the h le solution provider

35
The H le Solution Provider M U L T I - C H E M L I M I T E D A N N U A L R E P O R T 2 0 0 1

Upload: others

Post on 09-Jun-2022

4 views

Category:

Documents


0 download

TRANSCRIPT

Page 1: The H le Solution Provider

The H le Solution Provider

M U L T I - C H E M L I M I T E D A N N U A L R E P O R T 2 0 0 1

Page 2: The H le Solution Provider

We can drill a hole 20 times smaller than this at the precise location

and with the required hole-wall quality. In our business, precision is the key.

Page 3: The H le Solution Provider

[ C O N T E N T S ]

Corporate Profile 2 Corporate Data 3 Board of Directors 4 Management Team 6

Chairman’s Statement 8 Operations Review 13 Prospects & Future Plans 17 Calendar of Significant Events 18

Group Structure 19 Financial Highlights 20 Financial Review 23 Value Added Statement 24

Information on Employees 25 Investor Relations 26 Corporate Governance Report 27 Corporate Directory 32

Page 4: The H le Solution Provider

[ C O R P O R A T E P R O F I L E ]

Since we were established in 1985 as a small distributor

of Printed Circuit Board (”PCB”) chemicals and materials,

Multi-Chem has seen tremendous growth. We are a major

distributor of specialty chemicals and other PCB-related

products and equipment. More importantly, we have

diversified into the provision of precision drilling services

to leading PCB manufacturers in the region and we are

the current market leader in terms of production capacity.

These accomplishments are testimony to the Group's

core strengths: namely our strategic planning ability,

skilful and dedicated production team, and application

of advanced technologies to the fullest.

Thes

e sa

me

fact

ors

have

em

pow

ered

us

to m

eet

cust

omer

s' s

trin

gent

req

uire

men

ts a

nd h

ave

prop

elle

d us

to

achi

eve

ISO 9

001

cert

ific

atio

n in

May

200

1.W

e ar

e co

nfid

ent

that

the

y w

ill

stee

r us

to

even

gre

ater

hei

ghts

of

succ

ess.

2

Page 5: The H le Solution Provider

[ C O R P O R A T E D A T A ]

3

BOARD OF DIRECTORS

Foo Suan Sai (Chairman & Chief Executive Officer)

Han Juat Hoon

Toshiaki Suzuki

Chew Thiam Keng

Wong Meng Yeng

COMPANY SECRETARIES

Ho Boon Chuan Wilson

Low Mei Mei Maureen

AUDIT COMMITTEE

Wong Meng Yeng (Chairman)

Foo Suan Sai

Chew Thiam Keng

REGISTERED OFFICE

11 Tuas Avenue 5

Singapore 639337

Tel: (65) 6863 1318

Fax: (65) 6863 1618

SHARE REGISTRAR

M & C Services Private Limited

138 Robinson Rd, #17-00

The Corporate Office

Singapore 068906

AUDITORS

Chio Lim & Associates

95 South Bridge Rd #07-28

Pidemco Centre

Singapore 058717

INTERNAL AUDITORS

C.C. Yang & Co.

10 Anson Road #13-16

International Plaza

Singapore 079903

PRINCIPAL BANKERS

The Development Bank of Singapore Ltd

6 Shenton Way

DBS Building Tower One

Singapore 068809

Overseas Union Bank Ltd

1 Raffles Place

OUB Centre

Singapore 048616

KBC Bank N.V.

Singapore Branch

30 Cecil Street #12-00

Prudential Tower

Singapore 049712

Page 6: The H le Solution Provider

[ B O A R D O F D I R E C T O R S ]

From left to right:

Mr Chew Thiam Keng (Independent Director) Mdm Han Juat Hoon (Chief Operating Officer)Mr Foo Suan Sai (Chairman & Chief Executive Officer) Mr Toshiaki Suzuki (Executive Director)

Mr Wong Meng Yeng (Independent Director)

4

Page 7: The H le Solution Provider

BIODATA OF DIRECTORS

Foo Suan Sai, Chairman and Chief Executive OfficerMember of Audit Committee

Mr Foo, one of the founding shareholders of Multi-Chem, has more than 20 years of experience

in the PCB industry, of which the last 13 years were spent building up the Company. Mr Foo

is responsible for the overall direction and development of the Group. He holds a Diploma in

Chemical Process Engineering from the Singapore Polytechnic and a Diploma in Management

Studies from the Singapore Institute of Management.

Han Juat Hoon, Chief Operating Officer

Mdm Han is a founding shareholder of Multi-Chem. She has been a Director of the Company

since 1987 and commenced working in an executive capacity with the Company in 1992.

Mdm Han is well versed in factory operations, having held the appointment of factory manager

with a chemical company for 12 years from 1980 to 1992. Mdm Han is responsible for the

overall operations of the Group. She holds a Diploma in Chemical Process Engineering from

the Singapore Polytechnic and a Diploma in Management Studies from the Singapore Institute

of Management.

Toshiaki Suzuki, Executive DirectorMember of Remuneration Committee

Mr Suzuki was appointed as a Director of the Company in January 2000. He is largely responsible

for the Group’s marketing efforts, particularly to Japanese customers. Mr Suzuki graduated from

Sophia University of Tokyo in 1958 and has over 35 years of experience in the PCB industry.

Wong Meng Yeng, Independent DirectorChairman of Audit Committee, Chairman of Remuneration Committee

Mr Wong has been on the Board of Directors of the Company since January 2000. He has been

an advocate and solicitor in Singapore for 18 years, with the past 12 years spent as a corporate

lawyer. He holds a Bachelor of Law (Hons) degree from the National University of Singapore.

He is currently a director in Alliance LLC, a law corporation he co-founded.

Chew Thiam Keng, Independent DirectorMember of Audit Committee, Member of Remuneration Committee

Mr Chew was appointed as a Director of the Company in January 2000. Currently, he is the

managing director of KS Tech Ltd. Before he joined KS Tech Ltd, Mr Chew was an executive

director of another public listed company between January 1996 and November 2001. Prior

to January 1996, he worked for 9 years with The Development Bank of Singapore Ltd in areas

such as corporate finance and retail banking. He holds a MBA and a Bachelor’s degree in

Mechanical Engineering. Mr Chew is also director and audit committee member of several listed

companies.

