2015 Annual Report Press Conference

Transcription

1 2015 Annual Report Press Conference Speaker Content Moderator Dear guests, investors and netizens, good morning! Welcome to CCCC 2015 Annual Report Press Conference. The presentation was organized by CCCC and technically supported by SSE Infonet Ltd. Thank you for your attention and participation. Moderator On March 29, CCCC published its 2015 Annual Report. Investors can visit roadshow.sseinfo.com to view the report. To deepen investors' knowledge of the company, Core Management of CCCC will communicate with investors online in regard to investors' concerns such as CCCC's business performance and distribution of profit in Dear moderator and investors, good morning! Welcome to CCCC 2015 Annual Results Presentation. First of all, I would like to thank all stockholders for your great attention and strong support to us over the years. We will directly communicate with you online and present our business performance in 2015 to deepen your understanding of us. In light of the complicated external situation in 2015, the Company, as guided by the strategy of experts in five areas, comprehensively completed the annual targets by performing the major tasks of consolidating foundation, adjusting the structure and going global. The Company has optimally accomplished various tasks as planned for the Twelfth Five-Year Plan period, and has made preparations for the favourable beginning of the Thirteenth Five-Year Plan period. In 2015, both the existing and new business of the Company developed stably and contributed to the solid growth of business performance. Revenue of the Group was 404,420 million yuan, representing a year-on-year increase of 10.29%. Profit attributable to owners of the Company was 156,96 million yuan, representing a yearon-year increase of 13.02%. Earnings per share was 0.95 yuan. New contracts amounted to 650,351 million yuan, representing a year-onyear increase of 6.89%. As at 31 December 2015, the backlog of the Group amounted to 867,298 million yuan, representing an increase of 5.99% compared with that as at 31 December In 2015, the Company ranked the 165 th among Fortune Global 500, improving by 22 places. The Company ranked the 5 th in ENR s Top International Contractors and was the only Chinese enterprise ranking the Top 10. The Company has been rated as a Grade A enterprise in the Operating Results Assessment of State-owned Enterprises conducted by the SASAC for the tenth consecutive year and was among the 11 state-owned enterprises being rated as Grade A enterprises consecutively. The Company has won 2 State Scientific

2 and Technological Progress Awards, 2 State Technological Invention Awards, 7 National Patent Awards and 11 National Grade Normalised Construction Methods. It was the first time for the Company to win the Special State Scientific and Technological Progress Award, State Technological Invention Award and National Invention Patent Gold Award. The Company has also been highly affirmed by the state and market for its efforts in implementing state strategies such as One Belt, One Road and national key engineering construction. In addition, the Company has been generally appreciated across the world for its harmonious and win-win development with stakeholders. In the following Q&A session, we will answer common concerns and the questions of investors wanting a better understanding of us, and sincerely hope you will be satisfied with our answers. Visitor Hello Mr. Liu. Would you please introduce the key business risks of the Company? We have annual operating revenues of over 400,000 million yuan and total assets of over 700,000 million yuan, our businesses cover a wide range of market fields such as traffic infrastructure design, construction, equipment manufacturing, investment and urban complex development, and we enjoy strong international influence in the overseas project market, thus results of single project bids and fluctuations in single market fields do not easily affect our business performance heavily. However, investors should notice that we still face the systematic impact of periodical functions of macro economy on our business development as a participator in free market competition, and face the risk of price fluctuations of materials such as steel, cement, fuel, sand stone and asphalt as a major engineering project contractor. Due to needs of daily business operation and business restructures, certain amounts of borrowings and payables may lead to the risk of interest rate fluctuations and changes, and overseas business development may lead to the risk of exchange rate changes and the risk of changes in international economic and political situation. With a multitude of projects in progress, we also face force majeure risks which may cause damage to operators and property, such as natural disasters in operation fields such as rainstorm, flood, earthquake, typhoon, tsunami and fire as well as public health emergencies. Visitor Hello, Mr. Liu, as indicated in 2015 annual report, provision for accounts receivable of the Company this year was billion yuan; but in 2014, major change took place in this number which was merely 238 million yuan. What is the reason?

