Boyuan Reports Record FY2011 Financial Results

- Revenue, EBITDA and net income largest in Company history -

TORONTO, Sept. 28, 2011 /CNW/ - Boyuan Construction Group, Inc., (TSX: BOY), (TSX: BOY.DB), (TSX: 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, 2011.  All figures are in U.S. dollars unless otherwise stated.

Selected Fiscal Year Financial Highlights

In thousands except share and % data FY 2011 FY 2010 Change
Revenue $186,128 $147,344 +26.3%
Gross profit $31,159 $25,569 +21.9%
Gross profit margins 16.7% 17.4%  
EBITDA1 $27,065 $22,527 +20.2%
Net income $13,593 $10,057 +35.2%
Earnings per share - diluted $0.53 $0.43 +23.3%
  June 30, 2011 June 30, 2010  
Total Assets $139,573 $93,869 +48.7%
Cash, equivalents,  and restricted cash $10,156 $8,726 +16.4%

"The 2011 fiscal year was a record year for Boyuan in all significant financial and operational metrics," said Mr. Cai Liang Shou, Chairman of Boyuan Construction Group.  "We grew revenue by 26%, EBITDA by 20%, net earnings by 35% and initiated construction on two of our largest projects to date.  Our continued strong growth provides not only continuing evidence that demand for construction services remains very robust in our core markets, but also expanding into new markets within Hainan Island and Shandong province was a success."

FY2011 Operational and Financial Highlights

  • Completed more than 70 projects over the past three fiscal years
  • Approximately 14 material construction projects currently in progress
  • Current project backlog now totals over $270 million
  • Record revenue of $186.1 million, up 26.3% from $147.3 million in FY2010
  • Record EBITDA of $27.1 million, up 20.2% from $22.5 million in FY2010
  • Record net earnings of $13.6 million, up 35.2% from $10.1 million in FY 2010
  • Initiated the two largest construction projects in Company's history, residential developments in Hainan province valued at $44.3 million and $43.1 million
  • Total new project value initiated in the 12-month period was $200.7 million, largest in the Company's history

Highlights Subsequent to Year End

  • Initiated a residential construction project located in Sanya, Hainan Province valued at $8.0 million

Review of Financial Results
Revenue 12-month period ended June 30, 2011 was $186.1 million, up 26.3% from $147.3 million for FY2010.  Boyuan recognizes revenue on the percentage-of-completion method.  The significant year-over-year growth in revenue was primarily attributable to an increase in the number of successful project bids with higher contract value by the Company as well as to an increase in demand for construction and engineering services in the Yangtze River Delta region and Hainan Island, Boyuan's core markets. The growth was also due to the Company's decision to expand into Shandong province and other cities in Hainan Island, emerging markets with growing demand for construction and engineering services.

Higher demand for construction and engineering services is due to ongoing urban migration and an expansion of China's middle class, which drives the need for new housing, commercial and public infrastructure projects.

Cost of construction for FY2011 was $155.0 million, up 27.3% from $121.8 million for FY2010.  The increase was primarily as a result of higher expenses associated with greater project volume and an expanded work force including the continued work on the Company's largest two construction projects to date, residential developments in Hainan province valued at $44.3 million and $43.1 million. Cost of sales includes all direct material, labor, subcontract and other related costs, such as equipment repairs.

Gross profit for FY2011 was $31.2 million, or 16.7% of revenue. Gross profit for FY2010 was $25.6 million, or 17.4% of revenue. The gross margin this year is consistent to the gross margins experienced in the past despite the substantial increase in our direct material costs as most of our construction contracts have cost adjustment clauses for raw material and labour.  Historically, Boyuan's gross profit margins have been in the range of 15% to 17%.

G&A expenses were $4.1 million in FY2011 compared to $3 million in FY2010. The Company is continuing to strengthen its management team in response to its listing status since March 2009.  The increase in its business activities also contributed to the increase in general expenses such as travelling.

Interest expense for FY2011 was $4.4 million, an increase of $1.7 million over last year.  The increase was primarily due to two items, an increase in bank loans and bank notes payable needed to fund start-up costs for new projects and to the Company's convertible debenture financing activities.  In FY2011, the Company has signed new agreements and commenced work for construction development projects valued at $200.7 million. Revenue for the projects will be recognized as the projects are completed, typically a duration of up to two years.

