ALLIED TECHNOLOGIES LIMITED Stay Focus and Meet The Challenges

112 Pages·2011·2.14 MB·English

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ALLIED TECHNOLOGIES LIMITED
Annual Report 2010
Company Registration No. 199004310E
25 Bukit Batok Street 22
Singapore 659591
T: (65) 6560 2011
F: (65) 6560 2055
E: [email protected]
www.allied-tech.com.sg
corporate information
our vision. BOARD OF DIRECTORS AUDITORS
Executive Directors Ernst & Young LLP
Mr Hsu Ching Yuh Certified Public Accountants
WWee eennvviissiioonn oouurrsseellvveess ttoo bbee tthhee Mr Soh Weng Kheong One Raffles Quay
Level 18 North Tower
lleeaaddiinngg oorriiggiinnaall ddeessiiggnn mmaannuuffaaccttuurreerr Independent Directors
Singapore 048583
Mr Loo Choon Chiaw
Partner-in-charge: Mr Philip Ling
aanndd pprroovviiddeerr ooff ffuullllyy iinntteeggrraatteedd Mr Sitoh Yih Pin
(Since Financial Year 2009)
Prof Chua Tat Seng
mmaannuuffaaccttuurriinngg ssoolluuttiioonnss iinn
COMPANY SECRETARY
tthhee eelleeccttrroonniiccss aanndd pprreecciissiioonn AUDIT COMMITTEE
Mr Tan Chee How
Chairman
eennggiinneeeerriinngg iinndduussttrriieess..
Mr Loo Choon Chiaw
SHARE REGISTRAR
Members
Boardroom Corporate & Advisory Services Pte. Ltd.
Mr Sitoh Yih Pin
50 Raffles Place
Prof Chua Tat Seng
Singapore Land Tower #32-01
Singapore 048623
NOMINATING COMMITTEE
Chairman
PRINCIPAL BANKERS
our mission. Mr Loo Choon Chiaw
DBS Bank Ltd
Members United Overseas Bank Limited
Mr Sitoh Yih Pin
WWee eennvviissiioonn oouurrsseellvveess ttoo pprroovviiddee iinnnnoovvaattiivvee,, qquuaalliittyy
Prof Chua Tat Seng
LEGAL COUNSEL
aanndd eeffffiicciieenntt iinntteeggrraatteedd rraannggee ooff eelleeccttrroonniiccss
Loo & Partners LLP
REMUNERATION COMMITTEE
mmaannuuffaaccttuurriinngg sseerrvviicceess aanndd oorriiggiinnaall ddeessiiggnn 16 Gemmill Lane
Chairman Singapore 069254
mmaannuuffaaccttuurriinngg aatt tthhee mmoosstt ccoommppeettiittiivvee pprriicceess Mr Loo Choon Chiaw
Members
tthhrroouugghh lloonngg--tteerrmm ssttrraatteeggiicc gglloobbaall ppaarrttnneerrsshhiippss,,
Mr Sitoh Yih Pin
wwhhiillsstt aacchhiieevviinngg ttoottaall ccuussttoommeerr ssaattiissffaaccttiioonn.. Prof Chua Tat Seng
REGISTERED OFFICE
25 Bukit Batok Street 22
contents.
Singapore 659591
Telephone number: [phone]
Facsimile number: [phone]
01 Corporate Profi le 12 Key Management
03 Regional Presence 13 Corporate Governance Report
04 CEO Statement 23 Financial Contents
07 Operation Review 99 Statistics of Shareholdings
09 Financial Highlights 100 Statistics of Warrantholdings
11 Board of Directors 101 Notice of Annual General Meeting
Proxy Form
corporate profile
Listed on the Main Board of the Singapore Exchange in June 2003, Allied Technologies
Limited (“Allied Technologies”), together with its subsidiaries (the “Group”), is a
manufacturer of precision stamped metal parts. Allied Technologies commenced operations
in May 1994 and provides vertically integrated precision manufacturing services, including
design and product development, prototyping services, tool and die fabrication, mass
production, plastic injection moulding and mechanical sub-assembly services to a wide
base of customers.
To ride on the growing outsourcing trend in Asia by multinational corporations (“MNCs”),
Allied Technologies set up its first overseas plant in Shanghai, China in 1997. Since then,
the Group has established more production facilities at low-cost bases to be close to its
customers and to improve its cost competitiveness. Today, Allied Technologies has a total
of eight production facilities in Asia, specifically in Malaysia, China and Vietnam.
