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Extracted from Annual Report 2015

Recap of Financial Year ended 31 December 2015

The Group's main customer segment, i.e. the Electronics & Precision Engineering segment, saw decrease in business turnover in the financial year ended 31 December 2015, following continued weak worldwide demand for personal computer and hard disk drive products, as well as more intensified price competition from overseas extrusion manufacturers.

For FY2015, the Group registered total business turnover of $19.2 million (from continuing operations), a decrease of 20.2% compared to $24.1 million reported in the previous year. For the same financial year, the Group also achieved lower gross profit of $0.1 million, compared with $2.2 million achieved in the previous year. The decrease was mainly caused by the Group writing down its inventories by $2.0 million (FY2014: $0.1 million) to net realizable value as a result of decline in aluminium price and its premium during the period.

As a whole, at the pre-tax level, the Group's continuing operations reported a profit of $0.8 million, compared with a loss of $5.3 million over the same period in FY2014. After taking into account income tax and non-controlling interests and other comprehensive income, net income attributable to shareholders in FY2015 was $0.9 million.

Major factors contributing to the bottom line of the Group this year were:

  1. Other operating income increased by 28.8% to $5.1 million, compared to $4.0 million in FY2014. The increase was mainly due to the write-back of accrual for China operation which was no longer needed following the disposal of a China subsidiary. Other operating income also include proceeds from sale of production scrap and foreign exchange gain.

  2. There was no other operating expenses recorded in FY2015. Other operating expenses of $5.2 million were recognized in FY2014 due to impairment of investment in associate as well as accrual of expenses for the Group's China operation.

  3. Share of loss of associated company for FY2015 was $0.2 million, compared with share of loss of $1.3 million in FY2014. The higher share of loss in FY2014 was mainly due to the provision for impairment made by the associate due to the fact that its production and trading had not resumed as a result of high raw material prices, controlled selling prices and stricter hygiene regulations.

Electronics & Precision Engineering

This segment comprises mainly of component manufacturers for the Electronics, Personal Computers, Hard Disk Drive and Consumer Products industries.

Revenue from this segment decreased by 19.8% to $17.8 million for the year ended 31 December 2015, compared with $22.2 million for the previous year. This main customer segment continued to face slowdown in global personal computer demand and lower customer order level during the financial year. For the most of first half of the financial year, the Group was not able to participate in certain end customer programs which required more stringent material specifications. The Group was subsequently qualified to supply certain of these customer programs in the second half of the financial year after meeting the specifications. Segment result decreased as a result of lower sales contribution.

Construction & Infrastructure

This segment comprises mainly of fabricators, contractors and stockists who serve the construction, civil engineering and infrastructure building industries.

Revenue from this customer segment decreased by 24.8% to $1.4 million during the year, compared with $1.9 million for the previous year.

Segment result decreased as a result of lower sales and lower contribution margin amid ongoing price competition faced in this customer segment.

Others Segment

Revenue from this segment relates to service fee income from associated company. Segment profit for FY2015 relates to write back on accrual of expenses for a China operation. Segment loss in FY2014 relates to impairment on associate.

Discontinued Operation

This segment previously consisted of the Group's China subsidiary which was in the business of producing forged metal components.

The Group had on 16 December announced that its subsidiary had entered into a sale and purchase agreement to dispose an indirect subsidiary. The agreement for the proposed disposal, as subsequently announced by the Group on 15 February 2016, had been completed on 2 February 2016.

Aluminium Price

LME Aluminium price started the year at the level of US$1,821.50, and went on to reach the highest price point for the year at $1,919.00 on 1 May, before going on a downtrend to close the year at US$1,507.50 on 31 December 2015.

Premiums charged by our suppliers for conversion of aluminium to billet also dropped in the second half of FY2015 in line with weaker market condition and lower energy prices.

Ongoing aluminium price will depend on industry demand and supply situations, ongoing global economic conditions as well as energy prices. Fluctuations in aluminium price and billet premiums will continue to have significant impact on the Group's operating margin and financial results.