Stock code: 000018 ，200018 Stock ID : Sino Great Wall ，Sino-B Announcement No.2019-042
Summary of 2018 Annual Report of Sino Great Wall Co., Ltd.
1. Important notes
The summary is abstract from full-text of annual report, for more details information , investors should found inthe full-text of annual report that published on website of Shenzhen Stock Exchange and other website appointedby CSRC.Objections of the directors, supervisors and senior management
| Name | Office title | Objection & reason |
StatementOther directors attending the Meeting for annual report deliberation except for the followed:
| Name of director absent | Title for absent director | Reasons for absent | Attorney |
| Jiang Chongguang | Independent director | Due to work reasons | Yu Haichun |
Non-standard auditor’s opinion√Applicable□ Not applicable
Due to the inability to obtain sufficient and appropriate audit evidence as the basis for expressing auditopinions on the financial statements, Reanda Public Certified Accountants (LLP) issued an audit report that couldreservation opinions on the company. The board of directors and the board of supervisors of the Company havemade detailed explanations on relevant matters, to which investors shall pay attention.Preliminary plan for profit distribution to the common shareholders or turning the capital reserve into the sharecapital for the reporting period, which has been reviewed and approved at the board meeting□ Applicable √Not applicableThe Company will not distribute cash dividend or bonus shares, neither capitalizing of common reserves for thereport period.Plans for profit distribution on preference shares for the reporting period approved by the Board□ Applicable √Not applicableII. Basic information about the company1. Company profile
| Stock ID | Sino Great Wall ，Sino-B | Stock code: | 000018、200018 | |
| Stock Exchange Listed | Shenzhen Stock Exchange | |||
| Contact person and contact manner | Board secretary | Securities affairs Representative | ||
| Name | Yang Chunling | Sun Yu | ||
| Contact address | Sino Great Wall Building, No.3 Jinxiu Street, Economic Technology Development Zone , Beijing | Sino Great Wall Building, No.3 Jinxiu Street, Economic Technology Development Zone , Beijing | ||
| Fax | 010-89045856 | 010-89045856 | ||
| Tel | 010-89045855 | 010-89045855 | ||
| Email. | 1208806865@qq.com | 000018sz@sina.com | ||
2. Brief introduction to the main business or products in the reporting period(I) Company main business scope and business model
Within the report period, the core business of Sino Great Wall is the engineering construction and medical
treatment and health industry investment and management. The engineering construction mainly includes theinternational EPC and domestic PPP business. The medical treatment and health industry investment andmanagement mainly comprises the hospitals and medical treatment operation management through engagement inthe industry through several ways including acquisition of existing hospitals, construction of new hospitals as wellas building and investing the hospital PPP project, etc. At present, the company business covers the housebuilding, roads and bridges, power and chemical industry as well as medical treatment and health, etc. amongmany countries and regions in Southeast Asia, the Middle East, South Asia and Africa, etc.
The company mainly engages in the foreign engineering construction through EPC, namely contracting the
whole process or several phases among the construction project design, purchase, construction and trail operation,etc. through integrating the high-quality resources at home and abroad. For the domestic engineering construction,the company mainly adopts PPP mode, namely the project operation mode through cooperation of thegovernmental and social capital. Under such mode, the government will select the social capital with theinvestment and operation management capacity through the competitive ways and both parties shall enter into thecontract subject to the equality-based consultation principle, under which, the social capital shall provide publicservices and the government shall pay the consideration against the social capital based on the public serviceachievement assessment result.
The Company business includes the project development, financing, design, procurement and construction,etc. and it will also participate in investment in and provision of operation services for high-quality projects withgood development prospect.
(II) Engineering construction industry macro-situation, competition pattern and position in industry
Foreign engineering: with the comprehensive advance of the “One Belt and One Road” initiative, the
Company’s contracted engineering projects industry for other countries is in the good growth momentum whollywith continuous expansion of the industry scale.During the reporting period, the company was awarded with the 138th medal in the "2018 ENR Top 250International Contractors" (ranked 39th among Chinese enterprises and 1st among Chinese private enterprises).According to statistics from the Ministry of Commerce and the State Administration of Foreign Exchange, China'sindustry-wide foreign direct investment in 2018 was USD 129.83 billion, with a year-on-year increase of 4.2%.Turnover from overseas contracted projects reached USD 169.04 billion, with a year-on-year increase of 0.3%.The turnover of overseas contracted projects in 63 countries and regions along the "the Belt and Road" was USD89.33 billion, accounting for 52% of the total for the same period. The Chinese government has continued to pushforward the construction of "the Belt and Road" and has strengthened strategic docking with countries and regionsalong the line. It has embraced a broader cooperation space in infrastructure construction, metallurgicalengineering, equipment manufacturing and other fields, and created more market opportunities for the company'soverseas business expansion.
