Full Year Financial Statement 2009

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Balance Sheet

Review of Performance

Group's Turnover

The Group recorded a turnover of S$556.5 million in FY2009, a commendable increase of about 9% when compared with the figure for FY2008. The turnover increase was attributed to stronger demand for electronic products in the second half of FY2009 in majority of the Asian markets where the Group operates. Turnover for second half of FY2009 was S$327.5 million registering increase of 30% and 43% respectively when compared to S$252.1 million for second half of FY2008 and S$229.1 million for first half of FY2009.

Turnover in South and South East Asia posted a decline of 21% when compared to FY2008. Lower sales were experienced by Singapore, Thailand and Malaysia which relied heavily on export to United States of America and Europe where demand for electronic products were most affected by the financial and economic crisis. Turnover improved in the second half of 2009 by 27% to S$34.4 million when compared to S$27.0 million in the first half of FY2009 providing encouraging signs that these markets whilst weak, are stabilizing and recovering.

North Asia (comprising Greater China, South Korea and Taiwan) bucked the trend to post an overall 14% increase in turnover when compared to FY2008. The increase was mainly due to continued strong domestic demand of the China market and contribution by new customers and higher sales to certain existing customers of the Korean subsidiaries. The Taiwan subsidiary however posted a decline in sales of 29% to S$20.0 million when compared to FY2008 due to loss of orders from a major customer whose business has been adversely affected by the financial and economic crisis. Sales from North Asia were significantly higher in the second half of FY2009, growing by 35% and 45% respectively when compared to the second half of FY2008 and first half of FY2009. Sales from North Asia were significantly higher in the second half of FY2009, growing by 35% and 45% respectively when compared to the second half of FY2008 and first half of FY2009.

Turnover from North Asia accounted for 89% of the Group’s total sales for FY2009 (FY2008: 85%) with Greater China covering 57%. The Group now operates 23 sales offices in key cities of China.


Group's Profit After Income Tax

For FY2009, the Group posted a net profit of about S$7.5 million, an increase of 24% as compared to a net profit of about S$6.0 million for FY2008.

The semiconductors / components distribution business registered a net profit of S$7.1 million as compared to a net profit of S$6.6 million in FY2008. The improved performance in FY2009 is mainly attributable to higher gross profit dollar from higher sales achieved. Average gross profit margin however declined to 8.7% from 9.1% in FY2008 reflecting the highly competitive nature of the electronic industry coupled with the negative effects of the financial and economic crisis. The declining gross profit margin was however negated by the Group’s continued focus on cost efficiency with total expenses as a percentage of turnover declining from 8.5% in FY2008 to 8.0% in FY2009.

The Group’s semiconductors / components distribution business performed well in the second half of FY2009 registering a net profit of S$5.8 million, buoy by strong sales achieved. This was an increase of 66% and 346% when compared to net profit of S$3.5 million and S$1.3 million for the second half of FY2008 and first half of FY2009 respectively.

The Group’s share of profit in its associated companies was about S$0.2 million as compared to a share of loss of S$0.5 million in FY2008. The profit was contributed by the Group’s 34.5% interests in Bull Will Co., Ltd, a company listed on the Over-The-Counter Securities Exchange in Taiwan due mainly to higher sales and gross profit achieved.

Commentary on Current Year Prospects

The Group has performed well in FY2009 amidst the financial and economic crisis. There are encouraging indicators that the worst of the recession is over and the global economy has turned around with major economies showing early signs of recovery.

While the Group is more confident of the business outlook in FY2010 than FY2009, it expects the markets it operates to remain challenging. Negative impacts of a continued fragile consumer demand in the United States of America and Europe, outcome of the Euro debt crisis and early withdrawal of stimulus packages and tightening of monetary policies by governments of major economies of the world will weigh on the performance of the Group’s semiconductors / components distribution business.

The Group will continue to work closely with its suppliers and customers to expand into the North Asian market, especially in emerging economies like China and India. Efforts will be focused on efficient and effective management of costs, inventories, customers’ credit risk and cash flows in response to a volatile operating environment.