Noah Holdings Limited Announces Financial Results For The First Quarter Of 2012

May 9, 2012

SHANGHAI, May 9, 2012 /PRNewswire-Asia/ -- Noah Holdings Limited ("Noah" or the "Company") (NYSE: NOAH), the leading independent service provider focusing on distributing wealth management products to the high net worth population in China, today announced its unaudited financial results for the first quarter of 2012.

FIRST QUARTER 2012 FINANCIAL HIGHLIGHTS

  • Net revenues in the first quarter of 2012 were US$16.8 million, a 10.8% increase from the corresponding period in 2011.
  • Income from operations in the first quarter of 2012 was US$2.6 million, a 60.2% decrease from the corresponding period in 2011.
  • Net income attributable to Noah shareholders in the first quarter of 2012 was US$2.7 million, a 52.6% decrease from the corresponding period in 2011. Non-GAAP[1] net income attributable to Noah shareholders in the first quarter of 2012 was US$3.7 million, a 40.5% decrease from the corresponding period in 2011.
  • Net income per basic and diluted ADS in the first quarter of 2012 were both US$0.05. Non-GAAP net income per diluted ADS in the first quarter of 2012 was US$0.06.

FIRST QUARTER 2012 OPERATIONAL HIGHLIGHTS

  • Total number of registered clients as of March 31, 2012 increased by 61.0% year-over-year to 29,814; this figure includes 28,924 registered individual clients, 824 registered enterprise clients and 66 wholesale clients that have entered into cooperation agreements with the Company.
  • Active clients[2] during the first quarter of 2012 were 952, a 44.5% increase from the corresponding period in 2011. The aggregate value of wealth management products distributed by the Company during the first quarter of 2012 was RMB5.3 billion (approximately US$0.8 billion)[3], a 5.7% increase from the corresponding period in 2011. Of this aggregate value, fixed income products accounted for 53.0%, private equity fund products accounted for 44.4%, and securities investment funds and investment-linked insurance products accounted for 2.6%. The average transaction value per client[4] in the first quarter of 2012 was RMB5.6 million (approximately US$0.9 million), a 26.8% decrease from the corresponding period in 2011, primarily due to changes in product mix as clients purchased more fixed income products that have lower minimum investment amount than private equity fund products.
  • Coverage network as of March 31, 2012 included 60 branches, up from 59 branches as of December 31, 2011. The number of relationship managers increased to 580 as of March 31, 2012, up 59.3% year-over-year.

Ms. Jingbo Wang, Co-founder, Chairwoman of the Board of Directors and Chief Executive Officer, commented, "Market environment has started to stabilize in the first quarter and we continued to focus on implementing our strategic initiatives to develop our mutual fund distribution business and our offshore business. During this quarter, we distributed several landmark products, which demonstrated yet again the importance of understanding client's needs and product innovation."

Mr. Tom Wu, Chief Financial Officer, said, "We are single-mindedly committed to deliver profitable growth for our shareholders by focusing on branch management, training and productivity. We will endeavor to realize economies of scale and to improve our profitability in the coming quarters."

FIRST QUARTER 2012 FINANCIAL RESULTS

Net Revenues

Net revenues for the first quarter of 2012 were US$16.8 million, a 10.8% increase from the corresponding period in 2011, due to an increase in net revenues in recurring service fees, which were offset by a decline in net revenues in one-time commissions for the first quarter of 2012.

Net revenues from one-time commissions for the first quarter of 2012 were US$9.2 million, a 19.0% decrease from the corresponding period in 2011. The year-over-year decrease was mainly due to lower average commission rate for short-term fixed income products.

Net revenues from recurring service fees for the first quarter of 2012 were US$7.6 million, a 97.8% increase from the corresponding period in 2011. The year-over-year increase was mainly due to the cumulative effect of private equity fund and securities investment fund products distributed previously.

Operating Margin

Operating margin for the first quarter of 2012 was 15.7%, as compared to 43.6% for the corresponding period in 2011. The year-over-year decrease in operating margin for the first quarter of 2012 was primarily due to an increase in operating cost and expenses resulting from the Company's expansions outpacing its net revenue growth.

Operating cost and expenses for the first quarter of 2012, including cost of revenues, selling expenses, G&A expenses and other operating income, were US$14.1 million, a 65.7% increase from the corresponding period in 2011.  

Cost of revenues for the first quarter of 2012 totaled US$3.9 million, a 47.6% increase from the corresponding period in 2011. The year-over-year increase for the first quarter of 2012 was primarily due to increases in compensation expenses paid to relationship managers mainly as a result of the expansion of the Company's sales force.

