FRENCKEN GROUP LIMITEDfrenckengroup.listedcompany.com/newsroom/20100513... · AGENDA 1Q FY2010 Results Briefing ... Business Review and OutlookBusiness Review and Outlook ... •

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

1Q FY20101Q FY2010Results PresentationResults Presentation

FRENCKEN GROUP LIMITED1Q FY2010 Results BriefingAGENDA

Financial ReviewFinancial Review

1Q101Q10

Business Review and OutlookBusiness Review and Outlook

Mechatronics DivisionMechatronics Division

EMS DivisionEMS Division

Questions and AnswersQuestions and Answers

FRENCKEN GROUP LIMITED1Q10 RESULTS – DIVISION REVENUE ANALYSIS

EMS

(33%)3.82.53.7Telco (Keypads & Others)

159%3.59.24.7Office Automation

81%2.54.64.8Automotive

(34%)1.40.91.8Others

53%11.217.215.0

N.M.-2.83.7Others

15%27.531.631.4

83%38.770.768.7Total

N.M.-21.922.3

N.M.-8.510.1Industrial Automation

N.M.-3.63.7Analytical

N.M.-0.50.7Medical

N.M.-6.54.1Semiconductor

Mechatronics Asia

(9%)3.02.72.8Others

6.6

12.0

10.3

1Q10

(13%)13.815.3Medical

333%2.46.0Semiconductor

(21%)8.37.3Analytical

Mechatronics Europe

Chg y-o-y1Q094Q09(S$ m)

* N.M. – Not Meaningful

1Q FY2010 Results Briefing

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FRENCKEN GROUP LIMITED1Q FY2010 Results Briefing1Q10 RESULTS – P&L SNAPSHOT

(56%)65.2%28.7%Effective Tax Rate

1266%0.3%4.3%NP Margin

2395%0.13.0Net Profit

1116%0.44.3Profit Before Tax

254%2.89.7Gross Profit (GP)

83%38.770.7Revenue

Chg y-o-y1Q091Q10(S$ m)

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FRENCKEN GROUP LIMITED1Q10 RESULTS – P&L SNAPSHOT

11.2

27.5

17.2

22.0

31.6

Division Revenue

1Q09 1Q10

Mechatronics(Europe)

EMSMechatronics

(Asia)

-0.4

0.7

-0.1

1.1

2.3

Division Net Profit*

Mechatronics(Europe)

EMSMechatronics(Asia)

*Note: Excludes Investment Division

53%

207%


1Q09 1Q10 1Q09 1Q10 1Q09 1Q10 1Q09 1Q10 1Q09 1Q10

15%

73%

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FRENCKEN GROUP LIMITED1Q10 RESULTS – GROUP REVENUE ANALYSIS

2.5

1.4

3.5

3.8

3.0

0.0

8.3

13.8

2.416.8

10.2

8.5

5.5

2.5

9.2

4.6

0.9

12.5

Others

Automotive

Office Automation

Telco (Keypad & Others)

Others

Industrial Automation

Analytical

Medical

Semiconductor

Breakdown by Business Segment

12%

MECHATRONICS (S$ m)*

EMS (S$ m)

Breakdown by Division:Mechatronics – 76%EMS – 24%

Medical

Semiconductor

Telco (Keypad &Others)

Automotive

Office Automation

18%

4%

13%

6%

Analytical

14%

Others

1%

Others

8%

IndustrialAutomation

24%

9%9%

86%86%

33%33%

34%34%* Include Mechatronic Asia’s numberswith no corresponding 1Q09 numbers

Mechatronics

EMS

1Q09 1Q10

N.M.N.M.

