IFM INVESTMENTS LIMITED (ADR)
BEIJING, China, August 18, 2015 - IFM Investments Limited (OTCQB: CTCLY) ("Century 21
China Real Estate" or the "Company"), a leading comprehensive real estate services provider and the exclusive franchisor for the CENTURY 21® brand in China, today announced its unaudited financial results for the second quarter ended June 30, 2015.
Consolidated net revenue in the second quarter of 2015 was RMB120.4 million (US$19.4 million), an increase of 33.2% from the first quarter of 2015, and a decrease of 1.8% from the second quarter of 2014.
Net income in the second quarter of 2015 was RMB9.2 million (US$1.5 million), compared to a net loss of RMB20.1 million in the first quarter of 2015, and a net loss of RMB41.1 million in the second quarter of 2014.
Net income attributable to IFM Investments Limited in the second quarter of 2015 was RMB9.5 million (US$1.5 million), compared to a net loss attributable to IFM Investments Limited of RMB19.7 million in the first quarter of 2015, and a net loss attributable to IFM Investments Limited of RMB38.8 million in the second quarter of 2014. Net income attributable to IFM Investments Limited in the second quarter of 2015 reflected restructuring costs, primarily store closure-related costs, of approximately RMB1.4 million (US$0.2 million).
"The second quarter is excellent, driven partly by our optimized network and leaner organization strategy, and partly by the government's loosened credit policies and improved sentiment toward the industry, which in turn resulted in increased transaction volumes and improved performances in our businesses," said Mr. Donald Zhang, Chairman and Chief Executive Officer of Century
21 China Real Estate.
Mr. Harry Lu, Vice Chairman and President, commented further: "We are excited to regain profitability in the second quarter and see outperformance in all of our segments. In the rest of
2015, we are confident to continue the growth momentum and enhance long term value for our shareholders."
1 This announcement contains translations of certain Renminbi ("RMB") amounts into U.S. dollar ("US$") amounts at specified rates solely for the convenience of readers. Unless otherwise noted, all translations from RMB amounts into US$ as of and for the quarter ended June 30, 2015, were made at a rate of RMB6.2000 to US$1.00 which is the noon buying rate on June 30, 2015 in New York for cable transfers in RMB as certified in the H.10 daily statistical release of the Federal Reserve Board. The Company's functional and reporting currency is the RMB.
decrease was primarily a result of lower revenue from franchise services, due to lower initial
sub-franchising fee received from the sales of franchise rights and lower ongoing service fees resulted from a reduction in the number of franchisees.
Revenue from company-owned brokerage services was RMB87.0 million (US$14.0 million), representing an increase of 65.1% from RMB52.7 million in the first quarter of
2015, a decrease of 1.9% from RMB88.7 million in the second quarter of 2014, and 72.3% of total net revenue. The sequential increase was primarily due to an increase in sales and purchase transaction volumes of secondary homes resulting from a seasonal rise. The year-over-year results only decreased slightly, despite of the substantial reduction in the number of sales offices in operation, primarily attributable to our improved efficiency and increased revenue per sales office.
Revenue from primary and commercial services was RMB15.4 million (US$2.5million), representing a decrease of 29.4% from RMB21.8 million in the first quarter of 2015, an increase of 6.2% from RMB14.5 million in the second quarter of 2014, and 12.8% of total net revenue. The sequential decrease primarily resulted from the lower selling price per square meter and average commission rate, which was partially offset by higher gross floor area of new properties sold. The year-over-year increase primarily resulted from higher gross floor area of new properties sold.
Revenue from mortgage management services was RMB15.4 million (US$2.5 million), representing an increase of 10.8% from RMB13.9 million in the first quarter of 2015, an increase of 23.2% from RMB12.5 million in the second quarter of 2014 and 12.8% of total net revenue. The sequential and year-over-year increases resulted from an increase in mortgage credit loans provided by the Company, which was partially offset by a decrease in traditional home mortgage loans brokered by the Company.
