EX-99.1 2 v426850_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

China HGS Reports Full Year Financial Results for the Fiscal Year 2015


HANZHONG, CHINA – December 18, 2015 – China HGS Real Estate Inc. (NASDAQ: HGSH) (“China HGS” or the “Company”), a leading regional real estate developer headquartered in Hanzhong City, Shaanxi Province, China, today filed its Annual Report on Form 10-K for the fiscal year 2015 ended September 30, 2015 with the U.S. Securities and Exchange Commission. An electronic copy of the Annual Report on Form 10-K can be accessed on the SEC's website at www.sec.gov.

 

Highlights for the Fiscal 2015

 

lTotal revenues for the fiscal 2015 were approximately $81.1 million, a decrease of approximately 35% from approximately $124.3million in fiscal 2014.

 

lFor the Company’s long-term real estate development projects, the related revenue recognized from percentage of completion method was approximately $76.8 million, which accounted for 95% of total revenue in fiscal 2015 and decreased 23% from the revenue recognized from percentage completion method in fiscal 2014.

 

lNet income for the fiscal 2015 totaled approximately $31.4 million, a decrease of approximately 3% from the net income of approximately $32.4 million in fiscal 2014.

 

lBasic and diluted net earnings per share (“EPS”) attributable to shareholders for the fiscal 2015 were $0.70, compared to $0.72 for the fiscal 2014.

 

“During the year, despite the overall slowing market and weakening economy in China, the Company has strived to manage its development and sales strategy and also to keep the costs down. I am pleased to see that our efforts have paid off. We were able to achieve a relatively high gross profit margin and maintain a relatively stable net income in the period.” said Mr. Xiaojun Zhu, Chairman and Chief Executive Officer of China HGS.

 

“Looking forward to fiscal 2016, we expect some favorable factors to impact our future performance positively. First, the reform of residency registration policy newly announced by the central government would support continued urbanization. Secondly, a string of policies and measures successively introduced since last year to adjust and stimulate the real estate market, such as looser credit policy and more relaxed housing purchase restrictions, is beginning to take effect and is expected to drive the demand of first-time homebuyers as well as home upgraders. We remain cautiously optimistic about the prospect of the real estate property sector. As for regional strategy, the Company is confident to maintain its leading position and prominent market presence in the local region in the next few years. ” concluded Mr. Xiaojun Zhu.

 

Safe Harbor Statement

This press release contains forward-looking statements, which are subject to change. The forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All "forward-looking statements" relating to the business of China HGS Real Estate Inc., which can be identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties which could cause actual results to differ. These factors include but are not limited to: the uncertain market for the Company's business, macroeconomic, technological, regulatory, or other factors affecting the profitability of real estate business; and other risks related to the Company's business and risks related to operating in China. Please refer to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2015, for specific details on risk factors. Given these risks and uncertainties, you are cautioned not to place undue reliance on forward-looking statements. The Company's actual results could differ materially from those contained in the forward-looking statements. The Company undertakes no obligation to revise or update its forward-looking statements in order to reflect events or circumstances that may arise after the date of this release.

 

 

 

 

About China HGS Real Estate, Inc.

China HGS Real Estate, Inc. (NASDAQ: HGSH), founded in 1995 and headquartered in Hanzhong City, Shaanxi Province, is a leading real estate developer in the region and holds the national grade I real estate qualification. The Company focuses on the development of high-rise, sub-high-rise residential buildings and multi-building apartment complexes in China's Tier 3 and Tier 4 cities and counties with rapidly growing populations driven by increased urbanization. The Company provides affordable housing with popular and modern designs to meet the needs of multiple buyer groups. The Company’s development activity spans a range of services, including land acquisition, project planning, design management, construction management, sales and marketing, and property management. For further information about China HGS, please go to www.chinahgs.com. 

 

Company contact:

 

Randy Xiong, President of Capital Market
China Phone: (86) 091-62622612

Email: randy.xiong@chinahgs.com

 

 

 

 
CHINA HGS REAL ESTATE INC.

