FRENCKEN GROUP LIMITEDfrenckengroup.listedcompany.com/newsroom/20100812... · 2Q10 Medical 12.0 9.6 32% Semiconductor 10.3 2.9 258% Analytical 6.6 7.8 (2%) Mechatronics Europe (S$

INCORPORATED IN SINGAPORE

FRENCKEN GROUP LIMITED

FRENCKEN GROUP LIMITED

Global Contract ManufacturerGlobal Contract Manufacturer

of High Tech Capital and Consumer Equipmentof High Tech Capital and Consumer Equipment

2Q FY20102Q FY2010Results PresentationResults Presentation

FRENCKEN GROUP LIMITED2Q FY2010 Results BriefingAGENDA

Financial ReviewFinancial Review

2Q102Q10

1H101H10

Business Review and OutlookBusiness Review and Outlook

Mechatronics DivisionMechatronics Division

EMS DivisionEMS Division

Questions and AnswersQuestions and Answers

FRENCKEN GROUP LIMITED2Q10 RESULTS – DIVISION REVENUE ANALYSIS

N.M.4.1-2.5Telco (Keypads & Others)

EMS

137%3.78.89.2Office Automation

49%3.14.64.6Automotive

225%0.93.10.9Others (Include Telco)

40%11.816.517.2

288%1.24.72.8Others

44%23.133.231.6

152%40.8102.870.7Total

798%5.953.121.9

908%3.232.38.5Industrial Automation

518%0.85.03.6Analytical

517%0.10.80.5Medical

1717%0.610.36.5Semiconductor

Mechatronics Asia #

(16%)2.82.32.7Others

7.7

12.6

10.6

2Q10

32%9.612.0Medical

258%2.910.3Semiconductor

(2%)7.86.6Analytical

Mechatronics Europe

Chg y-o-y2Q091Q10(S$ m)

2Q FY2010 Results Briefing

AB/4

#Mechatronics (Asia) - 2Q09 comprises 1 month revenue results (June 2009)- 1Q10 & 2Q10 comprises 3 months revenue results

FRENCKEN GROUP LIMITED2Q FY2010 Results Briefing2Q10 RESULTS – P&L SNAPSHOT

AB/5*N.M. – Not Meaningful

N.M.13.4-Negative Goodwill

N.M.N.M.16.2%Effective Tax Rate before negative goodwill

3282%(0.2%)5.6%NP Margin before negative goodwill

(57%)13.45.8Net Profit

2475%(0.3)6.9Profit/(Loss) Before Tax

413%2.613.6Gross Profit (GP)

152%40.8102.8Revenue


FRENCKEN GROUP LIMITED2Q FY2010 Results Briefing2Q10 RESULTS – P&L SNAPSHOT

370%(0.6)1.8Net Profit/(Loss) (before negative goodwill)

339%(0.9)2.2Profit/(Loss) Before Tax (before negative goodwill)


42%34.949.7Revenue


AB/6

Excluding Mechatronics Asia

601%0.64.0Net Profit

675%0.64.7Profit Before Tax


798%5.953.1Revenue


Mechatronics Asia #

#Mechatronics (Asia) - 2Q09 comprises 1 month results (June 2009)- 2Q10 comprises 3 months results

FRENCKEN GROUP LIMITED2Q10 RESULTS – P&L SNAPSHOT

11.8

5.9

23.1

16.5

53.1

33.2

Division Revenue

2Q09 2Q10

Mechatronics(Europe)

EMSMechatronics

(Asia) #

-0.90.60.1

-0.9

4.0

2.6

Division Net Profit*


EMSMechatronics(Asia) #

*Note: Excludes Investment Division

40%

3049%


2Q09 2Q10 2Q09 2Q10 2Q09 2Q10 2Q09 2Q10 2Q09 2Q10

44%

AB/7

798%

601%

N.M. – Not Meaningful

N.M.

#Mechatronics (Asia) - 2Q09 comprises 1 month results (June 2009)- 2Q10 comprises 3 months results

FRENCKEN GROUP LIMITED2Q FY2010 Results Briefing1H10 RESULTS – P&L SNAPSHOT

AB/8*N.M. – Not Meaningful

N.M.13.4-Negative Goodwill

16%18.0%21.0%Effective Tax Rate before negative goodwill

7982%0.1%5.1%NP Margin before negative goodwill

(35%)13.58.8Net Profit

18188%0.111.2Profit/(Loss) Before Tax


118%79.6173.5Revenue

Chg y-o-y1H091H10(S$ m)

