SHENYANG, China, April 15, 2008 -- Great China International Holdings, Inc. (OTCBB:GCIH) ("Great China International" or "the Company"), a real estate development and property management company in China, today announced record financial results for the fiscal year ended December 31, 2007.
Full Year 2007 Highlights
-- Total revenues were $9.7 million
-- Gross profit was $3.7 million, or 38.2% of revenues
-- Net income increased to $24.3 million, or $2.07 per diluted share, up
from a loss of $3.7 million, or a loss of $0.33 per diluted share, in 2006
-- Reduced short-term debt by $26.0 million, resulting in an $11.1 million
pre-tax gain on the settlement of debt
-- Completed the sale of Loyal Best Property Development Limited, resulting
in a $23.9 million net gain
"This was a very active year for Great China International Holdings. Our prestigious President Building in the Shenyang City financial district generated the majority of our revenues as we sold through our inventory of real estate properties," said Mr. Frank Jiang, Chairman and CEO of Great China International Holdings, Inc. "We also strengthened our balance sheet and successfully spun off our Loyal Best subsidiary, both of which generated significant gains and strengthened our capital base."
Full Year 2007 Results
Great China International's total revenues for 2007 were $9.7 million, down 24.0% from $12.7 million in 2006, as the Company sold its entire inventory of real estate properties. Real estate sales in 2007 declined 39.2% to $4.4 million, or 45.3% of total revenues, as compared to $7.2 million for 2006, or 56.6% of total revenues, in 2006. Rental and management fee income declined slightly to $5.3 million, compared to $5.5 million in 2006. The rental and management fee income as a percentage of total revenue increased to 54.7% from 43.4% in 2006.
Gross profit for the full year of 2007 was $3.7 million, a decrease of 38.7% from $6.0 million in 2006. Gross margin was 38.2% in 2007, down from 47.3% in 2006. The decline in gross margin was due to the decline in real estate sales, which typically have a higher profit margin than rental and management fee income.
Operating expenses in 2007 were $9.6 million, up 23.9% from $7.7 million in 2006. Administrative expenses rose from $3.9 million in 2006 to $6.8 million in 2007, primarily due to a $3.6 million bad debt expense. Operating and selling expenses were $414,179 in 2007, down 77.3% from $1.8 million in 2006, due to the lower business development requirements in 2007.
Operating loss for in 2007 was $5.9 million, compared with a loss of $1.7 million in 2006.
Non-operating income for 2007 was $7.8 million, compared to non-operating expenses of $2.0 million in 2006. The non-operating income in 2007 includes an $11.1 million gain on settlement of debt, $1.9 million in land leveling income and a $1.5 million loss related to a terminated project.
Provision for income taxes was $1.5 million in 2007. The Company did not pay any income taxes in 2006.
Net income from continuing operations in 2007 was $439,939, or $0.04 per fully diluted share, compared to net loss from continuing operations of $3.7 million, or a loss of $0.32 per fully diluted share, in 2006.
In December 2007, the Company sold its interest in its indirect subsidiary, Loyal Best Property Development Limited, which resulted in an extraordinary gain of $23.9 million, or $2.04 per fully diluted share, and was classified as income from discontinued operations.
Net income in 2007 was $24.3 million, or $2.07 per fully diluted share, compared to a loss of $3.7 million, or a loss of $0.33 per fully diluted share, in 2006.
Financial Condition
As of December 31, 2007, Great China International Holdings had $10.0 million in cash and equivalents and total assets of $100.5 million. The Company had $25.2 million and $5.5 million in short-term loans and long-term debt, respectively, compared to $51.3 million and $2.0 million, respectively, as of December 31, 2006. Stockholders' equity at December 31, 2007 was $25.4 million, compared to $0.09 million at December 31, 2006. The Company generated $60 million in cash flows from operating activities in 2007, compared to $4.5 million in 2006.
