China Railway Construction Corporate Limited 2014 Annual Results 1
I. Overview
Rising Industry Position with Increasing Recognition Moved up to Top 80 of the Fortune Global 500 Ranked Top 2 in ENR Top 250 Global Contractors for 5 Consecutive Years 356 th 252 nd 133 rd 105 th 111 th 100 th 80 th 2 nd 1 st 2 nd 1 st 1 st 4 th 4 th 2008 2009 2010 2011 2012 2013 2014 2014 2013 2012 2011 2010 2009 2008 Increasing Influence and Brand Recognition 2014 China Enterprise Top 500 2014 Most Respected Listed Companies by Investors 2014 China s Listed Companies with Most Overall Strength 2014 Hong Kong Listed Companies Top 100 2014 Best Information Disclosure Listed Companies 3
Steadily Increasing Results Value of New Contracts Value of Outstanding Contracts 853,484 827,708 1,743,771 1,762,978 Revenue Net Profit 586,790 591,968 10,439 11,572 4
Technical Capabilities and Innovations Winning Prestigious Awards and Recognition Market-driven Innovation Process and Well-performed Innovation Platforms The total number of national-level technical innovation platforms increased to 13 The first academician expert workstation was officially approved in Changsha, accomplished breakthrough in building high-end talent platforms Patent strategy has taken initial shape, newly awarded 995 authorized patents Engineering technologies continued to strengthen. Landmark projects included: China s First Coal Mine Inclined Well Road-header China s first long-distance and heavy-grade coal mine inclined well road-header Filled full-face tunnel road-headers application space in coal mine inclined wells, with the advantages of safety, speed, high quality and environmental friendliness Haihe Tunnel under Central Avenue of Tianjin China s first domestic immersed tube tunnel in high earthquake zone, and the first immerse tube tunnel in North China Earned 20 national patents, 1 invention patent and 8 provincial / ministerial or higher level construction methods Harbin to Qiqihar Railway Passenger Dedicated Line Songhua River Bridge The world s first four-wire tied arch girder structure The first domestic high-speed railway in high-latitude alpine landscape, with highly complicated construction technologies Repeatedly Winning Prestigious Awards National Science and Technology Progress Award 1 FIDIC Global Engineering Excellence 4 Zhan Tianyou Award of Civil Engineering 7 National Survey, Design and Consulting Award 7 New Invention Patent 132 New National Level Construction Methods 50 5
Strategic Global Footprint and Well-positioned for Further Expansion Overseas As the end of 2014, global presence across 78 countries and Hong Kong, Macau and other regions, with 446 projects under construction Value of Overseas New Contracts 127,803 Landmark Contracts Won in 2014 80,005 Bengal Dhaka elevated & high-speed highway project, with contract amount of USD 1.062 billion Bolivia Rurrenabaque - Riberalta highway project, with contract amount of USD 579 million Nigeria Coastal railway project, with contract amount of USD 11.97 billion Saudi Arabia Package No. 1, 3 and 5 in fifth stage construction for the development project of Security Premises of Ministry of Interior of Saudi Arabia, with contract amount of USD 1.979 billion Overseas Revenue 23,625 21,264 6
II. Operation Highlights in 2014
Construction Operation Strengths Further Solidifying Value of New Contracts Revenue Landmark Projects 690,705 687,306 468,015 512,123 Guangzhou-Shenzhen- Hong Kong Passenger Dedicated Line Yitian Road Tunnel: High-speed railway shield-bored tunnel with the largest diameter in China Value of Outstanding Contracts Gross Profit and Margin (RMB Million, %) Guiyang Longdongbao Airport Tunnel: The first domestic transportation hub that integrates aviation, highspeed rail, light rail and bus 1,601,626 1,607,955 45,562 47,346 9.7% 9.2% Turpan-Korla Second Line of Southern Xinjiang Railway: As an important section of New Silk Road, a trunk railway that connects Southern Xinjiang with Northern Xinjiang and the mainland 8
Survey, Design and Consultancy Operations Maintaining Market Leading Position Value of New Contracts Revenue Landmark Projects 9,192 10,015 7,761 9,009 Ningbo Railway Hub North Ring Road Yongjiang River Bridge: Railway cable-stayed bridge with mixed steel box girder and the world's largest span Value of Outstanding Contracts Gross Profit and Margin (RMB Million, %) Lhasa-Shigatse Railway: Extension of the Qinghai- Tibet Railway the highest altitude railway in the world, overcoming difficult geological conditions with the highest geothermal temperature in China Nanjing Metro Line 10: 4,179 4,145 2,230 2,786 30.9% The first cross-river shield metro line with single tunnel and double lines 28.7% 9
Manufacturing Operations Continuing to Grow Value of New Contracts Revenue 12,019 15,273 11,756 11,902 Value of Outstanding Contracts Gross Profit and Margin (RMB Million, %) 3,249 5,439 2,050 2,562 21.5% 17.4% 10
Real Estate Operations Healthy and Steady In 2014, the company continued to focus on residential property development and also invests in commercial properties. While improving its layout in first and second-tier cities, it entered into Zhuhai and Nanjing markets, with land acquisition of 1,342 acres in 11 cities and total construction area of 3.28 million square meters 86 projects were being sold in 40 cities during 2014, and 10 projects with sales amount exceeding RMB1 billion Revenue 24,710 24,631 As of the end of 2014, the company has 111 real estate development projects in 45 cities, including Beijing, Shanghai and Tianjin, with total land area for construction of 11.60 million square meters, and planned gross floor area of 36.81 million square meters Changchun (Ten Thousand m 2 ) Sales Area 299 301 Xi an Chengdu Chongqing Guiyang Wuhan Nanning Beijing Tianjin Xuzhou Hefei Changsha Shenyang Dalian Jinan Nanjing Shanghai Hangzhou Guangzhou Foshan (RMB Million, %) Gross Profit and Margin 7,362 6,329 29.9% Note: Blue dots in the map above indicate some of the project locations 25.6% 11
