Noah Holdings Limited Announces Unaudited Financial Results for the Second Quarter of 2014

12 Aug, 2014, 05:12 ET from Noah Holdings Limited

SHANGHAI, Aug. 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

  • Net revenues in the second quarter of 2014 were US$71.4 million, a 61.4% increase from the corresponding period in 2013.
  • Income from operations in the second quarter of 2014 was US$ 28.3 million, a 53.7% increase from the corresponding period in 2013.
  • Operating margin in the second quarter of 2014 was 39.6%, compared to 41.6% in the corresponding period in 2013.
  • Net income attributable to Noah shareholders in the second quarter of 2014 was US$22.9 million, a 58.3% increase from the corresponding period in 2013. Non-GAAP[1] net income attributable to Noah shareholders in the second quarter of 2014 was US$ 24.6 million, a 52.8% increase from the corresponding period in 2013.
  • Net income per basic and diluted ADS in the second quarter of 2014 were both US$0.41. Non-GAAP net income per diluted ADS in the second quarter of 2014 was US$0.44.

SECOND QUARTER 2014 OPERATIONAL HIGHLIGHTS

  • Total number of registered clients as of June 30, 2014 increased by 32.6% year-over-year to 60,801; this figure includes  58,150 registered individual clients, 2,532 registered enterprise clients and 119 wholesale clients that have entered into cooperation agreements with the Company.
  • Active clients[2] during the second quarter of 2014 were 3,538, a 36% increase from the corresponding period in 2013. The aggregate value of wealth management products distributed by the Company during the second quarter of 2014 was RMB18.2 billion (approximately US$2.9 billion)[3], a 46.6% increase from the corresponding period in 2013. Of this aggregate value, fixed income products accounted for 64.3%, private equity fund products accounted for 29.3%, and other products, including mutual fund products, private securities investment funds and insurance products, accounted for 6.4%. The average transaction value per client[4] in the second quarter of 2014 was RMB5.1 million (approximately US$0.8 million), a 6.9% increase from the corresponding period in 2013.
  • Coverage network as of June 30, 2014 included 57 branches, up from 56 branches as of March 31, 2014 but remained the same as December 31, 2013. The number of relationship managers was 690 as of June 30, 2014, up from 569 as of December 31, 2013 and 604 as of March 31, 2014.

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.

SOURCE Noah Holdings Limited



RELATED LINKS

http://www.noahwm.com