ANNUAL SPEEDYY DEVELOPMENT 2019 REPORT Corporate Information 2 Company Overview 3 Financial Highlights 6 Chairman’s Statement 7 Management Discussion and Analysis 13 Risk Factor Analysis 26 Investor Relations 28 Biographical Details of Directors and 30 CONTENTS Senior Management Directors’ Report 36 Corporate Governance Report 54 Definitions 69 Independent Auditor’s Report 72 Consolidated Statement of Profit or Loss 82 Consolidated Statement of Profit or Loss and 83 Other Comprehensive Income Consolidated Statement of Financial Position 84 Consolidated Statement of Changes in Equity 86 Consolidated Cash Flow Statement 88 Notes to the Financial Statements 90 CORPORATE INFORMATION BOARD OF DIRECTORS LEGAL ADVISERS TO THE COMPANY Executive Directors Chiu & Partners Mr. Cao Wei (Vice Chairman) Ms. Xuan Jing (Chief Executive Officer) PRINCIPAL BANKER The Hongkong and Shanghai Banking Corporation Non-Executive Directors Limited Mr. Zhang Yanyou (Chairman) Mr. Guan Jifa REGISTERED OFFICE Mr. Zheng Yi Cricket Square Mr. Ren Yuhang Hutchins Drive P.O. Box 2681 Independent Non-Executive Directors Grand Cayman, KY1-1111 Mr. Bai Jinrong Cayman Islands Mr. Luo Zhenbang (CPA) Mr. Huang Lixin HEAD OFFICE AND PRINCIPAL PLACE OF BUSINESS IN THE PRC AUTHORISED REPRESENTATIVES Jingtou Plaza, No.6 Xiaoying North Road PURSUANT TO RULE 3.05 OF THE Chaoyang District, Beijing, China LISTING RULES Ms. Xuan Jing PRINCIPAL PLACE OF BUSINESS Ms. Cheung Yuet Fan IN HONG KONG Unit 4407, 44/F, COSCO Tower COMPANY SECRETARY 183 Queen’s Road Central Ms. Cheung Yuet Fan Sheung Wan, Hong Kong AUDIT COMMITTEE PRINCIPAL SHARE REGISTRAR AND Mr. Luo Zhenbang (CPA) (Chairman) TRANSFER OFFICE IN CAYMAN ISLANDS Mr. Bai Jinrong SMP Partners (Cayman) Limited Mr. Huang Lixin Royal Bank House – 3rd Floor 24 Shedden Road REMUNERATION COMMITTEE P.O. Box 1586 Mr. Bai Jinrong (Chairman) Grand Cayman, KY1-1110 Mr. Guan Jifa (appointed on 30 March 2020) Cayman Islands Mr. Huang Lixin Mr. Cao Wei (resigned on 30 March 2020) BRANCH SHARE REGISTRAR AND TRANSFER OFFICE IN HONG KONG NOMINATION COMMITTEE Tricor Investor Services Limited Mr. Zhang Yanyou (Chairman) Level 54, Hopewell Centre Mr. Bai Jinrong 183 Queen’s Road East Mr. Huang Lixin Wanchai, Hong Kong AUDITORS WEBSITE KPMG www.biitt.cn Public Interest Entity Auditor registered in accordance with the Financial Reporting Council Ordinance STOCK CODE 1522 2 BII Railway Transportation Technology Holdings Company Limited Annual Report 2019 COMPANY OVERVIEW COMPANY INTRODUCTION The Group is a high-tech enterprise specialising in the field of rail transit, integrating investment and financing, technology R&D, and intelligent rail transport construction, operation and maintenance. The Company was listed on the Growth Enterprise Market (GEM) of the Stock Exchange on 16 May 2012 and transferred to Main Board of the Stock Exchange on 6 December 2013, with the stock code of 1522. The Group, which concentrates on rail transit for more than a decade, focuses on two core businesses, namely: Its intelligent rail transit business provides hardware and software products and services to clients in high-speed rail, intercity, urban and suburban intelligent rail transit railway, subway and other fields in both domestic and overseas markets. It is an industry leader in China in terms of PIS and AFC businesses. As for its infrastructure information business mainly based in Beijing, the infrastructure Group is a leading provider of civil communications transmission systems for information subways and integrated utility tunnel informatisation systems. Strategic Objectives Position: Mission: become a leading energise the railway intelligent system transportation by service provider of intelligent technology railway transportation in China Strategic Themes One Body: One Platform: One Centre: the core of its principal a strategic investment a big data centre equipped business based on the and control platform to with core technological railway transportation foster industry upgrade competitiveness intelligent system and market value appreciation BII Railway Transportation Technology Holdings Company Limited Annual Report 2019 3 Company Overview (continued) MARKET STRATEGY The Group adheres to its market strategy of “relying on Beijing and Hong Kong, radiating across the country, and making presence in international markets”, has been making remarkable results in market expansion. As of 31 December 2019, the Group’s businesses covered 39 cities in China, with 119 projects under construction, where it provided products and services, including intelligent rail transit and infrastructure information. As for overseas market, it has expanded into nine cities overseas in four countries and regions, with eight projects under construction, where it provided intelligent rail transit-related (PIS) products and services. Areas covered by the our businesses in China Areas covered by our businesses overseas Note: It has expanded its footprint to India, Sri Lanka, Indonesia, Costa Rica, etc. 4 BII Railway Transportation Technology Holdings Company Limited Annual Report 2019 Company Overview (continued) SUMMARY WITH FIGURES The Group concentrates on Its businesses cover rail transit for 15YEARS 39CITIES 9CITIES in China and overseas in four countries and regions. It owns and obtains As at the end of 2019, the orders on hand of the Group was approximately 75 291 HK$ BILLION. PATENTS SOFTWARE COPYRIGHTS. 