EX-99.1 2 c18207exv99w1.htm EXHIBIT 99.1 Exhibit 99.1
Exhibit 99.1
E-House Reports First Quarter 2011 Results
SHANGHAI, China, May 31, 2011 — E-House (China) Holdings Limited (“E-House” or the “Company”) (NYSE: EJ), a leading real estate services company in China, today announced its unaudited financial results for the fiscal quarter ended March 31, 2011.
First Quarter 2011 Financial and Operating Highlights
•  
Total gross floor area (“GFA”) of new properties sold increased by 15% year-on-year to 2.9 million square     meters. Total value of new properties sold increased by 26% year-on-year to RMB27.5 billion ($4.2 billion)1.
 
•  
Total revenues increased by 17% year-on-year to $83.3 million.     
 
•  
Non-GAAP2 income from operations decreased by 60% year-on-year to $10.3 million.     
 
•  
Non-GAAP net income attributable to E-House shareholders decreased by 58% year-on-year to $7.5 million, or     $0.09 per diluted American depositary share (“ADS”).
“Following the government’s announcement of aggressive tightening measures in January 2011, the real estate market in China experienced a sharp reduction in transaction volume during the first quarter,” said Mr. Xin Zhou, E-House’s executive chairman. “In light of this, I am pleased that we still achieved year-on-year increases in the total GFA and value of new properties sold. However, we expect market sentiment and transaction volume to remain subdued in the near term as the government continues to implement and enforce restrictive measures aimed at discouraging purchases of residential real estate. Moreover, as credit supply became more restricted as a result of tighter monetary policy by the Chinese central bank, commercial banks in China have slowed down approvals of new mortgage loans. This has led to a delay in our ability to complete sales for a number of projects for which a ‘successful sale’ is defined as when the bank releases mortgage loan proceeds. This will negatively impact our primary agency revenue for the second quarter.”
Mr. Zhou continued, “In light of the unfavorable market environment, we continue to focus on expanding our business in our existing cities and establishing our presence in additional tier-three cities. We believe it is important to diversify our geographic and client mix in light of the policy impact on tier-one and tier-two cities. Our recent successful launch of a project developed by Country Garden in a township near Nanjing, where we sold nearly 2,000 units on the day of launch, demonstrates our ability to execute major projects and deliver value for our clients in challenging market conditions, and also indicates that underlying demand for real estate purchase remains strong. Meanwhile, our online business segment continues to show impressive growth in market share and revenue, taking advantage of developers’ increased efforts to market their products.”
Financial Results for the First Quarter of 2011
Revenues
First quarter total revenues were $83.3 million, an increase of 17% from $71.4 million for the same quarter of 2010.
 
     
1  
This press release contains translations of certain RMB amounts into U.S. dollar amounts solely for the convenience of the reader. The RMB amounts were translated into U.S. dollar amounts at a rate of RMB6.5859 to US$1.00, which is the average central parity rate announced by the People’s Bank of China for the first quarter of 2011.
 
2  
E-House uses in this press release the following non-GAAP financial measures: (1) net income attributable to E-House shareholders, (2) net income, (3) income from operations and (4) net income per diluted ADS, each of which excludes share-based compensation expense and amortization of intangible assets resulting from business acquisitions. See “About Non-GAAP Financial Measures” and “Reconciliation of GAAP and Non-GAAP Results” below for more information about the non-GAAP financial measures included in this press release.

 

 

 

