China HGS Reports Second Quarter of Fiscal Year 2013 Results -- Revenue and Profit Up by Over 500% PR Newswire HANZHONG, China, May 13, 2013 HANZHONG, China, May 13, 2013 /PRNewswire-FirstCall/ -- 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 2013 ended March 31, 2013. Highlights for the Second Quarter of Fiscal 2013 oTotal revenues for the second quarter of fiscal 2013 were $19.4 million, an increase of 573.4% from $2.9 million in the same period of fiscal 2012. oTotal gross floor area ("GFA") sold during the three months ended March 31, 2013 was 41,474 square meters, more than 7 times from 4,938 square meters sold in the same period of fiscal 2012. oNet income for the second quarter of fiscal 2013 totaled $5.8 million, a significant increase compared to the net income of $0.9 million in the same period of fiscal 2012. oBasic and diluted net earnings per share ("EPS") attributable to shareholders for the second quarter of fiscal 2013 was $0.13, compared to $0.02 for the same periods of last year. "We are pleased to report another solid quarter with significantly higher revenues and net income than the same quarter of last year, reflecting a continuous dynamic housing market in Tier 3 and Tier 4 cities and counties," commented Mr. Xiaojun Zhu, China HGS's Chairman and Chief Executive Officer. "China's State Council recently announced new policies including levying a 20% tax on profits from real estate resales to keep prices from mounting higher the real estate market, with expectations that housing supply in major cities will not be able to meet demands in the short term. The new policies are not targeting at first time home buyers and we believe will have no significant impact on the real estate market in Tier 3 and Tier 4 cities and counties which our company is serving and where most housing purchasers are first time home buyers," continued Mr. Zhu. "During the second quarter of fiscal 2013, we made good progress on construction of our three on-going projects-Mingzhu Beiyuan, Oriental Pearl Garden, and Yangzhou Pearl Garden. Recently, the Company also received the presale license of Mingzhu Beiyuan, which we expect will facilitate the presales of this development. Once the construction is completed and the presold units are delivered to purchasers, the presales receipts, currently recorded as customer deposits, will contribute to the growth of our bottom line," concluded Mr. Xiaojun Zhu. Financial Results for the Second Quarter of Fiscal 2013 Revenues increased by 573.4% to approximately $19.4 million for the second quarter of fiscal 2013 from approximately $2.9 million for the same period in the last year.The total GFA sold during the second quarter of fiscal 2013 was 41,474 square meters, representing over 7 times increase from 4,938 square meters completed and sold for the second quarter of fiscal 2012. During the second quarter of fiscal 2013, the Company completed and delivered two high-rise buildings in Yangzhou Pearl Garden project and recognized $8.2 million in revenue. Gross profit was approximately $7.6 million for the second quarter of fiscal 2013 as compared to approximately $1.5 million for the same period of last year. The overall gross profit as a percentage of real estate sales before sales tax was 39.0%, decreased from 53.7% for the same quarter last year, because most of revenues in the second quarter of fiscal 2013 were from higher sales of residential apartments and lower sales of parking units which have higher margin than residential apartments.. Total operating expenses increased by 164.9%to $1.4 million for the second quarter of fiscal 2013 from $0.5 million for the same period of last year.The increase in operating expenses consisted of an increase in selling expense and, general and administration expenses, mainly attributable to more promotions, sales commission, marketing and real estate development activities as well as higher executive compensation, bonus, taxes and office expense.However, as a percentage of total sales, operating expenses declined to 7.3% from 18.6% in the same quarter of last year, demonstrating an improved operating efficiency achieved in this quarter. The Company reported net income of approximately $5.8 million for the second quarter of fiscal 2013, as compared to net income of approximately $0.9 million for the same period of last year. The increase of $4.8 million in our net income was primarily due to the increase in revenue. As of March 31, 2013, the Company had total cash and restricted cash balance of approximately $1.9 million, decreased by $0.3 million compared to approximately $2.2 million cash and restricted cash balance as of September 30, 2012. SafeHarborStatement 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, 2012, 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. CHINA HGS REAL ESTATE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) March 