Our financial and business transformations
continued through 2013.
Dragon Group International Limited (“DGI”)
completed the disposal of all issued and paid
up ordinary shares in the share capital of Dragon
Technology Distribution Pte. Ltd. on 3 May 2013,
un-encumbering ASTI of guarantees amounting
to about $120 million to financial institutions and
On 19 November 2013, DGI announced that it
has entered into a non-binding memorandum of
understanding (the “MOU”) with AMMS Group
Pty Ltd (“AMMS”). This non-binding MOU is
in relation to a proposed acquisition by the
Company of AMMS’ Australian engineering and
industrial maintenance business (the “Proposed
Acquisition”), at an indicative consideration in
the region of AUD12 million to 18 million. As
announced by DGI on 27 February 2014, DGI
no longer intends to pursue this Proposed
On 18 October 2013, the Company announced
that it had entered into a share purchase
agreement with Advanced Systems Automation
Limited (“ASA”) for the proposed disposal by
the Company of its entire shareholding interest
in Emerald Precision Engineering Sdn. Bhd. (“Emerald”) to ASA. On 15 November 2013,
Emerald ceased to be a wholly-owned subsidiary
of the Company but will remain within the Group.
On 28 January 2014, ASA announced that it had
entered into two Sales and Purchase Agreements
to purchase an additional 35% equity interest in
ASA Multiplate (M) Sdn. Bhd. (formerly known as
Auramas Teknologi Sdn. Bhd.)(“ASA Multiplate”)
bringing ASA’s equity interest to 90%.
Our collective strengthened balance sheets
have allowed us to pursue strategic
opportunities and directions which continue to
transform our Group. In 2012, ASTI acquired
the assets, technologies and know-how of
EoPlex, Inc. (“EoPlex”), a Silicon Valley additivemanufacturing
company. The Group will apply this enabling
and disruptive technology to build advanced
packaging technologies and products for
companies that manufacture semiconductors
and beyond. EoPlex’s xLC carrier product may
revolutionize wire bonding packages which
can address the requirements of the mobility
markets. We also increased our shareholding in
APS Investment Pte Ltd (“APSI”) via an acquisition
of 18.9% stake from our subsidiary, ASA. APSI
develops proprietary technology and provides
innovative and integrated flip chip solutions to
companies that manufacture semiconductors.
Both enterprises may contribute substantially to the advanced semiconductor packaging
arena in the foreseeable future. Along the same
route to address the advances in semiconductor
packaging, our equipment subsidiary STI
launched a new wafer inspection equipment in
the 1st half of 2014. This may be our growth driver
for our equipment business going forward.
We will focus on developing new and advanced
packaging solutions. Our ambition to be in
the driver’s seat in the backend semiconductor
packaging technology may bode well for
our inspection and manufacturing services
businesses. The look-ahead may potentially
allow our equipment and manufacturing
services enterprises to leverage into other
engagement or process points and customers,
thus strengthening our overall enterprise value
On 13 September 2012, the Group announced
that its subsidiary, DGI has entered into a
conditional Sale and Purchase Agreement with InflexionPoint Technologies Pte. Limited for
the disposal of its equity interest in the share
capital of Dragon Technology Distribution
Pte. Ltd. (“Disposal Group” or “Discontinued
In accordance with FRS 105, Non-current Assets
Held for Sale and Discontinued Operations,
the results of the Disposal Group have been
presented separately on the Group’s Income
Statement as Discontinued Operations for the
financial years ended 31 December 2013 and
31 December 2012. On the Group’s Balance
Sheet, the financial position of the Disposal
Group as at 31 December 2012 was aggregated
and presented as “Assets of disposal group
classified as held for sale”, “Liabilities of
disposal group classified as held for sale” and
“Reserves of disposal group classified as held
The continuing operations reported a 5.0% or
$5.1 million decrease in revenue from $101.9
million (FY2012) to $96.8 million (FY2013). BEST
business recorded a 2.9% decline in revenue
from $98.6 million (FY2012) to $95.8 million
(FY2013). Distribution & Service business posted
a decline of 69.2% in revenue from $3.3 million
(FY2012) to $1.0 million (FY2013) due to decrease
in demand from customers.
Gross Profit Margin
Gross profit margin for the continuing operations
increased to 31.9% for FY2013 compared to
29.8% for FY2012.
Marketing & distribution, research & development
and general administrative expenses increased
11.7% from $40.7 million (FY2012) to $45.5 million
(FY2013). The increase in costs was mainly due
to the higher research and development costs
incurred for the development of semiconductor
packaging technologies and the inclusion of
full year expenses incurred by ASA Group for FY2013 compared to only eight months of
expenses for FY2012.
