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, Dec. 12, 2014 -- China HGS Real Estate Inc. (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

Total revenues for the fiscal 2014 were approximately $124.3 million, an increase of approximately 83% from approximately $67.8 million in fiscal 2013.

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.
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.
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 our 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. Meantime, the Company will emphasis on Shanty area reforming 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 adapt certain restrict measurement to local conditions and more ready 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. (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: This email address is being protected from spambots. You need JavaScript enabled to view it.

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

China HGS Real Estate Inc ( HGSH )

China HGS Reports Full Year Financial Results for the Fiscal Year 2014 - Revenue and Net Profit Up by Approximately 83% and 56%, Respectively