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

2019-01-10 20:00 11573

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: randy.xiong@chinahgs.com

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