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China HGS Reports Full Year Financial Results for the Fiscal Year 2016

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HANZHONG, China, Dec. 21, 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 filed its Annual Report on Form 10-K for the fiscal year 2016 ended September 30, 2016 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 2016

  • Total revenues for the fiscal 2016 were approximately $40.6 million, a decrease of approximately 50% from approximately $81.1 million in fiscal 2015.
  • For the Company's long-term real estate development projects, the related revenue recognized from percentage of completion method was approximately $25.2 million, which accounted for 62% of total revenue in fiscal 2016 and decreased 67% from the revenue recognized from percentage completion method in fiscal 2015.
  • Net income for the fiscal 2016 totaled approximately $5.0 million, a decrease of approximately 84% from the net income of approximately $31.4 million in fiscal 2015.
  • Basic and diluted net earnings per share ("EPS") attributable to shareholders for the fiscal 2016 were $0.11, compared to $0.70 for the fiscal 2015.

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, 2016, 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,


2016


2015

ASSETS

Current assets:




Cash

$

6,401,237


$

1,333,919

Restricted cash


1,493,537



1,715,268

Cost and earnings in excess of billings


11,891,230



11,825,036

Real estate property development completed


113,185,929



75,391,512

Real estate property under development


-



55,154,153

Other current assets


2,722,036



228,223

Total current assets


135,693,969



145,648,111

Property, plant and equipment, net


792,650



780,038

Real estate property development completed, net of current portion


1,657,055



2,140,271

Security deposits


7,940,137



3,146,237

Real estate property under development, net of current portion


207,384,015



143,660,781

Due from local government for real estate property development completed


2,920,990



3,065,000

Total Assets

$

356,388,816


$

298,440,438







LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:






Bank loan

 

$

-


$

6,292,474

Other loans


6,125,753



5,674,239

Accounts payable


30,574,497



41,501,682

Other payables


5,200,807



12,676,362

Construction deposits


1,911,158



1,959,706

Billings in excess of cost and earnings


2,110,808



3,315,302

Customer deposits


16,790,208



17,387,969

Shareholder loans


2,709,523



1,810,000

Accrued expenses


3,205,099



4,855,891

Taxes payable


15,843,815



15,830,886

Total current liabilities


84,471,668



111,304,511

Deferred tax liabilities


5,107,887



4,711,161

Customer deposits, net of current portion


10,687,272



8,246,004

Other loans, less current portion


99,843,228



15,731,186

Construction deposits, net of current portion


1,329,820



972,432

Total liabilities


201,439,875



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

$

45,050


$

45,050

Additional paid-in capital


129,793,572



17,764,316

Statutory surplus


8,495,631



16,439,333

Retained earnings


20,661,184



119,668,198

Accumulated other comprehensive income (loss)


(4,046,496)



3,558,247

Total stockholders' equity


154,948,941



157,475,144

Total Liabilities and Stockholders' Equity

$

356,388,816


$

298,440,438

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,



2016


2015

Real estate sales


$

40,576,717


$

81,115,494

Less:   Sales tax



2,102,616



5,194,616

Cost of real estate sales



28,670,778



39,258,557

Gross profit



9,803,323



36,662,321

Operating expenses







Selling and distribution expenses



1,118,282



917,344

General and administrative expenses



2,466,717



2,304,706

Total operating expenses



3,584,999



3,222,050

Operating income



6,218,324



33,440,271

Interest expense- net



(225,155)



(61,419)

Other income - net



459



-

Income before income taxes



5,993,628



33,378,852

Provision for income taxes



974,688



1,951,226

Net income



5,018,940



31,427,626

Other comprehensive income (loss)







Foreign currency translation adjustment



(7,604,743)



(5,186,242)

Comprehensive income (loss)


$

(2,585,803)


$

26,241,384

Basic and diluted income per common share







Basic


$

0.11


$

0.70

Diluted


$

0.11


$

0.70

Weighted average common shares outstanding







Basic



45,050,000



45,050,000

Diluted



45,050,000



45,052,252

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, 2016 AND 2015


Common Stock



Additional

Paid-in Capital



Statutory

Surplus



Retained

Earnings



Accumulated
Other

Comprehensive
Income (Loss)



Total

Shares


Amount

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

Stock-based Compensation







59,600












59,600

Appropriation of statutory reserve










516,314



(516,314)






-

Net income for the year













5,018,940






5,018,940

Recapitalization of VIE ("Guangsha") equity*







111,969,656



(8,460,016)



(103,509,640)






-

Foreign currency translation adjustments
















(7,604,743)



(7,604,743)

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

* For the year ended September 30, 2016, Shaanxi Guangsha Investment and Development Group Co., Ltd ("Guangsha"), the VIE of the Company, had a recapitalization. The VIE's accumulated retained earnings and statutory reserve were reclassified to additional paid-in capital in the consolidated financial statements.

The accompanying notes are an integral part of these consolidated financial statement

 

 

CHINA HGS REAL ESTATE INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED SEPTEMBER 30,



2016


2015

Cash flows from operating activities





Net income


$

5,018,940


$

31,427,626

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







Deferred tax provision



631,099



1,870,180

Depreciation



74,723



83,701

Stock based compensation



59,600



4,967

Changes in assets and liabilities:







Advances to vendors



(60,480)



-

Security deposits



(5,045,816)



-

Cost and earnings in excess of billings



(634,893)



118,861

Real estate property development completed



(41,816,677)



(71,332,340)

Real estate property under development



(18,287,677)



63,376,691

Other current assets



(2,496,811)



1,171,630

Accounts payable



(9,166,316)



(14,428,567)

Other payables



(7,024,872)



(684,063)

Billings in excess of cost and earnings



(1,070,814)



462,916

Customer deposits



3,112,121



(8,439,960)

Construction deposits



456,014



1,654,075

Accrued expenses



(1,468,888)



1,201,727

Taxes payable



772,684



3,765,165

Net cash (used in) provided by operating activities



(76,948,063)



10,252,609








Cash flow from investing activities







Purchase of fixed assets



(125,023)



-

Net cash used in investing activities



(125,023)



-








Cash flow from financing activities







Restricted cash



144,112



(181,392)

Proceeds from other loans



93,658,620



27,670,998

Repayment of other loans



(6,286,930)



(20,865,164)

Repayment of bank loan



(6,123,136)



(12,975,849)

Proceeds from shareholder loan



3,236,078



11,642,580

Repayment of shareholder loan



(2,317,607)



(15,292,038)

Net cash provided by (used in) financing activities



82,311,136



(10,000,865)

Effect of changes of foreign exchange rate on cash



(170,732)



(43,370)

Net increase in cash



5,067,318



208,374

Cash, beginning of year



1,333,919



1,125,545

Cash, end of year



6,401,237



1,333,919

Supplemental disclosures of cash flow information:







Interest paid


$

5,102,735


$

1,840,535

Income taxes paid


$

424,970


$

144,742

Non-cash financing activities:







Recapitalization of VIE ("Guangsha")


$

111,969,656



-

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

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/china-hgs-reports-full-year-financial-results-for-the-fiscal-year-2016-300382327.html

SOURCE China HGS Real Estate Inc.

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