III. Financial Highlights in 2014
Revenue and Profits Continuing to Grow Revenue Gross Profit and Gross Margin (RMB Million, %) 2014 Revenue Segment Breakdown (1) 8.9% 586,790 591,968 59,542 64,239 1.9% 4.0% 1.5% 10.1% 10.9% 83.7% Profit Before Tax Net Profit and Net Margin (RMB Million, %) 2014 Gross Profit Segment Breakdown (1) 6.1% 13,040 14,952 10,439 11,572 4.0% 11.5% 4.4% 1.8% 2.0% 74.0% Construction Survey, Design and Consultancy Manufacturing Real Estate Logistics, Materials Trading and Others Note: (1) Before inter-segmental eliminations. 13
Financial Position Further Strengthening Total Assets Net Assets Cash and Bank Balances 617,004 102,891 98,088 553,019 93,434 83,825 2013.12.31 2014.12.31 2013.12.31 2014.12.31 2013.12.31 2014.12.31 14
Capital Expenditures Increasing Capital Expenditures 2014 Capital Expenditures Breakdown by Segment 22,113 16,844 9,158 2,933 533 79 409 191 175 259 41.4% 55.7% 12,890 12,330 0.8% 0.9% 1.2% Construction Survey, Design and Consultancy Manufacturing Real Estate Others Note: Others mainly refers to construction costs of BOT project. 15
Operating Cash Flow Significantly Improved Net Cash Flows from Operating Activities Net Cash Flows from Financing Activities 6,583 29,600-9,314 Net Cash Flows from Investing Activities 14,622-19,997-16,505 16
IV. Growth Strategies and Outlook
Robust Industry Fundamentals Providing Thrust for Growth Railway Construction According to China s 12 th Five-Year Plan for railway industry, China is targeting to increase its railway mileage to 120,000 km by 2015, an over 7% increase from 2014 level Highway Construction China s future road construction activities will be primarily driven by highway construction, with highway mileage projected to reach 108,000 km by the end of 2015, covering 90% of cities with populations above 200,000 Railway Mileage (000 km) Highway Investment (RMB billion) 3,000 2,216 886 Source: National Railway Administration of Ministry of Transport Total investment in urban rail transit is projected to exceed RMB1 trillion in 2011-2015. Total operating mileage is planned to reach 3,600 km by 2015 and 7,000 km by 2020 Urban Transit Mileage (km) Urban Rail Transit Construction The 10th 5-year The 11th 5-year The 12th 5-year Source: Ministry of Transport China s total hydropower installed capacity is projected to reach 420 GW by 2020, with hydropower construction intensity expected to remain strong in the interim Hydropower Installed Capacity (00 GW) Hydropower 7,000 1,011 1,471 1,699 2,058 2,408 3,600 2009 2010 2011 2012 2013 2015E 2020E Source: Ministry of Transport Source: China s 12 th Five-Year Plan for Renewal Energy 18
Development Strategy and 2015 Work Plan Construction-oriented, relevant diversification, integrated operation, and advance through transformation, so as to develop into a high-value creative multinational construction industry group with world-leading economic power, world-leading technological power and world-leading competitive power. Construction-oriented Construction engineering is the pillar industry and foothold of CRCC. It is also the premise and foundation of industrial restructuring and business expansion Continue to adhere to construction contracting as the core business, and the major mission of development is to enlarge the scale, strengthen the efficiency and build the brand, so as to develop the traditional construction industry into a modern construction industry Relevant Diversification Fully utilize the competitive advantage of CRCC s main business and the corporate brand reputation Build a diversified industrial development system with reasonable layout, distinct functions, business clustering, strong characteristics, cooperative division of labor, development diversification and low-carbon environmental friendliness in accordance to the cycle characteristics of industrial development Advance through Transformation Transform from relying mainly on railway construction to multi-discipline construction within and beyond railway Transform from relying on construction engineering to lead growth, to relying on industrial diversification to lead development together Transform from the target of boosting scale to the target of development based on structural quality efficiency Transform from domestic market-oriented to a balanced development in both the domestic and the international markets Integrated Operation Through the operating model with vertical and horizontal business expansion of the industrial chain, integration of engineering design and construction, integration of capital operation and related industrial operation, and integration of international and domestic operation Strengthen business collaboration mechanism and means of control, expand the brand influence of CRCC, facilitate system integration and complementary advantages, and improve overall operational efficiency 19
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