5

Page 8: The H le Solution Provider

[ M A N A G E M E N T T E A M ]

From left to right:Mr Ho Boon Chuan Wilson (Chief Financial Officer) Mr Pui Boon Tiong Eugene (Operations Manager)Mr Ong Teck Heng Bernard (Business Manager)

6

Page 9: The H le Solution Provider

7

BIODATA OF MANAGEMENT TEAM

Ho Boon Chuan Wilson, Chief Financial Officer

Mr Ho has been with the Company since March 2000. Before joining Multi-Chem, he worked

for 6 years with The Development Bank of Singapore Ltd, specialising in corporate finance. A

Certified Public Accountant and a Chartered Financial Analyst, he is responsible for Multi-Chem’s

finance, taxation, investments and investor relations. Mr Ho is also currently Multi-Chem’s

Company Secretary.

Ong Teck Heng Bernard, Business Manager

Mr Ong joined the Company in April 1997. He worked as an engineer at Pentex-Schweizer

Circuits Ltd for 4 years, and Stormedia International Ltd for a year before joining the Company.

Mr Ong was appointed Business Manager in January 2001, and is responsible for sales and

development of new product lines in the Distribution Division. He holds a Bachelor’s degree

in Engineering (Mechanical and Production) from the Nanyang Technological University.

Pui Boon Tiong Eugene, Operations Manager

Prior to joining the Company in December 1999, Mr Pui worked as an engineer with PCB

manufacturers Motorola Electronics Pte Ltd and WUS Printed Circuits Pte Ltd. He worked his

way up in Multi-Chem from Assistant Production Manager and Equipment Manager before

being named Operations Manager in February 2002. Mr Pui currently oversees operations in

the Manufacturing Services Division, which include production, maintenance and quality

assurance. He holds a Diploma in Engineering (Electronics & Computers) from Ngee Ann

Polytechnic.

Page 10: The H le Solution Provider

The year 2001 was a difficult one for the electronics industry in general. Competition in the PCB industry

intensified for the significantly-reduced orders and, as a supplier to PCB manufacturers, the effects filtered down

the supply chain to us. As customers cut back on orders, machine utilisation for our Manufacturing Services

Division remained low during the year. In the light of the difficult operating environment, the Group’s expansion

plans also proceeded at a significantly slower pace.

THE GROUP

Notwithstanding the above, the Group remains committed to providing quality services to our customers.

As a testimony to our commitment to quality, the Company achieved ISO 9001 certification in May 2001.

[ C H A I R M A N ’ S S T A T E M E N T ]

8

Page 11: The H le Solution Provider

Multi-Chem has also set up an in-house laboratory, which gives us the capability to carry out cross section

evaluation of hole-wall quality.

Our wholly-owned subsidiary, M-Precision Tech Sdn Bhd (“M-Precision”), was set up to provide PCB precision

drilling services to the Group’s customers in Malaysia. By shifting part of our operations across the causeway,

the Group is able to capitalise on lower operating costs, as well as gain faster turnaround time by virtue of closer

proximity to our customers. M-Precision commenced operations in May 2001. It currently has 8 CNC drilling

machines from Hitachi Via Mechanics, Ltd. (”Hitachi”), one of the industry’s leading manufacturers of CNC drilling

machines. M-Precision achieved ISO 9001 certification in December 2001.

9

Page 12: The H le Solution Provider

In September 2001, the Group expanded its precision drilling operations to the Philippines

through Cambridge Multi-Chem Electronics Corporation (“CMEC”), a 50%-owned joint venture

company of Multi-Chem. CMEC is currently providing precision drilling services to its other

shareholder, Cambridge Electronics Corporation. It has a total of 12 CNC drilling machines.

Our next phase of expansion will take place in the People’s Republic of China (“PRC”).

Multi-Chem (Suzhou) Co., Ltd (“MCL SZ”), located in the Suzhou Industrial Park, was incorporated

in October 2001 in the PRC. On 1 March 2002, MCL SZ took over the existing precision drilling

business, including the customer base, from Multi-Chem’s associated company, Hawera Precision

Tec (Suzhou) Co., Ltd (“HPTec SZ”), which has been in operations since August 2000. Including

the 8 Hitachi CNC drilling machines from HPTec SZ, MCL SZ currently has 32 CNC drilling

machines.

Despite the gradual shifting of operations outside Singapore, Multi-Chem continues to be

the Group’s headquarters and has the most advanced machines to service high end PCB

manufacturers based in Singapore. Multi-Chem currently has 44 Hitachi CNC drilling machines,

including 2x6MB, the most advanced CNC drilling machines from Hitachi.

In line with the scaling down of our Singapore operations, the Company recently entered

into a sale and purchase agreement for the sale of its factory at 13 Tuas Link 1 for a consideration

of $2.45 million. The sale is subject to approvals from the relevant authorities.

FINANCIAL PERFORMANCE

The Group’s business was affected by the ongoing difficult business conditions. While the

Group was still profitable in 2001, it performed poorly compared to 2000.

The Group recorded a turnover of $23.6 million in 2001 compared to $30.0 million in 2000,

a decrease of 21%. Group profit before tax (”PBT”) dropped by 80% to S$2.3 million from

$11.4 million in 2000.

The poorer performance was largely due to the twin effects of the downturn in the electronics

cycle and the overall slowdown in the global economies, with the events of 11 September

2001 in the United States (”US”) further magnifying the impact.

In 2001, the Manufacturing Services Division’s contribution to Group turnover dropped to

47%, compared to 53% the year before. In comparison, the Distribution Division contributed

a higher 53% to Group turnover. This was because turnover decreased in the Distribution

Division was a moderate 12% compared to a higher 30% for the Manufacturing Services Division.

The decrease in PBT was due to the sharp fall in turnover, accentuated by price pressures

resulting from intensified competition. Additionally, an amount of $1.2 million recorded in

“Other Income” in 2000 from the disposal of a 5% interest in Hawera Precision Tec Pte Ltd,

Multi-Chem’s associated company, did not recur in 2001. Due to the capital-intensive nature

of the Manufacturing Services Division, the Group’s profit and loss was weighed down by

depreciation of factory assets, one of the largest fixed cost items.