The Company also incurred a minimum total return (MTR) charge of $1.1 million for FY 2011 compared to $0.4 million in FY2010.  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 a 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, 2013.  The MTR expense recorded in FY2011 was a non-cash accrued expense based on calculations on June 30, 2011.

On February 27, 2011, the redemption of one third of the 11.75% debenture outstanding was not exercised by the holders. Based on the redemption date of February 27, 2013 and effective interest rates of 28.94% and 32.64%, the principal amount of the one third outstanding debentures at February 27, 2011 was recalculated and the reduced amount was accounted for as valuation gain of $0.7 million in this financial year.

After-tax net income for the FY2011 was $13.6 million, or $0.53 per fully diluted share, compared to net income of $10.1 million, or $0.43 per fully diluted share, for FY2010.   Net income for FY2010 included a make good provision of $3.2 million.  The increase was principally due to higher revenues from increased sales and the valuation gain on the 11.75% debenture, partially offset by higher interest expenses, the MTR charge as well as to a stock-based compensation charge of $1.2 million in FY2011.  The increase in fully diluted earnings per share for the period was tempered by a 20% increase year-over-year in the weighted average number of common shares outstanding and dilution relating to the issuance of a CDN$15 million debenture during the year.

The Company had working capital of $62.3 million, including cash, restricted cash and cash equivalents of $10.2 million for the period ended June 30, 2011. This compares to $39.3 million and $8.7 million, respectively, at June 30, 2010.

Selected Q4 2011 Financial Highlights

In thousands except share and % data Q4 2011 Q4 2011 Change
Revenue $56,578 $43,681 +29.5%
Gross profit $9,580 $8,020 +19.5%
Gross profit margin 16.9% 18.4%  
EBITDA $8,467 $7,883 +7.4%
Net income $4,274 $4,593 -7.0%
Earnings per share - diluted $0.15 $0.17 -11.8%

Revenue for the three-month period ended June 30, 2011 was $56.6 million, up 29.5% from $43.7 million for Q4 FY2010. Historically, the fourth quarter is the Company's strongest and busiest period due to a variety of seasonal factors. The growth on a comparative basis was primarily due to the Company's decision to expand in Hainan Island.

Cost of construction for Q4 FY2011 was $47.0 million, up 31.7% from $35.7 million for Q4 FY2010. The increase was primarily as a result of higher expenses associated with greater project volume and an expanded work force.  Significant increase in raw material costs also contributed to the increase in construction costs

Gross profit for Q4 FY2011 was $9.6 million, or 16.9% of revenue. Gross profit for Q4 FY2010 was $8.0 million, or 18.4% of revenue.

Net income after taxes for Q4 FY2011 was $4.3 million or $0.15 per share fully diluted. This compares to $4.6 million, or $0.17 per fully diluted share, for Q4 FY2010. Despite the significant increase in sales and gross profit, the net income for this period has experienced a small decline over the same period last year due to the stock based compensation and MTR expenses, both are non-cash accounting charges.

"We continue to be very encouraged by our short-term prospects as the ongoing development of tier two cities due to urbanization suggests continued growth in demand for our construction and engineering services," added Mr. Shou.  "In the near-term, the recent restrictive measures imposed by the Chinese central government on the residential market and the tightening of financing facilities to property developers may lead to slower growth rates for the Company, to which the full extent, if any, is unclear at this time."

"Over the longer term, we continue to believe there will be opportunities for us to expand beyond our core markets and capitalize on the strong demand for construction services throughout tier two cities across China, particularly with the high rate of urban migration taking place.  In an effort to further tap into this growing market potential we remain committed to upgrading our qualification and engineering standards, both of which will allow us to bid on larger scale projects with potentially higher margins," continued Mr. Shou.

Boyuan's consolidated statements for the three and 12-month periods ended June 30, 2011 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 2011 financial results on September 29, 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 October 6, 2011 at midnight. To access the archived conference call, please dial 1-855-859-2056 or 416-849-0833 and enter the reservation number 12589352#.

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, 2010, Boyuan completed more than 80 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 General Electric.  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 or follow us on Twitter @

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, 2010 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 generally accepted accounting principles (GAAP).



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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