UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 12, 2014
China HGS Real Estate, Inc.
(Exact Name of Registrant as Specified in
Charter)
| Florida | 001-34864 | 33-0961490 | ||
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
| 6 Xinghan Road, 19th Floor Hanzhong City Shaanxi Province, PRC 723000 |
| (Address of Principal Executive Offices and Zip Code) |
Registrant’s telephone number, including area code: (86) 091-62622612
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On December 12, 2014, China HGS Real Estate, Inc. issued a press release regarding its financial results for the fiscal year ended September 30, 2014. A copy of the press release is filed herewith as Exhibit 99.1 to this Current Report and is incorporated herein by reference.
As provided in General Instruction B.2 of SEC Form 8-K, such information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and it shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or under the Exchange Act, whether made before or after the date hereof, except as expressly set forth by specific reference in such filing to this Current Report on Form 8-K.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description |
| 99.1 | Press Release dated December 12, 2014 |
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated: December 12, 2014 | China HGS Real Estate, Inc. | |
| By: | /s/Xiaojun Zhu | |
| Name: Xiaojun Zhu | ||
| Title: Chief Executive Officer and Chairman | ||
Exhibit 99.1
China HGS Reports Full Year Financial Results for the Fiscal Year 2014 -
Revenue and Net Profit Up by Approximately 83% and 56%, Respectively
HANZHONG, CHINA – December 12, 2014 – 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 2014 ended
September 30, 2014 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 2014
| l | Total revenues for the fiscal 2014 were approximately $124.3 million, an increase of approximately 83% from approximately $67.8 million in fiscal 2013. |
| l | For the Company’s long-term real estate development projects, the related revenue recognized from percentage of completion method was approximately $99.6 million, which accounted for 80% of total revenue in fiscal 2014 and increased 262% from the revenue recognized from percentage completion method in fiscal 2013. |
| l | Net income for the fiscal 2014 totaled approximately $32.4 million, an increase of approximately 56% from the net income of approximately $20.8 million in fiscal 2013. |
| l | Basic and diluted net earnings per share (“EPS”) attributable to shareholders for the fiscal 2014 were $0.72, compared to $0.46 for the fiscal 2013. |
“I am pleased to report to shareholders that the Company achieved continuous growth in revenue and net profit in fiscal 2014, while the whole property sector in China is still under slow recovery,” said Mr. Xiaojun Zhu, Chairman and Chief Executive Officer of China HGS.
“Looking ahead in 2015, the Company will remain focused on completing the construction of our on-going apartment complex projects. In the meantime, the Company will place an emphasis on Shanty area reform projects, which is encouraged by the central government to improve the quality of urbanization and facilitate sustained and healthy economic development. The State Council indicated in its public circular that the government will optimize investment agendas to allocate more funds for shantytown reforms and encourage financial institutions to strengthen loan support for such projects. With such fundamentals undiminished, combined with the favorable development whereby the central government has begun to allow city governments to adopt certain restrictive measures to local conditions and assist with financing for first-time home buyers, we will step up our sales efforts, diversify product development, and expect our sales revenue to steadily increase in a long run,” 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, 2014, 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, | ||||||||
| 2014 | 2013 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 1,125,545 | $ | 5,878,101 | ||||
| Restricted cash | 1,589,887 | 1,332,807 | ||||||
| Advances to vendors | - | 109,134 | ||||||
| Cost and earnings in excess of billings | 12,332,396 | 2,178,270 | ||||||
| Real estate property development completed | 6,050,263 | 11,607,164 | ||||||