10

Page 13: The H le Solution Provider

FINANCIAL POSITION

The Group has maintained a healthy financial position. As at 31 December 2001, net working

capital of the Group stood at $15.9 million, with gearing at 36%. Current assets stood at

$25.4 million, which included cash of $13.5 million. While there was an overall cash outflow

due to the repayment of the principal sum on the transferable loan facility, the Group’s cash

flow from operations remained positive.

DIVIDENDS

The Directors recommended and the Company paid an interim dividend of 0.24 cents per

ordinary share less tax and 0.12 cents per ordinary share tax exempt. As the performance of

the Group for the second half of 2001 declined further from the first half, the Directors did

not recommend any final dividend.

11

Page 14: The H le Solution Provider

[ The trend towards outsourcing in the precision drilling of PCBs

is expected to continue as PCB manufacturers increasingly recognise

the benefits of outsourcing.]

BUSINESS OUTLOOK

The Group is expanding business activities regionally, in particular, in the PRC. Through our

subsidiary MCL SZ, the Group is already capitalising on market opportunities in Suzhou, where

many major PCB manufacturers are located. Since early this year, we have strengthened our

team in MCL SZ and will continue to focus our efforts and resources in growing the business

there. MCL SZ is expected to contribute to the Group’s performance in 2002.

With the fall in electronics demand in 2001, our customers cut back on outsourcing as their

in-house capacities were adequate to meet production requirements. However, once there is

an upturn in electronics demand, the need to outsource will re-emerge, particularly as businesses

have generally held back on any new capital expenditure. The trend towards outsourcing in

the precision drilling of PCBs is expected to continue as PCB manufacturers increasingly recognise

the benefits of outsourcing. The Group has aggregated one of the largest number of CNC

drilling machines in this region and hence is well poised to ride on the wave of recovery in

the electronics industry. As our customers produce more, there will also be additional requirements

for the products under our Distribution Division, including the specialty chemicals that we

distribute.

CORPORATE GOVERNANCE

The Directors have taken note of the new corporate governance rules and their required

implementation dates. We are implementing in stages to the rules and are pleased to inform

shareholders that the Group plans to commence quarterly reporting on the results of the third

quarter of 2002.

APPRECIATION

On behalf of the Board of Directors, I take this opportunity to commend our management

and staff for their commitment and contribution during a difficult 2001. I would also like to

express my sincere appreciation to our suppliers, customers and business partners for their

valued support. I also wish to thank the shareholders for granting the mandate on share buy-

back and for continuing to share our belief in the Group.

We are hopeful that the worst is behind us and we look forward to better performances in

the years ahead.

Foo Suan SaiGroup Chairman & Chief Executive Officer

12

Page 15: The H le Solution Provider

In the electronics industry, the years 2001 and 2000 presented a picture of extreme contrasts. Whereas the

Group tested new heights in its financial performance in 2000, this performance did not last into 2001.

In 2000, the electronics business was booming. It was a time where optimistic projections led to industry

players increasing production capacity to cater to further anticipated increase in demand for technology and

networking products. When the dot.com bubble burst and demand for technology and networking products

waned, the inventory amassed during 2000 led to an overhang, leaving a negative impact throughout the

industry.

In 2001, excess capacity led to intense competition for the significantly-fewer orders and that flowed down

the entire supply chain. As end customers cut back on purchases, suppliers at each stage of the supply chain

reduced orders and cut prices for orders placed. When a recovery looked to be on the cards in the second half

of 2001, the events of 11 September 2001 altered all that. Consumer confidence in the US, where most of our

electronics products are shipped to, plunged. Just as 2000 was the year where the supplier held the power,

2001 was the year where the customer reigned.

[ O P E R A T I O N S R E V I E W ]

13

Page 16: The H le Solution Provider

Manufacturing Services Division

As a service provider of precision drilling of PCBs, the Group relies on PCB manufacturers to

outsource their excess orders. In the PCB manufacturing process, precision drilling is generally

a bottleneck. As investments in CNC drill ing machines require large capital outlay, PCB

manufacturers prefer to invest only a percentage of their drilling requirements, while outsourcing

the rest. Multi-Chem, being the specialist in this area and with the largest number of CNC

drilling machines in this region, would be a prime beneficiary of this outsourcing trend.

However, in 2001, because of the downturn in the electronics industry, there were insufficient

orders from our customers, who had barely enough orders to fully utilise their own CNC drilling

machines. This resulted in a cut back in outsourcing. Consequently, there was a sharp decrease

in Group turnover arising from the lower business volume in Malaysia, Singapore and the

Philippines. Even as the Group focused on cost cutting measures, the actions we took were

insufficient in the face of high fixed costs of depreciation and the constant price pressures.

Consequently, the Group recorded an operating loss in this business in 2001.

In terms of equipment assets, Multi-Chem operates the most advanced CNC drilling machine

from Hitachi. All of our machines are able to run at speeds of 125,000 rpm and above. Fifteen

machines can run at 160,000 rpm, including 2x6MB machines which run on linear motors

instead of servo motors. Linear motors increase stability during in-feed and retract, therefore

14

Page 17: The H le Solution Provider

reducing drill breakages and boosting efficiency. The Group also uses advanced x-ray equipment

and automated hole checkers to provide quality assurance to customers. We have also set up

an in-house laboratory with the capability to carry out cross-section evaluation of hole-wall

quality.

Distribution Division

The Group supplies a range of PCB specialty chemicals for the wet processes in PCB

manufacturing, as well as other PCB-related products, including dry film, mass lam and clean

room products.

During the year, we focused our efforts on maintaining existing businesses, as well as getting

new products qualified for use in our customers' production lines. While the evaluation generally

ran smoothly, we had limited success securing orders for new products such as dry film and

mass lam. This was not unexpected as the demand for PCBs shrank during 2001, with some

PCB manufacturers operating at less than 50% capacity. In addition, the Group faced severe

price pressure even for existing products, such as specialty chemicals.

In the second half of 2001, the Group also supported one of our customers in Wuxi, PRC

in the starting up of the PTH (plated-through-hole) line.

Risk Factors

The Group’s primary business risk is our exposure to the electronics products segment. As

our customers are PCB manufacturers, most of them will be exposed to the cyclical nature of

the electronics business.

As we have already commenced operations in the PRC, we are also exposed to the political

and economic climate of that market. Success in the PRC will depend on our ability to secure

new customers. We will, however, leverage on the network already built up by our related

company, HPTec SZ, in Shanghai, Kunshan, Suzhou and Wuxi (“Greater Shanghai region”).

