Computime FY2018 Annual Results Presentation...FY2018 Results Overview 3 Revenue HK$3,867.5 m +5.0%...

Computime

FY2018 Annual Results

Presentation

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2

FY2018 Results Overview

3

Revenue

HK$3,867.5 m

+5.0%

Net Profit

HK$126.4 m

Flat

Consolidated

HK$137.2 m

+10.3%

Excluding Brand

Distribution

Basic EPS

Computime | FY2018 Annual Results Presentation

15.1 HK cents

FY2017: 15.1 HK cents

Dividend Per Share

7.5 HK cents

Final

49.8%

Payout Ratio

(Full Year)

Significant Progress in Transformation

4 Computime | FY2018 Annual Results Presentation

Corporate

• New company logo & website

• Relocation to Hong Kong Science

Park

• Advancements in Data Analytics

Seminar

• Enhanced resource allocation

Focus on IoT technologies

Deemphasize brand distribution

• Reorganization of business and

operations

Products and Business

• SALUS developments

Innovative product launches

Strategic alliance with a large

electronics conglomerate

• EMS business developments

Participation in industrial heating

market

28% growth in CIC segment

Partnership • Cooperation with MIT on

healthcare technologies

Awards & Recognitions • HKICT Awards

• ET Net Smart City Awards

• Bloomberg Listed Enterprises

of the Year

• etc…

Financial

Review

6

Income Statement Summary


For the year ended March 31

(HK$ m)

2018 2017 Change

Revenue 3,867.5 3,683.6 +5.0%

Gross profit 562.7 540.1 +4.2%

Gross profit margin 14.5% 14.7% -0.2% pts

Other income 7.3 20.4 -63.9%

Total operating expenses 395.4 388.7 +1.7%

Total operating expenses to revenue ratio 10.2% 10.6% -0.4% pts

Net profit (consolidated) 126.4 126.4 –

Net profit (excluding brand distribution) 137.2 124.4 +10.3%

Basic earnings per share (HK cents) 15.1 15.1 –

Dividend per share (HK cents) 7.5 7.5 –

7

Appliance Controls (APC)

APC Revenue (HK$ m) and Margin

FY2014 FY2015 FY2016 FY2017 FY2018

1,527

Revenue

1,555

1,668 1,609

2.4% 2.4% 1.4% 1.8% 2.1%

Segment Margin

40%

APC Revenue Contribution

(FY2018)

1,530

* Excluding the impairment of trade receivables of HK$65.9 million in the APC segment incurred

during FY2014

*


8

Commercial and Industrial Controls (CIC)

CIC Revenue Contribution

(FY2018)

CIC Revenue (HK$ m) and Margin

FY2014 FY2015 FY2016 FY2017 FY2018

Revenue

637

571

818

613

5.0% 6.0% 6.0% 6.3%

7.1%

Segment Margin

21%

507


9

Building and Home Controls (BHC)

BHC Revenue Contribution

(FY2018)

39%

BHC Revenue (HK$ m) and Margin

FY2014 FY2015 FY2016 FY2017 FY2018

1,523

Revenue

1,492

1,283

942

9.7% 9.5% 11.8% 13.7% 12.0%

Segment Margin

777

Note: BHC segment excludes brand distribution division


*

* Excluding the impairment of trade receivables of HK$7.0 million in the BHC segment incurred

during FY2015

10

Revenue Mix by Segment

55% 54% 51% 47% 42% 40%

16% 18% 19%

16% 17% 21%

29% 28% 30% 37% 41% 39%

FY2013 FY2014 FY2015 FY2016 FY2017 FY2018

Appliance Controls Commercial & Industrial Controls Building & Home Controls


Continued to grow more profitable segments

11

Gross Profit Margin

12.0%

11.5%

13.2%

14.7% 14.5%

FY2014 FY2015 FY2016 FY2017 FY2018

Computime | Corporate Presentation | June 2018

FY2018 gross profit margin

Favorable impact

• Higher sales volume

• Favorable segment mix

• Operational efficiencies

• Cost control

Unfavorable impact

• Rising raw material prices

12

Financial Position

Cash and Cash Equivalents (HK$ m)

