Exhibit 99.1

 

China HGS Reports Full Year Financial Results for the Fiscal Year 2019

 


HANZHONG, CHINA

 – January 14, 2020, 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 2019 ended September 30, 2019 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 2019

 

lTotal revenues for the fiscal 2019 were approximately $40.0 million, a decrease of approximately 39% from approximately $65.5 million in fiscal 2018.

 

lNet income for the fiscal 2019 totaled approximately $3.7 million, a decrease of approximately 29% from the net income of approximately $5.2 million in fiscal 2018.

 

lBasic and diluted net earnings per share attributable to shareholders for the fiscal 2019 were $0.08, compared to $0.12 for the fiscal 2018.

 

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. (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,   September 30, 
   2019   2018 
ASSETS          
Current assets:          
Cash  $263,139   $3,267,020 
Restricted cash   3,938,978    3,508,557 
Contract assets   12,668,925    12,582,965 
Real estate property development completed   100,817,944    58,999,178 
Real estate property under development   -    60,128,554 
Other current assets   2,031,937    1,408,826 
Total current assets   119,720,923    139,895,100 
Property, plant and equipment, net   614,008    718,366 
Real estate property development completed, net of current portion   1,115,086    1,217,650 
Security deposits   7,972,117    8,296,782 
Real estate property under development, net of current portion   215,745,225    215,431,915 
Due from local government for real estate property development completed   2,725,854    2,836,865 
Total Assets  $347,893,213   $368,396,678 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Current liabilities:          
Construction loans  $77,332,569   $55,610,803 
Accounts payables   27,368,510    20,507,128 
Other payables   5,289,176    4,894,774 
Construction deposits   1,814,232    1,879,570 
Contract liabilities   1,907,828    5,844,189 
Customer deposits   16,139,572    20,234,072 
Shareholder loans   2,129,114    2,142,110 
Accrued expenses   3,585,644    3,006,150 
Taxes  payable   13,882,875    15,492,902 
Total current liabilities   149,449,520    129,611,698 
Deferred tax liabilities   -    2,068,257 
Tax payable - long term   8,006,943    4,960,779 
Customer deposits, net of current portion   1,043,692    1,914,677 
Construction loans, less current portion   29,464,867    66,885,378 
Construction deposits, net of current portion   1,228,041    1,278,053 
Total liabilities   189,193,063    206,718,842 
           
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, 2019 and 2018   45,050    45,050 
Additional paid-in capital   129,907,805    129,907,805 
Statutory surplus   10,360,251    9,925,794 
Retained earnings   34,070,767    30,803,052 
Accumulated other comprehensive loss   (15,683,723)   (9,003,865)
Total stockholders’ equity   158,700,150    161,677,836 
Total Liabilities and Stockholders’ Equity  $347,893,213   $368,396,678 

 

 

 

 

CHINA HGS REAL ESTATE INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE LOSS

FOR THE YEARS ENDED SEPTEMBER 30, 2019 and 2018

 

   2019   2018 
Real estate sales  $39,964,556   $65,487,296 
Less: Sales tax   389,406    1,248,230 
Net real estate sales   39,575,150    64,239,066 
Cost of real estate sales   30,253,511    48,642,392 
Gross profit   9,321,639    15,596,674 
Operating expenses          
Selling and distribution expenses   494,646    843,813 
General and administrative expenses   2,661,578    2,530,269 
Total operating expenses   3,156,224    3,374,082 
Operating income   6,165,415    12,222,592 
Interest expense, net   (131,270)   (499,855)
Other income (expense), net   (309,930)   (1,407,109)
Income before income taxes   5,724,215    10,315,628 
Provision for income taxes   2,022,043    5,072,711 
Net income   3,702,172    5,242,917 
Other comprehensive loss          
Foreign currency translation adjustment   (6,679,858)   (5,509,080)
Comprehensive loss  $(2,977,686)  $(266,163)
Basic and diluted income per common share          
Basic and diluted  $0.08   $0.12 
Weighted average common shares outstanding          
Basic and diluted   45,050,000    45,050,000 

 

 

 

 

CHINA HGS REAL ESTATE INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE YEARS ENDED SEPTEMBER 30, 2019 AND 2018

 

   Common Stock   Additional   Statutory   Retained  

Accumulated
Other

Comprehensive

     
   Shares   Amount   Paid-in Capital   Surplus   Earnings   Loss   Total 
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 
Stock-based Compensation                                   
Appropriation of statutory reserve                  434,457    (434,457)        - 
Net income for the year                       3,702,172         3,702,172 
Foreign currency translation adjustments                            (6,679,858)   (6,679,858)
Balance at September 30, 2019                                   
    45,050,000   $45,050   $129,907,805   $10,360,251   $34,070,767   $(15,683,723)  $158,700,150 

 

 

 

 

CHINA HGS REAL ESTATE INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED SEPTEMBER 30, 2019 and 2018

 

   2019   2018 
Cash flows from operating activities          
Net income  $3,702,172   $5,242,917 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:          
Deferred tax provision   1,302,606    1,999,052 
Depreciation   79,270    85,788 
Stock based compensation   -    54,633 
Changes in assets and liabilities:          
Advances to vendors   20,395    38,990 
Security deposits        - 
Contract assets   (601,265)   (321,291)
Real estate property development completed   (45,818,735)   18,789,499 
Real estate property under development   50,974,817    (16,955,946)
Other current assets   (725,508)   37,764 
Accounts payables   7,967,500    (2,930,405)
Other payables   609,156    1,176,231 
Contract liabilities   (3,854,568)   1,817,121 
Customer deposits   (4,261,166)   (4,137,470)
Construction deposits   8,538    (26,353)
Accrued expenses   700,527    (74,789)
Taxes payables   (1,166,158)   (1,413,508)
Net cash provided by operating activities   8,937,581    3,382,233 
           
Cash flow from financing activities          
Proceeds from construction loans   488,307    5,150,795 
Repayment of construction loans   (11,825,666)   (6,060,305)
Proceeds from shareholder loans   -    1,505,324 
Repayment of shareholder loans   -    (1,659,834)
Net cash used in financing activities   (11,337,359)   (1,064,020)
Effect of changes of foreign exchange rate on cash   (173,682)   (259,240)
Net increase (decrease) in cash   (2,573,460)   2,058,973 
Cash, restricted cash, beginning of year   6,775,577    4,716,604 
Cash, restricted, cash, end of year  $4,202,117   $6,775,577 
Supplemental disclosures of cash flow information:          
Interest paid  $7,199,086   $6,643,169 
Income taxes paid  $347,675   $772,337 
           
Representing          
Cash  $263,139   $3,267,020 
Restricted cash  $3,938,978   $3,508,557 
   $4,202,117   $6,775,577 

 

 

 

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