Company Achieves Total Revenue and Net Income Growth for the First
Nine Months of 2008 of 35.5% and 43.8%, Respectively BEIJING, Nov.
25 /PRNewswire-Asia/ -- Xinyuan Real Estate Co., Ltd. ("Xinyuan" or
"the Company") (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
third quarter and nine months ended September 30, 2008. -- Total
revenues for the third quarter of 2008 decreased 5.4% to US$83.0
million from US$87.7 million for the second quarter of 2008. --
Total revenues for the nine months ended September 30, 2008
increased 35.5% to US$295.8 million from US$218.3 million for the
same period in 2007. -- Net income for the third quarter of 2008
decreased 40.9% to US$7.8 million from US$13.2 million for the
second quarter of 2008. -- Net income for the nine months ended
September 30, 2008 increased 43.8% to US$53.9 million from US$37.5
million for the same period in 2007. -- Diluted earnings per share
were US$0.05 for the third quarter of 2008, equivalent to US$0.10
per American Depositary Share ("ADS"), compared to US$0.08 diluted
earnings per share or US$0.16 per ADS for the second quarter of
2008. -- Diluted earnings per share were US$0.27 for the nine
months ended September 30, 2008, equivalent to US$0.54 per ADS,
compared to US$0.31 diluted earnings per share or US$0.62 per ADS
for the same period in 2007. -- During the third quarter of 2008,
the Company launched the first phase of a new project with total
developable gross floor area ("GFA") of 509,851 square meters in
Kunshan, and completed construction of total GFA of approximately
67,600 square meters for one ongoing project in Zhengzhou. -- As of
September 30, 2008, the Company had land reserves representing
approximately 2.2 million square meters of developable GFA, all of
which is either under construction or in the planning stage. This
represents future sales of 2 to 3 years of development activity,
and is consistent with the Company's business plan. Three Three
Nine Nine months months months months ended ended ended ended
9/30/07 9/30/08 9/30/07 9/30/08 Total revenue (US$000) 120,595
82,951 218,300 295,811 Net income (US$000) 16,049 7,785 37,484
53,909 Diluted earnings per share (US$) 0.13 0.05 0.31 0.27 "The
third quarter of 2008 continued a challenging period within China's
real estate sector," said Mr. Yong Zhang, Xinyuan's chairman and
chief executive officer. "Government policies introduced during the
second half of last year to cool a rapidly growing housing market
continued to weigh heavily on consumer demand and have created a
'wait-and-see' attitude amongst consumers. While home prices have
remained relatively stable in the markets in which we operate,
sales volumes have decreased across much of the industry. Despite
these challenges, Xinyuan has delivered solid results for the first
nine months of 2008." Mr. Zhang continued, "Recently, China's
central and municipal governments eased their monetary and fiscal
policies in a combined effort to stimulate the real estate sector
and promote growth. In addition, on November 9, 2008, China's State
Council announced a US$586 billion economic stimulus package aimed
at encouraging domestic consumption. These are encouraging signs,
and although it may take some time for these policies to
demonstrate measurable results, we believe our quick asset turnover
business model and strong cash position will allow us to take
advantage of the pent-up demand generated by China's rapid
urbanization and growing middle class. Looking to the remainder of
2008 and into 2009, we plan to modify our production schedule and
slow construction to enhance our capital efficiency and effectively
monitor our cash flow until markets and demand stabilize. Although
visibility remains difficult in the near-term, we remain confident
in the long-term prospects of the real estate sector in China." Mr.