81%81%


605%605%

22%22%

159%159%

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FRENCKEN GROUP LIMITEDWORKING CAPITAL MANAGEMENT

45.3

58.5

71.5

31 Mar10

34.2Trade Payables

54.2Trade Receivables

55.5Inventories

31 Dec09

(S$ m)

110

9092

114

30 Jun 09 30 Sept 09 31 Dec 09 31 Mar 10

106

9699108

7486

77

78

70

9284

72

50

100

150

30 Jun 09 30 Sept 09 31 Dec 09 31 Mar 10

Cash Conversion Cycle (Days)

Turnover Days

PayablesPayablesReceivablesReceivables

InventoriesInventories

(5.4)

(0.7)

(4.7)

31 Mar10

2.8Free cash flow

(0.8)Capital expenditure

3.6Net cash flow fromoperations

31 Mar09

(S$ m)

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


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FRENCKEN GROUP LIMITEDSTRONG BALANCE SHEET

195.3194.8Shareholders’ equity

32.338.2Total borrowings

61.259.8Cash and cash equivalents

31 Dec09

31 Mar10

Balance Sheet (S$ m)

0.119.6Gross gearing (%)

0.040.81EPS (S$ cents)

58.1951.91Net asset value per share(S$ cents)

31 Mar09

31 Mar10

Financial Indicators


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MECHATRONICS DIVISION

MechatronicsMechatronics DivisionDivisionBusiness Review & OutlookBusiness Review & Outlook

BUSINESS REVIEW & OUTLOOK 1Q FY2010 Results Briefing

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MECHATRONICS DIVISIONSALES

1Q10 Review

• Sales increased 95% y-o-y dueto recovery of technologysector and contribution fromETLA

• Sales steady q-o-q despiteseasonally slower period

• Sales from the Europeanoperations increased 15% y-o-yand almost flat q-o-q

Figures are inclusive of additionalcontributions from the Asiaoperations – i.e. 7 months in FY2009and 3 months in FY2010

44.4

171.3

111.6

157.3

31.621.9

FY2007 FY2008 FY2009 YTD Mar 10

27.5

23.129.7 31.4 31.6

5.9

22.3 21.916.2

1Q09 2Q09 3Q09 4Q09 1Q10

Currency: SGD million

Mechatronics Europe

Mechatronics Asia

29.0

45.9

156.0

Revenue: +95%

53.5


53.7

53.5

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MECHATRONICS DIVISIONNET PROFIT & NET PROFIT MARGIN


Mechatronics Asia

Mechatronics Europe

1Q10 Review

• Net profit increased 351% y-o-y

• Q-o-q decrease of 2.9% as netprofit in 4Q09 included a tax creditof S$1.3m from the Asia operations


Division Net Profit: +351%

NP margin 2.7% 2.3% 0.2% 6.5% 6.2%

2.31.9

1.0

0.1

0.7

0.6

-0.8

1.6 1.1

1Q09 2Q09 3Q09 4Q09 1Q10

0.2

3.5

18.9

12.9

3.7 2.3

1.41.1

FY2007 FY2008 FY2009 YTD Mar 10

NP margin 11.0% 8.2% 3.2% 6.2%

5.1

0.7

3.4

3.4Figures are inclusive of additionalcontributions from the Asia operations– i.e. 7 months in FY2009 and 3 monthsin FY2010

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MECHATRONICS DIVISIONSALES ANALYSIS – MEDICAL SEGMENT


Mechatronics Asia

Mechatronics Europe

1Q10 Review

• Sales declined 9% y-o-y and 22% q-o-q

Europe

• Sales was lower by 13% y-o-y and 22% q-o-q

• Slower sales of key medical customer at thebeginning of 1Q10

Asia

• Figures are not significant. Still at a low base butwith emerging business potential for theSingapore and China operations


12.0115.3113.74

9.56

13.78

0.13

0.650.67

0.51

1Q09 2Q09 3Q09 4Q09 1Q10

57.7

67.8

52.4

12.0

0.5

1.5

FY2007 FY2008 FY2009 YTD Mar 10

9.69

14.39

53.9

Revenue: -9%

- 22%

15.98

12.52

12.5Figures are inclusive of additional contributionsfrom the Asia operations – i.e. 7 months in FY2009and 3 months in FY2010

