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| 8-K - FORM 8-K - China Housing & Land Development, Inc. | v405892_8k.htm |
Exhibit 99.1
China Housing & Land Development
Inc. Announces
Fourth Quarter 2014 Financial Results
Xi’an, China – March 30, 2015 -- China Housing & Land Development, Inc. (“China Housing” or the “Company,” NASDAQ: CHLN) today announced its financial results for the quarter ended December 31, 2014.
Highlights for Q4 2014:
| · | Total revenue in the fourth quarter of 2014 was $44.9 million compared to $27.7 million in the third quarter of 2014 and $56.1 million in the fourth quarter of 2013. |
| · | Total gross floor area (“GFA”) sales were 30,888 sq. meters during the fourth quarter of 2014, compared with 21,768 sq. meters in the third quarter of 2014 and 28,582 sq. meters in the fourth quarter of 2013. |
| · | Average residential selling price (“ASP”) in the fourth quarter of 2014 was RMB4,736, compared with RMB6,597 in the third quarter of 2014, and RMB6,600 in the fourth quarter of 2013. |
| · | Gross profit was $(2.8) million in the fourth quarter of 2014 compared to gross profit of $5.8 million in the third quarter of 2014 and gross profit of $12.6 million in the fourth quarter of 2013. Fourth quarter 2014 gross margin was (6.2)%, compared with 20.9% in the third quarter of 2014 and 22.4% in the fourth quarter of 2013. |
| · | SG&A expenses as a percentage of total revenue decreased to 12.5%, from 14.2% in the third quarter of 2014 and increased from 9.1% in the fourth quarter of 2013. |
| · | Operating loss was $15.7 million in the fourth quarter of 2014 compared to operating income of $0.5 million in the third quarter of 2014, and operating income of $6.0 million in the fourth quarter of 2013. |
| · | Net loss attributable to the Company in the fourth quarter of 2014 was $16.1 million, or $(0.46) per diluted share, compared to net income of $2.2 million, or $0.06 per diluted share, in the third quarter of 2014 and net income of $3.9 million, or $0.11 per diluted share, in the fourth quarter of 2013. |
Mr. Pingji Lu, China Housing’s Chairman, commented, “In the fourth quarter, local real estate market conditions in Xi’an, where we primarily operate, remain challenging. We are encouraged by recent government policies to stimulate the local housing market, however such efforts will take time to reduce inventory in our local market. According to a study by E-House, real estate inventory in Xian rose to 30 million square meters at the end of 2014, resulting in higher supply, increased competition and lower average selling prices. This impacted our performance as we increased our promotional activity to drive sales and cash-flow. While this strategy negatively impacted our gross margin, the increased volume and cash flow reduced overall financial risk to our business.
In 2015, we believe the government will initiate additional policies to stabilize and instill greater confidence in the real estate market. Our strategy is to continue to be flexible on pricing, drive sales growth, control our costs and maintain stable cash flows. Taking such action can reduce our inventory down to more normalized levels.”
Total revenue in the fourth quarter of 2014 increased 62.1% to $44.9 million from $27.7 million in the third quarter of 2014 and decreased 20% from $56.1 million in the fourth quarter of 2013. Other revenue in the fourth quarter of 2014 increased to $9.1 million from $4.9 million in the third quarter of 2014 and $8.9 million in the fourth quarter of 2013.
In the fourth quarter of 2014, the Company’s top three real estate projects measured by revenue were Park Plaza, Puhua Phase Three and Ankang Phase One. Fourth quarter 2014 contract sales totaled $23.8 million, compared with $23.3 million in the third quarter of 2014 and $31.0 million in the fourth quarter of 2013. Total GFA sales were 30,888 sq. meters during the fourth quarter of 2014, compared with 21,768 sq. meters in the third quarter of 2014 and 28,582 sq. meters in the fourth quarter of 2013. The Company’s ASP in the fourth quarter of 2014 was RMB4,736 compared with RMB6,597 in the third quarter of 2014, and RMB6,600 in the fourth quarter of 2013.
Gross profit for the three months ended December 31, 2014 was $(2.8) million, compared to gross profit of $5.8 million in the third quarter of 2014 and $12.6 million in the fourth quarter of 2013. Gross profit margin for the three months ended December 31, 2014 was negative 6.2%, compared to 20.9% in the third quarter of 2014 and the 22.4% in the fourth quarter of 2013. The negative gross profit for the fourth quarter of 2014 was mainly due to a more competitive real estate environment resulting in lower average selling prices at the company’s major projects under construction.
