A Drop in MCC's Results for 2012, Followed by a Year-on-Yea
A Drop in MCC's Results for 2012, Followed by a Year-on-Year Improvement in Results for the First Quarter
Hong Kong, Mar 29, 2013 - (ACN Newswire) - MCC announced its 2012 annual results report on 29 March 2013. As a result of several separate events, MCC recorded a great loss in its results for 2012. On the same day, MCC announced the estimated first quarterly results. In the first quarter of 2013, the net profit attributable to shareholders of the Company is expected to record an increase of approximately 20%.
Loss incurred due to several separate events
In 2012, MCC made provisions for substantial assets loss for creditors' right of Huludao Nonferrous and Cape Lambert Iron Ore Project, Australia in which it invested. It also made substantial provisions for the estimated contractual loss for the Western Australia SINO Iron Ore project of CITIC Pacific, a project being undertaken by it. Due to the handling of these several separate events, MCC recorded significant loss in results in 2012.
As shown in MCC's recent announcement, it had transferred the creditors' right and equity interests held by it in Huludao Nonferrous entirely on 31 December 2012 and 5 February 2013, respectively. Huludao Nonferrous posed no impact on MCC thereafter. Huludao Nonferrous has been subject to bankruptcy and reorganization procedures, and is entrusted by a manager.
MCC plans to complete loaded linkage commissioning of the second main process production line for Western Australia SINO Iron Ore project of CITIC Pacific by mid April 2013. This signified MCC's completion of Western Australia SINO Iron Ore project as a general contractor. Based on the principle of prudence, MCC made provisions for an estimated contractual loss of RMB3.0 billion to alleviate the impact of uncertainties of the project in the future.
Stable growth in engineering and construction business and property development business with improvement in fundamentals
According to the annual report announced by MCC, it recorded operating revenue of RMB221.1 billion for year 2012, of which the income from engineering and construction business as well as property development business amounted to RMB175.2 billion and RMB25.3 billion, respectively, accounting for 90.7% of the operating revenue. Gross profit of the engineering and construction business as well as property development business amounted to RMB18.9 billion and RMB5.9 billion, respectively. Notwithstanding the impact brought about by the restructuring of the iron and steel industry by the State, MCC recorded less income from construction in its engineering and construction business as compared with last year. However, as MCC took up a larger market share in non-metallurgical markets such as civil construction, transportation and urban infrastructure, the operating revenue from engineering and construction business witnessed more stable growth.
Besides, the net cash flow generated from operating activities amounted to RMB4.4 billion in 2012, which marked the end of substantial negative cash flow for consecutive years and a positive turnaround.
While MCC's benchmarks relating to results performance and financial structure continued to decrease for the past 2 years and bottomed in 2012, its benchmark of corporate business risk improved. For the first quarter of 2013, the net profit attributable to shareholders of the Company is expected to increase by approximately 20% as compared with the previous year. Going forward, MCC's results will improve.
Learning from the painful experience, MCC shall focus on its traditional business
May it be the setback in progress of the major overseas resources project, as well as the long-standing burden of Huludao Nonferrous, the integrated resources enterprise in the PRC, MCC has learnt from the painful experience. As stated in its annual report, the Company's future development will follow "focus on building the scale and strength of principal businesses, whilst diversify the operation moderately to achieve a sound development". The Company will consolidate the strength through sustaining the sound development momentum of the traditional principal business of engineering and construction business as well as the property development businesses. It will expedite the development of strategic emerging industries in order to excel in it principal businesses.
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