In terms of domestic projects: In order to further standardize the development of the Public-Private Partnership
(PPP) market, in the first half of 2018, relevant government departments successively issued policy documentssuch as Notice on Regulating Investment and Financing Behavior of Financial Enterprises to Local Governmentsand State-owned Enterprises and Notice of the Ministry of Finance on Further Strengthening the StandardizedManagement of Public Private Partnership (PPP) Demonstration Project, further guiding the effective allocation ofresources and preventing risks, ensuring that truly standardized and efficient PPP projects can be implemented andthe market will decline in the short term. After October 2018, with the end of PPP clearing and government debtregulation, investment enterprises have rebounded steadily, and the restart of infrastructure investment is expectedto boost the overall investment.
(III) Company’s qualification
At present, the Company possesses the construction certificates such as Constructional Engineering
Construction General Constructing-Grade I, Highway Engineering General Constructing-Grade I；Municipalutility construction General Constructing-Grade I；Urban and road lighting engineering Constructing-Grade I；Environmental engineering Constructing-Grade I；Design and construction of architectural decorationConstructing-Grade I, Electromechanical Equipment Installation Project Specialized Contracting-Grade I,Construction Curtain Wall Project Specialized Contracting- Grade I, Fire Control Facilities Project SpecializedContracting-Grade I, Possessing 10 first-class qualifications of professional contracting for engineering ofwaterproof, anti-corrosion and insulation; meanwhile, possesses two class-a special-grade design qualifications ofbuilding curtain wall engineering design and architectural decoration engineering design; in addition, possesses 5second-class qualifications, including the second-class general contracting qualification of construction of waterconservancy and hydropower projects, the second-class of general contracting of metallurgy engineeringconstruction, the second-class qualification of professional contracting of steel structure engineering, the
second-class qualification of professional contracting of electronic and intelligent engineering and the second-classgeneral contracting qualification of mechanical and electrical engineering construction, and possesses thethird-class general contracting qualification of railway construction, the specialized contracting qualification forspecial projects and so forth qualifications. The scope covers architecture, highways, railways, municipal utilities,water conservancy and hydropower, petrochemical, electric power and other specialties.For the overseas market, the Company has always been developing the market, accumulating the talent andtechnology and improving the adaptive capacity of oversea standards and the local project management abilitycontinuously for many years.For the domestic business, accumulates experience in aspects of the project bidding, financing ways andoperation management and forms its unique operation ways.
（IV）Financing SituationDuring the reporting period, the company's financing structure was reasonable and it better supported thecompany's business development. The financing during the reporting period is as follows:
In RMB
| No | Financing Channel | December 31, 2018 | Financing cost range | Structure |
| 1 | Bank loans | 2,758,060,500 | 3.15%-8.1% | Within 1 year |
| 228,632,300 | 3.25%-5.75% | 1-2 years | ||
| 19,995,100 | 6.75% | 2-3 years | ||
| Subtotal | 3,006,688,000 | |||
| 2 | Trust financing | 558,770,000 | 7%-9.77% | Within 1 year |
| 1,200,000,000 | 6.65%-11% | 1-2 years | ||
| 300,000,000 | 6.30% | 2-3 years | ||
| Subtotal | 2,058,770,000 | |||
| 3 | ||||
| Bond financing | 200,000,000 | 5.96%-6.2% | 1-2 years | |
| 145,000,000 | 6.20% | 2-3 years | ||
| Subtotal | 345,000,000 |
| 4 | Notes | 75,257,400 | 0-10% | Within 1 year |
| Total | 5,485,715,400 |
(V) Quality Control SystemQuality is the life of engineering construction companies. Quality is the best display and promotion of theimage of construction companies. The company has always attached great importance to project qualitymanagement, has a dedicated QC (Quality Control) department, and is fully responsible for the management ofthe company's construction projects, forming a set of effective and mature quality control processes and systems.Quality control measures have been continuously optimized to cover all aspects and operate efficiently; qualitymanagement is scientific and standardized. During the reporting period, the company did not have major projectquality problems.
