CR Construction Announces Interim Results

Strong points:

• Revenue generated from environmental operations increased by 132.1% to approximately HK$114.8 million.

• Gross profit rose 10.8% to approximately HK$150.5 million.

• Net profit increased by 10.3% to approximately HK$46.0 million.

• Basic earnings per share were 9.1 HK cents. The board has recommended the payment of an interim dividend of 1.5 Hong Kong cents per share.

Financial Highlights:

HONG KONG SAR – Media OutReach – August 25, 2023 –
CR Construction Group Holdings Limited (“CR Construction” or the “Company”, together with its subsidiaries, the “Group”; stock code: 1582.HK), a construction contractor in Hong Kong, announced its half-year results for the six months ended June 30, 2023 ( the “Reporting Period”). During the reporting period, the Group’s revenue was approximately HK$2,832.1 million, a decrease of approximately 3.0% from approximately HK$2,919.9 million of Hong Kong for the six months ended June 30, 2022 (the “Corresponding Period Last Year”).

The Group’s net profit during the reporting period amounted to approximately HK$46.0 million, an increase of 10.3% over the corresponding period last year.

During the reporting period, the group’s gross profit was approximately HK$150.5 million, an increase of approximately 10.8% from HK$135.8 million. approximately for the corresponding period last year. The Group’s gross profit margin was approximately 5.3% and 4.7% for the six months ended June 30, 2023 and 2022, respectively. The Group’s gross profit margin slightly increased by approximately 0.6 percentage points comparing the six months ended June 30, 2023 to the six months ended June 30, 2022.

During the reporting period, the Group’s earnings per share were approximately 9.1 HK cents (for the six months ended June 30, 2022: 8.3 HK cents). The Board recommended the payment of an interim dividend of 1.5 cents per share.

ACTIVITY REPORT

Construction operations

Building construction work

For the six months ended June 30, 2023, revenue generated from construction work on the building was HK$2,455.9 million, an increase of approximately 9.9% from approximately 2,235 HK$.5 million for the six months ended June 30, 2022.

During the reporting period, gross profit from building construction works amounted to approximately HK$130.6 million, an increase of approximately 98.2% from HK$65.9 million. Hong Kong dollars for the corresponding period last year. Gross profit margin increased to approximately 5.3% for the six months ended 2023. The increase in gross profit margin and gross profit margin is primarily due to additional costs incurred for project change orders during the previous period, while the respective revenues were only certified in the previous period. the reference period.

Repair, Maintenance, Modification and Addition (“RMAA”)

Revenue from RMAA work decreased by approximately 58.8% from approximately HK$634.9 million for the six months ended June 30, 2022 to approximately HK$261.4 million for the six months ended June 30, 2023.

During the reporting period, gross loss from RMAA works amounted to approximately HK$1.4 million, representing a decrease of approximately HK$56.3 million from profit gross profit of approximately HK$54.9 million for the six months ended June 30, 2022. Gross profit margin decreased to approximately negative 0.5% for the six months ended June 30, 2023. The decrease in gross profit and gross profit margin for the six months ended June 30, 2023 is primarily due to incremental costs incurred for variable orders for a project during the reporting period, while the respective revenues are expected to be recognized at a later stage. .

Environmental operations

For the six months ended June 30, 2023, revenue from environmental operations was approximately HK$114.8 million, an increase of approximately 1.3 times from 49.5 million of Hong Kong for the six months ended June 30, 2022.

During the reporting period, the respective gross profit margin was approximately HK$21.3 million, an increase of approximately 42% from the approximately HK$15.0 million for the six months ended June 30, 2022. Gross profit margin decreased to approximately 18.5% for the six months. month ended June 30, 2023. The increase in gross margin and the decrease in gross profit margin for the six months ended June 30, 2023 are mainly due to the increase in construction and rehabilitation services revenues which contributed to a decline in gross profit margin during the period presented.

Contract costs

The Group’s contractual costs mainly consist of subcontracting costs, material costs, direct personnel costs and general site costs. For the six months ended June 30, 2023, contract costs recorded by the Group amounted to approximately HK$2,681.6 million, a decrease of 3.7% from approximately HK$2,784.1 million. Hong Kong dollars for the six months ended June 30, 2022. The decrease is attributable to lower subcontracting costs, material costs and direct personnel costs for new projects and existing projects, which were in partly compensated by the increase in rectification work and claims, during the reference period.

Other business development

Acquisition of the entire stake in Zhejiang Construction Investment Environment Engineering Company Limited

As disclosed in the Company’s announcement dated January 31, 2023, the Company and China Zhejiang Construction Group (HK) Limited (the “Seller”), one of the majority shareholders of the Company, have entered into an agreement to purchase shares relating to the Company has conditionally agreed to acquire the entire equity interest in Zhejiang Construction Investment Environment Engineering Company Limited (the “Target Company”) for a consideration of RMB 201,000,000 (equivalent to approximately HK$228,409,090 ).

All the conditions precedent of the Share Purchase Agreement have been satisfied, the completion took place on May 8, 2023 and the Target Company has since become a wholly-owned subsidiary of the Company.

OUTLOOK



After June 30, 2023, the Group was also awarded 2 new projects in relation to RMAA contracts for an initial amount of approximately HK$10.6 million.

The Group has also focused on technological innovation to strengthen its core competitiveness in the construction sector. Total research and development expenditures amount to approximately HK$10.7 million during the reporting period. Our self-developed Digital Works Supervision System (“DWSS”), SmarTick Pro, has obtained ISO27001 certification for Information Security Management System, meeting the requirements of this international standard and becoming the first company to obtain this certificate for the DWSS in Hong Kong. As the digitalization of construction continues to accelerate, the Group is keeping pace with the industry by adopting more digital tools at our sites to improve construction management and safety. At the same time, the Group has also developed a new sewage treatment membrane for sewage and waste water treatment services in the PRC.

In the second half of 2023, the city’s economic activities will return to normal levels, while the constant pressures will increase along with the recovery. While the government has recently introduced labor import schemes for the construction sector, we hope this will help alleviate some of the challenges associated with the shortage of skilled labour. The Company will continue its efforts in the search for new promising business opportunities in the construction sector, likely to generate profitable growth for the Group. At the same time, based on our industrial knowledge, the company wishes to explore suitable business opportunities in the field of construction locally or abroad.

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