SG&A expense was $5.6 million in the fourth quarter of 2014, compared with $3.9 million in the third quarter of 2014 and $5.1 million in the fourth quarter of 2013. SG&A expense as a percentage of total revenue was 12.5%, compared with 14.2% in the third quarter of 2014 and 9.1% in the fourth quarter of 2013. The decrease in SG&A expense as a percent of total revenue in the fourth quarter of 2014 compared to the 2014 third quarter was primarily due to the increased revenue in the fourth quarter compared to the third quarter, while SG&A expense remained consistent.
Operating loss in the fourth quarter of 2014 was $15.7 million compared to operating income of $0.5 million in the third quarter of 2014, and operating income of $6.0 million in the fourth quarter of 2013. The operating loss for the fourth quarter of 2014 included a one-time $5.5 million allowance related to construction in excess of billing of the low-income housing of government. Collection of this amount is not ensured due to current fiscal conditions of the local government.
Net loss attributable to China Housing in the fourth quarter of 2014 was $16.1 million, or $(0.46) per diluted share, compared to net income of $2.2 million, or $0.06 per diluted share, in the third quarter of 2014 and net income of $3.9 million, or $0.11 per diluted share, in the fourth quarter of 2013.
Sequential Quarterly Revenue Breakout Comparison
| Q3 2014 | Q2 2014 | |||||||||||||||||||||||||||||||||||||||
| Project | Recognized Revenue | Contract Sales | GFA Sold | ASP | Unsold GFA | POC | Recognized Revenue | Contract Sales | GFA Sold | ASP | ||||||||||||||||||||||||||||||
| ($) | ($) | (m2) | (RMB) | (m2) | ($) | ($) | (m2) | (RMB) | ||||||||||||||||||||||||||||||||
| Projects Under Construction | ||||||||||||||||||||||||||||||||||||||||
| Park Plaza Phase One | 5,913,163 | 5,090,548 | 8,843 | 3,538 | 30,503 | 99.8 | % | 8,126,813 | 6,150,233 | 4,285 | 8,845 | |||||||||||||||||||||||||||||
| Puhua Phase Three | 13,560,028 | 6,442,195 | 7,425 | 5,333 | 47,165 | 83.0 | % | 5,176,650 | 4,573,451 | 3,639 | 7,748 | |||||||||||||||||||||||||||||
| Puhua Phase Two-East Region | 4,150,988 | 4,994,287 | 5,344 | 5,744 | 53,236 | 86.0 | % | 2,226,757 | 1,916,575 | 1,877 | 6,293 | |||||||||||||||||||||||||||||
| Ankang Phase One | 11,088,809 | 3,583,725 | 5,525 | 3,987 | 44,084 | 83.0 | % | 4,241,380 | 2,559,384 | 3,828 | 4,123 | |||||||||||||||||||||||||||||
| Puhua Four | 849,179 | 3,455,283 | 3,443 | 6,168 | 119,555 | 21.0 | % | 2,851,066 | 7,772,451 | 7,868 | 6,090 | |||||||||||||||||||||||||||||
| Projects Completed | ||||||||||||||||||||||||||||||||||||||||
| Puhua Phase One | -24,415 | 9,447 | 100 | % | 21,271 | 21,271 | 0 | - | ||||||||||||||||||||||||||||||||
| Puhua Phase Two-West Region& New Coast Line | 160,608 | 160,608 | 205 | 6,168 | 12,743 | 100 | % | 304,026 | 304,026 | 271 | 6,915 | |||||||||||||||||||||||||||||
| JunJing III | 226,584 | 226,584 | 246 | 5,655 | 100 | % | -131,198 | - | 0 | - | ||||||||||||||||||||||||||||||
| JunJing II | -154,247 | -154,247 | -143 | 6,621 | 100 | % | - | - | 0 | - | ||||||||||||||||||||||||||||||
| Other Income | 9,137,336 | - | 0 | - | - | 4,893,589 | - | 0 | - | |||||||||||||||||||||||||||||||
| Total | 44,908,034 | 23,798,984 | 30,888 | 4,736 | 316,733 | - | 27,710,354 | 23,297,391 | 21,768 | 6,597 | ||||||||||||||||||||||||||||||
| Q-o-Q Change | 62.06 | % | 2.15 | % | 41.90 | % | -28.21 | % | - | - | -37.12 | % | -26.47 | % | -28.41 | % | 1.60 | % | ||||||||||||||||||||||
Total debt outstanding as of December 31, 2014 was $323.5 million compared with $300.7 million on December 31, 2013. Net debt outstanding (total debt less cash and restricted cash) as of December 31, 2014 was $199.9 million compared with $161.8 million on December 31, 2013. The Company’s net debt as a percentage of total capital (net debt plus shareholders’ equity) was 64.4% on December 31, 2014 and 54.1% on December 31, 2013, which mainly resulted from additional debt financing for the next 12 months. Consequently, the ratio of net debt as a percentage of total capital increased as of December 31, 2014 compared with December 31, 2013.
