Boyuan reports record results for fiscal 2009

    
           - Generates revenue of U.S. $101.7 million and exceeds
                          after-tax income target -
    

TORONTO, Oct. 26 /CNW/ - Boyuan Construction Group, Inc., a fast-growing construction company in China of commercial, residential and municipal infrastructure projects, reported its financial results for the three and 12-month periods ended June 30, 2009. All figures are in U.S. dollars unless otherwise stated.

    
    Financial Highlights
    ------------------------------------------------------------------------
                                                Q4 2009   Q4 2008   Change
    ------------------------------------------------------------------------
    Revenue                                     $41.1M    $17.5M    +134.9%
    ------------------------------------------------------------------------
    Gross profit                                $7.4M     $3.7M     +100.0%
    ------------------------------------------------------------------------
    Net income                                  $2.3M     $1.8M     +27.8%
    ------------------------------------------------------------------------
    Adjusted net income(1)                      $4.0M     $1.8M     +122.2%
    ------------------------------------------------------------------------
    Adjusted earnings per share - diluted(2)    $0.16     $0.07     +128.6%
    ------------------------------------------------------------------------

    ------------------------------------------------------------------------
                                                YE 2009   YE 2008   Change
    ------------------------------------------------------------------------
    Revenue                                     $101.7M   $56.2M    +81.0%
    ------------------------------------------------------------------------
    Gross profit                                $16.0M    $9.9M     +61.6%
    ------------------------------------------------------------------------
    Net income                                  $7.9M     $6.2M     +27.4%
    ------------------------------------------------------------------------
    Adjusted net income(1)                      $9.6M     $6.2M     +54.8%
    ------------------------------------------------------------------------
    Adjusted earnings per share - diluted(2)    $0.39     $0.25     +56.0%
    ------------------------------------------------------------------------
    Cash, equivalents,  and restricted cash     $5.5M     $6.9M     -20.2%
    ------------------------------------------------------------------------
    

"We are very pleased with our fiscal and operational performance in 2009," said Mr. Cai Liang Shou, Chairman of Boyuan Construction Group, Inc. "We realized a number of objectives that validated our business strategy and our ability to capitalize on China's urbanization and middle class growth trends. Most notably, we acquired a listing status on the TSX Venture Exchange, generated record revenue of $101.7 million, surpassed our after-tax net income target by $1.1 million and grew our revenue backlog significantly. We expect these milestones will provide a solid platform for us to sustain our momentum in 2010 and beyond."

    
    FY 2009 Highlights
      -  Completed the acquisition of all issued and outstanding common
         shares of SND Energy Ltd. through a reverse-takeover (RTO)
         transaction.
      -  Concurrent with the RTO transaction, completed a private placement
         financing, generating gross proceeds of CDN $4.1 million.
      -  The Company's common shares began trading on the TSX Venture
         Exchange under the symbol BOY and its debentures under the symbol
         BOY.DB.
      -  Generated $9.6 million of adjusted net income after taxes, exceeding
         the target forecast of $8.5 million found in the Company's make-good
         provision.
      -  Appointed Paul Law, CA, as Chief Financial Officer effective
         April 3, 2009.

    Highlights Subsequent to Year End
      -  Signed four new construction project agreements with an aggregate
         value of $48.1 million.
      -  Completed a private placement generating gross proceeds of
         CDN $6.47 million.
      -  Appointed Dr. Fang Lixin, professor at the Guanghua Law School of
         Zhejiang University, to the Company's Board of Directors.
    

Review of Financial Results

Revenue for the fourth quarter ended June 30, 2009 was $41.1 million, up 134.9% from $17.5 million for Q4 of FY2008. Revenue for the 12-month period of FY2009 was $101.7 million, an increase of 81% when compared to FY2008. Revenue is recognized on the percentage-of-completion method. The significant year-over-year growth was primarily attributable to an increase in the number of successful project bids by the Company as well as an increase in demand for construction and engineering services in the Yangtze River Delta and Sanya regions, Boyuan's core markets. Higher demand for construction and engineering services is due to ongoing urban migration and an expansion of China's middle class, which drive the need for new housing, commercial and public infrastructure projects.

Cost of sales for the fourth quarter of FY2009 was $33.6 million compared to $13.8 million for Q4 FY2008. For FY2009, cost of sales was $85.7 million, up from $46.3 million for FY2008. The increase was primarily as a result of higher costs associated with greater project volume and an expanded work force. Cost of sales include all direct material, labor, subcontract and other related costs, such as equipment repairs.

