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Extracted from Annual Report 2017

Income Statement

In FY2017, the Group achieved a 26.3% year-on-year increase in revenue to RMB574.5 million as compared to RMB455.0 million in FY2016. This was mainly attributable to stronger demand for larger-sized towercranes, in particular our core market in the PRC. Sales in the PRC grew significantly by 113.6% to RMB283.3 million in FY2017 as compared the RMB132.6 million reported in FY2016.

The Group’s key business segments performed well, with the sale of manufactured towercranes continuing to be the main engine driving our growth. This segment registered RMB360.7 million in revenue made up 62.8% of our turnover during the year in review. Meanwhile, sale of towercrane components and accessories also grew, contributing RMB62.8 million. Revenue from our rental and service segments increased by 62.7% and 37.1% respectively, for the year under review.

Overall, PRC sales formed the largest market of the Group, contributing 49.3% of total revenue in FY2017 as compared to 29.1% in FY2016. Sales in Asia (outside the PRC) comprised 38.6% of total revenue, while USA, Europe and Middle East contributed 12.1% in FY2017.

With an increase in Group revenue, gross profit increased by 39.0% from RMB141.2 million in FY2016 to RMB196.3 million in FY2017. Average gross profit margin increased to 34.2% in FY2017 from 31.0% in FY2016. The increase was mainly attributable to sales of more larger-sized towercranes of higher lifting capacity and luffing series towercranes which generate higher gross margin.

Other income decreased by 41.6% to RMB4.6 million in FY2017 mainly due to lower interest income offset by higher compensation income from customers and suppliers. Total operating expenses increased 11.2% to RMB160.8 million in FY2017 as compared to RMB144.6 million in FY2016.

In summary, we managed to achieve a net profit attributable to shareholders amounting to RMB28.1 million in FY2017 as compared to RMB3.9 million in FY2016.

Process Improvement & Product Rationalisation

Our philosophy has always been centred on innovation; our competitive edge involves being at the forefront of industry needs and delivering solution that ultimately unlock greater value for our stakeholders.

In FY2017, in our continuous pursuit of productivity efficiency and cost savings initiative, we have made various changes to improve our production processes. We continued with our effort to find approaches to re-configuring our automated robotic welding arms with different welding positions and angles. We further look into improving our production workflow and processes targeting at minimising double handling and reducing machine idle time. These initiatives have been refined to greater efficiency and with further fine-tuning will help generate greater savings in future.

We have also introduced a parts standardisation exercise across our range of towercrane models. This significantly reduced the range and volume of parts to be maintained, and also made it possible to reduce development resources, cut costs, stabilize quality and reduce inventory holding cost.

Our research and development team continued to be at the forefront, developing a comprehensive suite of towercranes with advanced mechanisms that cater to the evolving needs of the industry. We also maintained our strong track record in after sales service, as we continued to provide our customers with specialised service technicians who offer valuable technical guidance.

In FY2017, we continued to grow the brand’s presence via trade shows and exhibitions. We participated in the tri-annual “Munich-Germany Bauma 2016” 31st International Trade Fair in April 2016 and the bi-annual “Shanghai-PRC Bauma 2016” 8th International Trade Fair in last November. The Bauma is the world largest trade fair for Construction Machinery, Building Material Machines, Mining Machines and Construction Vehicles. The exhibition provided companies such as our Group to showcase their range of construction machinery to potential customers on an international platform.

Alongside these developments, we remain committed in complementing our business development and marketing efforts by seeking strategic business partnerships to further improve our global presence and performance. The Group will also continue to boost its marketing and branding efforts through trade shows and exhibitions.

Looking Ahead

In the coming financial year, we intend to maintain our focus on the PRC market, and seize on opportunities that arise from the country’s intensified development programmes and initiatives. We are cautiously optimistic that there will be steady demand for our high-capacity towercranes as the country continues to roll-out its urbanisation and modernisation plans. We believe that we have the capabilities and resources to keep up with the pace and scale of the PRC’s growth.

On the other hand, the global economy is expected to pick up moderately with stronger business and consumer confidence, rising industrial production and recovering employment and trade flows. But structural impediments to a stronger recovery may mean that risks remain tilted to the downside, especially over the medium term.

To ensure sustainable growth, we will continually pursue new opportunities in established markets, create strategic alliances overseas, and further invest in specialised equipment. Internally, we will explore new means of improving our efficiency and cost management. We will also look into strategic initiatives that will be built upon our current momentum and seek to further strengthen our operations amidst a challenging operating environment. We believe that these initiatives will help the Group in achieving greater value in the future.

Tian Ruo Nan
Chief Executive Officer