FRENCKEN GROUP LIMITED1H10 RESULTS – P&L SNAPSHOT

23.1

5.9

50.6

33.7

75.0

64.8

Division Revenue

1H09 1H10


EMSMechatronics

(Asia) #

-1.3

0.60.8

-1.0

5.14.9

Division Net Profit*


EMSMechatronics(Asia) #

46%

496%


1H09 1H10 1H09 1H10 1H09 1H10 1H09 1H10 1H09 1H10

28%

26%

AB/9

1169%

787%

*Note: Excludes Investment Division

#Mechatronics (Asia) - 1H09 comprises 1 month results (June 2009)- 1H10 comprises 6 months results

FRENCKEN GROUP LIMITED1H10 RESULTS – GROUP REVENUE ANALYSIS 2Q FY2010 Results Briefing

AB/10

5.6

2.3

7.3

7.9

6.9

3.2

16.9

23.5

5.9

37.7

22.9

40.8

12.5

2.5

18.0

9.2

4.0

25.9

Others

Automotive

Office Automation

Telco (Keypad & Others)

Others

Industrial Automation

Analytical

Medical

Semiconductor

Breakdown by Business Segment

24%

MECHATRONICS (S$ m)#

EMS (S$ m)

Breakdown by Division:Mechatronics – 81%EMS – 19%

Medical

Semiconductor

Telco (Keypad &Others)

Automotive

Office Automation

15%

2%

10%

5%

Analytical

13%

Others

2%

Others

7%

IndustrialAutomation

22%80%80%

68%68%

Mechatronics

EMS

1H09 1H1063%63%

539%539%

35%35%

148%148%

1173%1173%

73%73%

11%11%

#Mechatronics (Asia)- 1H09 comprises 1 month revenue results (June 2009)- 1H10 comprises 6 months revenue results

FRENCKEN GROUP LIMITEDWORKING CAPITAL MANAGEMENT

51.9

75.7

68.1

30 Jun10

34.2Trade Payables

54.2Trade Receivables

55.5Inventories

31 Dec09

(S$ m)

84

110

9092

30 Sep 09 31 Dec 09 31 Mar 10 30 Jun 10

82

106

9699

797486

7777

70

92

84

50

100

150

30 Sep 09 31 Dec 09 31 Mar 10 30 Jun 10

Cash Conversion Cycle (Days)

Turnover Days

PayablesPayablesReceivablesReceivablesInventoriesInventories

(4.4)Net cash flow from operations

(3.2)Capital expenditure

(7.6)Free cash flow

(2.6)Taxes & Interest

(19.6)

9.0

8.8

30 Jun10

Working Capital

Non-Cash

Net Profit

(S$ m)

Cash Conversion Cycle (Days) = Days sales outstanding + Days inventoryoutstanding – Days payables outstanding


AB/11

FRENCKEN GROUP LIMITEDSTRONG BALANCE SHEET

195.3190.9Shareholders’ equity

32.344.0Total borrowings

61.255.7Cash and cash equivalents

31 Dec09

30 Jun10

Balance Sheet (S$ m)

15.423.1Gross gearing (%)

0.02

4.19

2.35

2.35

EPS (S$ cents)

- Before negative goodwill

- After negative goodwill

53.6551.85Net asset value per share(S$ cents)

30 Jun09

30 Jun10

Financial Indicators


AB/12

AB/13AB/13

MECHATRONICS DIVISION

MechatronicsMechatronics DivisionDivisionBusiness Review & OutlookBusiness Review & Outlook

BUSINESS REVIEW & OUTLOOK 2Q FY2010 Results Briefing

AB/14AB/14

MECHATRONICS DIVISIONSALES

2Q10 Review

• Sales increased 198% y-o-y and 61%q-o-q due to exceptionally highcontribution from the Asianoperations

• Sales from the European operationsincreased 44% y-o-y and 5% q-o-q.(In Euro terms, sales increased 60%y-o-y and 14% q-o-q).

• Sales from the Asian operationsincreased 142% q-o-q- Not comparable y-o-y as only 1month of sales recorded in 2Q09

1H10 sales ~ 90% of FY2009 sales

Figures are inclusive of additionalcontributions from the Asia operations wef 1June 2009– i.e. 7 months in FY2009 and 6months in FY2010

44.4

171.3

111.6

157.3

64.8

75.0

FY2007 FY2008 FY2009 1H10

5.92

16.2022.29 21.95

23.0629.71 31.37 31.60 33.18

53.10

2Q09 3Q09 4Q09 1Q10 2Q10

Currency: SGD million

Mechatronics EuropeMechatronics Asia

28.98

45.91

156.0

Revenue: +198%

86.28


53.66

139.8

53.55

AB/15AB/15

MECHATRONICS DIVISIONNET PROFIT & NET PROFIT MARGIN


Mechatronics Asia

Mechatronics Europe

2Q10 Review

• Overall net profit increased 913%y-o-y and 100% q-o-q.

