Tai Sin Electric Limited

24 Gul Crecent, Jurong Town, Singapore 629531

T: (+65) 6672 9292 E: ir@taisin.com.sg


Email This Print ThisChairman's Statement

* Extracted from Annual Report 2016

Dear Shareholders,

"I am pleased to report that the Group put up a steady performance during the financial year ended 30 June 2016, in spite of the economic headwinds and more competitive environment."

We achieved revenues of $320.91 million, a rise of 10.67% over the $289.96 million for the previous year. Sales increases were recorded in two of our four business segments. The Cable and Wire ("C&W") segment accounted for the bulk of Group turnover, at 67.57% of the total, with sales to all its market sectors registering improvements. Sales of our Test & Inspection ("T&I") segment were also up, whereas the Electrical Material Distribution ("EMD") and Switchboard ("SB") segments saw a slight drop in revenues.

Group profit before tax ("PBT") rose 35.02% to $27.58 million, compared to $20.43 million for the previous financial year. The increase in PBT was derived from both C&W and T&I segments.

"We achieved revenues of $320.91 million, a rise of 10.67% over the $289.96 million for the previous year. Sales increases were recorded in two of our four business segments."

However, PBT were lower for the EMD and SB segments, due to the more competitive environments, higher operating costs and fewer projects.

Our management team's prudent administration also helped to maintain the Group's balance sheet at a healthy level. Cash and cash equivalents increased to $34.17 million, from $23.49 million a year ago, while inventories also increased slightly by 5.79% to $61.30 million. Due to increased transaction requirements, short-term bank borrowings rose 128.66% to $36.91 million, from $16.14 million.

The Group's reserves notched up 13.26% to $105.18 million, from $92.87 million for the previous reporting year. Group net asset backing per ordinary share registered a slight increase to 36.86 cents from 34.03 cents for the previous year.

ADJUSTING TO VOLATILE MARKET CONDITIONS

With the bulk of the Group's business still dependent on the Singapore market, we are wary of the country's sluggish growth and the possible effects of Brexit in the background of persistent weakness of the global economy.

The Singapore economy grew 2% in 2015. It expanded an average of 2.2% in the first half of 2016; the government has lowered its growth forecast for the entire year to 1-2%.

The International Monetary Fund ("IMF") in its World Economic Outlook released in July predicted that global GDP would grow slightly lower at 3.1% in 2016 and at 3.4% in 2017.

The oil price meltdown has impacted the chemical, oil and gas, and marine industries in the region, while economic uncertainty has also resulted in cautious investments in private building and construction.

Going forward, with the downgraded global economic outlook and continued geo-political instability in various parts of the world, governments in the region are increasing investments in infrastructure to drive their economies. According to the ASEAN Investment Report 2015, at least US$110 billion a year will be needed up to 2025 for infrastructure development.

For Singapore, the Building and Construction Authority ("BCA") has projected public sector construction demand will account for about 65% of an estimated $27 billion to $34 billion worth of projects in 2016. Private sector construction in 2016 is slated to slow down from the levels of the last few years against the background of an increased supply of completed private housing projects and offices, and as the government's cooling measures continue to bite.

"Our Board has constantly reminded the management team to work prudently and innovatively, while urging reliance on well-heeled best practices that have produced results in process efficiency, productivity and cost savings."

The Tai Sin management team is constantly monitoring the market and reviewing its strategy to ensure that it responds to business opportunities in a timely and effective manner to ensure that the Group stays relevant to the needs of various industries in Singapore and the region.

We continue to be guided by our vision to be "A leading industrial group that contributes to a safer tomorrow".

CONFRONTING INCREASINGLY DIFFICULT OPERATING CONDITONS

Since the drastic decline in oil prices in mid-2014 that reverberated across the global economy impacting almost every industry, the Group has further refined its strategy to deal with the market uncertainties. At the same time, we have reinforced the strength of our brand and leveraged on its reputation for quality and reliability to win orders in new market territories.

Our Board has constantly reminded the management team to work prudently and innovatively, while urging reliance on wellheeled best practices that have produced results in process efficiency, productivity and cost savings.

We also hold dear the values of professional human capital development, ensuring that continuing training and career advancement are available to the rank and file of our workforce, and everyone receives fair compensation for the work done. We believe continuing development of our human capital is critical to our growth strategy, including ensuring there will always be well-groomed and capable leaders to steer the Group effectively in good and bad times. This has endeared especially those who joined the company since many years ago to continue to work hard and strive for the growth and profitability of the Group.

We have in recent years also carefully planned and invested in computerisation and equipment automation to help us utilise appropriate technology for more efficient management in every possible areas of our business, including production, to meet the diverse demand from our clients.

Our team pursues Lean Management conscientiously to ensure continuous improvement over the long-term to systematically optimise our work processes in order to improve efficiency and quality, reduce waste and increase value added in our products and services.

All this effort has enabled us to build a strong business ecosystem to effectively manage the stresses of market changes, in particular a more competitive environment with rising costs that have continued to weigh heavily on our bottom lines.

Where necessary, we will make adjustments at the operating level to ensure that we are better geared for the future.

Over in Malaysia, we have during the year raised the paid-up capital of our wholly-owned subsidiary Tai Sin Electric Cables (Malaysia) Sdn. Bhd., from RM5 million to RM25 million, to better match its capital structure to the scale of its business.

Another of our Malaysian business entity, CASTconsult Sdn Bhd ("CASTconsult"), a 100% owned subsidiary of Cast Laboratories Pte. Ltd. ("CASTLab"), has also increased its share capital from RM1 million to RM3 million.

"To our customers, business partners and our long-standing contractor associates, we extend a big "thank you" for your continued guidance and support."

WE APPRECIATE THE EFFORTS & SUPPORT

Our continued success in delivering results will not be possible without a resilient business eco-system within the Group. This has been achieved with the strong commitment and support of every staff member over the years.

On behalf of the Board of Directors, I would like to extend our heartfelt appreciation to the Tai Sin management team and staff for their unrelenting effort to contribute positively to the growth and advancement of our company.

To our customers, business partners and our long-standing contractor associates, we extend a big "thank you" for your continued guidance and support.

For our shareholders, I wish to announce that the Board has decided to declare a final dividend of 1.60 cents per ordinary share, subject to approval at the annual general meeting. We would also like to thank the shareholders for their continued support over the years.


Tay Joo Soon
Chairman