HEBEI CONSTRUCTION GROUP CORPORATION LIMITED (A Joint Stock Company Incorporated in the People’S Republic of China with Limited Liability) (Stock Code: 1727)
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B_table indent_3.5 mm N_table indent_3 mm Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. 河北建設集團股份有限公司 HEBEI CONSTRUCTION GROUP CORPORATION LIMITED (A joint stock company incorporated in the People’s Republic of China with limited liability) (Stock Code: 1727) AUDITED ANNUAL RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 31 DECEMBER 2019 The board of directors (the “Board”) of Hebei Construction Group Corporation Limited (河北建設集 團股份有限公司) (the “Company”) hereby announces the audited annual results of the Company and its subsidiaries (collectively, the “Group”) for the year ended 31 December 2019. This announcement contains the full text of the annual report of the Company for 2019 and is in compliance with the relevant requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited in relation to information to accompany the preliminary announcement of annual results. AUDITOR AGREES TO 2019 ANNUAL RESULTS As stated in the Company’s announcement dated 30 March 2020 in relation to the Group’s unaudited annual results for the year ended 31 December 2019 (the “2019 Preliminary Results Announcement”), the annual results for the year ended 31 December 2019 (the “2019 Annual Results”) set forth therein had not been agreed with the auditor in accordance with the requirements under Rule 13.49(2) of the Listing Rules. As traffic restrictions in some areas of China were lifted in mid-March 2020, the relevant audit work has been resumed and the audit procedures have also made progress. The Board is pleased to announce that the auditor of the Company, Ernst & Young Hua Ming LLP, has completed the closing of audit of the Group’s consolidated financial statements for the year ended 31 December 2019 in accordance with the Chinese Certified Public Accountant Auditing Standards (the “Chinese Auditing Standards”) on 12 May 2020. Save as the adjustments disclosed below, Ernst & Young Hua Ming LLP has compared the figures in the Group’s consolidated balance sheet and consolidated income statement for the year ended 31 December 2019 and relevant notes as shown in the 2019 Preliminary Results Announcement with the figures contained in the Group’s audited consolidated financial statements for the year, and such figures are consistent. The work performed by Ernst & Young Hua Ming LLP in this regard does not constitute a certified engagement in accordance with the Chinese Auditing Standards issued by the Ministry of Finance of the People’s Republic of China. Therefore, no certification was issued for the 2019 Preliminary Results Announcement by Ernst & Young Hua Ming LLP. B_table indent_3.5 mm N_table indent_3 mm The 2019 annual results set forth in the 2019 Preliminary Results Announcement remain unchanged in major respects, except for the following amendments: Disclosed in the unaudited Disclosed in financial the audited information annual results Items announcement announcement Difference Notes (RMB‘000) (RMB‘000) (RMB‘000) Operating profit 1,191,373 1,211,661 20,288 1, 2 Total profit 1,188,461 1,208,749 20,288 1, 2 Net profit 745,540 763,123 17,583 1, 2 Other comprehensive income (net of tax) 73,100 58,657 (14,443) 2 Total comprehensive income 818,640 821,780 3,140 1, 2 Current assets 57,777,590 57,427,232 (350,358) 1, 3 Non-current assets 3,991,282 3,499,339 (491,943) 1, 3 Total assets 61,768,872 60,926,571 (842,301) 1 Current liabilities 53,352,860 53,128,750 (224,110) 1 Non-current liabilities 2,149,249 1,894,249 (255,000) 1 Total liabilities 55,502,109 55,022,999 (479,110) 1 Other comprehensive income 134,000 119,557 (14,443) 2 Surplus reserve 416,398 417,681 1,283 1, 2 Retained profit 1,745,144 1,760,756 15,612 1, 2 Total equity attributable to shareholders of the parent 5,718,158 5,720,610 2,452 1, 2 Minority interests 548,605 182,962 (365,643) 1, 2 Total equity 6,266,763 5,903,572 (363,191) 1, 2 1. Mainly due to the revision of the Group’s investment in the Company from subsidiaries to joint venture investment accounting in accordance with the articles of association of Qinhuangdao Yuanyi Road Construction Management Co., Ltd.; 2. Mainly because bills receivable are accounted for as account receivables financing, the changes in fair value are recognized in other comprehensive income; 3. Mainly due to the adjustment of the contract assets and receivables impairment provision based on the expected credit loss model. – 2 – B_table indent_3.5 mm N_table indent_3 mm PUBLICATION OF THE ANNUAL RESULTS ANNOUNCEMENT AND ANNUAL REPORT This annual results announcement has been published on the HKEXnews website of The Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”) at www.hkexnews.hk and the website of the