Boyuan Files Amended Financial Statements and Provides Disclosure Update

TORONTO, Nov. 27, 2015 /CNW/ - Boyuan Construction Group, Inc. (TSX: BOY, BOY.DB.A) ("Boyuan" or the "Company"), a growing construction company in China of commercial, residential and municipal infrastructure projects. In accordance to the issuance of a management cease trade order ("MCTO") by the Ontario Securities Commission ("OSC") on October 14, 2015, with the assistance of its auditors, the Company has filed amended and restated financial statements and revised annual MD&A for year ended June 30, 2014 which can be found on SEDAR (www.sedar.com) under the Company's profile.

The effect of the restatement is detailed as follows:

FY2014













Previously

reported

Adjustments

As restated




$

$

$


Consolidated Statement of Financial Position






Accounts receivable - current


12,977,360

(3,762,310)

9,215,050


Unbilled revenue - current


145,188,974

(49,602,854)

95,586,120


Accounts receivable – non current


-

2,803,087

2,803,087


Unbilled revenue – non current


-

32,289,474

32,289,474


Deferred tax assets


-

1,894,382

1,894,382


Deferred tax liabilities


1,427,356

(1,427,356)

-


Retained earnings


72,034,867

(14,950,865)

57,084,002










Previously

reported

Adjustments

As restated






$

$

$

Consolidated Statement of Comprehensive Income (Loss)




Construction revenue

278,340,895

(2,952,421)

275,388,474

General and administrative expenses

6,206,411

(969,387)

5,237,024

Provision for allowance for doubtful accounts

-

1,337,824

1,337,824

Impairment loss recognized on unbilled revenue

-

12,918,514

12,918,514

Interest and other income

147,699

4,282,559

4,430,258

Income taxes

6,239,005

(3,321,738)

2,917,267















In connection with the restatement of the annual financial statements for the fiscal year ended June 30, 2014, the following changes are made to the comparative information with respect to the fiscal year ended June 30, 2013 and its opening balances at July 1, 2012:

FY2013                              












Previously

reported

Adjustments

As restated



$

$

$

Consolidated Statement of Financial Position





Accounts receivable - current


9,706,093

(2,061,880)

7,644,213

Unbilled revenue - current


115,523,781

(37,407,415)

78,116,366

Accounts receivable – non current


-

1,593,146

1,593,146

Unbilled revenue – non current


-

31,560,359

31,560,359

Retained earnings


57,272,085

(6,315,790)

50,956,295















Previously

reported

Adjustments

As restated






$

$

$

Consolidated Statement of Comprehensive Income (Loss)




Construction revenue

209,207,276

(3,796,773)

205,410,503

Interest and other income

239,049

2,893,980

3,133,029





July 1, 2012                            












Previously

reported

Adjustments

As restated



$

$

$

Consolidated Statement of Financial Position





Accounts receivable - current


7,942,807

(838,039)

7,104,608

Unbilled revenue - current


84,098,041

(27,034,759)

57,063,282

Accounts receivable – non current


-

685,294

685,294

Unbilled revenue – non current


-

21,774,507

21,774,507

Retained earnings


50,540,221

(5,412,997)

45,127,224







The following notes describe the impact of the adjustments to the consolidated financial statements: 

(a)   The Company identified certain amounts of unbilled revenue that were impaired due to difficulties and delays in collecting the outstanding balances. A provision of $12,918,514 and $368,437 was recorded for unbilled revenue and accounts receivable respectively resulting in a net decrease of $13,286,951 in net income for the year ended June 30, 2014.

(b)   An impairment provision for accounts receivable of $969,387 previously presented in general and administrative expenses has been reclassified to provision for allowance of doubtful accounts to conform with the presentation of the consolidated financial statements.

(c)    The Company reclassified unbilled revenue of $36,684,340, $37,407,415 and $27,034,759 as at June 30, 2014, June 30, 2013 and July 1, 2012 respectively from current to non-current assets. A discount of $4,394,866, $5,847,056, and $5,260,252 was applied on the non-current balance as at June 30, 2014, June 30, 2013, and July 1, 2012 respectively with the offsetting decrease to revenue.

(d)   The Company reclassified accounts receivable of $3,393,873, $2,061,880, and $838,039 as at June 30, 2014, June 30, 2013, and July 1, 2012 respectively from current to non-current assets. A discount of $590,786, $468,734, and $152,745 was applied on the non-current balance as at June 30, 2014, June 30, 2013, and July 1, 2012 respectively with the offsetting decrease to revenue.

(e)   Accretion income from the discount on non-current accounts receivable and unbilled revenue of $4,282,559 and $2,893,980 was recorded to interest and other income for the years ended June 30, 2014 and 2013 respectively.

(f)     As a result of the impairment provision recorded at June 30, 2014 as described above, a deferred income tax recovery of $3,321,738 was recorded resulting in a decrease in deferred income tax liability of $1,427,356 and an increase in deferred income tax assets of $1,894,382.

As previously announced, The MCTO was issued as a result of Boyuan's delay in filing its audited annual financial statements for the fiscal year ended June 30, 2015 and related Management's Discussion & Analysis, Annual Information Form and CEO and CFO certification of filings (collectively, the "2015 Filings"), by the required date.  The MCTO restricts all trading in and all acquisitions of the securities of the Company, whether direct or indirect, by the Chief Executive Officer and the Chief Financial Officer of the Company until two full business days following the receipt by the OSC of all Annual Filings.  The MCTO will not affect the ability of persons who are not insiders of Boyuan to trade its securities.

Further to its press release issued on November 16, 2015, the Company intends to file restated interim financial statements and MD&As for three subsequent quarters by December 11, 2015, submit the FY2015 filings by December 18, 2015 and file the interim financial statements and MD&A for the first quarter FY2016 by December 23, 2015.

Boyuan intends to satisfy the provisions of the Alternative Information Guidelines as set out in National Policy 12 - 203 for as long as Boyuan remains in default, including the issuance of further by-weekly default status reports, each of which will be issued in the form of a press release. A general cease trade order may be issued if Boyuan fails to file such default status reports on a timely basis.

A copy of the MCTO can be found at the Company's website at www.boyuangroup.com.

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, 2014, Boyuan completed 45 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.  All information other than statements of historical fact may be forward-looking information.  Forward-looking information is often, but not always, identified by the use of words such as "seek", "anticipate", "budget", "plan", "continue", "estimate", "expect", "forecast", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar words or phrases (including negative variations) suggesting future outcomes or statements regarding an outlook. Forward-looking information contained in this press release includes, but is not limited to, management's expectation to restate and revise the 2015 interim filings and expected timing for the completion of the restatement and refiling, management's expectations on the areas and contents of the restatements; management's expectations to make the 2015 filings and expected timing for the filing; and management's expectation to comply with the Alternative Information Guidelines. 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 include, but are not limited to: risk of a general cease trade order bing issued, risk of risk of macro-economy cycle, risk from competition, risk from insufficient marketing to secure new projects, risk in obtaining additional financing, risk involving permits and licences, reliance on key management member, risk from supply of raw materials, risk of financial leverage, risk of bad debts in accounts receivables, risk involved in real estate development, foreign exchange fluctuations, political and economic conditions in China and other risks included in the Company's AIF for the fiscal year ended June 30, 2014 and in the Company's 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 are 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, paullaw@zjboyuan.com.cn; National Equicom, Ms. Renée Lam, (416) 848-1405, rlam@national.ca


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