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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
AB/4
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)
AB/5
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%
1Q FY2010 Results Briefing
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%
1Q FY2010 Results Briefing
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
1Q FY2010 Results Briefing
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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
1Q FY2010 Results Briefing
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MECHATRONICS DIVISION
MechatronicsMechatronics DivisionDivisionBusiness Review & OutlookBusiness Review & Outlook
BUSINESS REVIEW & OUTLOOK 1Q FY2010 Results Briefing
AB/11AB/11
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
1Q FY2010 Results Briefing
53.7
53.5
AB/12AB/12
MECHATRONICS DIVISIONNET PROFIT & NET PROFIT MARGIN
Currency: SGD million
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
1Q FY2010 Results Briefing
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
AB/13AB/13
MECHATRONICS DIVISIONSALES ANALYSIS – MEDICAL SEGMENT
Currency: SGD million
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
1Q FY2010 Results Briefing
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
AB/14AB/14
MECHATRONICS DIVISIONSALES ANALYSIS – SEMICONDUCTOR SEGMENT
Currency: SGD million
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
• Sales increased 605% y-o-y and 66% q-o-q
• Strong growth due to the markedimprovement in market conditions
1Q FY2010 Results Briefing
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
AB/15AB/15
MECHATRONICS DIVISIONSALES ANALYSIS – ANALYTICAL SEGMENT
Currency: SGD million
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
1Q FY2010 Results Briefing
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
AB/16AB/16
MECHATRONICS DIVISION (ASIA)SALES ANALYSIS – INDUSTRIAL AUTOMATION SEGMENT
Currency: SGD million
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.
1Q FY2010 Results Briefing
8.5
22.0
FY2009 YTD Mar 10
3.21
8.7510.11
8.51
2Q09 3Q09 4Q09 1Q10
AB/17AB/17
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.
1Q FY2010 Results Briefing
Source: Extract from LinkMagazine, April 2010
NEW PROJECT – LAUNCH OF PATHOLOGY SCANNER
MECHATRONICS DIVISION
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AB/19AB/19
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
Industrial Automation
Others – such as energy and environment
Medical
Analytical
Semiconductor
Industrial Automation
Others – such as energy and environment
1Q FY2010 Results Briefing
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
1Q FY2010 Results Briefing
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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
1Q FY2010 Results Briefing
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%
AB/23AB/23
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
1Q FY2010 Results Briefing
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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%
1Q FY2010 Results Briefing
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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
• Sales increased 155% y-o-y and 83% q-o-q
• Growth driven by the production ramp upof a project from an existing customer
+155%Currency: RM million
+83%
1Q FY2010 Results Briefing
AB/26AB/26
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%
1Q FY2010 Results Briefing
AB/27AB/27
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
1Q FY2010 Results Briefing
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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
1Q FY2010 Results Briefing
AB/29AB/29AB/29
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
1Q FY2010 Results Briefing
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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