Chairman's Statement

Extracted from Annual Report 2015

Chairman

Dear Shareholders,

It is my pleasure to inform you that for the financial year ended 31 December 2015, Excelpoint Technology Ltd reported a 13.6% growth in revenue, from US$729.0 million to US$828.3 million. Net profit after tax amounted to US$4.4 million, which was lower than the US$7.1 million reported in financial year 2014. However, excluding the non-recurring gain of US$3.6 million from the disposal of property in the previous financial year, there is a 25.7% increase from the net profit before extraordinary items of US$3.5 million reported in FY2014.

Despite the challenging business environment in 2015, I am very pleased that everyone worked together as a team, remained resilient, and succeeded in delivering the good set of results.

Corresponding to our performance this year, the Board is proposing an ordinary dividend of 2.5 Singapore cents per share, subject to your approval at our forthcoming Annual General Meeting.

The Year in Retrospect

We encountered a challenging business environment this year commencing with the uncertainties in the region's economy, led by the contraction of China's economy. Subsequently, the devaluation of the Chinese Yuan in the latter part of the year also left its marks on businesses.

Despite the tough operating environment, we saw mergers and acquisitions of big technology giants such as Avago and PLX, and Qualcomm and CSR. These events have released new opportunities and developments that have benefited our business. I believe more opportunities will arise once these mergers are finalised and I am confident of our teams' ability to capture the new businesses.

In addition, the arrival of the Internet of Things ("IoT") has also opened up new segments for us. With the addition of new product lines such as Hittite, Bourns, Power Integrations and others, we are optimistic about capturing the business opportunities that will surface in the IoT arena in the forthcoming years.

Notwithstanding the challenging business environment, all business units from both regions reported higher sales and I would like to take this opportunity to express my appreciation to all my colleagues for their hard work. The Hong Kong business unit, which includes mainly our businesses in China and Hong Kong saw a 19.1% increase in revenue, while the Singapore business unit, which covers sales to ASEAN countries and India reported a 6.5% rise in revenue.

On 29 July 2015, in compliance with Minimum Trading Price regulation from the Singapore Exchange, Excelpoint consolidated its shares on a 5:1 ratio. This exercise was completed on 11 August 2015. Consequently, as at 11 August 2015, the total number of shares in the market is 102,124,040 ordinary shares.

Another highlight this year was the SG50 event, during which we celebrated our country's 50th anniversary since independence. We participated alongside other indigenous home-grown enterprises to sponsor a year-long programme and over the following 12 months, our logo will be featured on Scoot's latest Boeing 787 Dreamliner- "Maju-lah". Together with Scoot and the other local enterprises, we proudly join our country in celebrating this important milestone.

North Asia

China remains the largest revenue contributor for Excelpoint. At the close of FY2015, revenue contribution from China accounted for about US$492.4 million, which is equivalent to approximately 59.4% of Excelpoint's aggregate revenue.

The team operating in China faced many challenges this year due to the uncertainties in the country. Nonetheless, despite growing competitive pressure, we saw growth across our business segments with the addition of new product lines that released new business opportunities for us. The handset segment continued its lead as the major contributor with increased demand for domestic brands.

On the same note, the new developments from our R&D teams in the area of wireless solutions harvested new opportunities. Going forward, we see strong potentials from our applications in the China market. In the new financial year, we remain confident about our ability to continue with our business growth in this country, with significant impact from our wireless audio and headset segment.

South East Asia and India

This year, the Southeast Asian countries and India were inundated with many challenges created by changing government policies and depreciation of the regional currencies against the US dollar. These events gave rise to uncertainties and exerted tremendous pressure on businesses in these economies. Despite difficult operating conditions, our business was resilient and this business segment reported a 6.5% revenue increase compared to the previous financial year.

The businesses in these countries came from the IoT arena, with focus segments such as smart homes, mobile handsets and wearables. With India's 'Made in India' drive to boost their ambition to become a manufacturing powerhouse, developments are in progress, especially in the telecommunication infrastructure. Coupled with the growing awareness of energy conservation and environmental protection within this region, the demand for products related to these key segments has increased. We are confident that our experienced teams in these countries will be able to fulfill the market needs and capture the market share in the various domestic markets.

I firmly believe that the Southeast Asian countries and India contain abundant opportunities for the electronic industry and together with the team, we are committed to invest resources in these markets.

Chairman

The Prospects

The challenges we saw last year look set to continue into the 2016 financial year. However, with new solutions and products in the offing, some of which were unveiled in the recent Consumer Electronics Show ("CES"), the industry may see some opportunities. We are preparing ourselves to mine these opportunities, but at the same time, we are also exercising caution in our business management.

In Appreciation

I would like to take this opportunity to thank our principals, customers, bankers, employees, business associates and last but not least, our shareholders, for your trust and confidence in Excelpoint. With expectations of a challenging year ahead of us, I look forward to your continuing support and to delivering another good set of performance to all of you.

Yours sincerely,

Albert Phuay Yong Hen
Chairman and Group CEO