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
Chg y-o-y2Q092Q10(S$ m)
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)
229%1.44.9Gross Profit (GP)
42%34.949.7Revenue
Chg y-o-y2Q092Q10(S$ m)
AB/6
Excluding Mechatronics Asia
601%0.64.0Net Profit
675%0.64.7Profit Before Tax
644%1.28.7Gross Profit (GP)
798%5.953.1Revenue
Chg y-o-y2Q092Q10(S$ m)
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*
Mechatronics(Europe)
EMSMechatronics(Asia) #
*Note: Excludes Investment Division
40%
3049%
2Q FY2010 Results Briefing
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
331%5.423.3Gross Profit (GP)
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
Mechatronics(Europe)
EMSMechatronics
(Asia) #
-1.3
0.60.8
-1.0
5.14.9
Division Net Profit*
Mechatronics(Europe)
EMSMechatronics(Asia) #
46%
496%
2Q FY2010 Results Briefing
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
2Q FY2010 Results Briefing
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
2Q FY2010 Results Briefing
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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
2Q FY2010 Results Briefing
53.66
139.8
53.55
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MECHATRONICS DIVISIONNET PROFIT & NET PROFIT MARGIN
Currency: SGD million
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).
2Q FY2010 Results Briefing
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
Currency: SGD million
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
2Q FY2010 Results Briefing
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
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MECHATRONICS DIVISIONSALES ANALYSIS – SEMICONDUCTOR SEGMENT
Currency: SGD million
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
• Sales increased 494% y-o-y and 25% q-o-q
• Strong growth due to the significantimprovement in market conditions
2Q FY2010 Results Briefing
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
Figures are inclusive of additional contributionsfrom the Asia operations wef 1 June 2009– i.e. 7months in FY2009 and 6 months in FY2010
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MECHATRONICS DIVISIONSALES ANALYSIS – ANALYTICAL SEGMENT
Currency: SGD million
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
• Sales increased 47% y-o-y and 24% q-o-q
2Q FY2010 Results Briefing
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
Figures are inclusive of additional contributionsfrom the Asia operations wef 1 June 2009– i.e. 7months in FY2009 and 6 months in FY2010
AB/19AB/19
MECHATRONICS DIVISION (ASIA)SALES ANALYSIS – INDUSTRIAL AUTOMATION SEGMENT
Currency: SGD million
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
2Q FY2010 Results Briefing
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
2Q FY2010 Results Briefing
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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
Industrial Automation
Others – such as energy and environment
Medical
Analytical
Semiconductor
Industrial Automation
Others – such as energy and environment
2Q FY2010 Results Briefing
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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
2Q FY2010 Results Briefing
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EMS DIVISION
EMS DivisionEMS DivisionBusiness Review & OutlookBusiness Review & Outlook
BUSINESS REVIEW & OUTLOOK 1Q FY2010 Results Briefing
EMS DIVISIONSALES 2Q FY2010 Results Briefing
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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
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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%
2Q FY2010 Results Briefing
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%
2Q FY2010 Results Briefing
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%
2Q FY2010 Results Briefing
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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%
2Q FY2010 Results Briefing
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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
2Q FY2010 Results Briefing
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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
2Q FY2010 Results Briefing
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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
2Q FY2010 Results Briefing
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
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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 LIMITED2Q FY2010 Results Briefing