Annual Report 2024 TENACITY and GRIT
Bracing for uncertainties with TENACITY and GRIT
04 Chairman’s Message 06 Our World Of Chemistry 08 Our Prospects & Strategy 09 Our Corporate Profile 11 Our Business Model 12 Our Global Footprint 14 Why Megachem 16 Defining Megachem 17 Board Of Directors 22 Senior Management 23 Our Human Capital 24 Our Achievement 25 Corporate Information 26 Global Office Contact 27 Financial Highlights 30 Operating And Financial Review 38 Share Information 39 Dividend 40 Year In Review 41 Financial Calendar 42 Investor Relations 44 Risk Management 48 Corporate Governance Report 65 Sustainability Report 95 TCFD Disclosure 98 GRI Content Index 101 Financial Statements 159 Statistics Of Shareholding 161 Notice Of Annual General Meeting Proxy Form This annual report has been reviewed by the Company’s sponsor, SAC Capital Private Limited (“Sponsor”). This annual report has not been examined or approved by the Singapore Exchange Securities Trading Limited (“Exchange”) and the Exchange assumes no responsibility for the contents of this annual report, including the correctness of any of the statements or opinions made, or reports contained in this annual report. The contact person for the Sponsor is Mr Bernard Lim (Tel: (65) 6232 3210) at 1 Robinson Road #21-01 AIA Tower Singapore 048542. Table of Contents 2 ANNUAL REPORT 2024
Results at a Glance Sales S$128.8 Mil 4.7% Net Profit S$7.9mil Net Profit (Adj)* S$2.9 Mil 53.5% Full Year Dividend 1.0Per Share *Adjusted for a one-off impact of a fire incident in 2023 3 ANNUAL REPORT 2024
Chairman’s Message Dear Valued Shareholders, On behalf of the Board of Directors, I am pleased to present to you Megachem’s annual report for the financial year ended 31 December 2024 (“FY 2024”). FY 2024: A Year Of Recovery FY 2024 was a year marked by recovery, resilience, and renewed momentum for Megachem. Despite the challenging macroeconomic environment characterised by high interest rates and persistent geopolitical tensions, Megachem demonstrated our ability to adapt and thrive. Like the global economy, our business displayed remarkable resilience as we navigated through a period of normalisation following the tepid demand and destocking cycle of 2023 and the disruption of our business by the warehouse fire in the same year. We observed a steady pickup in customer orders, a reflection of renewed confidence. Megachem’s diversified business model, which spans a wide range of products and a broad customer base, has been a cornerstone of our resilience. Our ability to operate across diverse markets, serve global customers, and leverage our extensive supplier network has proven to be a key differentiator setting us apart internationally. Financial Performance Recovering For FY 2024, Megachem’s revenue stood at S$128.8 million, a 4.7% increase compared to the S$123.0 million in the previous financial year ended 31 December 2023 (“FY 2023”). The higher revenue was attributed to rising chemical demand and higher sales across key geographic markets including ASEAN and North Asia. Sales from the Distribution segment increased by S$5.6 million or 4.7% while the smaller manufacturing segment rose by S$0.2 million or 5.7%. In line with the higher sales, gross profit increased by S$8.7 million or 38.8% to S$31.2 million. Adjusting for the impact of a fire incident in July 2023, gross profit margin and gross profit would be 24.5% and S$31.5 million respectively. Total operating expenses (excluding finance cost) increased by S$1.9 million or 6.1% to S$32.5 million, mainly due to higher waste disposal costs, employee renumeration, net foreign exchange losses and warehouse storage charges. This was offset by lower demolition and decontamination costs, lower compensation claims and the absence of loss from property, plant and equipment destroyed in the fire written down. Overall, Megachem recorded a net profit after tax of S$7.9 million for FY 2024, as compared to a net loss after tax of S$5.8 million in FY 2023. Adjusting for the impact of the fire incident, Megachem would have recorded a net profit after tax of S$2.9 million, representing an increase of S$1.0 million or 53.5% year-on-year. Earnings per share for FY 2024 came in at 5.93 cents as compared to losses per share of 4.43 cents for FY 2023. Net asset value per share rose to 43.92 cents as at 31 December 2024, up from 37.48 cents as at 31 Our ability to operate across diverse markets, serve global customers, and leverage our extensive supplier network has proven to be a key differentiator setting us apart internationally. 4 ANNUAL REPORT 2024
Chairman’s Message December 2023. The Group’s balance sheet remained in good standing with cash and bank balances of S$16.0 million as at 31 December 2024, as compared to S$13.6 million as at 31 December 2023. Net gearing ratio stayed healthy at 0.16 times as at 31 December 2024. Overall, our commitment to prudent capital management has enabled us to sustain a healthy financial position, allowing us to weather challenging times while supporting future business growth and expansion. Rebuilding our warehouse 2024 also marks the beginning of the reconstruction of our warehouse facility, which was destroyed by the fire incident in July 2023. Piling work for the new warehouse has been successfully completed and structural work has recently begun. If all goes as planned, we target to complete construction by the end of 2025. The new warehouse, which is safer, stringently compliant with Major Hazard Installations (MHI) Regulations and environmentallyfriendly, will enhance our operational efficiency and long-term strategic competitiveness. Bracing For Uncertainties As we look ahead, the global economy remains fraught with uncertainties. Persistent geopolitical issues raise concerns about the potential for renewed trade conflicts, particularly with the return of a Trump administration in the US. Meanwhile, China’s economic recovery continues to be sluggish, adding further strain to global demand. In the Middle East, ongoing conflicts, if left unresolved, threaten to disrupt supply chains and upend industries. Against this backdrop, managing optimal inventory levels remains a significant challenge. The health of the chemical industry and overall business conditions will continue to hinge on continued growth in manufacturing activities. For Megachem, prudent and optimal inventory management will be a key priority moving