Company at www.hebjs.com.cn. The annual report of the Company for 2019 will be published and dispatched to the Company’s H shareholders on or before 15 May 2020 and will be published on the aforesaid website of the HKEXnews of the Hong Kong Stock Exchange as well as the website of the Company. By order of the Board Hebei Construction Group Corporation Limited LI Baozhong Chairman and Executive Director Hebei, China 12 May 2020 As at the date of this announcement, the Board comprises four executive directors, namely Mr. LI Baozhong, Mr. SHANG Jinfeng, Mr. ZHAO Wensheng and Mr. LIU Yongjian; two non-executive directors, namely Mr. LI Baoyuan and Mr. CAO Qingshe; and four independent non-executive directors, namely Mr. XIAO Xuwen, Ms. SHEN Lifeng, Ms. CHEN Xin and Mr. CHAN Ngai Sang Kenny. – 3 – CONTENTS CHAIRMAN’S STATEMENT 2 CORPORATE INFORMATION 4 FINANCIAL HIGHLIGHTS 6 BUSINESS OVERVIEW 9 MANAGEMENT DISCUSSION AND ANALYSIS 28 REPORT OF THE BOARD OF DIRECTORS 36 REPORT OF BOARD OF SUPERVISORS 64 SIGNIFICANT EVENTS 68 CHANGES IN SHARE CAPITAL AND INFORMATION OF SHAREHOLDERS 70 CORPORATE GOVERNANCE REPORT 77 ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 97 DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES 163 INDEPENDENT AUDITOR’S REPORT 183 FINANCIAL STATEMENTS AND NOTES 206 FIVE YEAR FINANCIAL SUMMARY 373 DEFINITIONS AND GLOSSARY OF TECHNICAL TERMS 375 CHAIRMAN’S STATEMENT CHAIRMAN’S STATEMENT Dear Shareholders, First of all, on behalf of the Board of Directors of Hebei Construction Group Corporation Limited, I would like to express my sincere gratitude to all Shareholders and the public for the concerns and support to the Company in the past year! In 2019, facing the ever-increasing international and domestic competition in the external environment, we upheld the general keynote of “Improving Quality and Efficiency, and Achieving Stability for Sustainable Development”, stuck to the overarching goal to be “an enterprise with awareness, a legal person with character” and in “character” we mean integrity and ethical conduct, which has widely recognized by property owners and customers with new results achieved. We cherished the opportunity to work hard on a high-quality financial platform such as H shares, which enabled the Company to continuously increase its influence in the domestic and international markets, improved its internal control system and business processes, and accelerated the accumulation of internal and external resources. In 2019, the Company’s stock has officially included in the MSCI China All Shares Small Cap Index. We were bold to strive ahead and committed to the development strategy of “leading by the market” in amidst of the increasingly fierce market competition, which have led us to another success in market competition. In 2019, the accumulated new contract value of the Group was RMB72,084 million, representing an increase of 2.81% year-on-year. Under the influence of the government’s major activity requirements and the downward pressure of macro-economy, some customers adjusted their work arrangements, which led to the slowdown of the construction in progress of the Company. In 2019, the Group achieved operating revenue of RMB41,077 million, representing a decrease of 14.17% year-on-year, and a net profit of RMB743 million, representing a decrease of 34.74% year-on-year. We exerted our best efforts to obtain new achievements in quality and safety science and technology. The project of Inner Mongolia Natural History Museum undertaken by the Group was awarded the 2019 Lu Ban Award. We also garnered two “China Steel Structure Gold Awards (中國鋼結構金獎)”, two “China Construction Project Decoration Awards (中國建築工程裝飾 獎)”, one “Highway Traffic Quality Engineering Awards (公路交通優質工程獎)”, one “Silver Award of Landscape Engineering of the Science and Technology Awards by the Chinese Society of Landscape Architecture (中國風景園林學會科學技術獎園林工程銀獎)”, 77 provincial-level quality projects, with two projects shortlisted for the Lu Ban Award and two projects awarded as the “National Safety Production Standardized Construction Site (全國安全生產標準化建設工地)”. In terms of scientific and technological research and development, we received 34 “Scientific and Technological Progress Awards for Construction Systems in Hebei Province (河北省建設系統科技 進步獎)”, 25 provincial process methodologies and 112 patents. 2 Hebei Construction Group Corporation Limited CHAIRMAN’S STATEMENT We pay close attention to the future and continuously strengthen personnel training. In 2019, over 1,600 fresh graduates and mature social talents were newly recruited, and 216 employees of the Company have obtained the qualifications of Class I certified constructor. The total number of Class I certified constructor of the Company was over 1,807. A total of 36 employees won the title of “Outstanding Project Manager in Hebei Province (河北省優秀項目經理)”.