Jupai Reports Full Year 2018 Results

SHANGHAI,April 23,2019 -- Jupai Holdings Limited ("Jupai" or the "Company") (NYSE: JP),a leading third-party wealth management service provider,focusing on distributing wealth management products and providing quality product advisory services to high-net-worth individuals in China,today announced its unaudited financial results for the full year ended December 31,2018.

FULL YEAR 2018 FINANCIAL HIGHLIGHTS

Net revenues for the full year 2018 were RMB1,321.7 million (US$[1]192.2 million),a decrease of 22.5% from 2017.

(RMB '000,except percentages)

FY 2017

FY 2017 %

FY 2018

FY 2018 %

YoY Change %

One-time commissions

1,038,704

60.8%

737,482

55.7%

-29.0%

Recurring management fees

363,651

21.3%

435,523

33.0%

19.8%

Recurring service fees

105,001

6.2%

64,345

4.9%

-38.7%

Other service fees

198,806

11.7%

84,394

6.4%

-57.5%

Total net revenues

1,706,162

100.0%

1,321,744

100.0%

-22.5%

Loss from operations for the full year 2018 was RMB159.9 million (US$23.3 million),compared to income from operations of RMB523.6 million in 2017.

Non-GAAP[2] net income attributable to ordinary shareholders for the full year 2018 was RMB13.0 million (US$1.9 million),a decrease of 97.1% from 2017.

Net loss attributable to ordinary shareholders for the full year 2018 was RMB387.7 million (US$56.4 million),compared to net income attributable to ordinary shareholders of RMB409.5 million in 2017.

FULL YEAR 2018 OPERATIONAL UPDATES

Total number of active clients[3] for the full year 2018 was 8,638.

The aggregate value of wealth management products distributed by the Company for the full year 2018 was RMB30.3 billion (US$4.4 billion),a 44.3% decrease from 2017.

Wealth management products distributed by the Company - breakdown by producttype

Twelve months ended

December 31,2017

December 31,2018

Product type

(RMB in millions,except percentages)

Fixed income products

45,437

83%

8,560

28%

Private equity products

6,375

12%

19,038

63%

Secondary market equity fund products

449

1%

1,129

4%

Other products

2,055

4%

1,546

5%

All products

54,316

100%

30,273

100%

Jupai's coverage network as of December 31,2018 included 76 client centers covering 50 cities,as compared to 72 client centers covering 46 cities as of December 31,2017.

Total assets under management[4] as of December 31,2018 were RMB56.8 billion (US$8.3 billion),a 1.4% decrease from December 31,2017.

Assets under management – breakdown by producttype

As of

December 31,except percentages)

Fixed income products

35,558

62%

19,846

35%

Private equity products

18,868

33%

34,033

60%

Secondary market equity fund products

2,372

4%

1,658

3%

Other products

734

1%

1,215

2%

All products

57,532

100%

56,752

100%

"2018 was challenging for Jupai on several fronts," said Mr. Jianda Ni,Jupai's chairman of the board and chief executive officer. "During the year,investors became increasingly conservative as the Chinese government's focus on deleveraging at the expense of economic growth and the expanding US-China trade conflict contributed to an uncertain economic outlook. In addition,China's wealth management industry continued to experience a difficult transition period due to tightened regulations. Amid this unfavorable environment,the aggregate value of wealth management products distributed by Jupai decreased by 44.3% year-over-year to RMB30.3 billion in 2018,and total net revenue for 2018 declined by 22.5% year-over-year to RMB1.3 billion. We were,however,able to achieve an average one-time commission rate of 2.4% in 2018,compared to 1.9% in 2017,due to our enhanced bargaining power as real estate companies continued to face rising cost of capital. Based on our observation of the overall credit market since the beginning of 2019,we are confident in maintaining our average one-time commission rate at a healthy level in the next few quarters."

