CRSC Value and Return Enhancement Action Plan (2024)
In order to acvely implement the investor-oriented philosophy, in response to the call of theSSE’s Science and Technology Innovaon Board, China Railway Signal & CommunicaonCorporaon Limited (hereinaer referred to as “the Company” or “CRSC”) develops this planfrom operaons management, corporate governance, disclosure of informaon, and investorreturns in the light of the stage of development of the enterprise, the characteriscs of theindustry, and investors’ demands. This plan aims to improve the quality of listed companiesheld by the central enterprises, and seeks to create more value for investors and strengtheninvestor returns.The Company’s Leading Group for Quality and Eciency Improvement will acvely organizethe implementaon of this plan at all levels throughout the group of CRSC, and promote it inconcert with the implementaon of the Company’s 14th Five-Year Plan for Development, theeorts to expedite the construcon of a world-class enterprise, and the improvement of thequality of listed companies.CRSC’s main measures to “improve quality and eciency and increase returns” are asfollows:
I. CRSC will Deeply Explore the Main Industry to Culvate Advantages, and Put Forth Eortto Enhance Its Ability to Create Enterprise Value.Focusing on the main responsibilies and main business, we will develop the real economy,and constantly consolidate the foundaon of development, so as to have more prominentmain business and more obvious compeve strengths. We will adhere to the orientaon ofserving the naonal strategy, promote the high-end, intelligent and green transformaon ofrail transportaon, give full play to the advantages of the “three-in-one” services in the fullindustry chains, and maintain the leading posion in the industry around the globe. In 2024,we will strive to achieve a steady improvement in economic eciency, return on net assets,overall labour producvity, and operang cash rao.
1. Innovaon in newly expanded markets will be strengthened, and the leading edge willbe expanded. We will strengthen the market development eorts and resource investment,conduct in-depth research and analysis, and make plans for market operaon in advance. Asprojected, the Company’s market size of high-speed railway weak electricity systemintegraon in 2024 will not be smaller than that in 2023, and the peak bidding period will beconcentrated in the second quarter and the fourth quarter. The company will make everyeort to ensure that stable market share at a high level. In the eld of urban transit controlsystem, it is expected that in 2024, there will be more than 20 new/extended lines ofapproximately 800 kilometers for signaling system bidding. The Company will acvely striveto stabilize the contract undertaking scale. We will strengthen high-end and dierenatedcompeve strengths in rail transportaon, acvely develop “system, product, construcon+ operaon and maintenance” mode. In the meanme, relying on joint ventures andcooperaon and other means, we will seize the large regional markets, establish therst-mover advantage of high-speed rail overhaul and transformaon market, seize theincremental opportunity of urban express rail, and expand the new construcon and renewalof general railway and the market share of the newly-built subway, explore the opportunity
of contracng the “Four Electric Systems” business of the newly-built high-speed railway,promote the operaon and maintenance business to form scale, and strive for the steadygrowth of the business scale.
2. Eorts will be made to strength the control over costs and expenses and accountsreceivable, and to enhance the quality of operang eciency. We will strengthen the rigidconstraints of the budget, strictly control the expenses, increase the eorts to reduce costsand save expenses in the whole industry chain and value chain, expedite the progress in theconstrucon of the informaon system that integrates industry and nance, and solidlypromote the control of all-factor costs. We will connuously promote dierenated andpenetrang control work, fully consider customer credit, solvency and risk factors, andestablish a negave list for project contracng, so as to control risks from the source. We willconnue to carry out the special management of accounts receivable, strengthen theprocess monitoring and early warning, and acvely pursue recoveries in conjuncon withproject cleanup. Also we will improve the level of informaon management and control.With nancial sharing as an opportunity, we will advance the integraon of business andnance and connue to promote the digizaon of business front end, and realize theautomated capital income and expenditure planning and real-me early warning of overduereceivables. The target of accounts receivable backlog control will be incorporated into thecontractualised assessment of the management and the assessment of the head of theenterprise, and a special incenve policy for accounts receivable clearance will beformulated. Eorts will be made to keep the return on net assets of each secondaryenterprise above the comparable level in the same industry in the market, and to furtherimprove the return on net assets of the Company.