Primary Real Estate Agency Services
First quarter revenues from primary real estate agency services were $39.3 million, a decrease of 7% from $42.4 million for the same quarter of 2010. This decrease was mainly due to a decrease in average commission rate from 1.3% for the first quarter of 2010 to 0.9% for the same quarter of 2011, partially offset by a 15% increase in total GFA of new properties sold and a 26% increase in total transaction value of new properties sold. (See “Selected Operating Data” below for more details on total GFA and transaction value of new properties sold.)
Secondary Real Estate Brokerage Services
First quarter revenues from secondary real estate brokerage services were $5.2 million, an increase of 18% from $4.4 million for the same quarter of 2010. This increase was mainly due to more rental transactions in the quarter as a result of government polices discouraging property sales transactions. As of March 31, 2011, E-House had a total of 106 secondary real estate brokerage stores in eight cities in China, compared to 111 stores as of March 31, 2010 and 133 as of December 31, 2010. The Company closed a number of stores in Shanghai during the first quarter of 2011 in order to reduce cost and optimize its store network by strengthening its presence in certain districts while closing unprofitable stores in others.
Revenues from China Real Estate Information Corporation (“CRIC”)
CRIC, a subsidiary of E-House, provides real estate information, consulting, online and other services in China. First quarter revenues from CRIC were $38.1 million, an increase of 57% from $24.2 million for the same quarter of 2010. This was mainly attributable to a 148% year-on-year increase from $8.2 million to $20.4 million in revenues from CRIC’s online segment, which was mainly due to gains in market share in all major cities after CRIC acquired its online business in October 2009.
Cost of Revenues
First quarter cost of revenues was $27.5 million, an increase of 40% from $19.7 million for the same quarter of 2010, primarily due to higher salary expenses for additional sales staff in the primary real estate agency service segment, additional costs associated with CRIC’s launch of new Baidu, Inc. (“Baidu”) real estate channels and additional costs associated with the services provided by the real estate promotional event service provider acquired in the second quarter of 2010.
Selling, General and Administrative (“SG&A”) Expenses
First quarter SG&A expenses were $58.1 million, an increase of 53% from $38.0 million for the same quarter of 2010, primarily due to increases in (1) salary, rental and traveling expenses for the Company’s primary real estate agency service segment, (2) salary expenses associated with additional sales and administrative staff and marketing expenses paid to Baidu for the Company’s online business and (3) share-based compensation expenses as a result of restricted shares and stock options granted in the fourth quarter of 2010 and the first quarter of 2011.
Income (Loss) from Operations
First quarter loss from operations was $2.3 million, compared to income from operations of $13.7 million for the same quarter of 2010. First quarter non-GAAP income from operations was $10.3 million, a decrease of 60% from $25.6 million for the same quarter of 2010.
Net Income (Loss)
First quarter net loss was $1.5 million, compared to net income of $11.7 million for the same quarter of 2010. First quarter non-GAAP net income was $10.5 million, a decrease of 54% from $22.9 million for the same quarter of 2010.

 

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Net Income (Loss) Attributable to E-House Shareholders
First quarter net loss attributable to E-House shareholders was $0.5 million, or $0.01 loss per diluted ADS, compared to net income attributable to E-House Shareholders of $10.6 million, or $0.13 per diluted ADS, for the same quarter of 2010. First quarter non-GAAP net income attributable to E-House shareholders was $7.5 million, or $0.09 per diluted ADS, a decrease of 58% from $17.8 million, or $0.22 per diluted ADS, for the same quarter of 2010.
Cash Flow
As of March 31, 2011, the Company had a cash balance of $452.5 million. First quarter net cash used in operating activities was $71.5 million. This amount was mainly attributable to an increase in customer deposit by $59.5 million, an increase in accounts receivable by $7.5 million, a decrease in income tax and other tax payable by $9.3 million and a decrease of payroll payable by $5.0 million, partially offset by non-GAAP net income of $10.5 million. First quarter net cash used in investing activities was $18.3 million. This amount was mainly attributable to the payment of $10.3 million for the acquisition of Firmway Holdings Limited, which holds a 20-year lease for an office building in Shanghai that the Company intends to use as its corporate offices upon completion of construction and a $4.7 million payment for investment in affiliates.
Business Outlook
The Company estimates that its revenues for the second quarter of 2011 will be in the range of $84 million to $86 million, an increase of 18% to 21% from $71.2 million in the same quarter in 2010. This forecast reflects the Company’s current and preliminary view, which is subject to change.
Conference Call Information
E-House’s management will host an earnings conference call on May 31, 2011 at 8:30 a.m. U.S. Eastern Time (8:30 p.m. Beijing/Hong Kong time).
Dial-in details for the earnings conference call are as follows:
     
U.S./International:
  +1-617-597-5324
Hong Kong:
  +852-3002-1672
Mainland China:
  +86-10-800-130-0399
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 June 07, 2011:
     
International:
  +1-617-801-6888
Passcode:
  61632062
Additionally, a live and archived webcast will be available at http://ir.ehousechina.com.
About E-House
E-House (China) Holdings Limited (“E-House”) (NYSE: EJ) is China’s leading real estate services company with a nationwide network covering more than 140 cities. E-House offers a wide range of services to the real estate industry, including primary sales agency, secondary brokerage, information and consulting, online, advertising, promotional events and investment management services. The real estate information and consulting, online, advertising and promotional events services are offered through E-House’s majority owned subsidiary, China Real Estate Information Corporation (NASDAQ: CRIC). E-House has received numerous awards for its innovative and high-quality services, including “China’s Best Company” from the National Association of Real Estate Brokerage and Appraisal Companies and “China Enterprises with the Best Potential” from Forbes. For more information about E-House, please visit http://www.ehousechina.com.