CONSOLIDATED BALANCE SHEETS    

 

   September 30, 
   2015   2014 
ASSETS          
Current assets:          
Cash  $1,333,919   $1,125,545 
Restricted cash   1,715,268    1,589,887 
Cost and earnings in excess of billings   11,825,036    12,332,396 
Real estate property development completed   75,391,512    6,050,263 
Real estate property under development   55,154,153    140,313,127 
Other current assets   228,223    1,409,367 
Total current assets   145,648,111    162,820,585 
Property, plant and equipment, net   780,038    889,497 
Real estate property development completed, net of current portion   2,140,271    2,572,215 
Security deposits for land use rights   3,146,237    3,249,549 
Real estate property under development, net of current portion   143,660,781    128,516,074 
Due from local government for real estate property development completed   3,065,000    3,165,644 
Total Assets  $298,440,438   $301,213,564 
LIABILITIES AND STOCKHOLDERS' EQUITY          
Current liabilities:          
Bank loan  $6,292,474   $12,998,197 
Other loans   5,674,239    15,290,753 
Accounts payable   41,501,682    57,317,877 
Other payables   12,676,362    13,777,853 
Construction deposits   1,959,706    367,133 
Billings in excess of cost and earnings   3,315,302    2,960,452 
Customer deposits   17,387,969    31,100,334 
Shareholder loan   1,810,000    5,465,743 
Accrued expenses   4,855,891    3,801,567 
Taxes payable   15,830,886    12,579,071 
Total current liabilities   111,304,511    155,658,980 
Deferred tax liabilities   4,711,161    2,992,459 
Customer deposits, net of current portion   8,246,004    3,829,870 
Other loans, less current portion   15,731,186    6,499,098 
Construction deposits, net of current portion   972,432    1,004,364 
Total liabilities   140,965,294    169,984,771 
Commitments and Contingencies          
Stockholders' equity          
Common stock, $0.001 par value, 100,000,000 shares          
authorized, 45,050,000 shares issued and outstanding  $45,050   $45,050 
Additional paid-in capital   17,764,316    17,759,349 
Statutory surplus   16,439,333    12,845,197 
Retained earnings   119,668,198    91,834,708 
Accumulated other comprehensive income   3,558,247    8,744,489 
Total stockholders' equity   157,475,144    131,228,793 
Total Liabilities and Stockholders' Equity  $298,440,438   $301,213,564 

 

The accompanying notes are an integral part of these consolidated financial statements

 

 

 

 

CHINA HGS REAL ESTATE INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

FOR THE YEARS ENDED SEPTEMBER 30, 

 

   2015   2014   2013 
Real estate sales  $81,115,494   $124,295,928   $67,809,073 
Less:   Sales tax   5,194,616    7,547,052    4,244,644 
Cost of real estate sales   39,258,557    77,938,256    37,284,088 
Gross profit   36,662,321    38,810,620    26,280,341 
Operating expenses               
Selling and distribution expenses   917,344    923,879    915,217 
General and administrative expenses   2,304,706    2,573,573    3,087,434 
Total operating expenses   3,222,050    3,497,452    4,002,651 
Operating income   33,440,271    35,313,168    22,277,690 
Interest expense- net   (61,419)   (57,452)   (98,305)
Other income - net   -    -    10,398 
Income before income taxes   33,378,852    35,255,716    22,189,783 
Provision for income taxes   1,951,226    2,810,959    1,398,218 
Net income   31,427,626    32,444,757    20,791,565 
Other comprehensive income               
Foreign currency translation adjustment   (5,186,242)   (365,128)   2,634,743 
Comprehensive income  $26,241,384   $32,079,629   $23,426,308 
Basic and diluted income per common share               
Basic  $0.70   $0.72   $0.46 
Diluted  $0.70   $0.72   $0.46 
Weighted average common shares outstanding               
Basic   45,050,000    45,050,000    45,050,000 
Diluted   45,052,252    45,124,233    45,124,474 
                

 

The accompanying notes are an integral part of these consolidated financial statements

 

 

 

 

CHINA HGS REAL ESTATE INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE YEARS ENDED SEPTEMBER 30, 2015, 2014 AND 2013  

 

      Common Stock                                          
      Shares        Amount       

Additional

Paid-in Capital

      

Statutory

Surplus 

      