"Looking into 2019,we remain cautiously optimistic about China's overall economic outlook,as the government has introduced various stimulus policies to support private enterprises,especially SMEs,to enhance economic growth. The domestic equity market has also shown signs of recovery since the beginning of the year,which we believe will help restore investor confidence and gradually increase the appetite for wealth management products. During this time of industry transition,Jupai will focus on developing new product categories,including real estate equity products and overseas products to better meet investors' evolving needs,selecting high-quality project counterparties to control risk,and streamlining internal management to optimize costs. We are confident that we will be well-positioned to seize opportunities as the market recovers and we look forward to building Jupai into a leading wealth and asset management brand in China."

Ms. Min Liu,Jupai's chief financial officer,said,"Jupai's operating results in 2018 were under pressure due to the severe industry headwinds,and we saw declines in our revenue and bottom-line results for the full year. In the fourth quarter of 2018,based on our impairment assessment review,we recognized a goodwill impairment loss of US$39.0 million from acquisition of Scepter,as the volatile market environment continued to negatively impact the Company's operations and business outlook. As we have fully written down the book value of the goodwill related to the acquisition of Scepter with approximately RMB0.3 million of goodwill on our balance sheet,we do not expect to incur any additional substantial goodwill impairment losses going forward. Since the third quarter of 2018,Jupai has adopted various measures to enhance our operating efficiency,such as personnel optimization,IT system enhancement,business SOP streamlining,and more stringent cost controls. We expect these measures to take effect gradually and have a positive influence on our operating results in the quarters to come."

FULL YEAR 2018 FINANCIAL RESULTS

Net Revenues

Net revenuesfor the full year 2018 were RMB1,321.7 million (US$192.2 million),a 22.5% decrease from 2017,primarily due to decreases in both one-time commissions and other service fees.

Net revenues from one-time commissions for the full year 2018 were RMB737.5 million (US$107.3 million),a 29.0% decrease from 2017,primarily as a result of a decrease in the aggregate value of wealth management products distributed by the Company.

Net revenues from recurring management fees for the full year 2018 were RMB435.5 million (US$63.3 million),a 19.8% increase from 2017,primarily due to an increase in the moving average value of assets under management. RMB61.6 million (US$9.0 million) and RMB81.7 million carried interest were recognized as part of Jupai's recurring management fees for the full year 2018 and 2017,respectively.

Net revenues from recurring service fees for the full year 2018 were RMB64.3 million (US$9.4 million),a 38.7% decrease from 2017,primarily because the Company provided ongoing services to fewer product suppliers. The Company recognized RMB0.3 million (US$0.04 million) and RMB13.8 million variable performance fees for the full year 2018 and 2017,respectively.

Net revenues from other service fees for the full year 2018 were RMB84.4 million (US$12.3 million),a 57.5% decrease from 2017,primarily due to a decrease in sub-advisory fees collected from other companies.

Starting from January 1,2018,the Company adopted Accounting Standards Update 2014-09,Revenue from Contracts with Customers (ASC 606),on a modified-retrospective basis. The adoption has no material impact on the Company's financial positions,results of operations,or cash flows.

Operating Costs and Expenses

Operating costs and expensesfor the full year 2018 were RMB1,481.7 million (US$215.5 million),a 25.3% increase from 2017.

Cost of revenues for the full year 2018 was RMB684.6 million (US$99.6 million),a 7.2% decrease from 2017,primarily due to a reduction in performance-based compensation as a result of a decline in the aggregate value of wealth management products distributed.

Selling expenses for the full year 2018 were RMB303.2 million (US$44.1 million),a 7.4% increase from 2017,primarily due to the increase in marketing expenses.

General and administrative expenses for the full year 2018 were RMB274.8 million (US$40.0 million),a 34.7% increase from 2017,mainly due to the increase in payroll expenses and the provision for doubtful accounts of certain product providers.

Impairment loss of goodwill for the full year 2018 was RMB267.9 million (US$39.0 million),which was the impairment of goodwill from Scepter acquisition in 2015.