Frank Ng, Xinyuan's chief financial officer added, "As part of our
ongoing strategy during this period of softer consumer demand, we
continue to focus on improving our position within the six cities
we currently operate. During the third quarter we launched the
first phase of our Kunshan International City Garden project which
has a total developable GFA of 509,851 square meters and we
completed construction of approximately 67,600 square meters of GFA
in our Zhengzhou Commercial Plaza project. Our strong balance sheet
and good cash position of approximately US$184 million as of
September 30, 2008 provide us with sufficient funding to finance
the development of existing projects to completion and allow us
room to gear up for business expansion once demand increases and
new market opportunities are presented." Financial Results for the
Third Quarter and Nine Months ended September 30, 2008 Revenues
Total revenues were US$83.0 million for the third quarter of 2008,
compared to US$87.7 million and US$120.6 million for the second
quarter of 2008 and third quarter of 2007, respectively,
representing decreases of 5.4% and 31.2% from the second quarter of
2008 and third quarter of 2007, respectively. Third quarter total
revenues included a favorable adjustment of approximately US$1.7
million, which was caused by the inclusion of certain excluded
costs in management's cost estimate for two projects. Total GFA
recognized for revenue was approximately 93.9 thousand square
meters for the third quarter of 2008, compared to 101.0 thousand
square meters and 191.1 thousand square meters for the second
quarter of 2008 and third quarter of 2007, respectively. The
average selling price per square meter recognized for revenue was
approximately Renminbi ("RMB") 6,260 for the third quarter of 2008,
compared to RMB6,300 and RMB5,050 for the second quarter of 2008
and third quarter of 2007, respectively. The quarter-over-quarter
decrease in revenue was primarily due to decreased revenue of
US$15.5 million from Suzhou Lake Splendid, Suzhou Colorful Garden
and Suzhou International City Garden, as a result of weaker market
conditions in the third quarter of 2008 compared to the second
quarter of 2008, and was partially offset by increased revenue of
US$10.8 million from Jinan International City Garden and Zhengzhou
Xinyuan Colorful Garden, which launched pre-sales in the second
quarter of 2008. The year-over-year decrease in revenue was
primarily attributable to decreased revenue of US$67.3 million from
Jinan Elegant Scenery and Suzhou Lake Splendid compared to the
third quarter of 2007. These two projects launched pre-sales in
April and May 2007, respectively, and enjoyed strong sales
performance in the third quarter of 2007. The decreased revenue was
partially offset by increased revenue of US$43.5 million from Jinan
International City Garden and Zhengzhou Xinyuan Colorful Garden,
which launched pre-sales in November 2007 and April 2008,
respectively. For the nine months ended September 30, 2008, total
revenues were US$295.8 million, an increase of 35.5% from US$218.3
million for the same period in 2007. Total GFA recognized for
revenue was approximately 356.1 thousand square meters for the nine
months ended September 30, 2008, compared to 363.5 thousand square
meters for the same period in 2007. The average selling price per
square meter recognized for revenue was approximately RMB6,100 for
the nine months ended September 30, 2008, compared to RMB4,800 for
the same period in 2007. The geographic breakdown of revenues from
real estate sales were as follows: Revenue (US$ '000) City 2007Q3
2008Q2 2008Q3 amount % amount % amount % Suzhou 54,686 46% 31,664
36% 16,213 20% Zhengzhou 26,750 22% 10,987 13% 21,763 27% Hefei
17,906 15% 11,885 14% 10,388 13% Jinan 20,360 17% 32,540 37% 30,156
36% Kunshan* -- 0% -- 0% 1,913 2% Chengdu* -- 0% -- 0% 1,418 2%
119,702 100% 87,076 100% 81,851 100% * Pre-sales results for phase
one of Kunshan International City Garden and phase one of Chengdu
Xinyuan Splendid One consisted of the sales period from September
20-30, 2008. Gross Profit Gross profit for the third quarter of
2008 was US$18.4 million, compared to US$20.7 million and US$31.7
million for the second quarter of 2008 and third quarter of 2007,
respectively. For the nine months ended September 30, 2008, gross
profit was US$75.7 million, an increase of 6.1% from US$71.3
million for the same period in 2007. The gross margin percentage
for the third quarter of 2008 was 22.2%, compared to 23.6% and
26.3% for the second quarter of 2008 and third quarter of 2007,
respectively. The quarter-over-quarter decrease in gross margin
percentage was mainly attributed to the third quarter 2008 sale of
projects of Suzhou International City Garden and Zhengzhou Xinyuan
Colorful Garden which generated lower gross margins due to higher
land acquisition costs and construction costs. The year-over-year
decrease in gross margin percentage was attributed to the third
quarter 2007 sale of Zhengzhou Central Garden West and Zhengzhou
Central Garden East which generated higher gross margins due to
lower land acquisition costs and construction costs. Similarly, due
to lower margins on newly launched projects of Suzhou International
City Garden and Zhengzhou Xinyuan Colorful Garden, for the nine
months ended September 30, 2008 the gross margin percentage was
25.6%, compared to 32.7% for the same period in 2007. Selling,
General and Administrative Expenses Selling, general and
administrative expenses were US$13.5 million for the third quarter
of 2008, compared to US$12.4 million and US$5.7 million for the
second quarter of 2008 and third quarter of 2007, respectively. As
a percentage of total revenue, the selling, general and
administrative expenses for the third quarter of 2008 were 16.3%,
compared to 14.2% and 4.8% for the second quarter of 2008 and third
quarter of 2007, respectively. The quarter-over-quarter increase in
total selling, general and administrative expenses was due to
increased selling and marketing activities to promote new projects.