2008 Outlook
"2007 was an extremely successful year for us. We completed two major transactions which improved our capital reserves and positioned us to seek additional opportunities in real estate development and investment in 2008 and beyond. In the coming year, we plan to build on this success by expanding our real estate development activities in both the commercial and residential fields. We are currently evaluating a number of projects that we believe will be beneficial to our shareholders," said Mr. Jiang. "In our efforts to improve our internal control system, we recently completed a top-down risk assessment designed to document our existing controls and identify areas where improvements are needed. In 2008, we hope to further improve corporate governance and oversight."
Recent Events
On March 14, 2008, the Company appointed Mr. Raymond Reed Baker as a director to its Board of Directors. Mr. Baker is a Managing Director with The One World Investment Group. He began his career with Pricewaterhouse Coopers LLP, serving in the Transition Services practice and specializing in financial due diligence. Mr. Baker is a Certified Public Accountant in the state of Pennsylvania, has a B.S. in Accounting from The Pennsylvania State University and an MBA from Hong Kong University. Ms. Chen Jin Rong resigned as an independent director on April 2, 2008 due to personal reasons.
About Great China International Holdings, Inc.
Founded in 1989, Great China International Holdings' wholly owned subsidiary, Shenyang Maryland International Industry Co., Ltd., is the largest non-state-owned real estate developers in Northeast China. The company's core business is premium residential and commercial development and management. It currently owns and manages the President Building, which was completed in April 2002, with 20 tenants comprised of Fortune 500 companies, including General Electric (China) Co., Ltd., Johnson & Johnson, Kodak and Philip Morris. The company's prior developments included the Maryland Building, Qiyun New Village, Peacock Garden, University Campus of Shenyang Teacher's University, and Chenglong Garden, mostly located in Shenyang. For more information, visit http://www.greatchinaholdings.com/.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: This press release contains certain "forward-looking statements," as defined in the United States Private Securities Litigation Reform Act of 1995, that involve a number of risks and uncertainties. There can be no assurance that such statements will prove to be accurate and the actual results and future events could differ materially from management's current expectations. Such factors include, but are not limited to the Company's ability to maintain its existing bank loan and to obtain additional bank loans to finance projects, the demand for residential and commercial real estate properties in the Shenyang region, the Company's relationship with the independent contractors, risk related to property development, potential liability due to the practice of pre-selling projects, competition in the real estate development market, and other risk factors related to doing business in China. The Company undertakes no obligation to publicly update or revise any forward- looking statements, whether as a result of new information, future events or otherwise.
GREAT CHINA INTERNATIONAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2007 and 2006
2007 2006
Revenues
Real estate sales $4,378,993 $7,205,954
Rental and management fee income 5,296,635 5,532,339
Total revenues 9,675,627 12,738,293
Cost of revenues 5,980,853 6,708,995
Gross profit 3,694,774 6,029,298
Expenses
Operating and selling expenses 414,179 1,824,710
Administrative expenses 6,831,838 3,860,917
Depreciation and amortization 2,343,721 2,051,664
Total expenses 9,589,739 7,737,291
Income (loss) from operations (5,894,965) (1,707,993)
Other income (expense)
Land leveling income, net 1,929,041 --
Gain on settlement of debt 11,115,201 --
Loss on terminated project (1,504,604) --
Other income (expense) (642,577) 1,268,529
Interest and finance costs (3,047,347) (3,275,175)
Total other income (expense) 7,849,714 (2,006,646)
Income (loss) before income taxes 1,954,749 (3,714,639)
Provision for income taxes 1,514,810
Net income (loss) from continuing
operations 439,939 (3,714,639)
Discontinued operations
Loss from operations of subsidiary (61,271) (603,395)
Gain from disposal of subsidiary 23,947,054 571,232
Income (loss) from discontinued