| Q4 2014 | ||||||||
| Projects in Planning | Unsold GFA |
First Pre-sales Scheduled |
||||||
| (m2) | ||||||||
| Golden Bay | 329,508 | 2015 | Q2 | |||||
| Ankang Project-Phase II | 170,851 | 2015 | Q4 | |||||
| Park Plaza- Phase II | 66,155 | 2015 | Q3 | |||||
| Textile City | 630,000 | 2016 | Q2 | |||||
| Total projects in planning | 1,196,514 | |||||||
2015 First Quarter Guidance Outlook
Total contract sales for the 2015 first quarter are expected to be in the range of $18 million to $22 million, compared with $34.3 million in the 2014 fourth quarter and $19.8 million in the first quarter of 2014. The Company is reporting revenues, which are subject to percentage of completion alterations.
Conference Call Information
Management will host a conference call at 8:00 am ET on March 30, 2015. Listeners may access the call by dialing 1-913-312-0669. To listen to the live webcast of the event, please go to http://public.viavid.com/index.php?id=113753. Listeners may access the call replay, which will be available through April 3, 2015, by dialing 1-858-384-5517; passcode: 5536170.
About China Housing & Land Development, Inc.
Based in Xi’an, the capital city of China’s Shaanxi province, China Housing & Land Development, Inc., is a residential developer of residential and commercial properties in northwest China. China Housing has been engaged in land acquisition, development, and management, including the sales of residential and commercial real estate properties through its wholly-owned subsidiary in China, since 1992.
China Housing & Land Development is the first Chinese real estate development company traded on NASDAQ. The Company’s news releases, project information, photographs, and more are available on the internet at www.chldinc.com.
Safe Harbor
This press release may contain certain forward-looking information about China Housing & Land Development, Inc. which is covered under the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements are statements that are not historical facts. These statements can be identified by the use of forward- looking terminology such as believe, expect, may, will, should, project, plan, seek, intend, or anticipate or the negative thereof or comparable terminology, and include discussions of strategy, and statements about industry trends and China Housing & Land Development's future performance, operations, and products.
Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Actual performance results may vary significantly from expectations and projections. Further information regarding this and other risk factors are contained in China Housing’s public filings with the U.S Securities and Exchange Commission.
All information provided in this press release and in any attachments is as of the date of the release, and the Company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under law.