(VI) Safety Production OperationThe company has firmly established the guiding principle of "safety first, prevention first", attaches greatimportance to safety production, carefully organizes safety education and training, adheres to the safety red line,strictly implements the safety production responsibility system, and conducts in-depth safety inspections andhidden trouble investigations, enhances safety precautions, and creates a safe, harmonious, standardizedconstruction environment, and constantly improves the level of precision management of safety production.During the reporting period, the company did not have major safety issues, all work was carried out in an orderlymanner, and the construction was safe and stable.
3. Major accounting data and financial indicators（1）Major accounting data and financial indicators for the last three yearsMay the Company make retroactive adjustment or restatement of the accounting data of the previous years□Yes √No
In RMB
| 2018 | 2017 | Changed over last year（％） | 2016 | |
| Operating revenue | 2,426,987,687.02 | 6,497,124,980.52 | -62.65% | 4,664,999,117.17 |
| Net profit attributable to the shareholders of the listed company（Yuan） | -1,704,739,736.40 | 380,090,990.82 | -548.51% | 473,661,862.67 |
| Net profit after deducting of non-recurring gain/loss attributable to the shareholders of listed company（Yuan ） | -1,411,440,495.34 | 377,087,197.69 | -474.30% | 470,274,602.37 |
| Net cash flow generated by business operation, net（Yuan） | 827,879,055.45 | -1,781,868,618.65 | -146.46% | -1,687,875,813.94 |
| Basic earning per share(Yuan/Share) | -1.004 | 0.220 | -560.45% | 0.28 |
| Diluted gains per share(Yuan/Share)(Yuan/Share) | -1.004 | 0.220 | -560.45% | 0.28 |
| Net asset earning ratio（%） | -142.85% | 19.35% | -162.20% | 31.18% |
| End of 2018 | End of 2017 | Changed over last year（％） | End of 2016 | |
| Gross assets | 9,603,455,934.89 | 11,667,845,186.30 | -17.69% | 7,986,178,961.63 |
| Net assets attributable to shareholders of the listed company | 235,202,473.51 | 2,151,482,467.52 | -89.07% | 1,777,948,117.49 |
(2)Main Financial Index by Quarters
In RMB
| First quarter | Second quarter | Third quarter | Fourth quarter | |
| Operating income | 923,442,740.92 | 663,528,834.32 | 672,083,613.81 | 167,932,497.97 |
| Net profit attributable to the shareholders of the listed company | 218,523,628.75 | -74,524,173.03 | -118,516,821.76 | -1,730,222,370.36 |
| Net profit after deducting of non-recurring gain/loss attributable to the shareholders of listed company | 56,977,615.63 | -65,023,592.77 | -144,157,168.17 | -1,284,719,983.99 |
| Net Cash flow generated by business operation | 809,676,459.22 | 288,487,906.41 | 189,148,952.32 | -459,434,262.50 |
Whether significant variances exist between the above financial index or the index with its sum and the financialindex of the quarterly report as well as semi-annual report index disclosed by the Company.
