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Executive Chairman’s Statement

DEAR SHAREHOLDERS,
 
As the global economy faces headwinds, the Group is pleased to announce we managed to keep our revenue constant  for the financial year ended 31 December 2015 (“FY2015”). The Group’s revenue in FY2015 was down marginally by 0.9% to S$414.5 million due to discontinuation of  agencies and lower  sales volume on its products for the distribution segment of the Consumer Business.
 
Revenue contributed by our Consumer Business was down by S$12.2 million or 6.3% to S$181.5 million as a result of lower revenue generated from distribution business in Singapore, which  was partially off-set by higher revenue from its distribution business of new products in Malaysia. On the other hand, our Packaging Business, which constitutes Tat Seng Group, reported higher revenue of 3.1% to S$231.4 million for the financial year. The increase was largely due to the strengthening of Renminbi (“RMB”) against Singapore Dollar (“SGD”)  by 6.9% as compared to the previous year.
 
The Group’s gross profit for FY2015 hiked by 5.8% to S$90.2 million due to higher margin achieved by the Packaging Business. The reduction of $0.3 million in warehouse and delivery income for consumer business in Singapore attributed to other income dip from S$3.9 million in the previous year to S$3.6 million in FY2015. Lower gain on disposal of property, plant and equipment by  S$0.1 million  as compared  to  the  previous  year was another contributing factor for the dip in figures. However, this was partially balanced by an increase in rental income of S$0.2 million for the year.
Overall, the Group recorded higher profit before tax of S$16.1 million in FY2015, which translated to a year- on-year gain of 43.9%. Consequently, the Group’s net profit after tax for FY2015 surged by 81.3% to S$11.4 million from S$6.3 million in FY2014.
 
Where segmental profits were concerned, the Consumer Business reported a loss of S$0.5 million in FY2015 against a loss of S$0.4 million in FY2014. This was largely the result of impairment loss on property, plant and equipment of S$0.7 million.
 
Concurrently, our Packaging Business continued to deliver a higher profit of 14.8% to S$17.6 million from S$15.3 million, as driven by higher sales and reduction of factory overhead costs of its Singapore operations.
 
As at 31 December 2015, our cash and cash equivalents position stood positive and strong at S$152.7 million, up from S$116.4 million from the previous year.
 
SIGNIFICANT MILESTONES/PROGRESS IN FY2015
As part of our ongoing commitment  towards service excellence, we have implemented a series of initiatives during the year to boost our business. In addition to the brands that we are distributing, we will be focusing on building more of our own house brands via new product developments to cater to the new millennials. We will also be exploring more agency partnerships that offer viable margins as part of our strategy to remain competitive  in the increasingly challenging consumer market.
In line with our principle to constantly stay abreast in the industry with our products and services, we have made plans to upgrade and expand the  existing  premise. This will allow us to gain access to better production facilities, thereby increasing our efficiency and product quality, as well as strengthen our ability to expand our product offerings.
 
Concurrently, we also embarked on planning and initiating a 2-phased Enterprise Resource Planning (ERP) project to improve efficiency of internal working processes. This initiative will complement the Company’s overall efforts  to expand and upgrade the hardware and software of the Company’s growing operations and we expect to gradually implement this over the next few years.
 
MOVING  AHEAD
In line with  our strategy to increase our competitive edge in the FMCG market, we will continue to focus on strengthening our presence in the market by expanding our range of home brand products as we work to enhance our existing house brands like Sobe, Fortune, Golden Circle and Beautex. In  FY2015, we  secured a new distributorship for “Greenfields” range of products, which commenced in March 2016. This new distributorship will further consolidate our Consumer business and operations.
 
However, we foresee that weaker demand in the manufacturing sector, coupled with higher raw material costs due to strengthening of the US dollar against the Singapore dollar, will  add pressure on our Packaging Business in Singapore.
 
With the slowdown in the China economy, we anticipate that its corrugated packaging industries will remain challenging as over-capacity aggravates the market weakness and labour shortage will further increase labour costs in our China operations.
To compete more effectively and overcome these challenges, the management will continue to explore new sales avenues to drive earnings, invest in machinery upgrades to implement  automation and provide staff training to improve productivity and efficiency.
 
IN APPRECIATION AND ACKNOWLEDGEMENT
I  would  like  to  thank  the  Board  of  Directors  for their invaluable insights and guidance towards the development  of  Hanwell.  We  have progressed  well over the years and I believe we can continue to attain greater achievements in the years ahead. Separately, I would also like to extend my gratitude towards our management, staff  and business associates for their staunch faith and commitment  that has kept Hanwell going and progressing to where it is today.
 
I would also like to express my appreciation to our valued shareholders for their unwavering support. We will continue to explore new opportunities and enhance our existing business to deliver greater shareholder value for everyone.
 
Last but not least, I would like to take this opportunity to thank Mr Chee Teck Kwong, Patrick, who will retire from the Board, for his dedication and valuable contribution  to the Group over the years.
 
 
DR ALLAN  YAP
Executive Chairman