OUR FUTURE

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OUR FUTURE - Intraco Limited

MOULDINGOUR FUTUREINTRACO Limited Annual Report 2010


ContentsCorporate Information 1Chairman’s Statement 2Board of Directors 4Group Senior Management 6Business Review 7Financial Highlights 8Corporate Governance Report and 9Statutory Accounts


INTRACO Limited Annual Report 2010Corporate InformationCompany SecretariesMr Chew Kok LiangMr Wee Jee KinAuditorsKPMG LLP16 Raffles Quay#22-00 Hong Leong BuildingSingapore 048581Audit Partner – Ms Karen Lee(appointed in 2010)Share RegistrarKCK CorpServe Pte. Ltd.333 North Bridge Road#08-00 KH Kea BuildingSingapore 188721Registered OfficeINTRACO Limited348 Jalan Boon LaySingapore 619529Tel : 65 6586 6777Fax : 65 6316 3128Email : admin@intraco.comWebsite : www.intraco.comBankersDevelopment Bank of Singapore LimitedUnited Overseas Bank Limited1


INTRACO Limited Annual Report 2010Chairman’s StatementBEING AGILEANDRESPONSIVE TOCHALLENGESEXECUTIVE CHAIRMANDR ALLAN YAPOVERVIEWBoosted by a strong recovery which started in late 2009,Singapore’s GDP in the first half of 2010 grew by a record18.1% in line with economies around the world. However,towards the second half of the year, this rebound wasaffected by global events such as the Eurozone debt woesand Thailand’s political turmoil. This has led to countriesaround the world, including the United States of America,to introduce more initiatives to spur economic activities.These events have also affected the stellar economic growthin Singapore, and GDP for the full year of 2010 rose by14.5%.In spite of this, growth was not uniform across all industriesas certain sectors, such as the semiconductor industry, wereaffected more significantly than others. Being one of the keybusiness segments of the Intraco Group (“the Group”), thechallenging semiconductor industry has inevitably affectedour overall performance.BEING NIMBLE AND RESPONSIVE TO CHANGESHaving more than 40 years of experience, we are mindfulof the fast changing business environment and the need tobe agile and responsive to challenges. We understand theimportance of identifying and delving into other businesssegments that will become potential avenues of sustainablegrowth and profitability for the Group. We are also inthe process of reviewing our business model to be morecompetitive and relevant in the industry.In line with our restructuring process, the Group has forayedinto plastics, minerals and metals trading which haveproduced positive results. Plastics trading, in particular,registered strong revenue growth of 43% in the financialyear (“FY”) 2010 as compared to FY 2009. Overall, thisbusiness segment accounted for 65% of the Group’s totalrevenue, and has contributed substantially to the Group’sbottom line.2