 

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Safe Harbor: Forward-Looking Statements
This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “may,” “intend,” “confident,” “is currently reviewing,” “it is possible,” “subject to” 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 reports filed or furnished with the U.S. Securities and Exchange Commission, including on Forms 20-F and 6-K, 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 and are subject to change. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained, either expressly or impliedly, in any of the forward-looking statements in this press release. Potential risks and uncertainties include, but are not limited to, a severe or prolonged downturn in the global economy, E-House’s susceptibility to fluctuations in the real estate market of China, government measures aimed at China’s real estate industry, failure of the real estate services industry in China to develop or mature as quickly as expected, diminution of the value of E-House’s brand or image, E-House’s inability to successfully execute its strategy of expanding into new geographical markets in China, E-House’s failure to manage its growth effectively and efficiently, E-House’s failure to successfully execute the business plans for its strategic alliances and other new business initiatives, E-House’s loss of its competitive advantage if it fails to maintain and improve its proprietary CRIC system or to prevent disruptions or failure in the system’s performance, E-House’s failure to compete successfully, fluctuations in E-House’s results of operations and cash flows, E-House’s reliance on a concentrated number of real estate developers, natural disasters or outbreaks of health epidemics and other risks outlined in E-House’s filings with the U.S. Securities and Exchange Commission. All information provided in this press release is current as of the date of this press release, and E-House does not undertake any obligation to update any such information, except as required under applicable law.
About Non-GAAP Financial Measures
To supplement E-House’s consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles (“GAAP”), E-House uses in this press release the following non-GAAP financial measures: (1) net income attributable to E-House shareholders, (2) net income, (3) income from operations and (4) net income per diluted ADS, each of which excludes share-based compensation expense and amortization of intangible assets resulting from business acquisitions. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the table captioned “Reconciliation of GAAP and Non-GAAP Results” set forth at the end of this press release.

 

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E-House believes that these non-GAAP financial measures provide meaningful supplemental information to investors regarding its operating performance by excluding share-based compensation expense and amortization of intangible assets resulting from business acquisitions, which may not be indicative of E-House’s operating performance. These non-GAAP financial measures also facilitate management’s internal comparisons to E-House’s historical performance and assist its financial and operational decision making. A limitation of using these non-GAAP financial measures is that share-based compensation expense and amortization of intangible assets resulting from business acquisitions are recurring expenses that will continue to exist in E-House’s business for the foreseeable future. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying tables have more details on the reconciliation between non-GAAP financial measures and their most comparable GAAP financial measures.
For investor and media inquiries please contact:
In China
Michelle Yuan
Manager, Investor Relations
E-House (China) Holdings Limited
Phone: +86 (21) 6133-0770
E-mail: liyuan@ehousechina.com
Derek Mitchell
Ogilvy Financial, Beijing
Phone: +86 (10) 8520-6284
E-mail: ej@ogilvy.com
In the U.S.
Jessica Barist Cohen
Ogilvy Financial, New York
Phone: +1 (646) 460-9989
E-mail: ej@ogilvy.com

 

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E-HOUSE (CHINA) HOLDINGS LIMITED
UNAUDITED CONSOLIDATED BALANCE SHEET
(In thousands of U.S. dollars)
                 
    December 31,     March 31,  
    2010     2011  
ASSETS
                
Current assets
                
Cash and cash equivalents
     543,818       452,480  
Restricted cash
     6,985       5,186  
Marketable securities
     16,564       15,432  
Customer deposits
     90,617       152,156  
Unbilled accounts receivable, net
     138,013       144,664  
Accounts receivable, net
     36,101       36,574  
Properties held for sale
     4,458       4,558  
Deferred tax assets
     17,285       17,285  
Prepaid expenses and other current assets
     22,052       22,266  
Amounts due from related parties
     19       2,152  
 
            
Total current assets
     875,912       852,753  
Property and equipment, net
     21,303       21,708  
Intangible assets, net
     183,912       185,345  
Investment in affiliates
     10,161       14,403  
Goodwill
     453,140       455,007  
Other non-current assets
     13,838       16,876  
 
            
Total assets
     1,558,266       1,546,092  
 
            
LIABILITIES AND EQUITY
                
Current liabilities
                
Accounts payable
     8,149       6,321  
Accrued payroll and welfare expenses
     37,853       33,080  
Income tax payable
     42,276       35,776  
Other tax payable
     14,765       12,744  
Amounts due to related parties
     5,155       965  
Advance from property buyers
     7,619       3,970  
Deferred revenue
     7,973       10,363  
Other current liabilities
     16,309       14,447  
 