The Group’s major customers include Cal-comp Group, Flextronics Group and Venture
Group, who have been customers of Allied Technologies for over a decade, and MNCs such
as Hewlett-Packard Group, Jabil Group, Apple Group, Fujixerox and Konica Minolta. Major
product segments range from computer and computer peripherals, consumer electronics
equipment, office equipment, audio and visual equipment to automotive parts.
ANNUAL REPORT 2010 ALLIED TECHNOLOGIES LIMITED 1
Positioned
for Sustainable
Growth
regional presence
Suzhou 4 7 Tai Cang
3 Shanghai
Wujiang 5
Dongguan 6 9 Taoyuan
8 Ho Chi Minh City
2 Johor Bahru
1 Singapore
China
Taiwan Vietnam MMaallaayyssiiaa SSiinnggaappoorree
(Taoyuan) (Ho Chi Minh) ((TTaaii CCang) ((DDoonngggguuan) ((WWWuujjjiiiaang)) (((SSSuuzzhhhoou)) ((SShhhanghhaii)) ((JJohhor BBBahhru))
1 R&D
8 4 3 2 Prototyping
8 6 5 4 3 2 Metal Stamping
8 6 5 4 3 2 Sub-assembly
8 6 4 3 2 Tool & Die
8 4 Surface Painting
8 4 Plastic Injection
8 4 3 2 Box Assembly
7 Anordizing & Electrochemical
9 1 Marketing Office
ANNUAL REPORT 2010 ALLIED TECHNOLOGIES LIMITED 3
ceo statement
HHssuu CCChhhiiinnngg YYuuhh,,
CCEEOO && GGrroouupp MMaannnaaaggggiiiinnnnggg DDDiirrreeccttoorr
Dear Shareholders,
I am pleased to present to you Allied Technologies Limited’s LCD metal stamping related segments increased. As a
Annual Report for the financial year ended December 31, result, net profit surged almost four times to S$6.5 million in
2010 (“FY2010”). FY2010, partly supported by gains from disposal of assets,
including an idle factory building and machineries.
Significant Progress in the Wake of an Economic Recovery
During the year, our PE business made significant
FY2010 was a year of economic recovery as most progress, especially in the LCD related stamping and
companies in Asia Pacific experienced a turnaround in their computer peripheral segments. Our increased efforts in
performance buoyed by overall positive sentiments. Riding placing further emphasis on our other segments, such
on the back of the economic recovery, Allied Technologies as automotive, solar power, telecommunication-related
Limited (the “Company”, and together with its subsidiaries, products, have also yielded positive results as they began
the “Group”) benefited greatly from an enlarged order to account for a larger proportion of the revenue.
book and greater operating efficiency, despite the ongoing
In line with our continuing efforts to optimise our asset
foreign currency risks, particularly the continued weakness
utilisation, we disposed of an idle factory building in
in the US dollar and Vietnam Dong.
Vietnam, and downsized our operations in Malaysia and
Buoyed by the overall positive sentiments, the Group Singapore.
delivered strong results, reporting a revenue of S$144.0
Geographically, our China subsidiaries remained the
million, which was 35% higher than that of FY2009. This
major regional contributor, accounting for 82.8% of our
was mainly attributable to the Group’s improved precision
total revenue, up from 67% in FY2009. The improved
engineering (“PE”) business in China, as sales orders of
profitability was largely due to an increase in the order book
computer peripherals, data storage devices (“DSD”) and
4 ALLIED TECHNOLOGIES LIMITED ANNUAL REPORT 2010
of our Shanghai plant, which consisted of new projects with During the year, we carried out a rights issue of warrants
greater margins. As such, revenue from our Shanghai plant on the basis of one (1) warrant for every five (5) existing
surged 32% to S$58 million. In view of the continuously ordinary shares in the capital of the Company to raise funds
positive results, we are confident that our Shanghai plant for the Group. As at the date hereof, the Group has fully
will remain a significant contributor to the Group’s revenue, utilised the net proceeds from the rights issue of warrants
as we maintain our efforts in growing this market to secure for the Group’s working capital purposes.
more superior project opportunities.
