FrenckenFrencken Group LimitedGroup Limitedelectrotech.listedcompany.com/misc/slides_2q09.pdf ·...
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AB/1
2Q FY2009 Results Briefing
FrenckenFrencken Group LimitedGroup Limited
2Q FY20092Q FY2009Results PresentationResults Presentation
International Contract Manufacturer to CapitalEquipment and Consumer Industries
International Contract Manufacturer to CapitalInternational Contract Manufacturer to CapitalEquipment and Consumer IndustriesEquipment and Consumer Industries
14 August 200914 August 2009
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2Q FY2009 Results Briefing
New Group Operating StructureNew Group Operating Structure
Financial ReviewFinancial Review
2Q092Q09
1H091H09
Business Review and OutlookBusiness Review and Outlook
MechatronicsMechatronics DivisionDivision
EMS DivisionEMS Division
Questions and AnswersQuestions and Answers
AGENDA
Frencken Group Limited
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2Q FY2009 Results Briefing
New Group Operating Structure
Frencken Group Limited
Frencken Group LimitedFrencken Group Limited
Mechatronics Division
Asia
Group operating structure following acquisition of ETLA in May 2009
Frencken Europe B.V.Frencken Europe B.V.
FrenckenMechatronics B.V.
Machinefabriek Gebrs.Frencken B.V.
Optiwa B.V.
Europe
ETLA LimitedETLA Limited
Frencken Mechatronics(M) Sdn.Bhd.
ETLA Technologies(Wuxi) Co., Ltd.
EMS Division
Precico Group Sdn. Bhd.Precico Group Sdn. Bhd.
Precico ElectronicsSdn. Bhd.
Precico Sdn. Bhd.
Merit Process Sdn. Bhd.
ETLA LimitedETLA Limited
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2Q FY2009 Results Briefing
2Q09 Results – Financial Overview
Frencken Group Limited
• Attributable to negative goodwill from
acquisition of ETLA Group of
• Excluding negative goodwill, net loss was
S$72,000
Net profitNet profit
• In the short term, limited options to align costs to
lower capacity utilisation
• Shift in sales mix
Gross ProfitGross Profit
• Negative goodwill gain has no impact on cash flow
• Cash flow remains healthyNet Cash GeneratedNet Cash Generatedfrom Operationsfrom Operations
• First time consolidation of ETLA Group
(1 month contribution in June 2009 only)
• Slow down across all segments as economy
remains subdued
30%
67%
S$4.7m
230%
RevenueRevenue
S$13.4mil
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2Q FY2009 Results Briefing
6.5
4.7
3.3
3.5
0.9
3.1
3.7
4.1
Others
Automotive
Office
Automation
Telco (Keypad &
Others)
MECHATRONICS (S$ m)
2Q09 - Division Revenue Analysis
EMS (S$ m)
0.0
3.5
11.6
16.8
8.5
3.5
9.7
8.6
3.2
4.0Others
Industrial
Automation
Analytical
Medical
Semiconductor
N. M.N. M.
59%59% 37%37%
2Q08 2Q09Mechatronics
EMS
14%14%
Frencken Group Limited
42%42%
26%26%
21%21%
13%13%
71%71%
* N.M. – Not Meaningful
BackBack
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2Q FY2009 Results Briefing
13.4Negative Goodwill
30.3Provisional Fair Value of Net Assets Acquired
16.9
3.0Attributable Expenses
13.9Issued 71,471,067 shares @ S$0.195
Acquisition Consideration
(S$ m)
Acquisition of ETLA – Negative Goodwill
Frencken Group Limited
BackBack
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2Q FY2009 Results Briefing
157%5.113.1Profit Before Tax
(67%)8.12.6Gross Profit (GP)
230%4.013.4Net Profit
(30%)58.440.8Revenue
Chg y-o-y2Q082Q09(S$ m)
2Q09 – P&L Snapshot
Frencken Group Limited
* N.M. – Not Meaningful
N.M.20.9%N.M.Effective Tax Rate
(103%)6.9%(0.2%)NP Margin before negative goodwill
(102%)
N.M.
