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Noah Holdings Limited Announces Unaudited Preliminary Financial Results for the Fourth Quarter and Full Year 2017

SHANGHAI, March 6, 2018 /PRNewswire/ -- Noah Holdings Limited ("Noah" or the "Company") (NYSE: NOAH), a leading wealth and asset management service provider in China with a focus on global investment and asset allocation services for high net worth individuals and enterprises, today announced its unaudited preliminary[1] financial results for the fourth quarter of 2017 and the full year ended December 31, 2017.

FOURTH QUARTER 2017 FINANCIAL HIGHLIGHTS

  • Net revenues for the fourth quarter of 2017 were RMB722.1 million (US$111.0 million), an 11.7% increase from the corresponding period in 2016.

(RMB millions,
except percentages)

Q4 2016



Q4 2017



YoY Change

Wealth management

488.2



524.8



7.5%

Asset management

136.4



166.8



22.3%

Internet financial services

21.6



30.5



41.2%

Total net revenues

646.2



722.1



11.7%

  • Income from operations for the fourth quarter of 2017 was RMB135.7 million (US$20.9 million), a 62.7% increase from the corresponding period in 2016.

(RMB millions,
except percentages)

Q4 2016



Q4 2017



YoY Change

Wealth management

82.4



79.7



(3.3)%

Asset management

43.5



76.9



76.9%

Internet financial services

(42.5)



(20.9)



(50.8%)

Total income from operations

83.4



135.7



62.7%

  • Net income attributable to Noah shareholders for the fourth quarter of 2017 was RMB160.3 million (US$24.6 million), a 49.3% increase from the corresponding period in 2016.
  • Non-GAAP[2] net income attributable to Noah shareholders for the fourth quarter of 2017 was RMB184.7 million (US$28.4 million), a 40.5% increase from the corresponding period in 2016.

FULL YEAR 2017 FINANCIAL HIGHLIGHTS

  • Net revenues in the full year 2017 were RMB2,826.9 million (US$434.5 million), a 12.5% increase from the full year 2016.

(RMB millions,
except percentages)

FY 2016



FY 2017



YoY Change

Wealth management

1,931.7



2,126.3



10.1%

Asset management

531.8



588.0



10.6%

Internet financial services

50.1



112.6



124.7%

Total net revenues

2,513.6



2,826.9



12.5%

  • Income from operations in the full year 2017 was RMB777.0 million (US$119.4 million), a 16.4% increase from the full year 2016.

(RMB millions,
except percentages)

FY 2016



FY 2017



YoY Change

Wealth management

526.0



580.9



10.4%

Asset management

321.3



302.9



(5.7%)

Internet financial services

(180.0)



(106.8)



(40.7%)

Total income from operations

667.3



777.0



16.4%

  • Net income attributable to Noah shareholders in the full year 2017 was RMB770.2 million (US$118.4 million), a 19.6% increase from the full year 2016.
  • Non-GAAP net income attributable to Noah shareholders in the full year 2017 was RMB863.8million (US$132.8 million), a 19.5% increase from the full year 2016.

FOURTH QUARTER AND FULL YEAR 2017 OPERATIONAL UPDATES

Wealth Management Business

The Company's wealth management business offers financial products and provides comprehensive financial services to high net worth individuals, enterprises and institutional clients. Noah primarily distributes onshore and offshore fixed income products, private equity products, secondary market products and insurance products.

  • Total number of registered clients as of December 31, 2017 was 186,918, a 38.1% increase from December 31, 2016.
  • Total number of active clients[3] during the fourth quarter of 2017 was 6,276, a 38.5% increase from December 31, 2016, due to our promotion events during the fourth quarter of 2017. The total number of active clients during the full year 2017 was 12,720, a 5.8% increase from the full year 2016.
  • Aggregate value of financial products distributed during the fourth quarter of 2017 was RMB28.2 billion (US$4.3 billion), a 13.1% increase from the fourth quarter of 2016.

Product type

Three months ended December 31,


2016


2017




(RMB in billions, except percentages)

Fixed income

14.3


57.5%


15.4


54.5%

Private equity

8.5


34.2%


7.4


26.1%

Secondary market equity

1.7


6.8%


5.4


19.2%

Other products

0.4


1.5%


0.1


0.2%

All products

24.9


100.0%


28.2


100.0%

  • Aggregate value of financial products distributed during the full year 2017 was RMB117.4 billion (US$18.0 billion), a 15.8% increase from the full year 2016.

Product type

Twelve months ended December 31,


2016


2017




(RMB in billions, except percentages)

Fixed income

64.5


63.6%


71.8


61.1%

Private equity

27.5


27.2%


34.3


29.2%

Secondary market equity

7.8


7.7%


10.8


9.2%

Other products

1.5


1.5%


0.6


0.5%

All products

101.4


100.0%


117.4


100.0%

  • Average transaction value per client[4] for the fourth quarter of 2017 was RMB4.5 million (US$0.7 million), an 18.3% decrease from the corresponding period in 2016. Average transaction value per client for the full year 2017 was RMB9.2 million (US$1.4 million), a 9.5% increase from the full year 2016.
  • Coverage network included 237 branches and sub-branches covering 79 cities as of December 31, 2017, up from 222 branches and sub-branches covering 78 cities as of September 30, 2017, and 185 branches and sub-branches covering 71 cities as of December 31, 2016.
  • Number of relationship managers was 1,335 as of December 31, 2017, a 3.8% increase from September 30, 2017 and a 14.2% increase from December 31, 2016.

Asset Management Business

Gopher Asset Management Co. Ltd. ("Gopher"), a subsidiary of the Company, is a leading alternative asset manager in China. Gopher develops and manages private equity, real estate, secondary market, credit, and other investments denominated in both Renminbi and foreign currencies.

