Megachem Limited Annual Report 2015 4 Chairman’s Message SIDNEY CHEW Executive Chairman & Managing Director Dear Shareholders, It is with pleasure that I present to you, on behalf of the Board of Directors of Megachem Limited (“Megachem” or the “Group”), our annual report for the full year ended 31 December 2015 (“FY2015”). Resilience amidst macroeconomic uncertainties 2015 has been a year of resilience for Megachem. Against a backdrop of a challenging macroeconomic environment during the year, our overall operations have responded fairly well. This was achieved due to the strong foundations laid out while building Megachem’s global network in our earlier years and our prudent approach towards business. An improved bottom-line Our financial performance has been resilient although our revenue was impacted by a 4.6% decline to S$110.6 million in FY2015, largely led by lower sales from our America and ASEAN markets. Comparatively, revenue in the previous corresponding full year (“FY2014”) was S$115.9 million. The dip in revenue contribution from America was driven primarily by our conscious decision to actively mitigate potential risks in South America tied to the current geopolitical climate. However, our strong presence in North Asia, which led to a robust sales growth of S$2.7 million in that market, helped to partially offset the dip. Our distribution operations remained the largest contributor of the business. Sales from our distribution segment contracted 4.9% to S$107.1 million while our manufacturing operations grew 3.4% to S$3.5 million during the year. Despite the decline in revenue, we achieved a 8.2% rise in gross profit to S$25.4 million while gross profit margin improved 2.7 percentage points to 22.9% during the year. The rate of increase in our overall operating expenses was at a slower pace than the improvement in gross profit, thus, contributing to the 2.9% rise in our net profit after tax to S$3.3 million in FY2015 from S$3.2 million in FY2014. Correspondingly, EBITDA climbed to S$6.4 million in FY2015 from S$6.2 million in FY2014 while earnings per ordinary share rose to 2.22 cents in FY2015 from 2.08 cents in FY2014. Our Asia-centric approach, improvement in operational capabilities and strategy to strengthen ties with customers and suppliers over the years have provided us with a good buffer in these uncertain times.
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