The year-over-year increase in total selling, general and
administrative expenses was due to increased selling and marketing
activities to promote new projects, salaries and other expenses
associated with the addition of new employees, stock-based
compensation amortization, and professional fees associated with
maintenance as a listed company on the New York Stock Exchange and
compliance with the rules and regulations of the Securities and
Exchange Commission. Similarly, for the nine months ended September
30, 2008, selling, general and administrative expenses were US$36.8
million, compared to US$13.7 million for the same period in 2007.
As a percentage of total revenue, the selling, general and
administrative expenses for the nine months ended September 30,
2008 were 12.4%, compared to 6.3% for the same period in 2007.
Operating Margin The operating margin percentage for the third
quarter of 2008 was 5.9%, compared to 9.4% and 21.5% for the second
quarter of 2008 and third quarter of 2007, respectively. For the
nine months ended September 30, 2008, the operating margin
percentage was 13.1%, compared to 26.4% for the same period in
2007. The quarter-over-quarter and year-over-year decrease in
operating margin was due to reduced gross margins of property
developments for the third quarter of 2008 and increased selling
and marketing activities to promote new projects, salaries and
other expenses associated with the addition of new employees,
stock-based compensation amortization, and professional fees.
Excluding share-based compensation expenses (non-GAAP), operating
margin for the third quarter was 7.8%, compared to 12.3% and 21.6%
in the second quarter of 2008 and third quarter of 2007,
respectively. Share of Income in an Equity Investee and Exchange
Gains In the third quarter of 2008, the Company recognized income
in the amount of US$3.2 million from its equity investment in a 45%
owned project company, Zhengzhou Jiantou Xinyuan Real Estate Co.,
Ltd., compared to income in the amount of US$3.7 million and US$2.2
million in the second quarter of 2008 and third quarter of 2007,
respectively. Similarly, for the nine months ended September 30,
2008, the Company recognized income in the amount of US$10.5
million, compared to US$5.8 million for the same period in 2007. In
addition, the Company recognized unrealized foreign exchange gain
of US$0.7 million in the third quarter of 2008, which resulted from
the appreciation of Renminbi against U.S. dollar, as the Company
translated certain U.S. dollar-denominated long-term debts into
Renminbi for the third quarter of 2008 using the exchange rate at
September 30, 2008. A US$1.5 million and US$0.8 million foreign
exchange gain of the same nature was recognized in the second
quarter of 2008 and third quarter of 2007, respectively. For the
nine months ended September 30, 2008, the Company recognized
unrealized foreign exchange gain of US$4.4 million, compared to
US$1.5 million for the same period in 2007. Change in Fair Value of
Derivative Liabilities In the third quarter of 2008, the Company
recognized a gain of US$2.0 million arising from a decrease in fair
value of the warrants issued with floating rate notes, compared to
a gain of US$2.8 million arising from a decrease in fair value of
the warrants in the second quarter of 2008 and an expense of US$1.8
million arising from an increase in fair value of the warrants in
the third quarter of 2007. For the nine months ended September 30,
2008, the Company recognized a gain of US$16.1 million arising from
a decrease in fair value of the warrants, compared to a loss of
US$6.2 million for the same period in 2007. Income Taxes Income tax
expense for the third quarter of 2008 was US$3.5 million, compared
to US$4.3 million and US$9.7 million for the second quarter of 2008
and third quarter of 2007, respectively. The quarter-over-quarter
and year-over-year decrease was primarily attributable to decreased
gross profit recognized and increased selling, general and
administrative expenses charged in the third quarter of 2008, as
compared to the second quarter of 2008 and third quarter of 2007.
For the nine months ended September 30, 2008, the income tax
expense was US$18.8 million, compared to US$20.6 million for the
same period in 2007. Net Income Net income for the third quarter of
2008 was US$7.8 million, compared to US$13.2 million and US$16.0
million for the second quarter of 2008 and third quarter of 2007,
respectively. For the nine months ended September 30, 2008, net
income was US$53.9 million, compared to US$37.5 million for the
same period in 2007. The Company reported basic and diluted
earnings per share of US$0.05 and US$0.05, or earnings per ADS of
US$0.10 and US$0.10 for the third quarter of 2008, respectively.