  • Total assets under management as of December 31, 2017 were RMB148.3 billion (US$22.8 billion), a 3.8% increase from September 30, 2017 and a 22.6% increase from December 31, 2016.

Investment type

As of
September 30,
2017


Asset
Growth


Asset
Expiration/
Redemption


As of
December 31,
2017


(RMB billions, except percentages)

Real estate

11.6


8.1%


2.6


2.7


11.6


7.8%

Private equity

81.3


56.9%


5.6


0.1


86.9


58.6%

Secondary market

6.0


4.2%


0.3


0.2


6.2


4.2%

Credit

40.4


28.3%


7.1


7.5


40.0


27.0%

Other investments

3.6


2.5%


0.1


-


3.6


2.5%

All Investments

142.9


100.0%


15.7


10.3


148.3


100.0%














 

Investment type

As of
December 31,
2016


Asset
Growth


Asset
Expiration/
Redemption


As of
December 31,
2017


(RMB billions, except percentages)

Real estate

23.2


19.2%


14.5


26.1


11.6


7.8%

Private equity

58.0


48.0%


30.3


1.4


86.9


58.6%

Secondary market

8.3


6.9%


0.5


2.7


6.2


4.2%

Credit

27.8


23.0%


40.6


28.4


40.0


27.0%

Other investments

3.6


3.0%


0.1


0.1


3.6


2.5%

All Investments

120.9


100.0%


86.0


58.6


148.3


100.0%














Internet Financial Services Business

The Company's Internet financial services business includes its online wealth management platform as well as micro-lending, payment processing and other online services.

Mr. Kenny Lam, Group President of Noah, said, "2017 marks another year of record-high earnings for us. We believe 2018 will be another exciting year of development as clients broaden their needs and industry regulations provide a more solid foundation of growth. We remain highly focused on building a sustainable platform that deepens client relationships. We will also continue to invest in technology to expand our service coverage and build on our large domestic and global footprint."

FOURTH QUARTER 2017 FINANCIAL RESULTS

Net Revenues

Net revenues for the fourth quarter of 2017 were RMB722.1 million (US$111.0 million), an 11.7% increase from the corresponding period in 2016, primarily driven by increased recurring service fee revenues and performance-based income.

  • Wealth Management Business
    • Net revenues from one-time commissions for the fourth quarter of 2017 were RMB241.0 million (US$37.0 million), a 7.4% decrease from the corresponding period in 2016, primarily due to a decline in distribution of insurance products.
    • Net revenues from recurring service fees for the fourth quarter of 2017 were RMB252.9 million (US$38.9 million), a 21.1% increase from the corresponding period in 2016. The increase was primarily due to the cumulative effect of financial products with recurring service fees previously distributed.
    • Net revenues from performance-based income for the fourth quarter of 2017 were RMB10.6 million (US$1.6 million), compared with RMB3.4 million in the corresponding period of 2016. The increase was primarily due to an increase in performance-based income from secondary market products distributed in previous periods.
    • Net revenues from other service fees for the fourth quarter of 2017 were RMB20.2 million (US$3.1 million), a 29.3% increase from the corresponding period in 2016.
  • Asset Management Business
    • Net revenues from recurring service fees for the fourth quarter of 2017 were RMB140.9 million (US$21.7 million), a 12.1% increase from the corresponding period in 2016. The increase was primarily due to the increase in assets under management.
    • Net revenues from performance-based income for the fourth quarter of 2017 were RMB19.1 million (US$2.9 million), compared with RMB10.3 million in the corresponding period of 2016, primarily due to an increase in performance-based income from real estate products.
  • Internet Financial Service Business
    • Net revenues for the fourth quarter of 2017 were RMB30.5 million (US$4.7 million), a 41.2% increase from the corresponding period in 2016. The increase was primarily due to the growth of sales of several services within this segment compared with the corresponding period of 2016.

Operating costs and expenses

Operating costs and expenses for the fourth quarter of 2017 were RMB586.5 million (US$90.1 million), a 4.2% increase from the corresponding period in 2016. Operating costs and expenses primarily consisted of compensation and benefits of RMB379.6 million (US$58.3 million), selling expenses of RMB111.5 million (US$17.1 million), general and administrative expenses of RMB79.3 million (US$12.2 million) and other operating expenses of RMB41.3 million (US$6.3 million).

  • Operating costs and expenses for the wealth management business for the fourth quarter of 2017 were RMB445.2 million (US$68.4 million), a 9.7% increase from the corresponding period in 2016, primarily due to an increase in marketing expenses and consulting fees.
  • Operating costs and expenses for the asset management business for the fourth quarter of 2017 were RMB89.9 million (US$13.8 million), a 3.2% decrease from the corresponding period in 2016, primarily due to a decrease in investment advisory expenses.
  • Operating costs and expenses for the Internet financial services business for the fourth quarter of 2017 were RMB51.4 million (US$7.9 million), a 19.7% decrease from the corresponding period in 2016, primarily due to a decrease in product promotion expenses and an increase in government subsidies.

Operating Margin

Operating margin for the fourth quarter of 2017 was 18.8%, an increase from 12.9% for the corresponding period in 2016. The increase was mainly due to cost optimization measures and increased government subsidies.

  • Operating margin for the wealth management business for the fourth quarter of 2017 decreased to 15.2% from 16.9% for the corresponding period in 2016.
  • Operating margin for the asset management business for the fourth quarter of 2017 was 46.1%, compared with 31.9% for the corresponding period in 2016.
  • Operating loss for the Internet financial services business for the fourth quarter of 2017 was RMB20.9 million (US$3.2 million), down from RMB42.5 million for the corresponding period in 2016.

Income Tax Expenses

Income tax expenses for the fourth quarter of 2017 were RMB35.1 million (US$5.4 million), a 58.3% increase from the corresponding period in 2016. The increase was primarily due to higher taxable income. 