forward, given our business’s deep integration with both the global economy and the chemical industry. As we navigate these uncertainties, we will endeavour to remain agile in our approach, ensuring we are well-positioned to seize opportunities for sustainable growth. Capitalising On Growth Opportunities Looking ahead, given its booming population and growing middle class, Asia remains a key geographic market and growth driver for us. Fuelled by latent market potential and investment activity, we foresee the expansion of Asia’s production capacity and surge in demand for chemicals. To capitalise on growth opportunities, we will continue to expand our geographic footprint and product portfolio, ensuring we remain competitive while delivering customised value-added solutions to our global customer base. We will endeavor to deepen our collaboration with customers to finetune our product and solution offerings as a one-stop partner for their evolving needs. By committing to our proven track record, we aim to deliver sustainable value for our stakeholders. Sustainable Chemistry Sustainability has always been a core priority. We remain steadfast in integrating sustainability into our operations and actively collaborating with our business partners to build a better future for all. Words of Appreciation I would like to extend our gratitude to Mr. Lee Bon Leong, Mr. Chan Kam Loon and Dr. Tay Kin Bee for their invaluable contributions to the Company over the past years. As this juncture, a warm welcome is also extended to my fellow new Board members, Mr. Daniel Loh Hong Chye and Mr. Sim Guan Seng. Mr. Loh has been appointed as the Independent Director and will assume the positions of Chairman of the Remuneration Committee and member of the Audit Committee, and Mr. Sim, who has been appointed as the Independent Director, will assume the positions of Chairman of the Audit Committee and member of the Nominating and Remuneration Committees. Their expertise and guidance will undoubtedly enhance our Board as we continue to prioritise resilience and collaboration in our path ahead. I would like to convey my heartfelt appreciation to the Board of Directors for their guidance and stewardship. My appreciation also goes to the management team, our staff and business partners for their continued support. Lastly, I would also like to express my deepest gratitude to our shareholders for their continued trust and unwavering support over the years. I believe that Megachem is well-positioned to capitalise on growth opportunities in the region and beyond, leveraging our diversified product offerings and tapping on our global network to provide onestop solutions for our customers. Together, we are committed to building a leading specialty chemicals business that delivers value and sustainable growth for all stakeholders. YEO WEE KIONG Independent Director and Non-Executive Chairman Megachem Limited 5 ANNUAL REPORT 2024
Our World of Chemistry Performance Coatings and Polymers • Paints and Inks • Polymerisation • Adhesives • Construction • Textile Surface Technology • Electronics • Metal Finishings • Industrial Cleaning • Water Treatment • Pulp & Paper Making the World a Brighter Place Enabling Technologies 6 ANNUAL REPORT 2024
Biotech • Food and Beverages • Pharmaceuticals • Nutraceuticals • Cosmeceuticals • Homecare • Flavours/Fragrances • Agriculture • Feeds Advanced Polymer Composites • Rubber • Plastics • Polyurethane • Polyesters Oil & Gas/Resources • Petrochemicals • Lubricants & Grease • Oil Fields • Refinery • Oleochemicals • Mining Nourishing Our Well-Being Energising Our World Driving Performance 7 ANNUAL REPORT 2024
Our Prospect Economy The road ahead for the global economy is likely to be bumpy as political conflicts in Ukraine and the Middle East region, trade protectionism and sluggish economic recovery in China continue to pose a threat to the global economic growth trajectory. Chemical industry The chemical industry may continue to face supply chain risks as the Middle East conflicts will take a while to reach a full resolution even though a ceasefire has been agreed. Managing inventory therefore remains challenging. Business conditions in the industry is primarily dependent on continued growth in manufacturing activities. Megachem Given the supply chain challenges the industry face, prudent inventory management will be a key focus for Megachem in 2025. Megachem’s chemical products are sold to a wide spectrum of industries. Our business prospects are to a large extent intertwined with the chemical industry and overall economy. If the conditions in the global economy and industry remain positive, the recovery momentum in our business, seen in 2024, may remain intact in 2025. However, any deterioration in economic growth could alter the picture of our growth outlook. Rebuilding Our Warehouse On 5 July 2023 Megachem informed shareholders via an SGX announcement that a fire broke out on the same day at 132 Pioneer Road where one of our warehouses is located. The structural work for the rebuilding of our warehouse had just recently commenced, following the completion of the piling phase. If all go as planned, construction is targeted to complete by end of 2025. The budget for the warehouse rebuilding is estimated at about S$19 million of which S$16.2 million is for the construction and the balance for professional fees, equipment and other fixtures. This is budgeted to be funded by insurance compensation proceeds, bank loan and internal funds. While the reconstruction of the warehouse will increase our cost in the short and medium term, it will lead to lower warehousing cost in the longer term as we reduce our reliance on third party warehouses. The new warehouse, which is stringently compliant with Major Hazard Installations (MHI) Regulations, more environmentallyfriendly and has bigger warehousing capacity, will enhance our operational efficiency and long term strategic competitiveness. Our Strategy (CH emical)+Re(Action)2: for- Gr{OW} th The Megachem formula for growth is a reaction of 3 key strategies creating a chemistry that will elevate us to a different level of growth. We develop our strategies around the key pillars of geographic network, product offerings and industry coverage. Combine these with our supply chain infrastructure and close relationships with customers and suppliers, Megachem will be well positioned to grow its business, thereby enhancing value for our shareholders. 8 ANNUAL REPORT 2024