3. Lean nancial management will be performed to improve value for money. We willspeed up the eorts to build the treasury system, strengthen the lean management of funds,sciencally develop fund budgets, raonally arrange fund posions, promote theconvergence of fund budgets and business plans, give full play to the advantages ofcentralized funds, and connuously improve the eecveness of fund ulizaon. Combinedwith the special cleanup of bank accounts, we will increase eorts to clean up inecient andineecve bank accounts, improve the promoon of direct linkage between banks andenterprises, and connue to enhance the concentraon of funds. We will reasonably allocatebudget resources. Specically, in the allocaon of funds and other nancial resources, wewill focus on key projects, control resources allocated for convenonal business, aachimportance to eciency, and focus on the main responsibilies of the main business. Forstrategic emerging business, we will increase the allocaon of nancial resources, promotethe development of the industry by investment, mergers and acquisions, industrial fundsand other means, and enhance the eciency of resource allocaon.II. CRSC will Play the Role as an Innovave Subject and Promote Self-reliance and Strengthin Technology at a High LevelWe will fully grasp the new situaon and new requirements of deepening reform, strengthenthe Company’s principal status in technological innovaon, and play the leading role to servethe overall situaon of naonal technological innovaon. We will speed up eorts toaggregate innovave elements, promote the transformaon of original achievements, striveto opmize the innovaon ecosystem, and rmly grasp the major key core technologies in
our own hands. In 2024, CRSC will connue to increase its investment in R&D. The intensityof R&D investment is expected to reach 5% and above, and by the end of 2024, CRSC isexpected to have at least 5,000 authorized patents, of which at least 3,000 ones areinvenon patents.
1. Independent innovaon capacity will be enhanced. As a naonal team of technologicalinnovaon, we have gathered forces to carry out original and leading technological research,and have made every eort to complete a number of naonal major research tasks and keyR&D projects. CRSC serves the development trend of rail transportaon with its owninnovave technology, and plans to carry out no less than 800 R&D projects in 2024. Forexample, to meet the needs of the future collaborave development of urbanagglomeraons, the Company has independently developed the collaborave transportaonand service system of regional rail transportaon. This system can be used to build thestrongest “smart brain” of the regional rail transportaon, which displays real-meprojecon of passenger ow, train ow and facilies and equipment situaon, providescooperave preparaon and dynamic adjustment of the transportaon plan of the wholenetwork, and strengthens the comprehensive guarantee and linkage response and disposal,so as to realize the new change of regional rail transit and promote the high-qualitydevelopment of urban agglomeraons. In order to support the need to “foster severalmodern metropolitan areas with a high degree of urban integraon”, the Company hascarried out the integrated research of mul-mode control systems in accordance with theneeds of urban (suburban) railroads in dierent regions, and has completed thedevelopment of compable on-board equipment, and the eld tests for 3-minute automacturnback and 20-second automac manipulave side change funcons of the CTCS2+ATOsystem in urban railways. For the control system for high-speed railway train with a speedabove 400 km, the Company develops system soluons and key technical equipment for twoapplicaon scenarios of new high speed railway for trains with speed above 400 km/hourand speed upgrading of exisng lines, so as to enrich and expand China’s basic theories ofhigh-speed railway train control technology and engineering praccal experience. In order tomeet the growing demand for capacity of heavy railway in China, the Companyindependently develops the integrated dispatching and command management system forrailway freight transport and independently develops the self-grouping high-densityautomac operaon control system of heavy freight trains based on China’s high-speedrailway control and self-driving technology, which enhances the transportaon eciency,taps the potenal of driving, improves the operaon quality of freight trains, reduces thelabor intensity of drivers and the energy consumpon of transportaon, and signicantlyimproves the comprehensive eciency of freight railway transportaon.
2. More eorts will be invested to develop the innovaon capacity system. We will build acurator of original technology for rail transportaon safety control system to support theaccelerated development of naonal rail transportaon safety control technology. We alsowill strengthen the funconal posioning of the technological innovaon plaorm, beerserve the core business and strategic objecves of enterprises, and add one new naonalenterprise technology center in 2024.Steady eorts will be made to increase investment in technology and innovaon. More R&Dfunds will be input for original leading technology research, with R&D-based core
sub-enterprises invesng no less than 10% in basic, forward-looking, original and leadingresearch.
