TORONTO, Nov. 14, 2018 /CNW/ - Boyuan Construction Group, Inc. ("Boyuan" or the "Company") (TSX: BOY), an established China-based construction and engineering company, today reported strong first quarter financial results for the three-month period ended September 30, 2018. All figures are in U.S. dollars unless otherwise stated.
First Quarter 2019 Highlights
- Revenue grew 52.3% to $94.3 million;
- Gross profit increased 26.4% to $7.3 million;
- Earnings significantly improved, with net income increasing 64.3% to $3.9 million;
- Commenced construction on four material projects with an aggregate contract value of $81.1 million.
Highlights Subsequent to Year End
- As announced on October 29, 2018, commenced construction on three new residential projects with combined contract values of $54.9 million.
"Our continued strong financial performance was partially based on the execution of new residential and commercial contracts announced during the quarter and demonstrates the strong reputation that we are developing in our core market of Jiaxing and its surrounding area," said Mr. Cai Liang Shou. "The significant project awards announced during the quarter and another $54.9 million in new residential projects announced subsequent to quarter end, are indicative of the strong markets in select smaller centres, which Boyuan is well-positioned to participate in going forward."
Selected First Quarter Financial Results
In thousands except share and % data
Gross profit margin
Earnings per share – diluted
In thousands except % data
Sept. 30, 2018
June 30, 2018
Cash, cash equivalents & restricted cash
1 EBITDA is defined as earnings before interest, income taxes, depreciation and amortization. EBITDA is not a defined performance measure under IFRS.
Review of First Quarter 2019 Financial Results
Revenue for the quarter increased 52.3% to $94.3 million compared to $61.9 million for the same period last year. Revenue continued to benefit from the relatively robust real estate market in Jiaxing and its surrounding area in Zhejiang province. The Company commenced construction on four material new projects with an aggregate contract value of $81 million during the quarter.
Cost of construction was $87.0 million for the quarter, up 54.8% from $56.2 million in the first quarter of last year. The increase was primarily a result of higher expenses associated with larger project volume. Direct material costs were $59.5 million and labour costs were $24.7 million in the quarter, compared with direct material costs and labour costs of $37.3 million and $15.9 million respectively in the same quarter last year.
Gross profit for the quarter was $7.3 million, or 7.7% of revenue. Gross profit for the same period last year was $5.7 million, or 9.3% of revenue. The Company is continuing to experience some downward pressure on its margins.
There was an impairment recovery on deposits of $0.3 million that was included in the G&A expenses in the first quarter last year. There was no such recovery in the current quarter. G&A expenses were $1.52 million in the first quarter of this year, compared to $1.03 million in the first quarter of last year. The increase was mainly due to the impairment recovery on deposits recorded in the first quarter of last year.
Other income was $1.20 million for the quarter, compared to $1.19 million in the same period last year. Accretion income from the discount on non-current accounts receivable and unbilled revenue of $1.09 million and $1.16 million was recorded in other income for the periods ended September 30, 2018 and 2017 respectively.
In the first quarter, the Company has reversed an impairment loss on contract assets and accounts receivable of $0.39 million and 0.08 million respectively on previously impaired accounts. This is net of additional impairment loss of $0.24 million as a result of the application of IFRS 9 in the current period. In comparison, the Company had an impairment loss of $1.2 million on accounts receivable and reversed an impairment loss on unbilled revenue of $0.08 million in the same quarter last year.
Interest expense for the quarter was $2.0 million compared to $1.8 million a year ago. The increase was mainly due to the additional interest paid on the larger amount of bank notes payable in the period.
Net income of $3.9 million, or $0.13 per diluted share, for the quarter compares to $2.3 million, or $0.08 per diluted share for the same period the prior year. The increase was principally due to the increase in revenue as a result of the larger number of new projects taken up in the past year.
Boyuan had working capital of $49.1 million, including cash, cash equivalents, and restricted cash totalling $16.0 million as at September 30, 2018. This compares to $53.3 million and $15.8 million, respectively at June 30, 2018.
Boyuan's consolidated statements for the three-month period ended September 30, 2018 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
A conference call for analysts and investors will be held at 9:30 A.M. (ET) on Thursday, November 15, 2018, to discuss the quarterly results. All interested parties can join the conference call by dialing 1-888-231-8191 or 647-427-7450. Please connect approximately 15 minutes prior to the beginning of the call to ensure participation. The conference call will be archived for replay until Thursday, November 22, 2018 at 11:59 P.M. (ET). To access the archived conference call, dial 1-855-859-2056 or 416-849-0833 and enter the reservation number 4586739#.
About Boyuan Construction Group, Inc.
Backed by a longstanding track record, Boyuan Construction Group, Inc. ("Boyuan" or the "Company") has the knowledge and expertise to design and build a wide range of commercial and residential developments, as well as municipal infrastructure and engineering projects. Based in Jiaxing City and with a growing presence in both Zhejiang Province and Hainan Province, Boyuan focuses on construction projects in China's fast-growing regions of the Yangtze River Delta and the Hainan Province. The Company's current project backlog includes residential, commercial, industrial and mixed-use developments. 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. All information other than statements of historical fact may be forward-looking information. Forward-looking information is often, but not always, identified by the use of words such as "seek", "anticipate", "budget", "plan", "continue", "estimate", "expect", "forecast", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar words or phrases (including negative variations) suggesting future outcomes or statements regarding an outlook. Forward-looking information contained in this press release includes, but is not limited to, management's expectation to comply with the Alternative Information Guidelines. 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 include, but are not limited to: risk of a general cease trade order bing issued, risk of risk of macro-economy cycle, risk from competition, risk from insufficient marketing to secure new projects, risk in obtaining additional financing, risk involving permits and licences, reliance on key management member, risk from supply of raw materials, risk of financial leverage, risk of bad debts in accounts receivables, risk involved in real estate development, foreign exchange fluctuations, political and economic conditions in China and other risks included in the Company's AIF for the fiscal year ended June 30, 2018 and in the Company's 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 are 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.
SOURCE Boyuan Construction Group, Inc.