Boyuan Reports Third Quarter FY2013 Financial Results

TORONTO, May 15, 2013 /CNW/ - Boyuan Construction Group, Inc., (TSX: BOY, BOY.DB, BOY.DB.A) a growing construction company in China of commercial, residential and municipal infrastructure projects, reported today its financial results for the three- and nine-month periods ended March 31, 2013.  All figures are in U.S. dollars unless otherwise stated.

Selected Fiscal Year Financial Highlights

In thousands except share and % data Q3 FY2013 Q3 FY2012 Change
Revenue $41,387 $38,737 +6.8%
Gross profit $6,032 $6,302 -4.3%
Gross profit margins 14.6% 16.3%  
EBITDA1 $4,085 $4,628 -11.7%
Net income $1,353 $2,186 -38.1%
Earnings per share - diluted $0.05 $0.08 -25.0%
  Mar. 31, 2013   June 30, 2012    
Total Assets $195,913 $172,685 +13.5%
Cash, cash equivalents and restricted cash   $13,783 $11,081 +24.4%

"Despite the challenges we are facing with respect to restrictive measures imposed by the central government on the residential market and the tightening of financing facilities to property developers, we were able to grow our revenue to the largest third quarter amount our history," said Mr. Cai Liang Shou, Chairman of Boyuan Construction Group.  "The third quarter results reflect our ability to grow while also being very selective in choosing which new construction projects we accept given the challenging conditions currently in China.  We will continue to be conservative with our cash flow management in the short term until conditions improve in an effort to maintain our financial flexibility."

Q3 FY2013 Operational and Financial Highlights

  • Largest third quarter revenue in Company history
  • Revenue of $41.4 million, up 7% from Q3 FY2012 of $38.7 million
  • Q3 EBITDA of $4.1 million, down 12% from $4.6 million in Q3 FY2012
  • Q3 net earnings of $1.4 million, down from $2.2 million in Q3 FY2012
  • Initiated a luxury hotel construction project located in Hainan Lingshui County, valued at $10.9 million
  • Total cash balance of $13.8 million at quarter-end

Highlights Subsequent to Quarter-End

  • Announced a refinancing loan agreement and the May 15, 2013 maturing of its 11.75% secured convertible debentures with the original maturity date of February 27, 2013

Review of Financial Results
Revenue for the three-month period ended March 31, 2013 was $41.4 million, up 6.8% from the corresponding period in FY2012.  Revenue for the first nine months of FY2013 was $147.7 million, up 0.9% from $146.4 million for the same period of 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 continue to effect business activities. The Company has continued to be more selective in taking up new construction projects under the current uncertain economic environment.

Cost of construction for Q3 FY2013 was $35.4 million, up 9.3% from $32.4 million for Q3 FY2012.  Cost of construction for the first nine months of FY2013 was $125.9 million, up 2.0% from $123.4 million for the corresponding period of 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 $26.5 million and labour costs were $8.8 million in this quarter. In comparison, direct material costs and labour costs were $23.5 million and $8.1 million in the same quarter last year.

Gross profit for Q3 FY2013 was $6.0 million, which represented a margin of 14.6% on revenue. Gross profit for the corresponding period of last year was $6.3 million, which represented a margin of 16.3% on revenue. The year-over-year decline was attributable to a slight downward pressure on margins relating to the current real estate market situation in China. Developers have become more price sensitive and have longer development cycles, thus eroding some of Boyuan's normal margins. Historically, Boyuan's gross profit margins have been in the range of 15% to 17%.  On a nine month basis, gross profit for FY2013 was $21.9 million, which represented a margin of 14.8% on revenue. In the same period of FY2012, gross profit and gross margins were $23.0 million and 15.7%, respectively.

G&A expenses were $1.1 million in Q3 FY2013 compared to $1.2 million in Q3 FY2012.  G&A expenses for the nine-month period ended March 31, 2013 were $3.6 million representing an increase of $0.3 million in the same period last year. The increase in G&A expenses in this quarter came from the increase in office administrative costs such as legal fees and audit fees.

Interest expense for Q3 FY2013 was $1.9 million, an increase of $0.3 million over the same period last year.  On a year-to-date basis, interest expense for FY2013 was $6.9 million, up from $4.6 million for FY2012. The increase was due to an increase in borrowing as a result of longer payment cycles from our customers.

After-tax net income for Q3 FY2013 was $1.4 million, or $0.05 per fully diluted share, compared to net income of $2.2 million, or $0.08 per fully diluted share, for Q3 FY2012.   The decrease in net income was a result of smaller gross profit margin for the period and the increases in G&A expenses and interest expenses.  On a nine-month basis, net income for FY2013 was $5.6 million or $0.22 per share fully diluted. This compares to a net income of $8.1 million, or $0.31 per share fully diluted, for the same period of FY2012.

The Company had working capital of $62.0 million, including cash and cash equivalents of $4.8 million for the period ended March 31, 2013. This compares to $54.1 million and $3.1 million, respectively, at June 30, 2012.  The increase in working capital is due to the contribution of net earnings and improved working capital management.

Boyuan's consolidated statements for the three-and six- month periods ended March 31, 2013 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 Q3 FY2013 financial results on May 16, 2013 at 9:30 a.m. Eastern. 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 May 23, 2013 at midnight. To access the archived conference call, please dial 1-855-859-2056 or 416-849-0833 and enter the reservation number 60366943#.

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 52 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 please 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, 2011 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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