3. The applicaon of technological innovaon results will be accelerated. High-qualitysustainable development with high-performance results will be promoted. We will work withusers to carry out diversied technological innovaon cooperaon, so as to promote theindustrializaon and transformaon of technological achievements, and support theaccelerated development of new quality forces. According to the on-site tests conducted byShenhua Group, the heavy-duty group operaon control system meets the main technicalindexes of group control; and intelligent yard system completes the commercial applicaonat Mohan Staon. For Train Autonomous Control System (TACS), the 30-train high-speedtrain test for Shanghai Line 3 & 4 will be completed; for C2+ATO system, the passenger trialoperaon of Shanghai Urban Railway Airport Line will be competed; for Railway IntelligentIntegrated Operaon and Maintenance System, the applicaon demonstraon of WuhanRailway Bureau will be competed; for Fully Automac Operaon (FAO) train control systemfor urban railways with the funcon of exible grouping, Beijing Subway Line 12 will beopened.
4. The ecology of technological innovaon work will be opmized. We will strengtheninternaonal technological innovaon exchanges, and deeply parcipate in the acvies ofinternaonal organizaons with respect to rail transportaon control and the formulaon ofstandards. We will connuously opmize the management system for R&D projects, and givefull play to the leading role of experts and talent in innovaon. Meanwhile, we will opmizethe incenve mechanism, connue to strengthen the income distribuon incenves aer thetransformaon of results, select the relevant pilot enterprises and pilot results to carry outresearch on the applicaon of “results of the transformaon of excess prot dividends”,“patent operaon and transformaon” and other incubaon and transformaon modes. Wewill further authorize and decentralize the total wage bill of employees in enterprises in“scienc and technological system reform” and “double-hundred acon”, further increasesupport for strategic emerging industries and future industrial layout, explore and improvethe dierenated wage adjustment mechanism, explore more diversied medium- andlong-term incenves, and realize opmized combinaon of a variety of short-, medium- andlong-term incenves. Further eorts will be made to deeply implement the incenvemechanisms such as the “technology reward”, “horse racing” and “completely raonedresearch funds”.III. CRSC will Promote Value Realisaon and Enhance Investors’ Sense of Gain.We establish scienc market values, and strive to enhance the performance of the capitalmarket to create a new situaon of value realisaon. Special acons will be carried out toimprove the quality of listed companies, with a focus on shortcomings and weaknessesaecng high-quality development. We will apply categorized measures, make preciseeorts, strengthen the quality internally and shape the image externally, striving to be anexemplary example of outstanding main business, excellent and strong development, perfectgovernance and honest operaon in the capital market.
1. We will adhere to the implementaon of a cash dividend policy with higher percentages.The Company is commied to acvely providing stable returns for its shareholders. Asconsidered and approved at the 20th meeng of the 4th Board of Directors of the Company,
it was proposed to distribute a cash dividend of RMB1.70 (inclusive of tax) for every tenshares to all shareholders for the year 2023, based on the total share capital registered as atthe date of registraon of shareholdings for the implementaon of the equity distribuon.As of 31 December 2023, the total share capital of the Company was 10,589,819,000 shares,on which basis the total proposed cash dividend would amount to RMB1,800 million(inclusive of tax), accounng for 51.77% of the Company’s net prot aributable toshareholders of the listed company for the year 2023.
2. The controlling shareholder was encouraged to connue to implement the plan toincrease their holdings. In January 2024, the Company’s controlling shareholder, ChinaRailway Signal & Communicaon Co., Ltd. (hereinaer referred to as “CRSC Group”),increased its shareholding of 3,659,000 A shares of the Company through the trading systemof the Shanghai Stock Exchange by centralized bidding with its equity fund of approximatelyRMB15.68 million. Aer the increase, CRSC Group’s shares account for approximately 0.03%of the total number of issued shares of the Company. The Company will acvely follow andpush CRSC Group to connue to implement the plan to increase its shareholding.