| Real estate property under development | 140,313,127 | 1,580,670 | ||||||
| Other current assets | 1,409,367 | 368,377 | ||||||
| Total current assets | 162,820,585 | 23,054,523 | ||||||
| Property, plant and equipment, net | 889,497 | 977,739 | ||||||
| Real estate property development completed, net of current portion | 2,572,215 | 7,619,811 | ||||||
| Security deposits for land use right | 3,249,549 | 3,259,240 | ||||||
| Real estate property under development, net of current portion | 128,516,074 | 142,916,601 | ||||||
| Accounts receivable-Local government | 3,165,644 | - | ||||||
| Total Assets | $ | 301,213,564 | $ | 177,827,914 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Bank loan – current portion | $ | 12,998,197 | $ | 4,888,860 | ||||
| Short-term loans - other | 15,290,753 | - | ||||||
| Accounts payable | 57,317,877 | 22,527,686 | ||||||
| Other payables | 13,777,853 | 1,863,922 | ||||||
| Construction deposits | 367,133 | 357,447 | ||||||
| Billings in excess of cost and earnings | 2,960,452 | 5,109,758 | ||||||
| Customer deposits | 31,100,334 | 6,130,466 | ||||||
| Shareholder loan | 5,465,743 | 1,810,000 | ||||||
| Accrued expenses | 3,801,567 | 2,896,539 | ||||||
| Taxes payable | 12,579,071 | 6,612,707 | ||||||
| Total current liabilities | 155,658,980 | 52,197,385 | ||||||
| Deferred tax liabilities | 2,992,459 | 650,067 | ||||||
| Customer deposits, net of current portion | 3,829,870 | 13,410,081 | ||||||
| Long-term bank loan, less current portion | 6,499,098 | 11,407,340 | ||||||
| Construction deposits, net of current portion | 1,004,364 | 1,013,877 | ||||||
| Total liabilities | 169,984,771 | 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 as of | ||||||||
| September 30, 2014 and 2013 | $ | 45,050 | $ | 45,050 | ||||
| Additional paid-in capital | 17,759,349 | 17,759,349 | ||||||
| Statutory surplus | 12,845,197 | 8,977,230 | ||||||
| Retained earnings | 91,834,708 | 63,257,918 | ||||||
| Accumulated other comprehensive income | 8,744,489 | 9,109,617 | ||||||
| Total stockholders' equity | 131,228,793 | 99,149,164 | ||||||
| Total Liabilities and Stockholders' Equity | $ | 301,213,564 | $ | 177,827,914 | ||||
The accompanying notes are an integral part of these consolidated financial statements
CHINA HGS REAL ESTATE INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE YEARS ENDED SEPTEMBER 30,
| 2014 | 2013 | 2012 | ||||||||||
| Real estate sales | $ | 124,295,928 | $ | 67,809,073 | $ | 18,856,978 | ||||||
| Less: Sales tax | 7,547,052 | 4,244,644 | 1,180,437 | |||||||||
| Cost of real estate sales | 77,938,256 | 37,284,088 | 9,590,009 | |||||||||
| Gross profit | 38,810,620 | 26,280,341 | 8,086,532 | |||||||||
| Operating expenses | ||||||||||||
| Selling and distribution expenses | 923,879 | 915,217 | 517,025 | |||||||||
| General and administrative expenses | 2,573,573 | 3,087,434 | 2,049,388 | |||||||||
| Total operating expenses | 3,497,452 | 4,002,651 | 2,566,413 | |||||||||
| Operating income | 35,313,168 | 22,277,690 | 5,520,119 | |||||||||
| Interest income (expense) - net | (57,452 | ) | (98,305 | ) | (73,608 | ) | ||||||
| Other income - net | - | 10,398 | 12,659 | |||||||||
| Income before income taxes | 35,255,716 | 22,189,783 | 5,459,170 | |||||||||
| Provision for income taxes | 2,810,959 | 1,398,218 | 283,077 | |||||||||
| Net income | 32,444,757 | 20,791,565 | 5, 176,093 | |||||||||
| Other comprehensive income | ||||||||||||
| Foreign currency translation adjustment | (365,128 | ) | 2,634,743 | 862,601 | ||||||||
| Comprehensive income | $ | 32,079,629 | $ | 23,426,308 | $ | 6,038,694 | ||||||
| Basic and diluted income per common share | ||||||||||||
| Basic | $ | 0.72 | $ | 0.46 | $ | 0.11 | ||||||
| Diluted | $ | 0.72 | $ | 0.46 | $ | 0.11 | ||||||
| Weighted average common shares outstanding | ||||||||||||
| Basic | 45,050,000 | 45,050,000 | 45,050,000 | |||||||||
| Diluted | 45,124,233 | 45,124,474 | 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, 2014, 2013 AND 2012
| Common Stock Shares | Par value $0.001 Amount | Additional Paid-in Capital | Statutory Surplus | Retained Earnings | Accumulated Other Comprehensive Income | Total | ||||||||||||||||||||||
| Balance at October 1, 2011 | 45,050,000 | $ | 45,050 | $ | 17,724,085 | $ | 5,945,384 | $ | 40,322,106 | $ | 5,612,273 | $ | 69,648,898 | |||||||||||||||