Income from Equity in Affiliates

Income from equity in affiliates for the fourth quarter of 2017 was RMB18.4 million (US$2.8 million), compared with RMB2.1 million in the corresponding period in 2016. The increase was mainly due to the increased net asset value of the Company's investment in an asset management joint venture. We are still reviewing the financial results of the funds of funds we manage and invest in as the general partner. Any potential changes in fair value of those investments could affect the income from equity in affiliates.

Net Income

  • Net Income
    • Net income for the fourth quarter of 2017 was RMB157.9 million (US$24.3 million), a 93.2% increase from the corresponding period in 2016.
    • Net margin for the fourth quarter of 2017 was 21.9%, up from 12.6% for the corresponding period in 2016.
    • Net income attributable to Noah shareholders for the fourth quarter of 2017 was RMB160.3 million (US$24.6 million), a 49.3% increase from the corresponding period in 2016.
    • Net income attributable to Noah shareholders per basic and diluted ADS for the fourth quarter of 2017 was RMB2.82(US$0.43) and RMB2.72(US$0.42), respectively, up from RMB1.90 and RMB1.86 respectively, for the corresponding period in 2016.
  • Non-GAAP Net Income Attributable to Noah Shareholders
    • Non-GAAP net income attributable to Noah shareholders for the fourth quarter of 2017 was RMB184.67 million (US$28.38 million), a 40.5% increase from the corresponding period in 2016.
    • Non-GAAP net margin attributable to Noah shareholders for the fourth quarter of 2017 was 25.6%, up from 20.3% for the corresponding period in 2016.
    • Non-GAAP net income attributable to Noah shareholders per diluted ADS for the fourth quarter of 2017 was RMB3.12(US$0.48), up from RMB2.26 for the corresponding period in 2016.

FULL YEAR 2017 FINANCIAL RESULTS

Net Revenues

Net revenues for the full year 2017 were RMB2,826.9 million (US$434.5 million), a 12.5% increase from the full year 2016, primarily due to increases in recurring service fees and performance-based income.

  • Wealth Management Business
    • Net revenues from one-time commissions for 2017 were RMB1,092.2 million (US$167.9 million), a 1.3% decrease from 2016, primarily due to a decline in distribution of insurance products.
    • Net revenues from recurring service fees for 2017 were RMB871.7 million (US$134.0 million), a 16.8% increase from 2016. The increase was primarily due to the cumulative effect of financial products with recurring service fees previously distributed by the Company.
    • Net revenues from performance-based income for 2017 were RMB92.5 million (US$14.2 million), a 695.4% increase from 2016, primarily due to an increase in performance-based income from secondary market, real estate and private equity products previously distributed by us.
    • Net revenues from other service fees for 2017 were RMB69.9 million (US$10.7 million), representing a 4.5% increase from 2016.
  • Asset Management Business
    • Net revenues from recurring service fees for 2017 were RMB527.6 million (US$81.1 million), a 9.6% increase from 2016. The increase was primarily due to the increase in assets under management by the Company.
    • Net revenues from performance-based income for 2017 were RMB47.7 million (US$7.3 million), a 2.4% increase from year 2016, primarily due to an increase in performance-based income from real estate products previously distributed by us.
  • Internet Financial Services Business
    • Net revenues for the full year 2017 were RMB112.6 million (US$17.3 million), a 124.7% increase from 2016. The increase was primarily due to the growth of sales of various services within this segment compared with 2016.

Operating costs and expenses

Operating costs and expenses for the full year 2017 were RMB2,049.9 million (US$315.1 million), an 11.0% increase from the full year 2016. Operating costs and expenses for the full year 2017 primarily consisted of compensation and benefits of RMB1,407.4 million (US$216.3 million), selling expenses of RMB320.5 million (US$49.3 million), general and administrative expenses of RMB248.9 million (US$38.3 million) and other operating expenses of RMB147.3 million (US$22.6 million).

  • Operating costs and expenses for the wealth management business for 2017 were RMB1,545.3 million (US$237.5 million), a 9.9% increase from 2016, primarily due to an increase in relationship manager compensation in line with the growth in the number of relationship managers.
  • Operating costs and expenses for the asset management business for 2017 were RMB285.1 million (US$43.8 million), a 35.4% increase from 2016, primarily due to an increase in staff compensation and decreased government subsidies.
  • Operating costs and expenses for the Internet financial services business for 2017 were RMB219.4 million (US$33.7 million), a 4.7% decrease from 2016.

Operating Margin

Operating margin for the full year 2017 was 27.5%, compared to 26.5% for the full year 2016, mainly due to cost optimization measures and increased operating efficiency of the Internet financial services business.

  • Operating margin for the wealth management business for 2017 was 27.3%, compared to 27.2% for 2016.
  • Operating margin for the asset management business for 2017 was 51.5%, compared to 60.4% for 2016, primarily due to a decrease in government subsidies.
  • Operating loss for Internet financial services business for 2017 was RMB106.8 million (US$16.4 million), compared to 180.0 million for 2016.

Income Tax Expenses

Income tax expenses for the full year 2017 were RMB199.1 million (US$30.6 million), a 26.0% increase from the full year 2016, primarily due to an increase in taxable income.

