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Chairman's Message  

Dear Shareholders,

With a renewed focus on family life, my resignations were announced on 7 April 2019. Succession is being planned and we will ensure a smooth transition through 2019. Having pushed through the inflexion point with the disposal of Semiconductor Technologies & Instruments Pte Ltd (STI), we went from loss after taxation of S$14.6m in 2017 to a Profit after taxation of S$19.7m in 2018. We declared 2 cents per share interim dividend on 14 November 2018 and are pleased to recommend a final dividend of 0.5 cents per share, bringing the total dividends pay-out for FY2018 of S$16.3m to our shareholders. This is a historical record for our company.

We reported a revenue decline primarily due to a de-consolidation of Advanced Systems Automation Limited (ASA) Group’s revenue after the completion of ASA Group’s rights issue on 14 June 2017. ASTI’s generic businesses continued to grow and remain profitable. Dragon Group International Limited (DGI) is undergoing a delisting process. On 4 January 2019, we announced a renewed investment deal of US$20m in EoCell Limited from Yinlong Energy Co., Ltd which was subsequently completed on 20 May 2019. ASA underwent restructuring by disposing the unprofitable Beijing operations, and acquired a profitable business coupled with a significant change in shareholder structure to better position itself to compete in the market.

OPERATIONS REVIEW

INCOME STATEMENT

Revenue The Group recorded revenue of S$63.4 million for the financial year ended 31 December 2018 (“FY2018”), down by 4.9% or $3.3 million from S$66.7 million in the previous financial year ended 31 December 2017 (“FY2017”).

 

Profit before tax
The Group reported a loss before tax from continuing operations of S$21.5 million and S$19.6 million in FY2018 and FY2017 respectively. Included in FY2017 was a gain on disposal of ASA Group of S$2.9 million. Marketing and distribution expenses for FY2018 decreased by 40%; from S$2.9 million in FY2017 to S$1.8 million. The decrease was primarily due to the absence of 6 months results from ASA Group. Administrative expense increased by S$9.9 million or 49.3% from S$20.1 million in FY2017 to S$30.0 million in FY2018. The increase was mainly due to a bonus pay-out to a director during the year. Other expense in FY2017 included foreign exchange loss of S$2.5 million, arising from the weakening of Singapore Dollar against United States Dollars. The Group recorded lower finance cost by S$0.02 million in FY2018 as compared to FY2017 due to loan repayment made during the year.

Net Profit

Taking into consideration the above factors, the Group recorded a net loss after tax from continuing operations of S$22.9 million and S$20.9 million in FY2018 and FY2017 respectively. After taking into account Profit from Discontinued Operations, net profit for FY2018 is S$19.7 million compared to net loss of S$14.6 million in FY2017. Included in FY2018 is the gain on disposal of STI Group which was completed on 26 September 2018 of S$34.5 million.

BALANCE SHEET

Non-current assets

Non-current assets comprised the increase in development expenditure incurred by (i) the battery storage solutions, (ii) additional property, plant and equipment purchased by the Group and (iii) other receivables in relation to disposal of STI Group. This increase was offset by the depreciation of PPE and investment properties, coupled with translation changes for non-current assets. This resulted in an overall increase of S$12.9 million from S$30 million as at 31 December 2017 to S$42.9 million as at 31 December 2018.

Current assets

The decrease in current assets of S$30.9 million or 35% from S$88.9 million as at 31 December 2017 to S$58.0 million as at 31 December 2018 was mainly due to the disposal of STI Group.

Current liabilities

The decrease in current liabilities of S$23.9 million or 38% from S$63.7 million as at 31 December 2017 to $39.8 million as at 31 December 2018 was mainly due to decrease in loans and borrowings of S$22.4 million.

CASHFLOW STATEMENT

The Group utilized S$3.8 million for its operational working capital. An amount of S$1.8 million was used for the net payments of interests and taxes. Net cash generated from investing activities amounted to S$15.8 million was mainly due to a net cash inflow on disposal of STI Group of S$32.9 million. However, this is mitigated by an amount of S$12.5 million used for purchase of property, plant and equipment and S$2.2 million on research and development projects. The Group has borrowed S$1.9 million but repaid S$6.4 million to financial institutions during the period. Loans of S$2.4 million were provided to an associate.

OUTLOOK

With the disposal of STI, ASTI retains Telford and Eoplex. Telford’s 8 factory locations collectively with a headcount of over 3,500, continue to grow profitably. We will continue working to improve on our existing businesses now that we are through the inflexion point and cash flow is good. We remain cautious about our prospect in 2019 which may be affected by the markets uncertainties arising from the looming trade disputes. With the completion of the investment into EoCell Limited by Yinlong Energy Co., Ltd, our cash flow and profitability outlook will improve. Coupled with the structural changes in ASA, the outlook for ASTI cash flow remains positive and we look forward to more dividend whenever appropriate. Being the controlling shareholder of DGI, ASTI will be working on a cash exit offer to DGI’s shareholders. ASTI’s shareholders will be informed of the development in due course.

IN APPRECIATION

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 and to our management succession. To all our employees, I appreciate your perseverance and dedication, and I have confidence in your commitment to make our Group financially, commercially and technologically strong to ride the opportunities ahead of us.

Yours sincerely,

 

DATO’ MICHAEL LOH
Executive Chairman and Chief Executive Officer

 

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Blk 25 Kallang Avenue #06-01 Kallang Basin Industrial Estate Singapore 339416T (65) 6392 6922F (65) 6392 5522Company Registration No.: 199901514C
 
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