Dividend
In addition, we are also pleased to report that our prudent
management of costs and efficiency drive have paid off In line with the Group’s improved financial performance,
well. Our Suzhou entities have successfully turned around, I am pleased to announce that the Board of Directors has
boosted by encouraging gains from their LCD, solar energy proposed a final dividend of 0.3 cent per ordinary share
and DSD segments. In view of China’s sheer market size and for the financial year ended 31 December 2010 as a way
available opportunities, it remains the primary production of rewarding our loyal shareholders for their unwavering
base for the Group, despite a stipulated 12% increase in support.
minimum staff wage during the year. We will continue to
We have also paid out an interim dividend of 0.2 cent per
work towards expanding our customer base as we grow our
ordinary share for the third quarter ended 30 September
alternate energy and consumer products segments.
2010 on 22 December 2010.
On the same note, our Vietnam entities also recorded a
revenue of S$5.2 million in FY2010, which represented a Future Outlook and Prospects
marginal increase from FY2009, due to sales orders from
Moving forward, we expect the business environment in
new customers. As such, the operating losses narrowed
FY2011 to be challenging as the adverse impact from
significantly by 46% in FY2010 against that of FY2009.
escalating production costs in China, foreign currency
During the year, we managed to achieve better cost
risks and volatility in raw material prices will likely affect
management and even booked a one-time net gain of
our bottom line.
S$1.3 million from disposing our idle local factory building.
However, this was partly offset by the continual devaluation
Despite this, we are cautiously optimistic that the economic
of the Vietnam Dong by the Vietnamese central bank,
recovery would be able to help us ride out these trials
giving rise to foreign exchange losses of about S$0.9
and tribulations, and even our journey towards better
million against losses of S$1.3 million in FY2009.
performance. We will continue to enhance shareholders’
value by maintaining good cost discipline and greater
In view of the existing operating difficulties in Vietnam, we
operating efficiencies. At the same time, we will monitor
will continue to monitor the external environment closely,
the business environment closely and look out for available
as we step up our efforts to achieve greater cost efficiency
opportunities to capitalise on and invest in.
in the process of consolidating our Vietnam subsidiaries.
We maintain our view that Vietnam is an up-and-coming
Acknowledgement
emerging market with room for growth and plenty of
opportunities available due to rising affluence of the local
On behalf of the Board of Directors, I would like to express
population, its attractive cost structure and increasing need
my appreciation towards the management and staff of the
for electronic products.
Group for their invaluable contribution to the Group thus
far. I would also like to extend my gratitude to our valued
In conjunction with the Group’s strategy to downsize our
customers, suppliers and business associates for their
operations in Singapore and Malaysia, we disposed of some
unwavering support towards the Group over the years.
excess machinery in Malaysia to remain lean and cost
effective. This is necessary as our Singapore and Malaysia In closing, I would like to thank our shareholders for their
entities experienced a dip in demand in our printer segments faith and confidence in us through our most difficult times.
due to projects transfer by some of our customers. We will continue to forge ahead in our corporate journey in
search of greater heights and to bring about greater value
Separately, we have shifted all our Thailand operations to a for your investment.
newly incorporated subsidiary in Dongguan, China in April
2010. Our Thailand subsidiary has effectively ceased all
operations in March 2010 as a result of projects transfer Hsu Ching Yuh,
by its customer to Southern China. CEO & Group Managing Director
ANNUAL REPORT 2010 ALLIED TECHNOLOGIES LIMITED 5
operation review
Driving
towards Growth
6 ALLIED TECHNOLOGIES LIMITED ANNUAL REPORT 2010
operation review
FFYY22001100 wwaass aa yyeeaarr ooff eeccoonnoommiicc rreeccoovveerryy aass most In tandem with higher sales, the Group increased our raw
companies in Asia Pacific experienced a turnaround in materials and consumables use by 38% from S$61.9 million
their performance buoyed by overall positive sentiments. in FY2009 to S$81.0 million in FY2010. On the same note,
Our continuous efforts in restructuring and streamlining our staff costs also surged by 43% as we strengthened our staff
operations paid off, as the Group was well-poised to reap strength to cope with the strong sales orders during the
the benefits of a firm rebound. year. The hike in our staff costs was further compounded
by a 12% increase in the minimum wage for our employees
In line with improved economic conditions, the Group in Shanghai, Suzhou and Vietnam.
recorded a 35% increase in sales revenue from S$106.9
million in FY2009 to S$144.0 million in FY2010. Net Concurrently, our increase in business activity caused our
profit stood at S$6.5 million, which was about six times other operating expenses to rise by 32% to S$26.7 million
the net profit reported in FY2009, despite ensuing foreign in FY2010 as compared to S$20.2 million in FY2009.
currency losses caused by a weakening of the US dollar This was inclusive of a S$2.8 million foreign exchange
and Vietnam Dong. loss incurred during the year mainly owing to unrealised
revaluation losses for inter-companies’ balances.