operations 23,885,783 (32,163)
Net income (loss) 24,325,722 (3,746,802)
Other comprehensive income:
Foreign currency translation
adjustment 1,000,202 268,605
Net comprehensive income (loss) $25,325,923 $(3,478,197)
Net income (loss) per share from
continuing operations
Basic & diluted $0.04 $(0.32)
Net income (loss) per share from
discontinued operations
Basic & diluted $2.03 $(0.00)
Net income (loss) per share
Basic & diluted $2.07 $(0.33)
Weighted average number of shares
outstanding:
Basic & diluted 11,759,966 11,439,751
GREAT CHINA INTERNATIONAL HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2007 AND 2006
2007 2006
ASSETS
Current assets:
Cash and equivalents $10,044,579 $1,769,744
Accounts receivable, net 325,058 1,454,164
Receivable on disposal of
subsidiaries 30,701,957
Other receivable, net 1,070,863 2,731,463
Properties held for resale 7,696,437 10,620,550
Prepaid expenses 86,617
Total current assets 49,838,893 16,662,538
Property and equipment, net 50,632,336 43,894,578
Construction in progress 9,372,189
Total assets $100,471,229 $69,929,305
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term loans $25,231,297 $51,308,184
Accounts payable and accrued
expenses 8,615,415 8,113,187
Other payable 5,723,489 3,209,289
Payable to disposed subsidiaries 10,494,449
Commission payable 8,898,502
Advances from buyers 2,034,019 3,004,011
Amounts due to related companies 695,002
Taxes payable 8,552,316 1,083,765
Current portion of long-term debt 428,076
Total current liabilities 69,549,487 67,841,514
Long term debt, net of current
portion shown above 5,486,968 1,999,465
Total liabilities 75,036,455 69,840,979
Stockholders' equity:
Common stock, $.001 par value
50,000,000 shares authorized,
11,759,966 issued and outstanding
at December 31, 2007 and
2006, respectively 11,760 11,760
Additional paid in capital 4,562,855 4,542,308
Statutory reserve 638,128
Other comprehensive income 1,468,546 468,344
Retained earning /
(accumulated deficit) 18,753,485 (4,934,086)
Total stockholders' equity 25,434,773 88,326
Total liabilities and
stockholders' equity $100,471,229 $69,929,305
GREAT CHINA INTERNATIONAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2007 and 2006
2007 2006
Cash flows from operating activities:
Net income (loss) $ 24,325,722 $(3,746,802)
Adjustments to reconcile net income
(loss) to operating activities -
Depreciation and amortization 2,343,721 2,051,664
(Reduction in) Provision for doubtful
accounts 3,731,419 (335,421)
Non-cash stock compensation expense 20,524 513,835
Loan closing costs 723,612
(Increase)/decrease in assets:
Restricted cash 482,548
Accounts receivable and other receivable 1,916,364 (600,796)
Other receivable (3,135,764) 810,702
Advances to suppliers --
Prepaid expenses 778,975 1,236,771
Amounts due from related parties --
Properties held for resale 3,540,825 3,945,587
Increase/(decrease) in liabilities:
Accounts payable and other payables and
accrued expenses 24,358,712 (532,399)
Deposits held (87,443)
Advances from buyers (91,924) 186,455
Income and other taxes payable 2,242,023 428,996
Net cash provided by operating activities
from continuing operations 60,030,598 5,077,309
Net cash provided by/(used in) operating
activities from discontinue operations -- (559,415)
Net cash provided by operating activities 60,030,598 4,517,894
Cash flows from investing activities:
Construction in progress 9,630,817 (6,466,661)
Purchases of property & equipment (7,354,196) (1,042,194)
Sale of property & equipment 1,641,649 117,053
Net cash provided by/(used in) investing
activities from continuing operations 3,918,271 (7,391,802)
Net cash used in investing activities
from discontinue operation (30,701,958) --
Net cash used in investing activities (26,783,687) (7,391,802)
Cash flows from financing activities:
Loan proceeds -- 76,835,664
Loan repayments (25,792,012) (87,664,216)
Advances from (to) directors and
affiliated companies (430,262) 1,828,512
Dividends -- --
Proceeds from stock issuance, net of
offering costs -- 2,478,280
Net cash used in financing activities
from continuing operations (26,222,274) (6,521,760)
Net cash used in financing activities
from discontinue operation -- --
Net cash provided by (used in) financing
activities (26,222,274) (6,521,760)
Effect of exchange differences 1,250,198 268,605
Net increase (decrease) in cash and cash
equivalents 8,274,834 (9,127,063)
Cash and cash equivalents, beginning of
period $1,769,744 $10,896,807
Cash and cash equivalents, end of period $10,044,579 $1,769,744