FY2014 FY2015 FY2016 FY2017 FY2018

40.8% 36.4%

20.1%

772

640

39.2%

15.4%

48.2%

591 544

730

Debt (HK$ m)

FY2014 FY2015 FY2016 FY2017 FY2018

265 276

321 267 251


13

Inventories

Inventories (HK$ m)

FY2014 FY2015 FY2016 FY2017 FY2018

40.8%

20.1%

627

635

39.2%

695

609

859

Inventory Turnover (days)

FY2014 FY2015 FY2016 FY2017 FY2018

73

83 91

73

95 615

695

754

660

1H (as at 30 Sep)

FY (as at 31 Mar)

108

97 93

79

1H

FY

638

71


14

Research and Development

Gross R&D Spending (HK$ m)

45 55

77

63 69

7

9

9

8

8

FY2014 FY2015 FY2016 FY2017 FY2018

40.8% 36.4%

20.1%

85

52

39.2%

15.4%

48.2%

65

76

Gross R&D Spending as % of Revenue

R&D Current Year Expenditure

R&D Additions

1.8%

2.0%

2.4%

1.9% 2.0%

FY2014 FY2015 FY2016 FY2017 FY2018

71


15

Dividend and Returns

Dividend Per Share (HK cents) and Payout Ratio

FY2014 FY2015 FY2016 FY2017 FY2018

7.5

Dividend Per Share

4.5

2.0

5.8

48.8% 48.9% 49.6% 49.7% 49.8%

Payout Ratio

• Stable payout ratio

~50%

• Dividend yield1

5.8%

• Total return since FY20142

316.8%

1 As at 27 Jun 2018

2 Source: Bloomberg (dividend reinvested, investment period from 2 Apr 2013 to 27

Jun 2018)

7.5


SALUS

Business

Updates

17

SALUS

Business Performance

• Overall, revenue flat in local currency terms

• UK market continued to be mired by Brexit uncertainties, negatively affecting sales

• Rest of European territories, especially Nordic regions, posted healthy sales growth

Product launches

• A number of new products launched in FY2018

• Auto Balancing Actuator – patent pending revolutionary product that

resolves longstanding challenges faced by underfloor heating system

installers and customers

Increased market presence and recognitions

• Designated provider of smart heating control devices for a large global electronics

conglomerate in their participation in utility tenders for smart home projects in the UK

• Industry recognitions


Outlook

19

Outlook – FY2019

Revenue

• Cautiously optimistic; target to record relatively stable revenue

• Mixed factors in play

Growth momentum for higher margin business to continue

Ongoing trade disputes

Constrained supply of certain critical electronic components

Costs

• Organizational changes to lead to leaner manufacturing and operational efficiencies

• No short term relief for tight supply of certain critical electronic components

Rising material costs to put pressure on gross profit margin, and magnitude of impact is

uncertain


SALUS Business

• Continue to expand SALUS’ presence in North America and Europe

• UK: Strategy in place and new products in pipeline to recover sales and accelerate growth

• Pursue more opportunities to participate in large scale smart home projects

20

Outlook – Long Term


Continued Execution of Transformation Strategies

• Growing technical capabilities are increasingly being recognized by the marketplace, opening up

new and sizeable market opportunities

• EMS business as a foundation of support as we invest in more advanced technologies while

expanding the SALUS brand

• Stay focused on transformation into a technology-driven company

US-China Trade Dispute

• For the time being, no easy way for any China-based manufacturers to switch manufacturing base

• Exploring strategies, including relocation of production lines, to diversify risks in long term

• Final outcome of the dispute may have an impact on the Company’s performance

Appendix

23

Revenue by Geographical Region

Revenue by geographical region (HK$ m)

FY2014 FY2015 FY2016 FY2017 FY2018

27.8%

3,868

Asia

Americas

Europe

47.3%

24.9%

51.5%

19.1%

3,522

3,164

47.7%

24.8%

27.5%

2,814 29.4%

23.3%

50.7%

26.0%

28.3%

3,684

49.4%

22.3%


Consolidated Statement of Profit or Loss

24

For the year ended 31 March

2018

HK$’000

2017

HK$’000

Revenue 3,867,510 3,683,598

Cost of sales (3,304,836) (3,143,514)