3. The mechanism for iniang market value maintenance measures will be strengthened.The Party Commiee and the Board of Directors of the Company acvely pay aenon tothe market situaon and promote the implementaon of measures such as extending thelock-up period of the controlling shareholder, increasing the shareholdings of the controllingshareholder and repurchasing in a mely manner, in the light of the performance of thecapital market, so as to boost the market condence, guide the value of listed companies toreturn to the intrinsic value in a reasonable manner, and facilitate the benign developmentof enterprises.IV. CRSC will Value the Demands of Shareholders and Strengthen Communicaon withInvestors.We will adhere to the concept that communicaon creates value, acvely communicate withinvestors and listen to their voices. We will aach importance to market feedback,reasonable guide expectaons, convey the Company’s value, increase the recognion of allpares, so that investors can get closer to us, be able to understand, see clearly and havecondence.
1. Result briengs will be held on a regular basis. The Company plans to hold three resultbriengs in 2024, widely inving investors, especially small and medium-sized investors,industry analysts, media, among others. The chairman, president, and independent directorswill aend the annual result brieng. The result briengs will be held exibly in online andoine forms. Digital technology will be fully ulized to help us acvely communicate andinteract with investors through live streaming, video meeng, telephone meeng and otherforms, so as to protect the legimate rights and interests of various investors.
2. Communicaon acvies will be conducted in an orderly manner. We will conduct onlineor oine investor exchanges through the “SSE Roadshow Center” plaorm and makingappointments for online and on-site meengs. Investors can make an appointment by callingor emailing to the Company at ir@crsc.cn.
3. We will connue to carry out the acvity of “Visit CRSC”. In 2023, the Companyparcipated in the SSE’s “Visit Listed Companies” series acvies in April and December, andin 2024, the Company will connue to invite investors to pay a visit to CRSC to learn more
about the Company’s development planning, business operaons, technology products,corporate culture and other aspects.
4. The mechanism for solicing and giving feedback to investors will be improved. We willmaintain investor relaons, understand investors’ demands, report investors’ opinions andsuggesons to the management and relevant business lines in a mely manner, study anddevelop relevant measures, and acvely respond to them through informaon disclosureand other compliant means.V. CRSC will Improve Corporate Governance and Eecvely Enhance Its Eecveness.We will connuously promote in-depth the unicaon of strengthening the Party’sleadership and improving corporate governance, and further improve the corporategovernance mechanism with statutory authority and responsibility, transparency of authorityand responsibility, coordinated operaon, and eecve checks and balances.
1. The Arcles of Associaon will play a guiding role. The Company spulates the condionsfor independent directors in its Arcles of Associaon and requires that independentdirectors shall account for not less than one-third of members of the Board of Directors, andthat there shall be at least three independent directors. The independent directors shouldconscienously perform their dues, express their opinions in a fair and objecve manner,oer advice and suggesons for the development of the Company and safeguard the overallinterests of the Company, focusing on maers closely related to the interests of small andmedium-sized shareholders, such as the Company’s connected transacons, externalguarantees, use of raised funds, M&A and restructuring, major investment and nancingacvies, remuneraon of senior management and prot distribuon. The Report on theDuty Performance of Independent Directors will be published at the same me with theannual report to fully disclose the annual performance of independent directors. Inaccordance with the requirements of the Measures for the Administraon of IndependentDirectors of Listed Companies, Guidelines on the Arcles of Associaon of Listed Companiesand other laws and regulaons, we amended the Arcles of Associaon, with therequirements of A+H lisng on two exchanges taken into account.
2. Connuous eorts will be made to strengthen the building of the Board of Directors. Wewill strengthen the construcon of the “1+5+1” plaorm, namely “the Board of Directors+specialized commiees and specialized meeng of independent directors” plaorm. TheCompany’s Board of Directors has experienced members in complementary speciales and adiversied structure. The ve special commiees conduct in-depth and detailed priorresearch on maers in their respecve elds, to assist the Board of Directors in improvingthe eciency of its decision-making and the quality of its operaons. A mechanism for thespecial meeng of independent directors will be established, the dues of the Audit and RiskManagement Commiee, the Remuneraon and Evaluaon Commiee, and the NominaonCommiee will be further adjusted, and eorts will be made to promote the coordinatedoperaon of the Board of Directors, the special commiees, and the special meeng ofindependent directors in their respecve roles. Furthermore, we will connue to improvethe mechanism for the management to exercise authority and perform their dues, so as toenhance operaonal vitality and improve management eciency.
