Sunningdale Technologies

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Full Year Financial Statement And Dividend Announcement 2016






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Profit & Loss




Consolidated Statement of Comprehensive Income




Balance Sheet




Review of Performance



CONSOLIDATED INCOME STATEMENT

October – December 2016 (“4Q16”)

The Group’s revenue increased 3.4% year-on-year (“yoy”) from $178.1 million for 4Q15 to $184.1 million for 4Q16. An increase in revenue from the Automotive and Consumer/IT business segments was offset by a decrease in revenue from the Healthcare and Mould Fabrication segments.

The decrease in revenue from the Healthcare business segment was due to a decrease in orders. The decrease in revenue from the Mould Fabrication business segment was due to (i) a reduction in capacity resulting from the downsizing of our mould fabrication facilities in Southern China; (ii) lesser orders billed and recognised to profit and loss during the period.

The Group’s gross profit increased by 6.0% yoy from $23.7 million for 4Q15 to $25.1 million for 4Q16. Gross profit margin increased marginally from 13.3% for 4Q15 to 13.6% for 4Q16.

The increase in other income was due to a foreign exchange gain of $8.4 million and a gain on the disposal of property, plant and equipment of $5.1 million for 4Q16 compared to a foreign exchange loss of $45,000 for 4Q15.

The increase in other expenses was due to retrenchment costs amounting $1.9 million as a result of (i) a restructuring exercise in our Southern China plant and (ii) a relocation of an operating unit from the Group's Shanghai plant to its Chuzhou plant.

The increase in income tax expenses was mainly due to a tax refund of $5.9 million for 4Q15 recorded in a subsidiary when the appeal was finalised.

The Group achieved a net profit of $21.5 million for 4Q16 compared to $13.2 million for 4Q15. Excluding acquisition costs, foreign exchange gains, gains on the disposal of property, plant and equipment, retrenchment costs and the tax refund, net profit would have been $9.8 million for 4Q16 and $7.5 million for 4Q15, representing a 31.7% yoy increase.

January – December 2016 (“FY16”)

The Group’s revenue increased 1.5% yoy from $674.5 million for FY15 to $684.5 million for FY16. An increase in revenue from the Automotive and Consumer/IT business segments was offset by a decrease in revenue from the Healthcare and Mould Fabrication segments.

The decrease in revenue from the Healthcare business segment was due to a decrease in orders and a delay in new product launches. The decrease in revenue from the Mould Fabrication business segment was due to (i) a reduction in capacity resulting from the downsizing our mould fabrication facilities in Southern China; (ii) lesser orders billed and recognised to profit and loss during the period.

The Group’s gross profit increased by 3.8% yoy from $90.8 million for FY15 to $94.3 million for FY16.Gross profit margin increased marginally from 13.5% for FY15 to 13.8% for FY16.

The increase in other income was due to a gain on the disposal of property, plant and equipment of $5.0 million for FY16 compared to loss on the disposal of property, plant and equipment of $104,000 for FY15.

The increase in other expenses was due to retrenchment costs of $6.5 million as a result of (i) a restructuring exercise in our Southern China plant and (ii) a relocation of an operating unit from the Group's Shanghai plant to its Chuzhou plant.

The increase in income tax expenses was mainly due to a tax refund of $5.9 million for 4Q15 recorded in a subsidiary when the appeal was finalised.

The Group achieved a net profit of $39.1 million for FY16 compared to $42.1 million for FY15. Excluding acquisition costs, foreign exchange gains, gains on the disposal of property, plant and equipment, retrenchment costs and the tax refund, net profit would have been $31.7 million for FY16 and $23.6 million for FY15, representing a 34.1% yoy increase.

CONSOLIDATED BALANCE SHEET

The Group’s property, plant and equipment amounted $191.6 million as at 31 December 2016, compared to $186.9 million as at 31 December 2015. Property, plant and equipment were stated net of depreciation charges of $29.6 million (FY15: $32.1 million) and partially offset by currency re-alignment and the addition of $39.2 million (FY15: $26.7 million) in capital expenditure for machineries and building.

The decrease in loans and borrowings was due to the repayment of loans.

The Group maintained a cash balance of $115.3 million as at 31 December 2016 (31 December 2015: $121.1 million), resulting in a net cash position of $15.5 million (31 December 2015: $1.1 million), after accounting for loans and borrowings of $99.8 million (31 December 2015: $120.0 million).

CONSOLIDATED CASHFLOW STATEMENT

October - December 2016 (“4Q16”)

Net cash generated from operating activities was $8.5 million for 4Q16, compared to $20.6 million for 4Q15. Net cash generated from investing activities was $20,000 for 4Q16 compared to Net cash used in investing activities of $5.4 million for FY15 due to net proceeds from the disposal of property, plant and equipment of $7.0 million for 4Q16 and dividend income from a joint venture of $0.6 million for 4Q16 which was partially offset by payment for property, plant and equipment of $7.5 million for 4Q16 (4Q15: $5.4 million).

Net cash used in financing activities was $3.4 million for 4Q16, compared to $8.2 million for 4Q15.

January - December 2016 (“FY16”)

Net cash generated from operating activities was $52.8 million for FY16, compared to $67.4 million for FY15. Net cash used in investing activities was $27.7 million for FY16 compared to $24.4 million for FY15 mainly due to payment for property, plant and equipment of $36.0 million for FY16 (FY15: $24.1 million) which was partially offset by net proceeds on the disposal of property, plant and equipment of $7.3 million for FY16.

Net cash used in financing activities was $26.1 million for FY16, compared to $25.1 million for FY15.

Commentary On Current Year Prospects


The business landscape in 2016 was challenging as subdued economic growth and uncertainty characterised the global economy. Despite the headwinds, the Group ended 2016 on a positive note posting a record year of revenue and improved operating margins as a result of its commitment to enhance operational efficiency. In addition, the Group continued to generate positive operating cash flows, strengthening its balance sheet with a cash balance of S$115.3 million as it improved to a net cash position of S$15.5 million as at 31 December 2016.

As an update, the Group completed the construction of its manufacturing facility in Chuzhou, China during the fourth quarter of 2016. The Group intends to progressively add capacity to this facility in order to optimise resources in the region. In 2017, the Group intends to begin the construction of a new manufacturing plant in Penang, Malaysia.

In terms of operations, the Group’s business development initiatives have yielded positive results. With manufacturing facilities in nine different countries, the Group continues to receive business queries from new and existing customers who are confident in the Group’s ability to handle projects on a global scale. As such, the overall order backlog across the Group’s Automotive, Healthcare, Consumer/IT, and Mould Fabrication segments remain stable. In the year ahead, the Group has identified the Automotive segment to be a key growth driver.

The Group expects the business environment to remain subdued as rising labour costs and foreign exchange volatility create added uncertainty. While staying vigilant to industry challenges, the Group remains cautiously optimistic as its strategy of diversifying its customer base and expanding its product offering is on track. The Group will also focus on sharpening its competitive edge by developing new engineering capabilities. In line with its overarching strategy, the Group remains focused on building a business model that is both sustainable and profitable for the long-term.