Armstrong Industrial Corporation Limited AR2012

92 Pages·2013·4.57 MB·English

VERSATILE
ADAPTABLE
RESILIENT
ANNUAL REPORT 2012
FINANCIAL HIGHLIGHTS
Sales increased Gross profit Dividend of
marginally by
margin reduced from 0.6 cents
0.9% to
S$216.2 million 21.5% to 19.7% per share
Revenue Statement (S$’000) 2007 2008 2009 2010 2011 2012
Turnover 182,994 182,415 173,683 225,449 214,251 216,238
Gross Profit Margin – % 27.96% 26.99% 25.42% 27.51% 21.46% 19.67%
Earnings Before Interest, Tax, Depreciation and
Amortisation (EBITDA) 28,229 23,234 24,492 39,041 18,975 20,332
Profit Before Taxation & Non-Controlling Interests 24,135 18,366 18,811 33,250 13,086 14,565
Taxation (3,647) (3,511) (4,094) (6,755) (4,569) (2,038)
Net Profit Attributable to Equity Holders of Company 17,556 13,131 14,059 24,903 7,132 11,483
Net Profit Margin – % 9.59% 7.20% 8.09% 11.05% 3.33% 5.31%
Financial Position (S$’000) 2007 2008 2009 2010 2011 2012
Total Shareholders Equity 86,502 92,598 99,629 108,410 105,759 108,619
Total Liabilities 42,885 45,361 49,853 56,184 65,439 60,716
Total Assets 129,387 137,959 149,482 164,594 171,198 169,335
Net Tangible Assets 85,755 91,893 98,724 107,548 104,735 107,074
Fixed Assets 33,424 41,615 40,057 40,155 39,795 48,247
Net Current Assets 51,955 51,668 60,906 69,123 67,891 65,970
Cash and Bank Balances 26,555 26,506 30,285 26,247 33,394 31,624
Debt to Equity Ratio – Gearing (Times) 0.07 0.08 0.12 0.14 0.22 0.20
Financial Indicators 2007 2008 2009 2010 2011 2012
Return on Net Shareholders Equity 23.8% 16.0% 15.8% 25.6% 7.3% 11.5%
Return on Net Assets 23.7% 16.0% 14.8% 24.4% 8.1% 11.5%
Net Tangible Assets per Share (Cents) 15.65 16.80 18.57 19.91 19.57 19.98
Earnings per Share (Cents) 3.49 2.62 2.81 4.97 1.43 2.33
Gross Dividend per Share (Cents) 1.60 1.00 1.60 4.00 0.60 0.60
Dividend Payout 8,001 5,001 8,004 20,069 2,965 2,962
CONTENTS ABOUT OUR COVER
Chairman’s Statement 02 Armstrong has proven to be
Board of Directors 04 a trusted and innovative brand
for the past 38 years. Creating
Operating and Financial Review 06
versatile, adaptable and resilient
Corporate Information 09 value in the Automotive and
Corporate Governance 10 Electronics industries for all
our stakeholders.
Financial Reports 16
Armstrong Industrial Corporation Limited is a leading foam and rubber components
manufacturer specialising in noise, vibration and heat management for the
automotive and electronics industries.
VISION MISSION 5C’S CULTURE
To be a global enterprise We will exceed customers’ • Commitment
providing world-class expectations by : • Competence
products and services. • Contribution
• Institutionalizing Quality
• Cohesiveness
• Managing Innovation
• Communication
• Advocating Teamwork
• Grooming People
• Engineering For Growth
Turnover Net Profit Attributable to
(S$’000) Equity Holders of Company
(S$’000)
2012 216,238 2012 11,483
2011 214,251 2011 7,132
2010 225,449 2010 24,903
2009 173,683 2009 14,059
2008 182,415 2008 13,131
2007 182,994 2007 17,556
Earnings Before Interest, Tax, Gross Dividend Per Share
Depreciation and Amortisation (EBITDA) (Cents)
(S$’000)
2012 20,332 2012 0.60
2011 18,975 2011 0.60
2010 39,041 2010 4.00
2009 24,492 2009 1.60
2008 23,234 2008 1.00
2007 28,229 2007 1.60
Armstrong Industrial Corporation Limited 01
Annual Report 2012
CHAIRMAN’S STATEMENT
Versatile
Adaptable
Resilient
We recognize the
critical need to remain
versatile, adaptable
and resilient to survive
the tough times
and to optimize our
opportunities during
the good times.
