Noah Holdings Limited Announces Unaudited Financial Results for The Third Quarter Of 2012

  Noah Holdings Limited Announces Unaudited Financial Results for The Third
                               Quarter Of 2012

PR Newswire

SHANGHAI, Nov. 14, 2012

SHANGHAI, Nov. 14, 2012 /PRNewswire/ -- 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 third quarter
of 2012.

THIRD QUARTER 2012 FINANCIAL HIGHLIGHTS

  o Net revenues in the third quarter of 2012 were US$25.8 million, a 33.7%
    increase from the corresponding period in 2011.
  o Income from operations in the third quarter of 2012 was US$9.3 million, a
    58.7% increase from the corresponding period in 2011.
  o Net income attributable to Noah shareholders in the third quarter of 2012
    was US$7.5 million, a 31.7% increase from the corresponding period in
    2011. Non-GAAP(1) net income attributable to Noah shareholders in the
    third quarter of 2012 was US$8.6 million, a 33.8% increase from the
    corresponding period in 2011.
  o Net income per basic and diluted ADS in the third quarter of 2012 were
    both US$0.14. Non-GAAP net income per diluted ADS in the third quarter of
    2012 was US$0.15.

THIRD QUARTER 2012 OPERATIONAL HIGHLIGHTS

  o Total number of registered clients(2) as of September 30, 2012 increased
    by 53.3% year-over-year to 37,943; this figure includes 36,675 registered
    individual clients, 1,166 registered enterprise clients and 102 wholesale
    clients that have entered into cooperation agreements with the Company.
  o Active clients(3) during the third quarter of 2012 were 1,613, a 34.4%
    increase from the corresponding period in 2011. The aggregate value of
    wealth management products distributed by the Company(4) during the third
    quarter of 2012 was RMB7.4 billion (approximately US$1.2 billion)(5), a
    37.1% increase from the corresponding period in 2011. Of this aggregate
    value, fixed income products accounted for 71.9%, private equity fund
    products accounted for 23.1%, and other products, including securities
    investment funds and mutual fund products, accounted for 5.0%.  The
    average transaction value per client(6) in the third quarter of 2012 was
    RMB4.6 million (approximately US$0.7 million), a 2.0% increase from the
    corresponding period in 2011.
  o Coverage network as of September 30, 2012 included 57 branches, up from 53
    branches as of September 30, 2011 but down from 60 branches as of June 30,
    2012 as the Company closed three branches to streamline its operations in
    the third quarter of 2012. The number of relationship managers was 501 as
    of September 30, 2012, down from 505 as of September 30, 2011 and 550 as
    of June 30, 2012.

(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) "Total number of registered clients" includes clients registered with Noah
Upright (Shanghai) Fund Investment Consulting Co., Ltd., Noah's mutual fund
distribution business, which began operations in the second quarter of 2012.
(3) "Active clients" refers to those registered clients who purchased wealth
management products distributed by Noah during any given period. Active
clients include clients who have purchased mutual fund products that were
distributed since the second quarter of 2012.
(4) "The aggregate value of wealth management products distributed by the
Company" includes the incremental value of mutual fund products distributed by
the Company since the second quarter of 2012. Through its PRC affiliated
entity, the Company received a license in February 2012 to distribute mutual
fund products.
(5) 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.
(6) "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.

Ms. Jingbo Wang, Co-founder, Chairwoman of the Board of Directors and Chief
Executive Officer, commented, "We did a good job executing our strategies on
product sourcing and selection, internal management improvement and meeting
client needs. With our asset management business performing well this quarter,
we also increased assets under our management, which laid solid foundation for
our future growth."

Mr. Tom Wu, Chief Financial Officer, said, "It was a solid quarter, with
quarterly revenues reaching a record high in the Company's history. We also
improved our operating leverage translating into higher profits this quarter.
Going forward we will continue to focus on increasing our productivity."

THIRD QUARTER 2012 FINANCIAL RESULTS

Net Revenues

Net revenues for the third quarter of 2012 were US$25.8 million, a 33.7%
increase from the corresponding period in 2011, due to increases in both
one-time commission revenues and recurring service fees for the third quarter
of 2012.

Net revenues from one-time commissions for the third quarter of 2012 were
US$15.2 million, an 18.7% increase from the corresponding period in 2011. The
year-over-year increase was primarily due to an increase in transaction value,
partially offset by a decrease in average commission rate.

Net revenues from recurring service fees for the third quarter of 2012 were
US$10.2 million, a 57.8% 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 third quarter of 2012 was 35.9%, as compared to 30.3%
for the corresponding period in 2011. The year-over-year increase in operating
margin for the third quarter of 2012 was primarily due to an increase in net
revenues, partially offset by an increase in expenses related to the
expansions of coverage network and development of the mutual fund distribution
business and the overseas business.

Operating cost and expenses for the third quarter of 2012, including cost of
revenues, selling expenses, G&A expenses and other operating income, were
US$16.5 million, a 22.8% increase from the corresponding period in 2011.