Our Corporate Profile Established in 1988, Megachem has since emerged as a leading chemical player in Singapore and the region. Listed on the Singapore Stock Exchange in 2003, we are today a global one-stop specialty chemical solutions provider, offering integrated value-added services including distribution of specialty chemicals as well as contract manufacturing tailored to customers’ needs. We have a global presence and diverse customer base from a wide spectrum of industries. Our technical capabilities, supply chain infrastructure and professional team serve to ensure total customer satisfaction. Your Total Chemical Solutions Partner 9 ANNUAL REPORT 2024
Our Corporate Profile Serving You Globally with One-Stop Supply of Specialty Chemicals Providing Integrated Value-Added Solutions A Premium Provider of Chemical Contract Manufacturing Services 10 ANNUAL REPORT 2024
Our Business Model Purchase PRODUCERS DISTRIBUTION VALUE-ADDING IN THE CHEMICAL SUPPLY CHAIN MANUFACTURING/CUSTOM BLENDING Store Custom Blending Auxiliary Services Technical Support CUSTOMERS Transport Vendor Managed Inventory • Wide product portfolio >1,000 types and grades of chemicals • Global Sourcing Network -China, Europe, Japan, US, India • Global Distribution Network -presence in 12 countries • Strong customer base >2,000 customers • Providing Just-in-Time delivery and Vendor-Managed Inventory Service • Mixing and Blending according to customers’ formulations • Repackaging from bulk to smaller packaging • Filling, packaging and labeling • Technical support from dedicated application laboratories 11 ANNUAL REPORT 2024
Connecting to the World of Opportunities With an extensive global network and strategic locations in Asia, we are well-positioned to develop strategic relationships and forging winning formula in a challenging business landscape. Our Global Footprint 12 ANNUAL REPORT 2024
CHINA MYANMAR PHILIPPINES VIETNAM THAILAND INDONESIA AUSTRALIA SINGAPORE MALAYSIA INDIA MIDDLE EAST UK GLOBAL SOURCING GLOBAL MARKETS 13 ANNUAL REPORT 2024
Why Megachem Our Competitive Strengths, Your Competitive Advantages Every single element has to be exactly in place to create the desired formula for success and Megachem has been building this winning formula over the decades. Several vital ingredients make up this potent formula: Our integrated solutions, superior manufacturing capability, extensive global network, our strong customer base, outstanding product portfolio, efficient supply chain solutions and sophisticated IT support services. Together, these elements give our customers the competitive edge they seek, making us their indispensable partner on their journey to growth. Our Competitive Strengths Integrated Specialty Chemical Solutions Provider Megachem’s capabilities in proprietary chemical products manufacturing, contract manufacturing and global distribution provide customers with integrated solutions, thus adding higher value to them. These make us a one-stop shop where customers can find total solutions. Superior Manufacturing Capability in Contract Manufacturing We add value by blending materials according to our customers’ formulation and specific requirements. With our proven track record with several multinationals, customers can confidently outsource to us their non-core production activities so that they can focus on what they do best - making their business grow. Extensive Global Network Our extensive network in Singapore, Malaysia, Indonesia, Thailand, Philippines, Vietnam, Myanmar, China, India, Middle East, Australia and the UK enables us to serve our customers globally. Our direct presence in these markets offers a premium service level and minimized operating cost for our customers. Our integrated network also allows for cross-border exchange of market information and enables us to connect our suppliers to their desired markets. Strong Customer Base Over the years we have developed a strong and diversified customer base comprising largely multinationals companies spreading across a wide range of industries. This is a testimony of their confidence in us and of our ability to deliver long-term value to them. Outstanding Product Portfolio We carry a wide range of products which provides a one-stop shop and enables us to be a key supplier to our customers. Quality Supply Source Our suppliers have proven track records in quality, consistency, competitive pricing and supply reliability. A strong presence in Asia has helped several of our principal suppliers to penetrate key markets, which led to our appointment as their sole distributor and business partner Efficient Supply Chain Solutions Our warehousing facilities stock different classes and grades of specialty chemicals. Coupled with an efficient logistics support and just-in-time inventory controls, we are able to help customers improve their inventory planning and reduction of inventory costs. Sophisticated IT Infrastructure Megachem invests heavily in a worldclass IT infrastructure including mySAP Business Suite software. This enhances our service efficiency as well as provides seamless information exchange which gives us a competitive advantage over our competitors. 14 ANNUAL REPORT 2024
YOUR COMPETITIVE ADVANTAGES As Our Customers Competitive Product Pricing Megachem can act as a single source supplier of a full suite of products, offering you increased product cost effectiveness. Through product bundling, overall product cost and freight cost can be reduced for our customers. Process and Operational Cost Efficiency Instead of having a big procurement team inquiring with several suppliers, negotiating prices, terms and conditions with each of them, you can rely on us as one single point of contact. By consolidating your chemical materials requirements and outsourcing to us, it enables you to focus your time and effort on your core activities. We can source and order your products for you, store them in close proximity to your production locations and deliver them not before or after they are needed; instead, they arrive “just-in-time” as they are needed, effectively reducing operational costs such as warehousing and inventory obsolescence. Product Options Megachem has global sourcing network around the world with the ability to source for quality products at economical cost. We are able to offer various alternatives for your chemical raw