INTRACO Limited Annual Report 2010HAVING MORE THAN 40 YEARS OF EXPERIENCE, WE ARE MINDFUL OF THEFAST CHANGING BUSINESS ENVIRONMENT AND THE NEED TO BE AGILEAND RESPONSIVE TO CHALLENGES. WE UNDERSTAND THE IMPORTANCEOF IDENTIFYING AND DELVING INTO OTHER BUSINESS SEGMENTSTHAT WILL BECOME POTENTIAL AVENUES OF SUSTAINABLE GROWTHAND PROFITABILITY FOR THE GROUP. WE ARE ALSO IN THE PROCESSOF REVIEWING OUR BUSINESS MODEL TO BE MORE COMPETITIVEAND RELEVANT IN THE INDUSTRY.Over the past years, the Group hasdeveloped its leasing, management,operation and maintenance oftelecommunication infrastructurebusiness in partnership with localtelecommunication operators in theSingapore North East MRT Line (NEL).We will continue to use our strengthand growing operational experienceto explore more opportunities in thissector.Additionally, to streamline operationsand realign our business, the Grouphad disposed off its equity stake inIntelorg Pte Ltd and Abecha Pte Ltd fora sum of S$1.28 million. This will allowthe Group to focus its revenue to growother segments with better potential.GROUP PERFORMANCEIn FY2010, the Group’s turnover fell2.9% to S$191.0 million as comparedto S$196.7 million in the previousyear. This is primarily attributable tostiffer competition in the semiconductorindustry and a more stringent selectionof projects undertaken by the Group.Net profit attributable to shareholders ofthe Group declined to S$378,000 inFY2010, as compared to S$3.1 millionin FY2009. The comparatively highernet profit attributable to shareholdersof the Group in FY2009 reflected aone-time write-back of over provisionof prior years’ tax.Despite this, we are well-positionedin our new business segments. This,together with our continued efforts torevamp the Group’s business model,gives us confidence that the Group’sperformance in the foreseeable futurewill remain resilient, barring anyunforeseen circumstances.PROPOSED DIVIDENDTo reward our faithful shareholders,the Directors have recommended a firstand final tax-exempt (one-tier) dividendof 0.3 cent per ordinary share, tobe approved by shareholders at theupcoming Annual General Meeting.A CAUTIOUS OUTLOOKWhile overall economic conditionscontinue to be positive, politicalinstability in the Middle East, high oilprices and inflation are likely to be thechallenges that the Group will face.Therefore, we remain cautious on thebusiness outlook for the coming year.ACKNOWLEDGEMENTS ANDAPPRECIATIONFinally, on behalf of the Board ofDirectors, I would like to express mygratitude to the Group’s managementteam and staff for their many invaluablecontributions and dedication towardsthe Group. I would also like to take thisopportunity to express my appreciationto all shareholders, business associates,partners and customers for theunwavering support that they havegiven to the Group over the years. Lastbut not least, I would like to extend myappreciation to the Board of Directorsfor their guidance and leadershipthrough the years.3


INTRACO Limited Annual Report 2010Board of Directors.01.02.03.04.051. DR ALLAN YAPEXECUTIVE CHAIRMAN2. DR TAN NG CHEEDEPUTY CHAIRMAN/NON-EXECUTIVE DIRECTOR/LEAD INDEPENDENT DIRECTOR3. MR FOO DER RONGEXECUTIVE DIRECTOR4. DR TAN BOON WANNON-EXECUTIVE DIRECTOR/INDEPENDENT DIRECTOR5. MR HOON TAI MENGNON-EXECUTIVE DIRECTORAudit CommitteeDr Tan Boon Wan (Chairman)Dr Tan Ng CheeMr Hoon Tai MengNominating CommitteeDr Tan Ng Chee (Chairman)Dr Tan Boon WanMr Hoon Tai MengRemuneration CommitteeDr Tan Ng Chee (Chairman)Dr Tan Boon WanMr Hoon Tai Meng4