Gross profit for the fourth quarter of FY2009 was $7.4 million, representing a margin of 18% on revenue. Gross profit for the same period last year was $3.7 million, representing a margin of 21% on revenue. Gross profit for FY 2009 increased 61.6% to $16 million from $9.9 million for FY2008. The growth was due to increased project volume and higher value of projects, particularly in the Sanya region.

Income from operations for the fourth quarter of FY2009 was $5.7 million, up 90% from $3.0 million for Q4 FY2008. Income from operations for FY2009 was $13.5 million, an increase of 58.8% when compared to FY2008.

Income tax expense for the fourth quarter of FY2009 was $1.4 million compared to $1.1 million for Q4 of FY2008. For the fiscal year 2009, the income tax expense was $3.3 million up from $2 million for FY2008. The increase was due to higher income earned.

Net income for the fourth quarter of FY2009 was $2.3 million, up 27% from $1.8 million for Q4 FY2008. Net income for FY2009 was $7.9 million, an increase of 27.4% when compared to $6.2 million for FY2008.

Adjusted net income for the fourth quarter of FY2009 was $4.0 million and $9.6 million for FY2009. These compare to $1.8 million and $6.2 million for the 3 month and 12-month periods ended June 30, 2008 respectively.

Adjusted net income is not a recognized measure under GAAP and excludes a non-cash, stock-based compensation charge of $1.7 million related to the fair value transfer of shares under the make-good provision of a financing agreement signed in March 2009. As specified by the Company's make-good provision, Boyuan forecasted an after-tax net income of $8.5 million for the fiscal year ending June 30, 2009. As a condition of the make-good provision, Boyuan's Chairman put 2.05 million shares in escrow and would have transferred 1.025 million shares to investors if the forecast target had not been met. By generating $9.6 million in adjusted after tax net income, the shares previously held in escrow will be returned to Chairman Shou. As a result of the transfer of shares from escrow, Boyuan incurred a non-cash fair value charge of $1.7 million in compliance with Canadian GAAP.

Cash, cash equivalents and restricted cast at June 30, 2009 were $5.5 million compared to $6.9 million for 2008. Subsequent to the year-end, Boyuan raised CDN $6.5 million in gross proceeds through a private-placement financing. The funds will be used for working capital purposes, including the procurement of new construction equipment.

Outlook

"China's economic stimulus plan as well as ongoing urbanization and middle-class growth trends provide a very favourable backdrop for our prospects over the long-term," Mr Shou said. "On a near-term basis, we are expecting our after-tax net income target of $12.4 million for 2010 based on our growing sales backlog and our recent successful expansion into Shandong and Jiangxi, two of China's fastest growing regions."

Boyuan will host a conference call to discuss its financial results on Tuesday, October 27 at 9:00 a.m. (ET). To access the conference call by telephone, dial 416-644-3418 or 1-877-974-0445. Please connect approximately 15 minutes prior to the beginning of the call to ensure participation. A live audio webcast of the conference call will be also available at www.boyuangroup.com. 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.

Boyuan's consolidated statements for the year and quarter ended June 30, 2009 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.

About Boyuan Construction Group, Inc.

Based in Jiaxing City, China, Boyuan Construction Group, Inc. is in the business of residential and commercial building construction, municipal infrastructure and engineering projects. In its last three fiscal years ending June 30, 2008, Boyuan completed more than 120 projects for a number of private and public sector clients including Cargill and the Dalian Shide Group, a billion dollar conglomerate whose partners include DuPont, Mitsubishi and GE. Boyuan's current backlog includes residential, industrial and mixed-use developments, including a five-star hotel and a project at the Qingshan Nuclear Plant, China's first and largest nuclear facility. From its operating bases in Zhejiang Province and on Hainan Island, Boyuan focuses on construction projects in China's fast-growing regions of the Yangtze River Delta and the city of Sanya.

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, the Company's expectations regarding its net income in 2010, the project use of proceeds of private placement, and the Company's ability to sustain revenue generating momentum. 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 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 MD&A for the fiscal year ended June 30, 2009 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.

    
    Neither TSX Venture Exchange nor its Regulation Services Provider (as
    that term is defined in the policies of the TSX Venture Exchange) accepts
    responsibility for the adequacy or accuracy of this release.