material requirements by offering wider choices in terms of product quality and pricing. Optimum Service Level Megachem partners many multinationals companies, serving them as a global supplier. For these companies our Key Accounts Managers provide impeccable level of personalised services and offer customised solutions. Adding Value Through Contract Manufacturing Megachem adds further value to your business by providing contract manufacturing services. We can source the raw materials for you, store them in our warehouses, produce the finished products according to your formulations, pack them according to your requirements and deliver them directly to you or your customers. By engaging us as your contract manufacturer, your non-core production is outsourced to us and in so doing reduces your capital expenditure, production and other related costs. Outsourcing your non-core productions to us also enables you to penetrate key markets in Asia without investing heavily in capital expenditure. As Our Suppliers Your Partner In Growing Your Markets As a supplier to us, we add value to you by bringing your products to your desired markets. We do so by leveraging on our extensive network around the world, especially in Asia where there is a tremendous potential for growth. Supported by an efficient logistical infrastructure and our in-depth market knowledge, we can assist you in developing your markets bigger and faster. Streamlining your Distribution Channels Acting as your distributor, you can outsource smaller customer accounts to us, enabling you to channel your resources towards the bigger customers thus streamlining your distributions channels, operations and reducing your operational cost. Reducing your Inventory Cost By appointing us as your distributor, you will be able to reduce your inventory holding cost. Our robust inventory management system and strong supply chain infrastructure will ensure sufficient level of stocks to meet customers’ demand within shortest possible delivery time. Market Information Sharing We view our suppliers as important business partners. As such, we have open channels of sharing and communication of market knowledge and information to keep our suppliers abreast of market developments. 15 ANNUAL REPORT 2024
We constantly DIFFERENTIATE ourselves to stay ahead of competition We are ENERGIZED towards realizing our vision in everything that we do We constantly pursue better ways to ENGAGE with our business partners to achieve mutually beneficial relationship Our people are committed to EXECUTE and deliver quality results Because we truly believe in our PASSION to better serve and deliver our best We are a PERFORMANCE-DRIVEN organization We embrace CHANGE to stay relevant Defining Megachem Supporting Megachem’s key success factors is the invigorating deep culture – one that bonds the spirit of our people together with common values, easily recognizable in the conduct of our business 16 ANNUAL REPORT 2024
Board of Directors Mr. Yeo Wee Kiong, Age 69 Independent and Non-Executive Chairman Date of first appointment as a Director: 20 April 2024 Date of last re-election as a Director: Not applicable Length of service as a Director: 0 years and 10 months Country of principal residence: Singapore Board’s comments on the appointment The re-election of Mr Yeo Wee Kiong as Independent and Non-Executive Chairman was recommended by the Nominating Committee and approved by the Board, after taking into consideration Mr Yeo Wee Kiong’s contributions, performance, expertise and past experiences. Board committee memberships Chairman of Nominating Committee Member of Audit Committee Member of Remuneration Committee Academic and professional qualifications Barrister-at-Law, Lincoln’s Inn in England Master of Business Administration from the National University of Singapore Degree in Law (Honours) from University of London Bachelor of Mechanical Engineering (Honours) from National University of Singapore Working experience and occupations for the past 10 years and principal commitments Working experience and occupation during the last 10 years Nil Principal Commitments (other than directorships) Present Nil Past Nil Directorships (Present and Past 5 years) Present other than Megachem Limited Listed AF Global Limited Pacific Century Regional Development Limited SUTL Enterprise Limited Non-listed Ezyhealth Holdings Pte Ltd Ezyhealthcare Trust Management Pte Ltd Raffles Fund 1 Limited Raffles Fund 2 Limited Raffles Venture Partners Pte. Ltd Past 5 years, listed and non-listed Listed Asian Healthcare Specialists Limited Roxy Pacific Holdings Limited Non-listed Bonvests Holdings Pte Ltd Heliconia Capital Management Pte Ltd Sabana Real Estate Investment Management Pte Ltd Orchid 1 Investments Pte Ltd Orchid 2 Investments Pte Ltd Asia Township Development Pte Ltd Genkai Capital Secured Investment Pte Ltd BIS Minerals Pte Ltd Shareholdings (direct and deemed) in the Company (as at 21 January 2025) Nil Familial relationship with any director and/or substantial shareholder of the Company or of any of its principal subsidiaries Nil Conflict of interest (including any competing business) Nil Mr Yeo Wee Kiong, who is seeking re-election at the annual general meeting, had responded negative to items (a) to (j) listed in the Appendix 7F of the Catalist Rules. For item (k) listed in the Appendix 7F, Mr Yeo Wee Kiong responded that in 1990, he attested as witness to the signing of mortgage documents without insisting on the signer’s physical presence as he knew the signer. Mr Yeo Wee Kiong was fined by the Singapore Law Society and the documents had to be re-executed. 17 ANNUAL REPORT 2024