INTRACO Limited Annual Report 2010DR ALLAN YAPEXECUTIVE CHAIRMANDr Allan Yap was appointed as Executive Chairman ofIntraco Limited on 3 December 2003. His portfolio includes28 years of experience in finance, investment and banking.Dr Yap is the Executive Chairman of PSC Corporation Ltdand Tat Seng Packaging Group Ltd. He is the ExecutiveDirector of Rosedale Hotel Holdings Limited (formerly knownas Wing On Travel (Holdings) Limited) and the Chairman ofHanny Holdings Limited, both of which are Hong Kong-listedcompanies. He is the Chairman of China Enterprises Limited,the shares of which are traded on the OTC Securities Marketin the United States of America. Dr Yap is the Chairman andChief Executive Officer of Burcon NutraScience Corporation,a Canada-listed company. He received an Honorary Degreeof Doctor of Laws from the University of Victoria, Canada.DR TAN NG CHEEDEPUTY CHAIRMAN/NON-EXECUTIVE DIRECTOR/LEAD INDEPENDENT DIRECTORDr Tan Ng Chee joined the board in December 2002 andis a member of the Audit Committee and Chairman of theRemuneration and Nominating Committees. He studied lawin England and obtained a doctorate in law at the Universityof Oxford. Dr Tan had previously worked at JP Morgan’soffices in New York, London, Kuala Lumpur, Singapore andHong Kong where he was the Vice President and RegionalManager of Morgan’s trust and investment business in Asia.Dr Tan returned to Singapore in 1989 and became theExecutive Vice President of Singapore’s Overseas Union Bankand was responsible for the bank’s treasury division and allits businesses and investments overseas. Concurrently, hewas also appointed Chief Executive of International Bank ofSingapore Ltd and Chairman of OUB Bullion & Futures Ltd.Currently he serves as an independent director on the boardsof Hotung Investment Holdings Ltd, LGT Bank in Liechtenstein(Singapore) Ltd, ACRU China + Absolute Return Fund Ltdand Prudential Assurance Company Singapore (Pte) Ltd.(where he is the Chairman of the Audit Committee). Dr Tanis also an Adjunct Professor of Law at the National Universityof Singapore Law School at which he teaches a course inComparative Corporate Governance to final year LLB andLLM law students, and is an examiner to Ph.D students inCompany Law and Corporate Governance. Dr Tan alsoteaches a similar course to postgraduate LLM students at theEast China University of Politics and Law (formerly St John’sUniversity) in Shanghai, China.MR FOO DER RONGEXECUTIVE DIRECTORMr Foo Der Rong has served as an Executive Director on theBoard since 3 December 2003. He has been holding theposition of Managing Director and Chief Executive Officerof PSC Corporation Ltd for the past 8 years and is presentlythe Executive Director of Tat Seng Packaging Group Ltd.Both of these Companies are listed on the Mainboard ofthe Singapore Stock Exchange. Mr Foo graduated with aBachelor of Commerce degree from Nanyang University.He has a wealth of experience and knowledge in businessdevelopment, corporate restructuring, investment strategiesand operations management in FMCG, services andmanufacturing. Mr Foo is also active in community serviceand is the Vice Chairman of Teck Ghee Community Club.DR TAN BOON WANNON-EXECUTIVE DIRECTOR/INDEPENDENT DIRECTORDr Tan Boon Wan sits on the Boards of several energyrelatedcompanies including Concord Energy Pte Ltd andConcord Refinery Pte Ltd. Presently, he is the Non-ExecutiveChairman of Provenance Capital Pte Ltd. Dr Tan is a formerElected Member of the Singapore Parliament for the Ang MoKio GRC from 1997 to 2006, during which he served on theGovernment Parliamentary Committees for Education; Financeand Trade & Industry; and Information, Communication andthe Arts. Dr Tan was awarded the Public Service Medal(PBM) in 1993 for his contributions to the community.MR HOON TAI MENGNON-EXECUTIVE DIRECTORMr Hoon Tai Meng has more than 14 years of legalpractice experience, and is a Partner in KhattarWong. Heholds a Bachelor of Commerce Degree in Accountancyfrom Nanyang University and a LLB (Honours) from theUniversity of London. Mr Hoon is a fellow member of theInstitute of Certified Public Accountants (Singapore), theChartered Institute of Management Accountants (UK) andthe Association of Chartered Certified Accountants (UK).His other directorships in public listed companies includeChinese Global Investors Group Ltd (formerly known asAuswin Holdings Limited), Chip Eng Seng CorporationLtd, Dynamic Colours Limited, Sin Ghee Huat CorporationLimited, Thai Village Holdings Limited, Time WatchInvestments Ltd and Yangtze China Investment Limited.Mr Hoon has around 20 years of experience in financialplanning and management, audit, tax and corporatesecretarial function.5


INTRACO Limited Annual Report 2010Group Senior ManagementMr Tan Puay Chuan, Mr Ronald Lim, Ms Connie ChangMR RONALD LIMCHIEF OPERATING OFFICERMr Lim brings with him more than 32 years of experience in both senior and general management positions with MNCs andlocal corporations in plastic manufacturing and packaging industries. He currently serves as the President of the SingaporePlastic Industry Association. He also holds the appointment of Permanent Secretary-General at ASEAN Federation of PlasticIndustries and is a founding member of Asia Plastics Forum.MS CONNIE CHANGFINANCIAL CONTROLLERHEAD OF FINANCE DIVISIONMs Chang has more than 25 years of experience in senior and general management positions in finance with MNCs andlocal corporations in food related and trading industries. She is a fellow member of the Association of Chartered CertifiedAccountants (UK).MR TAN PUAY CHUANCHIEF EXECUTIVE OFFICERINTRACO TECHNOLOGY PTE LTDMr Tan has more than 29 years of senior and general management experience with the Intraco Group. He holds a Bachelorof Engineering degree in Electrical Engineering from the National University of Singapore.6


