CR Construction Announces Annual Results, Gross profit increased by nearly 20% YoY

Proposed a final dividend of HK1.8 cents per share

Highlights:

• Revenue generated from environmental operations increased by 49.8% to approximately HK$213.9 million.
• Gross profit increased by 19.3% to approximately HK$306.0 million.
• Basic earnings per share was HK14.38 cents. The Board recommended the payment of final dividend of HK1.8 cents per share.

Financial Highlights:

	For the year ended 31 Dec 2023
HK$’000	2023	2022 (Restated)	Change
Revenue	5,445,560	6,409,429	-15.0%
Building Construction Works Repair, Maintenance, Alteration and Addition (“RMAA”) Environmental Operations	4,703,000 528,681 213,879	4,995,343 1,271,246 142,840	-5.9% -58.4% +49.8%
Gross profit	305,991	256,498	+19.3%
Gross profit margin	5.6%	4.0%	+1.6 ppts.
Net profit	72,225	72,940	-1.0%
Earnings per share (HK cents)	14.38	14.42	-0.3%

HONG KONG SAR – Media OutReach Newswire – 22 March 2024 – CR Construction Group Holdings Limited (“CR Construction” or the “Company”, together with its subsidiaries, the “Group”; stock code: 1582.HK), a building contractor in Hong Kong, announced its annual results for the year ended 31 December 2023 (the “Financial Year under Review”).

During the Financial Year under Review, the revenue recorded by the Group amounted to approximately HK$5,445.6 million representing a decrease of approximately 15.0% as compared to approximately HK$6,409.4 million for the year ended 31 December 2022 (the “Corresponding Period Last Year”).

Net profit of the Group during the Financial Year under Review was approximately HK$72.2 million, representing a decrease of 1.0% as compared to the Corresponding Period Last Year. During the Financial Year under Review, gross profit of the Group was approximately HK$306.0 million, representing an increase of approximately 19.3% as compared to approximately HK$256.5 million for the Corresponding Period Last Year. The Group’s gross profit margin was approximately 5.6% and 4.0% for the year ended 31 December 2023 and 2022, respectively.

During the Financial Year under Review, earnings per share of the Group was approximately HK14.38 cents (for the year ended 31 December 2022: HK14.42 cents). The Board recommended the payment of final dividend of HK1.8 cents per share.

BUSINESS REVIEW

Construction Operations

Building Construction Works
For the year ended 31 December 2023, the revenue generated from the building construction works was HK$4,703.0 million, representing a decrease of approximately 5.9% as compared to approximately HK$4,995.3 million for the year ended 31 December 2022.

During the Financial Year under Review, the gross profit of building construction works was approximately HK$204.4 million, representing an increase of approximately 38.9% as compared to approximately HK$147.2 million for the Corresponding Period Last Year. The gross profit margin increased to approximately 4.3% for the year ended 31 December 2023.

Repair, Maintenance, Alteration and Addition (“RMAA”)
The revenue generated from the RMAA works decreased by approximately 58.4% from approximately HK$1,271.3 million for the year ended 31 December 2022 to approximately HK$528.7 million for the year ended 31 December 2023. The decrease was mainly attributable to existing projects were closed to completion during the Financial Year under Review.

During the Financial Year under Review, the gross profit of RMAA works was approximately HK$61.7 million, representing a decrease of approximately HK$11.7 million from the gross profit of approximately HK$73.4 million for the year ended 31 December 2022. The gross profit margin increased to approximately 11.7% for the year ended 31 December 2023. The decrease in the gross profit and increase in gross profit margin was mainly due to decrease in revenue from RMAA works projects with higher gross profit margin during the Financial Year under Review.

Environmental Operations
For the year ended 31 December 2023, the revenue generated from the environmental operations was approximately HK$213.9 million, representing an increase of approximately 49.8% as compared to approximately HK$142.8 million for the year ended 31 December 2022. The increase was mainly attributable to increase in revenue from new and existing projects from construction and rehabilitation services during the Financial Year under Review.