1.99 technology company data warehouse- cloud-based ANCC high-tech enterprise capable that has achieved MLC based information system combining AFC of providing products and standardisation. centre. Clearing Centre and technologies, system integration, MLC systems. operation services and technical consultation for high-speed rail, normal-speed railway, urban rail transit, intercity railway, and urban railway. Revenue was approximately Profit attributable to equity shareholders in 2019 amounted to approximately MILLION HK$1,193.9 MILLION in 2019, representing an increase of approximately HK$96.9 representing an increase of approximately 163.4% as compared to 2018. 104.4% as compared to 2018. BII Railway Transportation Technology Holdings Company Limited Annual Report 2019 5 FINANCIAL HIGHLIGHTS For the year ended 31 December 2019 2018 2017 2016 2015 Key profit items (HK$ Thousand) Revenue 1,193,937 453,204 564,587 479,309 320,782 Gross profit 424,779 108,815 113,286 103,985 121,452 Earnings before interest, taxes, depreciation and amortization 209,019 105,303 93,839 66,020 61,965 Profit attributable to equity shareholders of the Company 96,870 47,398 38,554 25,728 22,945 As at 31 December 2019 2018 2017 2016 2015 Key statement of financial position items (HK$ Thousand) Non-current assets 1,528,471 703,412 731,123 654,271 315,212 Current assets 2,505,375 2,340,020 1,981,904 1,840,626 1,231,066 Total assets 4,033,846 3,043,432 2,713,027 2,494,897 1,546,278 Total liabilities 1,761,306 845,780 498,918 378,370 324,776 Equity attributable to equity shareholders of the Company 2,189,216 2,168,810 2,194,076 2,104,699 1,211,100 Financial year 2019 2018 2017 2016 2015 Return to shareholders Earnings per share – Basic (HK$ cent) 4.6 2.3 1.8 1.7 1.7 – Diluted (HK$ cent) 4.6 2.3 1.8 1.7 1.7 Dividend per share (HK$ cent) 2.0 1.0 1.0 – – Net assets per share (HK$) 1.0 1.0 1.0 1.0 0.9 Revenue Gross profit Profit attributable Basic earnings per share (HK$ Thousand) (HK$ Thousand) to equity shareholders (HK$ cent) of the Company (HK$ Thousand) 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 20162017 2018 2019 6 BII Railway Transportation Technology Holdings Company Limited Annual Report 2019 CHAIRMAN’S STATEMENT Seize strategic opportunities, lead intelligent upgrade and achieve rapid development Mr. Zhang Yanyou Chairman Dear valued shareholders and friends, fortified its businesses to build a solid foundation, and increased profits from diversified channels. Efforts were On behalf of the board of directors (the Board), I am made to leverage capital competitiveness to continuously pleased to present the annual results of the Group for FY improve the industrial competitive advantage of the 2019. Group’s main businesses. The Group increased its investments in scientific R&D and innovation and 2019 is a boom year for China’s rail transit industry as improved the ability to export its own products and core well as the first year for the Group to implement its technologies. With higher awareness of risk prevention development strategy of “New Journey and Remodelling and control, it established a good market image and 2021”. In 2019, the Group seized the strategic created a high brand value. Thanks to the improved development opportunities arising from intelligentisation corporate governance mechanism and the strategic of China’s rail transit, continuously deepened its strategic guidance and scientific decision making of the Board, the positioning of “China’s leading intelligent rail transit Group saw sound, sustained and fast-growing operating system service provider”, and firmly adhered to the results, paving a good start to further fulfil its strategic strategy of “one body, one platform, and one centre”. mission of “energise the railway transportation by It made an effective shift from a “market-driven” model intelligent technology”. to a “market, capital, and technology-driven” model, BII Railway Transportation Technology Holdings Company Limited Annual Report 2019 7 Chairman’s Statement (continued) RESULTS Develop strategies and make comprehensive The Group recorded revenue of approximately breakthroughs to step up presence in and HK$1,193.9 million in FY 2019, an increase of outside mainland China approximately HK$740.7 million or 163.4% from FY As of the end of 2019, the orders on hand of the Group 2018. Profit attributable to equity shareholders in FY was approximately HK$1.99 billion, demonstrating its 2019 amounted to approximately HK$96.9 million, a great business development and strong development year-on-year rise of approximately HK$49.5 million or potential.