Dear Shareholders
The year in review
It was about two years ago that the
world economy was badly shaken by a disastrous meltdown
in the financial markets resulting in global economies
slipping into a severe recession. The sudden and rapid
slowdown in economic activities forced many governments,
including Singapore, to adopt drastic fiscal and monetary
measures to revive and stimulate their economy.
These measures were effective and the
Singapore economy pulled itself out of recession by
the fourth quarter of 2009. However, this growth was
primarily powered by the manufacturing and construction
sectors. Traditionally, the Group serves customers mainly
from the marine, oil & gas and engineering sectors
which did not enjoy as rapid a recovery as the general
economy. Correspondingly, market prices for the Group’s
products, although relatively stable, were lower than
in a similar phase of the previous economic cycle. In
response to the muted demand and lower pricing in these
sectors, the Group instituted measures to operate more
efficiently and thus, was able to achieve profit after
tax for every quarter of the financial year ended 30
June 2010 (‘FY10’). Overall, the net profit
after tax for FY10 was $10.3 million (FY09:$14.1 million)
achieved on Group revenue of $177.7 million (FY09:$321.7
million).
To prepare for an upturn in demand
and taking advantage of more reasonable construction
costs, the Group begun the redevelopment of one of its
warehouse facilities. The Group also took advantage
of this period of low activity, and with the help of
government training grants, to train and prepare its
staff and management for future growth.
The Group continued to observe financial
discipline by maintaining a healthy cash position and
minimum borrowings throughout FY10. Inventory was also
kept at an undemanding level of $69.8 million (as at
30 June 2010), sufficient to meet customers’ requirements
and yet gave the Group the capability to take advantage
of fluctuations in prices. Our strong balance sheet
position has always been a source of confidence to our
bankers and business suppliers throughout the recent
tumultuous times.
Outlook
It is forecasted that the Singapore
economy will achieve double digits growth for calendar
year 2010. Till the first quarter of this year, this
growth had been concentrated in the manufacturing and
construction sectors.
We hope that the rapid growth in these
sectors will spill over to the marine, oil and gas and
engineering sectors which will bring about increases
in demand for steel products in the near term.
The recent sovereign debt crisis in
some European countries reminded us that there are still
obstacles in the global recovery process. Growth in
the US is also showing signs of slowing down due to
weaker consumer spending power as unemployment remains
high. After years of robust growth, the Chinese economy
is facing contraction in its exports and needs to increase
domestic consumption to maintain its growth. These developments
will doubtless hinder the rate of global recovery and
will certainly affect the Singapore economy.
Against this backdrop of continuing
global developments, the Group is financially well placed
and is optimistic not only to ride out the uncertainties
but to benefit from any increase in demand for steel
products in the new financial year.
Dividend
Th e Directors are pleased to recommend a fi nal tax
exempt dividend of 0.5 cent per share for FY10 (FY09:
1.0 cent), in addition to an interim tax exempt dividend
of 0.5 cent per share paid earlier. Th erefore the total
tax exempt dividend for FY10 will amount to 1.0 cent
per share matching those paid in FY09. Th is is to express
our appreciation for the support of our shareholders.
Acknowledgement
I would like to thank my fellow Directors
for their support and wise counsel and the Management
and staff for their loyalty, dedication and contributions
to the Group.
I would also like to express the Group’s
appreciation to our customers, suppliers and business
associates for their continuing support.
Finally, I would like to thank our
shareholders for your commitment, support and loyalty
to the Group.
Tang See Chim
Non-executive Chairman
2010 |