Net Income

  • Net Income
    • Net income for the full year 2017 was RMB762.9 million (US$117.3 million), a 27.6% increase from the full year 2016.
    • Net margin for the full year 2017 was 27.0%, compared to 23.8% for the full year 2016.
    • Net income attributable to Noah shareholders for the full year 2017 was RMB770.2 million (US$118.4 million), a 19.6% increase from the full year 2016.
    • Net income attributable to Noah shareholders per basic and diluted ADS for the full year 2017 was RMB13.62(US$2.09) and RMB13.07(US$2.01), respectively, as compared to RMB11.44 and RMB11.04, respectively, for the full year 2016.
  • Non-GAAP Net Income Attributable to Noah Shareholders
    • Non-GAAP net income attributable to Noah shareholders for the full year 2017 was RMB863.8 million (US$132.8 million), a 19.5% increase from the full year 2016.
    • Non-GAAP net margin attributable to Noah shareholders for the full year 2017 was 30.6%, compared to 28.8% for the full year 2016.
    • Non-GAAP net income attributable to Noah shareholders per diluted ADS for the full year 2017 was RMB14.62(US$2.25), compared to RMB12.36 for the full year 2016.

Balance Sheet and Cash Flow

As of December 31, 2017, the Company had RMB1,906.8 million (US$293.1 million) in cash and cash equivalents, compared with RMB1,987.8 million as of September 30, 2017 and RMB2,982.5 million as of December 31, 2016.

Net cash inflow from the Company's operating activities during the fourth quarter of 2017 was RMB167.3 million (US$25.7 million). Net cash inflow from the Company's operating activities during the full year 2017 was RMB628.4 million(US$96.9), compared to RMB686.2 during the full year 2016, driven by profit earned from business operations.

Net cash outflow from the Company's investing activities during the fourth quarter of 2017 was RMB46.6 million (US$7.2 million). Net cash outflow from the Company's investing activities during the full year 2017 was RMB833.9 million(US$128.2), compared to RMB883.8 million during the full year 2016. This is primarily consisted of loan disbursement of RMB660.1 million, investments of RMB495.0 million, purchases of properties and equipment of RMB153.3 million and cash inflow from factoring receivables of RMB500.0 million.

Net cash outflow from the Company's financing activities was RMB160.5 million (US$24.7million) in the fourth quarter of 2017. Net cash outflow from the Company's financing activities during the full year 2017 was RMB791.8 million(US$121.7), compared to RMB994.6 inflow during the full year 2016, primarily due to the previously announced repurchase of Sequoia's investment in Gopher and payment of factoring receivables.

On July 8, 2017, the Company's board of directors authorized a share repurchase program of up to US$50 million worth of its issued and outstanding ADSs over the course of one year. As of December 31, 2017, the Company had repurchased no ADS under this program.

Note to Financial Information

As of the date of this press release, we are still in the process of reviewing the financial results of the funds of funds we manage and invest in as the general partner or manager. Any changes in the fair value of those investments could affect the income from equity in affiliates, net income, net income attributable to Noah Shareholders, income per ADS and the balance of investments in affiliates in our consolidated financial statements. While not included in the unaudited preliminary fourth quarter 2017 financial results in this press release, we will include any such fair value adjustments in the audited consolidated financial statements in our 2017 Form 20-F and will make a subsequent announcement when our review conclude, as appropriate.

2018 FORECAST

The Company estimates that non-GAAP net income attributable to Noah shareholders for the full year 2018 will be in the range of RMB1 billion to RMB1.05 billion, an increase of 15.8% to 21.6% compared with the full year 2017. This estimate reflects management's current business outlook and is subject to change.

CONFERENCE CALL

Senior management will host a combined English and Chinese language conference call to discuss the Company's fourth quarter and full year 2017 unaudited financial results and recent business activities.

The conference call may be accessed with the following details:

Conference call details

Date/Time:

Tuesday, March 6, 2018 at 8:00 p.m., U.S. Eastern Time
Wednesday, March 7, 2018 at 9:00 a.m., Hong Kong Time

Dial in details:


- United States Toll Free

+1-866-311-7654

- Mainland China Toll Free

4001-201203

- Hong Kong Toll Free

800-905-945

- International

+1-412-317-5227

Conference Title:

Noah Holdings Limited Fourth Quarter and Full Year 2017 Earnings Call

Participant Password:

Noah Holdings

A telephone replay will be available starting one hour after the end of the conference call until March 13, 2018 at +1-877-344-7529 (US Toll Free) or +1-412-317-0088 (International Toll). The replay access code is 10117575.

A live and archived webcast of the conference call will be available at Noah's investor relations website under the News & Events section 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 attributable to Noah shareholders results reflecting adjustments to exclude the impact 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 attributable to Noah shareholders, non-GAAP net income attributable to Noah shareholders per diluted ADS and non-GAAP net margin attributable to Noah shareholders 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. The Company utilized the non-GAAP financial results to make financial results comparable period to period and to better understand its historical business operations.

ABOUT NOAH HOLDINGS LIMITED

Noah Holdings Limited (NYSE: NOAH) is a leading wealth and asset management service provider in China with a focus on global investment and asset allocation services for high net worth individuals and enterprises. In the full year 2017, Noah distributed RMB117.4 billion (US$18.0 billion) of financial products. Through its subsidiary, Gopher Asset Management, Noah had assets under management of RMB148.3 billion (US$22.8 billion) as of December 31, 2017.

Noah's wealth management business primarily distributes onshore and offshore fixed income products, private equity products, secondary market products and insurance products. Noah delivers customized financial solutions to clients through a network of 1,335 relationship managers across 237 branches and sub-branches in 79 cities in mainland China, and serves the international investment needs of its clients through subsidiaries in Hong Kong, Taiwan, Canada, Australia and the United States. The Company's wealth management business had 186,918 registered clients as of December 31, 2017. As a leading alternative asset manager in China, Gopher Asset Management manages private equity, real estate, secondary market, credit and other investments denominated in both Renminbi and foreign currencies. The Company also provides Internet financial services, including online wealth management, micro-lending and payment processing services, etc.

For more information, please visit Noah at ir.noahwm.com.

