Revenue Grows 147% Year-Over-Year; Net Income Grows 242% Year-Over-Year
SHANGHAI, China, Aug. 22 /Xinhua-PRNewswire-FirstCall/ -- E-House (China) Holdings Limited ('E-House") , a leading real estate services company in China, today announced its unaudited financial results for the fiscal quarter ended June 30, 2007.
-- Total revenues were $24.0 million for the second quarter of 2007, an increase of 147% from $9.7 million for the same quarter in 2006. For the first half of 2007, total revenues were $40.0 million, an increase of 193% from $13.7 million for the same period in 2006. -- Net income for the second quarter of 2007 was $6.4 million, an increase of 242% from $1.9 million for the same quarter in 2006. For the first half of 2007, net income was $10.8 million, a substantial increase from $0.5 million for the same period in 2006. -- Diluted earnings per ADS was $0.09 for the second quarter of 2007 and $0.15 for the first half of 2007.
'We are very pleased to have posted strong growth for our second quarter and first half of 2007,' said Mr. Xin Zhou, E-House's Chairman and Chief Executive Officer. 'As the leading integrated real estate services company in China with unparalleled nationwide coverage, we continue to benefit from China's rapidly growing real estate industry. Looking forward, E-House remains ideally positioned to capture market opportunities presented by China's accelerating urbanization and increasingly affluent population.'
Mr. Li-Lan Cheng, E-House's Chief Financial Officer added, "We believe our successful listing on the New York Stock Exchange earlier this month demonstrates investors' confidence in E-House's business model and recognition of the long-term growth potential of China's real estate industry. In the months and quarters ahead we will continue to focus on increasing our market share in current and new urban markets, as well as expanding our service offerings.'
Financial results for second quarter and first half of 2007 Revenue
Total revenues were $24.0 million for the second quarter of 2007, an increase of 147% from $9.7 million for the same quarter in 2006. For the first half year of 2007, total revenues were $40.0 million, an increase of 193% from $13.7 million for the same period in 2006.
Primary Real Estate Agency Services
Revenues from primary real estate agency services were $20.6 million for the second quarter of 2007, an increase of 269% from $5.6 million for the same period in 2006. For the first half of 2007, revenues from primary real estate agency services were $33.3 million, an increase of 285% from $8.7 million for the same period in 2006. This increase was mainly due to the further expansion of primary real estate agency operations, which resulted in an increase in the gross floor area ('GFA') of new properties sold. (See 'Selected Operating Data' below for details.) The average commission rate was 2.7% in the first half of 2007 compared to 1.5% in the same period of 2006 mainly due to higher commission revenues earned upon the Company's exceeding sales targets for a number of projects.
Secondary Real Estate Brokerage Services
Revenues from secondary real estate brokerage services were $2.2 million for the second quarter in 2007, an increase of 110% from $1.1 million for the same period in 2006. For the first half of 2007, revenues from secondary real estate brokerage services were $4.1 million, an increase of 185% from $1.4 million for the same period in 2006. This growth was primarily attributable to the expansion of secondary real estate brokerage services since the first half of 2006. As of June 30, 2007, the Company had a total of 141 brokerage stores in five cities in China.
Real Estate Consulting and Information Services
Revenues from real estate consulting and information services were $1.2 million for the second quarter in 2007, a decrease of 61% from $3.1 million for the same period in 2006. For the first half of 2007, revenues from real estate consulting and information services were $2.6 million, a decrease of 26% from $3.6 million for the same period in 2006. This decrease was primarily due to one major consulting project that was completed in the second quarter in 2006. This decrease was partially offset by the increased sales of subscriptions to the Company's CRIC systems during the first half of 2007 as the Company expanded its CRIC system to include data covering additional cities.
Cost of Revenues
Cost of revenues was $4.5 million for the second quarter in 2007, an increase of 94% from $2.3 million for the same period in 2006. This was primarily due to an increase in commissions paid to the Company's sales team as a result of a higher transaction value for new properties sold and an increase in project-related advertising and promotion expenses that the Company was contractually obligated to pay for several primary real estate projects. For the first half of 2007, cost of revenues was $6.9 million, an increase of 90% from $3.6 million for the same period in 2006.
