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China HGS Reports Second Quarter of Fiscal Year 2016 Results

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HANZHONG, China, May 10, 2016 /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 second quarter of fiscal 2016 ended March 31, 2016 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 second quarter of fiscal 2016 were approximately $6.9 million, a decrease of 70.9% from approximately $23.6 million in the same quarter of fiscal 2015. Total revenues recognized from percentage of completion method were approximately $3.5 million, which accounted for 51.6% of total revenues in the second quarter of fiscal 2016.
  • Net income for the second quarter of fiscal 2016 totaled approximately $1.3 million, a decrease of approximately 86.0% from the net income of approximately $9.3 million in the same period of last year. The decreased profit in this quarter compared to the same quarter of last year was primarily due to a slowdown of contracted sales achieved in the current quarter.
  • Basic and diluted net earnings per share ("EPS") attributable to shareholders for the second quarter of fiscal 2016 were $0.03, compared to $0.21 for the same quarter last year.

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, 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)



March 31


September 30



2016


2015

ASSETS

Current assets:






Cash


$

1,645,683



$

1,333,919

Restricted cash



1,754,899




1,715,268

Cost and earnings in excess of billings



10,776,949




11,825,036

Real estate property development completed



70,037,049




75,391,512

Real estate property under development



54,500,779




55,154,153

Other current assets



2,589,958




228,223









Total current assets



141,305,317




145,648,111









Property, plant and equipment, net



728,832




780,038

Real estate property development completed, net of current portion



1,953,991




2,140,271

Security deposits for land use right



3,101,064




3,146,237

Real estate property under development, net of current portion



162,980,474




143,660,781

Due from local government for real estate property development completed



3,020,993




3,065,000









        Total Assets


$

313,090,671



$

298,440,438


LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:






Bank loan


$

1,550,532



$

6,292,474

Other loans



-




5,674,239

Accounts payable



27,463,408




41,501,682

Other payables



13,211,084




12,676,362

Construction deposits



1,510,987




1,959,706

Billings in excess of cost and earnings



2,293,100




3,315,302

Customer deposits



22,113,775




17,387,969

Shareholder loan



2,296,867




1,810,000

Accrued expenses



4,351,823




4,855,891

Taxes  payable



16,047,250




15,830,886









Total current liabilities



90,838,826




111,304,511

Deferred tax liabilities



4,798,516




4,711,161

Customer deposits, net of current portion



9,259,448




8,246,004

Other loans, less current portion



49,334,131




15,731,186

Construction deposits, net of current portion



912,119




972,432









Total liabilities



155,143,040




140,965,294

Commitments and Contingencies








Stockholders' equity








Common stock, $0.001 par value, 100,000,000 shares








authorized, 45,050,000 shares issued and outstanding








March 31, 2016 and September 30, 2015



45,050




45,050

Additional paid-in capital



17,794,116




17,764,316

Statutory surplus



16,439,333




16,439,333

Retained earnings



122,395,463




119,668,198

Accumulated other comprehensive income



1,273,669




3,558,247

Total stockholders' equity



157,947,631




157,475,144









Total Liabilities and Stockholders' Equity


$

313,090,671



$

298,440,438


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 March 31,



Six months ended  31,





2016



2015



2016



2015

















  Real estate sales


$

6,851,859



$

23,558,742



$

12,708,466



$

34,124,429



Less: Sales tax



(481,325)




(1,566,839)




(893,313)




(2,237,389)



Cost of real estate sales



(4,128,020)




(11,330,140)




(7,336,909)




(18,355,946)



Gross profit



2,242,514




10,661,763




4,478,244




13,531,094





















Operating expenses


















Selling and distribution expenses



126,026




217,976




216,179




593,142



General and administrative expenses



580,851




593,348




1,059,362




1,209,526



Total operating expenses



706,877




811,324




1,275,541




1,802,668





















Operating income



1,535,637




9,850,439




3.202.703




11,728,426





















Interest income



-




3,276




-




4,440



Interest expense



(69,094)




(18,100)




(173,140)




(36,200)



Income before income taxes



1,466,543




9,835,615




3,029,563




11,696,666





















Provision for income taxes



166,502




565,514




302,298




800,575



Net income



1,300,041




9,270,101




2,727,265




10,896,091





















Other comprehensive income (loss)


















Foreign currency translation adjustment



1,054,539




593,266




(2,284,578)




780,027





















Comprehensive income


$

2,354,580



$

9,863,367



$

442,687



$

11,676,118





















Basic and diluted income per common share


















Basic and diluted


$

0.03



$

0. 21



$

0.06



$

0.24





















Weighted average common shares outstanding


















Basic



45,050,000




45,050,000




45,050,000




45,050,000



Diluted



45,050,000




45,120,699




45,050,000




45,120,699




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)



Six months ended March 31,




2016



2015


Cash flows from operating activities




Net income


$

2,727,265



$

10,896,091


Adjustments to reconcile net income to net cash providing by (used in) operating activities:









               Deferred tax provision



154,618




734,407


Stock based compensation



29,800




-


Depreciation



39,909




42,012


Changes in assets and liabilities:









Due from local government for real estate property development completed



-




814,120


Advances to vendors



(22,979)




(65,130)


Cost and earnings in excess of billings



876,158




1,299,070


Real estate property development completed



4,416,727




1,675,022


Real estate property under development



(21,468,295)




801,585


Other current assets



(2,336,254)




1,176,152


Accounts payables



(13,409,544)




(17,215,394)


Other payables



714,978




547,901


Billings in excess of cost and earnings



(972,219)




2,985,006


Customer deposits



6,092,375




(890,271)


Construction deposits



(465,792)




(9,832)


Accrued expenses



(437,604)




767,099


Taxes payable



442,578




1,004,726


Net cash (used in) providing by operating activities



(23,618,279)




4,562,564




















Cash flow from financing activities









Restricted cash



(64,102)




(30,168)


Proceeds from shareholder loan



842,975




5,856,780


Repayment of shareholder loan



(357,298)




-


Repayment of bank loans



(4,640,228)




(6,512,961)


Proceeds from other loans



33,746,140




4,884,721


Repayment of other loans



(5,579,101)




(8,873,910)


Net cash provided by (used in) financing activities



23,948,386




(4,675,538)











Effect of changes of foreign exchange rate on cash



(18,343)




5,884


Net increase (decrease) in cash



311,764




(107,090)


Cash, beginning of period



1,333,919




1,125,545


Cash, end of period


$

1,645,683



$

1,018,455


Supplemental disclosures of cash flow information:









Interest paid


$

961,149



$

1,056,229


Income taxes paid


$

162,762



$

72,089











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-second-quarter-of-fiscal-year-2016-results-300265725.html

SOURCE China HGS Real Estate Inc.

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