Dear Stakeholders
On behalf of the Board of Directors,
I would like to thank you for your
continued belief in Armstrong
through 2012.
After an extremely tough year with
severe natural disasters in 2011,
our key priority was to manage costs
and more critically, to enhance our
ability to add more strategic value
to our customers. We needed to
strengthen our market position while
maintaining a basic growth and
protecting our bottom line for 2012.
02 Armstrong Industrial Corporation Limited
Annual Report 2012
Consequently, we achieved sales of S$216.2 million INVESTING IN SUSTAINABLE
and profit of S$10.5 million after adjustments for
LONG TERM GROWTH
exceptional items, which are both slightly better than
the results in 2011. Our 3 key focus areas were :
It is very important we continue to invest our
resources and time to connect with our customers so
1. Firstly, we started to engage actively with we can work towards common goals to serve them
several new global customers to drive long- better for the long term. In addition, we are making
term business across our Singapore, Malaysia investments plans in the near future to upgrade to a
and China operations. new Enterprise Resource Planning system to enable
us to standardize our data for more intelligent
decision making processes and better control.
2. Secondly we embarked on Quality initiatives to
enhance our on-going ability to achieve better
control in managing our processes. We will continue to focus on strengthening our core
competencies and consolidating regionally to get
prepared for the long journey ahead.
3. Thirdly, we expedited our regional activities in
driving productivity through a combination of
lean manufacturing tools with technical and
process reviews. These efforts are expected APPRECIATION AND DIVIDEND
to bring positive changes to our entire
manufacturing competence and enable us to
In closing, I would like to extend my heartfelt
gain competitive advantage for greater value-
appreciation to our directors, management and
add to our customers.
staff for their passion and commitment towards the
Group. We are pleased to propose a dividend of
0.6 Singapore cents per share.
REMAINING VERSATILE,
ADAPTABLE AND RESILIENT
In the past 38 years of operations, we have
continued to transform ourselves to stay relevant
to the market and our customers. We are operating
GILBERT ONG
in a global world which is so dynamic and many of
our competitors are hungry to succeed and grab our Chairman and Chief Executive Officer
market share. It is important that as a company we Armstrong Industrial Corporation Limited
continue to get our people ready to be constantly
on their toes; to be versatile in both our skillset and
mindset; adaptable and creative in our approach to
win; resilient and patient to ride through difficult
times as a team.
Armstrong Industrial Corporation Limited 03
Annual Report 2012
BOARD OF DIRECTORS
From Left to right:
Chow Goon Chau Patricia,
Koh Gim Hoe Steven,
Ong Peng Koon Gilbert,
Chan Pee Teck Peter,
Anthony Ang Meng Huat and
Tan Peng Chin
ONG PENG KOON CHOW GOON CHAU KOH GIM HOE
GILBERT PATRICIA STEVEN
Chairman and Executive Director Deputy Chief
Chief Executive Officer Executive Officer
Mr Gilbert Ong is the founder of Ms Patricia Chow is an Executive Mr Steven Koh joined the Company
the Company. With more than Director of the Group since 1988. in 1998 and was appointed to the
40 years of industry experience, She is the wife of Mr Ong, the board in 2000. Mr Koh has held
Mr Ong has played a pivotal Chairman and Chief Executive several management positions
role in engineering Armstrong’s Officer. Ms Chow is the Director in major banks. He was the
transformation into a leading – Human Resource & Admin of Chairman of the Singapore Club
precision engineering component the Company and is also actively in South Korea. Mr Koh has been
supplier with regional presence. involved in the management and instrumental in providing critical
Mr Ong still leads in the mapping operations of the Company. directions in key functions including
out and execution of the corporate strategy, finance and
Company’s growth blueprint and Ms Chow holds a Diploma in operations, in particular, in guiding
is actively involved in seeking out Business Administration. the Company in its current phase
and establishing new markets of regional expansion and attaining
and businesses. He is a member sustainable profitability.
