(Company Registration No : 198300506G) 2011 FULL YEAR FINANCIAL STATEMENT ANNOUNCEMENT 1(a) CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE TWELVE MONTHS ENDED 31 DECEMBER 2011 (In Singapore Dollars) GROUP 31/12/2011 31/12/2010 % Increase/ S$'000 S$'000 (Decrease) Revenue 57,394 56,438 1.7 Cost of sales (55,605) (51,483) 8.0 Gross profit 1,789 4,955 (63.9) Other income - Other operating income 8,908 9,002 (1.0) - Finance income 234 350 (33.1) Expenses - Selling & distribution expenses (1,400) (1,385) 1.1 - Administrative expenses (5,632) (7,347) (23.3) - Other expenses (3,235) - nm - Finance cost (79) (41) 92.7 Profit before tax 585 5,534 (89.4) Income tax (572) (1,367) (58.2) Profit net of tax 13 4,167 (99.7) Profit for the year attributable to : Owners of the Company 146 4,240 (96.6) Non-controlling interests (133) (73) 82.2 13 4,167 (99.7) Other comprehensive income for the year, net of tax Foreign currency translation 94 (62) nm Total comprehensive income for the year 107 4,105 (97.4) Total comprehensive income attributable to : Owners of the Company 232 4,184 (94.5) Non-controlling interests (125) (79) 58.2 107 4,105 (97.4) nm - not meaningful Notes to the Consolidated Statement of Comprehensive Income : 31/12/2011 31/12/2010 $'000 $'000 The profit after tax is determined after (crediting) / charging the following : Sale of aluminium scraps (8,173) (8,377) Sale of other metal scraps (229) (204) Interest on fixed deposits (54) (70) Interest on loan receivables (180) (280) Depreciation of property, plant and equipment 2,670 2,324 Impairment loss on convertible loan 3,235 - Interest on finance leases / term loan 79 41 Foreign exchange (gain) / loss (303) 1,279 Loss on disposal of property, plant and equipment 393 588 Write back for doubtful debts - trade, net - (24) 1
1(b)(i) STATEMENTS OF FINANCIAL POSITION Group Company 31/12/2011 31/12/2010 31/12/2011 31/12/2010 S$' 000 S$' 000 S$' 000 S$' 000 Non-current assets Property, plant and equipment 17,696 19,272 15,583 17,326 Investment in subsidiaries - - 956 956 17,696 19,272 16,539 18,282 Current assets Loan to subsidiaries - - 4,068 2,500 Inventories 10,477 12,017 10,012 11,918 Trade receivables 8,575 10,023 8,169 9,845 Loan receivable 3,000 3,000 3,000 3,000 Convertible loan receivable - 3,208-3,208 Other receivables 542 509 108 203 Prepaid operating expenses 69 97 27 80 Cash and cash equivalents 26,666 22,753 26,173 22,416 49,329 51,607 51,557 53,170 Current liabilities Trade payables 4,065 5,408 3,848 5,111 Other payables 2,382 2,462 2,011 2,203 Amounts due to subsidiary - - 708 560 Current portion of finance leases 512 494 512 494 Current portion of term loans 534 250 250 250 Provision for taxation 1,282 1,124 1,279 1,116 8,775 9,738 8,608 9,734 Net current assets 40,554 41,869 42,949 43,436 Non-current liabilities Non-current portion of finance leases 798 1,310 798 1,310 Non-current portion of term loans 1,079 729 479 729 Deferred taxation 2,149 2,473 2,101 2,382 4,026 4,512 3,378 4,421 Net assets 54,224 56,629 56,110 57,297 Equity attributable to equity holders of the Company Share capital 46,465 46,465 46,465 46,465 Asset revaluation reserve 1,296 1,296 1,296 1,296 Treasury shares (1,697) (1,697) (1,697) (1,697) Foreign currency translation reserves 24 (62) - - Retained profits 8,062 10,428 10,046 11,233 54,150 56,430 56,110 57,297 Non-controlling interests 74 199 - - Total Equity 54,224 56,629 56,110 57,297 2
1(b)(ii) AGGREGATE AMOUNT OF GROUP'S BORROWINGS AND DEBT SECURITIES Amount repayable in one year or less, or on demand : As at 31 December 2011 As at 31 December 2010 Secured Unsecured Secured Unsecured S$'000 S$'000 S$'000 S$'000 796 250 494 250 Amount repayable after one year : As at 31 December 2011 As at 31 December 2010 Secured Unsecured Secured Unsecured S$'000 S$'000 S$'000 S$'000 1,398 479 1,310 729 Details of any collateral Finance leases are entered for certain plant and machineries that are secured by the lessors' charge over the leased assets. Certain term loan is entered by subsidiary to finance working capital and is secured by Corporate Guarantee from the Company. 3