FOREIGN CURRENCY TRANSLATION

In this announcement, the unaudited financial results for the fourth quarter of 2017 and the full year ended December 31, 2017 are stated in RMB. This announcement contains currency conversions of certain RMB amounts into US$ at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to US$ are made at a rate of RMB6.5063 to US$1.00, the effective noon buying rate for December 31, 2017 as set forth in the H.10 statistical release of the Federal Reserve Board.

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 2018 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 fourth 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 Noah's 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 qualified 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 to infringe on the intellectual property rights of others. Further information regarding these and other risks is included in Noah's filings with the U.S. Securities and Exchange Commission, including its annual reports on Form 20-F. All information provided in this press release and in the attachments is as of the date of this press release, and Noah does not undertake any obligation to update any such information, including forward-looking statements, as a result of new information, future events or otherwise, except as required under the applicable law.


[1] As of the date of this press release, we are still in the process of reviewing the financial results of the funds of funds we manage and invest in as the general partner or manager. Any changes in the fair value of those investments could affect the income from equity in affiliates, net income, net income attributable to Noah Shareholders, income per ADS and the balance of investments in affiliates in our consolidated financial statements. While not included in the unaudited preliminary fourth quarter 2017 financial results in this press release, we will include any such fair value adjustments in the audited consolidated financial statements in our 2017 Form 20-F and will make a subsequent announcement when our review conclude, as appropriate.

[2] 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.

[3] "Active clients" refers to registered clients who purchased financial products distributed by Noah during the period specified.

[4] "Average transaction value per client" refers to the average value of financial products distributed by Noah that were purchased by active clients during the period specified.

Contacts:

Noah Holdings Limited

Steve Zeng
Noah Holdings Limited
Tel: +86-21-8035-9221
ir@noahwm.com  

____________________________________

FINANCIAL AND OPERATIONAL TABLES FOLLOW -- 

 

Noah Holdings Limited 

Condensed Consolidated Balance Sheets

(unaudited)


As of


September 30, 


December 31, 


December 31,


2017


2017


2017


RMB'000


RMB'000


USD'000

Assets







Current assets:








Cash and cash equivalents

1,987,798


1,906,753


293,063



Short-term investments (including short-term investments measured at fair value of RMB363,692 thousands and RMB95,345 thousands, as of September 30, 2017 and December 31, 2017, respectively)

424,692


160,345


24,645



Accounts receivable, net of allowance for doubtful accounts of nil as of September 30, 2017 and December 31, 2017

144,724


175,518










26,977



Loans receivable

401,229


765,398


117,640



Amounts due from related parties

701,756


515,454


79,224



Loans receivable from factoring business

440,794


256,944


39,492



Other current assets 

238,830


255,680


39,297



Total current assets 

4,339,823


4,036,092


620,338









Long-term investments (including long-term investments measured at fair value of RMB116,975 thousands and RMB482,006 thousands, as of September 30, 2017 and December 31, 2017, respectively)

690,747


988,266


151,894


Investment in affiliates

640,820


969,670


149,036


Property and equipment, net

248,090


303,349


46,624


Non-current deferred tax assets

52,083


72,654


11,167


Other non-current assets 

104,438


125,871


19,349

Total Assets

6,076,001


6,495,902


998,408







Liabilities and Equity







Current liabilities:








Accrued payroll and welfare expenses 

491,929


622,494


95,676



Income tax payable

70,051


18,360


2,822



Amounts due to related parties

273


276


42



Deferred revenues

211,861


201,254


30,932



Loans payable from factoring business

303,866


-


-



Other current liabilities

366,450


492,970


75,769



Convertible notes

498,998


487,973


75,000



Total current liabilities

1,943,428


1,823,327


280,241










Non-current Deferred tax liabilities

4,424


50,121


7,703


Other non-current liabilities

71,807


113,660


17,469


Total Liabilities 

2,019,659


1,987,108


305,413


Equity

4,056,342


4,508,794


692,995

Total Liabilities and Equity

6,076,001


6,495,902


998,408


 

 

Noah Holdings Limited

Condensed Consolidated Income Statements

(In RMB'000, except for USD data, per ADS data and percentages)

(unaudited)


Three months ended 


December 31,


December 31,


December 31,


Change


2016


2017


2017



Revenues:

RMB'000


RMB'000


USD'000



Revenues from third party








One-time commissions

164,146


130,462


20,052


(20.5%)

Recurring service fees

126,923


154,949


23,815


22.1%

Performance-based income

6,013


9,006


1,384


49.8%

Other service fees

37,178


52,482


8,066


41.2%

Total third party revenues 

334,260


346,899


53,317


3.8%

Revenues from related party








One-time commissions

98,616


113,572


17,456


15.2%

Recurring service fees

209,605


241,463


37,112


15.2%

Performance-based income

7,719


20,833


3,202


169.9%

Other service fees

392


4,541


698


1058.4%

Total related party revenues

316,332


380,409


58,468


20.3%

Total revenues

650,592


727,308


111,785


11.8%

Less: business taxes and related surcharges 

(4,362)


(5,194)


(798)










19.1%

Net revenues

646,230


722,114


110,987


11.7%

Operating costs and expenses:








   Compensation and benefits








Relationship manager compensation

(150,033)


(167,363)


(25,723)


11.6%

Performance Fee Compensation

-


(11,291)


(1,735)


0.0%

Other Compensations

(190,475)


(200,982)


(30,890)


5.5%

Total compensation and benefits

(340,508)


(379,636)


(58,348)


11.5%

Selling expenses

(98,672)


(111,516)


(17,140)


13.0%

General and administrative expenses 

(71,144)


(79,271)


(12,184)


11.4%

Other operating expenses 

(66,592)


(41,274)


(6,344)


(38.0%)

Government subsidies 

14,068


25,199


3,873


79.1%

Total operating costs and expenses 

(562,848)