Cost of revenues for the third quarter of 2012 totaled US$5.1 million, a 28.6%
increase from the corresponding period in 2011. The year-over-year increase
was primarily due to an increase in compensation expenses paid to relationship
managers mainly as a result of an increase in transaction value.

Selling expenses for the third quarter of 2012 were US$7.2 million, a 27.7%
increase from the corresponding period in 2011. The year-over-year increase
for the third quarter of 2012 was primarily due to increases in personnel
expenses and rental expenses as a result of the Company's network expansions.
Selling expenses as a percentage of net revenues for the third quarter of 2012
was 28.1%, as compared to 29.4% for the corresponding period in 2011.

G&A expenses for the third quarter of 2012 were US$5.2 million, a 23.0%
increase from the corresponding period in 2011. The year-over-year increase
for the third quarter of 2012 was primarily due to increases in personnel
expenses and share-based expenses attributable to G&A expenses as a result of
the Company's expansion. G&A expenses as a percentage of net revenues for the
third quarter of 2012 was 20.3%, as compared to 22.1% for the corresponding
period in 2011.

Other operating income for the third quarter of 2012 was US$1.1 million, as
compared to US$0.5 million for the corresponding period in 2011. 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 third quarter of 2012 were US$2.9 million, a
43.1% increase from the corresponding period in 2011. The year-over-year
increase was primarily due to an increase in taxable income.

Net Income

Net income attributable to Noah shareholders for the third quarter of 2012 was
US$7.5 million, a 31.7% increase from the corresponding period in 2011. Net
margin for the third quarter of 2012 was 29.3%, as compared to 29.7% for the
corresponding period in 2011. Income per basic and diluted ADS for the third
quarter of 2012 were both US$0.14, as compared to US$0.10 for the
corresponding period in 2011.

Non-GAAP net income attributable to Noah shareholders for the third quarter of
2012 was US$8.6 million, a 33.8% increase from the corresponding period in
2011. Non-GAAP net margin for the third quarter of 2012 was 33.2%, the same
compared to the corresponding period in 2011. Non-GAAP income per diluted ADS
for the third quarter of 2012 was US$0.15, as compared to US$0.11 for the
corresponding period in 2011.

Balance Sheet and Cash Flow

As of September 30, 2012, the Company had US$122.0 million in cash and cash
equivalents, an increase from US$114.6 million as of June 30, 2012. In the
third quarter of 2012, the Company generated US$12.2 million in its operating
activities, received US$7.9 million from the maturity of fixed-term deposits,
invested US$11.1 million mostly in fixed income products and used US$0.6
million to acquire property and equipment. In the third quarter of 2012, the
Company used US$2.9 million to repurchase ADSs and received US$1.6 million
from third-party minority investments in PRC affiliated entities of the
Company.

On May 22, 2012, the Company's board of directors authorized a share
repurchase program of up to US$30 million worth of its issued and outstanding
ADSs over the course of one year. As of September 30, 2012, the Company has
repurchased 1,239,588 ADSs for approximately US$6.2 million, inclusive of
transaction charges.

2012 FORECAST

The Company estimates that non-GAAP net income attributable to Noah
shareholders for the full year of 2012 is expected to be near the high end of
the current guidance range of US$22.0 million and US$25.0 million, the high
end of which representing a year-over-year decline of 4.3%. This estimate
reflects management's current business outlook and is subject to change.

CONFERENCE CALL

Senior management will host a conference call on Wednesday, November 14, 2012
at 8:00 pm (Eastern) / 5:00 pm (Pacific) / 9:00 am (Hong Kong, Thursday,
November 15) to discuss the Company's financial results for the third quarter
of 2012 and recent business activities. 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
o    Domestic        800-819-0121
o    Domestic Mobile 400-620-8038
Hong Kong            800-93-0346
United Kingdom       080-8234-6646
Conference ID #      57448720

A telephone replay will be available shortly after the call until November 21,
2012 at +1-718-354-1232 (US Local Toll) or +61-2-8235-5000 (International).
Conference ID # 57448720.

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 wealth management products, including primarily fixed
income products, private equity funds, securities investment funds and mutual
funds. With 501 relationship managers in 57 branch offices as of September 30,
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.

Contacts:

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
                                             June 30, 2012  September 30, 2012
                                             $              $
Assets
 Current assets:
  Cash and cash equivalents                  114,649,545    122,012,859
  Restricted cash                            78,703         79,557
  Short-term investments                     37,702,078     41,248,860
  Accounts receivable, net of allowance for
  doubtful accounts of nil at June 30, 2012  9,170,488      13,013,433
  and September 30, 2012
  Deferred tax assets                        2,784,838      2,814,290
  Amounts due from related parties           1,363,080      3,077,780
  Other current assets                       3,817,391      3,741,739
  Total current assets                       169,566,123    185,988,518
 Investment in affiliates                    5,443,884      5,198,962
 Property and equipment, net                 3,976,982      4,115,478
 Non-current deferred tax assets             597,682        586,740
 Other non-current assets                    739,210        735,842
Total Assets                                 180,323,881    196,625,540
Liabilities and Equity
 Current liabilities:
  Accrued payroll and welfare expenses       6,356,122      7,539,102
  Income tax payable                         2,577,307      3,423,152
  Other current liabilities                  8,090,408      13,979,724
  Total current liabilities                  17,023,837     24,941,978
 Non-current uncertain tax position          1,347,104      1,400,484
 liabilities
 Other non-current liabilities               1,933,367      1,825,132
 Total Liabilities                           20,304,308     28,167,594
 Equity                                      160,019,573    168,457,946
Total Liabilities and Equity                 180,323,881    196,625,540