A large portion of our profits was attributable to our
operations in the People’s Republic of China (“China”), In FY2010, the Group successfully cut our bank borrowings
which turned in higher profit contributions due to further by S$8.1 million, lowering our finance costs
new projects with better profit margins and improved significantly by 50% to S$0.5 million.
performances of the local LCD, Solar Energy and DSD
segments. The high profits were partially offset by the net
loss incurred by our Vietnam, Singapore and Malaysia
subsidiaries due to foreign currency losses.
ANNUAL REPORT 2010 ALLIED TECHNOLOGIES LIMITED 7
operation review
Segmental Contribution operations for greater cost efficiency. Our plant at Dongguan
commenced operation in late 2010. We also acquired Tai
The Group remained focus on our core precision engineering
Cang Shanfeng Hardware Co., Ltd (“Tai Cang Shanfeng”) as
business by channeling substantial resources and efforts to
part of our expansion plan in China. Tai Cang Shanfeng is a
expand our order book in this area. Lifted by the buoyant
licenced anodising plant, which will lend valuable synergy to
economy in FY2010, the Group reported significant
our business while enhancing our competitive edge.
improvement in our overall revenue. In particular, our
computer peripheral segment continues to produce positive
earnings as a result of our strategic emphasis shift towards Vietnam
higher profit margin sectors. This is evident in the revenue
Sales at our Vietnam entities were marginally higher due
contribution of this segment, which comprised 26% of our
to orders from new customers, with revenue increasing by
sales in FY2010, against 23% in FY2009.
2% to S$5.4 million. Taking into account an additional one-
Our LCD related stamping segment also saw its contribution time net gain of S$1.3 million arising from the disposal of
towards our sales increase from 2% in FY2009 to 13% our idle factory building, our local operations reported a net
in FY2010 as our investments in the research and profit, a turnaround from the net loss position in FY2009,
development of cosmetic metal stamping parts paid off. which was offset by foreign exchange losses of about S$0.9
million caused by the depreciation of the Vietnam Dong
In view of our encouraging results in FY2010, we will against Singapore and US dollars.
dedicate more effort and resources in building the more
lucrative segments, while enhancing our profit margins for In view of the situation, we will continue to monitor our
other segments to increase our profitability further. costs closely, while we tap on the potential business
opportunities available in the local market.
Geographical Contribution
Singapore and Malaysia
People’s Republic of China (“China”)
Our Singapore and Malaysia entities continued to operate
Our China operations accounted for 82.8% of our earnings profitably with a total revenue of S$19.4 million. However,
in FY2010, compared to 67% in FY2009. Our Shanghai due to unrealised foreign currency losses of S$2.8 million
plant remained our most profitable entity with net profit largely caused by a revaluation of inter-companies’
rising by 89%, in line with a surge in revenue to S$58 balances, our operations in Singapore and Malaysia fell
million in FY2010 from S$44 million in the same period last into a net loss position. To remain cost effective, we have
financial year. This was mainly attributable to the recording downsized our operation and reduced our operating costs
of new projects which yielded higher margins. to match lower orders.
Our Suzhou plant also reported higher sales revenue
of S$60 million, a 114% increase from S$28 million in Thailand
FY2009, which was consistent with the overall improved
As part of our ongoing restructuring efforts, we have ceased
China business performance. As a result, we registered a
operations of our Thailand subsidiary in March 2010 and
net profit in FY2010, unlike the net loss we experienced in
reallocated all our local business to our new subsidiary in
FY2009, supported by earnings from the LCD, solar energy
Dongguan, China, as a result of the loss of business projects
and DSD segments.
from our existing customers. This will allow us to cut cost
During the year, the Group incorporated a new subsidiary and better streamline our business to remain competitive.
in Dongguan, China in a bid to consolidate our business
8 ALLIED TECHNOLOGIES LIMITED ANNUAL REPORT 2010