HOHHOT, China, February 27, 2012 /PRNewswire-Asia/ -- Gold Horse International, Inc., (OTC Bulletin Board: GHII) ("Gold Horse" or the "Company"), a multifaceted business group that controls and through the Jin Ma Companies operates a construction company, real estate development business and a hotel/banquet facility in Inner Mongolia, China, today announced its financial results for the six months ended December 31, 2011.
The Second Quarter Fiscal Year 2012 Highlights
"Strategically, we sold all remaining inventory of apartment units available for sale in the fourth quarter of fiscal 2011 and have no apartment units available for sale now. Consequently, we minimize the effects of the slower real estate markets on Gold Horse. Moreover, we will keep going forward on track to become one of the most prominent construction and real estate development companies in Inner Mongolia, China and we are confident that the construction and the real estate development in Hohhot, Inner Mongolia and its surrounding areas, a third-tier city, will remain strong in the future," said Mr. Liankuan Yang, chairman and CEO of Gold Horse.
Results for Six Months ended December 31, 2011
For the six months ended December 31, 2011, net revenue was $26.8 million, down 1.6% from $27.3 million for the comparable period in fiscal 2011. Construction revenue was $25.6 million or 95.4% of net revenue, up from $25.0 million, or 91.6% of net revenue for the comparable period in fiscal 2011.
Gross profit for the six months ended December 31, 2011 was $4.2 million with $4.4 million gross profit in the comparable 2011 period. Gross margin was 15.6%, down from 16.1% in the prior period.
Operating expenses for the six months ended December 31, 2011 were $0.9 million, or 3.2% of net revenue.
Income from operations for the six months ended December 31, 2011 was $3.33 million, up from $3.27 million from the comparable period in fiscal 2011. Operating margin for the six months ended December 31, 2011 was 12.4% as compared to 12.0% in the comparable period in fiscal 2011.
The Company recorded net income of $2.6 million for the six months ended December 31, 2011 as compared to net income of $2.8 million in the comparable period in fiscal 2011. Adjusted net income excluding non-cash gains was $2.5 million or $1.16 per fully diluted common share as compared to adjusted net income of $2.7 million or $1.34 per fully diluted common share for the 2011 period.
Financial Condition
As of December 31, 2011, Gold Horse had $0.2 million in cash and cash equivalents, short-term debt of $8.3 million and long-term debt of $4.6 million. Shareholders' equity was $53.9 million, up from $50.4 million as of June 30, 2011. Cash provided by operating activities for the six months ended December 31, 2011 was $0.27 million.
Business Outlook
At December 31, 2011, the construction segment is in various stages of development of three new construction projects totaling approximately $45 million in estimated revenues over fiscal years 2012 to 2013. The real estate segment has acquired several land use rights and began developing one residential project. The project is a joint effort between the construction segment and the real estate segment with the construction business serving as the general contractor for the construction of the project.
Mr. Liankuan Yang, Chairman and CEO of Gold Horse, offered a brief description on each project:
In construction segment, three new projects began in October 2011:
In real estate segment:
Reconciliation of Net Income to Adjusted Net Income
In addition to disclosing financial results in accordance with United States generally accepted accounting principles (GAAP) and to supplement the Company's consolidated financial statements presented on a GAAP basis in Table 1, the Company's earnings release contains the non-GAAP financial measures "adjusted net income".
Adjusted net income is not a measure of performance defined in accordance with GAAP. However, management believes that adjusted net income is useful to investors in evaluating the Company's performance because adjusted net income reflects the elimination of gains from derivative liabilities.
Management believes that the disclosure of adjusted net income offers an additional view of the Company's operations that, when coupled with the GAAP results and the reconciliation to GAAP net income, provides a more complete understanding of the Company's results of operations and the factors and trends affecting the Company.
Adjusted net income should not be considered as an alternative to net income as an indicator of the Company's performance or as an alternative to net cash provided by operating activities as a measure of liquidity. The primary material limitations associated with the use of adjusted net income as compared to GAAP net income is:
The Company compensates for these limitations by providing a reconciliation of adjusted net income to GAAP net income to enable investors to perform their own analysis of the Company's operating results.
Reconciliation of Adjusted Net Income to GAAP Net Income | ||
($ in thousands, except per share data) | ||
|
| |
| Six Months Ended December 31, | |
| 2011 | 2010 |
|
|
|
Net income | $ 2,578 | $ 2,810 |
Gain on change in fair value of derivative liabilities | (32) | (157) |
|
|
|
Adjusted net income | $ 2,546 | $ 2,653 |
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|
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Net income per common share - diluted | $ 1.18 | $ 1.42 |
Adjusted net income per common share - diluted | $ 1.16 | $ 1.34 |
Weighted average common shares outstanding - diluted | 2,190,081 | 1,972,611 |
About Gold Horse International, Inc.
