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Extracted from Annual Report 2016

Income Statement

For the financial year ended 31 March 2016 ("FY 2016"), the Group registered a 41.9% year-on-year ("yoy") decline in revenue at RMB 455.0 million compared to RMB 783.0 million for FY2015. The decrease in revenue was mainly attributable to weaker market demand in Asia in particular the PRC market whereby sales fell by 65.8% as a result of weaker domestic demand arising from sluggish market conditions contributed in part by the ongoing property slump and general slowdown in investment growth.

The decline in PRC sales was also partly due to deferred sales of RMB 31.2 million in Q1 FY2016 which will only be recognised over three to four years. Meanwhile, Asia (outside the PRC) emerged to form the bulk of sales at 45.8% in FY2016 as compared to 34.8% in FY2015. Contribution from the region however had decreased by 23.6% as the rental revenue contribution from Macau operations was lower following the completion of various casino projects.

The PRC is now our second-largest market and contributed 29.1% or RMB 132.6 million to group revenue. Meanwhile, sales of our products to the USA, Europe and Middle East decreased by 6.7% as compared to the previous financial year.

Gross profit decreased 42.5% to RMB 141.0 million in FY2016 from RMB 245.4 million in FY2015 in line with the fall in revenue. In addition, the decrease in gross profit was due to accounting recognition of unrealised profits of RMB 14.5 million in Q1 FY2015 from previous sale of towercranes and towercrane accessories to associated companies. This was realised upon disposal of the associated companies in accordance with FRS 28 – Investments in Associates and Joint Ventures.

Average gross profit margin decreased slightly to 31.0% in FY2016 from 31.3% in FY2015. The decline was attributable to lower rental income, partly offset by changes in product mixed with a higher percentage of sales reported for Luffing series towercranes which in turn contributed to a higher profit margin.

Other income decreased by 47.6% to RMB 7.9 million in FY2016 mainly due to a one-time gain on restructuring of RMB 12.1 million which was recognised in Q1 FY2015 upon the completion of the Restructuring with Tat Hong Holdings Ltd. The decrease was offset by an increase in interest income and compensation income received from a customer.

Total operating expenses decreased by 13.6% to RMB 144.6 million in FY2016 as compared to RMB 167.5 million in FY2015. Distribution costs in turn decreased 21.2% to RMB 46.2 million in FY2016 as compared to RMB 58.6 million in FY2015 due to lower freight and transportation charges as a result of lower sales, lower entertainment cost and lower staff cost resulted from lower number of employee and lower bonus accruals. This was partly offset by higher sales service expenses.

Administrative expenses decreased 4.7% to RMB 74.9 million in FY2016 as compared to the RMB 78.6 million in accrued in FY2015 largely due to higher entertainment and transportation expenses arising from participation in the bi-annual Bauma China 2014 exhibition in Q3 FY2015. Furthermore, the decrease was greater due to lower staff cost resulting from the lower number of staff and lower bonus accruals and lower office related expense.

Other operating expenses decreased to RMB 2.9 million in FY2016 from RMB 8.9 million reported in FY2015. The decrease was mainly due to lower provision for doubtful debts and lower bank charges. In addition, FY2016 reported a marginal exchange gain as compared to an exchange loss in FY2015.

Profit before taxation decreased 95.2% to RMB 4.4 million in FY2016 from RMB 93.0 million in FY2015 mainly due to lower revenue resulting in lower gross profit for the financial year, partly offset by lower operating expenses.

Statement of Financial Position

Non-current Assets

Non-current assets increased by RMB 19.6 million to RMB 564.6 million as at 31 March 2016 mainly due to higher deferred costs and additions in property, plant and equipment, partly offset by depreciation expenses charged for the financial year.

Current Assets

Current assets decreased by RMB 27.8 million to RMB 869.3 million as at 31 March 2016 mainly due to lower trade and other receivables offset by higher inventories and cash and cash equivalents.

Inventories increased by RMB 17.3 million for delivery due in first quarter FY2017. Trade and other receivables decreased by RMB 77.2 million mainly due to a decrease in trade receivables in line with lower sales and repayment from customer. Certain repayments were made by means of hire purchase arrangements with financial institution which resulted in higher deferred income reported during the financial period in accordance with the Group's revenue recognition policy.

Non-current Liabilities

Non-current liabilities increased by RMB 2.3 million to RMB 64.8 million as at 31 March 2016 mainly due to higher deferred income, partly offset by lower borrowings.

Current Liabilities

Current liabilities decreased by RMB 2.5 million to RMB 741.3 million as at 31 March 2016 mainly due to repayment to trade and other payables, partly offset by higher borrowings and advances from related parties. Trade and other payables decreased by RMB 55.6 million mainly due to lower trade and bills payables in line with lower purchases.

Deferred income included mainly RMB 30.3 million of revenue deferred due to uncertainty in the timing of the consideration for the delivery of goods made to the customer. Owing to the uncertainty, the amount of the unpaid sum owed by the customer to the financial institution is deferred and recognised as revenue when the uncertainty is removed. The deferred costs, as mentioned under non-current and current assets above, related to the amount carried in the statement of financial position to the extent that revenue has been deferred. The increase in deferred income, from RMB 17.2 million as at 31 March 2015, was mainly due to the increase in such deferred sales partly offset by repayment by customers to financial institutions.

Total Equity

As at 31 March 2016, the Group's total equity amounted to RMB 627.8 million. The decrease was mainly due to dividend paid, partly offset by lower net profit of RMB 2.3 million and other comprehensive income of RMB 6.7 million for FY2016.

Statement of Cash Flows

The Group reported a net increase in cash and cash equivalents amounting to RMB 21.5 million in FY2016 mainly due to:

  1. Net cash used in operating activities in FY2016 of RMB 1.5 million mainly from operating profit before working capital changes, net collections from operating receivables and decrease in deferred income, offset by net repayment to operating payables, increase in inventories and increase in deferred cost;
  2. Net cash used in investing activities of RMB 4.8 million from purchases of machinery and payment for land use rights in the PRC, Fushun City, partly offset by interest received and grants obtained from government;
  3. Net cash generated from financing activities of RMB 27.9 million mainly from net proceeds from bank borrowing, advances from a related party and lower restricted bank balances, partly offset by payment to finance lease creditors and dividend paid in Q2 2016.


With China rebalancing its economy from an investment-driven growth to a consumption-based growth, the investment slowdown has affected key pillars of the economy such as the property and construction market. With this, the Group will persistently monitor economic trends and maintain vigilance for the year ahead.

In anticipation of the slowdown for domestic demand for construction equipment in the PRC in the period ahead, the Group aims to effectively channel its resources in infrastructure projects, as well as further improve its operational efficiency and capacity.

Moving forward, the Group will continue to focus on reinforcing its established global brand name, strengthen our R&D and service excellence, and enhance our strategies in key markets accordingly. We will also continue to collaborate with our partners and pursue new business opportunities to attain higher value for our shareholders and customers.

Tian Ruo Nan
Chief Executive Officer