31, September 30, 2013 2012 ASSETS Current assets: Cash $ 712,193 $ 1,104,686 Restricted cash 1,217,523 1,080,985 Accounts receivable 4,040,848 - Advances to vendors 4,066,690 2,566,422 Loans to outside parties, net 5,174 20,957 Real estate property development completed 12,803,437 19,534,088 Real estate property under development 5,444,570 8,590,275 Other current assets 230,206 171,863 Total current assets 28,520,641 33,069,276 Property, plant and equipment, net 1,000,968 1,037,080 Real estate property development completed, net 5,787,356 6,691,813 of current portion Security deposits for land use right 23,485,479 22,894,698 Real estate property under development, net of 76,734,184 56,021,787 current portion Total Assets $ 135,528,628 $ 119,714,654 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 5,167,190 $ 3,828,880 Other payables 1,877,500 1,213,394 Construction deposits 297,409 301,318 Customer deposits 9,404,479 11,597,422 Shareholder loan 1,810,000 1,810,000 Accrued expenses 2,508,137 2,305,086 Taxes payable 5,232,511 4,336,458 Total current liabilities 26,297,226 25,392,558 Construction deposits, net of current portion 973,761 864,259 Customer deposits, net of current portion 20,584,780 17,743,993 Total liabilities 47,855,767 44,000,810 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, 2013 and September 30, 2012 $ 45,050 $ 45,050 Additional paid-in capital 17,755,849 17,750,337 Statutory surplus 6,549,354 6,549,354 Retained earnings 56,170,026 44,894,229 Accumulated other comprehensive income 7,152,582 6,474,874 Total stockholders' equity 87,672,861 75,713,844 Total Liabilities and Stockholders' Equity $ 135,528,628 $ 119,714,654 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 March 31, 2013 2012 2013 2012 Real estate $ 19,382,960 $ 2,878,446 $ 30,386,375 $ 5,380,427 sales Sales tax (1,148,725) (193,579) (1,859,442) (369,484) Cost of real (10,678,011) (1,139,329) (14,508,255) (2,021,229) estate sales Gross profit 7,556,224 1,545,538 14,018,678 2,989,714 Operating expenses Selling and distribution 297,914 39,432 459,008 81,873 expenses General and administrative 1,117,545 494,873 1,678,516 813,645 expenses Total operating 1,415,459 534,305 2,137,524 895,518 expenses Operating 6,140,765 1,011,233 11,881,154 2,094,196 income Interest - 63 - 14,000 income Interest (18,100) (18,100) (36,200) (36,200) (expense) Other income (expenses) - 7 - 7,959 - net Income before 6,122,672 993,196 11,852,913 2,071,996 income taxes Provision for 355,952 47,945 577,116 96,283 income taxes Net income $ 5,766,720 $ 945,251 $ 11,275,797 $ 1,975,713 Other comprehensive income Foreign currency $ 468,723 $ 459,860 $ 677,708 $ 804,449 translation adjustment Comprehensive $ 6,235,443 $ 1,405,111 $ 11,953,505 $ 2,780,162 income Basic and diluted income per common share Basic $ 0.13 $ 0.02 $ 0.25 $ 0.04 Diluted $ 0.13 $ 0.02 $ 0.25 $ 0.04 Weighted average common shares outstanding Basic 45,050,000 45,050,000 45,050,000 45,050,000 Diluted 45,116,695 45,050,000 45,090,074 45,050,000 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, 2013 2012 Cash flows from operating activities Net income $ 11,275,797 $ 1,975,713 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation 44,671 44,416 Stock Based Compensation 5,512 16,634 Provision for losses on loans to - 7,830 outside parties Changes in assets and liabilities: Restricted cash (127,177) (159,548) Advances to vendors (1,475,065) 2,017,926 Loans to outside parties 15,917 863,917 Security deposits for land use (398,329) (11,682,885) rights Accounts receivable (4,030,621) - Real estate property development 7.834,524 1,712,880 completed Real estate property under (16,983,329) (5,305,964) development Other current assets (56,762) (57,933) Accounts payables 1,302,987 (4,517,307) Other payables 652,305 441,900 Customer deposits 401,479 6,926,080 Construction Deposits 95,605 (152,238) Accrued expenses 184,157 (46,889) Taxes payable 857,617 62,413 Net cash used in operating (400,712) (7,853,055) activities Cash flow from financing activities Proceeds from shareholder loan - 3,142,332 Repayment of shareholder loan - (3,142,332) Net cash provided by financing - - activities Effect of changes of foreign 8,219 68,664 exchange rate on cash Net decrease increase in cash (392,493) (7,784,391) Cash, beginning of period 1,104,686 8,837,795 Cash, end of period $ 712,193 $ 1,053,404 Supplemental disclosures of cash flow information: Interest paid $ - $ - Income taxes paid $ 37,408 $ 59,368 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements SOURCE China HGS Real Estate Inc. Website: http://www.chinahgs.com Contact: Randy Xiong, President of Capital Market, China Phone: (86) 091-62622612Email: firstname.lastname@example.org
China HGS Reports Second Quarter of Fiscal Year 2013 Results -- Revenue and Profit Up by Over 500%
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