XI'AN, China--China Properties Developments, Inc. (OTCBB:CPDV) through its majority owned subsidiaries, is primarily engaged in the acquisition and development of land holdings, and the development, sale, rental, and management of mixed-use residential, commercial and office properties in the City of Xi’an, the capital of Shaanxi Province in the People’s Republic of China, recently announced results for the fiscal year ended December 31, 2007.
For the year ended December 31, 2007, revenues were $2,408,000 for the year ended December 31, 2007 compared to revenues of $4,734,000 for the year ended December 31, 2006. The revenues were due to sales of condominium units and office space in the Yangming building which sales decreased in 2007 compared to the prior year. Gross profit, defined as sales less cost of sales, was $722,000 for the year ended December 31, 2007 compared to gross profit of $1,440,000 for the year ended December 31, 2006. Cost of sales consists of costs such as construction and labor costs. Cost of sales were $1,686,000 for the year ended December 31, 2007 compared to $3,294,000 for the year ended December 31, 2006 which change was primarily due to reduced costs resulting from the decrease in sales of condominium units and office space in 2007. We also achieved rental income of $375,000 for the year ended December 31, 2007 compared to rental income of $314,000 for the year ended December 31, 2006. We had a comprehensive loss of $36,000 or $0.00 per share, for the year ended December 31, 2007 compared to a comprehensive loss of $210,000 or ($0.01) per share, for the year ended December 31, 2006. Although revenues and our gross profit decreased in 2007 compared to the prior year, with operating income decreasing to a lesser extent, we incurred late delivery penalties of $451,000 in 2006 compared to late delivery penalties of only $39,000 in 2007.
China Properties terminated its February 16, 2006, agreement with the shareholders of Shaanxi Xinyuan Real Estate Co. Ltd., owner and developer of the Yan Ta Shopping Mall, and entered into a new share subscription agreement with Shaanxi, a People’s Republic of China limited liability corporation, pursuant to which China Properties has agreed to acquire new treasury stock from Shaanxi which shall provide China Properties with 90% equity ownership of Shaanxi. The total purchase price for the share acquisition is 230 million Renminbi, estimated to be approximately US$30 million at the current currency exchange rate which is subject to change. The parties have agreed that the obligation of China Properties to purchase the shares is subject to China Properties obtaining equity or debt financing for the full amount of the purchase price. There is no assurance that such financing will be obtained by China Properties on acceptable terms. Assuming the closing of the transaction, Shaanxi will become a 90% owned subsidiary of China Properties. The use of proceeds from the US$30 million share issuance by Shaanxi will be to fund a portion of the costs of the construction of Phase II of the Yan-Ta Shopping Mall.
Comprising a large urban park, a high-end shopping mall and entertainment facilities, the Yan-Ta Shopping Mall is listed as one of The City of Xi'an's Key Projects for 2005/06. The park will occupy a total of 12 acres. Below ground, a three-story shopping mall will provide 1,291,670 square feet of retail and commercial space plus 2,000 parking spaces.
Construction of Phase I, representing 25% of the Yan-Ta Shopping Mall, was completed ahead of schedule and under budget to open its doors on Friday, October 26, 2007. In addition, over 90% of Phase I of the Yan-Ta Shopping Mall has been leased.
Construction of Phase II is scheduled to commence in mid 2008 and occupancy is scheduled upon completion in late 2009. Total investment in the Yan-Ta Shopping Mall Project will be in excess of $100M US.
Ping'an Wu, Chairman, President and CEO of China Properties Developments, Inc., said, “We are pleased to announce our financial results for 2007. 2007 was another milestone year in the development of China Properties as during the year Shaanxi completed development of the Phase I of the Yan-Ta Shopping Mall ahead of schedule and under budget, and leased out over 90%. We are very excited about plans for the rest of 2008.”
Steven Lou, Director, Executive VP and CFO of China Properties Developments, Inc., stated, “We are pleased with our progress on the Shaanxi Yan Ta Mall acquisition. The Company is continuing to work hard to leverage our position as a publicly traded company. China Properties remains committed to working towards increasing long term shareholder value.”
About The Company
China Properties Developments, Inc. owns 90.28% of its subsidiary, Xi'an Jiahui Real Estate Co. Ltd. formed under the Company Law of the People's Republic of China ("Jiahui"). Jiahui is a sino-foreign joint venture company formed in 1996. China Properties Developments, Inc. develops and manages high-end residential, commercial and office real estate in the city of Xi'an, the capital of Shaanxi Province in the People's Republic of China. One of China's most ancient cities, Xi'an is a thriving cultural, historical and intellectual center, whose population of more than 6 million. The Company has completed development of the Jiahui Office Building and Yangming International Tower. The Company recently entered into an agreement to acquire Shaanxi Xinyuan Real Estate Co., developer of the Yan-Ta Shopping Mall. The Company is currently developing the Garden Villa and Bali Village projects. The total assets of the Company are over US$24 million.
This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks defined in this document and in statements filed from time to time with the Securities and Exchange Commission. All such forward-looking statements, whether written or oral, and whether made by or on behalf of the companies, are expressly qualified by the cautionary statements and any other cautionary statements which may accompany the forward-looking statements. In addition, the companies disclaim any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.