Full Year Revenues Grew 117.6% Year-Over-Year; Full Year Net Income
Grew 163.8% Year-Over-Year ZHENGZHOU, China, March 4
/Xinhua-PRNewswire/ -- Xinyuan Real Estate Co., Ltd. ("Xinyuan")
(NYSE:XIN), a fast-growing residential real estate developer with a
focus on strategically selected Tier II cities in China, today
announced its unaudited financial results for the fourth quarter
and fiscal year ended December 31, 2007. -- Total revenues for the
fourth quarter of 2007 were US$91.4 million, an increase of 114.0%
from US$42.7 million for the same quarter in 2006. -- Total
revenues for the fiscal year 2007 increased by 117.6%
year-over-year to US$309.7 million from US$142.4 million in 2006.
-- Net income for the fourth quarter of 2007 was US$6.6 million, an
increase of 81.1% from US$3.6 million for the same quarter in 2006.
-- Net income for fiscal year 2007 increased to US$42.5 million,
representing a 163.8% increase from US$16.1 million in 2006. --
Gross margin for fiscal year 2007 was 32.8%, up from 24.0% in
fiscal year 2006. -- In the fourth quarter of 2007, we acquired one
parcel of land with a total developable gross floor area ("GFA") of
501,244 square meters; launched two projects with a total
developable GFA of 357,174 square meters; and completed one project
with a total GFA of 61,066 square meters. -- In fiscal year 2007,
we acquired nine parcels of land with a total developable GFA of
1,721,695 square meters; launched six projects with a total
developable GFA of 905,270 square meters; and completed three
projects with a total GFA of 416,656 square meters. -- As of
December 31, 2007, Xinyuan had a total developable GFA of
approximately 2,498,570 million square meters of land under
construction and under planning. This represents future sales of
1.5 to 2 years, and is consistent with the Company's business plan.
"We are very pleased to have posted strong growth in the fourth
quarter and fiscal year 2007," said Mr. Yong Zhang, Xinyuan's
chairman and chief executive officer. "As a fast-growing
residential real estate developer in China, we have expanded our
offerings into six strategically selected Tier II cities and have
developed robust property development capabilities that are
well-suited to adapt to changing market conditions. Our unique
business model addresses the challenges imposed by the government's
recently implemented policy changes aimed at curbing land
appreciation and tightening credit, as we rely on operating
efficiency, not land appreciation, to generate attractive returns.
In addition, we are constantly seeking out new initiatives to
alleviate credit tightening pressures, such as our recent
partnership with China Construction Bank, which provides us and our
customers with real estate development and mortgage loans." Mr.
Zhang continued, "Looking forward, Xinyuan remains ideally
positioned to take advantage of accelerating urbanization and
increasing demand in Tier II cities as we strive to provide China's
increasingly affluent middle class with modern, affordable and high
quality homes." Mr. Longgen Zhang, Xinyuan's chief financial
officer added, "Xinyuan's successful IPO on the New York Stock
Exchange in December demonstrates the confidence investors have in
our unique, asset-light business model, which focuses on acquiring
land for immediate development. Our strong revenue growth during
fiscal year 2007 was driven by our dedication to efficient asset
management, strict cost control and rapid asset turnover, and by
the continued success of our expansion strategy in China's Tier II
cities. With rapid economic growth and large land supplies, we
believe Tier II cities will continue to represent the most
attractive market in China's real estate industry." Financial
Results for Fourth Quarter 2007 Revenues Total revenues were
US$91.4 million for the fourth quarter of 2007, an increase of
114.0% from US$42.7 million for the same quarter in 2006. The
increase was primarily due to higher sales volume and sales prices
during the fourth quarter. Cost of Revenues Cost of revenues was
US$61.1 million for the fourth quarter in 2007, an increase of
87.7% from US$32.6 million for the same period in 2006. The
increase resulted from higher land acquisition costs and higher
total construction costs due to expanded sales volume of new
property projects launched and sold in the fourth quarter. The
fourth quarter included a favorable adjustment of approximately
US$3 million to the cost of revenue, which was caused by a change
