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Financial Statements

Full Year Financial Statement And Dividend Announcement 2018






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Profit & Loss




Consolidated Statement of Comprehensive Income




Balance Sheet




Review of Performance


CONSOLIDATED INCOME STATEMENT

October - December 2018 (“4Q18”)

The Group’s revenue decreased 1.5% year-on-year (“yoy”) from $187.0 million for 4Q17 to $184.2 million for 4Q18.

Revenue from the Group’s Healthcare segment increased 6.5% yoy to S$14.4 million. Similarly, revenue from the Group’s Mould Fabrication segment increased 3.4% yoy to S$36.0 million. This growth was offset by a decrease in revenue from the Group’s Automotive segment which declined 6.2% yoy to S$63.5 million. In addition, revenue from the Group’s Consumer/IT segment declined marginally to S$70.3 million.

The decrease in revenue from the Group’s Automotive segment was due to certain projects reaching end-of-life coupled with a decrease in orders resulting from weakening demand across global automotive markets in 4Q18.

The decrease in revenue from the Group’s Consumer/IT segment was due to a strategic long-term decision to exit low margin projects.

The Group’s gross profit decreased 23.4% yoy from $25.0 million for 4Q17 to $19.2 million for 4Q18. Correspondingly, the Group’s gross profit margin declined from 13.4% for 4Q17 to 10.4% for 4Q18. This was mainly due to an increase in labour costs, utility costs, raw material costs and pricing pressure from customers.

The increase in other income was due to a gain on the disposal of property amounting to $13.1 million for 4Q18.

The increase in marketing and distribution expenses from $3.5 million for 4Q17 to $3.9 million for 4Q18 was due to higher staff costs and marketing expenses.

The decrease in other expenses was mainly due to the Group reporting foreign exchange losses of $2.8 million in 4Q17 as compared to foreign exchange gain of $0.2 million for 4Q18 under other income and allowance for impairment on property, plant and equipment (“PPE”) of $0.6 million for 4Q18.

The Group achieved a net profit of $10.6 million for 4Q18 compared to a net profit of $7.7 million for 4Q17. Excluding the impact from foreign exchange gains/losses, retrenchment costs, losses on the disposal of property, plant and equipment, allowance for impairment on PPE and gains on the disposal of property, net profit would have been $1.7 million for 4Q18 and $10.5 million for 4Q17, representing a 83.8% yoy decline.

January - December 2018 (“FY18”)

The Group’s revenue increased marginally by 0.3% year-on-year (“yoy”) from $724.5 million for FY17 to $726.8 million for FY18.

The Group reported an increase in revenue from all business segments except for the Consumer/IT segment. The decrease in revenue from the Consumer/IT segment was due to certain projects reaching end-of-life and the strategic long-term decision to exit low margin projects.

The Group’s gross profit decreased 17.4% yoy from $105.5 million for FY17 to $87.1 million for FY18. Correspondingly, the Group’s gross profit margin declined from 14.6% for FY17 to 12.0% for FY18. This was mainly due to an increase in labour costs, utility costs, raw material costs, lower manufacturing yield for certain new projects during the initial ramp up stage and price pressure from customers.

The increase in other income was due to a gain on the disposal of property amounting to $13.1 million for FY18.

The decrease in other expenses was mainly due to the Group reporting a foreign exchange gain of $0.7 million for FY18 as compared to foreign exchange losses amounting to $10.6 million for FY17 and allowance for impairment on PPE of $0.6 million for FY18.

The Group achieved a net profit of $29.8 million for FY18 compared to a net profit of $31.4 million for FY17. Excluding the impact from foreign exchange gains and losses, retrenchment costs, losses on the disposal of property, plant and equipment, allowance for impairment of PPE and gains on the disposal of property and transaction costs relating to acquisitions, the Group’s net profit would have been $20.9 million for FY18 and $41.9 million for FY2017, representing a 50.1% yoy decline.

CONSOLIDATED BALANCE SHEET

The Group’s property, plant and equipment (“PPE”) amounted to $190.4 million as at 31 December 2018 as compared to $193.9 million as at 31 December 2017. PPE was stated net of depreciation charges of $29.2 million (FY17: $28.9 million), partially offset by currency re-alignment and additions of $37.2 million (FY17: $36.8 million) in PPE.

The increase in trade and other receivables was due to the amount to be collected on disposal of the property for $28.2 million which was collected on 3 January 2019.

The Group maintained a cash balance of $88.7 million as at 31 December 2018 (31 December 2017: $105.3 million). This resulted in a net debt position of $21.0 million (31 December 2017: net cash $1.6 million) after accounting for loans and borrowings amounting to $109.7 million (31 December 2017: $103.7 million). The decrease in net cash was due to a foreign currency translation loss of $1.1 million on the opening balance of cash and cash at bank, the payment of capital expenditure amounting to $37.0 million, the payment of dividends amounting to $14.2 million and the payment of transaction costs on disposal of the property of $5.8 million.

CONSOLIDATED CASHFLOW STATEMENT

January - December 2018 (“FY18”)

Net cash flows from operating activities amounted to $35.4 million for FY18 as compared to $38.3 million for FY17. Net cash flows used in investing activities amounted to $41.8 million for FY18 as compared to $34.3 million for FY17 mainly due to payment of transaction costs on the disposal of the property.

Net cash flows used in financing activities amounted to $9.0 million for FY18 as compared to $10.8 million for FY17.

Commentary On Current Year Prospects

Business conditions remain challenging as we continued to face headwinds in the form of rising labour costs, rising utility costs, price pressure and negative market sentiment surrounding the US/China trade war. Furthermore, global economic growth remained relatively subdued. In addition, the Group was impacted by a slowing automotive market as global automotive sales declined in key markets such as the US, China and Europe towards the end of 2018.

At the Group’s latest manufacturing site in Penang, Malaysia, the Group is progressively adding capacity with new contract wins from both new and existing customers. While still in the initial start-up phase of its operations, the levels of utilisation are low. However, the Group expects production and utilisation at its Penang facility to ramp up in 2H2019 having secured new projects with several customers.

Similarly, the Group continues to gradually shift operations and machinery from its facilities in Shanghai to its 50,000 square meter facility in Chuzhou. For FY2018, there were delays due to approvals from certain customers. Completion of this shift is expected to take place by 3Q2019 will optimise resources in China.

Despite the negative market sentiment, the Group’s technological capabilities and global manufacturing footprint have led to business queries from both new and existing customers who are confident in the Group’s ability to handle technically challenging projects. As a result, the Group’s order backlog across the Healthcare, Consumer/IT and Mould Fabrication segments remains stable. Within the Consumer/IT segment, the Group has made the strategic decision to shift from lower-margin projects to focus on high-margin, complex precision engineering parts. In the Automotive segment, the Group continues to monitor the market closely and is aggressively pursuing business development initiatives to secure new projects.

The Group continues to remain focused on building the long-term sustainability of its operations. In this light, the Group continues to sharpen its competitive edge by investing into technology and better machinery to stay ahead of the curve in an ever-changing business environment. Heading into FY2019, the Group’s key focus is on tightening cost controls, boosting productivity and enhancing operational efficiency.

Looking ahead, the Group is vigilant of headwinds such as rising costs and an increasingly competitive business landscape. While the Group has substantial operations outside of China, the Group continues to monitor the ongoing trade war situation closely. The Group remains confident in its resilient business model as the long-term sustainability and profitability of operations remain on track.


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