US$72.0 million and US$76.0 million, representing a year-over-year increase in the range of 27.0% and 34.1%. This estimate reflects management's current business outlook and is subject to change.
Key Personnel Change
Ms. Theresa Teng will be resigning as chief financial officer effective September 2nd, 2014 due to personal reason. A search for a replacement has commenced and Ms. Chia-Yue Chang, our current executive director, will be the acting CFO effective from September 3rd, 2014, until a suitable candidate comes on board.
CONFERENCE CALL
Senior management will host a conference call on Tuesday, August 12, 2014 at 8:00 am (Eastern) / 5:00 am (Pacific) / 8:00 pm (Hong Kong, Tuesday, August 12, 2014) to discuss its second quarter 2014 unaudited financial results and recent business activity. The conference call may be accessed by calling the following numbers:
Toll Free | |
United States | +1-877-870-4263 |
China | 4001-201203 |
Hong Kong | 800-90-5945 |
International | +1-412-317-0790 |
Conference ID # | 10050430 |
A telephone replay will be available shortly after the call until August 19, 2014 at +1-877-344-7529 (US Local Toll) or +1-412-317-0088 (International). Conference ID #10050430.
A live webcast of the conference call and replay will be available in the investor relations section of the Company's website at http://ir.noahwm.com.
DISCUSSION OF NON-GAAP FINANCIAL MEASURES:
In addition to disclosing financial results prepared in accordance with U.S. GAAP, the Company's earnings release contains non-GAAP financial measures that exclude the effects of all forms of share-based compensation. The reconciliation of these non-GAAP financial measures to the nearest GAAP measures is set forth in the table captioned "Reconciliation of GAAP to Non-GAAP Results" below.
The non-GAAP financial measures disclosed by the Company should not be considered a substitute for financial measures prepared in accordance with U.S. GAAP. The financial results reported in accordance with U.S. GAAP and reconciliation of GAAP to non-GAAP results should be carefully evaluated. The non-GAAP financial measure used by the Company may be prepared differently from and, therefore, may not be comparable to similarly titled measures used by other companies.
When evaluating the Company's operating performance in the periods presented, management reviewed non-GAAP net income results reflecting adjustments to exclude the impacts of share-based compensation to supplement U.S. GAAP financial data. As such, the Company believes that the presentation of the non-GAAP net income, non-GAAP income per diluted ADS and non-GAAP net margin provides important supplemental information to investors regarding financial and business trends relating to the Company's financial condition and results of operations in a manner consistent with that used by management. Pursuant to U.S. GAAP, the Company recognized significant amounts of expenses for the restricted shares and share options in the periods presented. To make financial results comparable period by period, the Company utilized the non-GAAP financial results to better understand its historical business operations.
ABOUT NOAH HOLDINGS LIMITED
Noah Holdings Limited is a leading wealth management service provider focusing on distributing wealth management products to the high net worth population in China. Noah distributes wealth management products, including primarily fixed income products, private equity funds, private securities investment funds and mutual funds. Noah is also equipped with asset management services capability, managing its own fund of funds and real estate fund products. With 690 relationship managers in 57 branch offices as of June 30, 2014, Noah's total coverage network encompasses China's most economically developed regions where the high net worth population is concentrated. Through this extensive coverage network, product sophistication, and client knowledge, the Company caters to the wealth management needs of China's high net worth population. For more information please visit the Company's website at http://www.noahwm.com.
SAFE HARBOR STATEMENT
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Among other things, the outlook for the full year 2014 and quotations from management in this announcement, as well as Noah's strategic and operational plans, contain forward-looking statements. Noah may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Noah's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: its goals and strategies; its future business development, financial condition and results of operations; the expected growth of the wealth management market in China and internationally; its expectations regarding demand for and market acceptance of the products it distributes; its expectations regarding keeping and strengthening its relationships with key clients; relevant government policies and regulations relating to its industry; its ability to attract and retain quality employees; its ability to stay abreast of market trends and technological advances; its plans to invest in research and development to enhance its product choices and service offerings; competition in its industry in China and internationally; general economic and business conditions in China; and its ability to effectively protect its intellectual property rights and not infringe on the intellectual property rights of others. Further information regarding these and other risks is included in Noah's filings with the Securities and Exchange Commission, including its annual report on Form 20-F. Noah does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law. All information provided in this press release and in the attachments is as of the date of this press release, and Noah undertakes no duty to update such information, except as required under applicable law.
