Review of Performance
Group's Turnover
The Group recorded a turnover of S$396.3 million in 1H2011, an increase of about 7% when compared with the
figure for 1H2010. The increase would have been higher if not for the appreciation of Singapore dollar and other
Asian currencies against the United States dollar. The turnover increase was attributed to healthy demand for
electronic products in most of the Asian markets where the Group operates, supported by the Group's
comprehensive product lines, extensive distribution network and diversified customer base.
Turnover in South and South East Asia posted an increase of 22% when compared to 1H2010. Majority of the
countries in South and South East Asia enjoyed growth as export of electronic products by the Group customers
remained healthy. Amongst them, Thailand and Philippines recorded the highest increase in turnover when
compared to 1H2010 as demand from its existing customers improved. India, which the Group commenced
operations in December 2006, registered turnover of S$4.4 million in 1H2011 as compared to S$4.3 million in
1H2010. The Group will continue to invest in India as one of its key market for future growth. It now operates 8
sales offices there. The turnover increase in South and South East Asia was also due to contribution from the
Group's newly acquired wholly owned subsidiary, Intraco Technology Pte Ltd. Intraco Technology Pte Ltd added
S$7.3 million revenue for the period from May to June 2011.
North Asia (comprising Greater China, South Korea and Taiwan) grew by 4% when compared to 1H2010. The
smallish percent growth was mainly attributed to the appreciation of Singapore dollar versus the Hong Kong dollar
and United States dollar. The higher revenue was mainly due to increased contribution from newer product lines and
strong demand from certain existing customers of the Hong Kong and China subsidiaries and stronger sales to/from
newer customers/ product lines of the South Korea and Taiwan subsidiaries.
Turnover from North Asia accounted for 85% of the Group's total sales for 1H2011 (1H2010: 87%) with Greater
China covering 55% (1H2010: 59%). The Group now operates 29 sales offices in key cities of China.
Group's Profit After Income Tax
For 1H2011, the Group posted a net profit after tax ("NPAT") of about S$7.1 million, an increase of 10% as
compared to a NPAT of about S$6.5 million for 1H2010.
The electronic components distribution business registered a NPAT of S$6.9 million as compared to a NPAT of S$6.7 million in 1H2010. Gross profit margin was 9.0% as compared to 9.6% in 1H2010 as the highly competitiveness of the electronic industry continued to exert pressures on margin. The gross profit margin was also affected by the appreciation of Singapore dollar and other Asian currencies against the United States dollar. Total expenses as a percentage of turnover declined from 7.6% in 1H2010 to 7.4% in 1H2011 as the Group continued to focus on cost efficiency, inventory and credit management and benefited from economies of scale. Increase in expenses arising from expansion activities in emerging countries and newer product lines reduced the percentage decline in total expenses over turnover.
The Group's other businesses recorded a profit of S$0.1 million as compared to a loss of S$0.4 million in 1H2010. The Group's newly-acquired wholly owned subsidiary, Contract Sterilization Services Pte Ltd earned profit after tax of S$0.4m on the back of S$1.8 million revenue from March to June 2011. During the 1H2011, the Group sold off two investment properties and made a total profit of S$0.4 million. The Group's 65% subsidiary, Serial Multivision Pte Ltd earned advertising income of S$0.6 million and incurred a loss of S$0.4 million due to interest costs and depreciation expenses.
The Group's share of profit in its associated companies was about S$0.1 million as compared to S$0.2 million in
1H2010. The profit was contributed by the Group's 34.3% interests in Bull Will Co., Ltd and 33.0% interests in
Unitron Tech Co., Ltd.
Commentary on Current Year Prospects
The Group is cautiously optimistic of the business outlook in the second half of FY2011. This is because of the
uncertainties of the pace of recovery of the United States of America economy, continued concerns of sovereign debt
sustainability in Europe, inflationary pressures and currency appreciation which will affect the continued strong
growth in Asia, especially China. Any negative impacts arising from these issues will affect the performance of the
Group's businesses.
While the Group is cautiously optimistic of a good performance in FY2011, it expects the business environment to remain uncertain and challenging. High unemployment and inflation rates, currency volatilities, real estate bubbles, social unrests, Eurozone debt crisis are some of the key concerns affecting the global economies. Any negative impacts arising from these issues will affect the performance of the Group's businesses.
While the business environment remains uncertain and challenging, the Group will continue its expansion strategies
by working closely with its customers and suppliers to expand new / existing product lines and product ranges, and
customer bases in the Asian market. The Group will also make acquisitions as and when opportunities arise to
capitalize on its competitive strengths of extensive distribution network, diversified customer base and
comprehensive product lines. As the Group expands, it will remain vigilant on cost, inventory, credit and cash
management in response to a volatile environment.
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