Sunningdale Technologies

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Financial Statement Announcement for the First Quarter Ended 31 March 2017






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Profit & Loss




Consolidated Statement of Comprehensive Income




Balance Sheet




Review of Performance



CONSOLIDATED INCOME STATEMENT

January – March 2017 ("1Q17")

The Group's revenue increased 6.5% year-on-year ("yoy") from $161.3 million for 1Q16 to $171.8 million for 1Q17. The Group reported an increase in revenue from all business segments except for the Mould Fabrication segment.

During the period, gross profit increased by 18.2% yoy from $21.9 million for 1Q16 to $25.9 million for 1Q17, in line with the increase in revenue. Gross margin improved from 13.6% for 1Q16 to 15.0% for 1Q17.

The increase in other income was due to a gain on the disposal of plant, property and equipment ("PPE") of $0.4 million for 1Q17 as compared to $0.06 million for 1Q16.

The decrease in other expenses was mainly due to foreign exchange loss of $2.1 million for 1Q17 as compared to $3.2 million for 1Q16.

The Group achieved a net profit of $7.7 million for 1Q17 compared to $3.6 million for 1Q16. Excluding foreign exchange losses, gain on disposal of PPE and retrenchment costs, net profit would have been $9.5 million in 1Q17 and $6.8 million in 1Q16, representing a 41.3% yoy increase.

CONSOLIDATED BALANCE SHEET

The Group's property, plant and equipment amounted $186.3 million as at 31 March 2017, compared to $191.6 million as at 31 December 2016. Property, plant and equipment were stated net of depreciation charges of $7.1 million (1Q16: $7.7 million) and partially offset by currency re-alignment and the addition of $9.2 million (1Q16: $6.5 million) in capital expenditure for machineries and building.

The Group maintained a cash balance of $112.6 million as at 31 March 2017 (31 December 2016: $115.3 million), resulting in a net cash position of $12.7 million (31 December 2016: $15.5 million), after accounting for loans and borrowings of $99.9 million (31 December 2016: $99.8 million). The decrease in net cash was due to foreign currency translation loss of $3.0 million on the opening balance of cash and cash at bank and payment of capital expenditure of $9.9 million (1Q16: $6.6 million).

CONSOLIDATED CASHFLOW STATEMENT

January - March 2017 ("1Q17")

Net cash from operating activities was $6.8 million for 1Q17, compared to $12.7 million for 1Q16. Net cash used in investing activities was $7.2 million for 1Q17 compared to $6.5 million for 1Q16 due to payment for purchase of property, plant and equipment which was partially offset by net proceeds for the disposal of property, plant and equipment.

Net cash from financing activities was $0.4 million for 1Q17 due to proceeds from loans, compared to $2.5 million in 1Q16.

Commentary On Current Year Prospects


Little has changed in the business landscape. Overall, sentiment remains subdued while economic headwinds such as rising labour costs and foreign exchange rate volatility present challenges to the Group's global operations. Coupled with these uncertainties, the Group continues to face pricing pressure from customers. Against this backdrop, the Group continues to drive operational efficiency and streamline its operations. This translated to the expansion of the Group's gross profit margin to 15.0% for 1QFY2017. Heading into the remainder of the year, the Group remains committed to operational excellence in order to boost productivity.

In line with the Group's strategy of investing for future growth, the Group will begin the construction of a new manufacturing facility in Penang, Malaysia. This new site is scheduled for completion by the end of the first quarter in 2018 and will incorporate the Group's latest precision engineering technology. In addition, the Group will progressively add capacity to its newest manufacturing plant in Chuzhou, China as it continues to optimise resources in the region.

Through intensive business development initiatives, the Group has maintained a stable order book across the Automotive, Consumer/IT, Healthcare and Mould Fabrication segments. The Group has indicated that the Automotive segment will be a key growth driver in the year ahead. With a global manufacturing footprint across 19 locations in nine different countries, the Group continues to receive enquiries from customers who are confident in the Group's ability to handle projects on a global scale.

Supported by a diverse customer base and wide product mix offering, the Group remains cautiously optimistic for FY2017. The Group's core business segments continue to generate strong positive operating cash flows, resulting in a net cash position of S$12.8 million as at 31 March 2017. This augurs well for the Group as it looks to further diversify its customer base and expand its product offering by developing new engineering capabilities. Overall, the Group's long-term strategy of developing a sustainable and profitable business model remains on track.