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Extracted from Annual Report 2018

Income Statement

During the year in review, the Group's revenue climbed 9.1%, from RMB574.5 million in FY2017 to RMB626.5 million in FY2018. This was largely driven by a boost in Towercrane sales and rental income throughout the period. While the PRC market continued as the mainstay of the Group's revenue and formed 44.1% of total sales, sales in Asia (outside the PRC) saw higher sales, and contributed a comparable 39.9% to total sales following a more widespread adoption of the Prefabricated Pre-finished Volumetric Construction (PPVC) construction method predominantly in Singapore. Meanwhile, sales in other regions, including the USA, Europe and the Middle East amounted to 16.0% of total sales. Overall, we experienced a relatively more even distribution of revenue across our geographic segments in FY2018 as compared to FY2017.

Despite an increase in Group revenue for FY2018, the Group's gross profit slid 7.9% year-on-year to RMB180.8 million in FY2018. This came about largely due to a higher proportion of sales being made up of relatively less lucrative small and medium-sized towercranes, a development that was further compounded by the higher prices of steel in the China market, a key raw material in our production.

Other income decreased from RMB4.6 million in FY2017 to RMB3.3 million in FY2018, owing largely to FY2017 having a RMB1.9 million compensation income from customers. On the other hand, our total operating expenses saw a slight 2.8% decrease from RMB160.8 million in FY2017 to RMB156.3 million in FY2018.

After factoring in the above, the net profit attributable to shareholders totalled RMB20.6 million, as compared to RMB28.1 million in FY2017.

The Holistic Nurturing Of Quality

As our Chairman highlighted in the previous section of this annual report, our world-class lineup of cranes exemplifies our ongoing quest for quality. While our innovative products embody our zeal for greater quality, this drive extends beyond our products to our customer service standards, internal working processes and the way we nurture employee growth and potential.

For the year in review, we continued to improve the way we work and share news of our advances with new and existing customers. A key method is through active participation in major trade events in the industry, where we build rapport with our clients and better understand their needs. This rapport is further cemented by our comprehensive technical service support which features a well-developed network of regional servicing centres close to our clientele. With our clients' projects becoming increasingly more complex and demanding, this network enables us to deliver robust, expedient technical support to our clients' worksites, giving clients confidence in not just the Yongmao product itself, but the Yongmao brand as a whole and as a turnkey solution provider. This extensive service standard elevates the Yongmao brand above the competition.

Just as we are proud to share our achievements, we do not rest on our laurels and in FY2018 made progress with our design and production workflow. A key development was the full implementation of Computer-Aided Design (CAD) which accelerates product development and raises precision and quality standards. Our Product Data Management (PDM) systems also received an overhaul, yielding greater interconnectivity between business operations and product development teams. The systems allow us to make strides towards a paperless culture with the implementation of an in-house electronic approval system. This enabled us to reduce on the printing of documents which translates into cost savings for the Company in the long run. Most importantly, it allows the Company better control over the safeguarding of the Company's intellectual property against unauthorised disclosure.

As we improve our tools we also look to nurture our people. To further inculcate a corporate culture that prizes quality and to foster the spirit of quality craftsmanship among employees, Yongmao initiated a "Quality Awareness Month" ("质量月") in September 2017. Guided by the overarching vision "A Yongmao Brand Forged in Integrity" ("质量赢得市场,诚信铸就品牌"), senior employees led employees through various activities, which included insightful seminars, lively discussion forums, induction courses for new employees and even a "Welding Skills Challenge" competition for the production staff. We also hosted the "Yongmao Cup" ("永茂杯") competition where our Yongmao delegation pitted their towercrane operating skills against industry peers. The activities were well-received by employees, and Yongmao made greater inroads on multiple fronts, from improved structural welding quality standards, enhanced cross-checking protocols and greater interdepartment synergy. Our managerial staff also participated in forums aimed at reviewing and improving the performance of the various departments. Through candid yet fruitful dialogue sessions, managers collectively identified, discussed and optimised various operational issues.

In FY2018, we also further promoted a more conducive working environment and healthy workforce, through the introduction of new recreational facilities, and sent staff teams to represent the company at municipal sporting events. We also implemented a workers' honour roll to both recognise and inspire stellar performances from our staff.

Looking Ahead

In our next chapter of growth, we will be focusing on two major growth drivers. Firstly, we will be seeking to further proliferate the use of our large and mega-sized towercranes for mega scale projects such as energy plants, airport and train terminals, shipyards and supertall skyscrapers. The recent successful release of towercrane models like the STT1330, STT2200 and STT3330 have demonstrated our capacity to deliver on that front. Secondly, we will also be prioritising the development of towercrane models to match up to the industry's increasing needs for prefabrication work. Recent developments include the STT373A towercrane that brings superior lifting capacity, lightweight construction and swift assembly and disassembly to the table, making it a towercrane of choice for both domestic and overseas projects.

As we make ready for another productive year ahead, we will continue upholding our exacting service quality standards, refining our operational workflow and maximising our human talent. We are confident this approach will stand us in good stead to seize the emergent opportunities that FY2019 will have to offer.

Tian Ruo Nan
Chief Executive Officer