of the Company’s Nominating
Committee and holds various He holds various Diplomas in
directorship in the Group’s Banking, Accountancy and
subsidiaries. Management from renowned
overseas and local institutions.
Mr Koh holds various directorship
in the Group’s subsidiaries.
He has been appointed by the
Commissioner of Inland Revenue
as a member of Taxpayer Feedback
Panel – Mandarin Dialogue for a
2-year term, from 1 September
2012 to 31 August 2014.
04 Armstrong Industrial Corporation Limited
Annual Report 2012
CHAN PEE TECK ANTHONY ANG TAN PENG CHIN
PETER MENG HUAT
Non-Executive and Non-Executive and Non-Executive and
Independent Director Independent Director Independent Director
Mr Peter Chan was appointed as Mr Anthony Ang Meng Huat is Mr Tan Peng Chin was appointed as
a Non-Executive and Independent an Independent Non-Executive a Non-Executive and Independent
Director of the Company on 19 Director of the Company. He was Director of the Company on
November 1993. He has served previously an Executive Director 6 November 1995. He is a member
and Group General Manager of the
as the Chairman of the Audit of the Audit Committee since
Group. He joined the Company in
Committee since 2 July 1998 and 6 November 1995.
1993 and was responsible for the
as member of the Nominating and
Group’s business development and
Remuneration Committee since Mr Tan has also been appointed
marketing activities. He resigned
16 September 2002. Mr Chan as Chairman of the Nominating
from his executive position on
specialises in managing private Committee and the Remuneration
31 March 2000 and had remained
equity investment funds and is as a Non-Executive director. Committee on 16 September
presently the Managing Partner of 2002. Mr Tan is an Advocate &
Crest Capital Asia Pte Ltd, which Mr Ang is a member of the Solicitor specialising in corporate,
is responsible for managing a Audit Committee since 26 March commercial and banking laws. He
number of private equity funds 1997. He is also a member of the is presently the Managing Director
covering Asia. Currently, Mr Chan Remuneration Committee from 16 of Tan Peng Chin LLC. Mr Tan
September 2002. He is presently
also serves on the Board of other holds a Degree in Law from the
CEO, ARA Managers (Asia Dragon)
Singapore-listed company. National University of Singapore.
Pte Ltd of the ARA Group, and
He is also a notary public and
manages a US$1.13 billion real
Mr Chan holds a Bachelor of a Commissioner for oaths.
estate private equity fund; the ARA
Accountancy (Honours) Degree
Group is a leading real estate fund
from National University of
management house which is listed
Singapore and is Fellow member
on the SGX and is an affiliate of the
of both the Institutes of Certified Cheung Kong Group of Hong Kong.
Public Accountants in Singapore
and Australia. Mr Ang holds a Master of Business
Administration degree from INSEAD,
France and a first class honours
degree in Mechanical Engineering
from the Imperial College of
London University, United Kingdom.
Mr Ang is a Fellow member of the
Chartered Management Institute,
United Kingdom.
Armstrong Industrial Corporation Limited 05
Annual Report 2012
OPERATING AND FINANCIAL REVIEW
The year started with optimism as we embarked on the road to recovery from the devastating impact from
the Thailand flood. However, this enthusiasm was short-lived against a backdrop of global economic uncertainty.
In spite of these events, the Group managed to report revenue of S$216.2 million, a marginal increase of 0.9%
growth in FY2012. Throughout these trying times, the Group aims to be Versatile, Adaptable & Resilient to stay
sustainable against this volatile market conditions.