230%230%
4.04
-
4.044.04
(0.07)
13.43
13.3613.36
Analysis of Net Profit
Net Profit before negative goodwill
Negative goodwill
Net Profit after negative goodwillNet Profit after negative goodwill
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2Q FY2009 Results Briefing
Frencken Group Limited2Q09 – P&L Snapshot
18.0
40.4
11.8
5.9
23.1
Division Revenue
2Q08 2Q09
Mechatronics(Europe)
2Q08 2Q09
EMS
2Q08 2Q09
Mechatronics(Asia)
0.9
3.2
-0.9
0.60.1
Division Net Profit*
97%
2Q08 2Q09
Mechatronics(Europe)
2Q08 2Q09
EMS
2Q08 2Q09
Mechatronics(Asia)
194%
*Note: Excludes Investment Division & Negative Goodwill
43%
34%
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2Q FY2009 Results Briefing
1H09 – P&L Snapshot
Frencken Group Limited
22%11.113.5Profit Before Tax
(70%)17.75.4Gross Profit (GP)
60%8.413.5Net Profit
(34%)120.179.6Revenue
Chg y-o-y1H081H09(S$ m)
* N.M. – Not Meaningful
(99%)
N.M.
60%60%
8.44
-
8.448.44
0.05
13.43
13.4813.48
Analysis of Net Profit
Net Profit before negative goodwill
Negative goodwill
Net Profit after negative goodwillNet Profit after negative goodwill
(25%)23.9%18.0%Effective Tax Rate
(99%)7.0%0.1%NP Margin before negative goodwill
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2Q FY2009 Results Briefing
1H09 – Group Revenue Analysis
Frencken Group Limited
6.5
6.2
7.8
14.7
7.0
0.0
24.8
33.4
19.75.9
16.9
3.2
6.9
7.9
7.3
5.6
2.3
23.5
Others
Automotive
Office Automation
Telco (Keypad & Others)
Others
Industrial Automation
Analytical
Medical
Semiconductor
Breakdown by Business Segment
4%
MECHATRONICS (S$ m)
EMS (S$ m)
Breakdown by Division:Mechatronics – 71%EMS – 29%
Medical
Semiconductor
Telco (Keypad &Others)
Automotive
Office Automation
30%
10%
9%
7%
Analytical
21%
70%70%
Others
3%
Others
9%
IndustrialAutomation
7%
30%30%
32%32%
1%1%
N.M.N.M.
47%47%
7%7%
13%13%
62%62%
1H08 1H09Mechatronics
EMS
* N.M. – Not Meaningful
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2Q FY2009 Results Briefing
1H09 – P&L Snapshot
Frencken Group Limited
35.1
84.9
23.1
5.9
50.6
Division Revenue
1H08 1H09
Mechatronics(Europe)
1H08 1H09
EMS
1H08 1H09
Mechatronics(Asia)
8.0
0.70.8 0.6
-1.3
Division Net Profit*
1H08 1H09
Mechatronics(Europe)
1H08 1H09
EMS
1H08 1H09
Mechatronics(Asia)
*Note: Excludes Investment Division & Negative Goodwill
40%
34%
90%
300%
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2Q FY2009 Results Briefing
Working Capital Management
Frencken Group Limited
14.3
31.5
43.2
30 Jun09
19.9Trade Payables *
41.6Trade Receivables *
46.0Inventories *
31 Dec08
(S$ m)
128131
9991
30 Sep 08 31 Dec 08 31 Mar 09 30 Jun 09
113110
8687
7782
6776
62
6154
72
50
100
150
30 Sep 08 31 Dec 08 31 Mar 09 30 Jun 09
Cash Conversion Cycle (Days) *
Turnover Days *
Payables
Receivables
Inventories
2.9
1.8
4.7
Q209
3.7Free cash flow
0.8Capital expenditure
4.5Net cash flow fromoperations
Q208(S$ m)
Cash Conversion Cycle (Days) = Days sales outstanding + Days inventoryoutstanding – Days payables outstanding
* Excluding ETLA Group
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2Q FY2009 Results Briefing
Frencken Group LimitedStrong Balance Sheet
179.7201.8Shareholders’ equity
0.231.1Total borrowings
45.850.9Total cash and cashequivalents
39.745.6Cash and cash equivalents
6.15.3Short-term funds with afinancial institution
31 Dec08
30 Jun09
Balance Sheet (S$ m)
0.4%15.4%Gross gearing (%)
2.77
2.77
0.02
4.19
EPS (S$ cents)
- Before negative goodwill
- After negative goodwill
58.4953.65Net asset value per share(S$ cents)
YTDJun 08
YTDJun 09
Financial Indicators
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2Q FY2009 Results Briefing
EMS Division
MechatronicsMechatronics DivisionDivisionBusiness Review & OutlookBusiness Review & Outlook