Other operating income (government subsidies) received by the Company for the full year 2018 was RMB48.7 million (US$7.1 million),an 18.5% increase from 2017. Government subsidies were recorded when received,with their availability and amount dependent upon government administrative policies.

Operating marginfor the full year 2018 was -12.1%,compared to 30.7% in 2017.

Income tax expenses for the full year 2018 were RMB129.9 million (US$18.9 million),a slight increase from 2017.

Loss from equity in affiliatesfor the full year 2018 was RMB113.5 million (US$16.5 million),as compared to income from equity in affiliates of RMB2.6 million in 2017. The loss was primarily attributable to RMB90.8 million (US$13.2 million) of impairment loss relating to the Company's investment in Shanghai Runju Financial Information Service Co.,Ltd. ("Runju"),a non-controlled investee of the Company. Due to new industry regulations implemented since March 2018,Runju's legacy business model had to be discontinued. By the end of 2018,an impairment provision for the full book value of investment in Runju had been provided.

Net Income

Non-GAAP Net Income

- Non-GAAP net income attributable to ordinary shareholders for the full year 2018 was RMB13.0 million (US$1.9 million),a 97.1% decrease from 2017.

- Non-GAAP net margin attributable to ordinary shareholders for the full year 2018 was 1.0%,as compared to 26.6% in 2017.

- Non-GAAP net income attributable to ordinary shareholders per diluted American depositary share ("ADS") for the full year 2018 was RMB0.37 (US$0.05),as compared to RMB 13.24 in 2017.

Net Income

- Net loss attributable to ordinary shareholders for the full year 2018 was RMB387.7 million (US$56.4 million),compared to net income attributable to ordinary shareholders of RMB409.5 million in 2017.

- Net margin attributable to ordinary shareholders for the full year 2018 was -29.3%,compared to 24.0% in 2017.

- Net loss attributable to ordinary shareholders per basic and diluted ADS for the full year 2018 were RMB11.60 (US$1.69) and RMB11.60 (US$1.69),respectively,as compared to net income attributable to ordinary shareholders per basic and diluted ADS of RMB12.57 and RMB11.95,in 2017.

Balance Sheet and Cash Flow

As of December 31,the Company had RMB1,302.6 million (US$189.5 million) in cash and cash equivalents and restricted cash,compared to RMB1,527.8 million as of December 31,2017.

Net cash used in operating activitiesfor the full year 2018 was RMB62.9 million (US$9.1 million).

Net cash used in investing activitiesfor the full year 2018 was RMB40.9 million (US$5.9 million).

Net cash used in financing activitiesfor the full year 2018 was RMB121.4 million (US$17.7 million).

[1]The U.S. dollars (US$) amounts disclosed in this press release,except for those transaction amounts that were actually settled in U.S. dollars,are presented solely for the convenience of the reader. The conversion of Renminbi (RMB) into U.S. dollars (US$) in this press release is based on the noon buying rate on December 31,as set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System,which was RMB 6.8755 to US$1.00. The percentages stated in this press release are calculated based on the Renminbi amounts.

[2]Jupai's non-GAAP financial measures are derived from adjusting the corresponding GAAP financial measures by excluding the effects of share-based compensation,amortization of intangible assets resulted from business acquisitions,impairment loss of investment in affiliates and impairment loss of goodwill.

[3]"Active clients" for a given period refers to clients who purchase wealth management products distributed by Jupai at least once during that given period.

[4]"Assets under management" or "AUM" of Jupai refers to the amount of capital contributions made by investors to the funds managed by the Company,for which the Company is entitled to receive management fees. The amount of AUM of Jupai is recorded and carried based on the historical cost of the contributed assets instead of fair market value of assets for almost all AUM of Jupai. For assets denominated in currencies other than Renminbi,the AUM are translated into Renminbi upon their contribution,without interim value adjustments solely due to changes in foreign exchange rates. As a result,Jupai's management fees for almost all its AUM are calculated based on the historical cost balance of the AUM.

