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Annual Report2007 .: $: $. : , Dredging Business Port Machinery Manufacturing Business Annual Report 2007 CHINA COMMUNICATIONS CONSTRUCTION COMPANY LIMITED (A joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock Code: 1800) We are building a connected World 00 Contents 81934-02N.indd 2 17/4/2008 17:59:42 Contents 2 Corporate Profile 3 Financial Highlights 4 Chairman’s Statement 10 Business Overview 26 Management’s Discussion and Analysis 41 Profile of Directors, Supervisors and Senior Management 45 Report of the Board of Directors 56 Report of the Supervisory Committee 58 Report on Corporate Governance Practices 62 Investor Relations 65 Independent Auditor’s Report 67 Balance Sheets 69 Consolidated Income Statement 70 Consolidated Statement of Changes in Equity 72 Consolidated Cash Flow Statement 73 Notes to the Consolidated Financial Statements 166 Terms & Glossaries 168 Corporate Information ccccc new .indb 3 18/4/2008 20:29:37 2 Corporate Profile China Communications Construction Company Limited (“CCCC” or the “Company”) was incorporated on 8 October 2006 and its H shares were listed on The Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”) with stock code of 1800 on 15 December 2006. The Company (including all of its subsidiaries except where the content otherwise requires) is the first large state-owned transportation infrastructure group entering the overseas stock market, and its stocks have been selected as a component stock of Morgan Stanley Capital International Index and Hang Seng China Enterprises Index. The Company and its subsidiaries (collectively the “Group”) are principally engaged in the construction and design of transportation infrastructure, dredging and port machinery manufacturing business. It is the largest port construction and design company in China, a leading company in road and bridge construction and design, and the largest dredging company in China and the third largest dredging company (in terms of dredging capacity) in the world. The Company is also the world’s largest container crane manufacturer. The Company currently has 40 wholly-owned or controlled subsidiaries. Through participation in various milestone construction projects, the Company has made significant contribution to the transportation infrastructure industry in the PRC, and has set several records as well as been recognised as a “top player” in the history of port and bridge construction in not only the PRC but also the rest of Asia and around the world. The Company has been involved in the design and construction of a significant number of large and medium-sized ports and navigation channels along China’s coast and inland rivers, major first-class expressways, as well as large and mega bridges and tunnels. The Company’s container crane business accounted for more than 70% of the global market share in terms of units ordered in 2007, with products penetrating into 64 countries and regions. The Company has actively participated in the international market as a construction contractor. It has established an eminent reputation in South East Asia, Africa, Middle East and America for the past 20 years. It has been included in the Engineering News Records (“ENR”)’ list of the world’s top 225 international contractors since 1992 consecutively and ranked the first among the Chinese enterprises in the ENR list in 2007 in terms of revenue from overseas projects. The Company has been committed to its brand development strategy and technological innovation, which has attracted talent. The Company retains three members of the Chinese Academy of Engineering, one National Reconnaissance Master, 12 National Design Masters and many other senior engineers and experts. The Company also has advanced technologies, research and development capabilities and equipment and owns 10 national design institutes, two national science and research centres and six key laboratories holding various scientific achievements and self-developed intellectual property rights with international standards. In the past 10 years, the Company has won more than 140 awards including the “National Award for Science and Technology Progress”, “China Construction Project Luban Award”, “China Civil Engineering Zhantianyou Award”, and “National High Quality Prize”. The Company owns a diverse range of specialised equipment, including modern dredging vessels, dedicated transportation fleet for port machinery, various equipment for marine and onshore engineering, as well as various state-of-the-art machinery and equipment for investigation, design and research, which enables the Company to win and perform contracts for challenging large-scale complex projects. The Company is committed to developing its transportation infrastructure business in the PRC and abroad as well as to providing its customers with high quality services and products by consistently pursuing its corporate mission of “trustworthy service to clients, high quality returns to shareholders and consistent out-performance”. China Communications Construction Company Limited ccccc new .indb 2 18/4/2008 20:29:44 Financial Highlights 3 2006-2007 2007 2006 change (%) For the year ended 31 December (RMB million) Revenue 150,601 114,881 31.1 Profit for the year 7,574 4,286 76.7 Profit attributable to equity holders of the Company 6,032 3,199 88.6 As at 31 December (RMB million) Total assets 167,397 126,952 31.9 Total liabilities 113,435 90,225 25.7 Capital and reserves attributable to equity holders of the Company 45,145 31,825 41.9 Minority interests 8,817 4,902 79.9 Per share (RMB) Earnings per share 0.41 0.29 41.4 Equity attributable to equity shareholders per share 3.05 2.15 41.9 Segment Revenue for Major Businesses Segment Revenue is before elimination of inter-segment transactions. Annual Report 2007 ccccc new .indb 3 18/4/2008 20:29:44 4 Chairman’s Statement Dear Shareholders, I am pleased to present to you the annual report of the Company for year 2007 on behalf of the Board. In 2007, the Company’s management, with the support of the shareholders of the Company, led the entire employees for the Company’s development. With their continuous dedication and innovation, the Company made a leap in development. The Company continued its rapid growth momentum and achieved a record performance in its main operations, making it one of the PRC construction enterprises achieving highest economic efficiency. Meanwhile, the Company’s stock price performed well. The closing price of the Company’s stock on 31 December 2007 increased by 345% compared to the initial offering price. On the same date, the market value of public float amounted to HK$90.5 billion and the total market capitalisation of the Company amounted to HK$303.2 billion. Chairman Zhou Jichang ccccc new .indb 4 18/4/2008 20:29:46 Chairman’s Statement 5 In 2007, the Company received a number of honours and awards, such as the first prize of the “National Award for Science and Technology Progress”, “Special Prize for Technology and Innovation”, “Most Trustworthy Company in the PRC Award” and the “Award for PRC Enterprise with the Highest Core Competitiveness”. The Company was ranked the 10th among the Top 100 PRC Listed Companies by FORTUNE Magazine and was also ranked the 14th among the largest international contractors in the world by ENR (No. 1 among PRC contractors in terms of revenue from overseas projects). Moreover, the Company was ranked 27th among the Top 500 PRC Enterprises. 1. Financial Results In 2007, the Company sustained a steady growth by various financial indicators. Revenue for the year amounted to RMB150,601 million, representing a year-on-year (“YOY”) increase of 31.1%. Profit attributable to equity holders of the Company amounted to RMB6,032 million, representing a YOY increase of 88.6%. Earnings per share amounted to RMB0.41, representing a YOY increase of 41.4%. The value of new contracts signed during the year amounted to RMB234,265 million, representing a YOY increase of 52.2%. 2. Business Development In 2007, leveraging on its integrated business model, the Company utilised the synergy between its business segments and provided its customers with quality services and products at each stage of infrastructure projects. The Company’s core businesses, namely infrastructure construction, infrastructure design, dredging and port machinery manufacturing, maintained continuous growth and the Company was able to maintain its leading position in the PRC infrastructure industry. Our infrastructure construction business achieved a steady growth during the year. The Company signed a large number of new construction contracts in respect of national key ports, roads and bridges. The key projects under construction were well progressed and a number of infrastructure projects of leading international standards, including Shenzhen Dachanwan Container Terminal, Caofeidian Coal Terminal, Suzhou-Nantong Yangtze River Highway Bridge and Hangzhou Bay Cross-sea Bridge, were completed. The Company continued its dominant position in port construction and its leading position in technology applied in large-scale bridge and high-grade road construction projects in the domestic market. Our infrastructure design business achieved a continuous growth and maintained its leading position in the PRC market. Meanwhile, our infrastructure design business