Boyuan Reports FY2012 Financial Results

- Largest annual revenue in company history -

TORONTO, Dec. 3, 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 and 12-month periods ended June 30, 2012.  All figures are in U.S. dollars unless otherwise stated.

Selected Fiscal Year Financial Highlights

In thousands except share and % data FY2012 FY2011 Change
Revenue $189,258 $186,128 +1.7%
Gross profit $30,639 $31,159 -1.7%
Gross profit margins 16.2% 16.7%  
EBITDA1 $25,839 $27,065 -4.5%
Net income $9,352 $13,929 -32.9%
Earnings per share - diluted $0.36 $0.54 -33.3%
  June 30, 2012 June 30, 2011  
Total Assets $172,685 $139,573 +23.7%
Cash, cash equivalents and restricted cash $11,081 $8,841 +25.3%

"We were able to recognize the highest revenue in Company history despite difficult market conditions and the strategic decision to slow growth in order to conserve cash," said Mr. Cai Liang Shou, Chairman of Boyuan Construction Group.  "As the uncertainty in our markets is expected to continue in the short term, we will maintain our current conservative approach to our cash flow management and will continue to be very selective in which projects we take on, ensuring our profitability and cash position, given the up coming maturity of some of our outstanding convertible debentures."

FY2012 Operational and Financial Highlights

  • Record annual revenue of $189.3 million, up 2% from $186.1 million in FY2011
  • EBITDA of $25.8 million, down 5% from $27.1 million in FY2011
  • Net income of $9.4 million, down 33% from $13.9 million in FY2011
  • Repaid $1.3 million of the 11.75% debentures as a result of some holders exercising their early redemption rights.
  • $68.1 million worth of projects initiated during the fiscal year
  • Made a final MTR expense payment of $2.2 million
  • Total cash of $11.1 million

Highlights Subsequent to Year End

  • 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

Review of Financial Results
Revenue for the 12-month period ended June 30, 2012 was $189.3 million, up 1.7% from $186.1 million for FY2011.  Boyuan recognizes revenue on the percentage-of-completion method.

Measures introduced by the Chinese central government last year in an effort to cool down property markets have adversely impacted business activities resulting in single digit growth in revenue for the first time since the Company was founded. The Company has also become more selective in which construction projects it chooses under the current uncertain economic environment. New projects undertaken in FY 2012 amounted to $68.1 million. Typically the Company's projects have duration between one to three years.

Cost of construction for FY2012 was $158.6 million, up 2.4% from $155.0 million for FY2011. 

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 $114.9 million and labour cost was $39.4 million in FY2012. In comparison, direct material costs and labour costs were $109.2 million and $35.7 million in FY2011.

Gross profit for FY2012 was $30.6 million, which represented a margin of 16.2% on revenue. Gross profit for the last fiscal year was $31.2 million, which represented a margin of 16.7% on revenue. The slight year-over-year decline in gross margins was attributable to a slight downward pressure on margins under the current real estate conditions in China. Developers are becoming more prices sensitive and have longer development cycles thus tightening some of the Company's historical margin levels.  Historically, Boyuan's gross profit margins have been in the range of 15% to 17%.

G&A expenses were $4.8 million in FY2012 compared to $4.1 million in FY2011.  The increase in G&A expenses were a result of the strengthening of the management team and increases in general expenses such as travelling.

Interest expense for FY2012 was $7.4 million, an increase of $3.1 million over last year.  The increase was primarily due to an increase in borrowing and having to incur the full year's interest expense for the convertible debentures issued in November 2010. The average interest rates for bank loans were also higher this year due to the generally tight liquidity situation in China.

The Company also incurred a minimum total return (MTR) charge of $0.8 million for FY 2012 compared to $1.1 million in FY2011.  MTR charges were determined based on the provisions of previous financing activities. Investors of the Company's convertible debentures issued on February 2009 were entitled to an MTR right of 25% per annum on their units. The calculation is based upon the 20 day volume weighted average price of the Company's common shares, less interest paid or payable on the convertible debentures, calculated on the first, second and third anniversary of February 27, 2009 and payable, if triggered, on February 27, 2012.  The final MTR payment incurred by the Company was $2,188,503.

After-tax net income for FY2012 was $9.4 million, or $0.36 per fully diluted share, compared to net income of $13.9 million, or $0.54 per fully diluted share, for FY2011.   The decrease was principally due to a smaller gross margin, an increase in amortization expenses and interest expenses.

The Company had working capital of $54.1 million, including cash, cash equivalents, and restricted cash of $11.1 million for the period ended June 30, 2012. This compares to $62.8 million and $8.8 million, respectively, at June 30, 2011.

Selected Q4 2012 Financial Highlights

In thousands except share and % data Q4 2012 Q4 2011 Change
Revenue $42,891 $56,578 -24.2%
Gross profit $7,627 $9,580 -20.4%
Gross profit margin 17.8% 16.9%  
Net income $1,287 $4,274 -69.9%
Earnings per share - diluted $0.05 $0.15 -66.7%

Revenue for the three-month period ended June 30, 2012 was $42.9 million, down 24.2% from $56.6 million for Q4 FY2011. 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 strong Q4. However, some of the current projects have had a longer construction period than originally planned, resulting in reduced revenue recorded in this period.

Cost of construction for Q4 FY2012 was $35.3 million, down 25.0% from $47.0 million for Q4 FY2011. The decrease was consistent with the decrease in construction revenue recorded in this period.

Gross profit for Q4 FY2012 was $7.6 million, or 17.8% of revenue. Gross profit for Q4 FY2011 was $9.6 million, or 16.9% of revenue.

Net income after taxes for Q4 FY2012 was $1.3 million or $0.05 per share fully diluted. This compares to $4.3 million, or $0.15 per fully diluted share, for Q4 FY2011.

"The continued growth of China's middle class and the ongoing development of tier two cities as a result of urbanization will result in higher demand for our construction services in the long term," added Mr. Shou.  "In the near term, the restrictive measures imposed by the central government on the residential market and 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 risks and to preserve capital."

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

Conference Call Notice
The Company will hold a conference call to discuss its fiscal 2012 financial results on December 5, 2012 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 December 12, 2012 at midnight. To access the archived conference call, please dial 1-855-859-2056 or 416-849-0833 and enter the reservation number 32762213#.

A live audio webcast of the conference call will be available from the investor relations section of the Company's website,, or from  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


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  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.

1  EBITDA is defined as earnings before interest, income taxes, depreciation and amortization. EBITDA is not a defined performance measure under IFRS.



SOURCE: Boyuan Construction Group, Inc.

For further information:

Boyuan Construction Group, Inc.
Mr. Paul Law, CFO
+(852) 9329 5088     

TMX Equicom
Philip Dale
(416) 815 0700 ext. 253


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