Report to Shareholders

Dear Shareholders,

FY2014 has been a positive year for Chasen Holdings on the back of continued global economic recovery. We continue to capitalize on our core competence in all three business segments leveraging on our regional leadership position as a turnkey relocation specialist to meet upstream integrated service needs of our local, regional and global customers. This thrust is in line with the Group’s Vision as a higher value-add Integrated Service Provider in the facility installation space.

The Group embraced this challenging transition to become a leading regional player as an Integrated Service Provider, and with boldness and the support of stakeholders and motivated employees, is globalizing our specialist relocation solutions. 

On the back of this economic framework and challenges, I am happy to report that the Group’s FY2014 revenue surpassed the S$100 million revenue mark for the first time in our corporate history. We continue to offer higher value add services and successfully launched new business initiatives such as the Facilitized Refurbishment and Testing Centre (FRTC) for a key OEM (Original Equipment Manufacturer) in refurbishing used semi-conductor related machines. During the year we also secured our maiden contracts from new markets such as the Middle East. 

The FRTC is another example of the Group’s ability to continue diversifying our revenue source to achieve business resilience. The Group is also beginning to monetize several areas of business initiated previously that are expected to be growth drivers to the top and bottom lines.

Overall, Chasen’s performance was underpinned by the continued investment inflows into our key markets – China and ASEAN. Financially, the Group’s revenue momentum boosted our profitability as we reversed from a loss in FY2013 (arising from write downs following the outcome of an arbitration case) to a net profit after tax of S$3.4 million in FY2014. All in all, the results from both strategic and financial standpoints, gave Chasen more room to continue growing the business exponentially.

During the year, shareholders approved the addition of property development as a new business segment of the Group. Though the Group has not yet undertaken any project in this industry, management continues to explore opportunities in this new business segment.

Growth Strategies: Leverage proven track record in regional markets to extend global reach augmented by our turnkey integrated capabilities

China and ASEAN will continue to be the Group’s anchor growth markets as movement of manufacturing facilities through this region continues to be vibrant. In 2013, Foreign Direct investment (FDI) into China topped US$117.6 billion while FDI into ASEAN stood at US$128.4 billion. Over the medium to long term, and in line with our strategy to offer integrated service providing turnkey solutions in the manufacturing and/or service operational facility space, the Group will leverage our significant and proven track record in current regional markets to explore business opportunities with MNCs that also operate outside of this region including businesses outside of the Group’s current customer base and industries.

The intent to continue broadening our revenue streams through a widely diversified customer’s base from different industries especially those that are counter-cyclical would bring resilience to the Group’s financial performance and entail global marketing initiatives in the new financial year.

Besides geographical expansion, the Group has been busy operationally integrating specific elements within the three core business segments (Specialist Relocation Solutions, Technical & Engineering Services and Third Party Logistics) to enhance integrated capabilities and organizational effectiveness in line with our Vision. 

Rationalizing operation and administration through operational integration is ongoing and positions Chasen to service a wider range of customers’ needs not only in the relocation of plants, but decommissioning/commissioning of existing machinery and equipment, plant maintenance, customized facility requirement and other value-adding services.

Strong Competitive Edge

Chasen continued to break new grounds in the year under review. On 16 October 2013, we announced that we were awarded a maiden turnkey relocation contract from the Middle East to relocate a wafer fabrication facility to Singapore. On 7 January 2014, Chasen announced the setting up of its first Facilitized Refurbishment and Testing Centre (FRTC) for a key Japanese OEM customer. This involves the provision of a Class 100K cleanroom refurbishment facility for wafer fabrication machine tools so as to shorten the turnaround time and ease the cost of transportation within the equipment refurbishment supply chain. The FRTC, if successful, can be further expanded to attract other OEMs to take up Chasen’s value-add offering, another source of revenue for the Group resulting from an extension of our specialist relocation business segment activity.

Throughout the year, Chasen announced the awarding of multi-million dollar specialist relocation turnkey contracts, ranging from the relocation of 8.5-Generation TFT LCD (thinned-film transistor liquid crystal diode) manufacturing facilities to Guangzhou, China as well as the move-in and installation of an aluminum products manufacturer in Vietnam, and other technical and engineering cum construction projects.

As evidenced by the range of our contracts, Chasen’s cross-border relocation capabilities remain our key strength as we continue to be the preferred vendor to several leading multinational manufacturers and OEMs. As a global marketing initiative, we would market our capability to relocate equipment and entire rocess lines to and from far-flung regions of the world such as the Americas, European Union and most recently, the Middle East and this part of the world, to the headquarters of MNCs in order to bid for their global relocation projects.