The Group is also exposed to foreign exchange risks as apart from Singapore dollars, we also

transact with suppliers and customers in US dollars and European euro, and to a lesser extent,

Chinese renminbi and Malaysian ringgit. The Group may, from time to time, enter into borrowing

and foreign exchange arrangements as currency hedges.

15

Page 18: The H le Solution Provider

Our Associated Companies

The Company holds a 35% interest in Hawera Precision Tec Pte Ltd ("HPTec"), which is a key subsidiary of

German-based PCB tools manufacturer, HPTec GmbH. HPTec is principally engaged in the distribution of the

"Hawera" brand drill and router bits in ASEAN and the provision of drill bit regrinding service. Its wholly-owned

subsidiary, HPTec SZ, located in the Suzhou Industrial Park, services PCB manufacturers in the Greater Shanghai

region. HPTec has an issued and paid-up share capital of S$3.0 million. Its directors are Messrs Foo Suan Sai,

Manfred Kling and Georg Konstantinou. HPTec SZ has a registered capital of US$2.1 million and its legal

representative is Mr Foo Suan Sai.

Our Joint Venture Company

Multi-Chem holds a 50% interest in CMEC, our joint venture with Philippines-based PCB manufacturer Cambridge

Electronics Corporation ("CEC"). CEC is a member of the JG Summit Group. CMEC has an issued and paid-up

share capital of PHP64.7 million. Its directors are Messrs Lance Y. Gokongwei, Foo Suan Sai, Jose S. Palma, Jr,

Ricardo C. Palma, Han Juat Hoon, Ma. Victoria M.Reyes-Beltran, Ho Boon Chuan Wilson and Cesar C. Cruz.

16

Page 19: The H le Solution Provider

The Group has been adversely affected by the slowdown in the global economy as well as the electronics

industry in 2001 and has taken measures to reduce costs. The Directors are committed to maintaining a strong

balance sheet through prudent cash flow management during the difficult year to await the next upturn in

the electronics cycle.

There have been signs that such an upturn is forthcoming. The US economy has seen an increase in electronic

equipment orders and consecutive monthly increases in the purchasing managers index. While the pick-up in

electronics demand is expected to occur sometime during 2002, the quantum of the pick-up and exactly when

it will be felt by the Group will play a crucial role in determining our performance this year.

Among the expected effects of an upturn in the global electronics cycle is the need for higher production

capacity. Additionally, PCB manufacturers have increasingly outsourced their drilling requirements instead of

increasing their in-house mechanical drilling capacity to cut back on capital expenditure on equipment and this

trend is expected to continue. The production of the PCB is moving towards higher layer count and higher

hole density PCBs and this is expected to further increase the requirements for drilling.

The Group has generally scaled down its operations in Singapore. In February 2002, the Company entered

into a sale and purchase agreement to sell one of our two factories in Singapore. This is reflective of the trend

of investments pouring into the PRC. As PCB manufacturers continue to move operations into the PRC, the

Group, too, must follow suit or we risk losing our customers.

In recent years, the Chinese PCB industry has been developing at a rate of 15% each year and has become

one of the largest PCB-manufacturing countries in the world1. Notwithstanding the sluggish global electronics

industry in 2001, the PRC continues to attract foreign investments, including PCB manufacturers which are

either existing customers or potential customers of the Group. The Suzhou Industrial Park, where MCL SZ is

located, is also emerging as the chip-making hub of the PRC2.

MANUFACTURING SERVICES DIVISION

MCL SZ, a subsidiary of Multi-Chem was incorporated in October 2001 with an investment amount of US$5.0

million and a registered capital of US$2.5 million. Its main business is primarily to provide precision drilling

services for PCB companies located in the Greater Shanghai region.

The plant is currently operational with 32 CNC drilling machines. To be even closer to customers, the Group

is already looking at expanding to other locations in the Greater Shanghai region. The expansion involves multi-

sites, each fully equipped to be an independent precision drilling service provider. Currently, the Group is

evaluating the feasibility of a new factory in the Kunshan or Wuxi area.

DISTRIBUTION DIVISION

The Distribution Division has generally been the more stable performer of the Group. It is currently focused

on expanding the distribution of the Nan Ya dry film, for which Multi-Chem is the agent for the South-East Asia

region, as well as the laminates, pre-preg and mass lam of Taiwan Union Technology Corporation.

Various evaluations have been carried out and the products have generally passed the stringent quality

requirements imposed by customers. However, orders have been slow as our customers have not yet indicated

to us any increase in their orders. The situation should improve once orders pick up.

With signs pointing to a recovery this year, the Directors are cautiously optimistic that the operating performance

of the Group for 2002 will be better than 2001.

1 Printed Circuit News. Issue 26. Jan/Feb 2002 2 The Business Times, 12 March 2002

[ P R O S P E C T S & F U T U R E P L A N S ]

17

Page 20: The H le Solution Provider

[ C A L E N D A R O F S I G N I F I C A N T E V E N T S ]

CORPORATE CALENDAR

• The Group was ranked joint 13th out of 268 companies in the Business

Times Corporate Transparency Index (with total score of 70) for companies

announcing results for the year ended 31 December 2000 (The Business

Times 9 April 2001).

• Multi-Chem's Investor Relations homepage at

http://www.multi-chem.com.sg was successfully launched.

• Multi-Chem was awarded ISO 9001 certification.

• In-house laboratory with capability to carry out cross-section

evaluation of hole-wall quality was set up.

• 2x6MB Hitachi drilling machines were acquired.

• CMEC commenced its precision drilling operations in the Philippines.

• MCL SZ was incorporated to provide precision drilling services to PCB

manufacturers in the Suzhou region.

• M-Precision attained ISO 9001 certification.

• To reach our Chinese reading investors, Multi-Chem joined Zaobao.com

to provide news and information about the Group.

• Multi-Chem entered into a sale and purchase agreement for the sale

of our factory at 13 Tuas Link 1.

