Saudi rail project expected to lose 4.1 billion yuan

China CRCC (601186) announced that the company's construction of the Saudi Megassafa to Mugodasha light rail project is scheduled to open operation on November 13, 2010.　　The project in the implementation process, due to the actual number of projects compared to the anticipated increase in the amount of work, and other reasons, is expected to be a large loss, according to the September 30, 2010 exchange rate conversion, the total amount of losses estimated to be about 4.153 billion yuan. According to the announcement, the company signed the "Shatmegassafa to Mugodasha light rail contract" with the Kingdom of Saudi Arabia on February 10, 2009, and agreed to adopt the EPC+O&M General Contracting mode (i.e. design, procurement, construction plus operation, maintenance of general Contracting mode), the company responsible for the design of the Saudi Mecca Light rail project　　, procurement, construction, systems (including vehicles) installation and commissioning and three years from November 13, 2010 operation and maintenance. Requirements for the duration: November 13, 2010 opened operation, reached 35% transport energy, May 2011 completed all commissioning, to achieve 100% transport energy.　　The total amount of the project contract is 6.65 billion Saudi riyal, about 1.77 billion U.S. dollars, at the September 30, 2010 exchange rate, the equivalent of 12.07 billion yuan. Company announcement, according to the exchange rate of September 30, 2010, the project contract estimated total revenue of 12.07 billion yuan, the contract estimated total cost of 16.069 billion yuan, the two subtract, the contract loss of 3.999 billion yuan.　　Plus the financial cost of 154 million yuan, the total loss of the project is expected to be 4.153 billion yuan. The company explains that the main reason for the change of the total cost of the contract is that the project adopts the EPC+O&M General Contracting mode, only the concept design when the project is contracted, mainly because the owners put forward the new function demand and the increase of the project quantity, the total cost of the contract is increased gradually during the implementation.　　by June 30, 2010, the total cost is expected to increase to 12.544 billion yuan. In the second half of 2010, the project entered into a large-scale construction phase, the various parts of the project in full operation, the actual number of projects than contracted when the expected increase in the number of projects, plus the owner of the project for the 2010 transport demand than the contract provisions for a significant increase in the owners responsible for the underground pipe　　Owners to add new features of a large number of prescriptive changes in some of the completed projects to readjust and other factors, resulting in a significant increase in project workload and cost investment, the planned duration of the phased delay. As a result of these changes, the total cost of the contract has increased significantly, the company has submitted changes and claim information to the owner under the contract, and the owner undertakes to set up a special committee to discuss the related claims and compensation issues after the project is completed.　　So far, the company is still in the above changes in the claims to negotiate with the owners, has not been approved by the owners. The Company believes that the project will have a significant impact on the company's third-quarter profit. If the owner's approval is not available prior to the 2010 Annual performance report on the change and claim, the project is expected to be profitable for the company in 2010Have a significant impact.