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TheStreet Open House

Noah Holdings Limited Announces 2011 Fourth Quarter And Full Year 2011 Financial Results And Declares Cash Dividend

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 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 over 500 relationship managers in 59 branch offices as of December 31, 2011, 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.

 
Noah Holdings Limited
Condensed Consolidated Balance Sheets
(In U.S. dollars)
(unaudited)
      As of

September 30,2011

 

December 31,2011

$ $
Assets
Current assets:
Cash and cash equivalents 137,503,856 136,859,336
Restricted cash 78,394 79,442
Fixed-term deposits 3,135,779 -
Short-term investments 12,397,950 20,714,145
Accounts receivable, net of allowance for doubtful accounts of nil at September 30, 2011 and December 31, 2011 11,323,319 6,233,227
Deferred tax assets 1,279,482 3,030,342
Amounts due from related parties 119,697 1,734,405
Other current assets 2,536,084 2,192,988
Total current assets 168,374,561 170,843,885
 
Long-term investments 1,864,711 1,892,308
Investment in affiliates 2,244,440 2,434,689
Property and equipment, net 3,309,284 4,436,936
Non-current deferred tax assets 453,307 537,988
Other non-current assets 902,566 928,496
Total Assets 177,148,869 181,074,302
 
Liabilities and Equity
Current liabilities:
Accrued payroll and welfare expenses 8,244,654 9,477,432
Income tax payable 1,682,800 1,932,895
Deferred tax liabilities 33,419 131,943
Other current liabilities 8,586,880 5,062,950
Uncertain tax position liabilities 318,127 322,378
Total current liabilities 18,865,880 16,927,598
 
Non-current uncertain tax position liabilities 1,216,393 1,272,219
Other non-current liabilities 1,406,698 1,854,762
Total Liabilities 21,488,971 20,054,579
 
Equity 155,659,898 161,019,723
Total Liabilities and Equity 177,148,869 181,074,302
 
 
Noah Holdings Limited
Condensed Consolidated Income Statements
(In U.S. dollars, except for ADS data, per ADS data and percentages)
(unaudited)
      Three months ended  
December 31,   December 31, Change
2010 2011  
Revenues: $ $
Third-party revenues 9,906,411 10,261,158 3.6%
Related party revenues 4,887,691 5,017,108 2.6%
Total revenues 14,794,102 15,278,266 3.3%
Less: business taxes and related surcharges (790,010) (831,955) 5.3%
Net revenues 14,004,092 14,446,311 3.2%
Operating cost and expenses:
Cost of revenues (2,560,956) (3,811,751) 48.8%
Selling expenses (3,533,004) (5,424,318) 53.5%
General and administrative expenses (1,835,112) (3,137,689) 71.0%
Other operating income 9,345 17,618 88.5%
Total operating cost and expenses (7,919,727) (12,356,140) 56.0%
Income from operations 6,084,365 2,090,171 (65.6%)
Other income(expenses):
Interest income 98,667 521,724 428.8%
Investment income 65,728 486,815 640.7%
Other (expense) income (128,661) 894,388 (795.2%)
Total other income 35,734 1,902,927 5225.3%
Income before taxes and loss from equity in affiliates 6,120,099 3,993,098 (34.8%)
Income tax expense (1,859,758) (430,094) (76.9%)
Loss from equity in affiliates (12,707) (28,746) -
Net income attributable to Noah Shareholders 4,247,634 3,534,258 (16.8%)
 
Income per ADS, basic 0.08 0.06 (25.0%)
Income per ADS, diluted 0.08 0.06 (25.0%)
Margin analysis:
Operating margin 43.4% 14.5%
Net margin 30.3% 24.5%
Weighted average ADS equivalent: [1]
Basic 46,329,565 55,892,072
Diluted 47,807,742 56,755,513
ADS equivalent outstanding at end of period 55,660,000 55,925,172
 
        [1]   Assumes all outstanding ordinary shares are represented by ADSs. Each ordinary share represents two ADSs
 
Noah Holdings Limited
Condensed Consolidated Income Statements
(In U.S. dollars, except for ADS data, per ADS data and percentages)
(unaudited)
         