CONFERENCE CALL

Jupai's management will host an earnings conference call on April 23,2019 at 8:00 a.m. U.S. Eastern Time (8:00 p.m. Beijing/Hong Kong time).

Dial-in details for the earnings conference call are as follows:

U.S./International:

+1-845-675-0437 or +1-866-519-4004

Hong Kong:

+852-3018-6771 or 800-906-601

Mainland China:

400-620-8038 or 800-819-0121

Singapore:

+65-6713-5090

Passcode:

5071448

Please dial in 10 minutes before the call is scheduled to begin and provide the passcode to join the call.

A replay of the conference call may be accessed by phone at the following numbers until May 1,2019:

U.S./International:

+1-855-452-5696

Hong Kong:

800-963-117

Mainland China:

400-632-2162

Singapore:

800-616-2305

Passcode:

5071448

Additionally,a live and archived webcast will be available at http://jupai.investorroom.com.

DISCUSSION OF NON-GAAP FINANCIAL MEASURES

In addition to disclosing financial results prepared in accordance with U.S. GAAP,the Company's earnings release contains non-GAAP financial measures that exclude the effects of all forms of share-based compensation,amortization of intangible assets related to acquisition,impairment loss of investment in affiliates and impairment loss of goodwill. The reconciliation of these non-GAAP financial measures to the nearest GAAP measures as set forth in the table captioned "Reconciliation of GAAP to Non-GAAP Results" below.

The non-GAAP financial measures disclosed by the Company should not be considered a substitute for financial measures prepared in accordance with U.S. GAAP. The financial results reported in accordance with U.S. GAAP and reconciliation of GAAP to non-GAAP results should be carefully evaluated. The non-GAAP financial measure used by the Company may be prepared differently from,and therefore may not be comparable to,similarly titled measures used by other companies.

When evaluating the Company's operating performance in the periods presented,management reviewed non-GAAP net income results reflecting adjustments to exclude the impacts of share-based compensation,impairment loss of investment in affiliates and impairment loss of goodwill,to supplement U.S. GAAP financial data. As such,the Company believes that the presentation of the non-GAAP net income attributable to ordinary shareholders,non-GAAP net income attributable to ordinary shares per diluted ADS and non-GAAP net margin attributable to ordinary shareholders provides important supplemental information to investors regarding financial and business trends relating to the Company's financial condition and results of operations in a manner consistent with that used by management. Pursuant to U.S. GAAP,the Company recognized significant amounts of expenses for the restricted shares and share options,impairment loss of investment in affiliates and impairment loss of goodwill in the periods presented. The Company utilized the non-GAAP financial results to make financial results comparable period to period and to better understand its historical business operations.

ABOUT JUPAI HOLDINGS LIMITED

Jupai Holdings Limited ("Jupai") (NYSE: JP) is a leading third-party wealth management service provider focusing on distributing wealth management products and providing quality product advisory services to high-net-worth individuals in China. Jupai's comprehensive and personalized client service and broad range of carefully selected third-party and self-developed products have made it a trusted brand among its clients. Jupai maintains extensive and targeted coverage of China's high-net-worth population.

For more information,please visit http://jupai.investorroom.com.

SAFE HARBOR STATEMENT

This announcement 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. Among other things,the business outlook and quotations from management in this announcement,as well as Jupai's strategic and operational plans,contain forward-looking statements. Jupai may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission,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 Jupai's beliefs and expectations,are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement,including but not limited to the following: the goals and strategies of the Company and the Company's ability to manage its growth and implement its business strategies; future business development,financial condition and results of operations of the Company; condition of the wealth management market in China and internationally; the demand for and market acceptance of the products the Company distributes; the Company's ability to maintain and further grow its active high-net-worth client base and maintain or increase the amount of investment by clients; developments in relevant government policies and regulations relating to the Company's industry and the Company's ability to comply with those policies and regulations; the Company's ability to attract and retain quality employees; the Company's ability to adapt to potential uncertainties in China's real estate industry and stay abreast of market trends and technological advances; the results of the Company's investments in research and development to enhance its product choices and service offerings; general economic and business conditions in China; and the Company's ability to protect its reputation and enhance its brand recognition. Further information regarding these and other risks is included in Jupai's filings with the U.S. Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of this press release,and Jupai does not undertake any obligation to update any such information,including forward-looking statements,as a result of new information,future events or otherwise,except as required under applicable law.

