China HGS Reports Full Year Financial Results for the Fiscal Year 2014 - Revenue and Net Profit Up by Approximately 83% and 56%, Respectively

News provided by

China HGS Real Estate Inc.

Dec 12, 2014, 07:00 ET

HANZHONG, China, Dec. 12, 2014 /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 2014 ended September 30, 2014 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 2014

  • Total revenues for the fiscal 2014 were approximately $124.3 million, an increase of approximately 83% from approximately $67.8 million in fiscal 2013.
  • For the Company's long-term real estate development projects, the related revenue recognized from percentage of completion method was approximately $99.6 million, which accounted for 80% of total revenue in fiscal 2014 and increased 262% from the revenue recognized from percentage completion method in fiscal 2013.
  • Net income for the fiscal 2014 totaled approximately $32.4 million, an increase of approximately 56% from the net income of approximately $20.8 million in fiscal 2013.
  • Basic and diluted net earnings per share ("EPS") attributable to shareholders for the fiscal 2014 were $0.72, compared to $0.46 for the fiscal 2013.

"I am pleased to report to shareholders that the Company achieved continuous growth in revenue and net profit in our fiscal 2014, while the whole property sector in China is still under slow recovery," said Mr. Xiaojun Zhu, Chairman and Chief Executive Officer of China HGS.

"Looking ahead in 2015, the Company will remain focused on completing the construction of our on-going apartment complex projects. Meantime, the Company will emphasis on Shanty area reforming projects, which is encouraged by the central government to improve the quality of urbanization and facilitate sustained and healthy economic development. The State Council indicated in its public circular that the government will optimize investment agendas to allocate more funds for shantytown reforms and encourage financial institutions to strengthen loan support for such projects. With such fundamentals undiminished, combined with the favorable development whereby the central government has begun to allow city governments to adapt certain restrict measurement to local conditions and more ready financing for first-time home buyers, we will step up our sales efforts, diversify product development, and expect our sales revenue to steadily increase in a long run," 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, 2014, 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,

2014

2013

ASSETS

Current assets:




Cash


$

1,125,545

$

5,878,101

Restricted cash

1,589,887


1,332,807

Advances to vendors

-


109,134

Cost and earnings in excess of billings



12,332,396


2,178,270

Real estate property development completed

6,050,263


11,607,164

Real estate property under development

140,313,127


1,580,670

Other current assets

1,409,367


368,377

Total current assets

162,820,585


23,054,523

Property, plant and equipment, net

889,497


977,739

Real estate property development completed, net of current portion

2,572,215


7,619,811

Security deposits for land use right



3,249,549


3,259,240

Real estate property under development, net of current portion

128,516,074


142,916,601

Accounts receivable-Local government

3,165,644


-

Total Assets

$

301,213,564

$

177,827,914

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:




Bank loan – current portion


$

12,998,197

$

4,888,860

Short-term loans - other

15,290,753


-

Accounts payable

57,317,877


22,527,686

Other payables

13,777,853


1,863,922

Construction deposits

367,133


357,447

Billings in excess of cost and earnings

2,960,452


5,109,758

Customer deposits

31,100,334


6,130,466

Shareholder loan

5,465,743


1,810,000

Accrued expenses

3,801,567


2,896,539

Taxes payable

12,579,071


6,612,707

Total current liabilities

155,658,980


52,197,385

Deferred tax liabilities

2,992,459


650,067

Customer deposits, net of current portion

3,829,870


13,410,081

Long-term bank loan, less current portion

6,499,098


11,407,340

Construction deposits, net of current portion

1,004,364


1,013,877

Total liabilities

169,984,771


78,678,750

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, 2014 and 2013

$

45,050

$

45,050

Additional paid-in capital

17,759,349


17,759,349

Statutory surplus

12,845,197


8,977,230

Retained earnings

91,834,708


63,257,918

Accumulated other comprehensive income

8,744,489


9,109,617

Total stockholders' equity

131,228,793


99,149,164

Total Liabilities and Stockholders' Equity

$

301,213,564

$

177,827,914

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,




2014

2013

2012

Real estate sales

$

124,295,928

$

67,809,073

$

18,856,978

Less:   Sales tax

7,547,052

4,244,644


1,180,437

Cost of real estate sales

77,938,256

37,284,088


9,590,009

Gross profit

38,810,620

26,280,341


8,086,532

Operating expenses









Selling and distribution expenses

923,879

915,217


517,025

General and administrative expenses

2,573,573

3,087,434


2,049,388

Total operating expenses

3,497,452

4,002,651


2,566,413

Operating income

35,313,168

22,277,690


5,520,119

Interest income (expense) - net

(57,452)

(98,305)


(73,608)

Other income - net

-

10,398


12,659

Income before income taxes

35,255,716

22,189,783


5,459,170

Provision for income taxes

2,810,959

1,398,218


283,077

Net income

32,444,757

20,791,565


5, 176,093

Other comprehensive income









Foreign currency translation adjustment

(365,128)

2,634,743


862,601

Comprehensive income

$

32,079,629

$

23,426,308

$

6,038,694

Basic and diluted income per common share









Basic

$

0.72

$

0.46

$

0.11

Diluted

$

0.72

$

0.46

$

0.11

Weighted average common shares outstanding









Basic

45,050,000

45,050,000


45,050,000

Diluted

45,124,233

45,124,474


45,050,000

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, 2014, 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 October 1, 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

Stock-based Compensation









-














-

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

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,


2014

2013

2012

Cash flows from operating activities




Net income

$

32,444,757

$

20,791,565

$

5,176,093

Adjustments to reconcile net income to net cash used in operating
activities:








Deferred tax provision

2,348,981

640,095


-

Depreciation

85,504

88,818


89,363

Stock based compensation

-

9,012


26,252











Changes in assets and liabilities:









Accounts receivable

(3,171,932)

-


-

Advances to vendors

109,025

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

(10,180,783)

(2,144,855)


-

Real estate property development completed

10,568,278

7,659,989


(7,110,766)

Real estate property under development

(125,009,367)

(76,766,598)


(126,162)

Other current assets

(1,044,153)

(188,464)


(85,398)

Accounts payables

34,926,405

18,299,774


(3,700,969)

Other payables

11,943,147

604,996


885,072

Billings in excess of cost and earnings

(2,138,352)

5,031,374


-

Customer deposits

15,478,439

(10,510,235)


7,089,879

Construction deposits

4,258

168,439


106,436

Accrued expenses

914,825

518,602


277,201

Taxes payable

5,997,914

2,114,271


264,205

Net cash used in operating activities

$

(26,723,054)

$

(11,162,107)

$

(7,654,086))











Cash flow from financing activities









Restricted cash

(261,561)

(216,286)


(184,604)

Proceeds from short-term loan-other

15,321,123

-


-

Proceeds from bank loan

8,140,008

16,046,213


-

Repayment of bank loan



(4,884,004)

-


-

Proceeds from shareholder loan

7,570,208

-


3,142,332

Repayment of shareholder loan

(3,907,204)

-


(3,142,332)

Net cash provided by (used in) financing activities

$

21,978,570

$

15,829,927

$

(184,604)











Effect of changes of foreign exchange rate on cash  

(8,072)

105,595


105,581

Net increase (decrease) in cash



(4,752,556)

4,773,415


(7,733,109)

Cash, beginning of year

5,878,101

1,104,686


8,837,795

Cash, end of year

$

1,125,545

$

5,878,101

$

1,104,686











Supplemental disclosures of cash flow information:









Interest paid

$

1,500,121

$

55,839

$

-

Income taxes paid

$

339,613

$

780,908

$

129,863

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

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/china-hgs-reports-full-year-financial-results-for-the-fiscal-year-2014---revenue-and-net-profit-up-by-approximately-83-and-56-respectively-300008553.html

SOURCE China HGS Real Estate Inc.

Related Links

http://www.chinahgs.com

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