VERSATILE : Capable of doing many things competently
ADAPTABILITY : Able to change to fit constantly changing circumstances
RESILIENT : Able to withstand or recover quickly from difficult conditions
GROWTH, PRODUCTIVITY, This process cannot happen in one day and will take
significant efforts. The core essence of our strategy map
COMPLIANCE & CONTROL
lies in the “value-add”. Value-add to the environment,
As the Group continues to expand Sales Growth our economic well-being and our people are the key
via GAP, which represents Geographical Expansion, tenets of corporate social responsibility.
Accounts Expansion and Product/Process Expansion,
one key success factor that enables the Group to cruise
MARKET PERFORMANCE
through troubled waters was the Group’s ability to
bring in new process technologies and expand our The Group’s operations in China remained the top
product offerings, particularly in the Automotive sector. revenue contributor, accounting for 30.4% of total
revenue with S$65.7 million. Revenue from China
Every resource, be it people, machine, space and declined by 4.4%, mainly due to an overall slowdown in
process, needs to be thoroughly scrutinized for various business segments, except for the Automotive
ways to improve overall productivity. As the Group business, which grew by 8.6%.
progressively differentiates from others in terms of
improved quality in all aspects, we must develop a As part of the Group’s expansion strategy, a new
unique identity to enhance our brand image. manufacturing automotive plant in Changshu, China
was set up. Established under the Armstrong Odenwald
Group, the setup of Changshu plant, Armstrong’s 8th
operation in China, is strategically located in the eastern
part of the country; this is in addition to the other plants
System
in the Northern, Central and Southern regions of China.
系統
Besides servicing key customers around the Shanghai
Suppliers Products
area, the same facility houses a technical center to
供應商 產品
drive collaboration with key customers in design and
TOTAL QUALITY
development to localise parts and materials.
MANAGEMENT
全面質量管理
Customers Services
客戶 服務
Machines & People
Equipment 員工
機器設備
06 Armstrong Industrial Corporation Limited
Annual Report 2012
Automotive China
Consumer Electronics Thailand
Data Storage Singapore
Office Automation 29.9% Indonesia 26.3%
Others Malaysia 30.4%
39.2% Vietnam
1.9%
25.2%
19.9%
1.0% 6.7%
9.5%
10.0%
Turnover by Industry Sector Turnover by Market Sector
Thailand surpassed Singapore as the second largest Automotive revenue in Thailand increased by 21.9%
revenue contributor, making up 26.3% of total sales to S$21.9 million, in line with the recovery from the
with S$56.9 million, followed by Singapore with 25.2% Thailand flood.
contribution of S$54.6 million. Thailand gained strong
sales momentum following the recovery from the The Data Storage segment declined 10.0% to S$43.1
Thailand flood, while Singapore experienced weaker million due to weaker Hard Disk Drive demand,
demand from various business segments especially mirroring the weakness in the global PC market and
from the Data Storage segment. inventory rebalancing. In the first half of 2012, the
Hard Disk Drive supply chain made steady progress
The Group has acquired a new land area of 137,000 back to recovery after the Thailand flood. However,
square feet in Southern Thailand to consolidate its this growth momentum was short-lived due to
operations, as a preventive measure in view of the weak macro-economics, year-end OEM inventory
Thailand floods. The plant is expected to be operational adjustments, and shifting consumer spending patterns
by second half of 2013. toward computer tablets.
Sales from Indonesia grew by 12.2% to S$20.5 million, Revenue from the Consumer Electronics segment
supported by the Automotive and Consumer Electronics declined by 2.4% to S$64.8 million due to slowing
segments, while Malaysia and Vietnam registered sales from China due to Korean and Chinese
consistent 5.0% growth to S$14.6 million and 20.1% competitors narrowing the gap. Similarly, revenue from
growth to S$4.1 million, respectively, in FY2012. the Office Automation segment also declined by 3.4%
to S$21.6 million due to weaker demand registered in
2012. Nevertheless, the Group manage to secure new
INDUSTRY SECTOR PERFORMANCE
projects from existing customers and new reputable
customers in the Consumer Electronics segment.
