CGDI China Growth Development Inc (CE)

China Growth Development, Inc. (OTCBB:CGDI) (�China Growth Development� or �the Company�), the largest investor, owner and manager of commercial real estate in Taiyuan, the capital city of the Shanxi Province, PRC, today announced its financial results for the third quarter ended September 30, 2008. Third Quarter 2008 Highlights: Net revenue increased approximately 23% year-over-year to $4.42 million. Operating expenses decreased approximately 8% year-over-year to $2.04 million. Net income improved approximately 45% year-over-year to $1.38 million, or $0.04 per diluted share. Net income for the first nine months of 2008 was $2.6 million, or $0.08 per diluted share, compared with $2.9 million or $0.09 per share for the first nine months of 2007. �The continued growth in our third quarter is a testament to the strength of our business model and the success of the prime location of our shopping centers,� stated Mr. Ning Liu, COO of China Growth Development, Inc. �We offer our tenants innovative payment options that enable us to maximize lease payments and reduce our accounts receivable. We also boast a seasoned management team with extensive and innovative commercial real estate experience. �Based on our land banking strategy to acquire three additional shopping centers on popular and profitable land in Taiyuan we are well positioned to continue to grow our business,� Mr. Ning added, �In addition, we will continue our financially prudent practice of requiring prepaid rent from our commercial tenants for the entire term of their leases, which typically span five to eight years. This method allows for an expeditious return of capital to the Company, while greatly reducing debt service carried on the properties.� Financial Results for the Three Months Ended September 30, 2008 Net revenue for the third quarter of 2008 increased by approximately 23% to $4.4 million, compared with $3.6 million for the third quarter of 2007. The increase was primarily the result of recognition of rental revenue from the Company�s new Xicheng Shopping Mall, which began operations in December 2007. Operating expenses for the three months ended September 30, 2008 decreased by approximately 8% to $2.0 million, compared with $2.2 million for the same period in 2007. The decrease in operating expenses was mainly attributed to the longer estimated economic useful lives applied for amortization of rights to use land. For the three months ended September 30, 2008 net income was $1.4 million, or $0.04 per diluted share based on approximately 35.0 million weighted average shares outstanding. This compares with net income for the three months ended September 30, 2007 of approximately $957,000, or $0.03 per diluted share based on 31.5 million weighted average shares outstanding. Financial Results for the Nine Months Ended September 30, 2008 Net revenue for the nine months ended September 30, 2008 increased by 20% to $11.8 million, compared with $9.8 million for the comparable period in 2007. The increase was primarily the result of recognition of rental revenue from the Company�s new Xicheng Shopping Mall, which began operations in December 2007. Operating expenses increased by 12% to $6.3 million, compared with $5.6 million. This increase was primarily attributed to one-time charges of approximately $880,000 associated with the issuances of warrants related to the closing of the Company�s reverse acquisition in May 2008. Excluding the one-time charges, operating expenses for the third quarter of 2008 would have decreased 3% year-over-year to $5.5 million. Minority interest for the nine months ended September 30, 2008 increased to $2.3 million, compared with $914,000 for the nine months ended September 30, 2007. This increase resulted from the decline in ownership of the Company�s five subsidiaries in Taiyuan, China to 60.9% from 76.1% in 2007, subsequent to the reverse acquisition in May 2008. Net income for the first nine months of 2008 was $2.6 million, or $0.08 per diluted share based on 33.1 million weighted average shares outstanding. This compares with net income for the first nine months of 2007 of $2.9 million, or $0.09 per share based on 31.5 million weighted average shares outstanding. The decrease in the year-to-date net income was primarily attributed to the increase in minority interest and the one-time charges associated with the closing of the Company�s reverse acquisition. About China Growth Development China Growth Development Inc. (CGDI) is the largest investor, owner and manager of commercial real estate in the capital city of Taiyuan, located in the Shanxi Province of southern China. China Growth Development Inc. owns and manages 5,000 commercial units within its six strategically located shopping centers, servicing an urban population of 3.4 million people. Formed in 2005, CGDI provides high-quality leasing opportunities for both retail and wholesale clients in convenient, modern shopping centers. Our continued focus on anticipating and satisfying the evolving needs of our retail and wholesale clients has positioned us as a leader in commercial real estate leasing. With a portfolio valued at more than US $60 million and more than half of the market share in commercial leasing, we are committed to defining the urban commercial landscape of Shanxi. Forward Looking Statements Forward Looking Statements: This news release contains certain �forward-looking statements.