Q : How was the performance of the Group in FY2009 and what are your thoughts on it?
A : 2009 was a very challenging year. The global financial crisis had caused worldwide economic turmoil, affecting not just YHI, but almost every company in the world. However, it is comforting to know that YHI has done well to overcome the challenges faced during the crisis and has made it through the storm relatively unscathed.

Although turnover of the Group decreased by 9.5% to S$414.4 million compared to FY2008, I am glad to say that we’ve finished the year with a much better result than we had anticipated, achieving a 16.1% rise in net profit to S$22.6 million over FY2008. This has once again demonstrated the concerted hard work and commitment of all our members in the YHI team. I am happy with our results considering the global financial crisis and difficult market conditions that we were operating under.


Q : How did the Group’s distribution and manufacturing segments perform in FY2009?
A : In FY2009, both our distribution and manufacturing segments reported lower turnover due to weaker demand in the first half of FY2009. Our distribution business segment accounted for about 69% and 80% of the Group’s turnover and net profit respectively. Our manufacturing business segment accounted for 31% and 20% of the Group’s turnover and net profit respectively. Our manufacturing business segment exceeded our expectations primarily due to better results achieved by our plants in Malaysia and China.


Q : Even though gross sales eased from FY2008 in both business segments, the Group achieved significant net profits. How was this achieved?
A : The 16.1% rise in net profit was mainly due to better gross profit margins achieved by the		  
  manufacturing business segment as a result of lower raw material costs as well as improved production processes and technology leading to lower rework ratio in FY2009. Various cost improvement initiatives implemented by the Group and foreign exchange gains in the distribution business segment also helped in achieving higher net profit in FY2009.


Q : Faced with the global economic downturn in FY2009, what did the Group do to remain its competitive edge in the global market?
A : In 2009, we embarked on an improvement driven reform and implemented various cost improvement initiatives within the Group. We believe that continuous training and development of human resources is a critical factor contributing to the success of a business organisation. In this regard, we have been training and developing our staff members to maintain a talented pool of leaders and managers and an outstanding and competitive work force. Our manufacturing plants have been seeking ways to upgrade our production technology and product development capabilities, improve the quality of our products as well as our value-added customer service level so as to strengthen our competitive edge in the global market place.


Q : We understand all the employees at YHI are involved in the 5S & Kaizen system which was initiated a few years back. Can you share the extent of effectiveness this
practice has brought to the Group?
A: We started the 5S & Kaizen campaign 2 years ago in the manufacturing business segment and rolled out to the distribution segment in ASEAN and Northeast region in
FY2009.arena where "The World Is Our Market"..

“Kaizen” is a Japanese philosophy that aims to eliminate waste, improve quality, reduce operating costs and increase operational efficiency. The campaign has triggered positive changes to the mindsets, attitudes and working spirit of staff members and has created a healthy and forward-looking YHI corporate culture. For example, the campaign has resulted in energy saving and lower rework ratio in the manufacturing business segment in FY2009.

5S & Kaizen have enhanced the Group’s overall quality and competitiveness. The essence and practice of 5S & Kaizen have become a natural and integral part of YHI’s business culture.


Q : YHI has a long-term initiative to establish itself as a key brand player in the global market. Has FY2009 brought the Group closer to this goal?
A : Our strategic efforts in the past few years to build YHI’s proprietary brand of alloy wheels, Advanti Racing, into an internationally recognised and preferred brand have resulted in Advanti Racing being made an official partner to the Scuderia Toro Formula One Team. I feel proud to be the first home-grown Singapore Company to showcase our alloy wheels in a world class racing event. Brand building is an on-going process and we will continue our efforts to develop YHI’s portfolio of premium and proprietary brands into a global brand name. YHI will fully implement the “Leading the World with Distinguished Brands and Superior Quality” strategy. Quality assurance and brand building will be our differentiating factors among our competitors and keys to success in today’s competitive market.


Q : After braving through 2009 with positive results, how will the outlook for YHI look this year? Will the business recovery experienced in 2009 be as significant in 2010?
A : With the global economy showing signs of recovery, I expect the general business environment to improve in 2010. However, there are still lingering risks and uncertainties in the global economy. With rebounding raw material prices and increasing energy costs, our manufacturing business segment is bound to face another round of new challenges in 2010. To enhance our competitiveness in the market place, we will continue to innovate and improve our production technology to raise
productivity and reduce operating costs. The distribution business is expected to remain resilient and we will strive to expand our product range in all our existing sales network and increase new distribution channels when the opportunity arises to sustain long term growth.

I am cautiously optimistic of our performance in 2010.


Q : With favourable results in FY2009, what can shareholders look forward to in terms of dividends?
A : As always, we will continue to reward our shareholders with good dividend payments. The Board of Directors has proposed to reward our shareholders with a first and final dividend of 1.15 cents per share for FY2009, which is higher than the dividend payout declared for FY2008. The proposed dividend payment of about S$6.72 million represents about 30% of our net profit after tax. This
payout ratio is similar to FY2008.

Our results in 2009 were achieved by the concerted hard work and commitment of all our members in the YHI team. I am confident that with the commitment, hard work and efforts put in by the dedicated team at YHI, we will continue to produce good results for 2010 and beyond.

To the YHI team – thank you for your efforts and contributions.

To the Board of Directors - thank you for your guidance and continued support.

To our stakeholders – our shareholders, customers, suppliers and business associates – thank you for your confidence and support in YHI.
  
 
I look forward to meeting you at our coming shareholders’ meeting.


Yours sincerely,
Tay Tian Hoe, Richard
Executive Chairman &
Group Managing Director