During the Financial Year under Review, the respective gross profit was approximately HK$39.9 million, representing an increase of approximately HK$4.0 million as compared to approximately HK$35.9 million for the year ended 31 December 2022. The gross profit margin decreased to approximately 18.7% for the year ended 31 December 2023. The increase in the gross profit and decrease in gross profit margin for the year ended 31 December 2023 was mainly due to increase in revenue from construction and rehabilitation services which contributed lower gross profit margin during the Financial Year under Review.

CONTRACT COSTS
The Group’s contract costs primarily consisted of subcontracting costs, material costs, direct staff costs, site overheads and provision for rectification works and claims. For the year ended 31 December 2023, the contract costs recorded by the Group were approximately HK$5,139.6 million, representing a decrease of 16.5% compared to approximately HK$6,152.9 million for the year ended 31 December 2022.

PROSPECTS
Subsequent to 31 December 2023, the Group has been further awarded 4 new projects relating to 3 building construction contracts with original contract sum of approximately HK$96.4 million and 1 RMAA contract with original contract sum of approximately HK$599.0 million.

The Group has also placed significant emphasis on technological innovation to enhance its core competitiveness in the construction industry. The total expenditure for the research and development was approximately HK$17.5 million. Our self-developed “CR Smart Site Safety System” (tentative name) has integrated various systems, including environmental sensors, Enertainers, gate monitoring systems, Building Information Modeling (BIM), artificial intelligence-based safety monitoring systems and IoT system. Managerial staffs can comprehensively and in real-time monitor the construction site through a mobile and web portal, ensuring the safety of construction activities. At the same time, the Group implements smart helmets in certain construction sites, which can detect the heart rate, blood pressure, and body temperature of site workers, as well as provide real-time location tracking. These smart helmets also incorporate Radio Frequency Identification (RFID) tags for correspondence with the heavy machines equipped with RFID sensors on the site. If any workers enter unauthorized restricted areas, the alarm system will be triggered, ensuring safety for workers.

As construction digitalization continues to accelerate, the Group is keeping pace with the industry by adopting more digital tools to enhance management and construction safety, aligning with the government’s development of Smart site.

In addition, ZCIEE collaborates with various universities for technological research. This includes conducting research and development of the technology for rural wastewater treatment with Zhejiang University of Technology, as well as conducting research on Fly Ash melting technology in partnership with Zhejiang Gongshang University. These research outcomes contribute to enhancing the technological level of the environmental industry.

The outlook for 2024 should remain stable. The government has recently announced in the Hong Kong Budget 2024-2025 that they have cancelled all demand-side management measures for residential properties, namely the Special Stamp Duty (SSD), Buyer’s Stamp Duty (BSD), and New Residential Stamp Duty (NRSD). Additionally, with ongoing projects in new development areas like the Northern Metropolis, they are anticipated to have a positive impact on the Group’s business. However, the Group will still face challenges such as talent shortages in the construction industry. To address these challenges, the Group will enhance the utilization of the Labour Importation Scheme and Top Talent Pass Scheme for the Construction Sector, continuing to dedicate efforts to seek out new and potential construction opportunities for profitable growth. Additionally, leveraging the industry experience and expertise, the Group is keen to explore suitable business opportunities in the construction sector both locally and overseas.

Hashtag: #CRConstruction

The issuer is solely responsible for the content of this announcement.

CR Construction Group Holdings Limited

CR Construction Group Holdings Limited, which is carrying out construction business for over 55 years locally, is one of the leading building contractors in Hong Kong. The Group principally act as a main contractor in building construction works and RMAA works projects across public and private sectors in Hong Kong. As a main contractor, the Group is responsible for (i) overall management of the projects; (ii) formulating work programmes; (iii) engaging subcontractors and supervising their works; (iv) sourcing construction materials; (v) communication and coordination with the customers and their consultant teams; and (vi) safeguarding compliance with safety, environmental and other contractual requirements.