(586,498)


(90,143)


4.2%

Income from operations 

83,382


135,616


20,844


62.6%

Other income:








Interest income 

7,931


12,910


1,984


62.8%

Interest expenses

(4,871)


(9,593)


(1,474)


96.9%

Investment income 

18,893


34,983


5,377


85.2%

Other (expense) income 

(3,606)


640


98


(117.7%)

Total other income

18,347


38,940


5,985


112.2%

Income before taxes and income from equity in affiliates

101,729


174,556


26,829


71.6%

Income tax expense

(22,157)


(35,081)


(5,392)


58.3%

Income from equity in affiliates

2,145


18,438


2,834


759.6%

Net income

81,717


157,913


24,271


93.2%

Less: net loss attributable to non-controlling Interests

(20,312)


(2,339)


(359)


(88.5%)

Less: Loss attributable to redeemable non-controlling interest of Subsidiary

(5,336)


-


-


(100.0%)

Net income attributable to Noah Shareholders 

107,365


160,252


24,630


49.3%









Income per ADS, basic

1.90


2.82


0.43


48.4%

Income per ADS, diluted

1.86


2.72


0.42


46.2%

Margin analysis:








Operating margin

12.9%


18.8%


18.8%



Net margin

12.6%


21.9%


21.9%



Weighted average ADS equivalent: [1]








Basic

56,482,118


56,782,875


56,782,875



Diluted

60,329,884


61,147,734


61,147,734



ADS equivalent outstanding at end of period

56,462,655


56,902,300


56,902,300




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




Noah Holdings Limited

Condensed Consolidated Income Statements

(In RMB'000, except for USD data, per ADS data and percentages)

(unaudited)


Twelve months ended 


December 31,


December 31,


December 31,


Change


2016


2017


2017



Revenues:

RMB'000


RMB'000


USD'000



Revenues from third party








One-time commissions

810,645


541,024


83,154


(33.3%)

Recurring service fees

475,000


547,123


84,091


15.2%

Performance-based income

19,740


86,494


13,294


338.2%

Other service fees

117,794


171,759


26,399


45.8%

Total third party revenues 

1,423,179


1,346,400


206,938


(5.4%)

Revenues from related party








One-time commissions

321,442


561,060


86,233


74.5%

Recurring service fees

775,726


860,730


132,292


11.0%

Performance-based income

39,501


54,502


8,377


38.0%

Other service fees

1,788


23,314


3,583


1203.9%

Total related party revenues

1,138,457


1,499,606


230,485


31.7%

Total revenues

2,561,636


2,846,006


437,423


11.1%

Less: business taxes and related surcharges 

(48,064)


(19,098)


(2,935)


(60.3%)

Net revenues

2,513,572


2,826,908


434,488


12.5%

Operating costs and expenses:








    Compensation and benefits








Relationship manager compensation

(563,620)


(616,064)


(94,687)


9.3%

Performance Fee Compensation

(8,146)


(11,291)


(1,735)


38.6%

Other Compensations

(728,639)


(780,017)


(119,886)


7.1%

Total compensation and benefits

(1,300,405)


(1,407,372)


(216,308)


8.2%

Selling expenses

(322,667)


(320,462)


(49,254)


(0.7%)

General and administrative expenses 

(234,488)


(248,878)


(38,252)


6.1%

Other operating expenses 

(151,088)


(147,318)


(22,642)


(2.5%)

Government subsidies 

162,365


74,156


11,398


(54.3%)

Total operating costs and expenses 

(1,846,283)


(2,049,874)


(315,058)


11.0%

Income from operations 

667,289


777,034


119,430


16.4%

Other income:








Interest income 

39,539


45,020


6,919


13.9%

Interest expenses

(19,289)


(24,128)


(3,708)


25.1%

Investment income 

48,537


67,343


10,350


38.7%

Other (expense) income 

(2,531)


3,542


544


(239.9%)

Total other income

66,256


91,777


14,105


38.5%

Income before taxes and income from equity in affiliates

733,545


868,811


133,535


18.4%

Income tax expense

(157,997)


(199,085)


(30,599)


26.0%

Income from equity in affiliates

22,343


93,184


14,322


317.1%

Net income

597,891


762,910


117,258


27.6%

Less: net loss attributable to non-controlling Interests

(40,602)


(13,745)


(2,113)


(66.1%)

Less: income(loss) attributable to redeemable non-controlling interest of Subsidiary

(5,336)


6,483


996


(221.5%)

Net income attributable to Noah Shareholders 

643,829


770,172


118,375


19.6%









Income per ADS, basic

11.44


13.62


2.09


19.1%

Income per ADS, diluted

11.04


13.07


2.01


18.4%

Margin analysis:








Operating margin

26.5%


27.5%


27.5%



Net margin

23.8%


27.0%


27.0%



Weighted average ADS equivalent: [1]








Basic

56,300,278


56,551,274


56,551,274



Diluted

60,073,525


60,467,645


60,467,645



ADS equivalent outstanding at end of period









56,462,655


56,902,300


56,902,300




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




Noah Holdings Limited 

Condensed Comprehensive Income Statements 

(unaudited)




Three months ended 






December 31,


December 31,


December 31,


Change




2016


2017


2017






RMB'000


RMB'000


USD'000



Net income

81,717


157,913


24,271


93.2%

Other comprehensive income, net of tax:








Foreign currency translation adjustments

14,342


(13,047)


(2,005)


N.A.

Fair value fluctuation of available for sale Investment (after tax)

(12,479)


243,655


37,449


N.A.

