Financial Statements



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Profit & Loss




Consolidated Statement of Comprehensive Income




Balance Sheet




Review of Performance


CONSOLIDATED INCOME STATEMENT

October - December 2019 ("4Q19")

The Group's revenue decreased 9.1% year-on-year ("yoy") from $184.2 million for 4Q18 to $167.4 million for 4Q19. This decrease was attributed to a decline in revenue from each of the Group's business segments.

Revenue from the Group's Automotive segment decreased 2.8% yoy to $61.8 million. This was mainly due to a decrease in orders from customers as a result of weakening demand across global automotive markets and certain projects reaching end-of-life, partially offset by new projects launched.

Revenue from the Group's Consumer/IT segment declined 15.8% yoy to $59.1 million. This was due to a slowdown in demand from customers for certain projects and our deliberate shift away from lower-margin projects to focus on more complex engineering projects.

Revenue from the Group's Healthcare segment declined 5.4% yoy to $13.6 million. This was due to a customer pulling certain projects in-house and delays in the qualification of tools for a new project set for mass production.

Revenue from the Mould Fabrication segment declined 8.8% yoy to $32.9 million. This was due to a decrease in demand from customers in the Automotive industry, partially offset by an increase in orders from new and existing customers from the Healthcare industry.

The Group's gross profit decreased 3.4% yoy from $19.2 million for 4Q18 to $18.5 million for 4Q19. Gross profit margin improved from 10.4% for 4Q18 to 11.1% for 4Q19. This was due to a change in product mix, tightening cost controls and the completion of the relocation of the Group's parts operations from one plant in Shanghai to Chuzhou.

The decrease in other income was due to a gain on the disposal of property amounting to $13.1 million for 4Q18 and none for 4Q19.

The decrease in marketing and distribution expenses from $3.9 million for 4Q18 to $3.3 million for 4Q19 was due to lower marketing activities.

The decrease in other expenses for 4Q19 was mainly due to lower retrenchment costs amounting to $0.7 million (4Q18: $3.9 million). Conversely, the Group reported net foreign exchange losses of $1.0 million for 4Q19 (4Q18: net foreign exchange gain $0.2 million) and incurred a penalty of $0.4 million for the early termination of rental contracts due to the consolidation of two operating locations into one location in Tianjin.

The Group achieved a net profit of $2.7 million for 4Q19 compared to a net profit of $10.6 million for 4Q18. Excluding the impact from net foreign exchange gains/losses, retrenchment costs, onerous rental, penalty on the early termination of rental contracts, net losses on the disposal of property, plant and equipment ("PPE"), net gain on the disposal of property and allowance for impairment on PPE, net profit would have been $5.0 million for 4Q19 and $1.7 million for 4Q18, representing a 189.6% yoy increase.

*Onerous rent refers to rent paid at the Group's operations in Shanghai and Thailand despite the shifting of operations from these locations. The Group was required to pay rent at these vacant premises during 3Q19 as the rental agreements will expire at a later date.

January – December 2019 ("FY19")

The Group's revenue decreased by 7.3% year-on-year ("yoy") from $726.8 million for FY18 to $673.8 million for FY19.

The Group reported a decrease in revenue from all business segments except for the Healthcare segment.

Revenue from the Group's Automotive segment decreased 9.2% yoy to $245.1 million. This was mainly due to a decrease in orders from customers as a result of weakening demand across global automotive markets and certain projects reaching end-of-life, partially offset by new projects launched.

Revenue from the Group's Consumer/IT segment declined 7.7% yoy to $253.0 million. This was due to a slowdown in demand from customers for certain projects and our deliberate shift away from low-margin projects, partially offset by new projects launched.

Revenue from the Group's Healthcare segment increased 1.0% yoy to $57.3 million. This was due to new projects from new and existing customers, partially offset by a customer pulling certain projects in-house and delays in the qualification of tools for a new project set for mass production.

Revenue from the Mould Fabrication segment declined 6.1% yoy to $118.3 million. This was due to a decrease in demand from customers in the Automotive industry, partially offset by an increase in orders from customers in the Healthcare industry.

The Group's gross profit decreased 14.7% yoy from $87.1 million for FY18 to $74.3 million for FY19. Correspondingly, the Group's gross profit margin declined from 12.0% for FY18 to 11.0% for FY19. This was mainly due to lower utilisation as a result of the decline in orders, lower levels of utilisation during the initial start-up phase at the Group's new plant in Penang and the relocation of the Group's Shanghai operations to Chuzhou.

The decrease in other income was due to a gain on the disposal of property amounting to $13.1 million for FY18 and none for FY19.