Revenue from franchise services was RMB2.5 million (US$0.4 million), an increase of
25.0% from RMB2.0 million in the first quarter of 2015, a decrease of 63.8% from RMB6.9 million in the second quarter of 2014, and 2.1% of total net revenue. The sequential increase was primarily due to increase in the initial franchise fees received from the sales of franchise rights for franchisees. The year-over-year decrease was primarily due to the one-off payment of initial sub-franchising fees received from the sale of franchise rights in Lanzhou in the second quarter of 2014.
Commissions and other agent-related costs were RMB68.4 million (US$11.0 million), representing an increase of 14.6% from RMB59.7 million in the first quarter of 2015, a decrease
of 23.0% from RMB88.8 million in the second quarter of 2014, and 56.8% of total net revenue.
The sequential increase resulted from an increase in commission expenses as a result of higher revenue from company-owned brokerage services and an increase in payroll expenses due to an increase in the number of sales staff. The year-over-year decrease was mainly due to a decrease in payroll expenses caused by a reduction in the number of sales offices and sales staff, which was partially offset by higher commission expenses as a result of higher commission rate compared to the second quarter of 2014.
As of June 30, 2015, the Company had cash and cash equivalents of RMB34.3 million (US$5.5 million), an increase of RMB4.0 million from March 31, 2015. Net cash used in operating activities in the second quarter of 2015 was RMB4.1 million (US$0.7 million), compared to net cash used in operating activities of RMB20.6 million in the first quarter of 2015, and net cash used in operating activities of RMB62.2 million in the second quarter of 2014. The sequential and year-over-year improvement in cash flow from operating activities was mainly due to an achievement of profitability in the second quarter of 2015. Net cash provided by investing activities in the second quarter of 2015 was RMB9.7 million (US$1.6 million). This was mainly the result of the net effect of providing and receiving repayment on mortgage credit loans of RMB8.8 million (US$1.4 million), as well as the purchase of property, plant and equipment of RMB0.8 million (US$0.1 million).
Network Update
During the second quarter of 2015, the Company's CENTURY 21® China Real Estate network
2 Explanation of the Company's non-GAAP financial measures and related reconciliations to GAAP financial measures is included in the "Non-GAAP Financial Measures" and "Reconciliations to Unaudited Condensed Consolidated Statements of Operations" in the accompanying condensed financial information included in this report.
covered 22 major cities with an average of more than 806 sales offices, including an average of
82 company-owned sales offices in operation. As of June 30, 2015, the Company's CENTURY
21® China Real Estate network employed more than 10,700 sales professionals and maintained more than 7.8 million property listings.
The Company currently estimates that its total net revenue for the third quarter of 2015 will be in the range of RMB90 million to RMB100 million. This forecast reflects the Company's current and preliminary view, which is subject to change.
About Century 21 China Real EstateIFM Investments Limited ("Century 21 China Real Estate" or "CTCLY") is a leading comprehensive real estate services provider and the exclusive franchisor for the CENTURY 21® brand in China. CTCLY primarily focuses on China's fast-growing and highly fragmented secondary real estate market, providing company-owned brokerage services, franchise services, mortgage management services, primary services, commercial services and fund management services. CTCLY has experienced substantial growth since it commenced operations in 2000, and received numerous awards and recognition as franchisor and real estate services provider for its service quality and business achievements. Century 21 China Real Estate became a public company in January 2010 and its ADSs, each of which represents 45 Class A ordinary shares of CTCLY, currently trade on the OTCQB marketplace under the symbol "CTCLY." For more information about CTCLY, please visit http://www.century21cn.com/english.
