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Management Online Q&A with Investors (7th March 2006)


Good afternoon to all investors,

Thank you for your questions posted over the past week. We are delighted to communicate with you on a virtual platform. Investors who wish to read up a bit more about us may find our IR website at http://www.listedcompany.com/ir/advanced a useful resource centre with our latest news, analysts reports, etc. For more information about our products and services, our corporate website is found at http://www.AdvancedHoldings.com

Your feedback is important to us, we are contactable at advanced@listedcompany.com

Best rgds,
Dr Wong Kar King
Managing Director

Your questions will be reposted in Blue followed by our replies in Black.


Dear Yellowcard88 , you wrote:

1) Dear management, congratulations on the good results. Some qns: - I read with interests that Advanced has got institutional investors like Lloyd George, Tiedamann and Wasatch, will any of these big fund managers be represented in the Board? I am sure investors will feel more confident if the Board has such an esteemed shareholder on it.

Thank you for your suggestion. There had been discussions on the matter; however, there is no immediate plan to invite the fund managers to be represented on the Board.

2) Divident not declared. I reckon the reason for that is for future business expansion? Pls shed some light if possible as well on M&A opportunities.

During the year, Advanced have paid out an interim dividend on 23 September 2005 and issued a 3- for-10 bonus share issue.

We see dividends as being an integral part of capital management which we should balance with our need to growth the Group.

Riding on the strong growth of the oil and gas and petrochemical sectors, the opportunities facing our Group are tremendous. Advanced is entering a very exiting phase of development and we have developed a 4-pronged growth plan to scale up our operations and drive our Group's next phase of growth. To implement this growth plan, particularly in the areas of "Organic Growth" and Strategic Investments", our priority is to reinvest our cashflow to provide for the expansion and growth of our business to deliver value to our Shareholders.

In the area of M&A, our Company is constantly exploring strategic investment opportunities, and when the right opportunity comes along, we will act on it. We will provide more information on the investments at the appropriate juncture.

[Note: For more details on our 4-pronged growth plan, please refer to our results press release dated 22 February 2005, "Advanced Holdings achieves record revenue and earnings".]

Dear Kimberly Ha, you wrote:

1) What will your company be doing in terms of M&A activity this year? Have you identified any targets, and which sectors will you hope to expand into via acquisitions? What is some target criteria?

Advanced are constantly exploring strategic investment opportunities that are synergistic with our business. Our objectives are to expand our core business and customer network, reduce operational risks and widen our range of offerings.

The sectors we are looking at are Petrochemicals & Chemicals, Oil & Gas, amongst others.

Target criteria include:-
  • Good Business Fundamentals,
  • Strong Earning Growth,
  • Strategic Technological Processes, and
  • Products and Competent Management Team, etc.
We have developed a 4-pronged growth plan to grow our business, and our M&A activities will be in line with this Plan.

[Note: For more details on our 4-pronged growth plan, please refer to our results press release dated 22 February 2005, "Advanced Holdings achieves record revenue and earnings".]

Dear Jayster, you wrote:

1) How do the company increase its margins in such a compeititive environment? Do the company increase the pricing of its products or source for cheaper raw material?

The increase in margins is a result of several reasons. The primary reasons are as follow:
  1. Effective project and cost management in our project delivery;
  2. Ability to manage costs of supplies and distribution costs; and
  3. Exclusive partnerships with renowned companies that supplies cutting-edged process technologies and equipments, for our primary markets.
Regarding your second query, our Company's pricing policy goes hand in hand with our attention to service quality. We price our products and services in accordance with the high level of quality we provide to each of our customers.

Dear Christine Low, you wrote:

1) Your operating expenses increased because of unrealised FOREX loss. Does Advance hedge against currency risk by buying futures or keeping the physical currency? What currency do Advance bill its customers in? Do Advance pay in USD or SGD to its suppliers. How do Advance manages this risk cause any adverse movement of currency would eat into the bottomline.

Our company has forex policies to manage our forex reserves, and hedging is part of our forex management policies.

We normally hedge against currency fluctuation risk by matching our buying and selling currency, i.e. USD versus USD or EUR versus EUR. However our profits which are normally in foreign currency are not hedged and will likely remain in the same foreign currency.

Our management conducts frequent review on our forex balances, and surplus foreign currencies are converted to our reporting currencies (SGD).

Dear Gerald, you wrote:

1) The oil and gas sector is booming with high oil prices and exploration activities is increasing in asia in countries like vietnam, cambodia & thailand. The company mentioned setting up office in thailand, any concrete plans yet?

To drive organic growth, our Management is looking at establishing a regional office in Thailand. We are reviewing the current situation of the Thai administration very closely, while at the same time studying the details of our execution plan carefully. The Management of Advanced is committed to ensure that the implementation process will be smooth and successful.


Dear Investors,

Thank you for all your questions and interest in Advanced Holdings Limited. We have come to the end of this Q&A session and hope that you have a better insight of our company and our operations.

Regards,
Dr Wong Kar King
Managing Director