Contacts:
Noah Holdings Limited
Jing Ou-Yang, Director of IR
Tel: +86 21 2510 0889
ir@noahwm.com
-- FINANCIAL AND OPERATIONAL TABLES FOLLOW --
Noah Holdings Limited | ||||||||
Condensed Consolidated Balance Sheets | ||||||||
(In U.S. dollars) | ||||||||
(unaudited) | ||||||||
As of | ||||||||
March 31,2014 | June 30,2014 | |||||||
$ | $ | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | 160,040,452 | 214,661,861 | ||||||
Restricted cash | 160,865 | 161,197 | ||||||
Short-term investments | 46,564,383 | 48,413,577 | ||||||
Accounts receivable, net of allowance for doubtful accounts of nil at March 31, 2014 and June 30, 2014 | 13,682,745 | 17,738,509 | ||||||
Loans receivable | 22,705,151 | 15,056,822 | ||||||
Deferred tax assets | 767,626 | 782,783 | ||||||
Amounts due from related parties | 23,454,477 | 21,003,828 | ||||||
Other current assets | 4,065,973 | 6,100,505 | ||||||
Total current assets | 271,441,672 | 323,919,082 | ||||||
Long-term investments | 18,487,819 | 10,273,068 | ||||||
Investment in affiliates | 16,696,255 | 18,393,796 | ||||||
Property and equipment, net | 9,004,958 | 10,102,932 | ||||||
Non-current deferred tax assets | 1,451,815 | 1,517,931 | ||||||
Other non-current assets | 1,278,920 | 1,874,288 | ||||||
Total Assets | 318,361,439 | 366,081,097 | ||||||
Liabilities and Equity | ||||||||
Current liabilities: | ||||||||
Accrued payroll and welfare expenses | 21,820,537 | 36,024,534 | ||||||
Income tax payable | 4,081,788 | 6,571,251 | ||||||
Amounts due to related parties | 3,175 | 10,834 | ||||||
Deferred revenues | 17,355,808 | 20,058,907 | ||||||
Short-term bank loans | 8,061,673 | 8,076,628 | ||||||
Other current liabilities | 13,783,725 | 14,682,721 | ||||||
Total current liabilities | 65,106,706 | 85,424,875 | ||||||
Non-current uncertain tax position liabilities | 1,664,713 | 1,666,812 | ||||||
Other non-current liabilities | 2,745,806 | 3,626,924 | ||||||
Total Liabilities | 69,517,225 | 90,718,611 | ||||||
Equity | 248,844,214 | 275,362,486 | ||||||
Total Liabilities and Equity | 318,361,439 | 366,081,097 | ||||||
Noah Holdings Limited | ||||||||||||
Condensed Consolidated Income Statements | ||||||||||||
(In U.S. dollars, except for ADS data, per ADS data and percentages) | ||||||||||||
(unaudited) | ||||||||||||
Three months ended | ||||||||||||
June 30, | June 30 | |||||||||||
2013 | 2014 | Change | ||||||||||
Revenues: | $ | $ | ||||||||||
Third-party revenues | 26,397,769 | 28,785,237 | 9.0% | |||||||||
Related party revenues | 20,455,258 | 46,736,661 | 128.5% | |||||||||
Total revenues | 46,853,027 | 75,521,898 | 61.2% | |||||||||
Less: business taxes and related surcharges | (2,588,670) | (4,077,767) | 57.5% | |||||||||
Net revenues | 44,264,357 | 71,444,131 | 61.4% | |||||||||
Operating cost and expenses: | ||||||||||||
Cost of revenues | (9,204,873) | (17,970,679) | 95.2% | |||||||||
Selling expenses | (8,897,931) | (11,953,347) | 34.3% | |||||||||
General and administrative expenses | (8,934,533) | (14,091,972) | 57.7% | |||||||||
Other operating income | 1,185,135 | 862,745 | (27.2%) | |||||||||
Total operating cost and expenses | (25,852,202) | (43,153,253) | 66.9% | |||||||||
Income from operations | 18,412,155 | 28,290,878 | 53.7% | |||||||||
Other income: | ||||||||||||
Interest income | 692,734 | 1,527,263 | 120.5% | |||||||||
Investment income | 847,153 | 1,247,554 | 47.3% | |||||||||
Other income | 12,617 | 23,982 | 90.1% | |||||||||
Total other income | 1,552,504 | 2,798,799 | 80.3% | |||||||||
Income before taxes and loss from equity in affiliates | 19,964,659 | 31,089,677 | 55.7% | |||||||||
Income tax expense | (5,394,450) | (7,706,562) | 42.9% | |||||||||
Income from equity in affiliates | 165,921 | 647,103 | 290.0% | |||||||||
Net income | 14,736,130 | 24,030,218 | 63.1% | |||||||||
Less: net income attributable to non-controlling interests | 288,312 | 1,158,911 | 302% | |||||||||
Net income attributable to Noah Shareholders | 14,447,818 | 22,871,307 | 58.3% | |||||||||
Income per ADS, basic | 0.26 | 0.41 | 57.7% | |||||||||
