Sunningdale Technologies

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Full Year Financial Statement And Dividend Announcement 2017






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Profit & Loss




Consolidated Statement of Comprehensive Income




Balance Sheet




Review of Performance



CONSOLIDATED INCOME STATEMENT

October – December 2017 ("4Q17")

The Group's revenue increased 1.6% year-on-year ("yoy") from $184.1 million for 4Q16 to $187.0 million for 4Q17. The Group reported an increase in revenue from all business segments except for Consumer/IT. The decrease in revenue from the Consumer/IT segment was due to multiple customers advancing orders scheduled for 4Q17 to earlier quarters and a decline in average selling price for certain projects due to a change in materials used in production.

Gross profit decreased marginally by 0.2% yoy from $25.1 million for 4Q16 to $25.0 million for 4Q17. Correspondingly, the Group's gross profit margin decreased from 13.6% for 4Q16 to 13.4% for 4Q17.

The decrease in other income was due to a gain on the disposal of property, plant and equipment ("PPE") of $5.1 million for 4Q16 and a foreign exchange gain of $8.4 million for 4Q16, while foreign exchange loss of $2.8 million for 4Q17 was recorded.

The Group achieved a net profit of $7.7 million for 4Q17 compared to $21.5 million for 4Q16. Excluding foreign exchange loss/(gain), retrenchment costs and loss/(gain) from the disposal of PPE, net profit would have been $10.6 million for 4Q17 and $9.8 million for 4Q16, representing a 8.1% yoy increase.

January – December 2017 ("FY17")

The Group's revenue increased 5.9% yoy from $684.5 million for FY16 to $724.5 million for FY17. The Group reported an increase in revenue from all business segments.

The Group's gross profit increased by 11.9% yoy from $94.3 million for FY16 to $105.5 million for FY17. Gross profit margin increased from 13.8% for FY16 to 14.6% for FY17.

The decrease in other income was due to a gain on the disposal of property, plant and equipment ("PPE") of $5.0 million for FY16 and a foreign exchange gain of $9.0 million for FY16, while foreign exchange losses amounting to $10.6 million for FY17 was recorded.

The Group achieved a net profit of $31.4 million for FY17 compared to $39.1 million for FY16. Excluding foreign exchange loss/(gain), gains on the disposal of PPE and retrenchment costs, net profit would have been $42.0 million for FY17 and $31.7 million for FY16, representing a 32.8% yoy increase.

CONSOLIDATED BALANCE SHEET

The Group's property, plant and equipment ("PPE") amounted to $193.9 million as at 31 December 2017, compared to $191.6 million as at 31 December 2016. PPE were stated net of depreciation charges of $28.9 million (FY16: $29.6 million), partially offset by currency re-alignment and the addition of $36.8 million (FY16: $39.2 million) in capital expenditure for machineries and buildings.

The increase in inventories was due to preparations for new project launches and the building up of safety stock. The increase in trade and other receivables and trade and other payables were in line with the increase in revenue. Additionally, this increase was due to several customers delaying payments to January 2018 and for the purchase of PPE.

The Group maintained a cash balance of $105.3 million as at 31 December 2017 (31 December 2016: $115.3 million). This resulted in a net cash position of $1.6 million (31 December 2016: $15.5 million) after accounting for loans and borrowings amounting to $103.7 million (31 December 2016: $99.8 million). The decrease in the Group's net cash position was due to a foreign currency translation loss of $3.3 million on the opening balance of cash and cash at banks, payment of capital expenditure of $33.9 million (FY16: $36.0 million), payment of dividends amounting to $16.0 million (FY16: $9.3 million) and a $2.0 million loan to a joint venture.

CONSOLIDATED CASHFLOW STATEMENT

October – December 2017 ("4Q17")

Net cash from operating activities amounted to $2.6 million for 4Q17, compared to $8.5 million for 4Q16. Net cash used in investing activities amounted to $8.8 million for 4Q17 compared to $20,000 for 4Q16 due to proceeds from the disposal of a building in 4Q16.

Net cash generated from financing activities was $1.0 million for 4Q17 mainly due to additional loans obtained to finance the construction of the Group's new factory in Penang. In comparison, net cash used in financing activities amounted to $3.4 million for 4Q16 which was mainly due to the repayment of loans.

January – December 2017 ("FY17")

Net cash generated from operating activities was $36.3 million for FY17, compared to $52.8 million for FY16. Net cash used in investing activities was $32.3 million for FY17 compared to $27.7 million for FY16 mainly due to the purchase of other investments amounting to $1.4 million (FY16: nil) and payment for property, plant and equipment amounting to $33.9 million for FY17 (FY16: $36.0 million) which was partially offset by net proceeds on the disposal of property, plant and equipment of $2.9 million (FY16: $7.3 million).

Net cash used in financing activities was $10.8 million for FY17, compared to $26.1 million for FY16.

Commentary On Current Year Prospects


The economic environment continues to present challenges to the Group's global operations. In addition to foreign exchange rate volatility and rising labour costs, the business landscape has become increasingly competitive while global growth remains subdued.

Against this backdrop, the Group has focused on improving its core operations through initiatives aimed at boosting productivity and increasing operational efficiency. Concurrently, the Group continues to sharpen its competitive edge by investing into technology and developing new engineering capabilities to ensure long-term sustainable growth.

Backed by a manufacturing footprint which spans across nine countries, the Group's business development initiatives have gained traction as customers are confident in the Group's ability to handle projects on a global scale. Moreover, the Group has continued to focus on diversifying its multinational customer base and broadening its product mix by leveraging on its world-class capabilities. These efforts have translated to a stable order book across the Group's Automotive, Consumer/IT, Healthcare, and Mould Fabrication segments.

While continuing its long-term growth trajectory, the Group continues to optimise resources across its manufacturing locations while adopting a prudent approach in progressively adding capacity with new contract wins. In Penang, Malaysia, the Group will open its new 15,000 square metre manufacturing site before the end of the first quarter of 2018. Strategically located to gain closer proximity to key customers, this new plant will service customers across the Automotive, Consumer/IT and Healthcare segments.

Looking ahead, the Group expects the business environment to remain subdued while macroeconomic headwinds create added uncertainty. While staying vigilant to industry challenges, the Group is cautiously optimistic as its overall strategy of building a business model that is both sustainable and profitable for the long-term is on track.