Boustead Singapore : FY2020 AGM Minutes

BOUSTEAD SINGAPORE LIMITED

Minutes of the Annual General Meeting of Boustead Singapore Limited (the "Company") held by way of electronic means on Tuesday, 25 August 2020 at 2.30 p.m.

Present:

Directors

Wong Fong Fui (Chairman & Group Chief Executive Officer)

Wong Yu Loon (Executive Director & Deputy Group Chief Executive Officer) Dr Tan Khee Giap (Independent Non-Executive Director)

Chong Ngien Cheong (Independent Non-Executive Director) Liak Teng Lit (Independent Non-Executive Director)

In Attendance:

Chan Shiok Faun (Group Chief Financial Officer)

Attending by live webcast or audio conference:

Shareholders as set out in the attendance records maintained by the Company

Godfrey Ernest Scotchbrook (Independent Non-Executive Director) Alvin Kok (Secretary)

Keith Chu (Senior Vice President, Corporate Marketing & Investor Relations) Kok Moi Lre (Auditors, PricewaterhouseCoopers LLP)

Teh Wee Wen (Auditors, PricewaterhouseCoopers LLP)

Rick Ong (Share Registrar, Boardroom Corporate & Advisory Services Pte Ltd) Hon Chia Hui (Share Registrar, Boardroom Corporate & Advisory Services Pte Ltd) Sia Chee Hui (Share Registrar, Boardroom Corporate & Advisory Services Pte Ltd) Madelyn Kwang (Independent Scrutineers, DrewCorp Services Pte Ltd)

Shelby Goh Kah Hui (Independent Scrutineers, DrewCorp Services Pte Ltd)

1. Quorum/Commencement

Mr Wong Fong Fui, the Chairman, welcomed shareholders who joined the Annual General Meeting (the "Meeting") by the electronic means of "live" audio-visual webcast and audio-only feed.

A quorum being present, the Chairman, called the Meeting to order at 2.30 p.m.

The Chairman introduced the members of the Board and management, and representatives from the auditors, share registrar and independent scrutineers who were in attendance in person or joining the Meeting via the "live" audio-visual webcast.

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1. Notice of Meeting
   The Notice of the Meeting dated 3 August 2020 having been circulated to the members was taken as read.
   The Chairman explained that due to the COVID-19 control measures in Singapore, the Meeting was held by electronic means. As mentioned in the Company's announcement dated 3 August 2020, shareholders would not be able to ask questions or vote during the Meeting and the Chairman had been appointed as proxy by the shareholders to vote on their behalf in accordance with their instructions.
   The Chairman added that in accordance with the requirements of the SGX Listing Rules, all Resolutions to be tabled at the Meeting would be voted by way of poll. As all instructions for the votes on the Resolutions had been given prior to the Meeting, all Resolutions would be taken as read, proposed and seconded.
   It was noted the poll votes had been collected and counted and DrewCorp Services Pte Ltd had been appointed as scrutineers in respect of the voting process.
2. Management Presentation
   The Chairman invited Ms Chan Shiok Faun, Group Chief Financial Officer, to present a financial review of the Boustead Group (the "Group") for the year ended 31 March 2020 ("FY2020").
   In respect of the Group's financial results for FY2020, Ms Chan highlighted the following:
3. • The Group achieved record revenues of S$726.6 million in FY2020 due to the healthy order book backlog of the Real Estate and Energy Engineering Divisions brought forward from the previous financial year.
   • However, profit before tax in FY2020 only improved marginally mainly as a result of a decline in gross margin, high fair value losses and the absence of a gain on the disposal of property (S$5.9 million in FY2019).
   • Total profit and attributable profit in FY2020 declined due to higher income taxes brought about by under provisions in prior years.
   • Attributable profit in FY2020 would have improved 34% after adjusting for impairment losses and other gains/losses net of non-controlling interests.
   • The lower attributable profit resulted in Earnings Per Share declining to 6.3 cents while Net Asset Value Per Share improved to 70.3 cents.
   • The Group had a strong net cash position of S$162.7 million at the end of FY2020, with a further S$49.5 million in investment securities, of which 37% were highly liquid.
   • The net increase in cash and cash equivalents during FY2020 comprised net cash inflow from operating activities of S$147.1 million, offset by net cash outflow to investing activities of S$88.2 million (mainly capital contribution and loans to joint ventures) and net cash outflow to financing activities of S$21.1 million (mainly dividends to shareholders and purchase of treasury shares).