3 Since 2014 when the Company adopted new accounting policy, provision aging of receivables has extended from 3 years to 5 years to the maximum; provision ratio was calculated for 5 years respectively; as a consequence, large accounts receivable were put back in 2014 and calculation basis for the provision in 2014 was low. In 2015, provision for accounts receivable was in accordance with new accounting policies and at normal level. Visitor Please give an introduction to latest development of the Sri Lanka s Port City Project. On March 9, cabinet council was held in Sri Lanka where resumption of work was officially approved for Port City Project. On March 14, Ministry of Aviation for port of Sri Lanka decided to officially cancel project suspension order and approve Project Company to resume work after meeting conditions for resumption of work approved by EIA and completing relevant legal procedures. The Port City Project was designed to build Colombo into a commercial and tourist center with a total investment amount of about USD1.4 billion funded by CCCC. All the commercial risks of the project were to be assumed by the Harbour City Project Company. The reclaimed land will attract local and international investors to invest in the construction of shopping malls, hotels, flats, convention centres, education and medical institutions, theme parks, restaurants, etc. Based on the people of Sri Lanka, the port city, upon completion, will benefit all the people of Sri Lanka. It is expected to create 83,000 job opportunities. Visitor Has the Company participated in overseas speed regulation railway project construction? How many projects are expected? The Group is one of the largest railway construction enterprises in China and has developed into main force in national railway construction by virtue of its high level of construction and excellent management capabilities. However, there is a large gap between the Group and two traditional railway construction enterprises-crec and CRCC in market shares in China, in terms of railway construction. However, with regard to external market, the Company has covered over one third shares of Chinese railway enterprises "going out" foreign contracted projects and has decisive market influence. Recently, the Company signed business contracts on four projects with Kenyan government including Naivasha - Kisumu standard gauge railway project, Kisumu- Malabar standard gauge railway project, newly established Kisumu port project and Nairobi container inner port expansion project with predicted contract amount of 5.3 billion yuan.

4 Visitor Since the state supports growth, investment in infrastructure shall be increased. So, has the Company experienced any change in market? Is it getting better? According to public information, the state has made it clear that integrated transport infrastructure network construction will be accelerated and new growth momentum is generating; investment in infrastructure is expected to maintain rapid increase. In 2016, investment in highway construction will reach 1.6 trillion yuan, railway 850 billion yuan, urban railway system 350 billion yuan, waterway construction 140 billion yuan, port machinery market 30 billion yuan and urban construction projects including underground pipe rack and sponge city 400 billion yuan. Visitor Does the Company have any refinancing plans, for example, issuing new shares, the overweight arrangement, issuing bonds, etc.? Actually, the Company has various normal financing needs in the process of its development. We will continuously pay attention to different financing channels and choose suitable means for moderate financing if needed. Visitor What aspects have caused cash flows from operating activities of the Company to have substantially improved? Will this situation be continuously improved in 2016? In 2015, cash flows from operating activities reached 31.9 billion yuan, which was recorded as best result mainly due to the Company s strengthening the efforts to recover accounts receivable, controlling scale of inventory and enhancing funds central management as well as various efforts. In 2016, the Company will continue to improve fund management and strive for better results. Visitor How is the gross profit margin of the Company s business sectors in 2015? Our integrated gross profit margin was 15.20%, up 1.59 percent from 13.61% registered in the same period of last year. And our gross profit margin from primary businesses was 15.10%, up 1.58 percent from 13.52% registered in the same period of last year. The gross profit margin increased on the improvement in the gross profit margin of infrastructural construction business, dredging business and equipment manufacturing business.

5 Visitor How much non-operating income did the Company have in 2015? What are included? Does the Company plan to sell financial assets for the next step? In 2015, investment income of 930 million yuan was obtained from disposing financial assets which decreased by 1.28 billion yuan compared with last year. Income obtained from disposing subsidiary reached 620 million yuan in total. Losses on foreign exchange forward contract were 65 million yuan. Total losses on operating activities increased by 360 million yuan compared with last year. Visitor11015 The performance of the Company in 2015 was really good, but I noticed that the administrative expenses increased greatly, as compared with that in the corresponding period of What s the reason? In 2015, the administrative expenses were 22,940 million yuan, representing an increase of 27.54%, as compared with 17,986 million yuan in the corresponding period of 2014, which is primarily attributable to the increase in cost of research & development. Besides, the cost of research & development in 2015 was 3,941 million yuan. Leoyoung Considering that downward pressure on the domestic economy is increasing and the state has put forward supply-side structural reforms. What are the specific measures that CCCC has adopted for implementing supply-side structural reforms during business development? The Company s recombination and spin-off listing of dredging businesses are one of the important measures the Company has adopted to respond to reform of state-owned enterprises. The Company has not received any notice on merger and reorganization yet; any arrangement received in any way will be promptly disclosed by the Company according to listing rules. Visitor Detailed regulations on replacing the business tax with a value-added tax have been implemented. What effect will the regulations have on performance of the Company in 2016? In the long run, what effect will replacing the business tax with a value-added tax have? According to provisions on Notice on Comprehensive Promotion of Pilot Where the Business Tax is Replaced with a Value-added Tax (CS [2016] No.36) released on Mar.23, 2016, value-added ratios of 11% and 6% will be applied to construction business and financial services of the Company since May 1, Considering the features of price and ratio separated of value-added tax, after replacing the business tax with a value-added tax, operating

