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Chairman's Statement

Extracted from Annual Report 2016

Chairman

Dear Shareholders,

On behalf of our Board of Directors, I am pleased to announce that our team delivered a 19.3% growth in revenue, which rose from US$828.3 million in FY2015 to US$988.2 million at the close of FY2016. Our profit after tax of US$7.1 million for FY2016 was an increase of 62.0% from US$4.4 million in the previous year.

Our revenue for the Hong Kong (including China) and Singapore (including ASEAN and India) business units grew by 11.9% and 30.1% respectively.

In view of our results for the year 2016, the Board proposes an ordinary dividend of 2.5 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

Given the challenging business environment, our teams in both regions have worked hard to overcome headwinds and grow the business.

North Asia

This region remains the largest revenue contributor for Excelpoint, accounting for about US$551.1 million, which is approximately 55.8% of Excelpoint's aggregated revenue.

Despite the slowdown of the economy and challenges faced in the business operating environment such as the depreciation of the Renminbi ("RMB"), China saw growth in the field of electronics manufacturing, especially with the advent of the Internet of Things ("IoT"), Robotics and more. China's smartphone labels have gained popularity, giving rise to increased domestic demand, and this contributed to our revenue growth in the mobile segment. China's 'Made in China 2025' initiative with the goal to upgrade its domestic manufacturing chain also gave rise to the emergence of new opportunities in the industrial and instrumentation space, which is a key segment for us.

We saw more opportunities coming from the smart home sector in China, which led to the increase in adoption of new reference solutions for smart audio and smart lighting developed by our R&D team.

South East Asia and India

This region accounted for about US$437.2 million at the close of FY2016, which is equivalent to approximately 44.2% of the Excelpoint's aggregated revenue.

Despite the political uncertainties in this region, we continue to see growth led by globalisation and infrastructure developments. Our close working relationship with our partners in these markets have positioned us well to capture opportunities that arise.

We continue to be optimistic about the potential of the market in India. With the government's initiatives such as 'Make in India', it is a rising platform for the growth of technology-related manufacturing companies. The recent direction from the government to provide a cashless economy has shown the importance of integrating hardware and software capabilities, which presents an opportunity for us. With India now placed in high growth trajectory, we foresee growth in the IoT related segments such as smart security, green energy for sustainability, and connectivity.

With the advent of opportunities coming from the emerging markets, we have also expanded our footprints into new territories such as Sri Lanka, Pakistan and Bangladesh.

Our Strategy

As a regional distributor who seeks to add value to our partners, innovation is vital. In 2016, we signed a partnership with Tata Elxis as our software partner, as well as obtained the distributorship of Xilinx in India to enhance our solutions offering. To capture opportunities in the IoT segment, we set-up a dedicated team with the expertise and market knowledge to design solutions that can be applied to a broad range of applications. Ultimately, we strive to create an ecosystem that can take Excelpoint to greater heights and strengthen our position in the market.

As we continue to grow our business organically, the Group is also looking for partnerships that can bring Excelpoint to the next level. We have, on 5 October 2016, completed a share placement raising S$7.8 million, which will be used mainly for our business expansion plans.

The Prospects

The electronics industry will continue to see more opportunities arising, especially with new developments from our suppliers at the recent Consumer Electronics Show in Las Vegas in January 2017. In addition, the increasing attention on IoT and the rise of government initiatives across the markets we operate in present new business opportunities, and we are well-positioned to capture them.

We continue to see more mergers and acquisitions in the semiconductor industry. These consolidations have led to new opportunities such as increasing our product range offering, as well as new business prospects. As the global growth remains uncertain and challenges in the business environment persists, we will remain nimble and focused in order to ensure business sustainability and growth.

In Appreciation

I would like to welcome Mr. Herbert Kwok Fei Lung (as an Executive Director), Mr. Tonny Phuay Yong Choon (as an Executive Director) and Ms. Joanne Khoo Su Nee (as an Independent Director) to the Board of Directors, and extend my appreciation to Mr. David Kok Fat Keung, who has stepped down as an Executive Director to focus on his personal commitments. I would like to thank Mr. Kok for his service to the Board and wish him all the best in all his future endeavours.

I would also like to thank all our Directors for their guidance in navigating the Group throughout the year. It is truly this concerted effort to work together as a team that will overcome challenges and propel Excelpoint to greater heights. Together with the members of the Board, I would like to thank my fellow employees, principals, customers, bankers, business associates and shareholders for your continued trust, support and confidence in Excelpoint.

Yours sincerely,

Albert Phuay Yong Hen
Chairman and Group CEO

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