Financials Reports
Second Quarter Results Financial Statement And Related Announcement
Financials Archive
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Condensed Interim Financial Statements for Second Quarter and Half Year Ended 31 December 2024
Condensed Interim Consolidated Statement Of Profit Or Loss And Other Comprehensive Income For The Second Quarter And Half Year Ended 31 December 2024
Condensed Interim Statements Of Financial Position
Review Of Performance
Review Of Profit And Loss
Group Revenue
For the three months ended 31 December 2024 ("2QFY2025"), the Group's revenue increased by 20.7% year-on-year ("yoy") to S$16.3 million from S$13.5 million in 2QFY2024. On a quarter-on-quarter ("qoq") basis, Group revenue in 2QFY2025 was 0.3% higher than S$16.2 million in 1QFY2025.
For the six months ended 31 December 2024 ("1HFY2025"), the Group's revenue grew 10.8% yoy to S$32.5 million from S$29.4 million in 1HFY2024.
Revenue by segment
In 2QFY2025, sales from the consumable tools segment increased by 12.0% yoy to S$12.7 million from S$11.4 million in 2QFY2024. On a qoq basis, sales declined by 0.1% from S$12.7 million. Consumable tools remained the Group's core business segment, accounting for 78.1% of the Group's revenue in 2QFY2025.
Sales from the Group's Wafer Fabrication Equipment ("WFE") segment increased by 66.6% yoy to S$3.6 million in 2QFY2025 from S$2.1 million in 2QFY2024, contributing 21.9% to the Group's revenue. On a qoq basis, WFE sales increased by 1.9% from S$3.5 million in 1QFY2025. The geographical markets for the WFE segment are mainly USA and Singapore.
By geographical segments, sales from China increased by 1.3% yoy to S$10.4 million and remained as the Group's largest geographical market, contributing 31.9% to the Group's revenue in 1HFY2025. Sales from the USA also grew 17.4% yoy to S$7.3 million. This reflects sustained momentum from the sharpened engineering focus on several main product areas for the WFE sector to develop a more compelling and competitive differentiation and improved margin.
Capacity Utilisation
The Group's average capacity utilisation rate improved substantially from 41% in 2QFY2024 to 47% in 2QFY2025 driven by improved efficiencies from the Group's 'Five-Star Factory' initiative. As announced in FY2024, the Group aims to achieve average capacity utilisation in the range of 50 to 65%. This will allow the Group to capture sudden surges in industry or customer demand that are typical for the semiconductor industry.
Gross Profit (GP) Margin
The Group's gross profit grew 24.7% yoy to reach S$7.7 million in 2QFY2025, with gross profit margin improving to 47.5% compared to the same period last year. Compared to 1QFY2025, gross profit margin for 2QFY2025 was slightly lower as cost of sales was higher at S$8.6 million (1QFY2025: S$8.0 million) due to product mix in consumable tools segment.
Other income, Distribution Expenses, Administrative Expenses, Other Operating Expenses and Net Finance Expense
For 2QFY2025, the Group's other income decreased 36.7% yoy to S$68k (2QFY2024: S$108k) due mainly to the cessation of rental income during the quarter. Distribution costs was 19% (or S$0.1 million) higher compared to the same period last year due to higher commission costs in line with higher sales achieved. Administrative and other operating expenses remained stable at S$2.4 million and S$0.8 million respectively.
The Group recorded a net finance income of S$66k, reversing a net finance expense position of S$96k in 2QFY2024. This was mainly due to foreign exchange gains during the period, as the US dollar strengthened against the Singapore dollar.
Profit before Tax and Net Profit
As a result of the above, the Group's profit before tax increased by 71.0% yoy to S$3.9 million in 2QFY2025 from S$2.3 million in 2QFY2024.
Income tax expenses remained steady at S$0.9 million for both 2QFY2025 and 2QFY2024. For 2QFY2025, the Group's effective tax rate decreased to 24.2% from 38.0% in 2QFY2024 primarily due to USA subsidiary generating a profit this quarter compared to a loss in 2QFY2024. The tax expenses included a provision of S$70k for withholding tax on dividends to be remitted to Singapore from various overseas subsidiaries.
