Chairman's Statement

Extracted from Annual Report 2017

Chairman

Dear Shareholders,

On behalf of our Board of Directors (the "Board"), I am pleased to inform you that our team has delivered a record revenue of US$1,146.4 million in FY2017, a 16.0% increase from US$988.2 million in FY2016.

Our net profit after tax of US$8.1 million for FY2017 was an increase of 14.8% from US$7.1 million in the previous year.

In view of our 2017 results, the Board proposes an ordinary dividend of 3.0 Singapore cents per share and a special dividend of 1.5 Singapore cents per share, subject to your approval at the forthcoming Annual General Meeting.

The Year in Retrospect

2017 has seen some positive recovery in the economy, alongside with the increased spotlight on the electronics industry. Our team has worked hard to grow the business – our Hong Kong and Singapore business units grew by 13.4% and 19.3% respectively.

The business growth was driven primarily by growing technological trends, which increased the demand for our products and services, reinforcing our management team's long-term confidence in the business. Asia's electronics manufacturing supply chain has shown positive momentum, and we continue to see a rise in electronics manufacturing activities in the regions where we operate. One of the trends we continue to see is the increased requirement of electronic components in all applications as compared to the past, and this will be one of the key drivers of our growth.

This year, we celebrated a significant milestone – our 30th anniversary. We rolled out many plans to accelerate our long-term growth, both internally and externally. Apart from a joyful celebration, we also identified more beneficiaries for us to give back to society. Embracing the concept and prospects of Internet of Things ("IoT"), we built an IoT demonstration facility to showcase our research and development ("R&D") capabilities that combine cutting-edge technologies from our suppliers. We also invested in systems that would further strengthen our business efficiency and future growth.

Continuing to add value to our products and services remains a key focus for the Group, and plans and strategies are in place to strengthen this aspect. With the advent of more advanced technologies, we believe that Excelpoint is in a good position to be a technology enabler and a solutions powerhouse to all our business partners.

North Asia

At the end of FY2017, revenue contribution from our Hong Kong business unit accounted for US$625.0 million, which was 54.5% of Excelpoint's aggregated revenue.

China's economy saw growth with a stable gross domestic product ("GDP") in 2017 and a positively high Purchasing Managers Index of 51.6 in the last quarter, according to the National Bureau of Statistics of China. With initiatives such as One Belt, One Road and Made in China 2025 taking flight, there will be major infrastructure developments, which will accelerate growth in this region. China remains a key driver of our growth in Asia, especially with its aim to upgrade its manufacturing chain. With our deeply etched footprints in this region, we have established strong positions in key operating markets across Asia Pacific, and the Chinese market continues to be robust in terms of its growth.

We saw growth in our key segments, especially with the strong seasonal demand coming from new innovations and updated designs in consumer electronics such as the release of new smartphones, which boosted the manufacturing sector.

In the new financial year, we remain focused at maximising our R&D efforts in our different technological applications, especially our key segments such as mobile and computing, consumer, and industrial and instrumentation.

South East Asia and India

Southeast Asia has been growing significantly, with many exciting developments stemming from government initiatives for infrastructure growth. At the end of FY2017, revenue contribution from our Singapore business unit accounted for US$521.4 million, which was 45.5% of Excelpoint's aggregated revenue.

Among Southeast Asian nations, Singapore has taken the lead in transforming itself into a Smart Nation, where people are empowered by advanced technology and companies are encouraged to embrace the use of technology to increase productivity. This is a window of opportunity for Excelpoint, as electronics is the foundation of many advanced technologies. With our in-house R&D support, we are capable of turning component levels into modules to support these applications, and our business development unit works closely with systems integrators to incorporate these technologies. Hence, we are confident of offering value-added solutions to our business partners.

We continue to see many prospects coming from the India market as well. In recent years, India has been in the spotlight due to its government's enterprising initiatives such as Make in India, Digital India, Smart Cities, Start-up India, as well as building a cashless economy. The electronics industry in this market is poised for a paradigm shift, and with Excelpoint's strong relationships with our partners, we are in a good position to support diverse requirements from local manufacturers, from component levels and modules to design solutions. We see demand for the solutions that are jointly designed with our suppliers in areas such as power and mobile phones, set-top boxes, banking cards, point-of-sale terminals, and e-vehicles.

Excelpoint remains committed to exploring new opportunities stemming from emerging markets around our region. With the stabilisation of strategies and policies coming from different governments, we believe that we are ready to grow in this region in the coming years.

Our Journey Of 30 Years

As I look back on our journey, Excelpoint has always placed emphasis on building a robust foundation, especially on our value-added services. Investing in our in-house technical capabilities has allowed us to advance further to provide greater value to our suppliers and customers.

As one of the pioneers making inroads into China, our well-established presence has remained strong until today. Throughout the 30 years, China has remained a key driver of our growth. On top of that, we have seized the opportunity to venture early into emerging markets such as India, and are now seeing our efforts come to fruition.

Since our listing on the mainboard of the Singapore Exchange ("SGX") in 2004, we have been working hard to build a sustainable business, so as to provide value to our shareholders who have placed their trust in us.

Due to our strong belief in sustainable growth, we have achieved a remarkable breakthrough with a record revenue crossing US$1 billion this year. With this achievement, it will propel us to build a stronger capital and capability base for more growth in the coming years.

Key Corporate Milestones

Chairman

Our Business Model

We strongly believe in providing more than just the traditional value chain. We work closely with our suppliers and customers through the provision of technical capabilities that allows faster time-to-market, as well as build strategic partnerships which will aid our business growth.

Chairman

The Future Ahead

Moving forward, we believe that the plans we have in place will serve as building blocks for Excelpoint from 2018 and beyond. Our position in the value chain constantly requires us to be the bridge between our suppliers and customers, and we are well-prepared for this. The electronics industry will continue to see the proliferation of opportunities, especially with new developments from our suppliers at the recent Consumer Electronics Show ("CES") in Las Vegas, United States of America, in January 2018. The IoT arena continues to flourish, and we see the advent of new businesses. On our part, we have invested in the building of an IoT demonstration facility with cutting-edge technologies from our suppliers. This is a platform that allows our customers to have access to applications that showcases our technologies. With the recovery of the global economy, we believe challenges will still persist, but we will remain focused in order to ensure business sustainability and growth to bring value to all our stakeholders.

In Appreciation

I would like to take this opportunity to thank our Directors for their commitment in providing guidance to the Group and propelling Excelpoint to greater heights.

On behalf of our Board, I would like to thank all our stakeholders – employees, principals, customers, bankers, business associates, and shareholders – for your continued trust and confidence in Excelpoint for the past 30 years. As we embark on the next milestone of our journey, I look forward to your ardent support. We will continue to work hard to deliver sustainable growth and performance to all of you.

Yours sincerely,

Albert Phuay Yong Hen
Chairman and Group CEO