Selling, General and Administrative Expenses
Selling, general and administrative expenses were $9.7 million for the second quarter of 2007, an increase of 96% from $5.0 million for the same period in 2006. This was primarily due to an increase in staff salaries and bonuses as a result of hiring additional managerial employees and employees for secondary real estate brokerage services. The increase was also due to higher operating expenses for the secondary brokerage services and the corporate headquarters. For the first half of 2007, selling, general and administrative expenses were $17.5 million, an increase of 87% from $9.4 million for the same period in 2006.
Net Income
Net income was $6.4 million for the second quarter in 2007, an increase of 242% from $1.9 million for the same period in 2006. For the first half of 2007, net income was $10.8 million, a substantial increase from $0.5 million for the same period in 2006.
Cash Flow
As of June 30, 2007, the Company had a cash balance of $24.3 million. Net cash inflow from operating activities was $0.5 million in the second quarter of 2007, compared to an outflow of $1.7 million in the first quarter of 2007.
Other Recent Developments
On August 8, 2007, E-House successfully completed its initial public offering (IPO) and its American Depositary Shares (ADSs) began trading on the New York Stock Exchange under the ticker symbol 'EJ.' Including the exercise of an over-allotment option, E-House issued and sold a total of 13,167,500 ADSs, and the selling shareholders sold an additional 3,622,500 ADSs. Each ADS represents one ordinary share. The offering price was $13.80 per ADS. After deducting underwriting commission, net offering proceeds for E-House were approximately $169.0 million, and proceeds for selling shareholders were approximately $46.5 million.
On July 23, 2007, the Company granted options to purchase a total of 915,000 ordinary shares to certain employees at an exercise price of $12.50 per share.
Business Outlook
The Company estimates that its revenues for the third quarter of 2007 will range from $24 million to $26 million, representing an increase of 208% to 233% from the same period in 2006.
Conference Call Information
E-House's management will host an earnings conference call at 8 PM on August 22, 2007 U.S. Eastern Time (8 AM on August 23, 2007 Beijing/Hong Kong time).
Dial-in details for the earnings conference call are as follows: US: +1-617-597-5330 Hong Kong: +852-3002-1672
Please dial-in 10 minutes before the call is scheduled to begin and provide the passcode to join the call. The passcode is 'E-House earnings call.'
A replay of the conference call may be accessed by phone at the following number until August 28, 2007:
International: +1-617-801-6888 Passcode: 66346094
Additionally, a live and archived webcast of the conference call will be available at http://ir.ehousechina.com/ .
About E-House
E-House (China) Holdings Limited (NYSE: EJ; "E-House") is a leading real estate services company in China based on scope of services, brand recognition and geographical presence. Since its inception in 2000, E-House has experienced rapid growth and was ranked as the largest real estate agency and consulting services company in China from 2004 to 2006. E-House provides primary real estate agency services, secondary real estate brokerage services and real estate consulting and information services. E-House's services are supported by its proprietary and comprehensive real estate database system, the China Real Estate Information Circle (CRIC), which provides up-to-date and in-depth information covering residential and commercial real estate properties in 24 leading cities in China. For more information about E-House, please visit http://www.ehousechina.com/ or refer to public filings by E-House with the Securities and Exchange Commission.
Safe Harbor: Forward-Looking Statements
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' and similar statements. Among other things, the Business Outlook section and quotations from management in this press release, as well as E-House's strategic and operational plans, contain forward-looking statements. E-House may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on forms 20-F and 6-K, etc., 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 E-House's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, risks outlined in E-House's filings with the U.S. Securities and Exchange Commission, including its registration statements on Form F-1, as amended. E-House does not undertake any obligation to update any forward-looking statement, except as required under applicable law.