Mr Sidney Chew Choon Tee, Age 64 Managing Director Date of first appointment as a Director: 28 April 1989 Date of last re-election as Director: 18 April 2022 Length of service as a Director: 35 years and 10 months Country of principal residence: Singapore Board’s comments on the appointment The re-election of Mr Sidney Chew Choon Tee as Managing Director was recommended by the Nominating Committee and approved by the Board, after taking into consideration Mr Sidney Chew Choon Tee’s contributions, performance, expertise and past experiences. Board committee memberships Chairman of Executive Committee Member of Nominating Committee Academic and professional qualifications Bachelor of Science in Chemistry (Hons) Bachelor of Arts, majoring in Business Administration Board of Directors Working experience and occupations for the past 10 years and principal commitments Working experience and occupation during the last 10 years Executive Director of Megachem Limited Principal Commitments (other than directorships) Present and Past Nil Directorships (Present and Past 5 years) Present other than Megachem Limited Listed Megachem (Thailand) Public Company Limited Non-listed Megachem Manufacturing Pte Ltd Megachem Raya Pte Ltd Megachem (Shanghai) Pte Ltd C.N. Chemicals Sdn. Bhd. P.T. Mega Kemiraya Megachem Plus Limited Megachem Phils., Inc Megachem International Trading (Shanghai) Co., Ltd Megachem (UK) Ltd Megachem Middle East FZE Megachem Vietnam Company Limited Megachem Specialty Chemicals (I) Private Limited Megachem Australia Pty Ltd Past 5 years, listed and non-listed Nil Shareholdings (direct and deemed) in the Company (as at 10 March 2025) 48,267,012 Familial relationship with any director and/or substantial shareholder of the Company or of any of its principal subsidiaries Ms Liau Bin Bin who is the spouse of Mr Sidney Chew Choon Tee is an Executive Director of C.N Chemicals Sdn Bhd, a wholly-owned subsidiary of Megachem Limited Conflict of interest (including any competing business) Nil By virtue of section 7 of the Companies Act, 1967, Mr Sidney Chew Choon Tee, who by virtue of his interest of not less than 20% shareholding interest in the Company, is deemed to have an interest in the shares held by the Company in all the related corporations of the Company. Mr Chew Choon Tee, who is seeking re-election at the annual general meeting, had responded negative to items (a) to (k) listed in the Appendix 7F of the Catalist Rules. 18 ANNUAL REPORT 2024
Board of Directors Mr. Daniel Loh Hong Chye, Age 58 Independent Director Date of first appointment as a Director: 20 April 2024 Date of last re-election as Director: Not applicable Length of service as a Director: 0 years and 10 months Country of principal residence: Singapore Board’s comments on the appointment The re-election of Mr Daniel Loh Hong Chye as Independent Director was recommended by the Nominating Committee and approved by the Board, after taking into consideration Mr Daniel Loh Hong Chye’s contributions, performance, expertise and past experiences. Board committee memberships Chairman of Remuneration Committee Member of Audit Committee Academic and professional qualifications Master of Business Administration (High Honors) from Oklahoma City University Bachelor of Mechanical Engineering from National University of Singapore Working experience and occupations for the past 10 years and principal commitments Working experience and occupation during the last 10 years Managing Director and President Chemicals Asia of HELM Asia Pte Ltd President Director of BASF Indonesia Chairman of BASF Philippines Inc. Head of Singapore Business Area of BASF South East Asia Pte Ltd Managing Director of BASF (Malaysia) Sdn Bhd Principal Commitments (other than directorships) Present Freelance Strategic Consultant Volunteer, Firefly Mission (Non-governmental organisation) Past Managing Director and President Chemicals Asia of HELM Asia Pte Ltd President Director of BASF Indonesia Chairman of BASF Philippines Inc. Head of Singapore Business Area of BASF South East Asia Pte Ltd Managing Director of BASF (Malaysia) Sdn Bhd Managing Director and President Chemicals Asia of HELM Asia Pte Ltd Directorships (Present and Past 5 years) Present other than Megachem Limited Listed Nil Non-listed Nil Past 5 years, listed and non-listed Listed Nil Non-listed HELM Asia Pte Ltd HELM TH (Thailand) Ltd SPCI HELM Group Holdings Pte Ltd SPCI HELM Singapore Pte Ltd SPCI HELM Advance Pte. Ltd Shareholdings (direct and deemed) in the Company (as at 21 January 2025) Nil Familial relationship with any director and/or substantial shareholder of the Company or of any of its principal subsidiaries Nil Conflict of interest (including any competing business) Nil Mr Daniel Loh Hong Chye, who is seeking re-election at the annual general meeting, had responded negative to items (a) to (k) listed in the Appendix 7F of the Catalist Rules. 19 ANNUAL REPORT 2024
Mr. Sim Guan Seng, Age 65 Independent Director Date of first appointment as a Director: 20 April 2024 Date of last re-election as a Director: Not applicable Length of service as a Director: 0 years and 10 months Country of principal residence: Singapore Board’s comments on the appointment The re-election of Mr Sim Guan Seng as Independent Director was recommended by the Nominating Committee and approved by the Board, after taking into consideration Mr Sim Guan Seng’s contributions, performance, expertise and past experiences. Board committee memberships Chairman of Audit Committee Member of Nominating Committee Member of Remuneration Committee Academic and professional qualifications Bachelor of Accountancy (Honours) from National University of Singapore Fellow Chartered and Certified Accountant (FCCA) of Institute of Singapore Chartered Accountants Working experience and occupation for the last 10 years and principal commitments Working experience and occupation during the last 10 years Present Managing Director of Cohen Assurance PAC (2022 to present) Past Partner of Baker Tilly TFW LLP (2004 to 2022) Principal Commitments (other than directorships) Present Managing Director of Cohen Assurance PAC Honorary Consul of The Republic of Botswana Finance Board Chairman and member of Standing Committee of Diocese of Singapore Past Nil Directorships (Present and Past 5 years) Present other than Megachem Limited Listed Darco Water Technologies Limited Sitra Holdings (International) Limited Non-listed Cohen Assurance PAC Pro Bono SG Anglican Preschool Services Ltd Past 5 years Listed Nil Non-listed Cennerv Pharmaceuticals Ltd Baker Tilly Consultancy (Singapore) Pte. Ltd TFW Management Services Pte Ltd Park Crescent Services Pte Ltd Lightway Corporate Services Pte Ltd Singapore Accountancy Commission Baker Tilly TFW LLP NCC Research Fund NCCS Cancer Fund National Volunteer and Philanthropy Centre Shareholdings (direct and deemed) in the Company (as at 21 January 2025) Nil Familial relationship with any director and/or substantial shareholder of the Company or of any of its principal subsidiaries Nil Conflict of interest (including any competing business) Nil Mr Sim Guan Seng, who is seeking re-election at the annual general meeting, had responded