LETTER TO
SHAREHOLDERS
Our financial performance was underpinned by the
stellar efforts of our business segments. We serve leading
semiconductor companies whose spending patterns may
be broadly determined by the demand for electronic
components. One of the growing and resilient segments
which has seen an increase in demand for such electronic
components is the automotive industry. With the use of
more automotive sensors in the automotive industry with its
relentless march towards driverless cars, fail-safe electronic
components requiring burn-in services have provided
the growth momentum for the Burn-In Services business
segment. This segment is now able to offer burn-in services
for a wider range of devices to cater to our changing
customer needs. Our expanded capabilities also included
printed circuit board assembly services for the medical,
mobile communications and aviation industries.
Our Burn-In Board Manufacturing and PCBA Services
business segment, likewise, capitalised on the demand for
new critical components requiring different types of burn-in
boards. The division expanded its range of competencies in
board design and manufacturing. The Engineering Services
business segment was impactedby the slowdown in demand
from the life sciences sector. It, nonetheless, demonstrated
its mettle despite the economic headwinds and succeeded
in securing a major order from an existing customer. It is also
gradually building up its networks in the European market to
further widen its customer base.
DISRUPTIVE TECHNOLOGIES A WAY
FORWARD FOR SUSTAINABLE GROWTH
While technological changes have the ability to obliterate
certain industries, they also pave the way for new industries
and offer a second wind of growth for once struggling
sectors. Even as the personal computer market registers
a slowdown and the mobile phone industry levels off,
the semiconductor market is now being driven by the
automotive, networking devices and communications
industries as well as the rising demand for energy efficient
and secure data centres.
3
In general, the Internet of Things
(“IoT”) is anticipated to benefit a wide range of industries, in
particular, the semiconductor industry.
4
This bodes well for
our business segments. We are poised to leverage on our
abilities and expertise in providing a suite of burn-in, board
design andmanufacturing services as well as services relating
to the design, development and outsourced manufacturing
and system integration of semiconductor equipment and
automation systems for a widening range of industries,
which will increasingly include those driven by the IoT.
Overall, we remain optimistic of the Group’s continued
improved performance, provided that demand in the
sectors we serve remains strong and assuming there are no
unforeseen economic or other factors which may impact the
Group’s performance.
OUTLOOK
The economy has been softening since the start of 2016 and
the forecasted growth for the year is now pegged at 1.0%
to 2.0%,
5
given the weak global conditions. The uncertainty
and potential fallout brought about by the United Kingdom’s
‘Brexit’ referendum, the impending United States elections
and its far-reaching consequences, China’s continued
economic restructuring with the risk of a sharp slowdown
and other geopolitical factors could derail the economic
predictions. As such, we will continue with our prudent
financial management, productivity improvement and
operational processes enhancement to ensure that we are
poised to leverage on opportunities brought about by new
technologies, untapped markets and resurgent industries.
Automation, with the help of government tax schemes, will
continue to feature prominently in our enhanced operations.
We also remain open to initiatives such as synergistic and
complementary investments, mergers and acquisitions and
other types of business transactions that will value-add to
our business and ultimately our shareholder returns.
REWARDING SHAREHOLDERS
In light of our improved financial position and in appreciation
of our shareholders’ trust and confidence in our Group
and management, we are proposing a final dividend of
1.0 cent per share subject to shareholders’ approval at the
upcoming Annual General Meeting (“AGM”). The proposed
final dividend will be paid in December 2016 shortly after
the AGM. An interim dividend of 0.8 cents per share had
previously been declared and paid. Should approval of the
proposed final dividend be given, we will have paid a total
of 1.8 cents per share in dividends for FY16.
OUR APPRECIATION TO ALL
It goes without saying that our achievements were only
made possible by the valuable input and guidance from our
Board of Directors and the hard work, focus and dedication
of our management and staff. We would like to express our
thanks to all business partners, associates and customers
for their steadfast loyalty through the years. Lastly but most
importantly, our most heartfelt appreciation goes out to our
shareholders for their unwavering belief in us in good and
difficult times.
Khor Thiam Beng
Lim Eng Hong
Chairman
Chief Executive Officer
1
Adjusted to reflect the share consolidation of every two existing ordinary
shares into one ordinary share effected on 23 November 2015
2
SGX Market Updates, Singapore’s Semiconductor Sector Averaged 4%
Gain in 2016 YTD [
/
newsflash/mu_12042016_1%20]
3
Nasdaq, Semiconductor Industry Outlook – May 2016
.
com/article/semiconductor-industry-outlook-may-2016-cm621071]
4
McKinsey &Company, The Internet of Things: Opportunities and challenges
for semiconductor companies. October 2015
/
industries/semiconductors/our-insights/internet-of-things-opportunities-
and-challenges-for-semiconductor-companies]
5
Ministry of Trade and Industry, MTI narrows 2016 GDP Growth Forecast to
1.0 to 2.0 Per Cent [
/
Pages/Economic-Survey-of-Singapore-Second-Quarter-2016/PR_
2Q16.pdf]
05
AVI-TECH ELECTRONICS LIMITED
ANNUAL REPORT 2016