□ Yes √No
4.Share capital and shareholders（1）Number of holders of ordinary shares and preference shares with restored voting right and Top 10
shareholders
In shares
| Total number of common shareholders at the end of the reporting period | 77,544 | Total shareholders at the end of the month from the date of disclosing the annual report | 78,961 | The total number of preferred shareholders voting rights restored at period-end | 0 | Total preferred shareholders at the end of the month from the date of disclosing the annual report | 0 |
| Shareholdings of Top 10 shareholders | ||||||
| Shareholders | Nature of shareholder | Proportion of shares held（%） | Number of shares held at period -end | Amount of restricted shares held | Number or share pledged/frozen | |
| State of share | Amount | |||||
| Chen Lue | Domestic Natural person | 34.36% | 145,863,639 | 437,590,917 | Pledge | 583,454,462 |
| Freeze | 583,454,556 | |||||
| STYLE-SUCCESS LIMITED | Foreign legal person | 5.47% | 92,970,910 | 0 | ||
| Union Holdings Co., Ltd. | Domestic Non- State-owned legal person | 5.18% | 87,935,921 | 0 | ||
| He Feiyan | Domestic Natural person | 3.23% | 54,800,458 | 0 | Freeze | 54,800,458 |
| Jiutai Fund－Bank of Communications－Jiutai Huitong No.2 specific customer asset management plan | Other | 2.40% | 40,696,772 | 0 | ||
| Rich Crown Investment Co., Ltd. | Foreign legal person | 1.37% | 23,235,313 | 0 | ||
| Qinghai Heyi Industry Development Co., Ltd. | Domestic Non- State-owned legal person | 0.79% | 13,357,084 | 0 | Pledge | 13,357,084 |
| Huang Huaian | Domestic Natural person | 0.72% | 12,300,000 | 0 | ||
| Zhang Xubao | Domestic Natural person | 0.34% | 5,852,820 | 0 | ||
| Chen Lihong | Domestic Natural person | 0.28% | 4,775,760 | 0 | ||
| Explanation on associated relationship among the aforesaid shareholders | The largest shareholder of Mr. Chen Lue and the Fourth largest shareholder of Ms. He Feiyan aforesaid are persons acting in concerted; The controlling shareholder of the above-mentioned third shareholder Shenzhen Union Holdings Co.,Ltd. And Sixth shareholder Rich Crown Investment Co., Ltd.. Is Union Development Group Ltd.; It is unknown whether there is relationship between other shareholders and whether they are persons taking concerted action specified in the Regulations on Disclosure of Information about Change in Shareholding of Shareholders of Listed Companies. | |||||
| Notes to the shareholders involved in financing securities (if any) | Not applicable | |||||
(2)Total preference shareholders and the shares held by the Top 10 Preference shareholders
□ Applicable □ Not applicableThe Company had no shareholders with preferred stock held in the reporting.
(3)Block diagram of the ownership and control relations between the Company and the actual controller
5. Corporation bondsWhether the company has corporate bonds that have been publicly issued and listed on the stock exchange, and
not yet due or due but not folly cashed on the approval date of annual reportNoIII. Discussion and Analysis of the Management1. Business Operation summary in the reporting periodWhether the company needs to comply with the disclosure requirements of the particular industry
Reference disclosure
Civil Engineering Construction2018 is an extremely difficult year for the company, with the global economic situation increasingly complicated,international trade protection on the rise, growth rate of foreign engineering contracting industry slowed down andcompetition intensified. Due to the national capital management policy at the beginning of 2018 and theenvironmental impact of deleveraging, the company was subjected to loan recovery with different degrees such asloan withdrawal and loan cut, resulting in the liquidity difficulties of the company's operating funds and triggeringa series of chain reactions of operating difficulties. Overdue repayment appeared in the financing of the company,its subsidiaries and banks and other financial institutions. Major accounts, some assets and shares of subsidiarieswere frozen by overdue financial institutions in pre litigation preservation, further causing some employees of thecompany to default on their wages, some suppliers to default on their debts, and bidding for new projects was alsogreatly affected. The company's operating income has been greatly reduced, and the annual operating results in2018 show losses for the first time. In 2018, the company realized operation income of RMB 2.431 billion, adecrease of 62.58% from the last year; realized the operating profits of RMB- 1.48 billion, a decrease of 391.32%from the last year; and the net profit attributable to the parent company was RMB -1.736 billion, a decrease of556.66% from the last year.In terms of engineering construction, the company overcame difficulties and obstacles, rooted in the existingbusiness area and scale, and continued to steadily expand its business. During the reporting period, the companyfaced difficulties both domestically and abroad. In terms of foreign business, the company undertook thetraditional construction business-Cambodia Mekong River Villa Project; Meanwhile, it actively participated ininvestment and financing, development, construction and operation projects, and jointly develops DongpoxiComprehensive Park in Laos with international engineering companies; In addition, It completed and deliveredthe residential and commercial buildings of the stock project NAGA Phase II Integrated entertainment inCambodia and the Cambodia Haoli Diamond Project, and maintained the normal operation of the stock projects in
