In the year of 2018 featured by complicated environment, the Group has made great progress by sticking to each target and take measure of “Improvement Year of Management” activity.

(I) Constant transformation demonstrates strength.

The initial transformation of Zhonggang began from the year of 2012, transforming from simple construction management to investment and construction management, in order to develop into the first-class urban integrated operation service provider and overseas investor. Three years ago, the Group proposed to implement the PPP project. Ultimately, the development in 2018 benefits from the transformation, while the performance benefits from the strong support of transformation. The effect of “engineering finance” concept is amplified. The Group and Northern Heavy Industries have jointly established a fund company, helping make new progress. Guoheng (Suzhou) Asset Management Co., Ltd. is established in Taihu Fun Town, Suzhou High-Tech Zone, which lays the foundation for expanding business space. CCB Headquarter, BOC Headquarter and other local banks have increased the credit line for the Group with the annual credit line exceeding 5 billion yuan, which effectively guarantees the project construction. The investment-led revenue has increased significantly. In the total output value in 2018, the investment-led revenue accounted for 85%, and the PPP project accounted for 80%. Transformation has brought us a new world for development, but it is not smooth. We are already on the right path of transformation. I firmly believe that after a period of hard work, we will explore a new path for the transformation of large private enterprises.

(II) Major projects support the development.

In 2018, there are 49 projects under construction with a total investment of 17.1 billion yuan, and 11 projects are completed. There are 16 projects with more than 100 million yuan, accounting for 33% of all projects under construction and accounting for 73% of total output value. The Ninth Engineering Bureau makes investment in Xinjiang and has continued to expand. Among 9 projects under construction, there are 6 projects of 100 million yuan with the annual output value exceeding 500 million yuan. Based on Liaoning, the First Engineering Bureau has made 150 million yuan of output value, making positive contribution for the development of the Group. The Ring Road project with a total investment of 830 million yuan in Shache County, Xinjiang, the Comprehensive Pipe Gallery PPP project with a total investment of 149 million yuan in Yingkou Economic Development Zone, the North Road project with a total investment of 164 million yuan in Xishui County, Guizhou Province, Longjie Municipal Road project with a total investment of 154 million yuan in Yongping County, Yunnan Province, rural road upgrading project in Taicang City, channel project in Lusigang Town, Nantong City and other 10 projects exceeding 100 million yuan have met the chronological progress requirement. Xinxiang-Shanxi Province Expressway project is another major project invested by the Group, the total investment of which is estimated at 7.468 million yuan. This project is the key project of Henan Project as well as the project supervised by National Audit Office. Therefore, the implementation of this project will have an important significance influence for the operation upgrading and strategic transformation of the Group. In the past year, the Group, Xinxiang Rongsheng Company as well as various participating units jointly strive to establish a standardized PPP project featured by “standard operation mode, strict procurement procedure and appropriate contracting subject”. This project has been involved into the project library of the Ministry of Finance. The project’s 25% of capital of 1.87 billion yuan will be allocated in time after the successful bid. After the bidding, construction units including China Railway 18thBureau, China Communication Construction 3rdNavigation Bureau, CSCEC Road and Bridge Group and China Railway Tunnel Bureau have been under construction.

(III) Cultural tourism and environmental protection industry are successfully launched.

With rich experience in investment management and project operation, the Group has brought in professional talents, actively responds to national ecological civilization construction, and promotes the development of new formats and new industry and distributes cultural tourism and environmental protection industry by adhering to the concept of “creativeness and ecological priority”. In 2018, we cooperated with Huanjia Group to carry out all-around cooperation and actively promote the resource recycling base construction. In the first year of cooperation, GangJia (Chongqing) Renewable Resources Co., Ltd. achieved an operating income of over 400 million yuan. The Beijing Cultural Tourism Project with a total investment of nearly 5 billion yuan was listed as the key tourism project of Miyun District in Beijing City after the meeting of the Standing Committee of the District Party Committee.

(IV) Overseas expansion forges ahead steadily. 

“The Belt and Road” strategy has a wide-ranging impact on the international community in that the international investment environment has improved, from which vast number of private enterprises has benefited to “go out”. Since the operation of Delgado cement plant in Mozambique, the management has gained significant improvement, the production capacity has been further released, the sales situation has been stabilized and improved with the increasingly stable and improved regional situation, and the cement plant’s profitability has steadily improved; the Beijiang Power Plant in Vietnam has made new breakthroughs in that it has completed the professional adjustment about the finance, taxation and investment structure and officially signed the equity transfer agreement about acquiring the target project company; the Tete power plant project in Mozambique has initiated negotiation about the PPA. We have selectively explored overseas markets, track and demonstrate the new-type of LNG tanks international joint transportation and marketing project, Vietnam copper smelting project, Delgado project in Mozambique with annual output of 100,000 tons of cement clinker line, Sino-Vietnamese Pingxiang City cross-border cooperation zone project as well as other projects of high quality.

(V) We shall actively fulfill social responsibility.

Effectively strengthen the safety and environmental management. In 2018, under the unified leadership of the Group, whole systems, all regions and project departments have implemented the spirit of the “Improvement Year of Management” activities, strengthened the entity responsibility of safety production, implemented the safety production responsibility system for all employees, and strengthened environmental protection. We have achieved the goal of tasks and objectives about safety work and safe production set at the beginning of the year with no safety or environmental pollution accidents occurred throughout the year. The 100000-ton inbound waterway (second-stage) project of Lusi Port Area in Nantong Port was awarded as “Provincial Peaceful Demonstration Site in 2018” by the Provincial Communications Department. Effectively strengthen people-oriented management system. We always adhere to build a harmonious labor relationship among the companies. All qualified personnel have participated in the social insurance by paying more than 10 million yuan of various types of insurance throughout the year.

(Office of the Chairman)