� Forward-looking statements are based on current expectations and assumptions and are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, and many of which are beyond the Company�s control. The forward-looking statements are also identified through the use of words �believe,� enable,� �may,� �will,� �could,� �intends,� �estimate,� �anticipate,� �plan,� �predict� �probable,� �potential,� �possible,� �should,� �continue,� and other words of similar meaning. Actual results could differ materially from these forward-looking statements as a result of a number of risk factors detailed in the Company�s�periodic reports filed with the SEC. Given these risks and uncertainties, investors are cautioned not to place undue reliance on such forward-looking statements and no assurances can be given that such statements will be achieved. China Growth Development, Inc. does not assume any duty to publicly update or revise the material contained herein. CHINA GROWTH DEVELOPMENT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) � � � � � For The Three Months Ended September 30, For The Nine Months Ended September 30, 2008 2007 2008 2007 � Net revenue $ 4,422,398 $ 3,601,977 $ 11,789,732 $ 9,797,877 � General, selling and administrative expenses � 2,037,041 � 2,223,198 � 6,333,042 � 5,646,011 � Operating income 2,385,356 1,378,779 5,456,690 4,151,866 � Non-operating income (expenses) Interest income 1,714 63,473 5,180 67,187 Interest expense (53,747 ) (29,249 ) (226,364 ) (168,220 ) Other expense � (35,133 ) � (143,907 ) � (136,681 ) � (143,907 ) Total non-operating expenses � (87,167 ) � (109,683 ) � (357,866 ) � (244,940 ) � Income before provision for income tax 2,298,189 1,269,096 5,098,824 3,906,926 � Provision for income tax � 26,872 � 14,848 � 69,941 � 45,711 � Net income before minority interest 2,271,317 1,254,248 5,028,883 3,861,215 � Minority interest � 886,392 � 296,902 � 2,319,339 � 914,015 � Net income from continuing operations 1,384,925 957,346 2,709,544 2,947,200 � Loss from discontinued operations � - � - � (87,064 ) � - � Net income $ 1,384,925 $ 957,346 $ 2,622,480 $ 2,947,200 � Weighted average number of common shares: Outstanding, basic and diluted � 34,970,007 � 31,500,000 � 33,018,023 � 31,500,000 � Net earnings per share from continuing operations $ 0.04 $ 0.03 $ 0.08 $ 0.09 Net loss per share from discontinued operations $ - $ - $ - $ - Basic & diluted earnings per share $ 0.04 $ 0.03 $ 0.08 $ 0.09 � CHINA GROWTH DEVELOPMENT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) � For The Nine Months Ended September 30, 2008 2007 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 2,622,480 $ 2,947,200 Adjustments to reconcile net income to net cash provided by operating activities: � � � Depreciation & amortization � 1,791,574 1,307,132 Minority interest 2,319,339 914,015 Warrants issued for compensation 191,138 - Warrants issued in reverse acquisition 689,347 - Loss from discontinued operations 87,064 - Decrease (increase) in current assets: Other receivable (44,557 ) (78,634 ) Other receivable from related parties (114,717 ) - Interest receivable from related parties - 3,658 Advances to suppliers (104,688 ) 632,632 Prepaid expenses 22,885 141,644 Increase (decrease) in liabilities: Construction payable (537,629 ) (932,081 ) Other payable 230,432 1,212,219 Advance from customers 269,863 420,587 Tax payable 99,170 802,351 Accrued expense (117,609 ) 30,725 Deferred revenue (5,467,843 ) (3,738,006 ) Net cash used in discontinued operations (3,893 ) - � � � � Net cash provided by operating activities 1,932,355 3,663,442 � CASH FLOWS FROM INVESTING ACTIVITIES Cash acquired on reverse acquisition 3,742 - Acquisition of property & equipment (867,933 ) (4,046,418 ) Proceeds from loan receivables from employees 9,232 - Proceeds from loan receivables from related parties - 56,722 Proceeds from loan receivables from others - 82,474 � � � � Net cash used in investing activities (854,959 ) (3,907,221 ) � CASH FLOWS FROM FINANCING ACTIVITIES Net proceeds from loans from related parties 127,307 4,227 Repayments of short-term loan (145,695 ) (1,201,538 ) Proceeds from long-term debt - 1,100,975 Net cash provided by discontinued operations 3,531 - � � � � Net cash used in financing activities (14,858 ) (96,337 ) � EFFECT OF EXCHANGE RATE CHANGE ON CASH AND CASH EQUIVALENTS � 107,711 � 58,867 � NET (DECREASE) INCREASE IN CASH & CASH EQUIVALENTS 1,170,250 (281,249 ) � CASH & CASH EQUIVALENTS, BEGINNING BALANCE � 1,184,621 � 1,676,718 � CASH & CASH EQUIVALENTS, ENDING BALANCE $ 2,354,871 $ 1,395,468 � SUPPLEMENTAL DISCLOSURES: Interest paid $ 226,364 $ 168,220 Income tax paid $ - $ - � CHINA GROWTH DEVELOPMENT, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS � � � Assets September 30, 2008 December 31, 2007 (Unaudited) (Audited) Current Assets Cash and cash equivalents $ 2,354,871 $ 1,184,621 Other receivables, net 45,924 8,947 Other receivables from related party 216,753 92,634 Interest receivables from related parties 9,741 9,160 Notes receivable from related party 145,792 137,088 Prepaid expenses - 22,179 Advances to suppliers 11,685,044 10,885,969 Assets from discontinued operations � 46,280 � - � Total Current Assets 14,504,405 12,340,598 � Fixed assets, net 61,050,812 58,139,771 � Intangible assets, net � 10,770,378 � 10,288,717 � Total Assets $ 86,325,595 $ 80,769,086 � � Liabilities and Stockholders' Equity � Current Liabilities Accounts payable and accrued expenses $ 97,466 $ 205,627 Loans payable 1,960,899 1,985,030 Loans payable to related parties 512,526 358,548 Advance from Customers 278,143 - Construction payable 2,738,064 3,095,639 Income tax payable 346,117 229,343 Other payable 764,754 495,774 Deferred revenue - current 10,149,842 9,530,814 Liabilities from discontinued operations � 75,634 � - � Total Current Liabilities 16,923,444 15,900,775 � Deferred revenue - non-current � 25,724,975 � 29,501,367 � Total Liabilities 42,648,419 45,402,142 � Minority interest 15,934,462 7,159,250 � Stockholders' Equity Preferred stock - $.0001 par value; 10,000 shares authorized, 0 shares issued and outstanding - - Common stock - $.0001 par value; 200,000,000 shares authorized, 34,970,007 and 31,500,000 shares issued and outstanding 3,497 3,150 Additional paid-in capital 5,914,536 9,131,176 Other comprehensive income 4,433,889 1,958,238 Retained earnings � 17,390,792 � 17,115,130 � Total Stockholders' Equity � 27,742,714 � 28,207,694 � Total Liabilities and Stockholders' Equity $ 86,325,595 $ 80,769,086