in management's estimate of future revenue after considering the
actual market conditions. Selling, General and Administrative
Expenses Selling, general and administrative expenses were US$13.8
million for the fourth quarter of 2007, a substantial increase from
US$2.7 million for the same period in 2006. The increase was
primarily attributable to increased selling and marketing
activities to promote new projects and increased salaries of new
employees, stock awards amortization, professional fees, and
recruiting expenses. Operating Margin Operating margin for the
quarter was 18.0%, compared to 17.5% in the corresponding period of
2006. Excluding share-based compensation expenses (non-GAAP),
operating margin for the quarter was 22.9%, compared to 17.5% in
the corresponding period of the prior year. Net Income Net income
was US$6.6 million for the fourth quarter in 2007, up 81.1% from
US$3.6 million for the same period in 2006. As a result of a waiver
of the contingent conversion option contained in the Series A
convertible preference shares, we recognized a one-time, non-cash
deemed dividend in the fourth quarter of 2007 of approximately
US$182 million, which reduced our basic and diluted earnings per
share for the fourth quarter 2007 by approximately US$1.58 and
US$1.58, respectively. Basic and diluted losses per share amounted
to US$1.53 and US$1.53, respectively, and basic and diluted losses
per ADS amounted to US$3.06 and US$3.06, respectively. Each ADS
represents two ordinary shares. Financial Results for the Fiscal
Year 2007 Revenues For the fiscal year ended December 31, 2007,
Xinyuan reported revenues of US$309.7 million, representing a
117.6% increase year-over-year from US$142.4 million in 2006. The
increase was primarily attributable to higher sales volume and
sales prices, and geographic expansion. Operating Margin Operating
margin for the fiscal year 2007 was 23.9%, compared to 19.4% for
the fiscal year 2006. Excluding share-based compensation expenses
(non-GAAP), operating margin for the fiscal year 2007 was 25.4%,
compared to 19.4% for the prior year. Net Income Net income for the
fiscal year 2007 was US$42.5 million, representing a 163.8%
increase year-over-year. We recognized a one-time, non-cash deemed
dividend in the fourth quarter of 2007 of approximately US$182
million, which reduced our basic and diluted earnings per share for
2007 by approximately US$1.67 and US$1.67, respectively. Basic and
diluted losses per share for the fiscal year 2007 amounted to
US$1.31 and US$1.31, respectively, and basic and diluted losses per
ADS amounted to US$2.62 and US$2.62, respectively. Common shares
used in calculating basic and diluted losses per share increased in
the fiscal year 2007 mainly due to approximately 2.1 million new
common shares (equivalent to 1.05 million ADSs), calculated on a
weighted average basis, issued and sold by the Company in its
initial public offering in December 2007. Cash and Cash Equivalents
As of December 31, 2007, Xinyuan had cash and cash equivalents of
US$357.6 million, as compared to US$66.9 million as of December 31,
2006. The increase in cash and cash equivalents was primarily due
to approximately US$262 million in net proceeds from the Company's
initial public offering in December 2007. Outlook for Fiscal Year
2008 While the 2007 results are in line with the Company's
expectations, we have determined that providing forward guidance at
this time is not prudent due to the existing uncertainty related to
the current regulatory market in China. Specifically, the way in
which recent austerity measures tightening the availability of
credit may impact our future financial results and ability to
predict the same. With a strong balance sheet and disciplined land
acquisition strategy, Xinyuan remains well positioned to manage and
minimize the impact of such measures. The Company plans to consider
providing forward guidance if/when the current environment becomes
more clear and its future operating results become more
predictable. Non-GAAP Measures This release contains non-GAAP
financial measures, as such term is defined by the Securities and
Exchange Commission. These non-GAAP financial measures, which are
used as measures of the Company's performance, should be considered
in addition to, not in isolation or as a substitute for, measures
of the Company's financial performance prepared in accordance with
United States Generally Accepted Accounting Principles ("GAAP").