Cambodia, Russia, Sri Lanka, Malaysia, Algeria and Myanmar regions. In terms of domestic business, thecompany has successfully connected with strategic projects such as Chengdu Rennan Square Project, Future NewWorld Project, Xinhui Hilton Hotel and Villa Project. Meanwhile, it actively expands its major clients and reachesstrategic cooperation intentions with well-known real estate developers and investment companies, which areexpected to sign high-value business contracts with the company in 2019.The medical and health industry is an important pillar in the company's transformation and development strategy.Due to the influence of the adjustment of national financial policies, the company actively expanded thetraditional construction business of infrastructure, utilized existing resources, and strengthened horizontalintegration. It is expected that some breakthroughs will be made in Medical engineering and proton therapyprojects in the future.In smart housing sector, it will locate the trend and accurately position it, and comprehensively push forward theimplementation of strategic development goals. In recent years, the Chinese government has successively issuedrelevant policies to vigorously promote the transformation of the construction industry to constructionindustrialization. The company has set up a "Sino Great Wall Intelligence Residential Co, Ltd." in Zhanjiang,Guangdong, to produce fabricated supporting products. During the reporting period, the construction of the base'sfactory building framework was basically completed. Due to the financial environment, the production line hasnot yet been established and put into production. Meanwhile, the company promoted the rural assembly businessand made a preliminary layout in key regions of the country.Faced with the financial difficulties, the company has made concerted efforts from top to bottom to conquer thedifficulties. It has successively carried out a series of reforms and innovations in enterprise management mode,timely investigated and re-elected board members, integrated the senior management team, re-organized thebusiness sectors, defined the responsibility assessment, strengthened the asset preservation, comprehensivelyoptimized control and other measures to effectively stimulate enterprise development potential in adversity.
2. Material change in principal activities during the reporting period
□ Yes √No
3. Products accounting for over 10% of revenue or profit from principal activities of the Company
√ Applicable □ Not applicable
In RMB
| Name | Turnover | Operation cost | Gross profit rate(%) | Increase/decrease of revenue in the same period of the previous year(%) | Increase/decrease of business cost over the same period of previous year (%) | Increase/decrease of gross profit rate over the same period of the previous year (%) |
| EPC | 1,853,545,312.44 | 1,854,176,312.80 | -0.03% | -56.57% | -38.80% | -29.05% |
| Decoration work | 430,784,976.15 | 494,437,274.02 | -14.78% | -78.62% | -70.55% | -31.47% |
| On Area | 2,284,330,288.59 | 2,348,613,586.82 | -2.81% | -63.64% | -50.12% | -27.88% |
| Overseas | 1,725,531,194.49 | 1,817,363,558.28 | -5.32% | -53.99% | -40.14% | -24.36% |
| Domestic | 701,456,492.53 | 632,137,076.59 | 9.88% | -74.47% | -65.84% | -22.76% |
4. Seasonal or cyclical operations requiring special attention
□ Yes √No
5. Material difference of revenue, operating costs or net profit attributable to holders of ordinary shares of theCompany for the reporting period from the last reporting period
√ Applicable □Not applicable
Due to the national capital management policy at the beginning of 2018 and the environmental impact ofdeleveraging, the company was subjected to loan recovery with different degrees such as loan withdrawal andloan cut, resulting in the liquidity difficulties of the company's operating funds and triggering a series of chainreactions of operating difficulties. Overdue repayment appeared in the financing of the company, its subsidiariesand banks and other financial institutions. Major accounts, some assets and shares of subsidiaries were frozen byoverdue financial institutions in pre litigation preservation, further causing some employees of the company todefault on their wages, some suppliers to default on their debts, and bidding for new projects was also greatlyaffected. The company's operating income has been greatly reduced, and the annual operating results in 2018show losses for the first time.
6. Suspension in trading or delisting
□ Applicable √Not applicable
7. Events relating to the financial report(1) Reason for changes in accounting policies, accounting estimates and accounting methods as compared to thefinancial report for the prior year
√ Applicable □ Not applicable
The format of financial statements of general enterprises has been revised in accordance with the provisions ofNotice on Revision and Issue of 2018 Format of Financial Statements for General Enterprises (CK [2018] No.15)issued by the Ministry of Finance.(2) Reason for retrospective restatement to correct major accounting errors during the reporting period□ Applicable √ Not applicableNo major accounting errors within reporting period that needs retrospective restatement for the Company in theperiod.(3) Reason for changes in scope of the consolidated financial statements as compared to the financial report forthe prior year√ Applicable □Not applicableDuring the reporting period, the changes in the scope of consolidated statements are detailed in the notes to thefinancial reports.