1(c) CONSOLIDATED STATEMENT OF CASH FLOWS Group Cash flows from operating activities : 31/12/2011 31/12/2010 S$'000 S$'000 Profit before tax 585 5,534 Adjustments for : Depreciation expense 2,670 2,324 Loss on disposal of property, plant and equipment 393 588 Impairment loss on convertible loan 3,235 - Translation differences - foreign subsidiary (19) (69) Unrealised exchange (gain) / loss on loan receivable (28) 305 Interest expense 79 41 Interest income (234) (350) Write-down of inventories to net realisable value 925 - Write back for doubtful debts - trade, net - (24) Operating profit before reinvestment in working capital 7,606 8,349 Decrease in receivables 1,350 67 Decrease / (increase) in inventories 616 (5,981) (Decrease) / increase in payables (1,433) 2,275 Cash generated from operations 8,139 4,710 Interest paid (69) (44) Income tax paid (738) (1,725) Interest received 56 65 Net cash provided by operating activities 7,388 3,006 Cash flows from investing activities : Interest received from loan 270 - Proceeds from disposal of property, plant and equipment 198 109 Purchase of property, plant and equipment (1,582) (4,753) Net cash used in investing activities (1,114) (4,644) Cash flow from financing activities : Proceeds from term loans 884 1,000 Repayment of term loan (250) (21) Dividends paid (2,512) (7,836) Purchase of treasury shares - (1,697) Repayment of finance lease obligations (494) (242) Proceeds from issuance of shares to NCI - 101 Net cash used in financing activities (2,372) (8,695) Net increase / (decrease) in cash and cash equivalents 3,902 (10,333) Effect of exchange rate changes on cash and cash equivalents 11 - Cash and cash equivalents at 1 January 22,753 33,086 Cash and cash equivalents at end of the year 26,666 22,753 4
1(d)(i) STATEMENT OF CHANGES IN EQUITY Attributable to Equity Holders Group Share Treasury Asset Other Retained Total Non Revaluation Controlling Capital Shares Reserve Reserves Profits Equity Interest S$'000 S$'000 S$'000 S$'000 S$'000 S$'000 S$'000 As at 1 January 2010 46,465-1,296-14,024 61,785 28 Profit for the year - - - - 4,240 4,240 (73) Purchase of treasury shares - (1,697) - - - (1,697) - Dividends on ordinary shares - - - - (7,836) (7,836) - Issue of ordinary shares to NCI - - - - - - 250 Other comprehensive income Foreign currency translation - - - (62) - (62) (6) As at 31 December 2010 46,465 (1,697) 1,296 (62) 10,428 56,430 199 As at 1 January 2011 46,465 (1,697) 1,296 (62) 10,428 56,430 199 Profit for the year - - - - 146 146 (133) Dividends on ordinary shares - - - - (2,512) (2,512) - Other comprehensive income Foreign currency translation - - - 86-86 8 As at 31 December 2011 46,465 (1,697) 1,296 24 8,062 54,150 74 Company Share Treasury Asset Retained Total Revaluation Capital Shares Reserve Profits Equity S$'000 S$'000 S$'000 S$'000 S$'000 As at 1 January 2010 46,465-1,296 14,323 62,084 Total comprehensive income for the year - - - 4,746 4,746 Purchase of treasury shares - (1,697) - - (1,697) Dividends on ordinary shares - - - (7,836) (7,836) As at 31 December 2010 46,465 (1,697) 1,296 11,233 57,297 As at 1 January 2011 46,465 (1,697) 1,296 11,233 57,297 Total comprehensive income for the year - - - 1,325 1,325 Dividends on ordinary shares - - - (2,512) (2,512) As at 31 December 2011 46,465 (1,697) 1,296 10,046 56,110 NCI : Non-controlling interests 5
1(d)(ii) Details of any changes in the company's share capital arising from rights issue, bonus issue, share buy-backs, exercise of share options or warrants, conversion of other issues of equity securities, issue of shares for cash or as consideration for acquisition or for any other purpose since the end of the previous period reported on. State also the number of shares that may be issued on conversion of all the outstanding convertibles, as well as the number of shares held as treasury shares, if any, against the total number of issued shares excluding treasury shares of the issuer, as at the end of the corresponding period of the immediately preceding financial year. None 1(d)(iii) To show the total number of issued shares excluding treasury shares as at the end of the current financial period and as at the end of the immediately preceding year. 31/12/2011 31/12/2010 Total number of issued shares 251,196,667 251,196,667 (excluding treasury shares) No treasury shares were re-issued for the period ended 31 December 2011. 1(d)(iv) A statement showing all sales, transfers, disposal, cancellation and/or use of treasury shares as at the end of the current financial period reported on. Not applicable. 2 Whether the figures have been audited or reviewed and in accordance with which auditing standard or practice. The figures have not been audited or reviewed by our auditors. 3 Where the figures have been audited or reviewed, the auditors report (including any qualifications or emphasis of a matter). Not applicable. 4 Whether the same accounting policies and methods of computation as in the issuer's most recently audited annual financial statements have been applied. These financial statements have been prepared based on the accounting policies and methods of computation consistent with those adopted in the most recent audited financial statements for the year ended 31 Dec 2010. 5 If there are any changes in the accounting policies and methods of computation, including any required by an accounting standard, what has changed, as well as the reasons for, and the effect of, the change. The accounting policies adopted are consistent with those of the previous financial year except in the current financial year, the Group has adopted all the new and revised standards and Interpretations of FRS (INT FRS) that are effective for annual periods beginning on or after 1 January 2011. The adoption of these standards and interpretations did not have any effect on the financial performance or position of the Group. 6