After deducting income tax expenses, the Group's net profit grew 108.9% yoy to S$3.0 million in 2QFY2025 and net profit margin improved yoy to 18.1% (2QFY2024: 10.5%). Correspondingly, the Group's earnings per share increased 107.8% yoy to 2.12 cents in 2QFY2025 from 1.02 cents in 2QFY2024.
Dividend Payment
The Group has a formal dividend policy to distribute 40% or more of its after-tax annual earnings, after taking into consideration financial performance, projected cash flow and capital requirements for business growth and general economic conditions among other relevant factors.
The Board of Directors is declaring an interim dividend of 3 cents per share (one tier tax-exempt) in respect of 1HFY2025 (1HFY2024: 3 cents per share), which will be paid on 18 February 2025. The payout of S$4.2 million for 1HFY2025 represents a dividend payout ratio of 69.2%.
Balance Sheet
The Group remains in a resilient financial position. As at 31 December 2024, it had a balance sheet with total assets of S$58.2 million (FY2024: S$56.9 million), shareholders' equity of S$48.3 million (FY2024: S$46.1 million), cash and bank balances of S$20.2 million (FY2024: S$16.6 million), and no bank borrowings.
Long Term Assets
As at 31 December 2024, non-current assets decreased to S$22.6 million as compared to S$24.8 million as at 30 June 2024.
Trade Receivables
Total trade receivables as at 31 December 2024 increased slightly to S$10.9 million from S$10.8 million as at 30 June 2024. Of this, S$3.9k was outstanding for 90 days or more (30 June 2024: S$3.7k). There were no bad debts written off during the period.
Trade & Other Payables
As at 31 December 2024, our trade payables totaled S$786k (30 June 2024: S$924k) with minimal amount outstanding for 30 days or more.
Non-trade payables and accrued expenses totaled remained at approximately S$0.5 million and S$3.7 million as at 31 December 2024 (30 June 2024: S$0.8million and S$3.7 million).
Long term liabilities
As at 31 December 2024, the deferred tax liabilities remained stable at S$1.4 million.
Inventory
The Group continuously manages its inventory to avoid over-stocking and minimise write-offs. Our inventory of S$3.7 million as at 31 December 2024 (30 June 2024: S$3.9 million) was 5.6% of annualised sales (30 June 2024: 6.7%). Inventory written off in 2QFY2025 totaled S$13k, as compared to S$33k in 2QFY2024.
Capital Expenditure
The Group's capital expenditure in 2QFY2025 amounted to S$168k. This comprised approximately S$95k for the acquisition of new machines and accessories for our factories, with the balance used for upgrading of office premises and equipment.
For FY2025, the Group expects to incur capital expenditure of approximately S$2.0 million on machinery and equipment to upgrade the production capabilities of the Group's five factories.
Cash Flow Analysis
The Group generated net cash from operations of S$5.5 million in 2QFY2025 (S$3.4 million in 2QFY2024). After deducting net cash used in investing activities of S$0.2 million and net cash used in financing activities of S$4.6 million, the Group ended 2QFY2025 with cash and bank balances of S$20.2 million, which included S$0.2 million in pledged deposits.
Commentary On Current Year Prospects
Sector performance and outlook
The global semiconductor industry showed strong signs of recovery in 1HFY2025, affirming the Group's view that the industry is in the advanced stages of rebalancing production and inventory. In its updated Fall 2024 forecast, the World Semiconductor Trade Statistics ("WSTS") revised its projections for the global semiconductor market in 2024, anticipating sales to grow 19.0% yoy to US$627 billion. In line with this trend* of sustained growth, Group revenue increased for the fourth consecutive quarter to S$16.3 million for the three months ended 31 December 2024.
Looking ahead, the WSTS expects global semiconductor sales to grow 11.2% to US$697 billion in 2025. Despite the encouraging prospects, the Group remains cautiously optimistic about the continued growth of the semiconductor industry amid ongoing macroeconomic and geopolitical uncertainties, such as tighter trade restrictions on chip exports.