    Boyuan Construction Group, Inc.
    (formerly "SND Energy Ltd.")
    Consolidated Balance Sheets
    As at June 30, 2009 and 2008
    (Expressed in US Dollars)

                                                           2009         2008
                                                              $            $

    Current Assets
      Cash and cash equivalents                       2,365,738    6,484,545
      Restricted cash                                 3,101,189      397,352
      Accounts receivable                             4,447,059    3,722,980
      Unbilled revenue                               35,528,915   13,468,198
      Other receivables                               2,216,873      873,012
      Inventory                                         658,150      100,771
      Advances to suppliers and prepaid expenses      2,971,020    4,772,201
    -------------------------------------------------------------------------
                                                     51,288,944   29,819,059

    Deferred transaction costs                           55,222            -
    Due from related parties                            113,010      476,996
    Property and equipment                            5,946,748    5,504,431
    Land use rights                                     112,243      114,121
    -------------------------------------------------------------------------
                                                     57,516,167   35,914,607
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Current Liabilities
      Bank loans                                     12,926,776    3,790,982
      Accounts payable and accrued liabilities       12,842,823   10,442,761
      Income taxes payable                            2,093,874    3,824,977
      Deferred revenue                                1,454,145      560,778
      Automobile loans                                  118,292        6,057
      Due to related parties                             22,839    1,372,119
    -------------------------------------------------------------------------
                                                     29,458,749   19,997,674

    Convertible debentures                            1,880,200            -
    -------------------------------------------------------------------------
                                                     31,338,949   19,997,674
    -------------------------------------------------------------------------

    Shareholders' Equity
      Share capital                                   6,139,860    5,540,636
      Contributed surplus                             1,890,711            -
      Reserve                                         1,928,732      623,834
      Equity component of convertible debentures        137,295            -
    -------------------------------------------------------------------------
                                                     10,096,598    6,164,470
    -------------------------------------------------------------------------
      Retained earnings                              14,326,995    8,063,055
      Accumulated other comprehensive income          1,753,625    1,689,408
    -------------------------------------------------------------------------
                                                     16,080,620    9,752,463
    -------------------------------------------------------------------------
                                                     26,177,218   15,916,933
    -------------------------------------------------------------------------
                                                     57,516,167   35,914,607
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Boyuan Construction Group, Inc.
    (formerly "SND Energy Ltd.")
    Consolidated Statements of Income and Comprehensive Income
    (Expressed in US Dollars)
    For the Years Ended June 30, 2009 and 2008

                                                           2009         2008
                                                              $            $

    Construction revenue                            101,664,080   56,175,070

    Cost of construction                             85,682,653   46,319,651
    -------------------------------------------------------------------------
    Gross profit                                     15,981,427    9,855,419
    -------------------------------------------------------------------------
    Expenses
      Amortization of property and equipment            733,559      490,131
      General and administrative expenses             1,752,521      904,507
    -------------------------------------------------------------------------
                                                      2,486,080    1,394,638
    -------------------------------------------------------------------------
    Income from operations                           13,495,347    8,460,781
    -------------------------------------------------------------------------
    Other Income (expense)
      Interest and other income                          20,573       38,816
      Foreign exchange loss                            (138,135)           -
      Interest expense                                 (430,139)    (259,304)
      Make good provision                            (1,718,357)           -
    -------------------------------------------------------------------------
                                                     (2,266,058)    (220,488)
    -------------------------------------------------------------------------
    Net income before income taxes                   11,229,289    8,240,293

    Income taxes                                      3,336,779    2,060,074
    -------------------------------------------------------------------------
    Net income for the year                           7,892,510    6,180,219

    Other Comprehensive Income
      Unrealized gain on foreign exchange
       translation                                       64,217    1,267,049
    -------------------------------------------------------------------------
    Comprehensive income for the year                 7,956,727    7,447,268
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    --------------------
    (1) "Adjusted net income" is not a recognized measure under Canadian
    GAAP. It excludes a stock-based compensation charge of $1.7 million
    related to the fair value transfer of shares under the "make-good
    provision" of a financing agreement signed in March, 2009. The Company
    believes that adjusted net income is more representative of its
    performance as the make good charge is a non-cash accounting charge and
    unrelated to its business activities

    (2) "Adjusted earnings per share" is not a recognized measure under
    Canadian GAAP. It is calculated by dividing the Company's adjusted net
    income by the number of outstanding shares (diluted). By comparison,
    earnings per share (basic) were $0.63 and $2.40 for the three-month and
    12-month period ended June 30, 2009 respectively. Earnings per share
    (diluted) were $0.09 and $0.32 for Q4 and FY2009 respectively.
    

SOURCE Boyuan Construction Group, Inc.

For further information: For further information: Contacts: Boyuan Construction Group, Inc., Mr. Paul Law, CFO, +(852) 9329 5088, paullaw@zjboyuan.com.cn; The Equicom Group Inc., Joe Racanelli, (416) 815-0700 ext. 243, jracanelli@equicomgroup.com


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890