negative to items (a) to (j) listed in the Appendix 7F of the Catalist Rules. For item (k) listed in the Appendix 7F, Mr Sim Guan Seng responded that he was subjected to a disciplinary inquiry by the Public Accountants Board in 2003 and was fined. Mr Sim Guan Seng was appointed as the Lead Independent Director of Darco Water Technologies Limited (“DWT”) on 6 July 2020 and was redesignated as the Independent Non-Executive Chairman of DWT on 13 July 2021. DWT was issued a notice of compliance by the Singapore Exchange Regulation (the “SGX RegCo”) on 10 September 2021. The notice of compliance was in relation to, inter alia, the SGX RegCo’s request for a detailed report on the status of the proposed investment in the Gaoyi Project. DWT had, on 17 September 2021, complied with the notice of compliance. Please refer to the notice of compliance issued by the SGX RegCo dated 10 September 2021 and the Company’s announcement on its responses to the notice of compliance dated 17 September 2021. 20 ANNUAL REPORT 2024 Board of Directors
Mr Yasutaka Kawamura, Age 54 Non-Executive and Non-Independent Director Date of first appointment as a Director: 1 July 2020 Date of last re-election as Director: 19 April 2023 Length of service as a Director: 4 years 9 months Country of principal residence: Japan Board’s comments on the appointment Not applicable, Mr Yasutaka Kawamura is not subject to re-election. Board committee memberships Nil Academic and professional qualifications Master of Business Administration Bachelor of Economics Working experience and occupation for the last 10 years and principal commitments Working experience and occupation during the last 10 years Vice President of Chori (China) Co., Ltd Department Manager of Corporate Planning division in Chori Co., Ltd. Principal Commitments (other than directorships) Present Executive Officer of Chori Co., Ltd Deputy General Manager of Corporate Planning division in Chori Co., Ltd (Corporate Management Department and Affiliate Business Department) President of Chori Machinery Co., Ltd Past Key positions in finance, accounting and corporate planning within Chori Co.,Ltd Directorships (Present and Past 5 years) Present other than Megachem Limited Listed Chori Co.,Ltd Non-listed Chori Machinery Co., Ltd Past 5 years, listed and non-listed Listed Nil Non-listed Chori Europe Gmbh Chori (Dalian) Trading Co., Ltd Chori (Dalian) Commercial Import Export Co., Ltd Shareholdings (direct and deemed) in the Company (as at 21 January 2025) Nil Familial relationship with any director and/or substantial shareholder of the Company or of any of its principal subsidiaries An employee and nominee of Chori Co., Ltd, a 29.99% shareholder of Megachem Limited Conflict of interest (including any competing business) Nil 21 ANNUAL REPORT 2024 Board of Directors
Mr Francis Yau Thiam Hwa Chief Financial Officer Mr Francis Yau joined Megachem in 2000 as the General Manager of Megachem (Shanghai) Pte Ltd and Megachem International Trading (Shanghai) Co. Ltd prior to his appointment as the Group’s Financial Controller in 2001. He was promoted to the position of Chief Financial Officer on 1 January 2007. Mr Yau takes responsibility for all financial matters including financial and treasury planning, financial risk management and investor relations. He had several years of corporate banking experience prior to joining Megachem. He holds a bachelor degree in Business Administration from the National University of Singapore, majoring in finance and is also a member of the Institute of Singapore Chartered Accountants. He currently serves as an independent director in one company listed on SGX. Ms Kwok Hwee Peng Group Finance Manager Ms Kwok Hwee Peng joined Megachem as Group Accountant in 2002 and was promoted to the position of Group Finance Manager in 2008. She is responsible for the Group’s financial reporting and is also the Company Secretary. She has several years of experience in accounting and audit with PricewaterhouseCoopers prior to joining Megachem. She holds a Bachelor of Accountancy degree from the Nanyang Technological University and is also a member of the Institute of Singapore Chartered Accountants. 22 ANNUAL REPORT 2024 Senior Management
Our Human Capital We believe in the continuous investment and development of our people to realize their full potential to help the organization achieve excellence in our business results. The People Developer accolade awarded in past years is testimony to this longstanding commitment and belief that investment in people will thrust the organization towards the pinnacle of excellence in our relationship with our partners, customers and suppliers. In pursuit of People Excellence, we adopt a holistic approach to human capital development. Rewards & Benefits Megachem considers the competitive market place, relative value of each position to the Company as well as among similar jobs, performance of individual employees, qualifications and relevant work experience in deciding how much an individual is paid. As an adopter of the Tripartite Standards set by The Tripartite Alliance for Fair and Progressive Employment Practices (“TAFEP”), we uphold fair and meritbased compensation practices. The Company reviews its compensation and benefits program regularly to ensure it is on par with the market. The Company believes in providing targeted incentives and rewards to employees, consistent with their performance. Welfare and Well-Being We are committed to creating and sustaining a working environment supportive of work life balance for all employees as they are respected partners of the business. As an adopter of the Tripartite Standards, we uphold fair and progressive employment practices to foster an inclusive and diverse workplace. The Company conducts various programs to foster welfare and well-being among colleagues, to improve overall health of employees and to achieve work-life harmony. In so doing, a visible team of committed, productive and motivated employees is highly energized to realize the corporate vision, mission, values and culture. Learning and Development We place people at the core of our human resource (“HR”) strategy and hold strong belief in nurturing of our employees to achieve excellent business results and attain high level of competency. The Company’s HR policy is one that promotes the availability of opportunities for people to be trained on a continuing