Business Review & Outlook
Mechatronics Division
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2Q FY2009 Results Briefing
5.9
141.6157.3
171.3
50.6
FY2006 FY2007 FY2008 1H09
23.1
5.927.5
34.3
38.140.4
2Q08 3Q08 4Q08 1Q09 2Q09
Sales
Mechatronics Division
Currency: SGD million
Mechatronics Europe
Mechatronics Asia
1 month revenue contribution fromAsia operations
Sales from Europe operations waslower by 43% y-o-y and 16% q-o-q
2Q09 Review
• Sales declined 28% y-o-y but rose5% q-o-q
• Global demand for capitalequipment remained weak
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2Q FY2009 Results Briefing
Net Profit and Net Profit Margin
Mechatronics Division
12.9
18.9
15.2
FY2006 FY2007 FY2008 1H09
Asia net profit margin : 9.7%
Europe net profit margin : 0.4%
Europe net profit margin : 1.6%
Asia net profit margin : 9.7%
Division Net Profit: -79%Currency: SGD million
0.6*
0.1
Mechatronics Asia
Mechatronics Europe
NP margin 7.9% 8.3% 5.3% 2.7% 2.3%
0.6*
0.8
NP margin 10.7% 11.0% 8.2% 2.5%
0.7
1.8
3.23.2
2Q08 3Q08 4Q08 1Q09 2Q09
*For the month of June 2009
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2Q FY2009 Results Briefing
Sales Analysis – Medical Segment
Mechatronics Division
9.56
13.78
16.4018.00
16.78
2Q08 3Q08 4Q08 1Q09 2Q09
23.4
67.8
57.7
42.5
FY2006 FY2007 FY2008 1H09
Currency: SGD million
2Q09 Review
• Sales declined 42% y-o-y and 30% q-o-q dueto continuous depressed market conditions
Europe
• Sales was lower by 43% y-o-y and 31% q-o-q
• Lower sales to an existing customer as wellas the continued delay in the marketintroduction of a new product for anexisting customer
Asia
• Starting from a low base with emergingbusiness potential for the Singapore andChina operations
• Engaging in the imaging and in-vitrodiagnostic product segment
0.13*
0.1*
*For the month of June 2009
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2Q FY2009 Results Briefing
Sales Analysis – Semiconductor Segment
Mechatronics Division
Europe
• Sales down 65% y-o-y but up 24% q-o-q
• No significant increase in 2Q09 due tocontinued depressed market conditions
Asia
• Revenue derived mainly from back-endsemiconductor equipment which saw someincrease in orders
8.53
5.64
3.58
2.382.95
0.57
2Q08 3Q08 4Q08 1Q09 2Q09
5.3
29.0
55.8
47.4
FY2006 FY2007 FY2008 1H09
Currency: SGD million
2Q09 Review
• Sales down 59% y-o-y but up 48% q-o-q
• Growth impacted by prolonged cyclical downturnof semicon equipment industry
• Includes one month contribution from Asiaoperations
0.6
*For the month of June 2009
*
*
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2Q FY2009 Results Briefing
Sales Analysis – Analytical Segment
Mechatronics Division
Europe
• Sales down 33% y-o-y and 7% q-o-q
• Slight decline from 1Q09 due to the impactof adverse market conditions and changein product mix of an existing customer
Asia
• Growing sales contribution of this productsegment from the Singapore operations
• In line with product segment diversificationefforts
11.65 11.5210.96
8.357.79
0.81
2Q08 3Q08 4Q08 1Q09 2Q09
16.1
47.345.6
37.3
FY2006 FY2007 FY2008 1H09
2Q09 Review:
• Sales down 26% y-o-y but up 3% q-o-q
• Sales growth impacted by adverse marketconditions and change in product mix
• Slight growth in sales due to inclusion of onemonth contribution of Asia operations
Currency: SGD million
0.8
*For the month of June 2009
*
*
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2Q FY2009 Results Briefing
Sales Analysis – Industrial Automation Segment
Mechatronics Division (Asia)
Asia
• New business segment
• Sales contribution mainly from datastorage and pharmaceuticalpackaging equipment
• While sales for June 09 was high, thissegment is subject to high volatilityfrom month to month.
