On track to achieve make good provision net income targets
TORONTO, March 16 /CNW/ - Boyuan Construction Group, Inc., a leading builder of commercial, residential and municipal infrastructure projects in China's fast-growing regions of the Yangtze River Delta and the city of Sanya on Hainan Island, announced today its financial results for the three and six-months ended December 31, 2008. All figures are in U.S. dollars unless otherwise stated.
Q2 FY 2009 Financial and Operating Highlights
- Consolidated revenue was $23.4 million, an increase of 367% when
compared to $5.0 million for the second quarter of fiscal year 2008.
- Gross profit was $3.2 million, up from $0.4 million for Q2-FY2008.
- EBITDA(1) was $3.2 million compared to $0.1 million for Q2-FY2008.
- After tax net income was $2.4 million, up from $0.02 million for Q2-
FY2008.
Highlights Subsequent to Quarter End
- Completed the acquisition of all issued and outstanding common shares
of SND Energy Ltd. through a reverse-takeover (RTO) transaction.
- Concurrent with the RTO transaction, completed a private placement
financing, which generated gross proceeds of $4.1 million (CDN),
issuing secured convertible debentures and 512,500 common shares to
investors.
- As part of the private placement financing, the Company's chairman
deposited 2.05 million common shares into escrow, which will be
transferred to investors in the event that Boyuan does not achieve
after-tax net income of least $8.5 million (U.S.) for fiscal year
2009 and $11.5 million (U.S.) for fiscal year 2010.
- The Company's common shares began trading on the TSX Venture Exchange
under the symbol BOY and its debentures under the symbol BOY.DB.
"We are very pleased with our second-quarter performance," said Shou Cailiang, Chairman of Boyuan Construction Group, Inc. "Through our commitment to building quality projects and by capitalizing on China's urbanization and middle class growth trends, Boyuan achieved record revenue, EBITDA and after-tax net income results. Based on our current sales backlog and clear visibility for net income for each building project, we are confident of achieving our $8.5 million after-tax net income target for the year."
Operational Results
Revenue for the second quarter of 2009 was $23.4 million, up 367% when compared to $5.0 million for the second quarter of 2008. Revenue for the first six-months of 2009 was $44.7 million, an increase of 353% when compared to $9.9 million for the same period in 2008. The significant growth was mainly due to an increase in project volume as well as an increase in the number of projects with higher margins, particularly in the Sanya market, where contract value per construction area is stronger.
Cost of sales for the second quarter of 2009 was $20.2 million, compared to $4.7 million for the second quarter of 2008. For the first six months of 2009, the cost of sales was $38.4 million, up 314% from $9.3 million for the same period in 2008. The increase was primarily due to expanded project contract volume and an increase in labour costs.
Gross profit for the second quarter of 2009 was $3.2 million, up 789% from $0.4 million for the second quarter of 2008. Gross profit for the first six-months of 2009 increased 1007% to $6.2 million from $0.6 million from the same period of last fiscal year.
EBITDA for the second quarter was $3.2 million, up 3140% from $0.1 million for the second quarter of 2007. For the first six months of the year, EBITDA was $6.0 million compared to $0.1 million for the same period in 2008.
After tax net income for the second quarter of 2009 was $2.4 million compared to $0.02 million for the second quarter of 2008. After tax net income for the first six months of 2009 was $4.4 million, up from a loss of $0.02 million for the same period in 2008. As specified by the Company's make-good provision, Boyuan forecasts an after-tax net income of $8.5 million for the fiscal year ending June 30, 2009. If the target is not met, Boyuan's Chairman will transfer more than 1 million currently in escrow to investors.
Cash and cash equivalents at December 31, 2008 were $1.6 million compared to $1.1 million for 2007
Subsequent to the quarter-end, Boyuan raised $4.1 million in gross proceeds (CDN) through a private-placement financing. The funds will be used for working capital purposes, including the procurement of new construction equipment.
Outlook
"Backed by a diversified sales strategy, strong sales backlog and a growing reputation for building quality projects, we are very encouraged by our long-term prospects," said Mr. Shou Cailiang. "Not only are our core markets in the Yangtze delta growing rapidly, a significant portion of China's $585 billion stimulus package will be earmarked for major construction initiatives, which as a National Class-I qualified company, we are eligible to bid on."
Financial Highlights
For the For the For the For the
three three six six
months months months months
ended ended ended ended
December 31, December 31, December 31, December 31,
2008 2007 2008 2007
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Revenue $23,388,354 $5,006,453 $44,659,513 $9,858,371
Gross Profit $3,185,136 $358,212 $6,213,953 $561,323
EBITDA(1) $3,172,982 $97,937 $6,025,701 $121,695
Net Income $2,375,268 $19,834 $4,418,371 ($21,193)
Total Assets $60,016,435 $23,326,878 $60,016,435 $23,326,878
Cash and cash
equivalents $1,568,993 $1,138,582 $1,568,993 $1,138,582
Total Liabilities $38,175,770 $12,973,522 $38,175,770 $12,973,522
Working Capital $15,589,347 $3,243,958 $15,589,347 $3,243,958
Shareholders' Equity $21,840,665 $10,353,357 $21,840,665 $10,353,357
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(1) Earnings before interest, taxes, depreciation and amortization
(EBITDA) is a not a recognized measure under Canadian generally accepted
accounting principles (GAAP), however, management believes that it is a
useful performance measure as it approximates cash generated from
operations, before capital expenditures and changes in working capital
and excludes unusual items.
Boyuan's consolidated statements for the quarter ended December 31, 2008 and related management's discussion and analysis (MD&A) will be filed with securities regulatory authorities and available via SEDAR at www.sedar.com.
About Boyuan Construction Group, Inc.
Based in Jiaxing City, China, Boyuan Construction Group, Inc. is in the business of residential and commercial building construction, municipal infrastructure and engineering projects. In its last three fiscal years ending June 30, 2008, Boyuan completed more than 120 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 GE. Boyuan's current backlog includes residential, industrial and mixed-use developments, including a five-star hotel and a project at the Qingshan Nuclear Plant, China's first and largest nuclear facility. From its operating bases in Zhejiang Province and on Hainan Island, Boyuan focuses on construction projects in China's fast-growing regions of the Yangtze River Delta and the city of Sanya.
Caution concerning forward-looking statements ---------------------------------------------
This press release contains forward-looking statements. Such statements inherently involve numerous risks and uncertainties. Actual future results may differ from the anticipated results expressed in the forward-looking statements contained in this press release and Boyuan does not undertake to update this information. Investors are cautioned against placing undue importance on forward-looking information contained herein and should consult the Company's reports and other public filings which contain a more exhaustive analysis of risks and uncertainties connected to Boyuan's business
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
%SEDAR: 00026251E