basis. Although “People Developer”, a certification awarded by Enterprise Singapore to companies which have achieved excellence in human capital development had ceased in 2020, we continued to adopt its principle and guidelines for a total approach to attracting, managing and engaging employees for high performance and aims to bring the best out of our people. Career & Leadership Development Our performance appraisal process includes a development component that encourages employees to plan their growth, enhancing both their personal and professional capabilities. To support career progression, Megachem has established the Employee Development Program, where team members undergo structured training with all Heads of Departments to gain comprehensive business knowledge and functional expertise. Additionally, we encourage a culture of continuous learning through an Open Mentorship Program, where employees are encouraged to seek guidance from any leader within the organization. This flexible approach allows individuals to engage with experienced mentors based on their specific developmental needs, creating an inclusive and supportive environment for career advancement. Higher Learning Education Support The Higher Learning Education (“HLE”) program provides financial assistance and professional education and training (“PET”) to eligible employees who choose to further their professional education to enhance their knowledge and skills. This program provides reimbursement of eligible expenses for approved Diploma/Degree/ Master/PhD certification programs related to employee’s current or future job responsibilities. Students and Graduates Megachem welcomes interns/attachment students to embark on an exciting learning journey with challenging assignments and projects. Fresh graduates are strongly encouraged to apply and join the Company as Management Trainees in their first step towards building a promising career. At Megachem, our people are our greatest assets hence is at the heart of everything we do. 23 ANNUAL REPORT 2024
Our Achievement At Megachem, we are constantly pursuing higher standards of business excellence. Our string of achievements and awards garnered over the years attest to our customer-focused corporate values and quality standards. 24 ANNUAL REPORT 2024
Corporate Information BOARD OF DIRECTORS Yeo Wee Kiong (Independent and Non-Executive Chairman) Sidney Chew Choon Tee (Managing Director) Sim Guan Seng (Independent Director) Daniel Loh Hong Chye (Independent Director) Yasutaka Kawamura (Non-Executive and Non-Independent Director) Audit Committee Sim Guan Seng (Chairman) Yeo Wee Kiong Daniel Loh Hong Chye Remuneration Committee Daniel Loh Hong Chye (Chairman) Yeo Wee Kiong Sim Guan Seng Nominating Committee Yeo Wee Kiong (Chairman) Sim Guan Seng Sidney Chew Choon Tee Executive Committee Sidney Chew Choon Tee (Chairman) Francis Yau Thiam Hwa Kwok Hwee Peng Company Secretaries Kwok Hwee Peng Peck Jen Jen Registered Office 11 Tuas Link 1 Singapore 638588 Tel : (65) 6933 9999 Fax : (65) 6863 2818 Website: www.megachem.com Share Registrar And Share Transfer Office Tricor Barbinder Share Registration Services (a division of Tricor Singapore Pte Ltd) 9 Raffles Place #26-01 Republic Plaza Singapore 048619 Tel : (65) 6236 3333 External Auditor RSM SG Assurance LLP 8 Wilkie Road #03-08 Wilkie Edge Singapore 228095 Partner-in-charge: Tan Beng Teck (with effect from financial year ended 31 December 2022) Internal Auditor Baker Tilly Consultancy (Singapore) Pte Ltd 600 North Bridge Road #05-01 Parkview Square Singapore 188778 Principal Bankers Citibank, N.A. HSBC Oversea-Chinese Banking Corporation Limited Standard Chartered Bank United Overseas Bank Limited Continuing Sponsor SAC Capital Private Limited 1 Robinson Road #21-01 AIA Tower Singapore 048542 Tel: (65) 6232 3210 Investor Relations Advisor CDR 158 Cecil Street #05-01 Singapore 069545 Tel : (65) 6534 5122 Email : Megachem@cdrconsultancy.com Investor Relations Contact CDR Dolores Phua / Eric Seow Email : Megachem@cdrconsultancy.com Megachem Limited Francis Yau Email: fsyau@sg.megachem.com Investor Relations Website www.megachem.com www.shareinvestor.com Personal Data Protection Officer Contact Megachem Limited Woo Tze Yung Email: tywoo@sg.megachem.com Whistle Blowing Contact Email: auditcom@sg.megachem.com 25 ANNUAL REPORT 2024
MEGACHEM LIMITED MEGACHEM MANUFACTURING PTE LTD MEGACHEM RAYA PTE LTD MEGACHEM (SHANGHAI) PTE LTD 11 Tuas Link 1, Singapore 638588 Tel: +65 6933 9999 Fax: +65 6863 2818 E-mail: enquiry@sg.megachem.com Website: www.megachem.com MEGACHEM (UK) LTD Castlegate Business Park, Caldicot, Monmouthshire, NP26 5AD, United Kingdom Tel: +44 0 1291 422747 Fax: +44 0 1291 422479 E-mail: enquiry@uk.megachem.com Website: www.uk.megachem.com MEGACHEM INTERNATIONAL TRADING (SHANGHAI) CO., LTD 988 Dingxi Road, Unit 1502, Yintong Building, Shanghai, China 200050 Tel: +86 21 5237 5028 Fax: +86 21 5237 5025 E-mail: enquirysh@cn.megachem.com Website: www.megachem.net.cn MEGACHEM INTERNATIONAL TRADING (BEIJING) CO., LTD Room 2212, Building 7, First City Mingdundao External Guangqumenwai Street, Dongcheng District, Beijing, China 100022 Tel: +86 10 8751 2969 Fax: +86 10 8751 3382 E-mail: enquirybj@cn.megachem.com MEGACHEM AUSTRALIA PTY LTD Suite 2, 34 Edgewater Boulevard Maribyrnong Victoria Australia 3032 Tel: +61 03 9326 2882 Fax: +61 03 9375 7886 E-mail: enquiry@au.megachem.com C.N. CHEMICALS SDN BHD No. 9, (LOT 72791) Jalan SKI 1/KU7 Kawasan Industri Hi-Tech Sungai Kapar Indah, Mukim Kapar 42200 Klang, Selangor, Malaysia Tel: +60 33081 2399 Fax: +60 33081 2599 E-mail: enquiry@my.megachem.com MEGACHEM MIDDLE EAST FZE LIU 10 Unit AB03 South Zone, Jebel Ali Free Zone, Dubai, United Arab Emirates Tel: +971 4 866 5458, 286 6143 Fax: + 971 4 285 1615 E-mail: enquiry@uae.megachem.com MEGACHEM VIETNAM CO. LTD Unit 703, 7 th Floor 45 Dinh Tien Hoang Street, Ben Nghe Ward District 1, Ho Chi Minh City, Vietnam Tel: +84 28 3910 6638 Fax: +84 28 3910 6636 E-mail: enquiry@vn.megachem.com P.T. MEGA KEMIRAYA Wisma 77 Lt. 6 Jl. Letjend S.Parman Kav.77 Slipi Jakarta Barat, 11410 Indonesia Tel: +62 21 5363189 Fax: +62 21 5358987 E-mail: enquiry@id.megachem.com MEGACHEM SPECIALTY CHEMICALS (I) PRIVATE LIMITED 702 & 703, Fairmount, Plot No. 4 and 6, Sanpada, Palm Beach Road, Sector 17 Navi Mumbai 400705, India Tel: +91 22 4026 0957, 4026 0958 E-mail: info@in.megachem.com MEGACHEM PHILS INC Greenlee Compound 