• Net profit for Mechatronics Europeincreased 2844% y-o-y and 16.7%q-o-q (In Euro terms, it increasedby 3,423% y-o-y and 35.3% q-o-q).


Division Net Profit: +913%

NP margin 2.3% 0.2% 6.5% 6.2% 7.7%

2.652.271.870.95

0.09

0.57

-0.84

1.61 1.07

4.02

2Q09 3Q09 4Q09 1Q10 2Q10

0.11

3.48

18.9

12.9

3.7 4.91.4

5.1

FY2007 FY2008 FY2009 1H10

NP margin 11.0% 8.2% 3.2% 7.2%

5.1

0.66

6.67

10.0

3.34

Figures are inclusive of additionalcontributions from the Asiaoperations wef 1 June 2009– i.e. 7months in FY2009 and 6 months inFY2010

AB/16AB/16

MECHATRONICS DIVISIONSALES ANALYSIS – MEDICAL SEGMENT


Mechatronics Asia

Mechatronics Europe

2Q10 Review

• Sales increased 39% y-o-y and 7% q-o-q

Europe

• Sales rose by 32% y-o-y and 5% q-o-q (In Euroterms, sales rose by 46.7% yoy and 13.9% q-o-q).

• Indication of an uptrend for the remainingquarters of FY2010

Asia

• Sales rose by 51% q-o-q; albeit from a low base- Comparative y-o-y growth not meaningful asonly 1 month of sales recorded in 2Q 09


0.13

12.6512.01

15.3113.74

9.56

0.650.67

0.51 0.78

2Q09 3Q09 4Q09 1Q10 2Q10

57.7

67.8

52.4

24.7

1.3

1.5

FY2007 FY2008 FY2009 1H10

9.69

14.39

53.9

Revenue: +39%

+7%

15.98

13.43

26.0

12.52

Figures are inclusive of additional contributionsfrom the Asia operations wef 1 June 2009– i.e. 7months in FY2009 and 6 months in FY2010

AB/17AB/17

MECHATRONICS DIVISIONSALES ANALYSIS – SEMICONDUCTOR SEGMENT


Mechatronics Asia

Mechatronics Europe

Europe

• Sales increased 258% y-o-y and 3%q-o-q.(In Euro terms, sales increased 298% y-o-yand 11% q-o-q).

Asia

• Sales increased 60% q-o-q.- Comparative y-o-y growth notmeaningful as only 1 month of recordedin 2Q09

2Q10 Review


• Strong growth due to the significantimprovement in market conditions


0.57

2.53

2.955.25 6.00

10.31 10.57

4.08

6.45

10.32

2Q09 3Q09 4Q09 1Q10 2Q10

7.2

20.916.6

29.0

55.8

16.8

FY2007 FY2008 FY2009 1H10

3.52

7.78

23.8

Revenue: +494%

+25%

10.08

20.89

37.7

16.76


AB/18AB/18

MECHATRONICS DIVISIONSALES ANALYSIS – ANALYTICAL SEGMENT


Mechatronics Asia

Mechatronics Europe

Europe

• Sales down 2% y-o-y but gained 16% q-o-q. (InEuro terms, sales increased 8.5% y-o-y and 25.3%q-o-q).

• Based on customers’ near term forecasts, demandis expected to firm up over the next few auarters

Asia

• Sales increased 37% q-o-q though y-o-y growth isnot meaningful since 1 month of sales wasrecorded in 2Q09

• Making good inroads into this product segmentand prospects remain positive

2Q10 Review



0.812.00

7.79 8.037.30 6.57

7.65

3.693.65

4.99

2Q09 3Q09 4Q09 1Q10 2Q10

14.2

31.4

47.345.6

6.5

8.6

FY2007 FY2008 FY2009 1H10

37.9

8.60

10.03

Revenue: +47%

+24%

10.99

12.64

22.8

10.22


AB/19AB/19

MECHATRONICS DIVISION (ASIA)SALES ANALYSIS – INDUSTRIAL AUTOMATION SEGMENT


2Q10 Review

Asia

• Sales increased 280% q-o-q- Growth y-o-y not meaningful as 1month of sales recorded in 2Q09