 

Noah Holdings Limited
 Condensed Consolidated Income Statements
 (In U.S. dollars, except for ADS data, per ADS data and percentages)
 (unaudited)
                                    Three months ended
                                    September 30,     September 30,   Change
                                   2011              2012
Revenues:                          $                 $
   Third-party revenues            17,617,614        20,002,648      13.5%
   Related party revenues          2,782,569         7,268,368       161.2%
Total revenues                     20,400,183        27,271,016      33.7%
   Less: business taxes and        (1,132,791)       (1,515,774)     33.8%
related surcharges
Net revenues                       19,267,392        25,755,242      33.7%
Operating cost and expenses:
   Cost of revenues                (3,986,965)       (5,126,370)     28.6%
   Selling expenses                (5,663,065)       (7,230,023)     27.7%
   General and administrative      (4,257,648)       (5,236,637)     23.0%
expenses
   Other operating income          474,838           1,095,360       130.7%
Total operating cost and expenses  (13,432,840)      (16,497,670)    22.8%
Income from operations             5,834,552         9,257,572       58.7%
Other income(expenses):
   Interest income                 617,954           491,212         (20.5%)
   Investment income               380,109           788,997         107.6%
   Foreign exchange gain           914,824           75,471          (91.8%)
   Other income                    26,901            43,473          61.6%
Total other income                 1,939,788         1,399,153       (27.9%)
Income before taxes and loss from  7,774,340         10,656,725      37.1%
equity in affiliates
Income tax expense                 (2,056,313)       (2,942,322)     43.1%
Gain (loss) from equity in         12,918            (167,006)       (1392.8%)
affiliates
Net income                         5,730,945         7,547,397       31.7%
Less: net loss attributable to     -                 59              -
non-controlling interests
Net income attributable to Noah    5,730,945         7,547,338       31.7%
Shareholders
Income per ADS, basic              0.10              0.14            40.0%
Income per ADS, diluted            0.10              0.14            40.0%
Other comprehensive income, net of
tax:
     Foreign currency translation  824,644           1,118,361       35.6%
adjustments
Comprehensive income attributable  6,555,589         8,665,699       32.2%
to Noah Shareholders
Margin analysis:
Operating margin                   30.3%             35.9%
Net margin                         29.7%             29.3%
Weighted average ADS equivalent:
(1)
Basic                              55,838,530        55,259,030
Diluted                            57,045,008        55,769,254
ADS equivalent outstanding at end  55,876,787        56,372,310
of period
(1) Assumes all outstanding ordinary shares are represented by ADSs. Each
ordinary share represents two ADSs

 

Noah Holdings Limited
Supplemental Information
(unaudited)
                           As of 
                          September 30,        September 30,         Change
                          2011                 2012
 Number of registered     24,746               37,943               53.3%
clients
 Number of relationship   505                  501                  (0.8%)
managers
 Number of branch offices 53                   57                   7.5%
                           Three months ended
                          September 30,        September 30,         Change
                          2011                 2012
                          (in millions of RMB, except number of active clients
                          and percentages)
 Number of active clients 1,200                1,613                34.4%
 Transaction value:
        Fixed income      2,470                5,304                114.7%
products
        Private equity    2,206                1,703                (22.8%)
fund products
Other products, including
securities investment     704                  367                  (47.7%)
funds and mutual fund
products
 Total transaction value  5,380                7,374                37.1%
 Average transaction      4.48                 4.57                 2.0%
value per client

 

Noah Holdings Limited
Reconciliation of GAAP to Non-GAAP Results
(In U.S. dollars, except for ADS data and percentages)
(unaudited)
                                         Three months ended
                                        September 30,   September 30,   Change
                                        2011           2012
                                        $              $
Net income attributable to Noah         5,730,945      7,547,338       31.7%
Shareholders
   Adjustment for share-based
compensation related to:
           Share options                626,359        54,678          (91.3%)
           Restricted shares            35,797         952,121         2559.8%
Adjusted net income attributable to     6,393,101      8,554,137       33.8%
Noah Shareholders  (non-GAAP)*
Net income per ADS, diluted             0.10           0.14            40.0%
Adjusted net income per ADS, diluted    0.11           0.15            39.4%
(non-GAAP)*
Net margin                              29.7%          29.3%           (1.3%)
Adjusted net margin (non-GAAP)*         33.2%          33.2%           0.1%
*The non-GAAP adjustments do not take into consideration the impact of taxes
on such adjustments.

SOURCE Noah Holdings Limited

Website: http://ir.noahwm.com
Website: http://www.noahwm.com