Boyuan Reports FY2013 Financial Results
- Record annual revenue of $209 million -
TORONTO, Sept. 27, 2013 /CNW/ - Boyuan Construction Group, Inc., TSX: BOY, BOY.DB.A) a fast-growing construction company in China of commercial, residential and municipal infrastructure projects, reported today its financial results for the three and 12-month periods ended June 30, 2013. All figures are in U.S. dollars unless otherwise stated.
Selected Fiscal Year Financial Highlights
|In thousands except share and % data||FY2013||FY2012||Change|
|Gross profit margins||14.6%||16.2%|
|Earnings per share - diluted||$0.31||$0.36||-13.8%|
|June 30, 2013||June 30, 2012|
|Cash, cash equivalents and restricted cash||$13,321||$11,081||20.2%|
"We were able to recognize our second consecutive year of record revenue in spite of the tight liquidity for property developers and the restrictive central government policies that continue to characterize the current market," said Mr. Cai Liang Shou, Chairman of Boyuan Construction Group. "We believe the Boyuan's performance once again demonstrates our commitment to actively pursue high value opportunities in spite of market conditions, while validating our continuing commitment to remain selective in choosing which new construction projects we accept in order to minimize risk, preserve capital and ensure profitability."
FY2013 Operational and Financial Highlights
- Record annual revenue of $209.2 million, up 10.5% from $189.3 million in FY2012
- Net income of $7.9 million, or $0.31 per diluted share
- $46.2 million worth of projects initiated during the fiscal year
- Total cash of $13.3 million, up 20.2% from $11.1 million in FY2012
- EBITDA of $25.8 million
Highlights Subsequent to Year End
- Initiated four construction projects in Sanya City on the south coast of Hainan Island: a multi-family residential complex valued at US$17.0 million; a mid-size hotel valued at US$3.4 million; a multi-family residential complex valued at US$15.6 million; a water theme park valued at US$12.0 million
- Initiated two construction projects in Wanning City in the southeast of Hainan Island: a multi-family residential complex valued at US$38.9 million; a commercial complex valued at US$24.8 million.
- Initiated a construction project in Qiongzhong, an autonomous county located in the central part of Hainan Island: a multi-family residential complex valued at US$7.9 million
1 EBITDA is defined as earnings before interest, income taxes,
depreciation and amortization. EBITDA is not a defined performance
measure under IFRS.
Review of Financial Results
Revenue for the 12-month period ended June 30, 2013 was $209.2 million, up 10.5% from $189.3 million for FY2012. Boyuan recognizes revenue on the percentage-of-completion method. Measures introduced by the Chinese central government two years ago in an effort to cool down property markets have adversely impacted business activities resulting in slower growth in revenue and a smaller gross margin. The Company has also become more selective in which construction projects it chooses under the current uncertain economic environment. New projects undertaken in FY2013 amounted to $46.2 million. Typically the Company's projects have a duration of between one and three years.
Cost of construction for FY2013 was $178.6 million, up 12.6% from $158.6 million for FY2012. The increase was primarily due to higher expenses associated with greater project volume. Cost of construction includes all direct material, labor, subcontract and other related costs, such as equipment repairs. The two major components of the cost of construction are direct material and labour costs. Direct material costs were $136.4 million and labour cost was $38.9 million in FY2013. In comparison, direct material costs and labour costs were $114.9 million and $39.4 million respectively in FY2012.
Gross profit for FY2013 was $30.6 million, which represented a margin of 14.6% on revenue. Gross profit for the last fiscal year was also $30.6 million, which represented a margin of 16.2% on revenue. The Company has experienced a slight downward pressure on margins under the current real estate market situation in China. Developers are becoming more price-sensitive and have longer development cycles, thus eroding some of the Company's normal margins. Historically, Boyuan's gross profit margins have been in the range of 15% to 17%.
G&A expenses were $5.8 million in FY2013 compared to $4.8 million in FY2012. The increase was mainly due to an increase in legal, audit and penalty expenses in relation to the OSC investigation. The increase in the company's business activities also contributed to the increase in general expenses such as travel and insurance.
Interest expense for FY2013 was $8.4 million, an increase of $1.0 million over $7.4 million last year. The increase was primarily due to an increase in bank loans and bank notes payable. The average interest rates for bank loans were also higher this year due to the generally tight liquidity situation in the PRC.
There was no minimum total return (MTR) charge for FY2013 as the MTR was settled in FY2012.
