Powering growth - Aztech Group Ltd - Investor Relations

a z t e c h a n n u a l r e p o r t 2 0 0 9L e t t e r t o s h a r e h o l d e r sLetter To ShareholdersDear Shareholders,I am pleased to share that we have performed well again. Despite the evidentuncertainty in the global economy, the Group had done well and remained profitable inall our business sectors for the seventh consecutive year. We achieved a turnover ofS$280.27 million in FY2009 with net profit of S$15.42 million.These positive results reaffirmed the soundness of the diversification strategy that weembarked on last year. It also demonstrated our resilience against adversity.Today our strengths lie in our multi-disciplined businesses involving electronics,materials supply and marine logistics. The diversification strategy allows the Groupto generate revenue stream across various business sectors that can cushion anyrevenue instability in the challenging business climate. It also enables us to enhanceshareholders’ value.The Year in ReviewAgainst the backdrop of a challenging and highly competitive globaleconomy, many businesses were badly hit. However, instead of sharing asimilar plight, we managed to report a stronger FY2009 with growth on allfronts – total revenue, net profit and earnings per share.While the revenue increased marginally from S$276.45 million in FY2008 toS$280.27 million in FY2009, reflecting an increase of 1.4%, our net profitsaw a significant year-on-year improvement of 26.0%, from S$12.23 millionin FY2008 to S$15.42 million in FY2009. Correspondingly, our earnings pershare also increased 24.6% from 3.01 cents in FY2008 to 3.75 cents inFY2009.The Group’s performance for the year is a reflection of the effectiveness ofthe financials and various cost management measures that we implementedin the year. The cost optimisation efforts carried out by the Group andpolicies implemented to yield better operational efficiency improved theGroup’s selling and distribution costs, administration expenses and financialcost.Like FY2008, we maintained a healthy balance sheet with a positive netasset position of S$112.33 million in FY2009, thanks to the prudentfinancial discipline that we exercised. Our financial ratios remained healthycontrary to the belief that diversification would pose financial stress on theGroup. Our working capital management also improved.Cash flow position of the Group stayed healthy too. In FY2009, wegenerated net operating cash inflow of S$37.27 million. This representedan increase of 101.0% over S$18.55 million in FY2008. Our focus onquality customers and receivables, as well as the improvement in inventorymanagement, shortened the cash conversion cycles, bolstering the cashflow position of the Group.Overall, FY2009 was a fruitful year. After one full financial year of operation,we saw significant results from Az United Pte Ltd and Az Marine Pte Ltd.These achievements not only enhanced our shareholders’ value. On amore strategic level, the success of the materials supply and marinelogistics sectors effectively moved the Group a step closer to our vision oftransforming into a multi-disciplined corporation. We have also becomemore resilient and less dependent on the volatile electronics sector.Aztech Group BusinessesIn FY2009, we continued the momentum in FY2008 and proactively soughtout opportunities in the materials supply and marine logistics businesses.Concurrently, we proactively expanded our product line in the electronicssector through the exploration of product diversification. These multiprongedmeasures strengthened our core competencies and, at the sametime, enhanced our resilience against the macro environment.Electronics (Aztech)Still our largest revenue contributor, the electronics sector recorded arevenue of S$180.10 million and remained profitable. However, affected bythe adverse global economy, this represented a decrease of 28.8% over therevenue in FY2008.Operationally, Aztech expanded horizontally into the design and manufactureof energy-saving, long-lasting and eco-friendly LED lighting productsto leverage on the growing market opportunity. Under this initiative, welaunched a line of Aztech LED luminaries products under our new subsidiary,AZ E-lite Pte Ltd. We will leverage on the strength and experience of ourR&D team to design superior and innovative products.In the broadband and home networking product category, we continued toinnovate with new product developments. We designed the World’s FirstEco-friendly 200Mbps HomePlug AV Ethernet Adaptor (Aztech HL110E) andthe World’s Smallest 85Mbps HomePlug Turbo Ethernet Adaptor. For the