6 Earnings per ordinary share of the group for the current financial period reported on and the corresponding period of the immediately preceding financial year, after deducting any provision for preference dividends. Earnings per share (EPS) Group 31/12/2011 31/12/2010 i) Based on weighted average number 0.06 cents 1.65 cents of ordinary shares Weighted average number of shares 251,196,667 256,663,334 ii) On a fully diluted basis 0.06 cents 1.65 cents 7 Net asset value (for the issuer and group) per ordinary share based on issued share capital of the issuer at the end of the :- (a) current financial period reported on; and (b) immediately preceding financial year. Net asset value per ordinary share based on the existing issued share capital at the respective period Group Company 31/12/2011 31/12/2010 31/12/2011 31/12/2010 21.6 cents 22.5 cents 22.3 cents 22.8 cents 7
8. A review of the performance of the group, to the extent necessary for a reasonable understanding of the group s business. It must include a discussion of the following:- (a) any significant factors that affected the turnover, costs, and earnings of the group for the current financial period reported on, including (where applicable) seasonal or cyclical factors; and (b) any material factors that affected the cash flow, working capital, assets or liabilities of the group during the current financial period reported on. Group Performance Review FY2011 was a challenging year due to continuing global uncertainties and global supply chain disruptions stemming from the Japan s quake and floods in Thailand. Amidst the difficult and unpredictable operating environment, the Group achieved total revenue of $57.4 million, an increase of 1.7% from $56.4 million in FY2010. Despite the marginal increase in revenue, the Group s gross profit decreased by 63.9% from $5.0 million in FY2010 to $1.8 million in FY2011. The decrease in gross profit was mainly due to the lower margins achieved and slowdown in HDD sector in the second half of FY2011, write down of inventories to net realizable value by $0.9 million which arose from lower LME aluminum prices as at 31 December 2011, as well as higher production costs such as utilities and additional depreciation expenses from newly acquired extrusion machines in the second half of FY2010. In addition, production losses during this start-up period by our China subsidiary had also negatively impacted the Group s gross profit. Other operating income decreased by 1.0% to $8.9 million, compared to $9.0 million in FY2010. Other operating income was lower due to lower scrap sales, though this was partially offset by an exchange gain of $0.3 million. Finance income decreased by 33.1% to $0.2 million, compared to $0.4 million in FY2010. The decrease was mainly due to absence of interest income from convertible loan receivable. Selling and distribution expenses increased by 1.1% to $1.4 million, compared to $1.39 million in FY2010. The increase was mainly due to higher personnel and travelling expenses. Administrative expenses decreased by 23.3% to $5.6 million, compared to $7.3 million in FY2010. The decrease was mainly due to the absence of exchange losses in FY2011 as compared to foreign exchange loss of $1.3 million recorded in FY2010. It was also partly due to lower provision for the performance incentive bonus. The decrease was partially offset by higher administrative expenses of $1.1 million incurred by our China subsidiary. Other expenses of $3.2 million arose from the provision for impairment of a convertible loan receivable from M2B World Asia Pacific Pte Ltd. (Please refer to our announcement dated 22 February 2012) Finance cost increased by 92.7% to $0.08 million, compared to $0.04 million in FY2010. Finance cost comprised of interest expense on loans obtained in the middle of FY2010 to finance the purchase of plant and machineries. Overall, the Group reported a net profit of $0.01 million attributable to shareholders in FY2011. Group Balance Sheet and Cash Flow Review The Group s non-current assets decreased by $1.6 million from $19.3 million in FY2010 to $17.7 million for FY2011. The reduction was mainly due to disposal and depreciation of property, plant & equipment. 8
