SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
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Xinyuan Real Estate Co., Ltd.
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By:
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/s/ Longgen Zhang
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Name:
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Longgen Zhang
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Title:
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Chief Financial Officer
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Date: March 4, 2008
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Exhibit 99.1
Xinyuan Real Estate Announces Fourth Quarter and Full Year 2007 Results
Full Year Revenues Grew
117.6 % Year-Over-Year;
Full Year Net Income Grew 163.8 % Year-Over-Year
ZHENGZHOU, China, March 4, 2008 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.
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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.
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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.
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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.
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Net income for fiscal year 2007 increased to US$42.5 million, representing a 163.8% increase from US$16.1 million in 2006.
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Gross margin for fiscal year 2007 was 32.8%, up from 24.0% in fiscal year 2006.
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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.
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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.
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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 Companys business plan.
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We are very
pleased to have posted strong growth in the fourth quarter and fiscal year 2007, said Mr. Yong Zhang, Xinyuans 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 governments 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 Chinas increasingly affluent middle class with modern, affordable and high quality homes.
Mr. Longgen
Zhang, Xinyuans chief financial officer added, Xinyuans 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
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management, strict cost control and rapid asset turnover, and by the continued success of our expansion strategy in Chinas 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 Chinas 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 managements 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.
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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 Companys initial public offering in December 2007.
Outlook for Fiscal Year 2008
While the 2007 results are in line with the Companys 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 Companys performance, should be considered in addition to, not in isolation or as a substitute for, measures of the Companys financial performance prepared in accordance with United States
Generally Accepted Accounting Principles (GAAP). The Companys 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 Companys 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.
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The Companys management uses non-GAAP financial measures to gain an understanding of the Companys comparative
operating performance (when comparing such results with previous periods or forecasts) and future prospects. The Companys 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 Companys management in their financial and operating decision-making, because management believes they reflect the Companys 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 Companys 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 Companys 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 Companys current
financial results with the Companys past financial results. The Companys 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 Companys 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 Companys core operating results. The Companys 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 Companys cash
performance between reporting periods. In addition, such charges will not result in cash settlement in the future.
Conference Call Information
Xinyuans 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:
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US:
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+1-617-597-5378
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Hong Kong:
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+852-3002-1672
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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:
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International:
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+1-617-801-6888
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Passcode:
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91707074
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Additionally, a live and archived webcast of the conference call will be available at
http://ir.xyre.com
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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
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Chinas 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 Chinas 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