Report to Shareholders

Dear Shareholders,

I am pleased to present the annual report for the financial year ended 31 March 2024 (“FY2024”). This year has been an acid test to our business resilience and adaptability in the face of considerable challenges. Our financial performance was impacted by a non-recurring charge related to a property demolition to make way for our flagship Chasen Logistics Hub (“CLH”) and challenging business conditions marked by on-going geopolitical tensions between global powers, elevated interest rates and inflation, and slowing growth.

As previously announced, the Group is focusing on completing the disposal of the City Zone Group of Companies, approved by shareholders at the Extraordinary General Meeting (“EGM”) held on 24 April 2024. This corporate action to unlock intrinsic enterprise value, will benefit all shareholders and significantly strengthen the Group’s financial position, while providing us with the flexibility and resources to pursue new growth drivers, business opportunities and enhance shareholders’ value.

We are committed to ensuring the resilience and vitality of the remaining businesses. Despite the increased complexities of the global economic environment, we are determined to seize new business opportunities and expand our market share. Our strategy is centred on navigating these challenges with agility, leveraging our strengths and adapting swiftly to the changing market dynamics.

Additionally, CLH, an energy-efficient five-storey ramp-up warehouse development with future cleanroom facilities, will be constructed to BCA Green Mark certification standard. It will propel the Group’s sustainability adoption with full EV charging from electric cars, forklifts to prime movers and photo voltaic (“PV”) solar panel installation on its reinforced concrete roof-top heavy vehicles park. This multi-level modern warehouse facility will further strengthen the Group’s integrated connectivity with our semiconductor and OEM customers in Singapore and the industrial corridors of Malaysia, Thailand, Vietnam, China and beyond. The future cleanroom, located on the first storey, will present the opportunity for Chasen to ascend and capture higher value-add business offerings in line with Singapore’s national goals. It is making remarkable progress and on schedule to attain TOP in the first half of 2025

Financial Performance

The Group incurred a FY2024 loss after tax of S$6.6 million. This was primarily due to a non-recurring charge of S$4.7 million, attributable to the demolition of our property at 18 Jalan Besut, Singapore, and a weakened business performance amid the challenging global business landscape, particularly in the People’s Republic of China (“PRC”).

The main contributor to the remaining business loss was the Technical & Engineering segment’s components and parts manufacturing unit in the PRC, which faced reduced demand due to economic conditions and changes in product mix, leading to sub-optimal plant utilisation. However, our solar panel specialist installation unit continued to perform well, highlighting the potential in sustainable energy markets.

The Specialist Relocation segment was impacted by geopolitical factors and a slowdown in semiconductor demand. On the other hand, the Third Party Logistics segment demonstrated resilience, achieving strong performance in both its top and bottom lines despite economic adversity.

Cash and cash equivalents increased to S$18.9 million as of 31 March 2024, up from S$18.4 million as of 31 March 2023.

Looking Ahead

We anticipate continued economic headwinds and trade frictions due to geopolitical issues. However, these challenges also present opportunities. We will work closely with our customers as they adjust their strategies and investments and relocate to more favourable business locations, leveraging these shifts to our advantage.

Specialist Relocation

The slow recovery to pre-pandemic business activities in the PRC saw a decline in revenue especially in the display panel market, coupled with a slow ramp-up in the adoption of OLED technology. Additionally, the global reduction in demand for semiconductor chips and electronics since late 2022 contributed to the underperformance of this segment. The nascent generative AI that started with OpenAI releasing ChatGPT in 2022, has seen exponential increase in demand for AI-related chips though these demands has been largely met by a single supplier. The supply of semiconductor chips to feed AI-related demands is likely to broaden out to other industry players and potentially add to overall recovery of the sector vis-à-vis Specialist Relocation activities.

On the back of the above trends, cyclical recovery and geopolitical-influenced movement of businesses and plants, we anticipate a renewed positive outlook and opportunities for further expansion in market share within this segment particularly with the development of Chasen Logistics Hub. This facility will further support our diversified customers in the regions we operate in and enhance our service offerings.

3PL

The 3PL segment continued to demonstrate resilience among economic adversity, improving market share in local trucking by enhancing cost efficiency through optimised truck fleet and deployment and cross-selling of the warehouse business.

With the anticipated disposal of City Zone Group of Companies, the Group will focus on local transportation and warehouse activities complementary services to our core logistics operations.

T&E

The T&E segment’s components and parts manufacturing unit in the PRC saw reduced demand due to changes in product mix and a resultant drop in plant utilisation below optimal levels, leading to a significant decline in revenue from the previous year.

While our solar panel specialist installation unit continued to perform well and has captured a meaningful share in the energy transition to sustainable energy sources both in the Housing & Development Board (“HDB”) and commercial buildings, we shall not rest on our laurel. We are looking to the PV solar installation in CLH to explore and transition into additional value-add in the renewable energy transition story with selected customers to enable their green energy transition while potentially capturing recurring revenue streams for ourselves.

The Group will double-down efforts in seeking both top and bottom lines to grow and sustain the performance of our remaining businesses by strategically and wisely deploying allocated proceeds from the disposal of the City Zone Group of Companies in the coming year as approved by shareholders. By adapting to market dynamics, capitalizing on opportunities, and managing business risks, we aim to drive growth and value creation for all our stakeholders.

Commitment To Sustainability

Our commitment to sustainability remains unwavering. We recognize the importance of environmental stewardship and are actively seeking ways to reduce our carbon footprint across all operations and commensurate with all customers’ expectations.

The success of our solar panel specialist installation unit is a testament to our dedication to sustainable practices. We are also exploring other green initiatives, such as implementing energy-efficient technologies in our logistics and warehousing operations and transiting progressively toward using hybrid and electric vehicles in our transportation fleet. These efforts would align with our long-term vision of becoming a leader in sustainable business practices and contributing positively to the environment and communities we serve. With regard to this, we have revised our Vision and Mission statements to reflect our assurance toward sustainability.

Appreciation

Chasen celebrates its 25th Anniversary this year, and on behalf of the Group, I would like to extend my heartfelt gratitude to our customers, business partners and shareholders for their continued support. I also want to express my sincere thanks to my fellow board directors, management staff and all employees especially those who had loyally stayed the course with us, for their dedication and efforts, which have established Chasen as a trusted service provider for many companies and industries. Additionally, on behalf of the Board, I would like to thank Mr. Chew Mun Yew, who will be retiring after serving the Company as an Independent Director for the past eleven years. I wish Mr. Chew all the very best in his future endeavours.

Furthermore, I am pleased to welcome Ms Elaine Beh, who will be joining the Board as an independent director on 1 August 2024. We are eager to have her on board and look forward to her contributions.

LOW WENG FATT
Managing Director & Chief Executive Officer