Twelve months ended
December 31, December 31, Change
2010 2011  
$ $
Revenues:
Third-party revenues 30,996,179 63,636,367 105.3%
Related party revenues 9,068,669 12,724,077 40.3%
Total revenues 40,064,848 76,360,444 90.6%
Less: business taxes and related surcharges (2,201,289) (4,197,118) 90.7%
Net revenues 37,863,559 72,163,326 90.6%
Operating cost and expenses:
Cost of revenues (6,570,752) (14,805,431) 125.3%
Selling expenses (8,488,457) (19,262,014) 126.9%
General and administrative expenses (7,292,577) (13,556,787) 85.9%
Other operating income 172,737 562,333 225.5%
Total operating cost and expenses (22,179,049) (47,061,899) 112.2%
Income from operations 15,684,510 25,101,427 60.0%
Other income(expenses):
Interest income 179,069 1,953,619 991.0%
Investment income 281,076 1,368,358 386.8%
Other (expense) income (153,060) 3,347,301 (2286.9%)
Gain on change in fair value of derivative liabilities 354,000 - (100.0%)
Total other income 661,085 6,669,278 908.8%
Income before taxes and loss from equity in affiliates 16,345,595 31,770,705 94.4%
Income tax expenses (4,790,089) (7,779,408) 62.4%
Loss from equity in affiliates (25,137) (21,347) (15.1%)
Net income attributable to Noah Shareholders 11,530,369 23,969,950 107.9%
 
Deemed dividend on Series A convertible redeemable preferred shares (108,348) - (100.0%)
Net income attributable to ordinary shareholders 11,422,021 23,969,950 109.9%

 

Income per ADS, basic 0.26 0.43 65.2%
Income per ADS, diluted 0.23 0.42 82.8%
Margin analysis:
Operating margin 41.4% 34.8%
Net margin 30.5% 33.2%
Weighted average ADS equivalent: [2]
Basic 33,331,836 55,789,906
Diluted 38,060,223 57,042,544
 
        [2]   Assumes all outstanding ordinary shares are represented by ADSs. Each ordinary share represents two ADSs
 
Noah Holdings Limited
Supplemental Information
(unaudited)
      As of   Change
December 31, 2010   December 31, 2011
 
Number of registered clients 16,296 27,144 66.6%
Number of relationship managers 341 510 49.6%
Number of branch offices 39 59 51.3%
 
 
Three months ended Change
December 31, 2010 December 31, 2011

(in millions of RMB, except number of active clients andpercentages)

Number of active clients 621 937 50.9%
Transaction value:
Fixed income products 2,022 2,794 38.2%
Private equity fund products 2,336 1,467 (37.2%)
Securities investment funds and investment-linked insurance products 47 26 (44.7%)
Total transaction value 4,405 4,287 (2.7%)
Average transaction value per client 7.09 4.58 (35.5%)
 
 
Twelve months ended Change
December 31, 2010 December 31, 2011

(in millions of RMB, except number of active clients andpercentages)

Number of active clients 1,631 3,095 89.8%
Transaction value:
Fixed income products 5,908 9,638 63.1%
Private equity fund products 8,264 10,835 31.1%
Securities investment funds and investment-linked insurance products 246 2,113 758.9%
Total transaction value 14,418 22,586 56.7%
Average transaction value per client 8.84 7.30 (17.4%)
 
 
Noah Holdings Limited
Reconciliation of GAAP to Non-GAAP Results
(In U.S. dollars, except for ADS data and percentages)
(unaudited)
      Three months ended  

December31,

 

December31,

Change
2010 2011
$ $
Net income attributable to Noah Shareholders 4,247,634 3,534,258 (16.8%)
Adjustment for share-based compensation related to:
Share options 386,523 681,258 76.3%
Restricted shares 35,796 35,796 -
Adjusted net income attributable to Noah Shareholders (non-GAAP)* 4,669,953 4,251,312 (9.0%)
 
Net income per ADS, diluted 0.08 0.06 (25.0%)
Adjustment for share-based compensation 0.01 0.01 -
Adjusted net income per ADS, diluted (non-GAAP)* 0.09 0.07 (22.2%)
 
Net margin 30.3% 24.5% (19.1%)
Adjusted net margin (non-GAAP)* 33.3% 29.4% (11.8%)
 
*The non-GAAP adjustments do not take into consideration the impact of taxes on such adjustments.
 
Noah Holdings Limited
Reconciliation of GAAP to Non-GAAP Results
(In U.S. dollars, except for ADS data and percentages)
(unaudited)
      Twelve months ended
December 31,   December 31,
2010 2011
$ $
Net income attributable to Noah Shareholders 11,530,369 23,969,950
Adjustment for share-based compensation related to:
Share options 909,446 2,014,692
Restricted shares 1,310,721 142,018
Adjustment for gain on change in fair value of derivative liabilities (354,000) -
Adjusted net income attributable to Noah Shareholders (non-GAAP)* 13,396,536 26,126,660
 
Net income per ADS, diluted 0.23 0.42
Adjustment for share-based compensation 0.06 0.04
Adjustment for gain on change in fair value of derivative liabilities (0.01) -
Adjusted net income per ADS, diluted (non-GAAP)* 0.28 0.46
 
Net margin 30.5% 33.2%
Adjusted net margin (non-GAAP)* 35.5% 36.2%

 

*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 and gain on change in fair value of derivative liabilities.

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.





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