Automotive’s strong revenue continued to be driven by
focus on fewer, bigger and better customers. Revenue
from the Automotive segment increased by 12.4%
to S$84.7 million, driven by the Group’s Automotive
business in China and Thailand.
China’s European car makers experienced greater
demand at the expense of Japanese car makers as a
result of the on-going Sino-Japan tension. The Group’s
China Automotive sales increased by 8.6%, boosted by
increased demand from European car makers, which
are its major customers.
Armstrong Industrial Corporation Limited 07
Annual Report 2012
OPERATING AND FINANCIAL REVIEW
The Group’s net operating cash flow
remained healthy at S$19.5 million
in FY2012 and the Group’s net cash
position remained robust at S$11.8
million as at 31 December 2012
compared to S$12.5 million as at
31 December 2011.
LOOKING AHEAD Gross margin decreased from 21.5% in FY2011 to
19.7% in FY2012 mainly due to higher labour and
The Group will continue to focus on improvements in
material cost. The Group experienced higher labour cost
productivity and enhance operational processes through
as the minimum wages and levies were increased, for
advancement in technology and lean manufacturing.
example in Thailand, China and Singapore.
In addition, in view of the rising rental costs and
Other operating income reduced from S$7.6 million
escalating foreign levies in Singapore, Armstrong
to S$6.1 million mainly due to lower insurance claim
is planning to move a majority of its operations in
by S$2.1 million and lower net foreign exchange gain
Singapore to Malaysia within the next 3 years.
by S$1.8 million, partially offset by net gain on mark-
to-market adjustment of S$1.9 million arising from the
The Automotive business will be the pillar, driving profit
Group’s forward foreign exchange contracts in FY2012.
growth. The China Automotive segment is expected to
Following the Thailand flood in 2011, the Group
grow, albeit at a slower pace with the on-going disputes
recognized insurance claims of S$2.6 million in FY2012,
between China and Japan extending into 2013.
in addition to the S$4.7 million recognized in FY2011.
The Hard Disk Drive industry will face myriad
However, other operating expenses decreased from
challenges in 2013 as shipments for desktop PCs will
S$10.7 million in FY2011 to S$0.8 million in FY2012
slip this year, while notebook sales are under pressure
mainly due to lower impairment losses due to the
as consumers continue to favor smart phones and
Thailand flood by S$6.2 million and the absence of
tablets. The declining price of Solid-State Drives also
net loss on mark-to market adjustment on the Group’s
will reduce the market share of conventional Hard Disk
forward foreign exchange contracts of S$4.3 million
Drives. In line with the industry forecast, Armstrong
recognized in FY2011.
expects its Data Storage business to be challenging in
the next two years.
Consequently, net profit attributable to shareholders
increased by 61.0% from S$7.1 million in FY2011 to
S$11.5 million in FY2012 and the Group’s return on equity
FINANCIAL REVIEW
increased from 7.3% in FY2011 to 11.5% in FY2012.
Revenue increased marginally by 0.9% from S$214.3
million in FY2011 to S$216.2 million in FY2012. This is Net working capital for the Group decreased by 2.8%
mainly due to recovery from the effects of the Thailand from S$67.9 million as at 31 December 2011 to S$66.0
flood which occurred in the last quarter of FY2011 million as at 31 December 2012. Liquidity ratio remained
and the resultant disruption in regional supply chain. healthy and comparable at 2.2. Gross gearing ratio also
The impact of the recovery was partially offset by the remained comparable at 0.2.
slowdown in Data Storage segment in the second half
of FY2012. The Group’s net operating cash flow remained healthy
at S$19.5 million in FY2012 and the Group’s net
Gross profit decreased by 7.5% from S$46.0 million in cash position remained robust at S$11.8 million as at
FY2011 to S$42.5 million in FY2012. 31 December 2012 compared to S$12.5 million as at
31 December 2011.
08 Armstrong Industrial Corporation Limited
Annual Report 2012