3.21
2Q09
3.2
1H09
Currency: SGD million
2Q09 Review
*For the month of June 2009
*
*
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2Q FY2009 Results Briefing
New Project Plans
Mechatronics Division
Analytical
Semiconductor
Medical
MechatronicsEurope
• New development project formarket introduction targeted formid 2010
•Ongoing development project - commercialproduction expected by 4Q09
•Ongoing design & developmentproject for lithography equipment
•New project for next generationdual lane automated PCB assembly
•Ongoing engagement in next generation
(EUV) Lithography tools
•2 new development projects –commercial productionanticipated in 2010
•Redesign project for enhancement of an existingproduct
Analytical
Semiconductor
Medical
MechatronicsAsia
•Ongoing qualification of new parts and modulesfor customer’s new product transfer to Singapore
•Commenced qualification of a range ofmodules for an existing customer
•Engaging in prototype parts of 2new diagnostic products forcustomer’s design centres inEurope and USA
• Increasing production in Wuxi, China ofimaging modules in 2H09 for an existingcustomer
• Increasing volume production of parts ofexisting in-vitro diagnostic product to beassembled in the USA
Ind Automation •Development projects for new automationstations for an existing customer
•Advanced evaluation stages ofnew project for sheetmetalmodules for a new customer
AB/22
2Q FY2009 Results Briefing
Strategic Initiatives
Mechatronics Division
Strategic Initiatives
Market Segments
• Accelerate and enhance design and development capability and capacity in Europe tosupport the enlarged manufacturing facilities in Asia
• Strengthen New Product Introduction (NPI) team in Asia for smooth transfer of projects fromcustomers and also within the Group
• Accelerate sales expansion opportunities via strategic partnerships with existing and newcustomers by leveraging the Group’s value chain proposition and enlarged geographicalfootprint
• Strengthen overall manufacturing capability in Asia to capitalise on new opportunities in key andemerging markets
• Build up global sourcing, procurement and total supply chain – seek out best value componentsand strategic suppliers worldwide to enhance Group’s overall competitiveness
Medical
Analytical
Semiconductor
Industrial Automation
Others – such as energy and environment
Medical
Analytical
Semiconductor
Industrial Automation
Others – such as energy and environment
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2Q FY2009 Results Briefing
EMS Division
EMS DivisionEMS DivisionBusiness Review & OutlookBusiness Review & Outlook
EMS DivisionBusiness Review & Outlook
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2Q FY2009 Results Briefing
182.1165.1
54.0
161.3
FY2006 FY2007 FY2008 1H2009
42.547.2
34.0
25.928.1
2Q08 3Q08 4Q08 1Q09 2Q09
-3.0
5.19.7
27.5
-2.0-1.0
-0.3
3.82.2
Net Profit Margin
2Q08 5.2%
3Q08 8.1%
4Q08 -0.9%
1Q09 -4.0%
2Q09 -7.1%
EMS DivisionSales and Net Profit
Net Profit Margin
FY2006 15.1%
FY2007 5.9%
FY2008 3.2%
1H2009 -5.6%
Revenue: -34%
Net Profit: -190%
Revenue
Net profit
Currency: RM million
AB/25
2Q FY2009 Results Briefing
Sales Analysis – Keypad Segment
EMS Division
122.1
84.1
58.3
15.8
FY2006 FY2007 FY2008 1H09
8.127.71
10.10
18.17
13.71
2Q08 3Q08 4Q08 1Q09 2Q09
-41%
Currency: RM million
+5%
2Q09 Review:
• No significant recovery in 2009
• Order visibility remains very shortwhile volatility remains high
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2Q FY2009 Results Briefing
22.5
29.2
37.9
17.4
FY2006 FY2007 FY2008 1H09
8.958.44
9.4610.01
11.33
2Q08 3Q08 4Q08 1Q09 2Q09
Sales Analysis – Office Automation Segment
EMS Division
Currency: RM million
-21%
+6%
2Q09 Review:
• Growth hampered by depressedmarket conditions
• Delay in the commercial productionof a new industrialisation project
AB/27
2Q FY2009 Results Briefing
