Extracted from Annual Report 2020
FY2020 saw an 8.7% growth in the Group’s revenue, from RMB885.4 million in FY2019 to RMB962.4 million in FY2020. With the capacity to support more complex projects involving Prefabricated Prefinished Volumetric Construction (“PPVC”), demand for large and mega-sized tower cranes remained robust. Three of our four geographical segments reported minor to moderate year-on-year revenue growth: RMB15.6 million growth in the PRC, RMB74.7 million growth in Asia (outside the PRC) and RMB16.5 million growth in USA & Europe. Meanwhile, revenue from the Middle East and Others region, was more subdued and saw a RMB29.8 million contraction.
In line with the overall rise in revenue, gross profit rose 4.3% to RMB248.8 million in FY2020. Average gross profit margin, however, slipped 1.1 percentage points to 25.9% in FY2020. This decrease in margin was mainly attributable to high production overhead cost absorbed during the transitional period of Beijing Yongmao factory relocation and during the first quarters of year 2020 with government containment measures implemented in the PRC with the rapid spread of the COVID-19 pandemic. In addition, arising from the consolidation of Beijing Yongmao’s plant to Fushun, the Group recorded a one-off obsolescence stocks adjustment and write off in FY2020.
Other income increased by RMB7.4 million to RMB16.5 million in FY2020, mainly due to government grants received for the relocation. Interest income rose by RMB0.4 million, mainly stemming from deposits placed to secure a trade facility, partially offset by a lower compensation and rental income of RMB0.9 million and RMB0.4 million respectively.
After factoring in the above, the Group attained a net profit attributable to equity holders of RMB59.7 million for FY2020, slightly below the RMB61.5 million recorded in FY2019.
Preserving Health and Safety
Despite mounting production pressures, we also paid heed to ensure that the situation on another front – safety management are not traded-off. Since the outbreak of COVID-19, a continency and safety committee was formed and has enacted a strict adherence to epidemic prevention and control measures across all departments, while still upholding production and operational capabilities as best possible. Production planning teams reviewed production procedures and revised production and goods delivery schedules to observe COVID-19 control measures. Personal protective equipment was requisitioned and issued to staff, while measures such as disinfection, safe distancing, flexible working arrangements, contact tracing and temperature-taking were implemented and enforced. Safety officers and team leaders stepped up to diligently oversee the conduct of safety measures.
Yongmao held its “Safety Production Month” (质量月) in June 2020, with the slogan “Prevention at the Fore: Safety First” (安全第一，预防为主). Safety awareness programmes were conducted for various staff members to ensure that they keep abreast of the latest national policies on production safety and related regulations. This was further supplemented by updates on workplace bulletins and messaging groups. Safety topics covered in these programmes include fire safety, heatstroke prevention and cooling, disaster relief, emergency drills and case studies of minor incidents.
The management takes safety management very seriously, and even more so in light of the current pandemic and we consistently remind our staff to be mindful for the greater good.
The Ongoing Quest for Quality
Even as the tides of turbulence threaten to disrupt the industry, high quality products will stand strong as resolute breakwaters. One key aspect of our quality control lies in our procurement, knowledge and management of inventory.
We hosted the “Yongmao Cup” (永茂杯) competition, another iteration of friendly competition came in the form of collaboration with the China Electric Power Construction Association (中国电力建设企业协会). Our Yongmao delegation pitted their tower crane operating skills against industry peers where exceptional numbers of employees and teams were engaged. The Company also held a “Quality Recognition Award” ceremony to foster the spirit of skilled craftsmanship as part of our Quality Month event.
Moving Towards Greater Synergy
For the year under review, we commenced the relocation of our Beijing factory exercise in July and completed the move successfully in September. The new manufacturing premise is located in close proximity to our existing factory in Fushun, with land and built-up area approximate to 160,000 and 35,000 square metre respectively. In line with the Beijing local government’s drive to relocate manufacturing activities away from the capital city, the relocation has also allowed the Group to leverage on greater management efficiencies and sharing of group resources from the close proximity of our existing manufacturing facilities. Despite the initial of layingoff certain employees in the Beijing factory with compensation in accordance to the labour law, the Group likely sees the long term manpower cost savings due to lower average labour cost in Fushun as compared the capital city. Production in the relocated factory has commenced and is expected to be fully operational in FY2021.
The Group is constantly seeking opportunities to expand our business presence especially in the faster growing economies. During the year under review, we have made our footsteps and incorporated a subsidiary in Cambodia and setting a new office to further expand our business presence there.
Since Yongmao’s founding, we have always placed customers’ needs at the forefront. Extensive development of our R&D, manufacturing and quality control departments has always been integral to the brand. While this vision has brought about successes like the recent STT3930, we will not be resting on our laurels. Instead, we will continue our drive to offer even greater innovation, quality and value to our customers, while delivering to their needs with precision. For the upcoming financial year, we will continue preparing new quality products for release, such as the STL1045 luffing tower crane and STT1530 flat top tower crane currently in the pipeline.
At this juncture, I would like to extend my thanks to our staff members, who have stepped up to implement and regulate COVID-19 measures in addition to their regular work schedules, as well as our shareholders, who have remained steadfast in their support in spite of these challenging times.
Tian Ruo Nan
Chief Executive Officer