• Robust sales of automatedproduction equipment for datastorage products

• Revenue from this segmentcontinues to be subject to highvolatility

• Do not foresee sustainability of thisgrowth for the rest of FY2010


40.8

22.0

FY2009 1H10

3.21

8.7510.11

8.51

32.33

2Q09 3Q09 4Q09 1Q10 2Q10

Revenue: +908%

+280%

Figures are inclusive of additionalcontributions from the Asiaoperations wef 1 June 2009– i.e. 7months in FY2009 and 6 months inFY2010

AB/20AB/20

MECHATRONICS DIVISIONNEW PROJECT PLANS

MechatronicsEurope

Analytical

Semiconductor

Medical

• Finalisation phase of development project with commercial production starting in 3Q10

• New development project for market introduction targeted for 4Q10 is ongoing.

• Redesign project to enhance an existing product close to realisation phase for marketintroduction at the end of FY2010 (project for a succeeding product launched).

• Finalisation phase of project for the pathology market with commercial productionanticipated in 4Q10 – first systems installed at end-user’s sites.

• Continuing engagement in next generation (EUV) lithography equipment.

• In discussion with customer to take over design responsibilities of selected modules forimprovement and enhancement of complex key modules for lithography equipmentand pick & place machines.

MechatronicsAsia

Semiconductor

Medical

Ind Automation

• Increasing production in Wuxi, China of oncology modules for an existing customer

• Increasing volume production of components for an existing customer of in-vitrodiagnostic and surgical microscope products

• Ongoing engagement in prototype parts for 2 new diagnostic products. Secured pilotvolume production with orders to be fulfilled from end 4Q10

Analytical

• Ongoing evaluation stage of new projects for precision machining and sheet-metalmodules for a number of new customers

Others

• On going qualification and pilot production of modules for 2 new customers. Seriesproduction to commence in 2H10 as planned

• Ongoing qualification of new parts and modules for 2 new instruments for an existingcustomer. Commercial production commenced in 3Q10 as planned

• Co-development projects for new automation stations for an existing customer. Prototypebuild completed and expect commercial production to commence in 4Q10


AB/21AB/21

MECHATRONICS DIVISIONSTRATEGIC INITIATIVES

Ongoing 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 keyand emerging markets

• Build up global sourcing, procurement and total supply chain – seek out best valuecomponents and strategic suppliers worldwide to enhance Group’s overall competitiveness

Medical

Analytical

Semiconductor


Others – such as energy and environment

Medical

Analytical

Semiconductor


Others – such as energy and environment


AB/22AB/22

MECHATRONICS DIVISIONDIVISION OUTLOOK

• Increased interest and order intake from existing and potential customersresulting from the geographical expansion and global integration of theMechatronics Division

• Prospects of securing new projects are bright and order forecasts from customerscontinue on an increasing trend at both Europe and Asia operations

• Prospects for FY2010 look positive – barring any unforeseen circumstances


AB/23AB/23

EMS DIVISION

EMS DivisionEMS DivisionBusiness Review & OutlookBusiness Review & Outlook

BUSINESS REVIEW & OUTLOOK 1Q FY2010 Results Briefing

EMS DIVISIONSALES 2Q FY2010 Results Briefing

AB/24AB/24

Currency: RM million

2Q10 Review

• Sales increased 35% y-o-y anddecreased marginal 6% q-o-q

• Absence of keypad sales dueto discontinuation of thisproduct segment wef 2Q10

• Increased sales of officeautomation and automotivesegments

Revenue: +35%

165.1 161.3

122.6

78.6

FY2007 FY2008 FY2009 1H10

38.02

28.10

31.16

37.46

40.59

2Q09 3Q09 4Q09 1Q10 2Q10

AB/25AB/25

EMS DIVISIONNET PROFIT & NET PROFIT MARGIN

Net Profit Margin

2Q09 -7.1%

3Q09 -6.9%

4Q09 -12.2%

1Q10 -0.7%

2Q10 -6.8%

Net Profit Margin

FY2007 5.9%

FY2008 3.2%

FY2009 -8.0%

1H10 -3.6%

Currency: RM millionDivision Net Profit: -29%


9.7

5.1

-9.8

-2.9FY2007 FY2008 FY2009 1H10

-2.59

-2.00-2.16

-4.58

-0.272Q09 3Q09 4Q09 1Q10 2Q10

AB/26AB/26

EMS DIVISIONSALES ANALYSIS – OFFICE AUTOMATION SEGMENT

29.2

37.9 37.741.9

FY2007 FY2008 FY2009 1H10

8.95 8.54

11.79

21.5620.30

2Q09 3Q09 4Q09 1Q10 2Q10

2Q10 Review

• Sales increased 127% y-o-y anddecreased 6% q-o-q

• Expansion in range of products for anexisting customer

• Sales remained stable but subject to somevolatility due to the timing of billings ontooling for industrialisation projects

