- Year-to-date revenue up 57% and net income up 30% -
TORONTO, June 1 /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 nine-months ended March 31, 2009. All figures are in U.S. dollars unless otherwise stated.
Q3 FY 2009 Financial and Operating Highlights
- Revenue was $15.9 million, down 45% from $28.8 million for Q3 2008
when Boyuan accelerated completion of projects previously delayed
because of licensing issues unrelated to the Company.
- Gross profit was $2.3 million, representing a margin of 14.6% on
revenue.
- Operating income was $1.8 million compared to $5.4 million for Q3-
FY2008.
- After tax net income was $1.2 million, compared to $4.4 million for
Q3-FY2008.
- 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),
through the issuance of secured convertible debentures and 512,500
common shares to investors.
- As part of the private placement financing, the Company's Chairman,
Mr. Shou Cailiang, 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.
Highlight Subsequent to Quarter End
- Appointed Paul Law, CA as Chief Financial Officer effective April 3,
2009.
"Our third-quarter performance was consistent with our expectations and reflects our ongoing progress," said Mr. Shou Cailiang, Chairman of Boyuan Construction Group, Inc. "Despite a general economic slowdown due to Chinese New Year holidays in the period, we expanded our contract backlog and completed several key projects on time and budget. Most importantly, our year to date net income has grown by 30%, keeping us on track to exceed our $8.5 million target for the year."
Operational Results
Revenue for the third quarter of 2009 was $15.9 million compared to $28.8 million for Q3 of 2008. Higher revenue was generated in 2008 because Boyuan accelerated the completion of projects previously delayed due to licensing issues unrelated to the Company. Revenue for the first nine-months of 2009 was $60.6 million, an increase of 57% when compared to $38.7 million for the same period in 2008. The growth is mainly due to an increase in project volume as well as an increase in the number of projects, particularly in the Sanya market, where contract value per construction area is stronger.
Cost of contract revenue for the third quarter of 2009 was $13.6 million, compared to $23.2 million for the third quarter of 2008. For the first nine months of 2009, the cost of contract revenue was $52.1 million, up 60% from $32.5 million for the same period in 2008. The year-to-date increase was primarily due to expanded project contract volume.
Gross profit for the third quarter of 2009 was $2.3 million, down from $5.6 million for the third quarter of 2008. Gross profit for the first nine-months of 2009 increased 39% to $8.5 million from $6.1 million from the same period last fiscal year.
General and administrative expenses for the third quarter of 2009 totalled $0.5 million up 134% from $0.2 million for the same period of 2008. The increase was due primarily to fees relating to the Company's RTO transaction and securing a listing status on the TSX Venture Exchange.
Operating income for the third quarter of 2009 was $1.8 million compared to $5.4 million for the third quarter of 2008. For the first nine months of the year, operating income was $7.8 million compared to $5.4 million for the same period of 2008.
After tax net income for the third quarter of 2009 was $1.2 million compared to $4.4 million for the third quarter of 2008. After tax net income for the first nine months of 2009 was $5.6 million, up from $4.3 million for the same period in 2008. As specified by the Company's make-good provision, Boyuan must obtain 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 common shares currently held in escrow to investors.
Cash and cash equivalents at March 31, 2009 were $1.7 million compared to $6.4 million at year end June 30, 2008.
Outlook
"We remain bullish on our long-term prospects," said Mr. Shou Cailiang. "Demand for our construction services continues to grow in each of our core markets, particularly as the rise of China's middle class and growing urbanization are fueling the need for new, high-quality residential as well as commercial projects for which we are developing a strong reputation."
Boyuan's consolidated statements for the quarter ended March 31, 2009 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, including, but not limited to, those statements contained under "Outlook" and regarding the ability to meet the target for the make-good provision 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