China HGS Reports Full Year Financial Results for the Fiscal Year 2013 -- Revenue and Net Profit Up by Approximately 260% and 300%, Respectively

News provided by

China HGS Real Estate Inc.

Dec 13, 2013, 04:15 ET

HANZHONG, China, Dec. 13, 2013 /PRNewswire-FirstCall/ -- 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 2013 ended September 30, 2013 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 2013

  • Total revenues for the fiscal 2013 were approximately $67.8 million, an increase of approximately 260% from approximately $18.9 million in fiscal 2012.
  • The Company adopted Percentage of Completion method to recognize real estate sales from long term real estate development projects, total revenue recognized from percentage of completion method was approximately $27.5 million, which accounted for 40.6% of total revenue in fiscal 2013.
  • Net income for the fiscal 2013 totaled approximately $20.8 million, an increase of approximately 300% from the net income of approximately $5.2 million in fiscal 2012.
  • Basic and diluted net earnings per share ("EPS") attributable to shareholders for the fiscal 2013 were $0.46, compared to $0.11 for the fiscal 2012.

"I am very pleased that the Company delivered an outstanding performance driven by solid market demands despite restrictive measurements imposed by the central government on the real estate market in China," said Mr. Xiaojun Zhu, Chairman and Chief Executive Officer of China HGS.

"Looking ahead in fiscal 2014, we remain focused on completing the construction of our on-going apartment complex projects. As the construction of some of our large scale high rise apartment buildings are moving closer to the completion stage, we plan to step up our sales efforts and expect our sales revenue to steadily increase. Longer term, the Company will continue to focus on building large-scale and high quality communities in Tier 3 and Tier 4 cities and expand development models into new markets," 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, 2013, 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: [email protected]

CHINA HGS REAL ESTATE INC.

CONSOLIDATED BALANCE SHEETS

September 30,

2013

2012

ASSETS

Current assets:





Cash



$

5,878,101

$

1,104,686

Restricted cash


1,332,807


1,080,985

Advances to vendors


109,134


2,566,422

Loans to outside parties, net


-


20,957

Cost and earnings in excess of billings




2,178,270


-

Real estate property development completed


11,607,164


19,534,088

Real estate property under development


1,580,670


8,590,275

Other current assets


368,377


171,863

Total current assets


23,054,523


33,069,276

Property, plant and equipment, net


977,739


1,037,080

Real estate property development completed, net of current portion


7,619,811


6,691,813

Security deposits for land use right




3,259,240


22,894,698

Real estate property under development, net of current portion


142,916,601


56,021,787

Total Assets

$

177,827,914

$

119,714,654


LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Bank loan – current portion




$

4,888,860

$

-

Accounts payable



22,527,686


3,828,880

Other payables




1,863,922


1,213,394

Construction deposits



357,447


301,318

Billings in excess of cost and earnings



5,109,758


-

Customer deposits



6,130,466


11,597,422

Shareholder loan



1,810,000


1,810,000

Accrued expenses



2,896,539



2,305,086

Taxes payable




6,612,707




4,336,458

Total current liabilities



52,197,385



25,392,558

Deferred tax liabilities



650,067



-

Customer deposits, net of current portion



13,410,081



17,743,993

Long-term bank loan, less current portion



11,407,340



-

Construction deposits, net of current portion



1,013,877




864,259

Total liabilities



78,678,750




44,000,810

Commitments and Contingencies







Stockholders' equity







Common stock, $0.001 par value, 100,000,000 shares







authorized, 45,050,000 shares issued and outstanding as of







September 30, 2013 and 2012


$

45,050


$

45,050

Additional paid-in capital


17,759,349



17,750,337

Statutory surplus


8,977,230



6,549,354

Retained earnings


63,257,918



44,894,229

Accumulated other comprehensive income




9,109,617



6,474,874

Total stockholders' equity



99,149,164



75,713,844

Total Liabilities and Stockholders' Equity


$

177,827,914


$

119,714,654













CHINA HGS REAL ESTATE INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

FOR THE YEARS ENDED SEPTEMBER 30,











2013

2012

Real estate sales



$

67,809,073

$

18,856,978

Less:   Sales tax




4,244,644


1,180,437

Cost of real estate sales




37,284,088


9,590,009

Gross profit




26,280,341


8,086,532

Operating expenses










Selling and distribution expenses




915,217


517,025

General and administrative expenses




3,087,434


2,049,388

Total operating expenses




4,002,651


2,566,413

Operating income




22,277,690


5,520,119

Interest income (expense) - net




(98,305)


(73,608)

Other income - net




10,398


12,659

Income before income taxes




22,189,783


5,459,170

Provision for income taxes




1,398,218


283,077

Net income




20,791,565


5, 176,093

Other comprehensive income










Foreign currency translation adjustment




2,634,743


862,601

Comprehensive income



$

23,426,308

$

6,038,694

Basic and diluted income per common share










Basic



$

0.46

$

0.11

Diluted



$

0.46

$

0.11

Weighted average common shares outstanding










Basic




45,050,000


45,050,000

Diluted




45,124,474


45,050,000














 CHINA HGS REAL ESTATE INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE YEARS ENDED SEPTEMBER 30, 2013 AND 2012






Common Stock

Shares

Par value
$0.001
Amount

Additional

Paid-in

Capital

Statutory

Surplus

Retained

Earnings

Accumulated

Other

Comprehensive

Income

Total





















Balance at September 30,

2011

45,050,000

$

45,050

$

17,724,085

$

5,945,384

$

40,322,106

$

5,612,273

$

69,648,898

Stock-based Compensation









26,252














26,252

Appropriation of statutory reserve













603,970


(603,970)






-

Net income for the year

-














5,176,093






5,176,093

Foreign currency

translation adjustments





















862,601


862,601

Balance at September 30, 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



























 CHINA HGS REAL ESTATE INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED SEPTEMBER 30,








2013

2012

Cash flows from operating activities






Net income



$

20,791,565

$

5,176,093

Adjustments to reconcile net income to net cash used in operating

activities:









Depreciation




88,818


89,363

Stock based compensation




9,012


26,252












Changes in assets and liabilities:










Restricted cash




(216,286)


(184,604)

Advances to vendors




2,494,790


3,435,815

Loans to outside parties




21,249


2,581,379

Security deposits for land use rights






20,005,071


(16,562,486)

Cost and earnings in excess of billings




(2,144,855)


-

Real estate property development completed




7,659,989


(7,110, 766)

Real estate property under development




(76,766,598)


(126,162)

Other current assets




(188,464)


(85,398)

Accounts payables




18,299,774


(3,700,969)

Other payables




604,996


885,072

Customer deposits




(10,510,235)


7,089,879

Construction deposits




168,439


106,436

Billings in excess of cost and earnings




5,031,374


-

Accrued expenses




518,602


277,201

Taxes payable




2,114,271


264,205

Net cash used in operating activities



$

(12,018,488)

$

(7,838,690)












Cash flow from financing activities










Proceeds from bank loan




16,046,213


-

Proceeds from shareholder loan




-


3,142,332

Repayment of shareholder loan




-


(3,142,332)

Net cash provided by financing activities



$

16,046,213

$

-












Effect of changes of foreign exchange rate on cash






745,690


105,581

Net increase (decrease) in cash






4,773,415


(7,733,109)

Cash, beginning of year




1,104,686


8,837,795

Cash, end of year



$

5,878,101

$

1,104,686












Supplemental disclosures of cash flow information:










Interest paid



$

55,839

$

-

Income taxes paid



$

780,908

$

129,863



























SOURCE China HGS Real Estate Inc.