Results for the financial year ended 30 June 2016 (FY2016)
Q1. How did the Group's two largest semiconductor tooling markets of China and Malaysia perform in local currency terms?
In local currency terms, sales of semiconductor tools in China and Malaysia grew in FY2016. The revenue generated from these markets in FY2016 would have been higher if not for the depreciation of the Renminbi and Malaysia Ringgit against our reporting currency in Singapore dollars. China remained as the Group's largest market with a revenue contribution of S$14.3 million or 28% of total sales. Sales from our second largest market, Malaysia, were S$10.6 million in FY2016 and accounted for 21% of Group sales.
Back to topQ2. What is the reason for Group's decision to align its CMA factory in the USA with its core business of manufacturing process critical parts and tools primarily for the semiconductor industry? What type of products are these?
Our efforts to build a separate CMA division geared towards the manufacture of parts for equipment makers in the multiple industries have been challenging. After evaluating the engineering and investment requirements to achieve a meaningful level of progress and success in each of these different market segments, we believe the right strategy going forward will be to concentrate our efforts on several leading makers of semiconductor wafer-fabrication equipment with whom we have already made promising inroads. In this respect, our goal is to focus on manufacturing parts and tools used in process-critical applications where flawless quality, on-time delivery and cost-effective pricing create a compelling offering for our customers.
Q3. How much cost savings does the Group expect from its new strategy to focus the CMA Division on the semiconductor wafer-fabrication equipment market?
As mentioned in section 10 of our SGXNet dated 29 August 2016, we have ended our efforts to build a separate CMA division. Instead of working to build a business segment serving multiple industries, our plant in the USA will join the Group's four plants in Asia and focus on manufacturing parts and tools for process-critical applications mainly for customers in the semiconductor industry. Our decision is based primarily on market rather than cost-saving factors.
Q4. With advances in 3D printing, do you see it posing a threat to the Group's business?
The Group's products are manufactured through machining processes. This is "subtractive manufacturing" as opposed to "additive manufacturing" which is the process used in 3D printing. At present, 3D printing is used mainly to manufacture products that have two requirements - fast cycle time and parts with shapes that are not achievable using subtractive manufacturing. As 3D printing is unable to achieve the high precision levels required for our process-critical parts and tools, we do not presently view it as a threat to our business. Moreover, we have also been continuously improving our cycle time.
Q5. Given the Group's sound balance sheet, will Micro-Mechanics be looking at acquisitions as a growth strategy?
The Group is currently focused on growing our business through organic initiatives.
Q6. The Group will be paying dividends totalling 6 cents for FY2016. Does the Group plan to maintain this level of dividends in the future?
If approved by shareholders at our Annual General Meeting on 28 October 2016, the final dividend of 3.0 cents per share and special dividend of 1.0 cent per share will bring our total dividend for FY2016 to 6.0 cents per share compared to the dividends of 5.0 cents paid for FY2015.
Since listing in 2003, the Group has had a consistent practice of rewarding shareholders through regular dividend payments every year despite the ups and downs of the business cycle. The Group currently has a dividend policy to pay annual dividends of not less than 40% of the consolidated net profit as stated in the audited report, subject to the Group's retained earnings, financial position, capital expenditure requirements, future expansion, investment plans, and other relevant factors. For FY2016, the total dividend distributed to shareholders translated to a pay-out ratio of 70%.