E-HOUSE (CHINA) HOLDINGS LIMITED
CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars)
December 31, June 30,
2006 2007
(Audited) (Unaudited)
ASSETS
Current assets
Cash and cash equivalents 24,306 24,285
Customer deposits 8,493 6,443
Unbilled accounts receivable 30,125 49,113
Accounts receivable, net 8,677 2,525
Properties held for sale 2,897 2,554
Prepaid expenses and other current assets 2,623 8,359
Amounts due from related parties 918 1,250
Total current assets 78,039 94,529
Property, plant and equipment, net 3,646 4,673
Property, plant and equipment, net
Intangible assets, net 3,750 3,544
Goodwill 2,227 2,284
Other non-current assets 1,768 6,522
Total assets 89,430 111,552
Current liabilities
Short-term borrowings 11,368 11,420
Accounts payable 1,259 1,807
Accrued payroll and welfare expenses 4,098 4,960
Income tax payable 7,017 9,264
Other tax payable 2,563 2,950
Amounts due to related parties 267 2,707
Other current liabilities 2,180 5,244
Total current liabilities 28,752 38,352
Deferred tax liabilities 1,152 1,092
Other non-current liabilities -- 200
Total liabilities 29,904 39,644
Minority interest 2,328 2,531
Commitments and contingencies
Mezzanine equity:
Series A redeemable convertible preferred
shares ($0.001 par value): nil and
22,727,272 authorized, nil and 22,727,272
shares issued and outstanding as of December
31, 2006 and June 30, 2007, respectively
(liquidation value $25,000,000) 24,828 24,828
SHAREHOLDER'S EQUITY:
Ordinary share ($0.001 par value): 50,000,000
and 57,272,728 shares authorized, 50,000,000
and 50,000,000 shares issued and outstanding,
as of December 31, 2006 and June 30, 2007,
respectively 50 50
Additional paid-in capital 18,399 18,589
Retained earnings 12,979 23,540
Accumulated other comprehensive income 942 2,370
Total shareholders' equity 32,370 44,549
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 89,430 111,552
E-HOUSE (CHINA) HOLDINGS LIMITED
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of U.S. dollars, except share data and per share data)
Three months ended Six months ended
June 30, June 30,
2006 2007 2006 2007
Revenues:
Primary real estate agency
services 5,573 20,559 8,650 33,300
Secondary real estate
brokerage services 1,068 2,246 1,435 4,090
Real estate consulting and
information services 3,060 1,183 3,581 2,640
9,701 23,988 13,666 40,030
Cost of revenues (2,334) (4,523) (3,631) (6,884)
Selling, general and
administrative expenses (4,975) (9,729) (9,370) (17,528)
Income from operations 2,392 9,736 665 15,618
Other income (expense):
Interest expenses (89) (195) (242) (349)
Interest income 72 62 83 126
Other income -- -- 140 --
Income before taxes and
minority interest 2,375 9,603 646 15,395
Income tax expense (564) (2,538) (153) (4,072)
Minority interest 48 (707) 22 (563)
Net income 1,859 6,358 515 10,760
Earnings per share:
Basic 0.03 0.09 0.01 0.15
Diluted 0.03 0.09 0.01 0.15
Shares used in computation:
Basic 50,000,000 50,000,000 50,000,000 50,000,000
Diluted 72,727,272 72,916,081 61,868,687 72,843,792
Notes:
Note 1: Basic earnings per share is computed by dividing income
attributable to holders of ordinary shares by the weighted average
number of shares outstanding during the period. Diluted earnings
per share reflects the potential dilution that could occur if
securities or other contracts to issue shares were exercised or
converted into shares.
Note 2: The conversion of Renminbi ('RMB') amounts into USD amounts is
based on the rate of USD1 = RMB7.6155 on June 30, 2007 and USD1 =
RMB7.6765 for the three months ended June 30, 2007.
Note 3: The Company adopted the provisions of FIN 48 effective January 1,
2007. Based on its FIN 48 analysis documentation, the Company has
made its assessment of the level of tax authority for each tax
position (including the potential application of interest and
penalties) based on the technical merits, and has measured the
unrecognized tax benefits associated with the tax positions. The
adoption of FIN 48 has reduced the retained earnings as of January
1, 2007, by $200,000, including interest and penalties, with a
corresponding increase in the liability for uncertain tax
positions. The aforementioned liability is recorded in other non-
current liabilities in the consolidated balance sheet. The Company
has no material unrecognized tax benefit which would favorably
affect the effective income tax rate in future periods. The
Company classifies interest and/or penalties related to income tax
matters in income tax expense. The amount of interest and
penalties as of January 1, 2007 was approximately $96,000, and the
additional interest and penalties as of March 31, 2007 was
immaterial.
E-HOUSE (CHINA) HOLDINGS LIMITED
SELECTED OPERATING DATA
Three months ended Six months ended
June 30, June 30,
2006 2007 2006 2007
Primary real estate agency
service
Total Gross Floor Area ("GFA")
of new properties sold
(thousands of square meters) 415 771 614 1,282
Total value of new properties
sold (millions of $) 392 773 596 1,228
For more information, please contact:
In China
Kate Kui
Director of Corporate Development and Investor Relations
Tel: +86-21-5298-0219
Email:
