Exhibit 99.1

 

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

 

HANZHONG, CHINA – January 10, 2019 – 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 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

 

lTotal revenues for the fiscal 2018 were approximately $65.5 million, an increase of approximately 12% from approximately $58.7 million in fiscal 2017.

 

lFor 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.

 

lNet 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.

 

lBasic 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. (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, 
   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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