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"Dear Shareholders,
Three words aptly describe our activities in FY2007: rationalisation, realignment and reorganisation. Having completed the acquisition of both Dragon Group International Limited (formerly known as Flextech Holdings Limited) and Advanced Systems Automation Limited (“ASA”), the mission of ASTI Holdings Limited (“ASTI” or the “Group”) thereafter is to align the business activities and resources of all three companies. Henceforth, each entity will have a clear business vision and goals that synergise and complement each other. A clear vision and strong disciplines are necessary to propel our business units and ultimately, release the intrinsic values in all three companies to all our customers, shareholders and employees.
Another highlight of the year is our
strengthened cash position. At the close of
FY2007, there was a $19.3 million increase
in our cash and bank balances, which rose
from $55.5 million in FY2006 to $74.8
million, due mainly to our divestment of
an 11% equity interest in ASA. Similarly,
the cash and bank balances at the Dragon
Group also increased by $16.0 million,
rising from $22.6 million in FY2006 to
$32.7 million in FY2007. This is primarily
attributable to our divestment of 73.7
million ordinary shares of ASTI during
the year. Our strong cash positions will
help meet our working capital needs
and support the future expansion of the
Group.
Aggregating the businesses and the geographic network of all the three companies, the enlarged ASTI Group now has 6 research and development centres, 17 factories and 45 sales offices in Southeast Asia, Greater China, India, Korea, the United States of America (“US”) and United Kingdom (“UK”). Adding to this, we are now proud owners of more than 100 patents in vision systems, packaging technologies and electromechanical systems.
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In summary, by bringing the three companies together, the ASTI Group now has three main pillars. These are:
• Manufacturing, which is led by our renowned vision technology know how.
• Distribution and services, that are supported by our extensive pan Asian network, which strategically reaches out to customers in the US and Europe.
• Precision engineering capabilities that seek to constantly add value to global healthcare, scientific equipment and semiconductor manufacturers.
During the year, our team worked relentlessly to bring more than 2,900 employees from different cultural backgrounds into our fold. To unify this huge team of individuals, amid the winds of the organisational changes sweeping through the Group, is a daunting task. Nevertheless, by the end of the year, our team not only successfully assimilated our valuable pool of human capital but we also brought on a new distribution group with a well-entrenched network and reach into Hong Kong and China. These new arrivals – Dragon Technology Distribution Co., Ltd and Dragon Trading (Shanghai) Company Limited - have contributed positively to the performance of Dragon Group International Limited, (“Dragon Group” or “DGI”) our distribution and services division.
At the Group level, despite higher sales, our profits were lower due to the incurrence of higher operating expenses in FY2007. The higher operating expenses are largely due to the consolidation of the financial results of DGI, the costs arising from business reorganisation and the incurrence of higher financing costs. The Group’s performance this year also took into account the exceptional gain arising from the divestment of our equity stake in ASA in the final quarter of the year.
The Prospects Ahead
Into the new financial year, our business reorganisation and resource realignment initiatives will continue across all the companies in the Group. Ultimately, I am confident that, together with the help of the management and the guidance of the board, we will bring into being an organisation that will set a new paradigm in our industry.
In our stable today, we have more than 100 patents, and this number is still growing. Further boosting our extensive Asian footprints are our rapid expansions into China and our reach into the US and UK markets. Our team is dedicated and well experienced. Guided by prudent board members, all of us share the same ambition - to create a strong organisation that is not only relevant but has the ability to constantly renew and revitalise itself to address new needs.
On the business front, current concerns arising from the uncertainties in the US, inflationary pressures and rising energy costs are undeniable. However, our vision for ASTI is by no means myopic. Undoubtedly, the pessimism in the global economic outlook, coupled with the contraction forecast in the semiconductor industry, will likely affect our business in the new financial year. Nonetheless, we remained focused on our commitment to grow the businesses within the group, both organically and through acquisitions. The economic slowdown in the new financial year may help address the high valuations that we saw in the merger and acquisition scene in FY2007. Furthermore, bearish business sentiments may release more acquisition targets. At ASTI, our resources are ready. With the support of our bankers and our shareholders, there will be opportunities for us to bring in new partnerships that can add value to our Group.
In closing, I would like to express my appreciation to our customers, shareholders, bankers, business associates and employees for their trust and confidence in ASTI. The year ahead is poised to bring more challenges. With your support, we will endeavour to do our best to bring into being, an ASTI that we can all be proud of."
Dato' Michael Loh Soon Gnee
Executive Chairman
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