The Company's non-GAAP financial measures may be defined
differently than similar terms used by other companies.
Accordingly, care should be exercised in understanding how the
Company defines its non-GAAP financial measures. Reconciliations of
the Company's non-GAAP measures to the nearest GAAP measures are
set forth in the section below titled "Reconciliation of Non-GAAP
to GAAP Results." These non-GAAP measures include non-GAAP gross
profit, non-GAAP operating expenses, non-GAAP income from
operations, non-GAAP net income, and non-GAAP gross margin. The
Company's management uses non-GAAP financial measures to gain an
understanding of the Company's comparative operating performance
(when comparing such results with previous periods or forecasts)
and future prospects. The Company's non-GAAP financial measures
exclude certain special items, including stock-based compensation
charges, amortization of intangible assets, amortization of
convertible debt issuance cost and charges arising from changes in
fair value of derivative warrant liabilities, from its internal
financial statements for purposes of its internal budgets. Non-GAAP
financial measures are used by the Company's management in their
financial and operating decision-making, because management
believes they reflect the Company's ongoing business in a manner
that allows meaningful period-to-period comparisons. The Company
computes its non-GAAP financial measures using the same consistent
methods from quarter to quarter. The Company's management believes
that these non-GAAP financial measures provide useful information
to investors and others in the following ways: 1) in understanding
and evaluating the Company's current operating performance and
future prospects in the same manner as management does, if they so
choose, and 2) in comparing in a consistent manner the Company's
current financial results with the Company's past financial
results. The Company's management further believes the non-GAAP
financial measures provide useful information to both management
and investors by excluding certain expenses, gains and losses (i)
that are not expected to result in future cash payments or (ii)
that are non-recurring in nature or may not be indicative of its
core operating results and business outlook. The Company's
management believes excluding stock-based compensation from its
non-GAAP financial measures is useful for itself and investors as
such expense will not result in future cash payment and is
otherwise unrelated to the Company's core operating results. The
Company's management believes excluding the non-cash stock-based
compensation charges, amortization expense of intangible assets and
charges resulted from changes in fair value of derivative warrant
liabilities from its non-GAAP financial measure of net income are
useful for itself and investors because they enable a more
meaningful comparison of the Company's cash performance between
reporting periods. In addition, such charges will not result in
cash settlement in the future. Conference Call Information
Xinyuan's management will host an earnings conference call on March
4, 2008 at 8 a.m. U.S. Eastern Standard Time (9 p.m. Beijing/Hong
Kong time). Dial-in details for the earnings conference call are as
follows: US: +1-617-597-5378 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 "Xinyuan
earnings call." A replay of the conference call may be accessed by
phone at the following number until April 3, 2008: International:
+1-617-801-6888 Passcode: 91707074 Additionally, a live and
archived webcast of the conference call will be available at
http://ir.xyre.com/ . About Xinyuan Real Estate Co., Ltd. Xinyuan
Real Estate Co., Ltd. ("Xinyuan") (NYSE:XIN) is a fast-growing
developer of large scale, quality residential real estate projects
aimed at providing middle-income consumers with a comfortable and
convenient community life. Xinyuan focuses on China's Tier II
cities, characterized as larger, more developed urban areas with
above average GDP and population growth rates. Ranked #1 among all
property developers in Zhengzhou in terms of contracted sales of
residential units for the years 2004, 2005 and 2006, Xinyuan has
expanded its network to cover a total population of over 34.5
million people in 6 strategically selected Tier II cities,
including Chengdu, Hefei, Jinan, Kunshan, Suzhou and Zhengzhou.