Sales Analysis – Automotive Segment
EMS Division
6.3
17.4
32.2
13.5
FY2006 FY2007 FY2008 1H09
7.39
6.135.59
11.41
8.60
2Q08 3Q08 4Q08 1Q09 2Q09
-14%
Currency: RM million
+21%
2Q09 Review:
• Some increase in orders seen forproducts destined for the USA market
• Improving order inflow but stillsignificantly below original projections
AB/28
2Q FY2009 Results Briefing
Project Plans
EMS Division
Keypad •Production capacity realigned and capped atapproximately 50% of FY2008 level
•Continue to experience delays innew model/project launches
Office
Automation
•Commercial production of one major ongoingindustrialisation projects to commence in late 3Q09 –albeit at a lower quantity
•The other project remains on track for commercialproduction in 4Q09
•Commencement of a newindustrialisation project in 3Q09with target for commercialproduction in mid 2011
Automotive •Commercial production of two new module assemblyprojects commenced in early 3Q09 – but turnover willnot be significant until early 2010
•New industrialisation project in thepipeline with tooling launchexpected at the end of FY2009and target commercial productionin 2Q 2011
AB/29
2Q FY2009 Results Briefing
Safe Harbour for Forward-Looking Statements
ElectroTech Investments Limited
This presentation contains certain statements that are not statements of historical fact, i.e. forward-looking statements. Investors can identifysome of these statements by forward-looking items such as ‘expect’, ‘believe’, ‘plan’, ‘intend’, ‘estimate’, ‘anticipate’, ‘may’, ‘will’, ‘would’, and‘could’ or similar words. However, you should note that these words are not the exclusive means of identifying forward- looking statements.These forward-looking statements are based on current expectations, projections and assumptions about future events. Although FrenckenGroup Limited believes that these expectations, projections, and assumptions are reasonable, these forward-looking statements are subject tothe risks (whether known or unknown), uncertainties and assumptions about Frencken Group Limited and its business operations.
Some of the key factors that could cause such differences are, among others, the following:
•changes in the political, social and economic conditions and regulatory environment in the jurisdictions where we conduct business or expectto conduct business;
•the risk that we may be unable to realise our anticipated growth strategies and expected internal growth;
•changes in and new developments in technologies and trends;
•changes in currency exchange rates;
•changes in customer preferences and needs;
•changes in competitive conditions in our customers’ industries and our ability to compete under these conditions;
•changes in pricing for our products; and
•changes in our future capital needs and the availability of financing and capital to fund these needs.
Given these risks, uncertainties and assumptions, the forward-looking events referred to in this presentation may not occur and actual resultsmay differ materially from those expressly or impliedly anticipated in these forward-looking statements. Investors are advised not to placeundue reliance on these forward-looking statements.
Investors should assume that the information in this presentation is accurate only as of the date it is issued. Frencken Group Limited’sbusiness, financial conditions, results of operations and prospects may have changed since that day. Frencken Group Limited has noobligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except asrequired by law.
AB/30
2Q FY2009 Results Briefing
ThankThank YouYou
Frencken Group LimitedEnd of Presentation
Investor Relations ContactOctant Consultingtel (65) 6220 [email protected] or [email protected]
Frencken Group LimitedPlot 410, Lorong Perusahaan 8BPrai Industrial EstatePrai 13600, MalaysiaWebsite : www.electrotechgroup.com