China HGS Reports Second Quarter of Fiscal Year 2016 Results

CHINA HGS REAL ESTATE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

March 31

September 30

2016

2015

ASSETS

Current assets:

Cash

$

1,645,683

$

1,333,919

Restricted cash

1,754,899

1,715,268

Cost and earnings in excess of billings

10,776,949

11,825,036

Real estate property development completed

70,037,049

75,391,512

Real estate property under development

54,500,779

55,154,153

Other current assets

2,589,958

228,223

Total current assets

141,305,317

145,648,111

Property, plant and equipment, net

728,832

780,038

Real estate property development completed, net of current portion

1,953,991

2,140,271

Security deposits for land use right

3,101,064

3,146,237

Real estate property under development, net of current portion

162,980,474

143,660,781

Due from local government for real estate property development completed

3,020,993

3,065,000

        Total Assets

$

313,090,671

$

298,440,438

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Bank loan

$

1,550,532

$

6,292,474

Other loans

-

5,674,239

Accounts payable

27,463,408

41,501,682

Other payables

13,211,084

12,676,362

Construction deposits

1,510,987

1,959,706

Billings in excess of cost and earnings

2,293,100

3,315,302

Customer deposits

22,113,775

17,387,969

Shareholder loan

2,296,867

1,810,000

Accrued expenses

4,351,823

4,855,891

Taxes  payable

16,047,250

15,830,886

Total current liabilities

90,838,826

111,304,511

Deferred tax liabilities

4,798,516

4,711,161

Customer deposits, net of current portion

9,259,448

8,246,004

Other loans, less current portion

49,334,131

15,731,186

Construction deposits, net of current portion

912,119

972,432

Total liabilities

155,143,040

140,965,294

Commitments and Contingencies

Stockholders' equity

Common stock, $0.001 par value, 100,000,000 shares

authorized, 45,050,000 shares issued and outstanding

March 31, 2016 and September 30, 2015

45,050

45,050

Additional paid-in capital

17,794,116

17,764,316

Statutory surplus

16,439,333

16,439,333

Retained earnings

122,395,463

119,668,198

Accumulated other comprehensive income

1,273,669

3,558,247

Total stockholders' equity

157,947,631

157,475,144

Total Liabilities and Stockholders' Equity

$

313,090,671

$

298,440,438

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

CHINA HGS REAL ESTATE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME  AND COMPREHENSIVE INCOME 

(Unaudited)

Three months ended March 31,

Six months ended  31,

2016

2015

2016

2015

  Real estate sales

$

6,851,859

$

23,558,742

$

12,708,466

$

34,124,429

Less: Sales tax

(481,325)

(1,566,839)

(893,313)

(2,237,389)

(4,128,020)

(11,330,140)

(7,336,909)

(18,355,946)

Gross profit

2,242,514

10,661,763

4,478,244

13,531,094

Operating expenses

Selling and distribution expenses

126,026

217,976

216,179

593,142

General and administrative expenses

580,851

593,348

1,059,362

1,209,526

Total operating expenses

706,877

811,324

1,275,541

1,802,668

Operating income

1,535,637

9,850,439

3.202.703

11,728,426

Interest income

-

3,276

-

4,440

Interest expense

(69,094)

(18,100)

(173,140)

(36,200)

Income before income taxes

1,466,543

9,835,615

3,029,563

11,696,666

Provision for income taxes

166,502

565,514

302,298

800,575

Net income

1,300,041

9,270,101

2,727,265

10,896,091

Other comprehensive income (loss)

Foreign currency translation adjustment

1,054,539

593,266

(2,284,578)

780,027

Comprehensive income

$

2,354,580

$

9,863,367

$

442,687

$

11,676,118

Basic and diluted income per common share

Basic and diluted

$

0.03

$

0. 21

$

0.06

$

0.24

Weighted average common shares outstanding

Basic

45,050,000

45,050,000

45,050,000

45,050,000

Diluted

45,050,000

45,120,699

45,050,000

45,120,699

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

CHINA HGS REAL ESTATE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Six months ended March 31,

2016

2015

Cash flows from operating activities

Net income

$

2,727,265

$

10,896,091

Adjustments to reconcile net income to net cash providing by (used in) operating activities:

               Deferred tax provision

154,618

734,407

Stock based compensation

29,800

-

Depreciation

39,909

42,012

Changes in assets and liabilities:

Due from local government for real estate property development completed

-

814,120

Advances to vendors

(22,979)

(65,130)

Cost and earnings in excess of billings

876,158

1,299,070

Real estate property development completed

4,416,727

1,675,022

Real estate property under development

(21,468,295)

801,585

Other current assets

(2,336,254)

1,176,152

Accounts payables

(13,409,544)

(17,215,394)

Other payables

714,978

547,901

Billings in excess of cost and earnings

(972,219)

2,985,006

Customer deposits

6,092,375

(890,271)

Construction deposits

(465,792)

(9,832)

Accrued expenses

(437,604)

767,099

Taxes payable

442,578

1,004,726

Net cash (used in) providing by operating activities

(23,618,279)

4,562,564

Cash flow from financing activities

Restricted cash

(64,102)

(30,168)

Proceeds from shareholder loan

842,975

5,856,780

Repayment of shareholder loan

(357,298)

-

Repayment of bank loans

(4,640,228)

(6,512,961)

Proceeds from other loans

33,746,140

4,884,721

Repayment of other loans

(5,579,101)

(8,873,910)

Net cash provided by (used in) financing activities

23,948,386

(4,675,538)

Effect of changes of foreign exchange rate on cash

(18,343)

5,884

Net increase (decrease) in cash

311,764

(107,090)

Cash, beginning of period

1,333,919

1,125,545

Cash, end of period

$

1,645,683

$

1,018,455

Supplemental disclosures of cash flow information:

Interest paid

$

961,149

$

1,056,229

Income taxes paid

$

162,762

$

72,089