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MECHATRONICS DIVISIONSALES ANALYSIS – SEMICONDUCTOR SEGMENT


Mechatronics Asia

Mechatronics Europe

Europe

• Sales increased 333% y-o-y and 72% q-o-q

Asia

• Sales increased 58% q-o-q

1Q10 Review


• Strong growth due to the markedimprovement in market conditions


0.572.38

2.955.25 6.00

10.312.53

4.08

6.45

1Q09 2Q09 3Q09 4Q09 1Q10

7.2

10.316.6

29.0

55.8

6.5

FY2007 FY2008 FY2009 YTD Mar 10

3.52

7.78

23.8

Revenue: +605%

+66%

10.08

16.76

16.8

Figures are inclusive of additionalcontributions from the Asia operations – i.e. 7months in FY2009 and 3 months in FY2010

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MECHATRONICS DIVISIONSALES ANALYSIS – ANALYTICAL SEGMENT


Mechatronics Asia

Mechatronics Europe

Europe

• Sales down 21% y-o-y and 10% q-o-q

• Although on a slight decline, demand remainedfairly stable

Asia

• Sales decreased 1% q-o-q despite strong demanddue mainly to shorter number. of working days inFebruary 2010

• Growth prospects remain positive for the mid tolong term

1Q10 Review

• Sales increased 22% y-o-y but decreased 7% q-o-q

• y-o-y sales growth due to contribution from Asiaoperations


0.81

8.35

7.79 8.03 7.30 6.57

2.00 3.693.65

1Q09 2Q09 3Q09 4Q09 1Q10

6.5

31.4

47.345.6

6.5

3.7

FY2007 FY2008 FY2009 YTD Mar 10

37.9

8.60

10.03

Revenue: +22%

-7%

10.9910.22

10.2

Figures are inclusive of additional contributions from theAsia operations – i.e. 7 months in FY2009 and 3 months inFY2010

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MECHATRONICS DIVISION (ASIA)SALES ANALYSIS – INDUSTRIAL AUTOMATION SEGMENT


1Q10 Review

Asia

• Sales decreased 16% q-o-q despitestrong demand due to shipment intransit awaiting to be invoiced inApril 2010

• Revenue from this segmentcontinues to be subject to highvolatility

* Figures comprises sales contribution of 7months in FY2009 and 3 months in FY2010from the Asia operations.


8.5

22.0

FY2009 YTD Mar 10

3.21

8.7510.11

8.51

2Q09 3Q09 4Q09 1Q10

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MECHATRONICS DIVISIONNEW PROJECT PLANS

MechatronicsEurope

Analytical

Semiconductor

Medical

• Finalising development project – commercial production set for 3Q10.

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

• Redesign project for enhancement of an existing product now in prototype phase, with asucceeding project in definition phase.

• Ongoing development project for pathology market with commercial productionanticipated in 4Q10 (prototype presented at a major exhibition in March 2010).

• Engagement in next generation (EUV) lithography tools is continuing.

• Ongoing projects for improvement and enhancement of complex key modules forlithography equipment and pick & place machines.

MechatronicsAsia

Semiconductor

Medical

Ind Automation

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

• Increasing volume production of parts for existing in-vitro diagnostic and surgicalmicroscope products.

• Ongoing engagement in prototype parts for 2 new diagnostic products.

Analytical

• Ongoing evaluation stage of new projects for sheet-metal modules for a number of newcustomers

Others

• Completed qualification and pilot production of a module for a new customer. Seriesproduction expected to commence in 3Q10.

• Ongoing qualification of new parts and modules for 2 new instruments for an existingcustomer. Expect completion by end 2Q10 and commercial production in 3Q10.

• Co-development projects for new automation stations for an existing customer.Prototype build completed and expect commercial production in 2H10.


Source: Extract from LinkMagazine, April 2010

NEW PROJECT – LAUNCH OF PATHOLOGY SCANNER

MECHATRONICS DIVISION

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MECHATRONICS DIVISIONSTRATEGIC INITIATIVES

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 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/20AB/20

MECHATRONICS DIVISIONDIVISION OUTLOOK

• Continue to see positive outlook for the technology sector due to recovery indemand for capital equipment

• Increased interest and order intake from existing and potential customers dueto the expansion of the Mechatronics Division

• New projects and order forecasts from customers continue on an increasingtrend at both Europe and Asia operations

