Chairman's Statement

CHAIRMAN'S STATEMENT

Our transformation efforts have given us a head start and were then further accelerated as digitalisation of work was adopted with greater urgency and acceptance.

Dear Shareholders,

The financial year ended 30 June 2021 (“FY2021”) saw the Group strengthening its resilience despite the prolonged COVID-19 pandemic which has tremendously impacted the global economy since early 2020. Faced with the circumstances, we have pursued our mission by redesigning our operational systems and processes with renewed vigour to continue staying agile in the new normal.

As governments around the world endeavoured to limit the health and economic fallout of the pandemic with extended lockdowns, safe distancing measures and vaccine rollouts, companies have scrambled to adopt new ways of doing business. Our transformation efforts have given us a head start and were then further accelerated as digitalisation of work was adopted with greater urgency and acceptance. This in turn allowed our business arms to operate efficiently at a lower capacity while complying with stringent social distancing rules. We are now better geared to thrive in the new normal.

For FY2021, our Group revenue edged higher by 7.97% to 298.44 million due to higher contributions from our Singapore and Malaysia’s Cable & Wire (“C&W”), Electrical Material Distribution (“EMD”) and Test & Inspection (“T&I”) segments which were offsetted against the lower revenue contribution from our Vietnam C&W segment. The Switchboard (“SB”) segment did however register a marginal increase. The softer performance was largely attributable to the pandemic which translated to curtailed business activities across our segments and across borders. While the easing of circuit breaker (“CB”) measures in Singapore and Movement Control Order (“MCO”) in Malaysia meant that work could resume, Safe Management Measures (“SMM”) continued to limit the pace of construction work which consequently weighed down on our performance. The business activities in Vietnam had however continued to slow down with this prolonged pandemic with many projects and new investments being put on hold.

Similarly, the Group’s gross profit for the year under review declined, coming in 6.73% lower at 41.37 million as a result of provision for onerous contracts of $22.69 million which was offsetted partially by higher margins from more ad hoc contracts.

On a positive note, the Group’s other operating income increased by $12.58 million to $20.16 million from $7.57 million. This improvement is tied to higher fair value gain on derivative financial instruments amounting to $10.80 million due to the rise in copper prices towards year end which benefited the Group. Furthermore, the Group appreciative for the grant income recognition of $6.94 million under various government support schemes awarded in light of the pandemic which were mostly contributed by the Singapore Government.

Selling and distribution expenses in FY2021 were lower mainly due to reduction in transportation and advertisement costs from our Vietnam C&W segment which were as a result of the lower business activities. Administrative expenses on the other hand, increased by $856,000 to $19.43 million mainly led by higher staff costs as a result of better-performing business segments.

For the year under review, other operating expenses increased by $872,000 to $2.03 million primarily attributed to higher foreign exchange loss and loss allowance for trade receivables.

Finance costs, on the other hand, declined by $308,000 to $781,000 as a result of lower interest rate charge and utilisation of bank facilities.

The Group’s profit attributable to shareholders nearly doubled to $17.28 million from $9.70 million in FY2020. Despite global disruptions and economic headwinds from the coronavirus, we are continually thankful for the support of our partners, customers and shareholders. We recognise the sacrifices and hard work put in by staff and employees. On behalf of the Board of Directors, I would like to express my gratitude and am looking forward to your continued support as we navigate through the new normal in FY2022.

The Board has recommended a final dividend of 1.50 cent per ordinary share as a symbol of appreciation for shareholders’ support. The dividend will be subjected to approval at the upcoming annual general meeting.

Bobby Lim Chye Huat
Chairman

Extracted from Annual Report 2021