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

HANZHONG, China, Jan. 10, 2019 /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 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. (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


 

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