China HGS Reports First Quarter of Fiscal Year 2014 Results -- Revenues Up by Approximately 29% PR Newswire HANZHONG, China, Feb. 7, 2014 HANZHONG, China, Feb. 7, 2014 /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 first quarter of fiscal 2014 ended December 31, 2013 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 atwww.sec.gov. Highlights for the Quarter oTotal revenues for the first quarter of fiscal 2014 were approximately $14.1 million, an increase of 28.5% from approximately $11.0 million in the same quarter of fiscal 2013. Total revenues recognized from percentage of completion method were approximately $12.9 million, which accounted for 91.6% of total revenues in the first quarter of fiscal 2014. oNet income for the first quarter of fiscal 2014 totaled approximately $3.1 million, a decrease of approximately $2.4 million from the net income of approximately $5.5 million in the same period of last year. The decreased profit margin in this quarter compared to the same quarter of last year was primarily due to the mix of sold properties. More residential properties, which have lower average selling price per unit, were sold in this quarter, while more commercial properties, which have higher average selling price per unit, were sold in the same quarter of last year. oBasic and diluted net earnings per share ("EPS") attributable to shareholders for the first quarter of fiscal 2014 were $0.07, compared to $0.12 for the same quarter last year. "I am pleased with the recent sales progress under presale stage," said Mr. Xiaojun Zhu, Chairman and Chief Executive Officer of China HGS. "We believe that the demand for real estate in Tier 3 and Tier 4 cities and counties in China remained solid as a result of continuous urbanization and growing personal income. The government recently also announced intention to promote migration to Tier 3 and Tier 4 cities, while restrict migration to Tier 1 and Tier 2 cities. We expect that new policies forthcoming for further urbanization in China will focus more on development of Tier 3 and Tier 4 cities, which will attract more first-time home buyers to these less crowded cities from non-city population. As a leading regional developer, the Company will continue to focus its development on selected Tier 3 and Tier 4 cities, maximize the benefits of new government policies, and provide quality housing with affordable pricing for growing new urban residents in these cities," concluded Mr. Xiaojun Zhu. 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, 2013, 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: firstname.lastname@example.org CHINA HGS REAL ESTATE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) December 31 September 30 2013 2013 ASSETS Current assets: Cash $ 3,233,673 $ 5,878,101 Restricted cash 1,302,610 1,332,807 Advances to vendors 198,144 109,134 Cost and earnings in excess of billings 5,391,207 2,178,270 Real estate property development 11,413,583 11,607,164 completed Real estate property under development 1,708,660 1,580,670 Other current assets 459,689 368,377 Total current assets 23,707,566 23,054,523 Property, plant and equipment, net 962,283 977,739 Real estate property development completed, 7,330,449 7,619,811 net of current portion Security deposits for land use right 3,272,144 3,259,240 Real estate property under development, net 170,227,294 142,916,601 of current portion Total Assets $ 205,499,736 $ $177,827,914 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Bank loan – current portion $ 4,908,216 $ 4,888,860 Accounts payable 26,864,280 22,527,686 Other payables 3,639,846 1,863,922 Construction deposits 373,139 357,447 Billings in excess of cost and earnings 6,081,624 5,109,758 Customer deposits 7,051,799 6,130,466 Shareholder loan 6,145,591 1,810,000 Accrued expenses 2,803,811 2,896,539 Taxes payable 5,956,308 6,612,707 Total current liabilities 63,824,614 52,197,385 Long-term bank loan, less current portion 19,632,865 11,407,340 Deferred tax liabilities 958,212 650,067 Customer deposits, net of current portion 17,452,508 13,410,081 Construction deposits, net of current portion 1,017,892 1,013,877 Total liabilities 102,886,091 78,678,750 Commitments and Contingencies Stockholders' equity Common stock, $0.001 par value, 100,000,000 shares authorized, 45,050,000 shares issued and outstanding December 31, 2013 and September 30, 2013 45,050 45,050 Additional paid-in capital 17,759,349 17,759,349 Statutory surplus 8,977,230 8,977,230 Retained earnings 66,315,034 63,257,918 Accumulated other comprehensive income 9,516,982 9,109,617 Total stockholders' equity 102,613,645 99,149,164 Total Liabilities and Stockholders' $ 205,499,736 $ 177,827,914 Equity CHINA HGS REAL ESTATE, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited) Three months ended December 31, 2013 2012 Real estate sales $ 14,140,563 $ 11,003,415 Less: Sales tax (946,688) (710,717) Cost of real estate sales (9,145,841) (3,830,244) Gross profit 4,048,034 6,462,454 Operating expenses Selling and distribution expenses 114,350 161,094 General and administrative expenses 540,229 560,971 Total operating expenses 654,579 722,065 Operating income 3,393,455 5,740,389 Interest income 4,559 - Interest expense (18,100) (18,100) Other income - net - 7,952 Income before income taxes 3,379,914 5,730,241 Provision for income taxes 322,797 221,164 Net income 3,057,117 5,509,077 Other comprehensive income Foreign currency translation adjustment 407,365 208,985 Comprehensive income $ 3,464,482 $ 5,718,062 Basic and diluted income per common share Basic $ 0.07 $ 0.12 Diluted $ 0.07 $ 0.12 Weighted average common shares outstanding Basic 45,050,000 45,050,000 Diluted 45,127,025 45,050,000 CHINA HGS REAL ESTATE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three months ended December 31, 2013 2012 Cash flows from operating activities Net income $ 3,057,117 $ 5,509,077 Adjustments to reconcile net income to net cash used in operating activities: Deferred tax provision 304,878 - Depreciation 19,283 22,404 Stock based compensation - 3,412 Changes in assets and liabilities: Restricted cash 35,394 (77,263) Accounts receivable - (4,664,334) Advances to vendors (88,377) (1,806,155) Loans to outside parties - 15,903 Cost and earnings in excess of (3,197,042) - billings Real estate property development 557,801 3,830,244 completed Real estate property under (26,805,615) (6,376,199) development Other current assets (89,649) (9,542) Accounts payables 4,237,763 306,655 Other payables 1,764,531 178,775 Billings in excess of cost and 949,475 - earnings Customer deposits 4,875,305 3,019,617 Construction deposits 14,245 (731) Accrued expenses (103,277) 90,860 Taxes payable (681,032) (627,900) Net cash used in operating activities (15,149,200) (585,177) Cash flow from financing activities Proceeds from shareholder loan 4,325,754 - Proceeds from bank loan 8,161,800 - Net cash provided by financing activities 12,487,554 - Effect of changes of foreign exchange 17,218 4,359 rate on cash Net decrease in cash (2,644,428) (580,818) Cash, beginning of period 5,878,101 1,104,686 Cash, end of period $ 3,233,673 $ 523,868 Supplemental disclosures of cash flow information: Interest paid $ 355,757 $ - Income taxes paid $ 185,313 $ 404,003 SOURCE China HGS Real Estate Inc. Website: http://www.chinahgs.com
China HGS Reports First Quarter of Fiscal Year 2014 Results -- Revenues Up by Approximately 29%
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