For the nine months ended September 30, 2008, basic and diluted
earnings per share were US$0.36 and US$0.27, respectively, or
earnings per ADS of US$0.72 and US$0.54, respectively. Each ADS
represents two common shares. Appointment of Executive Officer The
Company recently appointed Mr. Meng Du as its chief operating
officer, replacing Ms. Yuyan Yang. Mr. Du brings with him more than
10 years of executive-level experience from several respected
property developers and has been involved in projects representing
a combined GFA of approximately 3 million square meters. Mr. Du
holds a masters degree in business administration from the Renmin
University of China. "We are delighted to welcome Mr. Meng Du to
our senior management team," said Mr. Zhang. "Mr. Du's outstanding
project execution track record and extensive experience within the
real estate industry provides us with a tremendous asset as we
complete our existing projects and look for new opportunities in
the market." Ms. Yang remains on the Company's board of directors
and is rotating back to the position she previously held with the
company as assistant to the chief executive officer. Outlook Given
the highly volatile and difficult credit and financial market
conditions experienced at the end of the third and into the fourth
quarter, along with the impact on the economy and real estate
industry from slowdowns in consumer spending, business investment
and the general labor market, the Company has determined that
near-term revenue visibility remains limited and providing forward
guidance is not prudent at this time. With a strong balance sheet,
including a cash balance of approximately US$184 million and a net
gearing ratio of 37% as of September 30, 2008, a disciplined land
acquisition strategy and an intense focus on capital management,
Xinyuan remains well positioned to capitalize on opportunities as
they arise. The breakdown of saleable GFA in the future is as
follows: Total Sold GFA as of Saleable GFA in GFA September 30,
2008 the future City (sq.m) (sq.m) (sq.m) Suzhou 481,789 245,205
236,584 Zhengzhou 534,826 98,322 436,504 Hefei 145,452 145,173 279
Jinan 348,424 256,859 91,565 Chengdu 450,374 2,503 447,871 Kunshan
509,851 5,060 504,791 2,470,716 753,122 1,717,594 Non-GAAP Measures
This release contains non-GAAP financial measures, as such term is
defined by the U. S. Securities and Exchange Commission. These
non-GAAP financial measures, which are identified in this release,
are used by management as measures of the Company's performance,
and 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 GAAP to Non-GAAP Results." These non-GAAP
measures include non-GAAP gross profit, non-GAAP operating
expenses, non-GAAP income from operations, and non-GAAP net income.
The Company's management uses certain 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 items, including stock-based compensation
charges, unrealized foreign exchange gain or loss, 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 can 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 can
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 settlement 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, unrealized foreign exchange gain, amortization expense of
intangible assets and charges resulting 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 November 25, 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: +1-617-614-3472 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
December 25, 2008: International: +1-617-801-6888 Passcode:
52247075 Additionally, a live and archived webcast of the
conference call will be available on the Investor Relations section
of Xinyuan's website 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, high quality
residential real estate projects aimed at providing middle-income
consumers with a comfortable and convenient community lifestyle.
Xinyuan focuses on China's Tier II cities, characterized as larger,
more developed urban areas with above average GDP and population
growth rates. Xinyuan has expanded its network to cover a total
population of over 34.5 million people in six strategically
selected Tier II cities, comprising Hefei, Jinan, Kunshan, Suzhou,
Zhengzhou and Chengdu. Xinyuan is the first real estate developer
from China to be listed on the New York Stock Exchange. For more
information, please visit http://www.xyre.com/ . Safe Harbor
Statement This press release 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," "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,
but not limited to, the risk that: our financing costs are subject
to changes in interest rates; our results of operations may
fluctuate from period to period; we require substantial capital
resources to fund our land use rights acquisition and property
developments, which may not be available; PRC economic, political
and social conditions as well as government policies can affect our
business; the market price of our ADSs may be volatile; you may be
subject to limitations on transfer of your ADSs, and other risks
outlined in our public filings with the Securities and Exchange
Commission, including our annual report on Form 20-F for the year
ended December 31, 2007. All information provided in this press
release is as of November 25, 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 This release contains
unaudited financial information which is subject to adjustment. In
addition, we are in the process of conducting further evaluations
of our internal control over financial reporting for compliance
with the requirements of Section 404 under the Sarbanes-Oxley Act.