+127%Currency: RM million

-6%


AB/27AB/27

EMS DIVISION

17.4

32.235.4

21.5

FY2007 FY2008 FY2009 1H10

10.5310.9211.84

10.05

7.39

2Q09 3Q09 4Q09 1Q10 2Q10

2Q10 Review

• Sales increased 43% y-o-y and softenedmarginal 4% q-o-q

• Recovery of automotive industry,especially in the USA

• Sales remained stable but subject to somevolatility on billings of tooling forindustrialisation projects

SALES ANALYSIS – AUTOMOTIVE SEGMENT

+43% Currency: RM million

-4%


AB/28AB/28

EMS DIVISIONSALES ANALYSIS – OTHERS (INCLUDES TELCO) SEGMENT

23.124.3

10.411.9

FY2007 FY2008 FY2009 1H10

7.18

4.684.43

1.671.98

2Q09 3Q09 4Q09 1Q10 2Q10

2Q10 Review

• Sales increased 264% y-o-y and53% q-o-q

• Sales of parts and products for telcobusiness segment has been reclassifiedto “Others” segment (following thediscontinuance of the keypad businessin February 2010)

+264% Currency: RM million

+53%


AB/29AB/29

EMS DIVISIONNEW PROJECT PLANS

Office Automation • Commercial production (of a delayed industrialisation project) commenced inJune 2010 albeit at lower volumes than originally forecasted

• Another project (that was delayed to end 2Q10) commenced commercialproduction in June 2010.

• New industrialisation project launched in 1Q10 is currently at the tooling launchphase. Target to commence commercial production in mid FY2011

Automotive • Awarded a significant project for serial production from an existing customer.Presently at the tooling launch phase. Commercial production anticipated tocommence in 2Q/3Q 2011

• Awarded another significant project from an existing customer with commercialproduction anticipated in 3Q/4Q 2011

• A number of smaller projects in the industrialisation phase with commercialproduction anticipated to commence in 2Q/3Q 2011


AB/30AB/30AB/30

EMS DIVISIONSTRATEGIC INITIATIVES

• Continuing the operational enhancement and rationalisation of the newlyconsolidated entity towards a leaner and more cost effective outfit

• Realigning the division’s operations to better support and focus on the growingautomotive and niche office automation business segments

• Carrying out feasibility studies on the geographical expansion of theautomotive business into China

• Focus on expansion of our customer base in the automotive business segment


AB/31AB/31AB/31

EMS DIVISIONDIVISION OUTLOOK

• No major commercial production launch of existing industrialisationprojects expected for the remainder of FY2010

• Significant industrialisation activities for 3 major projects are ongoing - withsubstantial sales revenue potential from 2H FY2011 onwards

• Prospects of securing new projects in the automotive business segmentremain positive

• In the short term, contribution from the office automation and automotiveproduct segments are not expected to fully offset the loss of contributionfrom the keypad business segment for FY2010 and 1HFY2011


AB/32AB/32

SAFE HARBOUR FOR FORWARD-LOOKING STATEMENTS

This presentation contains certain statements that are not statements of historical fact, i.e. forward-looking statements. Investors canidentify some 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 futureevents. Although Frencken Group Limited believes that these expectations, projections, and assumptions are reasonable, these forward-looking statements are subject to the risks (whether known or unknown), uncertainties and assumptions about Frencken Group Limitedand 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 orexpect to 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 actualresults may differ materially from those expressly or impliedly anticipated in these forward-looking statements. Investors are advised notto place undue 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.

FRENCKEN GROUP LIMITED2Q FY2010 Results Briefing

AB/33AB/33

THANK YOU

Q&A

Frencken Group LimitedPlot 410, Lorong Perusahaan 8BPrai Industrial EstatePrai 13600, Malaysia

Investor Relations ContactOctant ConsultingTel (65) 6220 [email protected]@octant.com.sg

FRENCKEN GROUP LIMITED2Q FY2010 Results Briefing

Documents

FRENCKEN GROUP LIMITEDfrenckengroup.listedcompany.com/newsroom/20100812... · 2Q10 Medical 12.0 9.6 32% Semiconductor 10.3 2.9 258% Analytical 6.6 7.8 (2%) Mechatronics Europe (S$