Gross profit 562,674 540,084

Other income 7,346 20,351

Selling and distribution expenses (120,307) (99,225)

Administrative expenses (287,338) (268,392)

Other operating income/(expenses), net 12,236 (21,094)

Finance costs (16,370) (10,380)

Share of profit of an associate 580 1,310

Profit before tax 158,821 162,654

Income tax expense (32,435) (36,220)

Profit for the year 126,386 126,434

Attributable to:

Owners of the Company 126,404 126,449

Non-controlling interests (18) (15)

Earnings per share attributable to

owners of the Company

Basic 15.1 HK cents 15.1 HK cents

Diluted 14.9 HK cents 15.0 HK cents


Consolidated Statement of Comprehensive

Income

25

For the year ended 31 March

2018

HK$’000

2017

HK$’000

Profit for the year 126,386 126,434

Other comprehensive income/(expense)

Other comprehensive income/(expense) to be

reclassified to profit or loss in subsequent periods:

Cash flow hedges:

Effective portion of changes in fair value of

hedging instruments arising during the year (33,538) 26,830

Reclassification adjustments for losses/(gains)

included in the consolidated statement of profit

or loss

15,623 (28,499)

Exchange differences on translation of foreign

operations 49,221 (15,365)

Other comprehensive income/(expense) for the

year, net of tax 31,306 (17,034)

Total comprehensive income for the year 157,692 109,400

Attributable to:

Owners of the Company 157,710 109,415

Non-controlling interests (18) (15)


Consolidated Statement of Financial Position

26

As at 31 March 2018

HK$’000

31 March 2017

HK$’000

Non-current assets

Property, plant and equipment 228,301 170,966

Goodwill 36,420 36,420

Club debenture 705 705

Intangible assets 121,161 106,801

Interest in an associate 5,624 6,277

Available-for-sale investment - -

Prepayments and deposits 8,291 3,338

Deferred tax assets 6,404 -

Total non-current assets 406,906 324,507

Current assets

Inventories 638,279 627,068

Trade receivables 483,278 602,636

Prepayments, deposits and other receivables 37,303 51,294

Tax recoverable - 5,041

Derivative financial instruments - 19,154

Cash and cash equivalents 729,615 771,920

Total current assets 1,888,475 2,077,113

Current liabilities

Trade and bills payables 499,659 729,580

Other payables and accrued liabilities 128,804 115,004

Interest-bearing bank borrowings 250,689 264,877

Amount due to a non-controlling shareholders 160 160

Derivative financial instruments 24,763 -

Tax payable 24,794 26,854

Total current liabilities 928,869 1,136,475

Net current assets 959,606 940,638

Total assets less current liabilities 1,366,512 1,265,145

Non-current liabilities

Deferred tax liabilities 14,718 13,189

Net assets 1,351,794 1,251,956

Issued capital 83,974 83,642

Reserves 1,267,063 1,167,539

Equity attributable to owners of the Company 1,351,037 1,251,181

Non-controlling interests 757 775

Total equity 1,351,794 1,251,956


27

Shareholding Structure

Computime Group Limited

(Stock code: 320)

As at 31 March 2018

Ms. Lana Leung Mr. Auyang Ho Other

shareholders

42.66% 25.63% 31.71%


28

Executive Management

Auyang Ho Founder, Chairman, and Executive

Director

Founded Computime with a vision of

creating a first-class technology company

to explore new markets

King Owyang Chief Executive Officer and Executive

Director

40 years experience in the electronics

and semiconductor industries. Global

managerial experience in the areas of

electrical engineering and manufacturing

Matthew Au Chief Operating Officer

25 years of finance and accounting

experience in multinational US-listed

enterprises

Wai Leung Ha Executive Vice President of

Technologies

30 years experience in engineering,

research and development. Instrumental

in developing the Company’s R&D

capabilities


Thank You

Computime FY2018 Annual Results Presentation...FY2018 Results Overview 3 Revenue HK$3,867.5 m +5.0%...

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