Gold Horse International, Inc., through its wholly owned subsidiaries, Gold Horse International, Inc. (Nevada) and Global Rise International Ltd., controls and operates its variable interest entities Inner Mongolia Jin Ma Construction Co., Ltd., Inner Mongolia Jin Ma Hotel Co., Ltd., and Inner Mongolia Jin Ma Real Estate Development Co., Ltd., all based in Hohhot, the regional capital of Inner Mongolia Autonomous Region in China. Jin Ma Construction has been providing construction and general contractor services in Hohhot to both private developers and to the local and regional governments since 1980. Jin Ma Hotel owns, operates and manages the Jin Ma Hotel, a full-service, two-star hotel and restaurant/banquet facility located in Hohhot. Jin Ma Real Estate develops residential and commercial properties in Hohhot. For more information on the Company, visit http://www.goldhorseinternational.com. Information on the Company's Web site or any other Web site does not constitute a portion of this release.
Safe Harbor Statement
This release contains certain "forward-looking statements" relating to the business of the Company and its variable interest entities Jin Ma Construction, Jin Ma Hotel and Jin Ma Real Estate. These forward looking statements are often identified by the use of forward-looking terminology such as "believes", "expects" or similar expressions. Such forward looking statements involve known and unknown risks and uncertainties such as cost overruns, lack of materials, projected earnings not realized and other risks of construction that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its Web site (http://www.sec.gov ). All forward-looking statements attributable to the Company or to persons acting on its behalf are expressly qualified in their entirety by these factors other than as required under the securities laws. The Company does not assume a duty to update these forward-looking statements.
For more information, please contact:
Gold Horse International, Inc.
Mr. Xiaodong Li, CFO
Phone: +86-13691011016
Email: cfo@goldhorseinternational.com
GOLD HORSE INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
(AMOUNTS EXPRESSED IN US DOLLAR) | |||||||
(UNAUDITED) | |||||||
|
| As of | |||||
|
| December 31, |
|
| June 30, | ||
|
| 2011 |
|
| 2011 | ||
|
|
|
|
|
| ||
ASSETS |
|
|
|
|
| ||
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|
|
|
|
| ||
Cash and cash equivalents |
| $ | 215,986 |
|
| $ | 242,238 |
Restricted cash |
|
| 20,842 |
|
|
| 20,458 |
Accounts receivable, net |
|
| 15,030,359 |
|
|
| 7,938,821 |
Notes receivable on sales type lease - current portion |
|
| 1,310,395 |
|
|
| 572,039 |
Inventories |
|
| 91,275 |
|
|
| 73,201 |
Prepaid expenses |
|
| 35,531 |
|
|
| 28,427 |
Other receivables, net |
|
| 125,737 |
|
|
| 114,403 |
|
|
|
|
|
|
|
|
Due from related parties |
|
| 247,483 |
|
|
| - |
Cost and estimated earnings in excess of billings |
|
| 15,727 |
|
|
| 130,928 |
Deferred tax assets |
|
| 186,039 |
|
|
| 225,519 |
|
|
|
|
|
|
|
|
Total Current Assets |
|
| 17,279,374 |
|
|
| 9,346,034 |
|
|
|
|
|
|
|
|
Property and equipment, net |
|
| 8,247,972 |
|
|
| 8,542,010 |
Construction in progress |
|
| 25,985,502 |
|
|
| 25,148,978 |
Notes receivable on sales type lease - net of current portion |
|
| 15,186,836 |
|
|
| 15,844,259 |
|
|
|
|
|
|
|
|
Total Assets |
| $ | 66,699,684 |
|
| $ | 58,881,281 |
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
|
Loans payable - current portion |
| $ | 644,806 |
|
| $ | 549,196 |
Accounts payable |
|
| 6,315,109 |
|
|
| 2,703,281 |
Due to related parties |
|
| - |
|
|
| 13,518 |
Accrued liabilities |
|
| 408,872 |
|
|
| 403,130 |
Taxes payable |
|
| 835,271 |
|
|
| 114,775 |
Derivative liability |
|
| 52,494 |
|
|
| 84,713 |
Billings in excess of costs and estimated earnings |
|
| 27,657 |
|
|
| - |
|
|
|
|
|
|
|
|
Total Current Liabilities |
|
| 8,284,209 |
|
|
| 3,868,613 |
|
|
|
|
|
|
|
|
Loans payable - net of current portion |
|
| 4,560,824 |
|
|
| 4,610,149 |
|
|
|
|
|
|
|
|
Total Liabilities |
|
| 12,845,033 |
|