| Stock-based Compensation | 26,252 | 26,252 | ||||||||||||||||||||||||||
| Appropriation of statutory reserve | 603,970 | (603,970 | ) | - | ||||||||||||||||||||||||
| Net income for the year | - | 5,176,093 | 5,176,093 | |||||||||||||||||||||||||
| Foreign currency translation adjustments | 862,601 | 862,601 | ||||||||||||||||||||||||||
| Balance at September 30, 2012 | 45,050,000 | $ | 45,050 | $ | 17,750,337 | $ | 6,549,354 | $ | 44,894,229 | $ | 6,474,874 | $ | 75,713,844 | |||||||||||||||
| Stock-based Compensation | 9,012 | 9,012 | ||||||||||||||||||||||||||
| Appropriation of statutory reserve | 2,427,876 | (2,427,876 | ) | - | ||||||||||||||||||||||||
| Net income for the year | - | 20,791,565 | 20,791,565 | |||||||||||||||||||||||||
| Foreign currency translation adjustments | 2,634,743 | 2,634,743 | ||||||||||||||||||||||||||
| Balance at September 30, 2013 | 45,050,000 | $ | 45,050 | $ | 17,759,349 | $ | 8,977,230 | $ | 63,257,918 | $ | 9,109,617 | $ | 99,149,164 | |||||||||||||||
| Stock-based Compensation | - | - | ||||||||||||||||||||||||||
| Appropriation of statutory reserve | 3,867,967 | (3,867,967 | ) | - | ||||||||||||||||||||||||
| Net income for the year | - | 32,444,757 | 32,444,757 | |||||||||||||||||||||||||
| Foreign currency translation adjustments | (365,128 | ) | (365,128 | ) | ||||||||||||||||||||||||
| Balance at September 30, 2014 | 45,050,000 | $ | 45,050 | $ | 17,759,349 | $ | 12,845,197 | $ | 91,834,708 | $ | 8,744,489 | $ | 131,228,793 | |||||||||||||||
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, | ||||||||||||
| 2014 | 2013 | 2012 | ||||||||||
| Cash flows from operating activities | ||||||||||||
| Net income | $ | 32,444,757 | $ | 20,791,565 | $ | 5,176,093 | ||||||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||||||
| Deferred tax provision | 2,348,981 | 640,095 | - | |||||||||
| Depreciation | 85,504 | 88,818 | 89,363 | |||||||||
| Stock based compensation | - | 9,012 | 26,252 | |||||||||
| Changes in assets and liabilities: | ||||||||||||
| Accounts receivable | (3,171,932 | ) | - | - | ||||||||
| Advances to vendors | 109,025 | 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 | (10,180,783 | ) | (2,144,855 | ) | - | |||||||
| Real estate property development completed | 10,568,278 | 7,659,989 | (7,110,766 | ) | ||||||||
| Real estate property under development | (125,009,367 | ) | (76,766,598 | ) | (126,162 | ) | ||||||
| Other current assets | (1,044,153 | ) | (188,464 | ) | (85,398 | ) | ||||||
| Accounts payables | 34,926,405 | 18,299,774 | (3,700,969 | ) | ||||||||
| Other payables | 11,943,147 | 604,996 | 885,072 | |||||||||
| Billings in excess of cost and earnings | (2,138,352 | ) | 5,031,374 | - | ||||||||
| Customer deposits | 15,478,439 | (10,510,235 | ) | 7,089,879 | ||||||||
| Construction deposits | 4,258 | 168,439 | 106,436 | |||||||||
| Accrued expenses | 914,825 | 518,602 | 277,201 | |||||||||
| Taxes payable | 5,997,914 | 2,114,271 | 264,205 | |||||||||
| Net cash used in operating activities | $ | (26,723,054 | ) | $ | (11,162,107 | ) | $ | (7,654,086 | )) | |||
| Cash flow from financing activities | ||||||||||||
| Restricted cash | (261,561 | ) | (216,286 | ) | (184,604 | ) | ||||||
| Proceeds from short-term loan-other | 15,321,123 | - | - | |||||||||
| Proceeds from bank loan | 8,140,008 | 16,046,213 | - | |||||||||
| Repayment of bank loan | (4,884,004 | ) | - | - | ||||||||
| Proceeds from shareholder loan | 7,570,208 | - | 3,142,332 | |||||||||
| Repayment of shareholder loan | (3,907,204 | ) | - | (3,142,332 | ) | |||||||
| Net cash provided by (used in) financing activities | $ | 21,978,570 | $ | 15,829,927 | $ | (184,604 | ) | |||||
| Effect of changes of foreign exchange rate on cash | (8,072 | ) | 105,595 | 105,581 | ||||||||
| Net increase (decrease) in cash | (4,752,556 | ) | 4,773,415 | (7,733,109 | ) | |||||||
| Cash, beginning of year | 5,878,101 | 1,104,686 | 8,837,795 | |||||||||
| Cash, end of year | $ | 1,125,545 | $ | 5,878,101 | $ | 1,104,686 | ||||||
| Supplemental disclosures of cash flow information: | ||||||||||||
| Interest paid | $ | 1,500,121 | $ | 55,839 | $ | - | ||||||
| Income taxes paid | $ | 339,613 | $ | 780,908 | $ | 129,863 | ||||||
The accompanying notes are an integral part of these consolidated financial statement