China HGS Reports Full Year Financial Results for the Fiscal Year 2018

News provided by

China HGS Real Estate Inc.

Jan 10, 2019, 07:00 ET

HANZHONG, China, Jan. 10, 2019 /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 2018 ended September 30, 2018 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 2018

  • Total revenues for the fiscal 2018 were approximately $65.5 million, an increase of approximately 12% from approximately $58.7 million in fiscal 2017.
  • For the Company's long-term real estate development projects, the related revenue recognized from percentage of completion method was approximately $36.7 million, which accounted for 56% of total revenue in fiscal 2018 and increased 174% from the revenue recognized from percentage completion method in fiscal 2017.
  • Net income for the fiscal 2018 totaled approximately $5.2 million, a decrease of approximately 17% from the net income of approximately $6.3 million in fiscal 2017.
  • Basic and diluted net earnings per share ("EPS") attributable to shareholders for the fiscal 2018 were $0.12, compared to $0.14 for the fiscal 2017.

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, 2018, 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,

September 30,


2018

2017

ASSETS







Current assets:







Cash

$

3,267,020

$

1,970,199

Restricted cash

3,508,557


2,746,405

Cost and earnings in excess of billings

12,582,965


12,673,349

Real estate property development completed

58,999,178


79,233,948

Real estate property under development

60,128,554


87,126,402

Other current assets

1,408,826


1,529,698









Total current assets

139,895,100


185,280,001









        Property, plant and equipment, net

718,366


825,833

        Real estate property development completed, net of current portion

1,217,650


1,386,552

        Security deposits

8,296,782


8,564,517

        Real estate property under development, net of current portion

215,431,915


180,667,276

        Due from local government for real estate property development completed

2,836,865


2,928,410









Total Assets

$

368,396,678

$

379,652,589









LIABILITIES AND STOCKHOLDERS' EQUITY







Current liabilities:







Other loans

$

55,610,803

$

28,545,233

Accounts payables

20,507,128


24,047,980

Other payables

4,894,774


3,897,093

Construction deposits

1,879,570


1,966,115

Billings in excess of cost and earnings

5,844,189


4,247,477

Customer deposits

20,234,072


24,613,864

Shareholder loans

2,142,110


2,304,632

Accrued expenses

3,006,150


3,158,432

Taxes payables

15,492,902


17,259,202









Total current liabilities

129,611,698


110,040,028

 

        Deferred tax liabilities

2,068,257


170,950

        Tax payable – long term

4,960,779


5,120,862

        Customer deposits, net of current portion

1,914,677


2,314,641

        Other loans, less current portion

66,885,378


98,797,447

        Construction deposits, net of current portion

1,278,053


1,319,295









Total liabilities

206,718,842


217,763,223









Commitments and Contingencies







Stockholders' equity







Common stock, $0.001 par value, 100,000,000 shares authorized,
45,050,000 shares issued and outstanding September 30, 2018 and 2017

45,050


45,050

Additional paid-in capital

129,907,805


129,853,172

Statutory surplus

9,925,794


9,142,899

Retained earnings

30,803,052


26,343,030

Accumulated other comprehensive deficit

(9,003,865)


(3,494,785)









Total stockholders' equity

161,677,836


161,889,366









Total Liabilities and Stockholders' Equity

$

368,396,678

$

379,652,589

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, 2018 and 2017



2018

2017

Real estate sales

$

65,487,296

$

58,671,424

Less: Sales tax

1,248,230


1,215,960

Net real estate sales

64,239,066


57,455,464

Cost of real estate sales

48,642,392


45,590,345

Gross profit

15,596,674


11,865,119

Operating expenses







Selling and distribution expenses

843,813


568,081

General and administrative expenses

2,530,269


3,177,649

Total operating expenses

3,374,082


3,745,730

Operating income

12,222,592


8,119,389

Interest expense, net

(499,855)


(497,798)

Other income (expense), net

(1,407,109)


2,222

Income before income taxes

10,315,628


7,623,813

Provision for income taxes

5,072,711


1,294,699

Net income

5,242,917


6,329,114

Other comprehensive income (loss)







Foreign currency translation adjustment

(5,509,080)


551,711

Comprehensive income (loss)

$

(266,163)

$

6,880,825

Basic and diluted income per common share







Basic and diluted

$

0.12

$

0.14

Weighted average common shares outstanding







Basic and diluted

45,050,000


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, 2018 AND 2017



Common Stock

Additional

Statutory

Retained

Accumulated
Other

Comprehensive





Shares

Amount

Paid-in Capital

Surplus

Earnings

Deficit

Total

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

Stock-based Compensation

-


-


59,600


-


-


-


59,600

Appropriation of statutory reserve

-


-


-


647,268


(647,268)


-


-

Net income
for the year

-


-


-


-


6,329,114


-


6,329,114

Foreign currency translation adjustments

-


-


-


-


-


551,711


551,711

Balance at September 30, 2017

45,050,000


45,050


129,853,172


9,142,899


26,343,030


(3,494,785)


161,889,366

Stock-based Compensation

-


-


54,633


-


-


-


54,633

Appropriation of statutory reserve

-


-


-


782,895


(782,895)


-


-

Net income
for the year

-


-


-


-


5,242,917


-


5,242,917

Foreign currency translation adjustments

-


-


-


-


-


(5,509,080)


(5,509,080)

Balance at September 30, 2018

45,050,000

$

45,050

$

129,907,805

$

9,925,794

$

30,803,052

$

(9,003,865)

$

161,677,836

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, 2018 and 2017



2018

2017

Cash flows from operating activities







Net income

$

5,242,917

$

6,329,114

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

operating activities:







Deferred tax provision

1,999,052


167,007

Depreciation

85,788


67,074

Stock based compensation

54,633


59,600

Changes in assets and liabilities:







Restricted cash



(917,026)


(1,253,981)

Advances to vendors

38,990


-

Security deposits

-


(590,274)

Cost and earnings in excess of billings

(321,291)


(734,569)

Real estate property development completed

18,789,499


33,718,033

Real estate property under development

(16,955,946)


(58,501,531)

Other current assets

37,764


1,171,589

Accounts payables

(2,930,405)


(6,451,836)

Other payables

1,176,231


(1,286,545)

Billings in excess of cost and earnings

1,817,121


2,082,143

Customer deposits

(4,137,470)


(604,497)

Construction deposits

(26,353)


35,365

Accrued expenses

(74,789)


(50,932)

Taxes payables

(1,413,508)


1,343,421

Net cash provided by (used in) operating activities

2,465,207


(24,500,819)









Cash flow from investing activities







Purchases of fixed assets

-


(97,524)

Net cash used in investing activities

-


(97,524)









Cash flow from financing activities







Proceeds from other loans

5,150,795


26,657,111

Repayment of other loans

(6,060,305)


(6,039,415)

Proceeds from shareholder loan

1,505,324


8,444,575

Repayment of shareholder loan

(1,659,834)


(8,842,359)

Net cash (used in) provided by financing activities

(1,064,020)


20,219,912

Effect of changes of foreign exchange rate on cash

(104,366)


(52,607)

Net increase (decrease) in cash

1,296,821


(4,431,038)

Cash, beginning of year

1,970,199


6,401,237

Cash, end of year

$

3,267,020

$

1,970,199

Supplemental disclosures of cash flow information:







Interest paid

$

6,643,169

$

5,756,560

Income taxes paid

$

772,337

$

721,177

Reclassification of deferred tax liability to income tax payable

$

-

$

5,120,862

SOURCE China HGS Real Estate Inc.

Related Links

http://www.chinahgs.com

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