*Note: WSTS forecasts global semiconductor sales, and while the Group's manufacturing of high precision tools and parts is part of the semiconductor industry's supply chain, the Group's performance in specific business segments during any particular time period may not always correlate with the general sales trend of the semiconductor industry.
Update on key initiatives for FY2025
The Group continues to progress several key initiatives to build on the improved financial performance in 1HFY2025 and sustain earnings recovery in FY2025. These include:
Sustaining the turnaround and returning to profitability at MMUS
In 2HFY2024, the Group completed a restructuring plan at MMUS, where it strategically recalibrated the plant's engineering and product focus to create a more compelling, competitive and higher-value product mix of process-critical parts for the WFE industry. The Group also implemented a host of initiatives to optimise costs and improve efficiency as part of its overarching focus on enhancing operational excellence and accelerating innovation across its facilities.
Since then, core operating performance at MMUS has continued to improve significantly as orders rebounded with an improved product mix. The Group achieved its second consecutive quarter of profitability at MMUS with profit before tax of S$316k, an increase of 47% from S$216k made in 1QFY2025. The Group remains confident that the completed restructuring will continue to be earnings accretive and is focused on sustaining this momentum.
Executing the 'Five-Star Factory' initiative
The Group also continues to progress and benefit from implementing the 'Five-Star Factory' initiative, which aims to strengthen five fundamentals or "pillars" to accelerate excellence across its five factories. These include:
- Fast, Effective & Local Support to Global Customers:: Strengthening the Group's decentralised structure, thus further improving its ability to respond to its customers' evolving needs quickly and effectively and to solve high-value customer and industry problems.
- In 1HFY2025, the Group observed increased demand for local customers within its consumable tools segment amid global supply chain uncertainties arising from US-China trade restrictions.
- Operational Excellence: Leveraging lean engineering and management principles, data and automation to develop fast, flawless and cost-effective manufacturing.
- Through its efforts, the Group has minimised inventory overstocking with inventory at S$3.7 million as of 31 December 2024 (30 June 2024: S$3.9 million), representing 5.6% of annualised sales (30 June 2024: 6.7%). In addition, inventory written off in 2QFY2025 totaled S$13k, as compared to S$33k in 2QFY2024.
- Innovation Excellence: Creating a culture that promotes fresh thinking and ingenuity that drives product and process innovations and improvements, enables new manufacturing capability, and encourages the adoption of new technologies and methodologies.
- The Group has started working on a road map for the next generation of equipment and machines to enhance productivity and add new manufacturing capability.
- The Group's R&D team completed the development of a moldable elastomer compatible with vision-based advanced packaging equipment.
- High-Performance Teams: Building a high-performance team of talented people with the right skills in the right positions, upskilling the Group's workforce through training programmes, and aligning incentive systems with measurements of progress and performance.
- All the Group's subsidiaries have completed their training programmes for 1HFY2025.
- Workplace Efficiency, Health, and Safety: Implementing "8S" practices by all personnel resulting in organised, productive, clean, safe and environmentally responsible operations.
- As of 1HFY2025, all of the Group's facilities are on track to achieving their internal "8S" targets.
Looking to the rest of FY2025, the Group remains focused on strengthening the five fundamentals or "pillars" to accelerate excellence across its five factories.
Prioritising disciplined capital management and good governance
The Group continues to exercise disciplined capital management and uphold good governance to deliver sustainable long-term shareholder returns. During 2QFY2025, the Group generated net cash from operating activities of S$5.5 million. After deducting net cash used in investing activities of S$174k and net cash used in financing activities of S$4.6 million (including S$4.2 million in dividends), the Group generated free cash flow of S$0.8 million for 2QFY2025 with S$20.2 million in cash and bank balances and no bank borrowings.
Business outlook
The Group remains focused on its goal to become a leading Next Generation Supplier of high precision tools and parts used in process-critical applications for the wafer-fabrication and assembly processes of the semiconductor industry heading into 2HFY2025. The Group remains cautiously optimistic of the continued recovery of the semiconductor industry amid ongoing macroeconomic and geopolitical uncertainty. While the Group believes that it is well-positioned to navigate these potential headwinds, it remains vigilant and focused on building the core foundation of the business to future-proof its operations for sustainable high-quality earnings and long-term growth.