Our Human Capital

At the heart of Chasen’s service capability is the dedication, teamwork, effectiveness and competence of our workforce. With the emphasis on cross-border capabilities and having close to a thousand employees regionally, Chasen sought to streamline and harmonize our human resource (HR) policies and practices across the Group. With the guidance of leading HR consultants, our HR Harmonization Project, which started in November 2012, was completed in August 2013. I believe Chasen’s management and staff are on track towards a well-motivated and effective team. 

Beyond establishing a standard HR management policy and administrative procedures, the Group has also identified critical skills, training plans, compensation and benefits to ensure that each member of our staff is well equipped and motivated to perform the task they were hired for as well as for the next job in the organizational hierarchy. Following the completion of the consultancy project, the Group is in the midst of adapting and integrating the best HR practices and SOP for implementation in all Singapore subsidiaries before extending them to our overseas business units.

Financial Performance

In brief, our Group’s FY2014 revenue rose 28% to S$101.5 million from S$79.4 million FY2013. This improvement was mainly due to an 87% increase in revenue contribution from the Specialist Relocation business segment, as compared to the previous financial year. Chasen’s Vietnam operation also made its maiden contribution to overall group revenue and profit as a subsidiary. In terms of profitability, the Group’s gross profit rose 38% to S$22.5 million in FY2014, as compared to S$16.3 million in FY2013. Net profit after tax stood at S$3.4 million in FY2014 as compared to a loss of S$7.3 million in FY2013, which was the result of required accounting adjustment following the outcome of an arbitration case.

Prospects and Outlook

The Group’s prospects in the current financial year will continue to be led by the positive outlook for the Specialist Relocation business segment in China and Vietnam. The successful execution of these relocation projects will contribute significantly to our revenue and profitability in the coming financial year. Geographically, our home country, Singapore, which hosts the most number of operating subsidiaries, would continue to contribute the bulk of Group revenue. Internally, the Group would seek to trim overall administrative overheads and improving operating efficiencies in order to boost our bottom-line further.

Investor Relations

Chasen believes that a well-structured and robust investor relation programme based on effective, regular, fair and timely communication, will lead to long term appreciation in share value. Investor relation plays an integral role in ensuring a consistent and transparent means of communicating and interacting with our shareholders. The Board can then take action that better balances shareholders needs and the long term needs of the Group as a whole.

Primary to its investor relations programme is the disclosure based regime in which Chasen operates. The Group makes timely material disclosures on an immediate basis as required under the Listing Manual of the SGX-ST or as soon as possible, if an immediate disclosure is not practicable.

Chasen regularly engages stock analysts in meetings with its key senior management team to review the Group’s most recent financial performance and to discuss its strategies and outlook. We also engage with the mainstream media to publish relevant news about the Group whenever a press release has been issued.

Capital Planning

As the regional expansion and business integration gathers pace, the Board of Directors regularly reviews the Group’s capital adequacy and explores various sources of funding. On 8 November 2013, in an effort to boost its capital base, the Group proposed a renounceable non-underwritten rights issue of 111,998,816 Warrants (“Warrants”), on the basis of four (4) Warrants for every ten (10) existing Shares held by the Entitled Shareholders on the existing issued share capital of the Company of 251,910,793 ordinary shares (excluding 332,502 treasury shares) (“Shares”). The issue price was S$0.01 (“Issue Price”) for each Warrant, each Warrant carrying the right to subscribe for one (1) new ordinary share in the capital of the Company (“New Share”) at an exercise price of S$0.12 (“Exercise Price”). At the close of the Warrants Issue exercise, 100,566,756 warrants were listed on SGX-ST on 25 March 2014. This latest Warrants issued, if fully exercised within three years from the date of its listing on the Mainboard, would bring the company a gross proceeds of S$13,073,678. As at the date of this report, 5,383,586 warrants from this recent exercise have been converted into shares of the Company with 95,183,190 outstanding warrants (security code ChasenHoldingsW170320) available for conversion.

Appreciation

On behalf of the Group, I would like to take this opportunity to thank our customers, advisors, partners and business associates for their continued support for Chasen in FY2014. To the shareholders of the Group, I extend our deepest appreciation for your patience and trust as we navigated through the various challenges throughout the year. Last but not least, the Board, management and staff of Chasen deserve special mention as our positive performance this year would not have been possible without your dedication, hard work and loyalty to the Group.

LOW WENG FATT
Managing Director and CEO