Xinyuan has completed 14 projects with a total gross floor area
("GFA") of over 1.0 million square meters within the past 10 years
and as of December 31, 2007, Xinyuan had 8 projects under
construction with a total GFA of 1.1 million square meters and 6
additional projects under planning with total GFA of 1.4 million
square meters. With a focus on high asset turnover, efficient
working capital management and strict cost control, Xinyuan is
dedicated to bringing high quality, affordable homes to China's
middle income buyers. For more information, please visit
http://www.xyre.com/ . Safe Harbor Statement This press release may
contain 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. Statements that
are not historical facts, including statements concerning our
beliefs, forecasts, estimates and expectations, are forward-looking
statements. Forward-looking statements involve inherent risks and
uncertainties that could cause actual results to differ materially
from those projected or anticipated, including risks related to:
the risk that we may be unable to complete our property
developments on time or at all; the risk that our results of
operations may fluctuate from period to period; the risk that the
PRC government may adopt further measures to curtail the
overheating property sector; the risk that we face intense
competition from other real estate developers; the risk that PRC
economic, political and social conditions as well as government
policies can affect our business and other risks outlined in our
public filings with the Securities and Exchange Commission,
including our registration statement on Form F-1, as amended. All
information provided in this press release is as of March 4, 2008.
Except as required by law, we undertake no obligation to update or
revise publicly any forward-looking statements, whether as a result
of new information, future events or otherwise, after the date on
which the statements are made or to reflect the occurrence of
unanticipated events. Notes to Unaudited Financial Information The
financial information disclosed in this press release is unaudited.
The audit of the financial statements and related notes to be
included in our annual report on Form 20-F for the year ended
December 31, 2007 is still in progress. Adjustments to the
financial statements may be identified when the audit work is
completed, which could result in significant differences between
our audited financial statements and this unaudited financial
information. XINYUAN REAL ESTATE CO., LTD. AND ITS SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (All US$
amounts and number of shares data in thousands, except per share
data) Three months ended Year ended December 31, December 31, 2007
2006 2007 2006 Revenue 91,425 42,712 309,725 142,367 Cost of
revenue (61,145) (32,583) (208,134) (108,196) Gross profit 30,280
10,129 101,591 34,171 Selling and distribution expenses (4,558)
(1,120) (10,515) (2,996) General and administrative expenses
(9,232) (1,530) (16,968) (3,626) Operating income 16,490 7,479
74,108 27,549 Interest income 681 334 1,417 461 Interest expense
(1,765) (420) (3,204) (727) Share of income (loss) in an equity
investee 3,179 3 8,998 (446) Change in fair value of warrant
liabilities (2,416) -- (8,602) -- Income from operations before
income taxes 16,169 7,396 72,717 26,837 Income taxes (9,596)
(3,768) (30,180) (10,717) Net income before minority interest 6,573
3,628 42,537 16,120 Minority interest -- 2 -- 3 Net Income 6,573
3,630 42,537 16,123 Accretion of Series A convertible preference
shares (572) -- (2,739) -- Deemed dividend (1) (182,229) --
(182,229) -- Net income attributable to ordinary shareholders
(176,228) -- (142,431) -- Earnings (loss) per share: Basic (1.53)
0.03 (1.31) 0.21 Diluted (1.53) 0.03 (1.31) 0.21 Shares used in
computation: Basic 115,361 106,510 108,858 72,694 Diluted 115,361
106,510 108,858 72,694 Note (1) On November 13, 2007, the holders
of the Series A convertible preference shares agreed to waive the
contingent conversion option contained in the shares. The
modification was deemed to be substantive and was treated as an
extinguishment of the Series A convertible preference shares. In
connection with this, we have recognized a dividend of
approximately US$182.2 million to the Series A convertible
preference shareholders, representing the difference between the
fair value of the convertible preference shares immediately after
the modification and the carrying value of the preference shares
immediately prior to the modification. This deemed dividend did not
affect our net income or cash flows, however, it reduced the net
income attributable to ordinary shareholders and retained earnings
for the year ended December 31, 2007. XINYUAN REAL ESTATE CO., LTD.