Consolidated net current assets decreased by $1.3 million mainly due to the impairment of a convertible loan receivable as well as lower inventories and trade receivables balances. Inventories decreased due mainly to lower level of inventories held by the Group and trade receivables was lower mainly due to lower sales in the last quarter of FY2011. The decrease was offset by lower trade payables as well as higher cash and cash equivalents balances. The Group s non-current liabilities decreased by $0.5 million mainly attributable to non-current bank borrowings to finance machinery purchases becoming current in FY2011 as well as lower deferred taxation. The decrease was partially offset by bank borrowings taken to finance working capital of our China subsidiary. The Group s net cash generated from operating activities was $7.4 million, an increase of $4.4 million from $3.0 million in FY2010. This was mainly due to decrease in receivables and inventories as well as lower corporate tax paid in FY2011. The Group s net cash used in investing activities for the year was $1.1 million, a decrease of $3.5 million from $4.6 million in FY2010. Cash was used to purchase plant and machineries for our China subsidiary. The Group s cash used in financing activities was $2.4 million, a decrease of $6.3 million from $8.7 million in FY2010. This was mainly due to dividend payment of $2.5 million and repayment of $0.7 million bank loans, offset by bank borrowings amounting to $0.9 million. The financial position of the Group remained healthy, with cash and cash equivalents standing at $26.7 million. 9. Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results. The Group s results are in line with the statement made on 10 August 2011. 10. A commentary at the date of the announcement of the significant trends and competitive conditions of the industry in which the group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months. The Group s main customer segment, Electronics & Precision Engineering, experienced two major disruptions during financial year 2011. The Japan earthquake & tsunami, followed by the severe flood in Thailand, caused massive damages to the production facilities of some of the major Hard Disk Drives (HDD) manufacturers and key component suppliers, resulting in major disruptions in the supply chain of the global Electronics and HDD industries. As a result, the industry as a whole experienced a slower second half in 2011, with significantly lower business volume. It will take some time for the industry to recover to the pre-flood production levels. In FY2011, the Group s China subsidiary commenced commercial production of several forged industrial and automotive parts. Customer qualifications of certain automotive parts which were delayed due to the Japan quake, have since resumed and we expect to receive qualifications and orders during FY2012. The Company refers to its announcement dated 20 February 2012 in which the Group has acquired 50% interest in Global Tongyi (S) Pte Ltd which owns 100% of a China subsidiary involved in edible oil and agricultural products processing. We expect Global Tongyi (S) Pte Ltd to commence operation in second quarter of 2012. 9
The prevailing uncertainty in the global economic outlook, coupled with the ongoing European sovereign debt crisis, is expected to weigh on business sentiment and global consumer demand. We expect business environment to remain challenging in 2012. The Group will remain vigilant in monitoring global economic developments and market trends, and at the same time to continue to improve its cost and operating efficiencies. Volatility in energy price arising from global political tension, fluctuations in LME aluminium price and rising wage costs, as well as any further strengthening of the Singapore Dollar will continue to have significant impact on the Group s profitability. 10
11 Dividend (a) Current Financial Period Reported On Any dividend declared for the current financial period reported on? Yes Name of Dividend Dividend type Dividend amount per share Tax rate First & Final Cash 1.0 cents Tax exempt one - tier (b) Corresponding Period of the Immediately Preceding Financial Year Any dividend declared for the corresponding period of the immediately preceding financial year? Yes Name of Dividend Dividend type Dividend amount per share Tax rate First & Final Cash 1.0 cents Tax exempt one - tier (c) Date Payable The proposed first and final dividend, if approved at the forthcoming Annual General Meeting of the Company, will be paid on 18 May 2012. (d) Books closure date Books closure date will be on 8 May 2012. 12 If no dividend has been declared / recommended, a statement to that effect. Not applicable 13 If the Group has obtained general mandate from shareholders for IPTs, the aggregate value of such transactions as required under Rule 920 (1)(a)(ii). If no IPT mandate has been obtained, a statement to that effect. The Group did not obtain a general mandate from shareholders for IPTs. 11