Selling expenses for the first quarter of 2012 were US$6.1 million, a 79.1% increase from the corresponding period in 2011. Selling expenses as a percentage of net revenues for the first quarter of 2012 was 36.5%, as compared to 22.6% for the corresponding period in 2011. The year-over-year increase for the first quarter of 2012 was primarily due to increases in personnel expenses, rental expenses and client service fees as a result of the Company's network expansions.                                                                            

G&A expenses for the first quarter of 2012 were US$4.2 million, a 67.5% increase from the corresponding period in 2011. G&A expenses as a percentage of net revenues for the first quarter of 2012 was 25.2%, as compared to 16.6% for the corresponding period in 2011. The year-over-year increase for the first quarter of 2012 was primarily due to increases in employee compensation expenses attributable to G&A expenses as a result of the Company's expansion.

Income Tax Expenses

Income tax expenses for the first quarter of 2012 were US$1.0 million, a 49.8% decrease from the corresponding period in 2011. The year-over-year decrease was primarily due to a decrease in taxable income.

Net Income

Net income attributable to Noah shareholders for the first quarter of 2012 was US$2.7 million, a 52.6% decrease from the corresponding period in 2011. Net margin for the first quarter of 2012 was 16.3%, as compared to 38.0% for the corresponding period in 2011. Income per basic and diluted ADS for the first quarter of 2012 were both US$0.05, as compared to US$0.10 for the corresponding period in 2011.

Non-GAAP net income attributable to Noah shareholders for the first quarter of 2012 was US$3.7 million, a 40.5% decrease from the corresponding period in 2011. Non-GAAP net margin for the first quarter of 2012 was 21.8%, as compared to 40.6% for the corresponding period in 2011. Non-GAAP income per diluted ADS for the first quarter of 2012 was US$0.06, as compared to US$0.11 for the corresponding period in 2011.

Balance Sheet and Cash Flow

As of March 31, 2012, the Company had US$123.1 million in cash and cash equivalents, a decrease from US$136.9 million as of December 31, 2011. In the first quarter of 2012, the Company generated US$0.7 million in its operating activities, received US$4.8 million from the maturity of fixed-term deposits, invested US$18.4 million mostly in fixed income products and used US$0.4 million to acquire property and equipment.

2012 FORECAST

The Company estimates that non-GAAP net income attributable to Noah shareholders for the full year 2012 is expected to be in a range of US$30.0 million and US$35.0 million, representing a year-over-year increase in the range of 14.8% and 34.0%. This estimate reflects management's current business outlook and is subject to change.

CONFERENCE CALL

Senior management will host a conference call on Wednesday, May 9, 2012 at 8:00 pm (Eastern) / 5:00 pm (Pacific) / 8:00 am (Hong Kong, Thursday, May 10) to discuss its first quarter 2012 financial results and recent business activity. The conference call may be accessed by calling the following numbers:


Toll Free

Toll

United States

+1-866-519-4004

+1-718-354-1231

China



- Domestic

800-819-0121  


- Domestic Mobile

400-620-8038 


Hong Kong

800-93-0346


United Kingdom

080-8234-6646


Conference ID #

75341366


A telephone replay will be available shortly after the call until May 16, 2012 at +1-718-354-1232 (US Local Toll) or +61-2-8235-5000 (International). Conference ID # 75341366.

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 certain amounts of expenses for the restricted shares and share options in the periods presented and expects to incur share-based compensation charges in the future. 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 the leading independent service provider focusing on distributing wealth management products to the high net worth population in China. Noah distributes over-the-counter wealth management products that are originated in China, including primarily fixed income products, private equity funds and securities investment funds. With 580 relationship managers in 60 branch offices as of March 31, 2012, 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 2012 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: our goals and strategies; our future business development, financial condition and results of operations; the expected growth of the wealth management market in China and internationally; our expectations regarding demand for and market acceptance of the products we distribute; our expectations regarding keeping and strengthening our relationships with key clients; relevant government policies and regulations relating to our industry; our ability to attract and retain quality employees; our ability to stay abreast of market trends and technological advances; our plans to invest in research and development to enhance our product choices and service offerings; competition in our industry in China and internationally; general economic and business conditions in China; and our ability to effectively protect our 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.

Notes:

[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.

Contact:

Noah Holdings Limited
Shang Chuang, Director of IR
Tel: +86 21 3860 2388
ir@noahwm.com

-- FINANCIAL AND OPERATIONAL TABLES FOLLOW --

Noah Holdings Limited

Condensed Consolidated Balance Sheets

(In U.S. dollars)

(unaudited)





As of





December 31, 2011


March 31, 2012





$


$

Assets






Current assets:







Cash and cash equivalents


136,859,336


123,121,230



Restricted cash


79,442


80,668



Short-term investments


20,714,145


34,825,265



Accounts receivable, net of allowance for doubtful accounts of nil at December 31, 2011 and March 31, 2012


6,233,227


11,136,087



Deferred tax assets


2,898,399


2,896,785



Amounts due from related parties


1,734,405


232,318



Other current assets


2,192,988


3,281,884



Total current assets


170,711,942


175,574,237









Long-term investments


1,892,308


1,417,527


Investment in affiliates


2,434,689


2,753,237


Property and equipment, net


4,436,936


4,212,775


Non-current deferred tax assets


537,988


524,697


Other non-current assets


928,496


944,146

Total Assets


180,942,359


185,426,619








Liabilities and Equity






Current liabilities:







Accrued payroll and welfare expenses


9,477,432


6,312,786



Income tax payable


1,932,895


2,425,881



Other current liabilities


5,062,950


8,482,861



Dividend payable


-


7,868,000



Uncertain tax position liabilities


322,378


364,310



Total current liabilities


16,795,655


25,453,838









Non-current uncertain tax position liabilities


1,272,219


1,271,645


Other non-current liabilities


1,854,762


1,811,085


Total Liabilities


19,922,636


28,536,568









Equity


161,019,723


156,890,051

Total Liabilities and Equity


180,942,359


185,426,619










 


Noah Holdings Limited


 Condensed Consolidated Income Statements


 (In U.S. dollars, except for ADS data, per ADS data and percentages)


 (unaudited)



 Three months ended





 March 31,


 March 31,


 Change



2011


2012




Revenues:

$


$




   Third-party revenues

14,047,759


14,521,729


3.4%


   Related party revenues

1,997,650


3,230,408


61.7%


Total revenues

16,045,409


17,752,137


10.6%


   Less: business taxes and related surcharges

(897,115)


(974,968)


8.7%


Net revenues

15,148,294


16,777,169


10.8%


Operating cost and expenses:







   Cost of revenues

(2,610,173)


(3,853,533)


47.6%


   Selling expenses

(3,421,605)


(6,128,402)


79.1%


   General and administrative expenses

(2,520,014)


(4,220,228)


67.5%


   Other operating income

13,132


52,812


302.2%


Total operating cost and expenses

(8,538,660)


(14,149,351)


65.7%


Income from operations

6,609,634


2,627,818


(60.2%)


Other income(expenses):







   Interest income

410,105


713,210


73.9%


   Investment income

225,780


533,026


136.1%


   Foreign exchange gain (loss)

550,136


(72,096)


(113.1%)


   Other income

46,935


28,383


(39.5%)


Total other income

1,232,956


1,202,523


(2.5%)


Income before taxes and loss from equity in affiliates

7,842,590


3,830,341


(51.2%)


Income tax expense

(2,075,150)


(1,041,470)


(49.8%)


Loss from equity in affiliates

(4,375)


(55,561)


1,170.0%


Net income attributable to Noah Shareholders

5,763,065


2,733,310


(52.6%)









Income per ADS, basic

0.10


0.05


(50.0%)


Income per ADS, diluted

0.10


0.05


(50.0%)









Other comprehensive income, net of tax:







     Foreign currency translation adjustments

236,908


(29,754)


(112.6%)


Comprehensive income attributable to Noah Shareholders

5,999,973


2,703,556


(54.9%)









Margin analysis:







Operating margin

43.6%


15.7%




Net margin

38.0%


16.3%




Weighted average ADS equivalent: [1]







Basic

55,676,667


55,940,872




Diluted

57,126,675


56,674,694




ADS equivalent outstanding at end of period

55,735,000


55,972,765



 [1] Assumes all outstanding ordinary shares are represented by ADSs. Each ordinary share represents two ADSs




 

Noah Holdings Limited

 Supplemental Information

(unaudited)


 As of 


 Change


March 31, 2011


March 31, 2012








 Number of registered clients

18,521


29,814


61.0%

 Number of relationship managers

364


580


59.3%

 Number of branch offices

39


60


53.8%














 Three months ended


 Change


March 31, 2011


March 31, 2012



(in millions of RMB, except number of active clients and percentages)

 Number of active clients

659


952


44.5%

 Transaction value:






        Fixed income products

1,695


2,819


66.3%

        Private equity fund products

2,523


2,362


(6.4%)

        Securities investment funds and investment-linked insurance products

815


137


(83.2%)

 Total transaction value

5,033


5,318


5.7%

 Average transaction value per client

7.64


5.59


(26.9%)


 

Noah Holdings Limited

 Reconciliation of GAAP to Non-GAAP Results

 (In U.S. dollars, except for ADS data and percentages)

 (unaudited)


 Three months ended




March 31,


 March 31,


 Change


2011


2012



$


$



Net income attributable to Noah Shareholders

5,763,065


2,733,310


(52.6%)

   Adjustment for share-based compensation related to:






           Share options

349,043


886,766


154.1%

           Restricted shares

35,018


35,407


1.1%

Adjusted net income attributable to Noah Shareholders  (non-GAAP)*

6,147,126


3,655,483


(40.5%)







Net income per ADS, diluted

0.10


0.05


(50.0%)

Adjusted net income per ADS, diluted  (non-GAAP)*

0.11


0.06


(41.4%)







Net margin

38.0%


16.3%


(57.1%)

Adjusted net margin (non-GAAP)*

40.6%


21.8%


(46.3%)


*The non-GAAP adjustments do not take into consideration the impact of taxes on such adjustments.

 

 

SOURCE Noah Holdings Limited


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