TORONTO, Dec. 18, 2012 /CNW/ - Boyuan Construction Group, Inc., TSX: BOY, BOY.DB, 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 month period ended September 30, 2012.
All figures are in U.S. dollars unless otherwise stated.
Selected Fiscal Year Financial Highlights
In thousands except share and % data
Gross profit margins
Earnings per share - diluted
Sept. 30, 2012
June 30, 2012
Cash, cash equivalents and restricted cash
"Our first quarter results were impacted by the restrictive measures
imposed by the central government on the residential market and the
tightening of financing facilities to property developers," said Mr.
Cai Liang Shou, Chairman of Boyuan Construction Group. "We believe
this situation will continue in the short term and therefore we will
continue to be very selective in choosing which new construction
projects we accept in order to minimize risk and to preserve capital.
Over the longer term, we are still confident that our growth will be
driven by expanding our reach in tier-two cities and increasing our
focus on specialty construction projects, which we believe will result
in higher profit margins."
Q1 FY2013 Operational and Financial Highlights
Revenue of $52.1 million, down 2% from $53.3 million in Q1 FY2012
EBITDA of $6.7 million, down 5% from $7.1 million in Q1 FY2012
Net income of $2.7 million, down 5% from $2.8 million in Q1 FY2012
Initiated a residential construction project located in Hainan Lingshui
County, a new market, valued at $29.3 million
Initiated a commercial construction project located in Hiayan County,
Jiaxing, a core market, valued at $6.0 million
Appointed Mr. John (Jack) Duffy to the board of directors and as a
member of the Audit Committee
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 three-month period ended September 30, 2012 was $52.1
million, down 2.3% from $53.3 million for Q1 FY2012. Boyuan recognizes
revenue on the percentage-of-completion method.
The measures introduced by the Chinese central government last year in
an effort to cool down the real estate market have had an adverse
effect on business activities. The Company has also become more
selective in taking up new construction projects under the current
uncertain economic environment.
Cost of construction for Q1 FY2013 was $44.3 million, down 2.4% from
$45.4 million for Q1 FY2012.
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 $32.7 million and labour costs were
$11.1 million in this quarter. In comparison, direct material costs and
labour costs were $33.6 million and $10.9 million in the same quarter
Gross profit for Q1 FY2013 was $7.8 million, which represented a margin
of 15.0% on revenue. Gross profit for Q1 FY2012 was $8.0 million, which
represented a margin of 15.0% on revenue. The Company has experienced a
slight downward pressure on margins as a result of the current real
estate market situation in China. Developers are becoming more price
sensitive and have longer development cycles. Historically, Boyuan's
gross profit margins have been in the range of 15% to 17%.
G&A expenses were $1.1 million in Q1 FY2013 compared to $0.9 million in
the first quarter of FY2012. The increase in G&A expenses were a
result of the Company strengthening its management team.
Interest expense for Q1 FY2013 was $1.9 million, an increase of $0.3
million over last year. The increase was primarily due to an increase
in borrowing as a result of longer payment cycles from customers. The
average interest rates for bank loans were also higher in this period
due to the generally tight liquidity situation in the PRC.
There was no minimum total return (MTR) charge in this quarter. The
Company incurred a MTR charge of $0.6 million for the same quarter last
After-tax net income for Q1 FY2013 was $2.7 million, or $0.10 per fully
diluted share, compared to net income of $2.8 million, or $0.12 per
fully diluted share, for Q1 FY2012. The decrease was principally due
to increases in amortization and interest expenses.
The Company had working capital of $55.9 million, including cash, cash
equivalents and restricted cash of $8.6 million for the period ended
September 30, 2012. This compares to $54.1 million and $11.1 million,
respectively, at June 30, 2012.
Boyuan's consolidated statements for the three and 12-month periods
ended June 30, 2012 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
Due to the timing of the recently released annual statements and
subsequent conference call, Boyuan will not be holding a conference
call to discuss its first quarter fiscal 2013 financial results. The
Company expects to recommence its usual policy of holding conference
calls to discuss its financial results for its second quarter fiscal
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, 2012 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. 253