Exhibit 99.1

 

China HGS Reports Full Year Financial Results for the Fiscal Year 2017


HANZHONG, CHINA – January 3, 2018 – 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 2017 ended September 30, 2017 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 2017

 

lTotal revenues for the fiscal 2017 were approximately $58.7 million, an increase of approximately 45% from approximately $40.6 million in fiscal 2016.

 

lFor the Company’s long-term real estate development projects, the related revenue recognized from percentage of completion method was approximately $13.4 million, which accounted for 23% of total revenue in fiscal 2017 and decreased 47% from the revenue recognized from percentage completion method in fiscal 2016.

 

lNet income for the fiscal 2017 totaled approximately $6.3 million, an increase of approximately 26% from the net income of approximately $5.0 million in fiscal 2016.

 

lBasic and diluted net earnings per share (“EPS”) attributable to shareholders for the fiscal 2017 were $0.14, compared to $0.11 for the fiscal 2016.

 

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   September 30 
   2017   2016 
ASSETS          
Current assets:          
Cash  $3,431,997   $6,401,237 
Restricted cash   1,284,607    1,493,537 
Cost and earnings in excess of billings   12,673,349    11,891,230 
Real estate property development completed   79,233,948    113,185,929 
Real estate property under development   87,126,402    - 
Other current assets   1,529,698    2,722,036 
Total current assets   185,280,001    135,693,969 
Property, plant and equipment, net   825,833    792,650 
Real estate property development completed, net of current portion   1,386,552    1,657,055 
Security deposits   8,564,517    7,940,137 
Real estate property under development, net of current portion   180,667,276    207,384,015 
Due from local government for real estate property development completed   2,928,410    2,920,990 
Total Assets  $379,652,589   $356,388,816 
LIABILITIES AND STOCKHOLDERS' EQUITY          
Current liabilities:          
Other loans  $28,545,233   $6,125,753 
Accounts payable   24,047,980    30,574,497 
Other payables   3,897,093    5,200,807 
Construction deposits   1,966,115    1,911,158 
Billings in excess of cost and earnings   4,247,477    2,110,808 
Customer deposits   24,613,864    16,790,208 
Shareholders loans   2,304,632    2,709,523 
Accrued expenses   3,158,432    3,205,099 
Taxes payable   17,259,202    15,843,815 
Total current liabilities   110,040,028    84,471,668 
Deferred tax liabilities   170,950    5,107,887 
Tax payable –long term   5,120,862    - 
Customer deposits, net of current portion   2,314,641    10,687,272 
Other loans, less current portion   98,797,447    99,843,228 
Construction deposits, net of current portion   1,319,295    1,329,820 
Total liabilities   217,763,223    201,439,875 
           

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, 2017 and 2016   45,050    45,050 
Additional paid-in capital   129,853,172    129,793,572 
Statutory surplus   9,142,899    8,495,631 
Retained earnings   26,343,030    20,661,184 
Accumulated other comprehensive loss   (3,494,785)   (4,046,496)
           
Total stockholders' equity   161,889,366    154,948,941 
           
Total Liabilities and Stockholders' Equity  $379,652,589   $356,388,816 

 

 

 

 

CHINA HGS REAL ESTATE INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)

FOR THE YEARS ENDED SEPTEMBER 30,

 

   2017   2016 
Real estate sales  $58,671,424   $40,576,717 
Less:   Sales tax   1,215,960    2,102,616 
Net real estate sales   57,455,464    38,474,101 
Cost of real estate sales   45,590,345    28,670,778 
Gross profit   11,865,119    9,803,323 
Operating expenses          
Selling and distribution expenses   568,081    1,118,282 
General and administrative expenses   3,177,649    2,466,717 
Total operating expenses   3,745,730    3,584,999 
Operating income   8,119,389    6,218,324 
Interest expense - net   (497,798)   (225,155)
Other income - net   2,222    459 
Income before income taxes   7,623,813    5,993,628 
Provision for income taxes   1,294,699    974,688 
Net income   6,329,114    5,018,940 
Other comprehensive income (loss)          
Foreign currency translation adjustment   551,711    (7,604,743)
Comprehensive income (loss)  $6,880,825   $(2,585,803)
Basic and diluted income per common share          
Basic  $0.14   $0.11 
Diluted  $0.14   $0.11 
Weighted average common shares outstanding          
Basic   45,050,000    45,050,000 
Diluted   45,050,000    45,050,000 

 

 

 

 

CHINA HGS REAL ESTATE INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE YEARS ENDED SEPTEMBER 30, 2017 AND 2016

  

   Common Stock   Additional   Statutory   Retained  

Accumulated
Other

Comprehensive

     
   Shares   Amount   Paid-in Capital   Surplus   Earnings   Income (Loss)   Total 
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 
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 

 

 

 

 

CHINA HGS REAL ESTATE INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED SEPTEMBER 30,

 

   2017   2016 
Cash flows from operating activities          
Net income  $6,329,114   $5,018,940 
Adjustments to reconcile net income to net cash used in
operating activities:
          
Deferred tax provision   167,007    631,099 
Depreciation   67,074    74,723 
Stock based compensation   59,600    59,600 
Changes in assets and liabilities:          
Restricted cash   207,817    144,112 
Advances to vendors   -    (60,480)
Security deposits   (590,274)   (5,045,816)
Cost and earnings in excess of billings   (734,569)   (634,893)
Real estate property development completed   33,718,033    (41,816,677)
Real estate property under development   (58,501,531)   (18,287,677)
Other current assets   1,171,589    (2,496,811)
Accounts payable   (6,451,836)   (9,166,316)
Other payables   (1,286,545)   (7,024,872)
Billings in excess of cost and earnings   2,082,143    (1,070,814)
Customer deposits   (604,497)   3,112,121 
Construction deposits   35,365    456,014 
Accrued expenses   (50,932)   (1,468,888)
Taxes payable   1,343,421    772,684 
Net cash used in operating activities   (23,039,021)   (76,803,951)
           
Cash flow from investing activities          
Purchases of fixed assets   (97,524)   (125,023)
Net cash used in investing activities   (97,524)   (125,023)
           
Cash flow from financing activities          
Proceeds from other loans   26,657,111    93,658,620 
Repayment of other loans   (6,039,415)   (6,286,930)
Repayment of bank loan   -    (6,123,137)
Proceeds from shareholder loan   8,444,575    3,236,078 
Repayment of shareholder loan   (8,842,359)   (2,317,607)
Net cash provided by financing activities   20,219,912    82,167,024 
Effect of changes of foreign exchange rate on cash   (52,607)   (170,732)
Net (decrease) increase in cash   (2,969,240)   5,067,318 
Cash, beginning of year   6,401,237    1,333,919 
Cash, end of year  $3,431,997   $6,401,237 
Supplemental disclosures of cash flow information:          
Interest paid  $5,756,560   $5,102,735 
Income taxes paid  $721,177   $424,970 
Non-cash financing activities:          
Recapitalization of VIE (“Guangsha”)  $-   $111,969,656 
Reclassification of deferred tax liability to income tax payable  $5,120,862      

 

 

 

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