China HGS Reports Full Year Financial Results for the Fiscal Year 2015

HANZHONG, China, Dec. 18, 2015 /PRNewswire/ -- China HGS Real Estate Inc. 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 2015 ended September 30, 2015 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 2015

Total revenues for the fiscal 2015 were approximately $81.1 million, a decrease of approximately 35% from approximately $124.3million in fiscal 2014.
For the Company's long-term real estate development projects, the related revenue recognized from percentage of completion method was approximately $76.8 million, which accounted for 95% of total revenue in fiscal 2015 and decreased 23% from the revenue recognized from percentage completion method in fiscal 2014.
Net income for the fiscal 2015 totaled approximately $31.4 million, a decrease of approximately 3% from the net income of approximately $32.4 million in fiscal 2014.
Basic and diluted net earnings per share ("EPS") attributable to shareholders for the fiscal 2015 were $0.70, compared to $0.72 for the fiscal 2014.

"During the year, despite the overall slowing market and weakening economy in China, the Company has strived to manage its development and sales strategy and also to keep the costs down. I am pleased to see that our efforts have paid off. We were able to achieve a relatively high gross profit margin and maintain a relatively stable net income in the period," said Mr. Xiaojun Zhu, Chairman and Chief Executive Officer of China HGS.

"Looking forward to fiscal 2016, we expect some favorable factors to impact our future performance positively. First, the reform of residency registration policy newly announced by the central government would support continued urbanization. Secondly, a string of policies and measures successively introduced since last year to adjust and stimulate the real estate market, such as looser credit policy and more relaxed housing purchase restrictions, is beginning to take effect and is expected to drive the demand of first-time homebuyers as well as home upgraders. We remain cautiously optimistic about the prospect of the real estate property sector. As for regional strategy, the Company is confident to maintain its leading position and prominent market presence in the local region in the next few years," 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, 2015, 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. 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,
	2015		2014
ASSETS
Current assets:
Cash	$	1,333,919	$	1,125,545
Restricted cash		1,715,268		1,589,887
Cost and earnings in excess of billings		11,825,036		12,332,396
Real estate property development completed		75,391,512		6,050,263
Real estate property under development		55,154,153		140,313,127
Other current assets		228,223		1,409,367
Total current assets		145,648,111		162,820,585
Property, plant and equipment, net		780,038		889,497
Real estate property development completed, net of current portion		2,140,271		2,572,215
Security deposits for land use rights		3,146,237		3,249,549
Real estate property under development, net of current portion		143,660,781		128,516,074
Due from local government for real estate property development completed		3,065,000		3,165,644
Total Assets	$	298,440,438	$	301,213,564
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank loan	$	6,292,474	$	12,998,197
Other loans		5,674,239		15,290,753
Accounts payable		41,501,682		57,317,877
Other payables		12,676,362		13,777,853
Construction deposits		1,959,706		367,133
Billings in excess of cost and earnings		3,315,302		2,960,452
Customer deposits		17,387,969		31,100,334
Shareholder loan		1,810,000		5,465,743
Accrued expenses		4,855,891		3,801,567
Taxes payable		15,830,886		12,579,071
Total current liabilities		111,304,511		155,658,980

Deferred tax liabilities		4,711,161		2,992,459
Customer deposits, net of current portion		8,246,004		3,829,870
Other loans, less current portion		15,731,186		6,499,098
Construction deposits, net of current portion		972,432		1,004,364
Total liabilities		140,965,294		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	$	45,050	$	45,050
Additional paid-in capital		17,764,316		17,759,349
Statutory surplus		16,439,333		12,845,197
Retained earnings		119,668,198		91,834,708
Accumulated other comprehensive income		3,558,247		8,744,489
Total stockholders' equity		157,475,144		131,228,793
Total Liabilities and Stockholders' Equity	$	298,440,438	$	301,213,564