China Housing contacts
Ms. Jing Lu
Chief Operating Officer, Board Secretary,
and Investor Relations Officer
+86 29.8258.2639 in Xi’an
jinglu@chldinc.com / English and Chinese
Mr. Bill Zima, ICR
+86 10 6583 7511
William.Zima@icrinc.com
China Housing Investor Relations Department
+1 646.308.1285
CHINA HOUSING & LAND DEVELOPMENT, INC., AND SUBSIDIARIES
Consolidated Balance Sheets
As of December 31, 2014 and 2013
| 2014 | 2013 | |||||||
| ASSETS | ||||||||
| Cash | $ | 33,223,127 | $ | 21,320,071 | ||||
| Cash - restricted | 90,328,084 | 117,534,900 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $579,926 and $594,382, as of 2014 and 2013, respectively | 33,041,324 | 41,158,998 | ||||||
| Construction in excess of billing, net of allowance of $5,532,777 and $ nil, respectively. | - | 2,106,975 | ||||||
| Other receivables, prepaid expenses and other assets, net | 9,377,150 | 7,188,153 | ||||||
| Real estate held for development or sale | 374,083,969 | 289,474,812 | ||||||
| Property and equipment, net | 43,383,002 | 36,281,168 | ||||||
| Advances to suppliers | 1,033,359 | 697,823 | ||||||
| Deposits on land use rights | 16,136,415 | 59,155,165 | ||||||
| Intangible assets, net | 23,561,951 | 42,453,473 | ||||||
| Goodwill | 1,922,053 | 1,969,964 | ||||||
| Deferred financing costs | 438,926 | 151,585 | ||||||
| Total assets | $ | 626,529,360 | $ | 619,493,087 | ||||
| LIABILITIES | ||||||||
| Accounts payable | $ | 75,845,987 | $ | 59,400,262 | ||||
| Advances from customers | 35,172,506 | 45,441,402 | ||||||
| Accrued expenses | 21,842,922 | 17,439,541 | ||||||
| Income tax payable | 24,280,260 | 24,534,095 | ||||||
| Other taxes payable | 9,318,119 | 7,139,870 | ||||||
| Other payables | 11,692,913 | 12,755,824 | ||||||
| Loans from employees | 29,819,381 | 25,759,453 | ||||||
| Loans payable | 293,660,575 | 274,917,332 | ||||||
| Deferred tax liability | 14,395,327 | 14,782,118 | ||||||
| Total liabilities | 516,027,990 | 482,169,897 | ||||||
| SHAREHOLDERS’ EQUITY | ||||||||
| Common stock: $0.001 par value, authorized 100,000,000 shares; issued 34,800,558 and 35,849,204, respectively | 34,800 | 35,849 | ||||||
| Additional paid in capital | 52,483,510 | 51,347,620 | ||||||
| Treasury stock at cost; 0 shares and 351,480 shares, respectively | (2,400,288 | ) | ||||||
| Statutory reserves | 11,700,198 | 11,535,242 | ||||||
| Retained earnings | 24,046,687 | 48,696,878 | ||||||
| Accumulated other comprehensive income | 22,236,176 | 28,107,889 | ||||||
| Total shareholders’ equity | 110,501,371 | 137,323,190 | ||||||
| Total liabilities and shareholders’ equity | $ | 626,529,360 | $ | 619,493,087 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
CHINA HOUSING & LAND DEVELOPMENT, INC., AND SUBSIDIARIES
Consolidated Statements of Operations
For The Years Ended December 31, 2014 and 2013
| 2014 | 2013 | |||||||
| REVENUES | ||||||||
| Real estate sales | $ | 115,207,107 | $ | 159,222,863 | ||||
| Other revenue | 23,520,952 | 30,811,894 | ||||||
| Total revenues | 138,728,059 | 190,034,757 | ||||||
| COST OF REVENUES | ||||||||
| Cost of real estate sales | 114,214,971 | 124,152,403 | ||||||
| Cost of other revenue | 17,006,602 | 22,056,802 | ||||||
| Total cost of revenues | 131,221,573 | 146,209,205 | ||||||
| Gross margin | 7,506,486 | 43,825,552 | ||||||
| OPERATING EXPENSES | ||||||||
| Selling, general, and administrative expenses | 17,433,892 | 16,968,686 | ||||||
| Stock-based compensation | 1,136,304 | 1,375,857 | ||||||
| Other expenses | 28,235 | 400,247 | ||||||
| Bad debt expenses | 5,532,777 | - | ||||||
| Financing expense | 5,455,689 | 7,317,008 | ||||||
| Total operating expenses | 29,586,897 | 26,061,798 | ||||||
| Operating (loss) Income | (22,080,411 | ) | 17,763,754 | |||||
| Loss from disposal of property and equipment | 563,710 | 1,107,212 | ||||||
| Gain on extinguishment of loan | (2,390,343 | ) | - | |||||
| (Loss) income before provision for income taxes | (20,253,778 | ) | 16,656,542 | |||||
| Provision for current income taxes | 1,241,767 | 5,039,240 | ||||||
| Recovery of deferred taxes | (45,104 | ) | (137,395 | ) | ||||
| Provision for income taxes | 1,196,663 | 4,901,845 | ||||||
| NET (LOSS) INCOME | $ | (21,450,441 | ) | $ | 11,754,697 | |||
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING | ||||||||
| Basic | 34,661,736 | 35,127,877 | ||||||
| Diluted | 34,661,736 | 35,127,877 | ||||||
| (LOSS) EARNINGS PER SHARE | ||||||||
| Basic | $ | (0.62 | ) | $ | 0.33 | |||
| Diluted | $ | (0.62 | ) | $ | 0.33 | |||
The accompanying notes are an integral part of these consolidated financial statements.