143 M.L Quezon Extension Street Brgy Manggahan, Pasig City Philippines,1611 Tel: +632 7914 0837 E-mail: enquiry@ph.megachem.com MEGACHEM (THAILAND) PUBLIC COMPANY LIMITED 25 Soi Chalongkrung 31 Ladkrabang Industrial Estate Soi G1/9, Lamplathew Lat Krabang, Bangkok 10520 Thailand Tel: +66 2739 6333, Fax: +66 2739 6332 E-mail: enquiry@megachem.com.th MEGACHEM PLUS LIMITED 278/40 Moo10 Bangpla Bangplee, Samutprakarn Bangkok 10520 Thailand Tel: +66 2752 5145-7 Fax: +66 2752 5148 E-mail: enquiry@megachem.co.th GREEN LEAF CHEMICAL CO., LTD. 15/8 – 15/9 Pattanachonnabot 3 Road, Klongsongtonnoon, Ladkrabang Bangkok 10520 Thailand Tel: +66 2 045 2935, 045 2940-2 Fax: +66 2 138 9624 E-mail: info@greenleafchemical.net MEGA FUJI GRAPHITE LTD. 25 Soi Chalongkrung 31, Ladkrabang Industrial Estate Soi G1/9, Lamplathew Lat Krabang, Bangkok 10520 Thailand Tel: +66 2739 6333 Fax: +66 2739 6332 Email: enquiry@megafujigraphite.co.th MEGACHEM (MYANMAR) LIMITED No.42:/302(B), Set Hmu 1 st Road Sat Mhu Zone 1, Shwe Pyi Thar Township Yangon, Myanmar 11411 Tel: +959 898 337766 Global Office Contact 26 ANNUAL REPORT 2024
Financial Highlights 160.0 140.0 120.00 100.0 80.0 60.0 40.0 20.0 - 105.2 138.9 143.7 123.0 128.8 Sales (S$’mil) Cash (S$’mil) 10.0 8.0 6.0 4.0 2.0 - -2.0 -4.0 -6.0 -8.0 Profit/(Loss) After Tax (S$’mil) 5.3 8.0 6.1 (5.8) 1.9 7.9 2.9 2020 2021 2022 2023 2023 2024 2024 (adj)* (adj)* 2020 2021 2022 2023 2024 2020 2021 2022 2023 2024 18.0 16.0 14.00 12.0 10.0 8.0 6.0 4.0 2.0 0.0 Net gearing ratio (times) 2020 2021 2022 2023 2024 0.45 0.4 0.35 0.3 0.25 0.2 0.15 0.10 0.05 0 16.2 0.06 11.5 0.30 11.9 0.42 13.6 0.30 16.0 0.16 * Adjusted for one-off impact from a fire incident in 2023 27 ANNUAL REPORT 2024
Financial Highlights INCOME STATEMENT 2020 2021 2022 2023 2024 Sales (S$’mil) 105.2 138.9 143.7 123.0 128.8 Sales Growth (%) (7.5%) 32.0% 3.5% (14.4%) 4.7% Profit/(loss) After Tax (S$’mil) 5.3 8.0 6.1 (5.8) 7.9 Profit/(loss) After Tax (adj) (S$’mil) (1) — — — 1.9 2.9 Profit/(loss) After Tax Growth (%) 32.0% 52.0% (24.1%) NM NM Profit/(loss) After Tax Margin (%) 5.0% 5.8% 4.2% (4.7%) 6.1% EBITDA (S$’mil) 7.7 11.1 10.5 (1.9) 11.8 Earnings/(loss) per share (cents) 3.85 5.82 4.41 (4.43) 5.93 Weighted Average Number of Ordinary Shares (mil) 133.3 133.3 133.3 133.3 133.3 ROE (%) 9.8% 13.6% 10.0% (11.8%) 13.5% HALF-YEAR BREAKDOWN 2020 2021 2022 2023 2024 Sales for first half (S$’mil) 52.0 65.9 75.2 60.7 65.2 % Growth 1H vs 1H (6.7%) 26.7% 14.1% (19.3%) 7.4% Sales for second half (S$’mil) 53.2 73.0 68.5 62.3 63.7 % Growth 2H vs 2H (8.3%) 37.1% (6.1%) (9.1%) 2.2% Profit After Tax for first half (S$’mil) 2.8 3.8 4.5 0.9 2.0 % Growth 1H vs 1H 39.9% 34.0% 18.0% (79.1%) > 100.0% Profit/(loss) After Tax for second half (S$’mil) 2.4 4.2 1.6 ( 6.7 ) 5.9 % Growth 2H vs 2H 24.0% 72.7% (61.8%) NM NM FINANCIAL POSITION 2020 2021 2022 2023 2024 Total Assets (S$’mil) 91.3 110.9 117.1 100.2 104.5 Shareholders Equity (S$’mil) 52.4 57.3 58.6 50.0 58.5 Net Asset/Share (cents) 39.33 42.95 43.96 37.48 43.92 Borrowings (S$’mil) 19.3 28.9 36.4 28.5 25.2 Gearing ratio (times) 0.37 0.51 0.62 0.57 0.43 Net gearing ratio (times) 0.06 0.30 0.42 0.30 0.16 Cash (S$’mil) 16.2 11.5 11.9 13.6 16.0 Current ratio (times) 2.2 1.8 1.8 1.7 1.8 DIVIDEND 2020 2021 2022 2023 2024 Net Dividend/Share (cents) 1.5 2.0 2.0 0.0 1.0 Net Dividend Payout (%) (2) 39.0% 34.4% 45.4% 0.0 46.0% Net Dividend Yield (%) (3) 4.5% 4.8% 3.9% 0.0 2.3% Note: (1) Adjusted for a one-off impact from a fire incident in 2023 (2) Net Dividend Payout for 2024 is based on adjusted net profit after tax (3) Dividend yield is based on closing price as at 31 December (4) NM denotes not meaningful 28 ANNUAL REPORT 2024
Financial Highlights GLOBAL MARKETS 8% 0% 8% 0% 0% 8% 9% 10% 9% 3% 3% 13% 23% 20% 13% 10% 0% 23% 28% 8% 58% 31% 31% 14% 11% 59% FY2024 FY2024 FY2023 FY2023 INDUSTRY COVERAGE ASEAN N Asia America Europe S Asia Middle East Australia Africa Performance Coatings & Polymers Advanced Polymer Composites Surface Technology Resource, Oil & Gas Biotech 29 ANNUAL REPORT 2024
Operating and Financial Review (a) Sales H2 2024 H1 2024 Variance Fav/(Unfav) H2 2024 vs H1 2024 H2 2023 Variance Fav/(Unfav) H2 2024 vs H2 2023 S$’000 S$’000 S$’000 % S$’000 S$’000 % ASEAN 36,639 37,613 (974) (2.6) 36,611 28 0.1 Europe 7,730 8,554 (824) (9.6) 7,396 334 4.5 North Asia 7,060 5,391 1,669 31.0 5,423 1,637 30.2 Australia 4,543 5,673 (1,130) (19.9) 5,393 (850) (15.8) Middle East 5,637 5,350 287 5.4 5,133 504 9.8 South Asia 1,910 2,335 (425) (18.2) 1,987 (77) (3.9) America 61 105 (44) (41.9) 117 (56) (47.9) Africa 86 154 (68) (44.2) 264 (178) (67.4) Total 63,666 65,175 (1,509) (2.3) 62,324 1,342 2.2 FY 2024 FY 2023 Variance Fav/(Unfav) S$’000 % S$’000 % S$’000 % ASEAN 74,252 57.7 72,226 58.7 2,026 2.8 Europe 16,284 12.6 15,704 12.7 580 3.7 North Asia 12,451 9.7 10,316 8.4 2,135 20.7 Middle East 10,987 8.5 10,559 8.6 428 4.1 Australia 10,216 7.9 9,692 7.9 524 5.4 South Asia 4,246 3.3 3,820 3.1 426 11.2 America 166 0.1 212 0.2 (46) (21.7) Africa 240 0.2 480 0.4 (240) (50.0) Total 128,842 100.0 123,009 100.0 5,833 4.7 Geographic Segment Sales Analysis H2 2024 vs H1 2024 Demand for chemicals contracted in the second half of 2024 (“H2 2024”). Except for North Asia and Middle East markets, most of our markets recorded lower sales in H2 2024 over first half of 2024 (“H1 2024”). The biggest decrease came from Australia market which recorded lower sales of S$1.1 million or 19.9% as compared to H1 2024. This was followed by ASEAN and Europe markets which recorded a dip in sales of S$1.0 million or 2.6% and S$0.8 million or 9.6% respectively. Other market such as South Asia recorded lower sales of S$0.4 million or 18.2% while sales to America and Africa markets fell by less than S$0.1 million each. Sales to North Asia and Middle East markets increased by S$1.7 million or 31.0% and S$0.3 million or 5.4% respectively. As a result, total sales decreased by S$1.5 million or 2.3% to S$63.7 million in H2 2024 vis-à-vis sales of S$65.2 million in H1 2024. H2 2024 vs H2 2023 As compared to second half of 2023 (“H2 2023”), total sales increased by S$1.3 million or 2.2%. Sales to North Asia recorded an increase of S$1.6 million or 30.2% while sales to Europe and Middle East markets grew by a smaller scale of S$0.3 million or 4.5% and S$0.5 million or 9.8% respectively. PROFITABILITY REVIEW 30 ANNUAL REPORT 2024
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