            
Total current liabilities
     140,099       117,666  
Deferred tax liabilities
     40,152       41,669  
Other non-current liabilities
     1,375       1,630  
 
            
Total liabilities
     181,626       160,965  
 
            
Equity
                
Ordinary shares ($0.001 par value): 1,000,000,000 and 1,000,000,000 shares authorized, 80,752,526 and 80,820,687 shares issued and outstanding, as of December 31, 2010 and March 31, 2011, respectively
     81       81  
Additional paid-in capital
     672,621       678,031  
Subscription receivables
     (65 )     (48 )
Retained earnings
     200,823       200,265  
Accumulated other comprehensive income
     27,640       31,441  
 
            
Total E-House equity
     901,100       909,770  
Non-controlling interests
     475,540       475,357  
 
            
Total equity
     1,376,640       1,385,127  
 
            
TOTAL LIABILITIES AND EQUITY
     1,558,266       1,546,092  
 
            

 

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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  
    March 31,  
    2010     2011  
 
                
Revenues
     71,436       83,280  
Cost of revenues
     (19,654 )     (27,498 )
Selling, general and administrative expenses
     (38,044 )     (58,085 )
 
            
Income (loss) from operations
     13,738       (2,303 )
 
                
Interest income
     531       650  
Other income, net
     1,580       28  
 
            
Income (loss) before taxes and equity in affiliates
     15,849       (1,625 )
Income tax (expense) benefits
     (4,080 )     393  
 
            
Income (loss) before equity in affiliates
     11,769       (1,232 )
Loss from equity in affiliates
     (68 )     (254 )
 
            
Net income (loss)
     11,701       (1,486 )
 
                
Less: net income attributable to non-controlling interests
     1,093       (974 )
 
            
 
                
Net income (loss) attributable to E-House shareholders
     10,608       (512 )
 
            
 
                
Earnings(loss) per share:
                
Basic
     0.13       (0.01 )
Diluted
     0.13       (0.01 )
Shares used in computation:
                
Basic
     80,151,775       80,758,317  
Diluted
     81,101,178       81,589,335  
Note
The conversion of Renminbi (“RMB”) amounts into USD amounts is based on the rate of USD1 = RMB6.5564 on March 31, 2011 and USD1 = RMB6.5859 for the three months ended March 31, 2011.

 

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E-HOUSE (CHINA) HOLDINGS LIMITED
Reconciliation of GAAP and Non-GAAP Results
(In thousands of U.S. dollars, except share data and per ADS data)
                 
    Three months ended  
    March 31,  
    2010     2011  
    (unaudited)     (unaudited)  
GAAP income (loss) from operations
     13,738       (2,303 )
Share-based compensation expense
     6,717       7,375  
Amortization of intangible assets resulting from business acquisitions
     5,175       5,251  
 
            
Non-GAAP income from operations
     25,630       10,323  
 
            
 
                
GAAP net income (loss)
     11,701       (1,486 )
Share-based compensation expense (net of tax)
     6,717       7,375  
Amortization of intangible assets resulting from business acquisitions (net of tax)
     4,503       4,577  
 
            
Non-GAAP net income
     22,921       10,466  
 
            
 
                
Net income (loss) attributable to E-House shareholders
     10,608       (512 )
Share-based compensation expense (net of tax and non-controlling interests)
     4,835       5,542  
Amortization of intangible assets resulting from business acquisitions (net of tax and non-controlling interests)
     2,389       2,429  
 
            
 
                
Non-GAAP net income attributable to E-House shareholders
    17,832       7,459  
 
            
 
                
GAAP net income (loss) per ADS — basic
     0.13       (0.01 )
 
            
 
                
GAAP net income (loss) per ADS — diluted
     0.13       (0.01 )
 
            
 
                
Non-GAAP net income per ADS — basic
     0.22       0.09  
 
            
 
                
Non-GAAP net income per ADS — diluted
     0.22       0.09  
 
            
 
                
Shares used in calculating basic GAAP / non-GAAP net income (loss) attributable to shareholders per ADS
     80,151,775       80,758,317  
 
            
 
                
Shares used in calculating diluted GAAP / non-GAAP net income (loss) attributable to shareholders per ADS
     81,101,178       81,589,335  
 
            

 

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E-HOUSE (CHINA) HOLDINGS LIMITED
SELECTED OPERATING DATA
                 
    Three months ended  
    March 31,  
    2010     2011  
Primary real estate agency service
                
Total Gross Floor Area (“GFA”) of new properties sold (thousands of square meters)
     2,544       2,935  
Total value of new properties sold (millions of RMB)
     21,926       27,543  
Total value of new properties sold (millions of $)
     3,212       4,182  

 

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