Corporate News
Letter To Shareholders
October 2001
Dear Investors
July 2001 began as an exciting chapter for Willas-Array as a listed company on the main board of the Singapore Exchange. To our new shareholders and investors, I bid you a warm welcome into the Willas-Array fold.
Following the distribution of our 2001 Annual Report in September this year, we have decided to institute a regular report as part of our continual efforts to maintain regular communications between the company and you. The reports will enable us to update you on the latest developments within the company, as well as the industry in which it operates.
The recent crisis in the United States has affected us to a certain extent in that chip shipments have been delayed and future orders have become uncertain. However, the bigger concern is how this uncertainty will further dampen the already depressed global demand for electronics, and in turn, the demand for electronic components. For the first six months of the current financial year ended 30 September 2001, our business has been adversely affected by the lower-than-expected demand. We expect sales to decline by approximately 25% year-on-year while profit after tax is expected to show a larger decline due to margin erosion stemming from the oversupply of a number of electronic components across all product segments.
While visibility remains poor for the rest of the year as we operate under conditions that are beyond our control, we would like to assure you that the Directors will continue in their efforts to source for new business opportunities that will complement and further strengthen the company while keeping operations lean and mean.
Expanded Distribution Network in PRC and Development of Projects
As China continues to be the market with the greatest growth potential for electronic components, and in spite of the rising competition in prices and margins, penetrating the market will remain our main focus for growth. In line with our strategy to extend our sales and distribution network to cover major cities and special economic zones, we have opened a new representative office in Qingdao in September to cover the territorial areas of Qingdao and the north-eastern part of China. This office will serve existing customers such as the Haier Group and potential customers such as Qingdao Ai Nuo Intelligent Instrument Co Ltd and the Hisense Group.
With this new office, we will have a total of five representative offices in China. We expect to set up another representative office in Xiamen in about three months' time. This office will serve the Fujian area where customers like Xiamen Topstar Lighting Co Ltd, Xiamen Solid Electronics Co Ltd, and Fujian Start Computer Group are located. All these offices will enable us to seamlessly meet the needs of our customers and principals in the key business and manufacturing hubs of PRC.
Apart from expanding offices in PRC, our Application and Development Department has also developed several projects which, in our opinion, will benefit the future business of the Group. These projects include:-
1. Set-Top Box solution with combined capabilities of web browsing, video playback in MPEG-2 and MPEG-4 format, MP3 audio playback and routing function for home gateway implementation;
2. developing a Digital Audio Demo Board with a dedicated power supply circuit that provides a turnkey solution for DVD with audio amplifier;
3. designing a high-speed router reference using a high performance system-on chip.
Catering to TV makers, DVD player manufacturers and internet service providers, all the above developments will add to our existing range of product solutions that utilise some of the 10,000 components we carry. Such value-adding capabilities serve as a key factor in staying competitive in a difficult business environment.
Management Appointment
People continue to be our most important resource. To help us manage our growth, we have brought Mr Andy Hung on board as the Group's Chief Financial Officer. Andy has an impressive record as a senior financial manager, and is well acquainted with the financial stipulations of listed companies having worked for several in the last 15 years. We are confident that Andy has the wealth of experience and vision to support Willas-Array in its advancement as a listed company that aims to maximise shareholders' return.
Looking Ahead
Certainly, the quarter ahead will be difficult, and given the current uncertainties and volatility in the market, estimating the Group's growth will be equally difficult. With continued pricing and margin pressures, the Group will focus on ways to improve efficiencies and reduce costs. Relationships with our principals will receive our undivided attention in these challenging times as the need for greater co-operation between the Group and the principals heightens.
Going forward, we believe that our company's cumulative achievements provide a solid basis for continued confidence in our ability to create value for our customers, our shareholders and our employees. Our confidence represents strong competitive desire, not complacency. We remain totally committed to establishing Willas-Array as a growth company and a choice investment for the long term.
Yours sincerely,
Lawrence Leung CC Kwok
Executive Chairman Managing Director