Apr 2001

May 2001

Jun 2001

Sep 2001

Oct 2001

Dec 2001

Jan 2002

Feb 2002

18

Payment date of 2000 final dividend on ordinary shares 28 May 2001

Announcement of 2001 half-year results 14 Aug 2001

Payment date of 2001 interim dividend on ordinary shares 19 Sep 2001

End of financial year 31 Dec 2001

EGM for share buy-back mandate 15 Jan 2002

Announcement of 2001 full-year results 19 Feb 2002

Annual General Meeting 16 May 2002

Announcement of 2002 half-year results Aug 2002

Announcement of 2002 full-year results Feb 2003

End of financial year 31 Dec 2001

Announcement of 2001 full-year results 19 Feb 2002

Announcement of 2002 half-year results Aug 2002

FINANCIAL CALENDAR

Page 21: The H le Solution Provider

[ G R O U P S T R U C T U R E ]

100%

HaweraPrecision Tec

Pte Ltd

HPTECGMBH

HaweraPrecision Tec

(Suzhou)Co.,Ltd

HaweraPrecision Tec (Thailand) Co.,Ltd

(Dormant)

35% 65%

100% 100% 100%

M-PrecisionTech

Sdn Bhd

HaweraPrecision Tec (HK) Ltd

(Dormant)

19

50%

CambridgeMulti-ChemElectronics

Corporation

100%

Mass-LamTech Pte Ltd(Dormant)

100%

Multi-Chem(Suzhou)Co., Ltd

100%

M.Tech ProductsPte Ltd

(Dormant)

Page 22: The H le Solution Provider

[ F I N A N C I A L H I G H L I G H T S ]

GROUP BALANCE SHEET ($'000)

1997 1998 1999 2000 2001

Fixed assets 3,576 4,412 12,690 34,956 30,823

Investment in associated company 1,038 1,479 2,017 2,995 4,129

Investment in joint venture - - - - 1,203

Other investments - - - 495 461

Other receivables and intangibles - - - 618 348

Current assets 12,182 9,422 10,079 37,878 25,421

Current liabilities (4,018) (1,922) (7,056) (14,796) (9,575)

Net current assets 8,164 7,500 3,023 23,082 15,846

Long term liabilities - - - (13,994) (7,128)

Deferred taxation (273) (534) (862) (2,590) (2,630)

Other payables (166) - - - (769)

12,339 12,857 16,868 45,562 42,283

Share capital 1,338 1,338 1,338 16,500 16,500

Reserves 11,001 11,519 15,530 29,062 25,783

12,339 12,857 16,868 45,562 42,283

GROUP PROFIT & LOSS ($'000)

1997 1998 1999 2000 2001

Turnover 13,367 16,549 21,594 30,031 23,605

Earnings before interest, tax, 3,393 3,928 9,228 14,479 8,816 depreciation & amortisation

Depreciation & amortisation (728) (947) (1,699) (4,706) (7,337)

Interest expense (16) (9) (24) (153) (774)

Profit from operations 2,649 2,972 7,505 9,620 705

Share of profit from associated 1,384 1,144 1,478 1,817 1,585 company/joint venture

Profit before taxation 4,033 4,116 8,983 11,437 2,290

Taxation (1,100) (1,007) (1,102) (2,261) (448)

Profit after taxation 2,933 3,109 7,881 9,176 1,842

20

Page 23: The H le Solution Provider

PER SHARE DATA (cents, unless otherwise stated)

1997 1998 1999 2000 2001

Net earnings (basic) 1.59 1.69 4.28 2.82 0.56

Net earnings (fully diluted) 1.59 1.69 4.28 2.60 0.55

Net dividend 0.79 3.31 0.70 1.37 0.30

Net dividend payout (times) 0.50 1.96 0.16 0.49 0.54

Net tangible assets 6.71 6.99 9.17 13.81 12.81

Note:Save as disclosed below, all per share data are computed based on 184,000,000 shares for each of 1997

to 1999, 330,000,000 shares for 2000 and 330,000,500 shares for 2001.Basic earnings per share and fully diluted earnings per share are computed based on 325,500,000 shares

and 353,000,000 shares respectively in 2000 and 330,000,322 shares and 335,176,755 shares respectivelyin 2001.

FINANCIAL RATIOS

1997 1998 1999 2000 2001

Current ratio (times) 3.03 4.90 1.43 2.56 2.65

Return on shareholders' funds (%) 23.77 24.18 46.72 20.14 4.35

Return on assets employed (%) 17.46 20.30 31.80 11.93 2.95

SEGMENTAL RESULTS (S$’000)

2001 2000

By Activity

Manufacturing Services 11,179 (1,578) 15,878 5,434

Distribution 12,426 2,283 14,153 4,186

Total 23,605 705 30,031 9,620

By Geographical Region

Singapore 17,962 536 23,175 7,136

ASEAN 5,643 169 6,856 2,484

Total 23,605 705 30,031 9,620

Turnover OperatingProfit

Turnover OperatingProfit

21

2001 TURNOVERBY ACTIVITY

Manufacturing Services - 47%

Distribution - 53%

2001 TURNOVER BYGEOGRAPHICAL REGION

ASEAN - 24%

Singapore - 76%

Page 24: The H le Solution Provider

First Half Year

1H2000 1H2001 1H2000 1H2001 1H2000 1H2001

Sales 7,123 6,586 5,884 6,728 13,007 13,314

Operating profit 3,254 (607) 1,113 1,682 4,367 1,075

Profits equity accounted for 908 883

Profit before tax 5,275 1,958

Profit after tax 4,297 1,990

Second Half Year

2H2000 2H2001 2H2000 2H2001 2H2000 2H2001

Sales 8,755 4,593 8,269 5,698 17,024 10,291

Operating profit 2,180 (971) 3,073 601 5,253 (370)

Profits equity accounted for 909 702

Profit before tax 6,162 332

Profit after tax 4.879 (148)

DEBT FINANCING STRUCTURE AS AT 31 DECEMBER 2001

GroupDistributionManufacturingServices

GroupDistributionManufacturingServices

HALF-YEAR RESULTS OF THE GROUP ($’000)

In dollar terms ($’000)

Amount available for drawdown 25,997 30 1,000 27,027

Amount utilised for loans 15,184 - - 15,184

Amount utilised for banker's guarantees - 30 - 30

Balance unutilised 10,813 0 1,000 11,813

In percentage terms (%)

Amount available for drawdown 96.19 0.11 3.70 100.00

Amount utilised 99.80 0.20 0 100.00

Average effective cost of debt in 2001 5.09

Interest coverage ratio

Net profit before interest and tax ($'000) 3,064

Interest expenses ($'000) 774

Interest coverage ratio (times) 3.96

Debt servicing ratio

Operating cash surplus before interest & tax ($'000) 4,215

Interest expenses ($'000) 774

Debt servicing ratio 5.45

Gearing ratio

Total debt ($'000) 15,184

Total equity ($'000) 42,283

Gearing ratio (times) 0.36

FixedRate Loans

Banker’sGuarantees

Lettersof Credit

TotalFacilities

22

Page 25: The H le Solution Provider

The Group recorded a turnover of $23.6 million in 2001, a 21.4% drop over the $30.0 million recorded

in 2000.

