(HGSH) Reports Full Year Financial Results

HANZHONG, China, Dec. 13, 2013 — 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 2013 ended September 30, 2013 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 2013

• Total revenues for the fiscal 2013 were approximately $67.8 million, an increase of approximately 260% from approximately $18.9 million in fiscal 2012.
• The Company adopted Percentage of Completion method to recognize real estate sales from long term real estate development projects, total revenue recognized from percentage of completion method was approximately $27.5 million, which accounted for 40.6% of total revenue in fiscal 2013.
• Net income for the fiscal 2013 totaled approximately $20.8 million, an increase of approximately 300% from the net income of approximately $5.2 million in fiscal 2012.
• Basic and diluted net earnings per share (“EPS”) attributable to shareholders for the fiscal 2013 were $0.46, compared to $0.11 for the fiscal 2012.

“I am very pleased that the Company delivered an outstanding performance driven by solid market demands despite restrictive measurements imposed by the central government on the real estate market in China,” said Mr. Xiaojun Zhu, Chairman and Chief Executive Officer of China HGS.

“Looking ahead in fiscal 2014, we remain focused on completing the construction of our on-going apartment complex projects. As the construction of some of our large scale high rise apartment buildings are moving closer to the completion stage, we plan to step up our sales efforts and expect our sales revenue to steadily increase. Longer term, the Company will continue to focus on building large-scale and high quality communities in Tier 3 and Tier 4 cities and expand development models into new markets,” concluded Mr. Xiaojun Zhu.

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, 2013, 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 STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30,
					2013						2012
Cash flows from operating activities
Net income					$	20,791,565				$	5,176,093
Adjustments to reconcile net income to net cash used in operatingactivities:
Depreciation						88,818					89,363
Stock based compensation						9,012					26,252
Changes in assets and liabilities:
Restricted cash						(216,286)					(184,604)
Advances to vendors						2,494,790					3,435,815
Loans to outside parties						21,249					2,581,379
Security deposits for land use rights						20,005,071					(16,562,486)
Cost and earnings in excess of billings						(2,144,855)					–
Real estate property development completed						7,659,989					(7,110, 766)
Real estate property under development						(76,766,598)					(126,162)
Other current assets						(188,464)					(85,398)
Accounts payables						18,299,774					(3,700,969)
Other payables						604,996					885,072
Customer deposits						(10,510,235)					7,089,879
Construction deposits						168,439					106,436
Billings in excess of cost and earnings						5,031,374					–
Accrued expenses						518,602					277,201
Taxes payable						2,114,271					264,205
Net cash used in operating activities					$	(12,018,488)				$	(7,838,690)
Cash flow from financing activities
Proceeds from bank loan						16,046,213					–
Proceeds from shareholder loan						–					3,142,332
Repayment of shareholder loan						–					(3,142,332)
Net cash provided by financing activities					$	16,046,213				$	–
Effect of changes of foreign exchange rate on cash						745,690					105,581
Net increase (decrease) in cash						4,773,415					(7,733,109)
Cash, beginning of year						1,104,686					8,837,795
Cash, end of year					$	5,878,101				$	1,104,686
Supplemental disclosures of cash flow information:
Interest paid					$	55,839				$	–
Income taxes paid					$	780,908				$	129,863