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 "aim," "anticipate," "believe," "confident," "continue," "estimate," "expect," "future," "intend," "is currently reviewing," "it is possible," "likely," "may," "plan," "potential," "will" or other similar expressions or the negative of these words or expressions. The Company has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect its financial condition, results of operations, business strategy and financial needs. Among other things, the Business Outlook section and quotations from management in this report, as well as the Company's strategic and operational plans, contain forward-looking statements. The Company may also make written or oral forward-looking statements in its reports filed or furnished with the U.S. Securities and Exchange Commission, in this report 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 the Company's beliefs and expectations, are forward-looking statements and are subject to change, and such change may be material and may have a material adverse effect on the Company's financial condition and results of operations for one or more periods. 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 report. Potential risks and uncertainties include, but are not limited to, the risks outlined in the Company's Annual Report on Form 20-F and other documents filed with the U.S. Securities and Exchange Commission. Unless otherwise specified, all information provided in this report and in the attachments is as of the date of this report, and the Company does not undertake any obligation
to update any such information, except as required under applicable law.
To supplement the financial measures prepared in accordance with generally accepted accounting principles in the United States, or GAAP, this report includes non-GAAP financial measures of adjusted income (loss) from operations, adjusted net income (loss) attributable to IFM Investments Limited and adjusted earnings per ADS, each of which is adjusted to exclude share-based compensation, impairment of goodwill and net change in fair value. The Company believes these non-GAAP financial measures are important to help investors understand the Company's current financial performance and future prospects, compare business trends among different reporting periods on a consistent basis and assess the Company's core operating results. For a reconciliation of each of these non-GAAP financial measures to the most directly comparable GAAP financial measure, please see the accompanying condensed financial information included with this report. One limitation of using non-GAAP financial measures as described above is that these expense charges have been and will continue to be significant recurring expenses in the Company's business for the foreseeable future. Readers are cautioned not to view non-GAAP results on a stand-alone basis or as a substitute for results under GAAP, or as being comparable to results reported or forecasted by other companies. Management compensates for this limitation by providing specific information regarding the GAAP amount excluded from the non-GAAP measure.
For investor and media inquiries, please contact:
Steve Ye
CFO
IFM Investments Limited
Phone: +86-10-6561-7788
E-mail: ir@century21cn.com
Cash and cash equivalents | 47,616 | 34,286 | 5,530 |
Restricted cash | 8,903 | 6,835 | 1,102 |
Accounts receivable, net | 156,786 | 130,873 | 21,109 |
Amounts due from related parties | 237 | 264 | 43 |
Loans receivable | 259,738 | 273,248 | 44,072 |
Prepaid expenses and other current assets | 20,998 | 26,953 | 4,347 |
Deferred tax assets | 14,437 | 13,795 | 2,225 |
Total current assets | 508,715 | 486,254 | 78,428 |
Investment in associates | 17,062 | 18,009 | 2,905 |
Property and equipment, net | 18,129 | 14,469 | 2,334 |
Intangible assets, net | 79,877 | 77,462 | 12,494 |
Goodwill | 83,559 | 83,559 | 13,477 |
Other non-current assets | 15,379 | 12,142 | 1,958 |
Deferred tax assets | 3,566 | 4,837 | 780 |
Accounts payable | 8,821 | 8,732 | 1,408 |
Accrued expenses and other current liabilities | 429,376 | 418,925 | 67,568 |
