TORONTO, Feb. 14, 2013 /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 six-month periods ended December
31, 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
Dec. 31, 2012
June 30, 2012
Cash, cash equivalents and restricted cash
"The second quarter of fiscal 2013 reflect the challenges we are facing
in respect to 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. "These results also reflect our
strategic decision to be very selective in choosing which new
construction projects we accept in order to minimize risk and to
preserve capital, which we have been consistently executing over the
past few quarters. As a result we have continued to successfully grow
our cash reserves."
Q2 FY2013 Operational and Financial Highlights
Revenue of $54.2 million, in line with Q2 FY2012 of $54.3 million
Q2 EBITDA of $6.6 million, down 13% from $7.6 million in Q2 FY2012
Q2 net earnings of $1.6 million, down from $3.1 million in Q2 FY2012
$46.2 million worth of projects initiated to date for the current fiscal
Total cash balance of $15.0 million at quarter end
Highlights Subsequent to Querter End
Initiated a luxury hotel construction project located in Hainan Lingshui
County, valued at $10.9 million
Review of Financial Results
Revenue for the three-month period ended December 31, 2012 was $54.2
million, essentially the same as the corresponding period in FY2012.
Revenue for the first six months of FY2013 was $106.3 million, down
1.2% from $107.6 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 have had an adverse
effect on 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 Q2 FY2013 was $46.2 million, up 1.3% from $45.6
million for Q2 FY2012. Cost of construction for the first six months
of FY2013 was $90.5 million, down 0.4% from $90.9 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 $32.4 million and labour costs were
$11.4 million in this quarter. In comparison, direct material costs and
labour costs were $33.6 million and $9.9 million in the same quarter
Gross profit for Q2 FY2013 was $8.0 million, which represented a margin
of 14.8% on revenue. Gross profit for the corresponding period of last
year was $8.7 million, which represented a margin of 16.1% 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 six month basis, gross profit for FY2013 was
$15.8 million, which represented a margin of 14.9% on revenue. In the
same period of FY2012, gross profit and gross margins were $16.7
million and 15.5%, respectively.
G&A expenses were $1.4 million in Q2 FY2013 compared to $1.2 million in
Q2 FY2012. G&A expenses for the six months period ended December 31,
2012 were $2.6 million representing an increase of $0.5 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 Q2 FY2013 was $3.1 million, an increase of $1.6
million over last year. On a year-to-date basis, interest expense for
FY2013 was $5.0 million, up from $3.0 million for FY2012. The increase
was due to an increase in borrowing as a result of longer payment
cycles from our customers. The average interest rates for bank loans
were also higher this year due to the generally tight liquidity
situation in the PRC.
After-tax net income for Q2 FY2013 was $1.6 million, or $0.06 per fully
diluted share, compared to net income of $3.1million, or $0.11 per
fully diluted share, for Q2 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 six-month basis, net
income for FY2013 was $4.3 million or $0.17 per share fully diluted.
This compares to a net income of $5.9 million, or $0.23 per share fully
diluted, for the same period of FY2012.
The Company had working capital of $59.0 million, including cash and
cash equivalents of $8.5 million for the period ended December 31,
2012. 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 December 31, 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.
At December 31, 2012, the Company was in violation of its convertible
debenture agreements as the Company failed to file its annual
consolidated financial statements before the end of September, 2012.
Under the terms of the convertible debenture agreements, such
noncompliance constitutes an event of default which gives the holders
of the convertible debentures the right to declare all outstanding
principal and accrued interest under the agreements immediately due and
payable after the passage of a 30 day waiting period and compliance
with the default notice provisions. On January 29, 2013, the Company
obtained a waiver of the event of default and a waiver of the
acceleration from the debenture holders.
Conference Call Notice
The Company will hold a conference call to discuss its fiscal Q2 FY2013
financial results on February 15, 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
The conference call will be archived for replay until February 22, 2013
at midnight. To access the archived conference call, please dial
1-855-859-2056 or 416-849-0833 and enter the reservation number
A live audio webcast of the conference call will be available from the
investor relations section of the Company's website, www.boyuangroup.com, or from www.newswire.ca. 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 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, 2011 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.
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
(416) 815 0700 ext. 253