Comprehensive income

83,580


388,521


59,715


364.8%

Less: Comprehensive loss attributable to non-controlling interests

(20,326)


(2,342)


(360)


(88.5%)

Loss attributable to redeemable non-controlling interest of Subsidiary

(5,336)


-


-


(100.0%)

Comprehensive income attributable to Noah Shareholders

109,242


390,863


60,075


257.8%




Noah Holdings Limited 

Condensed Comprehensive Income Statements 

(unaudited)

Twelve months ended


December 31,


December 31,


December 31,


Change


2016


2017


2017




RMB'000


RMB'000


USD'000



Net income

597,891


762,910


117,257


27.6%

Other comprehensive income, net of tax:








Foreign currency translation adjustments

19,241


(33,876)


(5,207)


N.A.

Fair value fluctuation of available for sale Investment (after tax)

(3,001)


252,706


38,840


N.A.

Comprehensive income

614,131


981,740


150,891


59.9%

Less: Comprehensive loss attributable to non-controlling interests

(40,697)


(13,776)


(2,117)


(66.1%)

Loss attributable to redeemable non-controlling interest of Subsidiary

(5,336)


6,483


996


(221.5%)

Comprehensive income attributable to Noah Shareholders

660,164


989,033


152,012


49.8%

 

Noah Holdings Limited

Supplemental Information 

(unaudited) 


As of 




December 31,
2016


December 31,
2017


Change







Number of registered clients 

135,396


186,918


38.1%

Number of relationship managers 

1,169


1,335


14.2%

Number of cities under coverage 

71


79


11.3%














Three months ended 




December 31,
2016


December 31,
2017


Change


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

Number of active clients 

4,532


6,276


38.5%

Transaction value: 






Fixed income products 

14,337


15,367


7.2%

Private equity products 

8,519


7,360


(13.6%)

Secondary market equity products

1,700


5,412


218.3%

Other products

364


48


(86.8%)

Total transaction value 

24,920


28,188


13.1%

Average transaction value per client 

5.50


4.49


(18.3%)














Twelve months ended 




December 31,
2016


December 31,
2017


Change


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

Number of active clients 

12,027


12,720


5.8%

Transaction value: 






Fixed income products 

64,494


71,759


11.3%

Private equity products 

27,545


34,261


24.4%

Secondary market equity products

7,846


10,754


37.1%

Other products

1,499


598


(60.1%)

Total transaction value 

101,385


117,371


15.8%

Average transaction value per client 

8.43


9.23


9.5%

 

Noah Holdings Limited 

Segment Condensed Income Statements 

(unaudited) 



Three months ended December 31, 2017


Wealth
Management
Business


Asset
Management
Business


Internet
Financial
Services
Business


Total


RMB'000


RMB'000


RMB'000


RMB'000









Revenues:








Revenues from third party








One-time commissions

130,190


272


-


130,462

Recurring service fees

149,367


5,582


-


154,949

Performance-based income

8,854


152


-


9,006

Other service fees

20,397


5,643


26,442


52,482

Total third party revenues

308,808


11,649


26,442


346,899

Revenues from related party








One-time commissions

112,656


916


-


113,572

Recurring service fees

105,436


136,027


-


241,463

Performance-based income

1,826


19,007


-


20,833

Other service fees

-


-


4,541


4,541

Total related party revenues

219,918


155,950


4,541


380,409

Total revenues

528,726


167,599


30,983


727,308

Less: business taxes and related surcharges 

(3,911)


(840)


(443)


(5,194)

Net revenues

524,815


166,759


30,540


722,114

Operating costs and expenses:








   Compensation and benefits








Relationship manager compensation

(166,699)


-


(664)


(167,363)

Performance Fee Compensation

-


(11,291)


-


(11,291)

Other compensation

(117,186)


(53,406)


(30,390)


(200,982)

   Total compensation and benefits

(283,885)


(64,697)


(31,054)


(379,636)

   Selling expenses

(104,538)


(1,965)


(5,013)


(111,516)

   General and administrative expenses 

(54,695)


(22,379)


(2,197)


(79,271)

   Other operating expenses

(22,800)


(3,992)


(14,482)


(41,274)

   Government subsidies 

20,768


3,131


1,300


25,199

Total operating costs and expenses 

(445,150)


(89,902)


(51,446)


(586,498)

Income (loss) from operations 

79,665


76,857


(20,906)


135,616




Noah Holdings Limited 

Segment Condensed Income Statements 

(unaudited) 



Three months ended December 31, 2016


Wealth
Management
Business


Asset
Management
Business


Internet
Financial
Services
Business


Total


RMB'000


RMB'000


RMB'000


RMB'000









Revenues:








Revenues from third party








One-time commissions

163,809


337


-


164,146

Recurring service fees

109,458


17,465


-


126,923

Performance-based income

2,771


3,242


-


6,013

Other service fees

15,774


-


21,404


37,178

Third party revenues

291,812


21,044


21,404


334,260

Revenues from related party








One-time commissions

98,592


24


-


98,616

Recurring service fees

100,948


108,657


-


209,605

Performance-based income

650


7,069


-


7,719

Other service fees

-


-


392


392

Related party revenues 

200,190


115,750


392


316,332

Total revenues

492,002


136,794


21,796


650,592

Less: business taxes and related surcharges 

(3,767)


(421)


(174)


(4,362)

Net revenues

488,235


136,373


21,622


646,230

Operating costs and expenses:








   Compensation and benefits








Relationship manager compensation

(147,169)


(325)


(2,539)


(150,033)

Other compensation

(120,756)


(38,873)


(30,846)


(190,475)

   Total compensation and benefits

(267,925)


(39,198)


(33,385)


(340,508)

   Selling expenses

(84,740)


(6,012)


(7,920)


(98,672)

   General and administrative expenses 

(37,492)


(25,297)


(8,355)


(71,144)

   Other operating expenses

(24,918)


(27,244)


(14,430)


(66,592)