TURNOVER

Manufacturing Services Division

The decrease in Group turnover was mainly due to the decrease in turnover from the Manufacturing Services

Division. Division turnover fell by $4.7 million from $15.9 million to $11.2 million, a decrease of some 29.6%.

Comparing the first half of 2001 ("1H2001") to its second half ("2H2001"), turnover in this Division fell by

30.3% or $2.0 million from $6.6 million to $4.6 million.

The performance decline was a result of the overall slowdown in the global electronics industry due to excess

inventory and capacity from the boom year of 2000. The sluggish demand for electronics affected the demand

for PCBs. As PCB manufacturers cut back on outsourcing with their in-house capacity being adequate to meet

production requirements, this in turn affected our business. Turnover in this Division for 2H2001 showed a

more significant decrease compared to 1H2001 as the global recession continued, exacerbated by the events

of 11 September 2001 in the US.

Distribution Division

Turnover from the Distribution Division decreased by 12.2% or $1.8 million from $14.2 million to $12.4

million. The decrease was mainly due to the fall in turnover during the second half of 2001. Comparing 1H2001

to 2H2001, the Division’s turnover decreased by 15.3% or $1.0 million from $6.7 million to $5.7 million as

orders from customers in this Division decreased with the electronics slowdown.

Profit before tax ("PBT")

PBT of the Group decreased by 80.0% or $9.1 million from $11.4 million to $2.3 million in FY2001. While

the Group recorded a PBT of $2.0 million in 1H2001, it only managed to register a PBT of $332,000 in 2H2001

resulting from which, there was only a small increase in PBT between 1H2001 and the full year 2001.

The decrease in PBT was mainly due to the following factors:

(1) Periodic price reductions given to customers due to the overall weakness in the electronics market. The

intense competition for the smaller pie resulted in low margins.

(2) Higher depreciation expense due to more CNC drilling machines (an average of 56 in 2001 compared to

an average of 43 in 2000) and full year depreciation for 40 CNC drilling machines acquired in 2000.

Depreciation expenses on factory assets alone increased by 53.3% or $2.4 million from $4.4 million to $6.8

million during the year.

(3) Interest expenses amounted to $774,000 in 2001 compared to $153,000 in 2000. This was due to a full

year interest charge for the transferable loan facility in 2001 compared to only two months in 2000.

(4) Gain on disposal of 5% interest in associated company in 2000 amounting to $1.2 million, which did not

recur in 2001.

(5) Reduction in foreign exchange gains of 38.1% or $302,000 from $792,000 in 2000 to $490,000 in 2001.

Profit after tax ("PAT")

PAT of the Group dropped by 80.0% or about $7.4 million from $9.2 million to $1.8 million, largely in line

with the decrease in PBT. Provision for tax for 2001 mainly comprised the Company's share of taxes of its

associated company and the provision of deferred tax. No other provision has been made as the Company still

has available investment allowance incentives to cover its tax position.

[ F I N A N C I A L R E V I E W ]

23

Page 26: The H le Solution Provider

[ V A L U E A D D E D S T A T E M E N T ]

VALUE ADDED STATEMENT ($'000)

1997 1998 1999 2000 2001

Turnover 13,367 16,549 21,594 30,031 23,605

Purchase of goods & services (8,552) (11,228) (10,789) (15,459) (13,462)

Value added from operations 4,815 5,321 10,805 14,572 10,143

Non production income 1,772 1,974 2,237 5,298 3,220

6,587 7,295 13,042 19,870 13,363

DISTRIBUTION

To Employees

Salary & other staff related costs 1,778 2,186 2,383 3,506 2,877

To Government

Income & other taxes 1,130 1,040 1,135 2,329 533

To Providers of Capital

Finance costs 43 38 49 161 897

Dividends 1,453 6,091 1,290 4,535 994

Retained in the Business

Depreciation 728 947 1,699 4,698 7,214

Retained earnings 1,455 (3,007) 6,486 4,641 848

6,587 7,295 13,042 19,870 13,363PRODUCTIVITY DATA

Value added per employee ($'000) 283 409 373 217 147

Value added per $ employment cost 2.71 2.43 4.53 4.16 3.53

Value added per $ net sales 0.36 0.32 0.50 0.49 0.43

Average number of employees 17 13 29 67 69

24

VALUE ADDED PER $ NET SALES

‘97

‘98

‘99

‘00

‘01

0.0.5 0.10 0.15 0.20 0.25 0.300 0.35 0.40 0.45 0.550.50

VALUE ADDED PER $ EMPLOYMENT COST

‘97

‘98

‘99

‘00

‘01

0.50 1.00 1.50 2.00 2.50 3.000 3.50 4.00 4.50 5.00

VALUE ADDED PER EMPLOYEE ($'000)

‘97

‘98

‘99

‘00

‘01

50 100 150 200 250 3000 350 400 450

Page 27: The H le Solution Provider

[ I N F O R M A T I O N O N E M P L O Y E E S ]

BREAKDOWN BYJOB GROUP

BREAKDOWN BYEDUCATIONAL QUALIFICATION

BREAKDOWN BYYEARS OF SERVICE

Technical & others - 50%

Administrative - 21%

Managerial - 11%

Engineering - 9%

Sales - 9%

Less than 3 years - 78%

6 to 9+ years - 7%

3 to 5+ years - 12%

10 years or more - 3%

Secondary level & lower - 38%

Degree and above - 26%

Trade Certificate & equivalent - 2%

‘O’ & ‘A’ levels & equivalent - 20%

Diploma & equivalent - 14%

The Company believes that our employees are key resources and we do not fail to recognise and reward

dedicated staff. In terms of remuneration, such employees are not affected by the across-the-board pay freeze.

