Hytera 2017 Annual Report Confirms Further Rapid Growth

Revenue from mainland China grew steadily at 8.9% year-on-year, while revenue from territories outside of mainland China including the newly acquired subsidiaries grew 115% in 2017, accounting for 60% of the total revenue.

Qingzhou Chen, President and CEO of Hytera, has been advocating a clear mandate to "do it best, or not at all." He believes that 2017 was a year of transition for Hytera's global development as it announced its intention to lead the transformation of the professional mobile radio (PMR) communications industry and completed the acquisitions of Sepura and Norsat.

• All newly acquired subsidiaries achieved their sales targets.
• The proportion of revenue generated from digital products continued to increase steadily, with year-on-year growth at 66%, while revenues from analog products were down 7.9% as customers migrate to Hytera's digital technologies.
• The revenue contribution from the systems portfolio increased significantly, accounting for 37% of total revenue with year-on-year growth at 90%.
• The revenue generated from other portfolios (mainly from communications vehicles) grew 15.3% year-on-year.

From analogue walkie-talkies to DMR, PDT and TETRA digital products and solutions, Hytera has never stopped innovating, delivering products with improved form, functionality and integration. In parallel, the organization continues to implement a globalization strategy, moving in to new markets, strengthening industrial integration and business partner relationships.

In May 2017, Hytera completed the acquisition of Sepura, a UK-listed company. This move helped Hytera strengthen its professional TETRA portfolio through the integration of Sepura's TETRA terminals and infrastructure product lines, and significantly enhanced the Group's technical capabilities in TETRA. In July, Hytera completed the acquisition of Norsat in Canada. This move enabled Hytera to enter the field of satellite communications, providing PMR users with more integrated solutions by adding Norsat's products to the expanding Hytera product family. Products from both acquisitions have been integrated into both the upstream and downstream of Hytera's value chain, enhancing Hytera's overall competitiveness and maximizing the impressive manufacturing and logistics resources within the organization.

In terms of broadband and narrowband convergent business, Hytera continues to innovate, making significant breakthroughs based on its deep insight into customers' needs for broadband data transfer, analytics and intelligence. The Hytera PMR-LTE innovative convergent product family was launched in May 2017 and quickly became a hot topic amongst global industry users, with a number of commercial deployments already across the globe. In the Chinese market, Hytera has deployed broadband demo systems in a number of cities, laying a solid foundation for the promotion and large-scale application of broadband products in the near future.

Hytera has focused on the PMR communications industry for over 25 years, investing significantly in R&D to continuously enrich, optimize and expand product portfolios. R&D investment increased by 58% year-on-year to 915 million RMB Yuan representing 17% of revenues. (Reference: 16.84% of revenue in 2016 in the annual report)

To better deliver customer values around the world, the group has been improving its local customer coverage. Hytera has set up over 90 branches and offices worldwide, with more than 4,000 dealers, integrators and business partners, supported by sales and service networks covering more than 120 countries and regions. This dynamic network has led to Hytera's global business growth acceleration.

"Hytera will continue to focus on the public safety market, expand our business into more industrial sectors, and always grow together with our business partners. While we are successfully supporting our customers in China, we will also penetrate the overseas high-end industrial markets through our great products, services, and the superior value that we can deliver to end users," said Chen. "We believe that with our better connected, more intelligent PMR technologies, delivered by a global team of professionals, we can help our customers to increase their situational awareness, collaboration and response rate."

Innovate for a safer world

With the in-depth implementation of China's national strategies such as "Made in China 2025", the "Belt and Road Initiative," and the construction of digital China, as well as the establishment of the national emergency management system, China's PMR industry will continue to offer more opportunities for development.

Around the world, economic recovery continues, but meanwhile globalization has also led to increasingly severe public security situations in some areas, seriously threatening peoples' daily life, work and personal safety. Governments all over the world, especially developed countries in Europe and the United States, are increasingly demanding more intelligence and increased convergence from their PMR emergency communication products. Hytera is able to respond by leading the global PMR industry into a new generation of convergence, enabling public safety agencies to upgrade their technology, professionalism and response rate with urgency.

In 2017 Hytera continued to upgrade its manufacturing capabilities through advanced IT and data technologies, aligned with the "Intelligent Hytera Production System" (iHPS)" strategy, deploying more high-end manufacturing lines and quickly improving automation. This comprehensive strategy also implements Quality 4.0, improving the product quality and customer experience across the Hytera family of products, synonymous with the Hytera brand. In 2017, Hytera was presented with the "Intelligent Manufacturing Pilot and Exemplary Enterprise Award" by the Ministry of Industry and Information Technology, subsequently being granted National Industrial Design Center status and also winning the "Guangdong Provincial Government Quality Award".

With the onset of the IoT era, Hytera is well positioned to support customers around the world thanks to its long-standing research and development of private IoT solutions. By leveraging the advantages of PMR infrastructure and traditional mature technology, Hytera has developed IoT products and solutions that integrate and provide turnkey services for public safety, emergence response services to fire and rescue, and emergency management and daily operation for mining, utilities, agriculture, forestry and other industrial customers.

Looking ahead to 2018, Yelin Jiang, Senior Vice President of Hytera, said

"We will, on the one hand, continue to focus on developing 'Application, System and Terminal' innovations in order to create world-leading products which include convergent terminals, convergent systems, and convergent intelligent command and control centers, providing customizable and comprehensive industry solutions based on specific customer needs. On the other hand, we will implement our product ecosystem and customer ecosystem strategy, for the purpose of driving technological innovation and global business development. We believe that together with our ecosystem, we can make the world safer."