Dear Shareholders,
Persevering through the challenges in the second year of COVID-19 (Coronavirus Disease 2019) pandemic, AnnAik has grown stronger in all business divisions and delivered a remarkable profit in FY2021. Our previous strategy of “Sustaining Steel Business and Growing Environmental Business” has paid-off well as distribution and manufacturing of steel flanges divisions benefitted from the hike in steel prices and strong demand since early of FY2021. We also continue with the strategy of investment and resource allocation through expansion and upgrading of wastewater treatment plants for environmental business division in order to enhance assets value and creating solid profit and cash flows contribution to our Group on a long term basis.
As the Singapore Government has adopted a living with COVID-19 approach, pushed for high vaccination rates, cautiously opening up of economic activities and connection with the World, Singapore’s Gross Domestic Product (“GDP”) grew by 7.6% in FY 2021. As a result, the Ministry of Trade and Industry (“MTI”) is maintaining Singapore’s GDP growth forecast at 3% to 5% for FY2022. Barring any unforeseen circumstances, such as constraints caused by COVID-19 pandemic, prolonged global supply disruptions and persistent inflation, we are expecting a sustainable operating environment for our business in FY2022.
Striking a Good Performance
With the hike in steel prices, strong demand of steel products and predictable contribution of the environmental division, our Group has achieved a remarkable profit attributable to owners of the Company of S$3.09 million for the financial year ended 31 December 2021. Both distribution and manufacturing of steel flanges divisions registered a much higher turnover and profit contribution to the Group. As a reliable and longestablished stockist of steel products in Singapore, we will continue to serve Singapore and regional markets with our strong stock holding, product ranges and value-added delivery services. Our diversification of trading business strategy from steel to nonsteel products since middle of 2020 has garnered more solid momentum and achievement in FY2021. We will be developing our trading business under the distribution division to complement our core distribution of steel products and manufacturing of steel flanges businesses.
Our environmental business is maintaining its contribution of profit and cash flows to the Group in FY 2021. We are actively participating in some of the tenders in Singapore and the PRC in order to increase our order book of Engineering, Procurement and Construction (“EPC”) projects. Recent completion of upgrading of two wastewater treatment plants; Changxing Linsheng Wastewater Treatment Co., Ltd and Changxing Wusheng Wastewater Treatment Co., Ltd in FY 2021 have enhanced our assets value and capability to meet stringent requirement set by Ministry of Environment in the PRC. It is heartening to note that the environmental division has proven to be growing, especially with the current strong support from the government in green environment investment.
Realising Growth Opportunities
Another two upgrading of wastewater treatment projects in Changxing Lijiaxiang New Era Wastewater Treatment Co., Ltd and Shuanglin (Huzhou) Wastewater Treatment Co., Ltd are currently in construction and scheduled for completion in the 4th quarter of FY2022. Again, we have proven our ability in process design, adoption of treatment technology, management and investment capabilities for our environmental division. We will continue to look for similar opportunities in the PRC and South East Asia region for expansion.
The recent legal completion of the disposal of property and plant in our manufacturing division provided us with an asset-light strategy and low fixed cost operating environment in FY2022. The redeployment of cash from the disposal has also improved our Group’s gearing ratio, quick asset ratio and net current assets position. With the availability of cash, we will review our potential businesses for any restructuring exercise in order to achieve higher contribution of profit and cash flows to the Group.
Dividend
Dividend The Board of Directors is pleased to propose a first and final one-tier tax-exempt dividend of 0.7 Singapore cent per share for the year ended 31 December 2021. The dividend will be paid out to shareholders upon approval at the annual general meeting.
In Appreciation
AnnAik had a productive and fruitful year in FY2021. We managed to deliver positive results despite the challenging macroeconomic circumstances. Thanking our shareholders, customers, vendors and business partners, their continued support, trust and confidence in us have strengthen our resolve to work harder and do better. Of course, we also recognise that these results would have been impossible without the invaluable contributions from our Board, management and staff.
We remain committed to realising our strategic objectives and achieving our profitability goals. Apart from keeping a strong focus on our existing businesses, we will also adapt our strategy in tandem with shifts in the economic landscape so as to stay competitive and ready to take advantage of new growth opportunities.
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