INTRACO Limited Annual Report 2010Business ReviewBEING A LEADING INTEGRATED SOLUTIONS TRADING COMPANY, THE INTRACO GROUP(THE “GROUP”) HAS ESTABLISHED A GLOBAL MARKET NETWORK THROUGH VARIOUSSTRATEGIC GLOBAL PARTNERSHIPS. THIS HAS ALLOWED THE GROUP TO EXTENDOUR REACH TO A DIVERSE VARIETY OF BUSINESSES.TRADING AND OTHERSThe Group’s Plastics division continuedits good performance in the financialyear (“FY”) 2010, supported by strongdemand and higher plastics resin prices.Coupled with our ability to source foran expansive avenue of supply whileenlarging our end-user customer base,the Group saw revenue of this divisionrise by 43% against that in FY2009.In view of China’s rapid industrialisation,we also shifted our focus to developingmore supply sources for strategicminerals, such as iron ore and coal,to meet growing demand. With theGroup’s long business history andpresence in China, our marketingarms in Shanghai and Beijing are wellequipped to develop long-term andreliable suppliers and customers.Since 2003, the Group’s WirelessTelecommunication division has beenleasing telecommunication infrastructurein the North East MRT Line (“NEL”)for commercial telecommunicationservices to the three local MobileTelecommunication Operators (“MTO”).We also provide professional servicesfor the management, operationand maintenance of the NELtelecommunication infrastructure. TheGroup is proud to announce that theoverall operational performance of ourNEL telecommunications infrastructureexceeded the expected Quality-of-Service Standards imposed by theInfocomm Development Authority ofSingapore (“IDA”). This is a testamentto the Group’s exceptional servicestandards and we will continue tomaintain our high standards in this areato achieve higher profitability.Overall, the Trading & others segmentrecorded an increase in revenue of31.3% to S$124.3 million in FY2010from S$94.7 million in FY2009.PROJECTSWith the focus on LED related projectsin recent years, the Group’s Lightingsdivision saw an increase in gross profitmargin despite a decline in overallsales as compared to FY2009. Wewill continue to monitor and reviewthis division’s business model, so asto be in line with the Group’s businessdirections. In FY2010, the Projectssegment recorded a revenue of S$13.6million as compared to S$30.2 millionin last year.SEMICONDUCTORDuring the year, the Group’sSemiconductors segment continued itsstrategy to strengthen the distributionchannel network for Advanced MicroDevices (AMD) processors, as wellas IT products and accessories in theSouth-East Asia region, particularly inIndonesia. As part of our business modelreview and diversification strategy, weterminated some of the uncompetitivesemiconductor agency lines andincreased our investments and focus inthe provision of design solutions to thehospitality and healthcare industries.Revenue for the Semiconductor segmentdipped to S$53.1 million in FY2010as compared to S$71.8 million in lastyear.Nevertheless, in view of the evolvingbusiness environment needs, we willcontinue to review our business modelto stay competitive, and create newsustainable avenues of growth andgreater profitability for the Group.7


INTRACO Limited Annual Report 2010Financial HighlightsREVENUE BY GEOGRAPHICAL SEGMENTSREVENUE BY OPERATING SEGMENTS10%Greater China3%India2%Others7%Projects45%Rest of ASEAN40%Singapore65%Trading and others28%SemiconductorsRevenue ($’000) Profit before income tax ($’000)364,692407,7107,732191,029 196,710294,5114,5672010 2009 2008 2007 2006 32620106991,0282009 2008 2007 2006Earnings per share (cents)Net asset value per share (cents)6.1678 79 77 75 762010 2009 2008 2007 2006 2010 2009 2008 2007 20063.833.151.210.388

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