We make no representation of management's assessment regarding
internal control over financial reporting or include an attestation
report of the Company's independent auditors due to a transition
period established by rules of the Securities and Exchange
Commission for newly public companies. 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 September 30, June 30, September 30, 2007 2008
2008 Revenue $120,595 $87,723 $82,951 Cost of revenue (88,931)
(66,997) (64,569) Gross profit 31,664 20,726 18,382 Selling and
distribution expenses (2,766) (4,153) (5,251) General and
administrative expenses (2,979) (8,285) (8,249) Operating income
25,919 8,288 4,882 Interest income 419 1,205 559 Interest expense
(1,757) 3 -- Share of income in an equity investee 2,220 3,716
3,186 Exchange gains 798 1,522 668 Change in fair value of warrant
liabilities (1,840) 2,776 2,026 Income from operations before
income taxes 25,759 17,510 11,321 Income taxes (9,710) (4,338)
(3,536) Net Income 16,049 13,172 7,785 Accretion of Series A
Convertible preference shares (722) -- -- Net income attributable
to ordinary shareholders $15,327 $13,172 7,785 Earnings (loss) per
share: Basic $0.14 $0.09 $0.05 Diluted(1) $0.13 $0.08 $0.05 Shares
used in computation: Basic 106,510 148,398 149,007 Diluted 117,256
160,467 160,200 Note (1) Diluted Earnings per Share for the three
months ended September 30, 2007, June 30, 2008 and September 30,
2008. The diluted earnings per share for the three months ended
September 30, 2007, June 30, 2008 and September 30, 2008 are
calculated as follows: (All US$ amounts and number of shares data
in thousands, except per share data) Three Months Ended September
30, June 30, September 30, 2007 2008 2008 Numerator: Net income
$16,049 $13,172 $7,785 Accretion of Series A convertible redeemable
preference shares (722) -- -- Net income attributable to ordinary
shareholders - diluted 15,327 13,172 7,785 Denominator: Number of
shares outstanding - basic 106,510 148,398 149,007 Convertible
subordinated notes 9,597 9,597 9,597 Incremental shares of 1,149 --
-- Burnham warrant Stock options -- 2,472 1,596 Number of shares
outstanding - diluted 117,256 160,467 160,200 Diluted earnings per
share $0.13 $0.08 $0.05 XINYUAN REAL ESTATE CO., LTD. AND ITS
SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (All US$ amounts and number of shares data in thousands,
except per share data) Nine months ended September 30, September
30, 2007 2008 Revenue $218,300 $295,811 Cost of revenue (146,990)
(220,148) Gross profit 71,310 75,663 Selling and distribution
expenses (5,957) (11,257) General and administrative expenses
(7,737) (25,550) Operating income 57,616 38,856 Interest income 736
2,805 Interest expense (1,439) -- Share of income in an equity
investee 5,819 10,487 Exchange gains 1,522 4,422 Change in fair
value of warrant liabilities (6,186) 16,098 Income from operations
before income taxes 58,068 72,668 Income taxes (20,584) (18,759)
Net Income 37,484 53,909 Accretion of Series A convertible
preference shares (2,167) -- Net income attributable to ordinary
shareholders $35,317 $53,909 Earnings (loss) per share: Basic 0.33
0.36 Diluted 0.31 0.27 Shares used in computation: Basic 106,510
148,601 Diluted 113,360 160,680 XINYUAN REAL ESTATE CO., LTD. AND
ITS SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS DATA (U.S.
Dollars in thousands) Audited Unaudited December 31, September 30,
2007 2008 ASSETS Current assets Cash and cash equivalents $309,315
$102,041 Restricted cash 48,267 82,016 Short term investment -- --
Accounts receivable 257 9,405 Other receivables 4,750 2,478 Other
deposits and prepayments 12,864 24,337 Advances to suppliers 3,052
10,327 Real estate property development completed 4,917 3,341 Real
estate property under development 379,142 725,480 Other current
assets 7,782 9,066 Total current assets 770,346 968,491 Real estate
property under development 9,738 -- Real estate properties held for
lease, net 6,811 13,147 Property and equipment, net 4,649 4,950
Other long-term investment 242 242 Interests in an equity investee
9,344 20,818 Other assets 6,065 6,368 TOTAL ASSETS $807,195
$1,014,016 Audited Unaudited December 31, September 30, 2007 2008
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts
payable $45,490 $88,137 Short-term bank loans 49,284 75,497
Customer deposits 25,261 22,604 Income tax payable 5,406 6,164
Deferred tax liabilities 7,532 14,154 Other payables and accrued
liabilities 18,296 21,552 Payroll and welfare payable 3,105 1,851
Total current liabilities 154,374 229,959 Long-term bank loans
137,858 190,088 Warrant liabilities 16,592 494 Deferred tax
liabilities 4,776 6,932 Unrecognized tax benefits 11,925 12,775
Other long-term debt 91,771 96,231 Total liabilities 417,296
536,479 Shareholders' equity Common shares 15 15 Additional paid-in
capital 490,361 497,854 Statutory reserves 12,145 12,145
Accumulated deficit(2) (123,704) (69,794) Accumulated other
comprehensive earnings 11,082 37,317 Total shareholders' equity
389,899 477,537 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $807,195
$1,014,016 Note (2) On November 13, 2007, the holders of the
Company's 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 for
accounting purpose as an extinguishment of the Series A convertible
preference shares. In connection with this, the Company 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 the Company's 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 by the same amount. XINYUAN REAL ESTATE CO., LTD. AND ITS
SUBSIDIARIES RECONCILIATION OF GAAP to NON-GAAP RESULTS (U.S.