After-tax net income for FY2013 was $7.9 million, or $0.31 per fully diluted share, compared to net income of $9.4 million, or $0.36 per fully diluted share, for FY2012. The decrease was principally due to a smaller gross margins and an increase in amortization expenses and interest expenses.
The Company had working capital of $79.8 million, including cash, cash equivalents, and restricted cash totalling $13.3 million as at June 30, 2013. This compares to $54.1 million and $11.1 million respectively at June 30, 2012.
Selected Q4 2013 Financial Highlights
|In thousands except share and % data||Q4 2012||Q4 2012||Change|
|Gross profit margin||14.2%||17.8%|
|Earnings per share - diluted||$0.09||$0.05||80.0%|
Revenue for the three-month period ended June 30, 2013 was $61.5 million, up 43.4% from $42.9 million for Q4 FY2012. Historically, the fourth quarter is the Company's strongest and busiest period due to a variety of seasonal factors, and last year the Company had an exceptionally weak Q4.
Cost of construction for Q4 FY2013 was $52.8 million, up 49.6% from $35.3 million for Q4 FY2012. The increase was consistent with the increase in construction revenue recorded in this period.
Gross profit for Q4 FY2013 was $8.7 million, or 14.2% of revenue. Gross profit for Q4 FY2012 was $7.6 million, or 17.8% of revenue.
Net income after taxes for Q4 FY2013 was $2.3 million or $0.09 per share fully diluted. This compares to net income after taxes of $1.3 million, or $0.05 per fully diluted share, for Q4 FY2012.
"The continued growth of China's middle class and the ongoing development of tier two cities as a result of urbanization suggest that higher demand for our construction services will remain strong in the long term," added Mr. Shou. "In the near term, the restrictive measures imposed by the central government on the residential market, as well as the tightening of financing facilities to property developers, have already led to a slower pace of growth for us. We believe this situation will continue in the near term and therefore we will continue to be very selective in which new construction projects we take on in order to minimize risk and preserve capital."
Boyuan's consolidated statements for the three- and 12-month periods ended June 30, 2013 and related management's discussion and analysis (MD&A) will be filed with securities regulatory authorities within applicable timelines and will be available via SEDAR at www.sedar.com.
Conference Call Notice
The Company will hold a conference call to discuss its fiscal 2013 financial results on Monday, September 30, 2013 at 10:00 a.m. ET. Mr. Paul Law, Boyuan's Chief Financial Officer, will host the call.
All interested parties can join the call by dialing 647-427-7450 or 1-888-231-8191. Please dial in 15 minutes prior to the call to secure a line.
The conference call will be archived for replay until Monday, October 7, 2013 at midnight. To access the archived conference call, please dial 1-855-859-2056 or 416-849-0833 and enter the reservation number 63780410#.
A live audio webcast of the conference call will be available from the investor relations section of the Company's website, www.boyuangroup.com, or from www.newswire.ca. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. The webcast will be archived at the above web site for 30 days.
About Boyuan Construction Group, Inc.
Based in Jiaxing City, China, Boyuan Construction Group, Inc. is in the business of commercial building and residential construction, municipal infrastructure and engineering projects. In its last three fiscal years ending June 30, 2012, Boyuan completed more than 50 projects for a number of private and public sector clients. Boyuan's current project backlog includes residential, commercial, industrial and mixed-use developments. From its operating bases in Zhejiang Province and in Hainan Province, Boyuan focuses on construction projects in China's fast-growing regions of the Yangtze River Delta, Hainan Province and Shandong Province. For more information visit www.boyuangroup.com.
Caution Regarding Forward-Looking Information:
Certain information contained in this press release constitutes forward-looking information, which is information relating to future events or the Company's future performance and which is inherently uncertain. Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information. The Company believes the expectations reflected in the forward-looking information are reasonable but no assurance can be given that these expectations will prove to be correct and readers are cautioned not to place undue reliance on forward-looking information contained in this press release. Some of the risks and other factors which could cause results to differ materially from those expressed in the forward-looking information contained in this press release have been identified in the Company's AIF for the fiscal year ended June 30, 2013 and in the Company's other public disclosure documents filed with certain Canadian securities regulatory authorities and available at www.sedar.com. The forward-looking information contained in this press release is made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as otherwise required by law.
SOURCE Boyuan Construction Group, Inc.For further information:
Boyuan Construction Group, Inc.
Mr. Paul Law, CFO
+(852) 9329 5088
(416) 815-0700 ext. 233