3. Support for the performance of dues by external directors will be strengthened. Amul-channel regular communicaon mechanism will be established for external directors to
open the Company’s OA to view the Company’s documents and noces, and to understandthe Company’s daily operaon. The producon and operaon informaon will be noed toexternal directors on a monthly basis, and the communicaon meeng with externaldirectors will be held every quarter. We will acvely invite external directors to parcipate inthe annual work conference and other important global meengs, and carefully plan andorganize the research. In 2024, we plan to carry out collecve research on external directorsfor more than three mes, and individual research on them for several mes, to realise the“full coverage” of research on external directors in each business segment and importantsub-companies, and to provide convenience for external directors to grasp the enterprisedevelopments in depth.
4. The Environmental, Social and Governance (ESG) working mechanism will be improved.We will strive to maker key core technology breakthroughs around the key industrial chain ofthe manufacturing industry, accelerate the R&D and promoon of applicaon ofcung-edge technologies, such as new energy, arcial intelligence, green and low-carbon,and acvely carry out scienc research projects on green environmental protecontechnologies, and popularize the use of new materials, new technologies and new processes.We will connuously promote energy-saving and carbon-reducing technologies for the mainrail transportaon industry, and adopt energy-saving ATO soware upgrades for trainoperaon devices in projects under construcon to realize high-quality automac driving, soas to save operang costs and reduce energy consumpon. We will also regularly discloseESG reports. Greater eorts will be invested to improve the Company’s ESG professionalgovernance capacity, risk management capacity, and to strengthen the research andapplicaon of new green energy-saving technologies and materials. We will establish andconnuously improve the Company’s environmental protecon system, strengthen themanagement organizaon of important environmental factors, reduce and eliminateenvironmental incidents. All of our subsidiaries have passed ISO14001 EnvironmentalManagement System Cercaon, with cercaon rate reaching 100%. In 2024, throughpromong photovoltaic projects, opmising product structure, energy-saving renovaon,and building an energy online monitoring plaorm to reduce major power consumpon, weexpect to achieve a further reducon in the comprehensive energy consumpon ofRMB10,000 output value, and connue to reduce the greenhouse gas emissions ofRMB10,000 output value (income) compared with that of 2023 (0.0183 tons).
5. Compliance management will be enhanced. The Company has always adhered to thecompliance concept of “compliance starts from the senior management, all employees takethe iniave to ensure compliance, and compliance creates value”. We are endeavoring tobuild a value system in which the senior management members lead compliance and allemployees pracce compliance, and we connuously strengthen the “ve-in-one”coordinated operaon of law, compliance, risk, internal control, and policy management toprovide solid legal protecon for the Company’s reform and development. The ChiefCompliance Ocer is deeply involved in the review and approval of major contracts andimportant decisions, and takes the lead in organizing the development of the compliancemanagement system and the evaluaon of the eecveness of the compliance system.Through enterprise self-evaluaon and on-site evaluaon and inspecon, problems anddeciencies in compliance work are idened, and the eecveness of the operaon of the
compliance management system is connuously enhanced through immediate andconnuous reccaon. In 2024, the compliance self-assessment of all subsidiaries will becompleted.VI. CRSC will Strengthen the Responsibility of “Key and Few Persons”.We will communicate closely with the “key and few persons” such as the actual controller,controlling shareholder, shareholders holding shares of 5% or more, directors, supervisorsand senior management members of the Company to track the fulllment of commitmentsof the relevant pares, and to connuously strengthen the sense of responsibility andcontract fulllment of the relevant pares.Directors, supervisors and senior management members of the Company will be organizedto acvely parcipate in the training related to the governance of listed companies, laws andregulaons for not less than 15 hours per person, and to acvely parcipate in the meengsand seminars of regulatory authories, so as to strengthen mastery of the “key and fewpersons” on the relevant laws, regulaons and professional knowledge of the capital market,and to connuously enhance their self-discipline and promote the high-quality developmentof the listed companies.
The Company will connue to evaluate the specic iniaves of the acon plan "improvequality and eciency and increase returns" and fulll its informaon disclosure obligaons ina mely manner. The Company's plans, work programs and related forecasts contained inthis report are forward-looking statements that are not fait accompli and do not constutecommitments by the Company to investors, and investors are advised to be aware of therelated risks.