Contacts:

Jupai Holdings Limited

Harry He

Director of Investor Relations

Jupai Holdings Limited

Phone: +86 (21) 6026 9129

Email: ir@jpinvestment.cn

Philip Lisio

The Foote Group

Phone: +86 (10) 8429 9544

Email: Jupai-IR@thefootegroup.com

-FINANCIAL AND OPERATIONAL TABLES FOLLOW -

Jupai Holdings Limited

Unaudited Condensed Consolidated Balance Sheets

(In RMB,except for USD data)

As of

December31,

December31,

2017

2018

2018

RMB

RMB

USD

Assets

Current assets:

Cash and cash equivalents

1,527,777,270

1,298,565,042

188,868,452

Restricted cash

-

4,000,000

581,776

Short-term investments

23,203,612

4,723,612

687,021

Accounts receivable

53,512,590

39,633,035

5,764,386

Other receivables

22,989,264

20,493,145

2,980,604

Amounts due from related parties

268,760,059

199,331,694

28,991,592

Other current assets

12,276,204

15,320,791

2,228,317

Total current assets

1,908,518,999

1,582,067,319

230,102,148

Long-term investments

50,450,000

58,950,000

8,573,922

Investment in affiliates

181,922,556

67,262,431

9,782,915

Amounts due from related parties — non-current

-

48,626,353

7,072,410

Property and equipment,net

44,957,054

36,267,042

5,274,822

Intangible assets,net

74,350,855

58,124,608

8,453,874

Goodwill

261,621,691

297,031

43,201

Other non-current assets

32,459,581

27,914,021

4,059,926

Deferred tax assets

71,807,042

100,985,228

14,687,692

Total Assets

2,087,778

1,494,033

288,050,910

Liabilities and Equity

Current liabilities:

Accrued payroll and welfare expenses

212,718,285

116,653,658

16,966,571

Income tax payable

179,224,777

227,537,993

33,094,029

Other tax payable

57,325,185

43,009,523

6,255,476

Amounts due to related parties-current

27,294,813

31,105,111

4,524,051

Deferred revenue from related parties

171,546,620

111,720,785

16,249,114

Deferred revenue

17,921,745

18,949,097

2,756,032

Other current liabilities

31,941,785

39,929,945

5,570

Total current liabilities

697,973,210

588,906,112

85,652,843

Deferred revenue — non-current from related parties

62,917,485

22,096,306

3,213,774

Deferred revenue — non-current

6,611,915

2,144,593

311,918

Deferred tax liabilities

4,717,167

198,187

28,825

Total Liabilities

772,219,777

613,345,198

89,207,360

Equity

1,853,001

1,367,148,835

198,843,550

Total Liabilities and Total Shareholders' Equity

2,910

Jupai Holdings Limited

Unaudited Condensed Consolidated Income Statements

(In RMB,except for USD data and ADS data)

Twelve months ended

December31,

2017

2018

2018

RMB

RMB

USD

Revenues

Third party revenues

479,547

335,246,612

48,759,598

Related party revenues

1,232,785,709

990,820,793

144,108,907

Total revenues

1,712,703,256

1,326,405

192,505

Taxes and surcharges

(6,541,634)

(4,323,742)

(628,862)

Net revenues

1,161,622

1,743,663

192,239,643

Operating costs and expenses:

Cost of revenues

(737,507,904)