Promising employees are given the opportunity to work for a period in our overseas subsidiaries to further

enhance their experience.

The Manufacturing Services Division is in a business which is capital intensive and that further requires our

employees to have the necessary knowledge in operating the machinery and equipment. Selected employees

are sent for training conducted by machine manufacturers to learn about the operations, capability and

maintenance of the equipment. In the Distribution Division, selected employees are trained by our principals,

as well as attached to our customers' production lines in the region, for on-the-job training. The amount spent

on employees providing them with on-the-job training, in-house and external training amounted to approximately

$50,000 in 2001.

The Company also participates in the internship programmes of local polytechnics to give students a stint

with a local corporation before they step into the working world. In 2001, the Company provided 10 weeks

of training to five polytechnic students.

25

Page 28: The H le Solution Provider

[ The Company was placed joint 13th (with a score of 70 points) out of 268 companies

in the complete listing of results of the Business Times Corporate Transparency Index

for our final results announcement for 2000. ]

[ I N V E S T O R R E L A T I O N S ]

The Company has made efforts to be as open as can be with shareholders and the investing community.

In May 2001, the Company's investor relations went on-line with our own website at www.multichem.com.sg.

Since then, we have also joined Zaobao.com to provide Chinese reading investors with news and

information about the Group. Information in Chinese about the Group can be found under

http://ir.zaobao.com/multichem.

Multi-Chem has always made efforts to announce its results early. In its short history of results

announcement, Multi-Chem has not taken more than two months after the period end to announce its

results. The Company has also organised press and analysts' briefings for each of its results announcement

to explain the results, clear doubts and to update on developments. We have made regular announcements

on the latest events to update the public.

The Company was placed joint 13th (with a score of 70 points) out of 268 companies in the complete

listing of results of the Business Times Corporate Transparency Index for our final results announcement

for 2000. The Company announced its full year results for 2001 on 19 February 2002 and was placed

4th (with a score of 70 points) in the Business Times Corporate Transparency Index out of 51 companies

whose results were announced for the period from 18 February 2002 to 6 March 2002.

While we would like to hold more regular meetings with investors, it is often difficult as we have yet

to attract any analyst coverage on a regular basis. This problem persists in many listed companies that

are not of substantial size. We are, however, not deterred and will work to differentiate ourselves from

the other listed companies in terms of information flow and investor relations.

To further improve the information flow to investors, the Company will commence quarterly reporting

this year. Its first quarterly reporting will take place in the fourth quarter of 2002 on the results of the

third quarter ending 30 September 2002.

Multi-Chem is committed to improving the information flow to our shareholders and the investing

community and will continue to make efforts to do so.

26

Page 29: The H le Solution Provider

Corporate governance refers to the processes and structure by which the business and affairs

of the Company are directed and managed. The Board of Directors of the Company recognise

that sound corporate governance can contribute to good business practices and improved

corporate accountability and has therefore made efforts to adopt the measures and practices

set out in Best Practices Guide issued by the Singapore Exchange. As the Code of Corporate

Governance (“Code”) issued on 21 March 2001 will essentially expand the scope of and replace

the Best Practices Guide, the Company intends to continue to make efforts to comply with the

Code.

BOARD OF DIRECTORS

The Board of Directors (“Board”) of the Company consists of five members, of which two are

independent Directors. Mr Foo Suan Sai, Chief Executive Officer, is Chairman of the Board.

[ C O R P O R A T E G O V E R N A N C E R E P O R T ]

27

Page 30: The H le Solution Provider

The role of the Chairman pertaining to Board proceedings includes:

• Scheduling of meetings that enable the Board to perform its duties responsibly while not

interfering with the flow of the Company’s operations;

• Preparing meeting agenda;

• Exercising control over quality, quantity and timeliness of the flow of information between

management and the Board; and

• Assisting in ensuring compliance with the Company’s guidelines on corporate governance.

The Board is responsible for the Company’s corporate governance. Members of the Board,

as Directors, shall, at all times, act honestly and use reasonable diligence and care in the

discharge of the duties of their office. They have to carry out their duties in the best interests

of the Company. Board members are required to submit themselves for re-election once every

three years.

The Board meets a minimum of two times annually and its significant responsibilities include:

• Business direction and corporate strategy;

• Corporate management;

• Internal controls;

• Regulatory compliance;

• Reporting to shareholders;

• Supervising the Company’s agents and employees in the discharge of their duties;

• Authorising major projects and significant financing matters;

• Review of internal and external audit reports; and

• Review of financial performance.

Board members are provided with adequate and timely information prior to Board meetings.

They also have separate and independent access to the Company Secretaries.

There is an Audit Committee and a Remuneration Committee set up by the Board, more

information of which is provided below.

AUDIT COMMITTEE

The Audit Committee (”AC”) comprises three members, including two independent Directors.

Mr Wong Meng Yeng, an independent Director, is Chairman of the AC.

The AC meets at least three times a year and, besides the members of the AC, such meetings

are also attended by external auditors and appropriate members of the executive management

by invitation.

The AC’s functions include assisting the Board in fulfilling its responsibilities in financial

reporting, developing policies that will enhance the controls and operating systems of the

Company, review of interested party transactions and serving as a channel of communication

between the Board and the external auditors on matters related to and arising out of external

audit.

As part of the AC’s responsibilities in enhancing the controls and operating systems of the

Company, internal auditors have been engaged to assist the AC. The internal audit function

has been outsourced to a public accounting firm and the internal auditors’ primary reporting

line is to the Chairman of the AC. It is the responsibility of the AC to ensure the adequacy of

the internal audit function.

28

Page 31: The H le Solution Provider

The opinion of the AC has to be sought for transactions not in the ordinary course of business

if such transaction exceeds $2.0 million in value. The opinion of the AC would not be required

for day-to-day decisions and matters which are operational in nature, even though such single

transaction may exceed $2.0 million in value. The Directors may seek independent professional

advice on company matters upon approval of the AC.

The AC confirms that the Company has adequate internal controls to safeguard shareholders’

investments and the Company’s assets.

REMUNERATION COMMITTEE

The Remuneration Committee (“RC”) comprises three members, two of whom are independent

Directors. Mr Wong Meng Yeng, an independent Director, is Chairman of the RC. The RC was

set up on 22 February 2001.