6 income of the company might decrease but degree of reduction is limited. Meanwhile, since labor cost and raw material purchase cost could not be completed used to deduct value-added tax and input tax, reduction of the Company s cost will be lower than that of operating income thus influencing profits of the Company; however, the influence is within single digit of percentage change. In the long run, the levying of VAT to replace business tax, through controlling VAT, will promote facilitate the implementation of the Company s professionalization strategy, regulate business operations, and improve company management. It will gradually weaken the negative effects of the Company, constantly facilitate management and development of the Company and unceasingly provide positive energy for the Company. Visitor Would you please introduce the profit of the Company s business sectors in 2015? In 2015, we registered operating revenues of 404,420 million yuan and primary operating revenues of 402,204 million yuan, up percent and percent from 366,673 million yuan and 364,607 million yuan in the same period of last year respectively. Reason for the growth of the primary operating revenues: the primary operating revenues of infrastructural construction business, infrastructural design business, dredging business were up percent, percent, percent year on year respectively (all before elimination of intersegment transactions). Our integrated gross profit was 61,477 million yuan, up percent from million yuan registered in the same period of last year, including a gross profit of 60,721 million yuan from primary businesses, up percent from 49,295 million yuan registered in the same period of last year. The integrated gross profit rate was percent, up 1.59 percent from percent registered in the same period of last year. The gross profit rate of primary businesses was percent, up 1.58 percent from percent registered in the same period of last year. The gross profit rate increased on the improvement in the gross profit rate of infrastructural construction business, dredging business, equipment manufacturing business and other businesses. Leoyoung Since CCCC is integrating dredging business segment and real estate business segment; is CCCC going to be listed itself? Restructuring of CCCC Dredging has been basically completed, and synergetic effects appears gradually. The growth of new contracts, revenues and gross profit margin of dredging business in 2015 is 15%, 20% and 2.82%.

7 In January 2016, CCCC Dredging submitted to the Hong Kong Stock Exchange to apply for its H shares on the Main Board of the Hong Kong Stock Exchange. For the details of the proposed spin-off, please refer to the announcements of the Company. Further announcements will be made by the Company as and when appropriate in compliance with the Hong Kong Listing Rules. Visitor11015 In 2015, CCCC achieved significant year-on-year growth of profits and revenues. Has such growth reached expectation of the Company? In light of the complicated external situation in 2015, the Company, as guided by the strategy of experts in five areas, comprehensively completed the annual targets by performing the major tasks of consolidating foundation, adjusting the structure and going global. The Company has optimally accomplished various tasks as planned for the Twelfth Five-Year Plan period, and has made preparations for the favourable beginning of the Thirteenth Five-Year Plan period. The year of 2016 is a starting year of the Thirteenth Five-Year Plan as well as a crucial year for implementing the structural reform. Our company has already endeavored to arrange all works and comprehensively completed the annual targets again. Moderator Dear investors and netizens, the presentation is drawing to an end. Let's welcome the guest from the listed company for a concluding speech. Dear shareholders, based on the this year s work, in 2015, we will continue to go on with the in-depth implementation of the strategy of experts in five areas on the emphasis of upgrading quality and increasing effectiveness by means of deepening the reform; supported by innovative drive with greater focus on business integration and capital operation, with further reinforcement on overseas priority, and strong enterprise and talents, featuring further lean management and risk control and prevention for devising and implementing the targets and tasks during the Thirteenth Five-Year Plan period elaborately with strong determination. The Company will attentively write a new chapter in practicing the five development concept of innovation, harmonization, green, openness and sharing, striving to comprehensively build itself into a world-class enterprise by the end of the Thirteenth Five-Year Plan period. May we have the continuous support from all our shareholders and all the people and friends who have paid long-term attention to us! We are much willing to make in-depth communication with you by various means in the future, thank you! Moderator That's all for the presentation. Thanks for your participation!

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