CHINA HOUSING & LAND DEVELOPMENT, INC., AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income (Loss)
For The Years Ended December 31, 2014 and 2013
| 2014 | 2013 | |||||||
| NET (LOSS) INCOME | $ | (21,450,441 | ) | $ | 11,754,697 | |||
| OTHER COMPREHENSIVE (LOSS) INCOME | ||||||||
| Foreign currency translation adjustment | (5,871,713 | ) | 6,546,790 | |||||
| COMPREHENSIVE (LOSS) INCOME | $ | (27,322,154 | ) | $ | 18,301,487 | |||
The accompanying notes are an integral part of these consolidated financial statements.
CHINA HOUSING & LAND DEVELOPMENT INC., AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For The Years Ended December 31, 2014 and 2013
| December 31, | December 31, | |||||||
| 2014 | 2013 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net (loss) income | $ | (21,450,441 | ) | $ | 11,754,697 | |||
| Adjustments to reconcile net income to cash provided by (used in) operating activities: | ||||||||
| Bad debt expense (recovery) | 5,532,777 | (164 | ) | |||||
| Impairment of real estate held for development or sales | 7,877,400 | - | ||||||
| Depreciation | 2,497,495 | 2,598,326 | ||||||
| Stock-based compensation | 1,136,304 | 1,375,857 | ||||||
| Loss on disposal of property and equipment | 563,710 | 1,107,212 | ||||||
| Amortization of intangible assets | 18,494,694 | 13,498,819 | ||||||
| Recovery of deferred taxes | (45,104 | ) | (137,395 | ) | ||||
| Gain on extinguishment of loan | (2,390,343 | ) | - | |||||
| (Increase) decrease in non-cash operating items : | ||||||||
| Accounts receivable | 7,141,930 | (13,637,800 | ) | |||||
| Construction in excess of billing | (3,457,512 | ) | (574,056 | ) | ||||
| Other receivables, prepaid expenses and other assets, net | (3,331,508 | ) | (468,501 | ) | ||||
| Real estate held for development or sale | (101,879,665 | ) | (70,989,071 | ) | ||||
| Advances to suppliers | (354,243 | ) | 693,807 | |||||
| Deposit (refund) on land use rights | 42,041,487 | (15,071,133 | ) | |||||
| Deferred finance costs | 517,972 | - | ||||||
| Accounts payable | 17,720,963 | 2,834,646 | ||||||
| Advances from customers | (7,056,543 | ) | (5,243,032 | ) | ||||
| Accrued expenses | 5,025,643 | (5,274,375 | ) | |||||
| Other payables | (748,082 | ) | 1,185,307 | |||||
| Income and other taxes payable | 2,725,370 | 7,572,979 | ||||||
| Net cash used in operating activities | (29,437,696 | ) | (68,773,877 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of property and equipment | (9,824,644 | ) | (5,793,142 | ) | ||||
| Proceeds from sale of property and equipment | 4,615 | 654,321 | ||||||
| Proceeds from sale of short term investment | 43,607,440 | - | ||||||
| Purchase/Sale of short term investment | (43,607,440 | ) | - | |||||
| Net cash used in investing activities | (9,820,029 | ) | (5,138,821 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Change in restricted cash | 24,601,193 | (3,694,203 | ) | |||||
| Loans from banks | 18,143,480 | 98,841,999 | ||||||
| Loans from Days Hotel and Dinghui | 31,642,982 | 46,269,017 | ||||||
| Repayments on loans | (26,296,875 | ) | (49,173,393 | ) | ||||
| Loans repayment to from employees | 4,766,270 | (2,902,615 | ) | |||||
| Repurchase of common stock | (635,970 | ) | (1,966,047 | ) | ||||
| Net cash provided by financing activities | 52,221,080 | 87,374,758 | ||||||
| INCREASE IN CASH | 12,963,355 | 13,462,060 | ||||||
| Effects on foreign currency exchange | (1,060,299 | ) | 1,736,563 | |||||
| Cash, beginning of year | 21,320,071 | 6,121,448 | ||||||
| Cash, end of year | $ | 33,223,127 | $ | 21,320,071 | ||||
The accompanying notes are an integral part of these consolidated financial statements.