(684,558,659)

(99,564,927)

Selling expenses

(282,171,751)

(303,170,575)

(44,331)

General and administrative expenses

(204,052,576)

(274,664)

(39,965,481)

Impairment loss of goodwill

-

(267,575)

(38,995)

Other operating income — government subsidies

41,138,443

48,742,897

7,089,360

Total operating cost and expenses

(1,182,593,788)

(1,481,686,576)

(215,502,374)

Income (loss) from operations

523,567,834

(159,942,913)

(23,731)

Gain from deconsolidation of subsidiaries

-

561,528

81,671

Interest income

11,385,895

3,990,096

580,335

Investment income (loss)

10,012,216

(292,384)

(42,525)

Other (loss) income

(2,040,641)

4,227,896

614,921

Total other income

19,357,470

8,487,136

1,234,402

Income (loss) before taxes and income from equity in affiliates

542,925,304

(151,455,777)

(22,028,329)

Income tax expense

(122,998,509)

(129,855,367)

(18,886,680)

Income (loss) from equity in affiliates

2,579,447

(113,486,155)

(16,505,877)

Net income (loss)

422,506,242

(394,797,299)

(57,420,886)

Net income(loss) attributable to non-controlling interests

(13,014,063)

7,053,281

1,025,857

Net income (loss) attributable to ordinary shareholders

409,492,179

(387,744,018)

(56,395,029)

Net income (loss) per ADS:

Basic

12.57

(11.60)

(1.69)

Diluted

11.95

(11.60)

(1.69)

Weighted average number of ADSs used in computation:

Basic

32,577,902

33,413,485

33,485

Diluted

34,278,651

33,485

Jupai Holdings Limited

Unaudited Condensed Comprehensive Income Statements

(In RMB,except for USD data)

Twelve months ended

December31,

2017

2018

2018

RMB

RMB

USD

Net income (loss)

422,886)

Other comprehensive income (loss),net of tax:

Change in cumulative foreign currency translation adjustment

(36,377,776)

12,501,586

1,818,281

Other comprehensive income(loss)

(36,2801

Comprehensive income (loss)

386,128,466

(382,295,713)

(55,602,605)

Less: Comprehensive income(loss) attributable to non-controlling interests

13,037,403

(6,934,658)

(1,008,604)

Comprehensive income (loss) attributable to ordinary shareholders

373,091,063

(375,361,055)

(54,594,001)

Jupai Holdings Limited

Reconciliation of GAAP to Non-GAAP Results

(In RMB,except for ADS data and percentages)

December31,

2017

2018

RMB

RMB

Net margin attributable to ordinary shareholders

24.0%

-29.3%

Adjusted net margin attributable to ordinary shareholders(non-GAAP)

26.6%

1.0%

Net income (loss) attributable to ordinary shareholders

409,018)

Adjustment for share-based compensation (net of tax effect of nil for both years ended Dec 3

1,2017 and 2018)

30,939

18,942

Adjustment for amortization of intangible assets related to acquisition (net of tax effect of

RMB4,668,059 and RMB4,642,486 for the years ended Dec 31,2017 and 2018,respectively)

14,004,176

13,927,456

Adjustment for impairment loss of investment in affiliates (net of tax effect of nil and

RMB3,322,805 for the years ended Dec 31,respectively)

-

100,194

Adjustment for impairment loss of goodwill (net of tax effect of nil for both years ended Dec

31,2017 and 2018)

-

267,575

Adjusted net income attributable to ordinary shareholders (non-GAAP)

453,952,294

12,149

Net income (loss)attributable to ordinary shareholders per ADS,diluted

11.95

(11.60)

Adjusted net income attributable to ordinary shareholders per ADS,diluted (non-GAAP)

13.24

0.37

Weighted average number of ADSs used in computation:

Diluted

34,651

35,035,842

View original content:/news-releases/jupai-reports-full-year-2018-results-300836235.html