Retained

Earnings 

      

Accumulated Other

Comprehensive Income 

       Total   
Balance at October 1, 2012     45,050,000       45,050       17,750,337       6,549,354       44,894,229       6,474,874       75,713,844  
Stock-based Compensation                     9,012                               9,012  
Appropriation of statutory reserve                             2,427,876       (2,427,876 )             -  
Net income for the year     -                               20,791,565               20,791,565  
Foreign currency translation adjustments                                             2,634,743       2,634,743  
Balance at September 30, 2013     45,050,000       45,050       17,759,349       8,977,230       63,257,918       9,109,617       99,149,164  
Appropriation of statutory reserve                             3,867,967       (3,867,967 )             -  
Net income for the year     -                               32,444,757               32,444,757  
Foreign currency translation adjustments                                             (365,128 )     (365,128 )
Balance at September 30, 2014     45,050,000     $ 45,050     $ 17,759,349     $ 12,845,197     $ 91,834,708     $ 8,744,489     $ 131,228,793  
Stock-based Compensation                     4,967                               4,967  
Appropriation of statutory reserve                             3,594,136       (3,594,136 )             -  
Net income for the year                                     31,427,626               31,427,626  
Foreign currency translation adjustments                                             (5,186,242 )     (5,186,242 )
Balance at September 30, 2015     45,050,000     $ 45,050     $ 17,764,316     $ 16,439,333     $ 119,668,198     $ 3,558,247     $ 157,475,144  

 

The accompanying notes are an integral part of these consolidated financial statements

 

 

 

 

CHINA HGS REAL ESTATE INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED SEPTEMBER 30,

 

   2015   2014   2013 
             
Cash flows from operating activities               
Net income  $31,427,626   $32,444,757   $20,791,565 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:               
Deferred tax provision   1,870,180    2,348,981    640,095 
Depreciation   83,701    85,504    88,818 
Stock based compensation   4,967    -    9,012 
                
Changes in assets and liabilities:               
Due from local government for real estate property development completed        (3,171,932)   - 
Advances to vendors        109,025    2,494,790 
Loans to outside parties        -    21,249 
Security deposits for land use rights        -    20,005,071 
Cost and earnings in excess of billings   118,861    (10,180,783)   (2,144,855)
Real estate property development completed   (71,332,340)   10,568,278    7,659,989 
Real estate property under development   63,376,691    (125,009,367)   (76,766,598)
Other current assets   1,171,630    (1,044,153)   (188,464)
Accounts payables   (14,428,567)   34,926,405    18,299,774 
Other payables   (684,063)   11,943,147    604,996 
Billings in excess of cost and earnings   462,916    (2,138,352)   5,031,374 
Customer deposits   (8,439,960)   15,478,439    (10,510,235)
Construction deposits   1,654,075    4,258    168,439 
Accrued expenses   1,201,727    914,825    518,602 
Taxes payable   3,765,165    5,997,914    2,114,271 
Net cash provided by (used in) operating activities   10,252,609    (26,723,054)   (11,162,107)
                
Cash flow from financing activities               
Restricted cash   (181,392)   (261,561)   (216,286)
Proceeds from other loans   27,670,998    15,321,123    - 
Repayment of other loans   (20,865,164)   -      
Proceeds from bank loan   -    8,140,008    16,046,213 
Repayment of bank loan   (12,975,849)   (4,884,004)   - 
Proceeds from shareholder loan   11,642,580    7,570,208    - 
Repayment of shareholder loan   (15,292,038)   (3,907,204)   - 
Net cash (used in) provided by financing activities   (10,000,865)   21,978,570    15,829,927 
                
Effect of changes of foreign exchange rate on cash   (43,370)   (8,072)   105,595 
Net increase (decrease) in cash   208,374    (4,752,556)   4,773,415 
Cash, beginning of year   1,125,545    5,878,101    1,104,686 
Cash, end of year  $1,333,919   $1,125,545   $5,878,101 
                
Supplemental disclosures of cash flow information:               
Interest paid  $1,840,535   $1,500,121   $55,839 
Income taxes paid  $144,742   $339,613   $780,908 

 

The accompanying notes are an integral part of these consolidated financial statements