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

News provided by

China HGS Real Estate Inc.

Dec 18, 2015, 07:00 ET

HANZHONG, China, Dec. 18, 2015 /PRNewswire/ -- 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

  • Total revenues for the fiscal 2015 were approximately $81.1 million, a decrease of approximately 35% from approximately $124.3million in fiscal 2014.
  • For 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.
  • Net 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.
  • Basic 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: [email protected]

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

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














CHINA HGS REAL ESTATE INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

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


Common Stock

Additional

Paid-in Capital

Statutory

Surplus

Retained

Earnings

Accumulated Other

Comprehensive Income

Total

Shares

Amount

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






























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




























SOURCE China HGS Real Estate Inc.

Related Links

http://www.chinahgs.com

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