- 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|
Gross profit margins
Earnings per share - diluted
||June 30, 2012||June 30, 2011||
Cash, cash equivalents and restricted cash
"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
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
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
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|
Gross profit margin
Earnings per share - diluted
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 www.sedar.com.
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
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
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 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.
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.