The RC meets once a year and is responsible for reviewing the performance of the Chief

Executive Officer, the Chief Operating Officer and senior management, as well as reviewing

and approving executive remuneration. The RC has access to expert advice or external research

so as to make informed decisions on remuneration matters.

The aggregate remuneration for the three executive Directors and two independent Directors

amounted to $1,204,692 (2000: $1,880,825 ) and $40,000 (2000: $40,000 ) respectively in

2001.

29

Page 32: The H le Solution Provider

The total remuneration of employees who are related to the substantial shareholders shall be subject to the

annual review and majority approval of the Audit Committee. For the financial year ended 31 December 2001,

the total remuneration paid to these employees amounted to $137,052 (2000: $146,785).

FY 2001

Directors$500,000 and above

Foo Suan Sai

Han Juat Hoon

$0 to $249,999

Toshiaki Suzuki

Executive Officers$0 to $249,999

Ho Boon Chuan Wilson

Ong Teck Heng Bernard

Pui Boon Tiong Eugene

BaseSalary

%

98

100

-

95

83

93

Variable Bonus

%

-

-

-

-

-

-

Benefits-in-kind

%

2

-

-

5

17

7

Fees

%

-

-

100

-

-

-

Total

%

100

100

100

100

100

100

30

OTHER INFORMATION ON DIRECTORS

Each Director attended the following meetings in 2001:

Name

Foo Suan Sai*

Han Juat Hoon

Toshiaki Suzuki#

Wong Meng Yeng*#

Chew Thiam Keng*#

NumberAttended

1

2

2

2

2

NumberAbsent

1

-

-

-

-

NumberAttended

1

3

2

3

3

NumberAbsent

2

-

1

-

-

NumberAttended

1

1

1

1

1

NumberAbsent

-

-

-

-

-

As at 31 December 2001, the Directors of the Company are as follows:

Name

Foo Suan Sai

Han Juat Hoon

Toshiaki Suzuki

Wong Meng Yeng

Chew Thiam Keng

Age

48

45

68

43

40

Position

Chairman

Executive Director

Executive Director

Independent Director

Independent Director

Date of InitialAppointment

30 Aug 1988

16 May 1987

5 Jan 2000

5 Jan 2000

5 Jan 2000

Date lastre-elected

-

23 Jun 2000

23 Jun 2000

2 May 2001

2 May 2001

* Member of AC # Member of RC

BOARD AC RC

The remuneration bands of the executive Directors and the three executive officers are set out below:

Page 33: The H le Solution Provider

SECURITIES TRANSACTIONS

The Company has adopted the Best Practices Guide relating to dealing in securities. In particular, share trading

guidelines, which specify that officers should not deal in the Company’s securities

- when in possession of unpublished material price sensitive information;

- on short term considerations; and

- during the period commencing one month before the announcement of the Company’s annual or half year

results and ending on the date of the particular announcement,

have been disseminated to Directors and key employees (including employees with access to price sensitive

information in relation to the Company’s shares). In addition, the guidelines require key employees to disclose

in writing to the executive Directors on dealings in the Company’s shares.

INTERESTED PARTIES TRANSACTION

No interested parties transaction occurred in 2001.

31

Tat Hong Holdings

Limited

Name

Foo Suan Sai

Present directorshipsin other listedcompanies

Nil

Past directorshipsin other listed companiesover last 3 years

Nil

Other majorappointments

Managing Director, Hawera

Precision Tec Pte Ltd

Legal Representative,

Hawera Precision Tec

(Suzhou) Co., Ltd

Deputy Chairman,

Cambridge Multi-Chem

Electronics Corporation

Han Juat Hoon Nil Nil Director, Hawera Precision

Tec (Suzhou) Co., Ltd

Director, Cambridge

Multi-Chem Electronics

Corporation

Toshiaki Suzuki Nil Nil Nil

Wong Meng Yeng Novena Holdings Ltd Nil Nil

Chew Thiam Keng Ban Joo & Company

Limited

Flaris Technology

Corporation Limited

KS Tech Ltd

TSM Resources Ltd

Kian Ann Engineering

Limited

Nil

Foo Suan SaiGroup Chairman & Chief Executive Officer

Information on directorships in other listed companies and other major appointments held by the Directors isset out below:

Page 34: The H le Solution Provider

Chairman & Chief Executive OfficerFoo Suan Sai

Chief Operating OfficerHan Juat Hoon

Executive DirectorToshiaki Suzuki

Finance, HR & AdministrationHo Boon Chuan WilsonLim San SanSiow Mee LinChua Kar Lin Catherine

Distribution DivisionOng Teck Heng BernardAndry Liong

Purchasing & LogisticsFoo Suan Ooi

Manufacturing Services DivisionPui Boon Tiong EugeneKoh Henry

OVERSEAS SUBSIDIARIES

Multi-Chem (Suzhou) Co., Ltd

No. 28 Su Tong Road, Suzhou Industrial Park

Jiangsu Province, PRC 215021

Tel : (86 512) 6252 9822 Fax : (86 512) 6252 9809

M-Precision Tech Sdn Bhd

PTD37441 Jalan Perindustrian 3,

Kawasan Perindustrian Senai 2,

81400 Senai, Johor, Malaysia

Tel : (60 7) 6598 8801 Fax : (60 7) 6598 8802

OVERSEAS JOINT VENTURE

Cambridge Multi-Chem Electronics Corporation

SEPZ, First Cavite Industrial Estate

BRGY, Langkaan, Dasmarinas

Cavite 4114, Philippines

Tel : (63 46) 402 0361 Fax : (63 46) 402 0362

ASSOCIATED COMPANY

Hawera Precision Tec Pte Ltd

11 Tuas Avenue 5 Singapore 639337

Tel : 6863 1318 Fax : 6863 1618

OVERSEAS ASSOCIATED COMPANY

Hawera Precision Tec (Suzhou) Co., Ltd

No. 28 Su Tong Road, Suzhou Industrial Park

Jiangsu Province, PRC 215021

Tel : (86 512) 6252 9822 Fax : (86 512) 6252 9809

[ C O R P O R A T E D I R E C T O R Y ]

32

Page 35: The H le Solution Provider

Multi-Chem Limited 11 Tuas Avenue 5 Singapore 639337 Tel: (65) 6863 1318 Fax: (65) 6863 1618