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• Return on shareholders' equity declined to 9.0% in FY2020 from 9.7% in the preceding year.
• Group orders secured in FY2020 amounted to S$396 million, substantially from the Energy Engineering Division which achieved record orders secured.
• With steady profitability from core businesses and a healthy cash position, a final dividend of 2.0 cents per share was proposed. Together with the interim dividend of 1.0 cent per share paid, the total dividend for FY2020 of 3.0 cents per share (matching that for the two preceding financial years) translated a dividend yield of 4.2%.

Ms Chan then handed over proceedings to Mr Wong Yu Loon, Executive Director & Deputy Group Chief Executive Officer, to give an overview on how the various businesses performed in FY2020 and discuss the various opportunities and challenges.

Energy Engineering Division

Mr Wong Yu Loon reported that the Energy Engineering Division saw a significant improvement in FY2020, mainly due to the strong performance of Boustead International Heaters ("BIH"), which sold a lot more heaters and waste heat recovery units. He attributed the success to hard work and the relentless focus of BIH.

However, the exceptional performance of BIH was dragged down by the underperforming water and waste water treatment business and the legacy mini-power plant business.

In the immediate term, the division has a healthy order book backlog of S$279 million. It has also made full provisions for the legacy mini-power plant business and would be dialling back activities for the water and waste water treatment business, which would provide less of a drag to the division going forward.

In the longer term, there remains much uncertainty in the oil and gas sector - climate change concerns have reduced activities in the sector and the COVID-19 pandemic has accelerated this reduction. In mitigation, the division would be shifting its focus to the end-user aftermarket by supplying services and equipment to optimise existing installations and reducing bidding for new green field projects.

Geospatial Division

Mr Wong Yu Loon reported that the Geospatial Division had a good year in FY2020, riding on the trend of increasing digitalisation and smart cities. He gave credit to the tireless effort of the marketing team in educating customers on geospatial thinking and design.

In terms of prospects, the impact of the COVID-19 pandemic on the geospatial business is expected to be minimal. However, governments have spent considerable sums to alleviate human suffering and economic pain brought about by the COVID- 19 pandemic and consequently, may have smaller budgets for geospatial projects.

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Healthcare Division

Mr Wong Yu Loon explained that most of the profits of the Healthcare Division was attributable to its 50%-owned Chinese associate. To strengthen that business, two acquisitions were made in FY2020 - a healthcare education business and a factory in Chongqing. The healthcare education business is strategic as it offers Western courses to Chinese physiotherapists who aspire to improve their professional qualifications.

In the immediate term, the COVID-19 pandemic is expected to have a negative impact on the growth of the business. However, in the longer term, there will be always be a demand for products and services that generate better outcomes for patients. One of the key priorities is to improve the capabilities of the sales and marketing team in order to capture the growing demand in this sector.

Real Estate Division

Mr Wong Yu Loon pointed out that the Real Estate Division operates under Boustead Projects, a separate listed entity with its own Board of Directors and management.

The division saw record revenues in FY2020 but its profitability was affected by lower margins and the lack of property sales. In terms of prospects, while the division has a sizeable order backlog, the outlook remains challenging. Competition is intense and the COVID-19 pandemic has further exacerbated structural weaknesses in the construction industry. The key to getting through this challenging period is how quickly the business embraces technological transformation, reduces reliance on foreign workers and improves construction productivity.

1. Brand Refreshment Exercise
   Mr Wong Yu Loon introduced a short video giving a sneak preview on the Company's brand refreshment exercise.
   Following the video, the Chairman stated that the Company is 192 years old, the longest surviving company in Singapore. Its ability to survive and prosper all these years has been mainly due to its corporate philosophy in believing "change is the only constant", a continuous evolving process in business. The brand refreshment seeks to further emphasise this management DNA and spirit.
2. Responses to Advance Questions from Shareholders
   The Chairman reported that the Company received a number of questions from shareholders prior to the Meeting. All substantial and relevant questions have been addressed by the Company and the responses were published on the SGXNet on 24 August 2020 and also uploaded on the Company's corporate website. He thanked shareholders who had taken their time to submit the questions in advance of the Meeting.

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