   Government subsidies

9,222


4,846


-


14,068

Total operating costs and expenses 

(405,853)


(92,905)


(64,090)


(562,848)

Income (loss) from operations 

82,382


43,468


(42,468)


83,382




Noah Holdings Limited 

Segment Condensed Income Statements 

(unaudited) 



Twelve months ended December 31, 2017


Wealth
Management
Business


Asset
Management
Business


Internet
Financial
Services
Business


Total


RMB'000


RMB'000


RMB'000


RMB'000









Revenues:








Revenues from third party








One-time commissions

539,936


1,088


-


541,024

Recurring service fees

519,575


27,548


-


547,123

Performance-based income

84,105


2,389


-


86,494

Other service fees

70,390


10,712


90,657


171,759

Total third party revenues

1,214,006


41,737


90,657


1,346,400

Revenues from related party








One-time commissions

560,048


1,012


-


561,060

Recurring service fees

358,321


502,409


-


860,730

Performance-based income

9,020


45,482


-


54,502

Other service fees

-


-


23,314


23,314

Total related party revenues

927,389


548,903


23,314


1,499,606

Total revenues

2,141,395


590,640


113,971


2,846,006

Less: business taxes and related surcharges 

(15,128)


(2,599)


(1,371)


(19,098)

Net revenues

2,126,267


588,041


112,600


2,826,908

Operating costs and expenses:








   Compensation and benefits








Relationship manager compensation

(611,550)


(4)


(4,510)


(616,064)

Performance Fee Compensation

-


(11,291)


-


(11,291)

Other compensation

(463,370)


(190,032)


(126,615)


(780,017)

   Total compensation and benefits

(1,074,920)


(201,327)


(131,125)


(1,407,372)

   Selling expenses

(295,798)


(9,271)


(15,393)


(320,462)

   General and administrative expenses 

(146,122)


(70,618)


(32,138)


(248,878)

   Other operating expenses

(77,490)


(27,773)


(42,055)


(147,318)

   Government subsidies 

49,008


23,848


1,300


74,156

Total operating costs and expenses 

(1,545,322)


(285,141)


(219,411)


(2,049,874)

Income (loss) from operations 

580,945


302,900


(106,811)


777,034




Noah Holdings Limited 

Segment Condensed Income Statements 

(unaudited) 



Twelve months ended December 31, 2016


Wealth
Management
Business


Asset
Management
Business


Internet
Financial
Services
Business


Total


RMB'000


RMB'000


RMB'000


RMB'000









Revenues:








Revenues from third party








One-time commissions

809,460


1,185


-


810,645

Recurring service fees

413,085


61,915


-


475,000

Performance-based income

11,143


8,597


-


19,740

Other service fees

67,437


-


50,357


117,794

Third party revenues

1,301,125


71,697


50,357


1,423,179

Revenues from related party








One-time commissions

318,555


2,887


-


321,442

Recurring service fees

347,819


427,907


-


775,726

Performance-based income

707


38,794


-


39,501

Other service fees

722


-


1,066


1,788

Related party revenues 

667,803


469,588


1,066


1,138,457

Total revenues

1,968,928


541,285


51,423


2,561,636

Less: business taxes and related surcharges 

(37,274)


(9,475)


(1,315)


(48,064)

Net revenues

1,931,654


531,810


50,108


2,513,572

Operating costs and expenses:








   Compensation and benefits








Relationship manager compensation

(556,554)


(1,452)


(5,614)


(563,620)

Performance Fee Compensation

-


(8,146)


-


(8,146)

Other compensation

(443,705)


(155,567)


(129,367)


(728,639)

   Total compensation and benefits

(1,000,259)


(165,165)


(134,981)


(1,300,405)

   Selling expenses

(280,993)


(16,172)


(25,502)


(322,667)

   General and administrative expenses 

(120,764)


(77,201)


(36,523)


(234,488)

   Other operating expenses

(82,059)


(35,923)


(33,106)


(151,088)

   Government subsidies

78,445


83,920


-


162,365

Total operating costs and expenses 

(1,405,630)


(210,541)


(230,112)


(1,846,283)

Income (loss) from operations 

526,024


321,269


(180,004)


667,289

 


Noah Holdings Limited

Reconciliation of GAAP to Non-GAAP Results 

(In RMB, except for per ADS data and percentages) 

(unaudited) 


Three months ended 




December 31, 


December 31, 


Change 


2016


2017




RMB'000


RMB'000









Net income attributable to Noah Shareholders

107,365


160,252


49.3%

Adjustment for share-based compensation related to:






Share options

11,854


10,796


(8.9%)

Restricted shares

12,178


13,625


11.9%

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

131,397


184,673


40.5%







Net margin 

12.6%


21.9%



Adjusted net margin (non-GAAP)*

16.4%


25.3%









Net income attributable to Noah Shareholders per ADS, diluted

1.86


2.72


46.2%

Adjusted net income attributable to Noah Shareholders per ADS, diluted (non-GAAP)*

2.26


3.12


38.1%


*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 RMB, except for per ADS data and percentages) 

(unaudited) 


Twelve months ended 




December 31, 


December 31, 


Change 


2016


2017




RMB'000


RMB'000









Net income attributable to Noah Shareholders

643,829


770,172


19.6%

Adjustment for share-based compensation related to:






Share options

39,008


51,054


30.9%

Restricted shares

40,163


42,581


6.0%

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

723,000


863,807


19.5%







Net margin 

23.8%


27.0%



Adjusted net margin (non-GAAP)*

26.9%


30.3%









Net income attributable to Noah Shareholders per ADS, diluted

11.04


13.07


18.4%

Adjusted net income attributable to Noah Shareholders per ADS, diluted (non-GAAP)*

12.36


14.62


18.3%

 

 

SOURCE Noah Holdings Limited

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