AND ITS SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS DATA (U.S. Dollars in thousands) December 31, 2007 2006
Assets Cash and cash equivalents 357,582 66,925 Property under
development 197,958 87,619 Total current assets 586,312 174,425
Property under development 190,922 19,185 Total Assets 804,346
204,956 Liabilities and Shareholders' Equity Short-term bank loans
49,284 22,667 Total current liabilities 153,984 118,840 Long-term
bank loans 137,858 12,806 Total Liabilities 417,781 136,064
Preferred shares -- 22,309 Common shares 15 8 Additional paid-in
capital 487,104 17,264 Statutory reserves 12,968 4,067 Retained
earnings/(accumulated loss) (1) (126,828) 23,680 Accumulated other
comprehensive earnings 13,306 1,564 Total Shareholders' Equity
386,565 46,583 Total Liabilities and Shareholders' Equity 804,346
204,956 Note (1) On November 13, 2007, the holders of the Series A
convertible preference shares agreed to waive the contingent
conversion option contained in the shares. The modification was
deemed to be substantive and was treated as an extinguishment of
the Series A convertible preference shares. In connection with
this, we have recognized a dividend of approximately US$182.2
million to the Series A convertible preference shareholders,
representing the difference between the fair value of the
convertible preference shares immediately after the modification
and the carrying value of the preference shares immediately prior
to the modification. This deemed dividend did not affect our net
income or cash flows, however, it reduced the net income
attributable to ordinary shareholders and retained earnings for the
year ended December 31, 2007. XINYUAN CORPORATION RECONCILIATION OF
NON-GAAP TO GAAP RESULTS (U.S. Dollar in thousands, except per
share data) Three months ended Three months ended December 31, 2007
December 31, 2006 Non-GAAP Non-GAAP Actual Adjustments Results
Actual Adjustments Results Gross profit 30,280 30,280 10,129 10,129
Operating expenses 13,790 (a) (4,437) 8,897 2,650 2,565 (b) (85)
(85) (c) (371) Operation income 16,490 (a) 4,437 23,799 7,479 7,564
(b) 85 85 (c) 371 (d) 2,416 Net income 6,573 (a) 4,437 13,882 3,628
3,713 (b) 85 85 (c) 371 (d) 2,416 Twelve months ended Twelve months
ended December 31, 2007 December 31, 2006 Non-GAAP Non-GAAP Actual
Adjustments Results Actual Adjustments Results Gross profit 101,591
101,600 34,171 34,171 Operating expenses 27,483 (a) (4,437) 21,593
6,622 6,508 (b) (341) (114) (c) (1,112) Operation income 74,108 (a)
4,437 88,600 27,549 27,663 (b) 341 114 (c) 1,112 (d) 8,602 Net
income 42,537 (a) 4,437 57,029 16,123 16,237 (b) 341 114 (c) 1,112
(d) 8,602 (a) To adjust stock-based compensation charges (b) To
adjust amortization of property management rights (c) To adjust
amortization of convertible debt issuance cost (d) To adjust
changes in fair value of derivative warrant liabilities For more
information, please contact: In China: Ms. Lisa Wang Director of
Investor Relations Tel: +86-371-6565-1611 Email: Mr. Derek Mitchell
Ogilvy Public Relations Worldwide (Beijing) Tel: +86-10-8520-6284
Email: In the United States: Mr. Jeremy Bridgman Ogilvy Public
Relations Worldwide (New York) Tel: +1-212-880-5363 Email:
DATASOURCE: Xinyuan Real Estate Co., Ltd. CONTACT: In China - Ms.
Lisa Wang, Director of Investor Relations, +86- 371-6565-1611, or ;
or Mr. Derek Mitchell of Ogilvy Public Relations Worldwide
(Beijing), +86-10-8520-6284, or ; or In the United States - Mr.
Jeremy Bridgman of Ogilvy Public Relations Worldwide (New York),
+1-212-880-5363, or , both for Xinyuan Real Estate Co., Ltd. Web
Site: http://www.xyre.com/ http://ir.xyre.com/
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