China HGS Reports Full Year Financial Results for the Fiscal Year 2016

News provided by

China HGS Real Estate Inc.

Dec 21, 2016, 05:00 ET

HANZHONG, China, Dec. 21, 2016 /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 2016 ended September 30, 2016 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 2016

  • Total revenues for the fiscal 2016 were approximately $40.6 million, a decrease of approximately 50% from approximately $81.1 million in fiscal 2015.
  • For the Company's long-term real estate development projects, the related revenue recognized from percentage of completion method was approximately $25.2 million, which accounted for 62% of total revenue in fiscal 2016 and decreased 67% from the revenue recognized from percentage completion method in fiscal 2015.
  • Net income for the fiscal 2016 totaled approximately $5.0 million, a decrease of approximately 84% from the net income of approximately $31.4 million in fiscal 2015.
  • Basic and diluted net earnings per share ("EPS") attributable to shareholders for the fiscal 2016 were $0.11, compared to $0.70 for the fiscal 2015.

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, 2016, 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,

2016

2015

ASSETS

Current assets:


Cash

$

6,401,237

$

1,333,919

Restricted cash

1,493,537

1,715,268

Cost and earnings in excess of billings


11,891,230

11,825,036

Real estate property development completed

113,185,929

75,391,512

Real estate property under development

-

55,154,153

Other current assets

2,722,036

228,223

Total current assets

135,693,969

145,648,111

Property, plant and equipment, net

792,650

780,038

Real estate property development completed, net of current portion

1,657,055

2,140,271

Security deposits


7,940,137

3,146,237

Real estate property under development, net of current portion

207,384,015

143,660,781

Due from local government for real estate property development completed

2,920,990

3,065,000

Total Assets

$

356,388,816

$

298,440,438






LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:




Bank loan

 

$

-

$

6,292,474

Other loans

6,125,753

5,674,239

Accounts payable

30,574,497

41,501,682

Other payables

5,200,807

12,676,362

Construction deposits

1,911,158

1,959,706

Billings in excess of cost and earnings

2,110,808

3,315,302

Customer deposits

16,790,208

17,387,969

Shareholder loans

2,709,523

1,810,000

Accrued expenses

3,205,099

4,855,891

Taxes payable

15,843,815

15,830,886

Total current liabilities

84,471,668

111,304,511

Deferred tax liabilities

5,107,887

4,711,161

Customer deposits, net of current portion

10,687,272

8,246,004

Other loans, less current portion

99,843,228

15,731,186

Construction deposits, net of current portion

1,329,820

972,432

Total liabilities

201,439,875

140,965,294

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

129,793,572

17,764,316

Statutory surplus

8,495,631

16,439,333

Retained earnings

20,661,184

119,668,198

Accumulated other comprehensive income (loss)

(4,046,496)

3,558,247

Total stockholders' equity

154,948,941

157,475,144

Total Liabilities and Stockholders' Equity

$

356,388,816

$

298,440,438

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

 

 

CHINA HGS REAL ESTATE INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)

FOR THE YEARS ENDED SEPTEMBER 30,


2016

2015

Real estate sales

$

40,576,717

$

81,115,494

Less:   Sales tax

2,102,616

5,194,616

Cost of real estate sales

28,670,778

39,258,557

Gross profit

9,803,323

36,662,321

Operating expenses





Selling and distribution expenses

1,118,282

917,344

General and administrative expenses

2,466,717

2,304,706

Total operating expenses

3,584,999

3,222,050

Operating income

6,218,324

33,440,271

Interest expense- net

(225,155)

(61,419)

Other income - net

459

-

Income before income taxes

5,993,628

33,378,852

Provision for income taxes

974,688

1,951,226

Net income

5,018,940

31,427,626

Other comprehensive income (loss)





Foreign currency translation adjustment

(7,604,743)

(5,186,242)

Comprehensive income (loss)

$

(2,585,803)

$

26,241,384

Basic and diluted income per common share





Basic

$

0.11

$

0.70

Diluted

$

0.11

$

0.70

Weighted average common shares outstanding





Basic

45,050,000

45,050,000

Diluted

45,050,000

45,052,252

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, 2016 AND 2015

Common Stock

Additional

Paid-in Capital

Statutory

Surplus

Retained

Earnings

Accumulated
Other

Comprehensive
Income (Loss)

Total

Shares

Amount

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

Stock-based Compensation





59,600










59,600

Appropriation of statutory reserve








516,314

(516,314)




-

Net income for the year











5,018,940




5,018,940

Recapitalization of VIE ("Guangsha") equity*





111,969,656

(8,460,016)

(103,509,640)




-

Foreign currency translation adjustments














(7,604,743)

(7,604,743)

Balance at September 30, 2016

45,050,000

$

45,050

$

129,793,572

$

8,495,631

$

20,661,184

$

(4,046,496)

$

154,948,941

* For the year ended September 30, 2016, Shaanxi Guangsha Investment and Development Group Co., Ltd ("Guangsha"), the VIE of the Company, had a recapitalization. The VIE's accumulated retained earnings and statutory reserve were reclassified to additional paid-in capital in the consolidated financial statements.

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

 

 

CHINA HGS REAL ESTATE INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED SEPTEMBER 30,


2016

2015

Cash flows from operating activities



Net income

$

5,018,940

$

31,427,626

Adjustments to reconcile net income to net cash provided by (used in) operating activities:





Deferred tax provision

631,099

1,870,180

Depreciation

74,723

83,701

Stock based compensation

59,600

4,967

Changes in assets and liabilities:





Advances to vendors

(60,480)

-

Security deposits

(5,045,816)

-

Cost and earnings in excess of billings

(634,893)

118,861

Real estate property development completed

(41,816,677)

(71,332,340)

Real estate property under development

(18,287,677)

63,376,691

Other current assets

(2,496,811)

1,171,630

Accounts payable

(9,166,316)

(14,428,567)

Other payables

(7,024,872)

(684,063)

Billings in excess of cost and earnings

(1,070,814)

462,916

Customer deposits

3,112,121

(8,439,960)

Construction deposits

456,014

1,654,075

Accrued expenses

(1,468,888)

1,201,727

Taxes payable

772,684

3,765,165

Net cash (used in) provided by operating activities

(76,948,063)

10,252,609







Cash flow from investing activities





Purchase of fixed assets

(125,023)

-

Net cash used in investing activities

(125,023)

-







Cash flow from financing activities





Restricted cash

144,112

(181,392)

Proceeds from other loans

93,658,620

27,670,998

Repayment of other loans

(6,286,930)

(20,865,164)

Repayment of bank loan



(6,123,136)

(12,975,849)

Proceeds from shareholder loan

3,236,078

11,642,580

Repayment of shareholder loan

(2,317,607)

(15,292,038)

Net cash provided by (used in) financing activities

82,311,136

(10,000,865)

Effect of changes of foreign exchange rate on cash



(170,732)

(43,370)

Net increase in cash



5,067,318

208,374

Cash, beginning of year

1,333,919

1,125,545

Cash, end of year

6,401,237

1,333,919

Supplemental disclosures of cash flow information:





Interest paid

$

5,102,735

$

1,840,535

Income taxes paid

$

424,970

$

144,742

Non-cash financing activities:







Recapitalization of VIE ("Guangsha")

$

111,969,656

-

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

SOURCE China HGS Real Estate Inc.

Related Links

http://www.chinahgs.com

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