|
| 8,478,762 |
|
|
|
|
|
|
|
|
Commitments (Note 17) |
|
| - |
|
|
| - |
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|
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Stockholders' Equity: |
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|
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|
|
|
|
Preferred stock ($0.0001 par value; 20,000,000 shares authorized; |
|
|
|
|
|
|
|
none issued and outstanding) |
|
| - |
|
|
| - |
Common stock ($0.0001 par value; 300,000,000 shares authorized; |
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|
|
|
|
|
|
2,195,033 and 2,158,244 shares issued and outstanding |
|
|
|
|
|
|
|
at December 31, 2011 and June 30, 2011, respectively) |
|
| 220 |
|
|
| 216 |
Additional paid-in capital |
|
| 7,488,664 |
|
|
| 7,464,917 |
Non-controlling interest in variable interest entities |
|
| 7,642,344 |
|
|
| 7,642,344 |
Retained earnings |
|
| 29,876,182 |
|
|
| 27,343,397 |
Statutory reserve |
|
| 3,111,443 |
|
|
| 3,066,583 |
Accumulated other comprehensive income |
|
| 5,735,798 |
|
|
| 4,885,062 |
|
|
|
|
|
|
|
|
Total Stockholders' Equity |
|
| 53,854,651 |
|
|
| 50,402,519 |
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders' Equity |
| $ | 66,699,684 |
|
| $ | 58,881,281 |
|
|
|
|
|
|
|
|
GOLD HORSE INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | |||||||
(AMOUNTS EXPRESSED IN US DOLLAR) | |||||||
(UNAUDITED) | |||||||
|
| For the Six Months Ended | |||||
|
| December 31, | |||||
|
| 2011 |
|
| 2010 | ||
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|
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| ||
NET REVENUES |
|
|
|
|
| ||
Construction |
| $ | 25,595,039 |
|
| $ | 24,991,149 |
Hotel |
|
| 1,045,537 |
|
|
| 1,565,475 |
Real estate |
|
| 191,628 |
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|
| 713,369 |
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|
|
|
|
|
|
|
Total Revenues |
|
| 26,832,204 |
|
|
| 27,269,993 |
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|
|
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COST OF REVENUES |
|
|
|
|
|
|
|
Construction |
|
| 21,929,118 |
|
|
| 21,437,820 |
Hotel |
|
| 506,469 |
|
|
| 909,055 |
Real estate |
|
| 201,449 |
|
|
| 540,214 |
|
|
|
|
|
|
|
|
Total Cost of Revenues |
|
| 22,637,036 |
|
|
| 22,887,089 |
|
|
|
|
|
|
|
|
GROSS PROFIT |
|
| 4,195,168 |
|
|
| 4,382,904 |
|
|
|
|
|
|
|
|
OPERATING EXPENSES: |
|
|
|
|
|
|
|
Other hotel operating expenses |
|
| 27,014 |
|
|
| 31,960 |
Bad debt recovery |
|
| (172,055) |
|
|
| (195,612) |
Salaries and employee benefits |
|
| 340,006 |
|
|
| 418,610 |
Depreciation |
|
| 434,517 |
|
|
| 392,437 |
Selling, general and administrative |
|
| 230,801 |
|
|
| 467,734 |
|
|
|
|
|
|
|
|
Total Operating Expenses |
|
| 860,283 |
|
|
| 1,115,129 |
|
|
|
|
|
|
|
|
INCOME FROM OPERATIONS |
|
| 3,334,885 |
|
|
| 3,267,775 |
|
|
|
|
|
|
|
|
OTHER (EXPENSES) INCOME: |
|
|
|
|
|
|
|
Other income |
|
| - |
|
|
| 6,842 |
Gain on change in fair value of derivative liabilities |
|
| 32,219 |
|
|
| 157,092 |
Interest income |
|
| 559,894 |
|
|
| 650,860 |
Interest expense |
|
| (419,912) |
|
|
| (252,006) |
|
|
|
|
|
|
|
|
Total Other (Expenses) Income |
|
| 172,201 |
|
|
| 562,788 |
|
|
|
|
|
|
|
|
INCOME BEFORE PROVISION FOR INCOME TAX |
|
| 3,507,086 |
|
|
| 3,830,563 |
|
|
|
|
|
|
|
|
PROVISION FOR INCOME TAXES |
|
| 929,441 |
|
|
| 1,020,468 |
|
|
|
|
|
|
|
|
NET INCOME |
| $ | 2,577,645 |
|
| $ | 2,810,095 |
|
|
|
|
|
|
|
|
COMPREHENSIVE INCOME: |
|
|
|
|
|
|
|
Net income |
| $ | 2,577,645 |
|
| $ | 2,810,095 |
|
|
|
|
|
|
|
|
OTHER COMPREHENSIVE INCOME: |
|
|
|
|
|
|
|
Unrealized foreign currency translation gain |
|
| 850,736 |
|
|
| 1,154,673 |
|
|
|
|
|
|
|
|
COMPREHENSIVE INCOME |
| $ | 3,428,381 |
|
| $ | 3,964,768 |
|
|
|
|
|
|
|
|
NET INCOME PER COMMON SHARE: |
|
|
|
|
|
|
|
Basic |
| $ | 1.19 |
|
| $ | 1.45 |
Diluted |
| $ | 1.18 |
|
| $ | 1.42 |
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: |
|
|
|
|
|
|
|
Basic |
|
| 2,172,002 |
|
|
| 1,941,476 |
Diluted |
|
| 2,190,081 |
|
|
| 1,972,611 |