The year saw the Group’s limestone processing and scrap metal trading businesses pick up the pace, registering significant growth in sales and profits, while our electronics business continued to face a sharp decline in demand.

Limestone Processing

Our limestone processing business, operated by the Group’s subsidiary, Compact Energy Sdn Bhd ('Compact'), benefited from a healthy improvement in market demand, achieving a 29% increase in turnover from S$16.3 million to S$21.0 million for the year. This translated to a 72% increase in earnings from S$2.5 million to S$4.3 million. 56% of the sales growth was registered in the fourth quarter alone. Following the deferment of the existing plant expansion last year due to a slowdown in market demand, the expected market rebound means that construction of a lime kiln plant as part of phase 2 of the project is now underway again. It is expected to be completed by mid-2011. Compact has embarked on further expansion of its business by tapping into downstream opportunities that will enable it to compete more effectively and efficiently, strengthen its market position, and generate higher profit margins. To this end, it has invested in the construction of a hydrated lime production plant strategically located in Klang Valley. Hydrated lime is produced by adding water to quicklime. It is an essential additive in several industrial processes – for PH control in potable water treatment plants and widely used in the flotation or recovery of many non-ferrous ores. Hydrated lime is also used in the flotation of copper, zinc, nickel and lead bearing ores. Construction of the plant is expected to be completed by December 2010 and will have an annual output capacity of 72,000 tons. It will position Compact to take advantage of the anticipated growth in demand for hydrated lime from Malaysia’s water treatment plants fuelled by rapid industrialisation and urbanisation.

Scrap Metal Trading

Turnover for our scrap metal trading business, operated by LAP Trading and Marketing Pte Ltd ('LAP Trading'), surged by 97% from S$10.0 million to S$19.7 million, reflecting a substantial improvement in demand. This resulted in earnings for the year doubling from S$0.2 million to S$0.4 million. Recycling scrap metal involves processing the metal into raw material feedstock for industrial manufacturing. With the upswing in demand from the Malaysian steel industry for raw material processed from recycled scrap metal, this business is gaining a firm foothold in the market. However, as market conditions do remain a challenge, we will continue to monitor and adapt growth strategies accordingly.

Electronics Division

The continued deterioration in the global electronics industry has had a devastating effect on our electronics business, operated by AE Technol Pte Ltd ('AE') (formerly known as Advent Electronics Pte Ltd). Despite restructuring the business to focus on the more profitable segment of turnkey project management, AE was unable to secure new sales, resulting in a 91% drop in turnover from S$35.5 million to S$3.1 million, and a loss for the year of S$1.3 million. As the electronics business is unfortunately no longer financially viable, AE has made the decision to discontinue it.

Moving forward

Moving forward, the expansion of our quicklime operations will put us in a stronger position to meet market demand. The new hydrated lime production plant, targeted to be operational by early 2011, will also enable us to reach out to new business segments such as water treatment plants and the mining sector.