The decrease in other expenses in FY19 was mainly due to lower retrenchment costs which amounted to $1.3 million (FY18: $3.9 million). Conversely, the Group reported net foreign exchange losses of $1.1 million (FY18: net foreign exchange gain $0.7 million), incurred a penalty of $0.4 million on the early termination of rental contracts due to the consolidation of two operating locations into one location in Tianjin, and the payment of rent at the Group's operations in Shanghai and Thailand despite shifting operations out of these locations.

The increase in finance costs in FY19 was due to accounting for interest expense on lease liabilities relating to right of use assets upon the adoption of SFRS(I) 16.

The Group achieved a net profit of $8.0 million for FY19 compared to a net profit of $29.8 million for FY18. Excluding the impact from net foreign exchange gains/losses, retrenchment costs, onerous rental, penalties on the early termination of a rental contract, net loss on the disposal of property, plant and equipment ("PPE"), net gain on the disposal of property, reversal of allowance for impairment on PPE and transaction costs relating to acquisition, the Group's net profit would have been $11.9 million for FY19 and $20.9 million for FY2018, representing a 43.3% yoy decline.

*Onerous rent refers to rent paid at the Group's operations in Shanghai and Thailand despite the shifting of operations from these locations. The Group was required to pay rent at these vacant premises during 3Q19 as the rental agreements will expire at a later date.

CONSOLIDATED BALANCE SHEET

The Group's PPE amounted to $171.7 million as at 31 December 2019 as compared to $190.4 million as at 31 December 2018. PPE was stated net of depreciation charges of $27.3 million (FY18: $29.2 million), partially offset by currency realignment, reclassification of land use rights to right-of-use assets and additions of $32.8 million (FY18: $37.2 million). During the year, the Group had purchased a building for $5.7 million in Singapore to consolidate warehousing inhouse and to expand the Group's manufacturing capacity in Singapore.

Upon the adoption of SFRS(I) 16, the Group recognised right-of-use assets and lease liabilities as of 1 January 2019.

The Group maintained a cash balance of $103.4 million as at 31 December 2019 (31 December 2018: $88.7 million). This resulted in a net debt position of $1.0 million (31 December 2018: net debt position of $21.0 million) after accounting for loans and borrowings amounting to $104.4 million (31 December 2018: $109.7 million). The decrease in net debt was mainly due to the collection of proceeds from the disposal of property and cash generated from operations. This was partially offset by the payment of PPE, payment of dividends and retrenchment costs.

CONSOLIDATED CASHFLOW STATEMENT

January - December 2019 ("FY19")

Net cash flows from operating activities amounted to $47.5 million for FY19 as compared to $35.3 million for FY18. Net cash flows used in investing activities amounted to $4.9 million for FY19 as compared to $41.7 million for FY18 mainly due to the collection of proceeds from the disposal of property in FY18.

Net cash flows used in financing activities amounted to $26.2 million for FY19 as compared to $9.0 million for FY18 mainly due to the repayment of loans and borrowings.

Commentary On Current Year Prospects

Business conditions remain challenging as the Group continues to face headwinds such as foreign exchange volatility, rising labour and utility costs, price pressure and subdued global economic sentiment. Moreover, although a phase one trade deal was signed between the US and China, the underlying fundamental conflict remains as global supply chains adjust to the changing business landscape.

In addition, the Group was impacted by mandatory government closures of its factories in China as a result of Covid-19 during the first half of February 2020. While operations have gradually resumed production, the full extent of the financial impact is difficult to ascertain as the situation continues to evolve and cause disruption across global supply chains. The Group continues to monitor the situation closely, adhering to regulations imposed by local authorities and controlling costs to mitigate the impact from the virus.

The slowdown across global automotive markets continues and the onset of Covid-19 should weigh on demand. Amid slowing demand within the Automotive segment, the Group is aggressively pursuing new projects with business development initiatives geared towards less labour-intensive projects. The Group's overarching strategy is to leverage on its complex, precision engineering capabilities to produce higher-margin plastic parts.

Within the Consumer/IT segment, the Group continues to see softening demand from customers due to subdued global economic growth and the added uncertainty surrounding Covid-19. Conversely, having laid the groundwork through continued investment, the Group remains positive on the Healthcare segment as a key growth driver for the Group in the near to mid-term. In the Healthcare segment, the Group has secured new projects from both new and existing customers.

Heading into the new financial year, the Group is focusing on tightening cost controls, enhancing capacity utilisation and aggressively pursuing new projects. While remaining vigilant of the headwinds, the Group is confident in its resilient business model and healthy balance sheet as the long-term sustainability of its operations remain on track.