Part II - ADDITIONAL INFORMATION REQUIRED FOR FULL YEAR ANNOUNCEMENT (This part is not applicable to Q1, Q2, Q3 or Half Year Results) 14 Segmented revenue and results for business or geographical segments (of the group) in the form presented in the issuer s most recently audited annual financial statements, with comparative information for the immediately preceding year. Electronics and Construction and Forged Others Consolidated precision engineering infrastructure building Components 31/12/2011 31/12/2011 31/12/2011 31/12/2011 31/12/2011 S$'000 S$'000 S$'000 S$'000 S$'000 Revenue 53,639 3,389 366-57,394 Results : Segment result 4,149 860 (1,173) (3,406) 430 Finance income 234 Finance costs (79) Profit before tax 585 Income tax (572) Profit net of tax 13 Electronics and Construction and Forged Others Consolidated precision engineering infrastructure building Components 31/12/2010 31/12/2010 31/12/2010 31/12/2010 31/12/2010 S$'000 S$'000 S$'000 S$'000 S$'000 Revenue 54,224 2,206 8-56,438 Results : Segment result 5,607 369 (579) (172) 5,225 Finance income 350 Finance costs (41) Profit before tax 5,534 Income tax (1,367) Profit net of tax 4,167 15 In the review of performance, the factors leading to any material changes in contributions to turnover and earnings by the business or geographical segments. Electronics and Precision Engineering Segment Revenue from this segment decreased by 1.1% to $53.6 million during the year ended 31 December 2011, compared to $54.2 million for the previous year. The severe and prolonged flood in Thailand during the fourth quarter of the financial year caused a major disruption in the global supply chain of this segment. As a result, customer order level dropped significantly in the fourth quarter. Segment result decreased due to higher aluminium raw material price during the financial year and rising production and operation costs. Construction and Infrastructure Building Segment Revenue from this segment increased by 53.6% to $3.4 million during the year, compared to $2.2 million for the previous year. Segment results decreased due to higher aluminium raw material price and continuing price competition faced in this segment. Forged Components Segment Revenue from this segment increased to $0.4 million after commencing commercial production during this financial year. Segment loss increased due to production losses during this startup period, as well as higher administrative expenses. Others Segment Loss before taxation of $3.4 million was mainly due to the impairment of a convertible loan. 12
16 A breakdown of sales. 31/12/2011 31/12/2010 % Increase/ S$'000 S$'000 (Decrease) Sales reported in first half year 29,399 28,653 2.6 Operating profit after tax before minority interests reported for the 1,302 (489) nm first half year Sales reported in second half year 27,995 27,785 0.8 Operating (loss) / profit after tax before minority interests reported for (1,289) 4,656 nm the second half year 17 A breakdown of the total annual dividend (in dollar value) for the issuer's latest full year and its previous full year. FY2011 FY2010 Ordinary (one tier tax exempt) $2,512,000 $2,512,000 Preference $0 $0 Total annual dividend $2,512,000 $2,512,000 18 Disclosure of person occupying a mangerial position in the issuer or any of its principal subsidiaries who is a relateive of a director or chief executive officer or substantial shareholder of the issuer pursuant to Rule 704(10) in the format below. If there are no such persons, the issuer must make an appropriate negative statement. Name Age Family relationship with Current position and Details of changes in any director, CEO or duties, and the year duties and position substantial shareholder the position was held held, if any, during the year Tan Chu En Ian 48 Spouse of Ms Sinta Muchtar, Chief Executive Officer Nil. an Executive Director of the Company with effect from 1 October 2003. Responsible for the Group's management, business strategies and expansion. Sinta Muchtar 49 Spouse of Mr Tan Chu En Executive Director since Nil. Ian, the Chief Executive 1987. Responsible for the Officer and Executive general administration, Director of the Company. finance and human resource matters of the Company. BY ORDER OF THE BOARD Ngiam Zee Moey Company Secretary 24 February 2012 13