CHINA HGS REAL ESTATE INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE YEARS ENDED SEPTEMBER 30,

	2015		2014		2013
Real estate sales	$	81,115,494	$	124,295,928	$	67,809,073
Less: Sales tax		5,194,616		7,547,052		4,244,644
Cost of real estate sales		39,258,557		77,938,256		37,284,088
Gross profit		36,662,321		38,810,620		26,280,341
Operating expenses
Selling and distribution expenses		917,344		923,879		915,217
General and administrative expenses		2,304,706		2,573,573		3,087,434
Total operating expenses		3,222,050		3,497,452		4,002,651
Operating income		33,440,271		35,313,168		22,277,690
Interest expense- net		(61,419)		(57,452)		(98,305)
Other income - net		-		-		10,398
Income before income taxes		33,378,852		35,255,716		22,189,783
Provision for income taxes		1,951,226		2,810,959		1,398,218
Net income		31,427,626		32,444,757		20,791,565
Other comprehensive income
Foreign currency translation adjustment		(5,186,242)		(365,128)		2,634,743
Comprehensive income	$	26,241,384	$	32,079,629	$	23,426,308
Basic and diluted income per common share
Basic	$	0.70	$	0.72	$	0.46
Diluted	$	0.70	$	0.72	$	0.46
Weighted average common shares outstanding
Basic		45,050,000		45,050,000		45,050,000
Diluted		45,052,252		45,124,233		45,124,474

CHINA HGS REAL ESTATE INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED SEPTEMBER 30, 2015, 2014 AND 2013
	Common Stock				Additional Paid-in Capital		Statutory Surplus		Retained Earnings		Accumulated Other Comprehensive Income		Total
	Shares		Amount		Additional Paid-in Capital		Statutory Surplus		Retained Earnings		Accumulated Other Comprehensive Income		Total
Balance at October 1, 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
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
Stock-based Compensation						4,967								4,967
Appropriation of statutory reserve								3,594,136		(3,594,136)				-
Net income for the year										31,427,626				31,427,626
Foreign currency translation adjustments												(5,186,242)		(5,186,242)
Balance at September 30, 2015		45,050,000	$	45,050	$	17,764,316	$	16,439,333	$	119,668,198	$	3,558,247	$	157,475,144

CHINA HGS REAL ESTATE INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30,

	2015			2014		2013
Cash flows from operating activities
Net income	$	31,427,626	$		32,444,757		$	20,791,565
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Deferred tax provision		1,870,180			2,348,981			640,095
Depreciation		83,701			85,504			88,818
Stock based compensation		4,967			-			9,012

Changes in assets and liabilities:
Due from local government for real estate property development completed					(3,171,932)			-
Advances to vendors					109,025			2,494,790
Loans to outside parties					-			21,249
Security deposits for land use rights					-			20,005,071
Cost and earnings in excess of billings		118,861			(10,180,783)			(2,144,855)
Real estate property development completed		(71,332,340)			10,568,278			7,659,989
Real estate property under development		63,376,691			(125,009,367)			(76,766,598)
Other current assets		1,171,630			(1,044,153)			(188,464)
Accounts payables		(14,428,567)			34,926,405			18,299,774
Other payables		(684,063)			11,943,147			604,996
Billings in excess of cost and earnings		462,916			(2,138,352)			5,031,374
Customer deposits		(8,439,960)			15,478,439			(10,510,235)
Construction deposits		1,654,075			4,258			168,439
Accrued expenses		1,201,727			914,825			518,602
Taxes payable		3,765,165			5,997,914			2,114,271
Net cash provided by (used in) operating activities		10,252,609			(26,723,054)			(11,162,107)

Cash flow from financing activities
Restricted cash		(181,392)			(261,561)			(216,286)
Proceeds from other loans		27,670,998			15,321,123			-
Repayment of other loans		(20,865,164)			-
Proceeds from bank loan		-			8,140,008			16,046,213
Repayment of bank loan		(12,975,849)			(4,884,004)			-
Proceeds from shareholder loan		11,642,580			7,570,208			-
Repayment of shareholder loan		(15,292,038)			(3,907,204)			-
Net cash (used in) provided by financing activities		(10,000,865)			21,978,570			15,829,927

Effect of changes of foreign exchange rate on cash		(43,370)			(8,072)			105,595
Net increase (decrease) in cash		208,374			(4,752,556)			4,773,415
Cash, beginning of year		1,125,545			5,878,101			1,104,686
Cash, end of year	$	1,333,919	$		1,125,545		$	5,878,101

Supplemental disclosures of cash flow information:
Interest paid	$	1,840,535	$		1,500,121		$	55,839
Income taxes paid	$	144,742	$		339,613		$	780,908

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SOURCE China HGS Real Estate Inc.

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