As the shift to sustainability accelerates, the Group will continue to pursue business opportunities that may arise with the continued growth of the electric vehicle ecosystem.

Dear Shareholders,

Significant events during the financial year ended 30 June 2023 (“FY2023”) underscored the fragility of the world economy as markets were roiled by central banks intensifying their efforts to combat inflation through aggressive monetary tightening policies and rapid interest rate hikes. Against this backdrop, the Group remained focused on strengthening our core capabilities through innovation as well as strategic expansion to enhance our distribution network and serve our clients better.

Notwithstanding the challenging business environment, the global transition to a green economy continues to gather pace. As the shift to sustainability accelerates, the Group will continue to pursue business opportunities that may arise with the continued growth of the electric vehicle ecosystem. The mass adoption of artificial intelligence tools by enterprises and consumers is expected to accelerate the demand for data centres. This also presents growth opportunities for the Group to support the digital economy.

The Group remains committed to achieving its strategic objectives to deliver sustainable growth and enhance shareholder value.

Group revenue increased 11.26% from $379.05 million in the financial year ended 30 June 2022 (“FY2022”) to $421.73 million in the year under review with higher contributions from the Cable & Wire (“C&W”) segment offset by decline in revenue from the Electrical Material Distribution (“EMD”), Testing & Inspection (“T&I”) and Switchboard (“SB”) segments. The robust performance of our flagship business unit was sustained by the continued recovery of public and private sector construction activities in the region. This shored up the overall performance of the Group amidst the cyclical slowdown in the global semiconductor industry and lower business volumes for non-destructive testing and heat treatment services in the region.

Gross profit decreased from $80.05 million in the previous financial year to $66.65 million in FY2023. Gross profit margin correspondingly declined from 21.12% to 15.81%. This was mainly due to the higher reversal of provision for onerous contracts in FY2022 and continued deliveries of the low margin projects in FY2023 that were secured two to four years ago when copper prices were low.

Other operating income increased to $5.00 million mainly due to the higher reversal of allowances for doubtful debts, higher scrap sales and fair value gain on derivative financial instruments in FY2023.

Selling and distribution increased to $24.09 million due to higher staff and business operation costs, which was in tandem with higher revenue. Administrative expenses also rose to $21.73 million mainly due to higher staff welfare expenses as well as higher operating costs incurred through the consolidation of our newly acquired subsidiary in Malaysia, Nishi Densen Sdn Bhd.

Other operating expenses decreased to $2.79 million mainly due to the absence of fair value loss on derivative financial instruments and loss allowance for trade and other receivables during the year under review, offset against the impairment loss on right-of-use assets for a leased building in Cambodia.

Finance costs increased to $2.15 million mainly due to higher borrowings and higher interest charges from shortterm bank borrowings.

Share of profit of associates decreased to $0.50 million mainly due to lower profits reported by the Nylect Group during the year under review.

As a result of the above, the Group’s profit attributable to shareholders decreased to $16.67 million in FY2023.

To appreciate our shareholders for your staunch support, the Board is pleased to recommend a final dividend of 1.60 cent per ordinary share. Subject to shareholders’ approval at our upcoming annual general meeting scheduled on 25 October 2023, the dividend is expected to be paid out to shareholders on or around 9 November 2023. This will bring the total cash dividend payout for FY2023 to 2.35 cent per ordinary share.

Finally, I would like to take this opportunity to thank our customers, business partners and shareholders for their unwavering support. I would also like to convey my heartfelt gratitude to our dedicated management team and staff for their indomitable spirit to overcome the challenges faced during the year. The Group has navigated the turbulent business environment during the pandemic and emerged stronger. I believe that we will be able to capitalise on the opportunities ahead and deliver enduring value to our stakeholders.

On behalf of the Board of Directors, we thank you and look forward to your continued support.

Bobby Lim Chye Huat
Chairman