Dollar in thousands, except per share data) Three months ended
September 30, 2008 Non-GAAP GAAP Adjustments Results Gross profit
18,382 18,382 Operating expenses 13,500 (a) (1,537) 11,878 (b) (85)
Operating income 4,882 (a) 1,537 6,504 (b) 85 Net income 7,785 (a)
1,621 6,797 (b) 85 (c) (2,026) (e) (668) Three months ended June
30, 2008 Non-GAAP GAAP Adjustments Results Gross profit 20,726
20,726 Operating expenses 12,438 (a) (2,441) 9,912 (b) (85)
Operating income 8,288 (a) 2,441 10,814 (b) 85 Net income 13,172
(a) 2,560 11,519 (b) 85 (c) (2,776) (e) (1,522) Three months ended
September 30, 2007 Non-GAAP GAAP Adjustments Results Gross profit
31,664 31,664 Operating expenses 5,745 (b) (85) 5,660 Operating
income 25,919 (b) 85 26,004 Net income 16,049 (b) 85 17,547 (c)
1,840 (d) 371 (e) (798) (a) To adjust stock-based compensation
charges (b) To adjust amortization of property management rights
(c) To adjust changes in fair value of derivative warrant
liabilities (d) To adjust amortization of convertible debt issuance
cost (e) To adjust unrealized exchange gain XINYUAN REAL ESTATE
CO., LTD. AND ITS SUBSIDIARIES RECONCILIATION OF GAAP to NON-GAAP
RESULTS (U.S. Dollar in thousands, except per share data) Nine
months ended September 30, 2008 Non-GAAP GAAP Adjustments Results
Gross profit 75,663 75,663 Operating expenses 36,807 (a) (7,153)
29,399 (b) (255) Operating income 38,856 (a) 7,153 46,264 (b) 255
Net income 53,909 (a) 7,525 41,169 (b) 255 (c) (16,098) (e) (4,422)
Nine months ended September 30, 2007 Non-GAAP GAAP Adjustments
Results Gross profit 71,310 71,310 Operating expenses 13,694 (b)
(255) 13,439 Operating income 57,616 (b) 255 57,871 Net income
37,484 (b) 255 43,145 (c) 6,186 (d) 742 (e) (1,522) (a) To adjust
stock-based compensation charges (b) To adjust amortization of
property management rights (c) To adjust changes in fair value of
derivative warrant liabilities (d) To adjust amortization of
convertible debt issuance cost (e) To adjust unrealized exchange
gain For more information, please contact: In China: Mr. Frank Ng
Chief Financial Officer Tel: +86-10-8588-9255 Email: Mr. Jacky
Zhang Deputy General Manager of Investor Relations Tel:
+86-10-8588-9262 Email: Mr. Derek Mitchell Ogilvy Financial,
Beijing Tel: +86-10-8520-6284 Email: In the United States: Mr.
Thomas Smith Ogilvy Financial, New York Tel: +1-212-880-5269 Email:
DATASOURCE: Xinyuan Real Estate Co., Ltd. CONTACT: In China: Mr.
Frank Ng, Chief Financial Officer, +86-10-8588- 9255, or ; Or Mr.
Jacky Zhang, Deputy General Manager of Investor Relations,
+86-10-8588-9262, or ; Or Mr. Derek Mitchell of Ogilvy Financial,
Beijing, +86-10-8520-6284, or ; Or In the United States: Mr. Thomas
Smith of Ogilvy Financial, New York, +1-212-880-5269, or Web site:
http://www.xyre.com/ http://ir.xyre.com/
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