Amounts due to related parties | 11,782 | 10,782 | 1,739 |
Deferred revenue | 7,815 | 1,059 | 171 |
Short term loan | 4,900 | 4,990 | 805 |
Contingent consideration payable | 5,623 | 5,623 | 907 |
Total current liabilities | 468,317 | 450,111 | 72,598 |
Long-term deposits payable | 10,430 | 9,937 | 1,603 |
Deferred tax liabilities | 15,008 | 14,662 | 2,365 |
Total liabilities | 493,755 | 474,710 | 76,566 |
Class A ordinary shares (US$0.001 par value,
3,133,000 and 3,133,000 shares authorized as of
December 31, 2014 and June 30, 2015, respectively; 669,233 and 669,233 shares issued and outstanding as of December 31, 2014 and June
30, 2015, respectively)
4,949 4,949 798
Additional paid-in capital 1,036,336 1,036,402 167,162
Statutory reserves 5,595 5,595 902
Accumulated deficit (856,209) (866,463) (139,752)
Total IFM Investments LimitedNon-controlling interest 41,861 41,539 6,700
Total shareholders' equity 232,532 222,022 35,810 TOTAL LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST ANDJune 30, 2014 | March 31, 2015 | June 30, 2015 | June 30, 2015 | |
RMB | RMB | RMB | US$ | |
Net revenue | 122,568 | 90,415 | 120,369 | 19,414 |
Costs and expenses: | ||||
Commissions and other agent-related costs | (88,832) | (59,718) | (68,404) | (11,033) |
Operating costs | (41,528) | (26,223) | (24,498) | (3,951) |
Selling, general and administrative expenses | (42,145) | (25,500) | (26,488) | (4,272) |
Total costs and expenses | (172,505) | (111,441) | (119,390) | (19,256) |
Income (Loss)from operations | (49,937) | (21,026) | 979 | 158 |
Interest income | 151 | (28) | (43) | (7) |
Other income | 2,378 | 18 | 7,595 | 1,225 |
Foreign currency exchange loss | (42) | (1) | (25) | (4) |
Income (Loss) before income tax and share of associates' income | (47,450) | (21,037) | 8,506 | 1,372 |
Income tax | 6,057 | (10) | 748 | 121 |
Share of associates' income | 279 | 961 | (14) | (2) |
Net income (loss) | (41,114) | (20,086) | 9,240 | 1,491 |
Net loss (income) attributable to non-controlling interest | 2,320 | 353 | 239 | 39 |
Net income (loss) attributable to IFM Investments Limited | (38,794) | (19,733) | 9,479 | 1,530 |
Net income (loss)per share, basic | (0.06) | (0.03) | 0.01 | 0.00 |
Net income (loss) per share, diluted | (0.06) | (0.03) | 0.01 | 0.00 |
Net income (loss) per ADS, basic | (2.61) | (1.33) | 0.64 | 0.10 |
Net income (loss) per ADS, diluted | (2.61) | (1.33) | 0.64 | 0.10 |
Number of shares used in calculating net income (loss) per share, basic | 669,233 | 669,233 | 669,233 | 669,233 |
Number of shares used in calculating net income (loss) per share, diluted | 669,233 | 669,233 | 669,233 | 669,233 |
Number of ADSs used in calculating net income (loss) per ADS, basic | 14,872 | 14,872 | 14,872 | 14,872 |
Number of ADSs used in calculating net income (loss) per ADS, diluted | 14,872 | 14,872 | 14,872 | 14,872 |
income (loss) per ADS, diluted 14,872 14,872 14,872 14,872
Company-owned brokerage services
IFM Investments Limited Other Financial and Operating Data For the Three Months EndedNet revenues (in thousands of RMB) | 88,688 | 52,739 | 86,992 |
Average number of operating sales offices(1) | 192 | 84 | 82 |
Average monthly net revenues per operating sales office | |||
(in thousands of RMB) | 154 | 209 | 354 |
Primary and Commercial Services
Net revenues (in thousands of RMB) | 14,520 | 21,768 | 15,428 |
Aggregate gross floor area of properties sold (in thousand square | |||
meters) | 100 | 77 | 125 |
Mortgage management services
Net revenues (in thousands of RMB) | 12,460 | 13,886 | 15,404 |
Amount of referred mortgages and home equity loans | |||
(in thousands of RMB) Average entrusted and mortgage credit loan balance outstanding | 513,096 | 485,827 | 335,085 |
(in thousands of RMB) | 159,160 | 255,727 | 269,633 |
Franchise services
Net revenues (in thousands of RMB) | 6,900 | 2,022 | 2,545 |
Number of regional sub-franchisors as of period-end | 22 | 20 | 20 |
(1) Equals the sum of the number of sales offices in operation that existed at the end of each month in the applicable year, divided by the number of months in such year.
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