Financing costs increased 87.4% from $0.4
million (FY2012) to $0.8 million (FY2013) arising
from the consolidation of the interest costs from
The continuing operations reported a net loss
attributable to shareholders of $14.8 million for
FY2013, compared to the net loss of $7.0 million
With the completion of the disposal on 3 May
2013, the Group has recognised the results
generated from discontinued operations for the
period from January to April 2013.
As at 31 December 2013, total assets stood
at $156.9 million comprising $63.4 million
from non-current asset and $93.5 million from
current assets. Total liabilities stood at $48.4
million comprising current liabilities of $44.6
million and non-current liabilities of $3.8 million.
Shareholders’ equity including minority interests
stood at $108.5 million.
The following are highlights of the Group’s
balance sheet as at 31 December 2013.
Intangible assets increased $1.0 million from
$14.5 million to $15.5 million. The increment
was mainly due to the provisional goodwill
of $2.4 million that arose from the acquisition
of the controlling interest in ASA Multiplate
in September 2013 that offset a $1.3 million
impairment of goodwill on consolidation.
Property, plant and equipment
Property, plant and equipment increased $9.6
million from $30.3 million to $39.9 million due to
the acquisition of ASA Multiplate.
Other receivables (non-current)
The amount of $2.3 million related to a portion
of the proceeds from the disposal of the
discontinued operations to be collected after 12
months from the balance sheet date.
The depletion of inventories during the period
was offset by the additional inventories from
Other receivables and prepayment
Included in the receivables was an amount of
$2.3 million for a portion of the proceeds from
the disposal of the discontinued operations to
be collected within 12 months from the balance
sheet date. Prepayment also increased due to
down-payment for purchase of equipment.
Amounts due from associates
With the acquisition of ASA Multiplate by ASA
Group in August 2013, ASA Multiplate became
a subsidiary of the Group and ceased to be an
associate. As such, there was no amount due
from associates as at 31 December 2013.
Trade receivables’ balance decreased $5.0
million from $30.7 million to $25.7 million which
was in line with the lower revenue for the period.
Amounts due to financial institutions
Amounts due to financial institutions decreased
$4.0 million from $20.1 million to $16.2 million. The
consolidated borrowings from ASA Multiplate
offset the repayment of bank borrowings during
Payables and accruals
Payables and accruals decreased $4.3 million
from $31.5 million to $27.3 million, mainly due
to the capitalisation of the $4.0 million advance
received for DGI’s share placement exercise.
Deferred tax liabilities
Deferred tax liabilities increased due to
acquisition of ASA Multiplate.
The Group generated $2.7 million from its
operations and utilised $1.4 million for the net
payments of interest and tax. An amount of $2.6
million was used for the purchase of property,
plant and equipment. The net proceeds of $5.2
million from the placement of shares to the noncontrolling
shareholders of its subsidiaries were
received during the year.
The Group repaid $8.0 million of borrowings to
financial institutions and lease creditors while
a net amount of $0.8 million was utilised to
acquire the additional equity interests in ASA
The discontinued operation received $4.1
million from the drawdown of bank borrowings.
The Group received $18.2 million from the
disposal of distribution group while cash and
cash equivalent of $32.5 million belonging to
the distribution business was disposed along
with the disposal.
The stronger transformed business entities are
strategically poised to pursue their destinies unencumbered.
ASA’s acquisition of ASA Multiplate and Emerald
has enlarged its geographical presence from
Beijing and Singapore to include Penang and
Johor respectively. The complementary and
synergistic skill-sets can offer a better value
proposition to ASA’s customers. ASA’s enhanced
Precision Engineering and ECMS business
position can lead to more customer acquisition
and set ASA on a growth trajectory. Overall,
ASA expects its performance to improve in the
Having divested the component distribution
business and sitting on a cash-rich balance sheet, DGI continues to explore investment
and business opportunities and will make the
appropriate announcements in due course.
While the Group expects continuing
improvement in its BEST business, visibility
remains low while the Group continues to invest
in its research and development activities.
Overall, the Group continues to remain cautious
about its performance this year.
It is important to note that our business is prone
to economic uncertainties and the cyclical nature
of the electronics and semiconductor industries.
Unforeseeable factors include but are not
limited to foreign exchange volatility, intellectual
property litigations, product and technology
obsolescence, and inventory adjustments. In
view of these factors, we will remain prudent and
cautious in the management of our businesses.
This year we saw the departure of our Group
Chief Executive Officer, Charles Cher, who left
the Group after working with us for more than
twenty years. On behalf of all my colleagues, I
would like to express our thanks and appreciation
to Charles for his contributions and guidance
over the years and wish him all the best in his
In closing, I would like to thank all our customers,
shareholders, business associates, and bankers
for your trust and confidence in us, and I look
forward to your support in the new financial
year. To all our employees, I appreciate your
perseverance and dedication, and I have
confidence in your commitment to make our
Group financially and technologically strong to
ride the opportunities of this super-cycle.
Dato' Michael Loh