• Prospects for FY2010 look positive – barring any unforeseen circumstances


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EMS DIVISION

EMS DivisionEMS DivisionBusiness Review & OutlookBusiness Review & Outlook

BUSINESS REVIEW & OUTLOOK 1Q FY2010 Results Briefing

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EMS DIVISIONSALES

Currency: RM million

1Q10 Review

• Sales increased 57% y-o-y and8% q-o-q due to strongperformance of officeautomation and automotivebusiness segments


165.1 161.3

40.6

122.6

FY2007 FY2008 FY2009 YTD Mar 10

25.928.1

31.2

37.440.6

1Q09 2Q09 3Q09 4Q09 1Q10

Revenue: +57%

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EMS DIVISIONNET PROFIT & NET PROFIT MARGIN

Net Profit Margin

1Q09 -4.0%

2Q09 -7.1%

3Q09 -6.9%

4Q09 -12.2%

1Q10 -0.7%

Net Profit Margin

FY2007 5.9%

FY2008 3.2%

FY2009 -8.0%

YTD Mar 10 -0.7%

Currency: RM millionDivision Net Profit: +74%

9.7

5.1

-0.3

-9.8

FY2007 FY2008 FY2009 YTD Mar 10

-2.0-2.2

-4.6

-0.3

-1.0

1Q09 2Q09 3Q09 4Q09 1Q10


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EMS DIVISIONSALES ANALYSIS – KEYPAD SEGMENT

84.1

58.3

33.1

4.8

FY2007 FY2008 FY2009 YTD Mar 10

4.81

7.739.54

8.127.71

1Q09 2Q09 3Q09 4Q09 1Q10

1Q10 Review

• Sales declined 38% y-o-y and 38% q-o-q

• Decline due to strategic decision tocease this business from 1st February2010

-38% Currency: RM million

-38%


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EMS DIVISIONSALES ANALYSIS – OFFICE AUTOMATION SEGMENT

29.2

37.9 37.7

21.6

FY2007 FY2008 FY2009 YTD Mar 10

8.44 8.95 8.54

11.79

21.56

1Q09 2Q09 3Q09 4Q09 1Q10

1Q10 Review


• Growth driven by the production ramp upof a project from an existing customer

+155%Currency: RM million

+83%


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EMS DIVISION

17.4

32.235.4

10.9

FY2007 FY2008 FY2009 YTD Mar 10

10.9211.84

10.05

7.39

6.13

1Q09 2Q09 3Q09 4Q09 1Q10

1Q10 Review

• Sales increased 78% y-o-y but decreased8% q-o-q

• q-o-q decline is due to the traditionallylower first quarter of each year

SALES ANALYSIS – AUTOMOTIVE SEGMENT

+78% Currency: RM million

-8%


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EMS DIVISIONNEW PROJECT PLANS

Office Automation • Commercial production of a delayed industrialisation project will commence in2Q10 albeit lower volumes than originally forecasted

• Commercial production of another project will now start in May 2010 instead ofend 2Q10

• New industrialisation project launched in 1Q10 with target for commercialproduction in mid FY2011 is currently on track

Automotive • Awarded a significant project for serial production from an existing customer.Industrialisation phase launched with commercial production anticipated in2Q/3Q 2011

• A number of potential new projects with existing and new customers in thepipeline


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EMS DIVISIONSTRATEGIC INITIATIVES

• Consolidation of the 3 manufacturing companies into one single integratedEMS entity under “Precico Electronics Sdn. Bhd.” completed on 1st May 2010

• Continuing to realign the division’s operations to better support and focus onthe growing automotive and niche office automation business segments

• Exploring geographical expansion of the automotive business into China


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EMS DIVISIONDIVISION OUTLOOK

• Progressive commercial production launch of existing industrialisationprojects in FY2010 and FY2011 are expected to provide a stable andgrowing revenue base for the subsequent years

• Making good progress in securing new projects for the automotivebusiness segment from new and existing customers

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


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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 LIMITED1Q FY2010 Results Briefing

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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 LIMITED1Q FY2010 Results Briefing

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FRENCKEN GROUP LIMITEDfrenckengroup.listedcompany.com/newsroom/20100513... · AGENDA 1Q FY2010 Results Briefing ... Business Review and OutlookBusiness Review and Outlook ... •