Income per ADS, diluted | 0.26 | 0.41 | 57.7% | |||||||||
Margin analysis: | ||||||||||||
Operating margin | 41.6% | 39.6% | ||||||||||
Net margin | 33.3% | 33.6% | ||||||||||
Weighted average ADS equivalent: [1] | ||||||||||||
Basic | 54,809,120 | 55,668,048 | ||||||||||
Diluted | 55,746,252 | 56,379,038 | ||||||||||
ADS equivalent outstanding at end of period | 54,915,820 | 55,748,158 | ||||||||||
Noah Holdings Limited | |||||||||
Condensed Comprehensive Income Statements | |||||||||
(In U.S. dollars) (unaudited) | |||||||||
Three months ended | |||||||||
June 30, | June 30, | ||||||||
2013 | 2014 | Change | |||||||
$ | $ | ||||||||
Net income | 14,736,130 | 24,030,218 | 63.1% | ||||||
Other comprehensive income, net of tax: | |||||||||
Foreign currency translation adjustments | 1,683,916 | 539,010 | (68.0%) | ||||||
Fair value fluctuation of available for sale Investment (after tax) | - | 47,801 | |||||||
Comprehensive income | 16,420,046 | 24,617,029 | 49.9% | ||||||
Less: Comprehensive income attributable to non-controlling interests | 387,716 | 1,188,986 | 206.7% | ||||||
Comprehensive income attributable to Noah Shareholders | 16,032,330 | 23,428,043 | 46.1% | ||||||
Noah Holdings Limited | |||||
Supplemental Information | |||||
(unaudited) | |||||
As of | |||||
June 30, 2013 | June 30, 2014 | Change | |||
Number of registered clients | 45,839 | 60,801 | 32.6% | ||
Number of relationship managers | 525 | 690 | 31.4% | ||
Number of branch offices | 56 | 57 | 1.8% | ||
Three months ended | |||||
June 30, 2013 | June 30, 2014 | Change | |||
(in millions of RMB, except number of active clients and percentages) | |||||
Number of active clients | 2,602 | 3,538 | 36.0% | ||
Transaction value: | |||||
Fixed income products | 10,618 | 11,701 | 10.2% | ||
Private equity fund products | 1,133 | 5,328 | 370.3% | ||
Other products, including mutual fund products, private securities investment funds and insurance products | 655 | 1,161 | 77.3% | ||
Total transaction value | 12,406 | 18,190 | 46.6% | ||
Average transaction value per client | 4.77 | 5.10 | 6.9% | ||
Noah Holdings Limited | |||||
Reconciliation of GAAP to Non-GAAP Results | |||||
(In U.S. dollars, except for ADS data and percentages) | |||||
(unaudited) | |||||
Three months ended | |||||
June 30, | June 30, | ||||
2013 | 2014 | Change | |||
$ | $ | ||||
Net income | 14,736,130 | 24,030,218 | 63.1% | ||
Adjustment for share-based compensation related to: | |||||
Share options | 58,316 | 479,049 | 721.5% | ||
Restricted shares | 1,612,898 | 1,287,005 | (20.2%) | ||
Adjusted net income (non-GAAP)* | 16,407,344 | 25,796,272 | 57.2% | ||
Net margin | 33.3% | 33.6% | |||
Adjusted net margin (non-GAAP)* | 37.1% | 36.1% | |||
Net income attributable to Noah Shareholders | 14,447,818 | 22,871,307 | 58.3% | ||
Adjustment for share-based compensation related to: | |||||
Share options | 58,316 | 479,049 | 721.5% | ||
Restricted shares | 1,612,898 | 1,287,005 | (20.2%) | ||
Adjusted net income attributable to Noah Shareholders (non-GAAP)* | 16,119,032 | 24,637,361 | 52.8% | ||
Net income attributable to Noah Shareholders per ADS, diluted | 0.26 | 0.41 | 57.7% | ||
Adjusted net income attributable to Noah Shareholders per ADS, diluted (non-GAAP)* | 0.29 | 0.44 | 51.7% | ||
*The non-GAAP adjustments do not take into consideration the impact of taxes on such adjustments. | |||||
[1] Noah's Non-GAAP financial measures are its corresponding GAAP financial measures as adjusted by excluding the effects of all forms of share-based compensation.
[2] "Active clients" refers to those registered clients who purchased wealth management products distributed by Noah during any given period.
[3] The amount in RMB was translated into U.S. dollars using the average rate for the period as set forth in the H.10 statistical release of the Federal Reserve Board.
[4] "Average transaction value per client" refers to the average value of wealth management products distributed by Noah that are purchased by active clients during a given period.
