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China HGS Reports First Quarter of Fiscal Year 2015 Results

2015-02-06 20:00 1904

HANZHONG, China, February 6, 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 reported its financial results for the first quarter of fiscal 2015 ended December 31, 2014 with the U.S. Securities and Exchange Commission. An electronic copy of the quarterly report on Form 10-Q can be accessed on the SEC's website at www.sec.gov.

Highlights for the Quarter

  • Total revenues for the first quarter of fiscal 2015 were approximately $10.6 million, a decrease of 25.3% from approximately $14.1 million in the same quarter of fiscal 2014. Total revenues recognized from percentage of completion method were approximately $9.8 million, which accounted for 92.9% of total revenues in the first quarter of fiscal 2015.
  • Net income for the first quarter of fiscal 2015 totaled approximately $1.6 million, a decrease of approximately $1.4 million from the net income of approximately $3.1 million in the same period of last year. The decreased profit margin in this quarter compared to the same quarter of last year was primarily due to a slow down of contracted sales achieved in the current quarter.
  • Basic and diluted net earnings per share ("EPS") attributable to shareholders for the first quarter of fiscal 2015 were $0.04, compared to $0.07 for the same quarter last year.

"We had a slow down in sales during the quarter," said Mr. Xiaojun Zhu, Chairman and Chief Executive Officer of China HGS. "Generally the first quarter is a slow season for the real estate developers. Since the construction of our real estate property under development is close to completion, we expect a recovery of sales when more residence move into our properties. In addition, we will consider increasing our marketing and promotional activities to attract more customers. We are positive about the outlook for the local real estate market in a long term," 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, as well as the Company's Quarterly Reports on Form 10-Q that have been filed since the date of such annual report, 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: randy.xiong@chinahgs.com

CHINA HGS REAL ESTATE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)



December 31


September 30



2014


2014

ASSETS

Current assets:





Cash


$

1,430,506



$

1,125,545

Restricted cash



1,605,282



1,589,887

Advances to vendors



269,681



-

Cost and earnings in excess of billings



12,114,016



12,332,396

Real estate property development completed



5,731,826



6,050,263

Real estate property under development



136,395,822



140,313,127

Other current assets



1,025,337



1,409,367

Total current assets



158,572,470



162,820,585

Property, plant and equipment, net



869,765



889,497

Real estate property development completed, net of current portion



2,467,850



2,572,215

Security deposits for land use right



3,254,149



3,249,549

Real estate property under development, net of current portion



131,880,441



128,516,074

Due from local government for real estate property development completed



2,356,588



3,165,644

Total Assets


$

299,401,263



$

301,213,564


LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:





Bank loan - current portion


$

13,016,596


$

12,998,197

Short-term loans - other



20,193,622



15,290,753

Accounts payable



47,317,247



57,317,877

Other payables



13,929,531



13,777,853

Construction deposits



367,652



367,133

Billings in excess of cost and earnings



4,135,323



2,960,452

Customer deposits



28,478,857



31,100,334

Shareholder loan



7,537,302



5,465,743

Accrued expenses



4,132,310



3,801,567

Taxes payable



11,898,229



12,579,071

Total current liabilities



151,006,669



155,658,980

Long-term bank loan, less current portion



6,508,298



6,499,098

Deferred tax liabilities



3,220,239



2,992,459

Customer deposits, net of current portion



4,618,728



3,829,870

Construction deposits, net of current portion



1,005,785



1,004,364

Total liabilities



166,359,719



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







December 31, 2014 and September 30, 2014



45,050



45,050

Additional paid-in capital



17,759,349



17,759,349

Statutory surplus



12,845,197



12,845,197

Retained earnings



93,460,698



91,834,708

Accumulated other comprehensive income



8,931,250



8,744,489

Total stockholders' equity



133,041,544



131,228,793

Total Liabilities and Stockholders' Equity


$

299,401,263


$

301,213,564


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

CHINA HGS REAL ESTATE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Unaudited)





Three months ended December 31,



2014



2013

Real estate sales


$

10,565,687



$

14,140,563

Less: Sales tax



(670,550)




(946,688)

Cost of real estate sales



(7,025,806)




(9,145,841)

Gross profit



2,869,331




4,048,034

Operating expenses








Selling and distribution expenses



375,166




114,350

General and administrative expenses



616,178




540,229

Total operating expenses



991,344




654,579

Operating income



1,877,987




3,393,455

Interest income



1,164




4,559

Interest expense



(18,100)




(18,100)

Income before income taxes



1,861,051




3,379,914

Provision for income taxes



235,061




322,797

Net income



1,625,990




3,057,117

Other comprehensive income








Foreign currency translation adjustment



186,761




407,365

Comprehensive income


$

1,812,751



$

3,464,482

Basic and diluted income per common share








Basic


$

0.04



$

0.07

Diluted


$

0.04



$

0.07

Weighted average common shares outstanding








Basic



45,050,000




45,050,000

Diluted



45,122,819




45,127,025


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

CHINA HGS REAL ESTATE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



Three months ended December 31,



2014



2013

Cash flows from operating activities



Net income


$

1,625,990



$

3,057,117

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







Deferred tax provision



223,803



304,878

Depreciation



21,015




19,283

Changes in assets and liabilities:








Restricted cash



(13,160)




35,394

Due from local government for real estate property development completed



814,478




-

Advances to vendors



(269,993)




(88,377)

Cost and earnings in excess of billings



236,110




949,475

Real estate property development completed



435,511




557,801

Real estate property under development



934,562




(26,805,615)

Other current assets



386,470




(89,649)

Accounts payables



(10,093,427)




4,237,763

Other payables



132,328




1,764,531

Billings in excess of cost and earnings



1,172,034




(3,197,042)

Customer deposits



(1,884,242)




4,875,305

Construction deposits



-




14,245

Accrued expenses



326,052




(103,277)

Taxes payable



(699,456)




(681,032)

Net cash used in operating activities



(6,651,925)




(15,149,200)

















Cash flow from financing activities








Proceeds from shareholder loan



2,068,775




4,325,754

Proceeds from bank loan



4,886,869




8,161,800

Net cash provided by financing activities



6,955,644




12,487,554









Effect of changes of foreign exchange rate on cash



1,242




17,218

Net increase (decrease) in cash



304,961




(2,644,428)

Cash, beginning of period



1,125,545




5,878,101

Cash, end of period


$

1,430,506



$

3,233,673

Supplemental disclosures of cash flow information:








Interest paid


$

500,397



$

355,757

Income taxes paid


$

58,190



$

185,313


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

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/china-hgs-reports-first-quarter-of-fiscal-year-2015-results-300031515.html

Source: China HGS Real Estate Inc.
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