Perfect Parts and Tools, On Time, Every Time FY2017 RESULTS PRESENTATION 29 AUGUST 2017
BUSINESS & CHRIS BORCH, CEO LOW MING WAH, COO INDUSTRY Micro-Mechanics FY2017 Results Presentation
Corporate Overview • Founded in 1983 in Singapore • Design and manufacture high precision tools and parts used in process-critical applications for the wafer- Our Mission is… fabrication and assembly processes of the semiconductor industry Perfect Parts and Tools On • Serve a worldwide base of customers from five facilities in Time, Every Time Asia (Singapore, Malaysia, China, Philippines) and the USA • More than 600 active customers Based on Scalable, Repeatable and Cost-Effective Processes • Listed on the Singapore Exchange (Main Board) since 2003 • Committed to generating shareholder returns Micro-Mechanics FY2017 Results Presentation
Focusing on Key Customer Outcomes Market demands flow down through our Semiconductor Customers to Us! Market Semiconductor Customers Consumer Wafer Fab & Chip Assembly Micro-Mechanics Parts and Tools for Process-Critical Applications based on… Supply Need Key Customer Outcomes Trend: Devices < 10 DESIGN RELIABILITY nanometers Mobility + Align to Customer Flawless Quality, Miniaturization + (and Market) 0 PPM Performance Reliability + Needs “On-demand! How? How? Precision + DELIVERY COST Low Cost!” Flawless Quality + On Time, Every Globally Competitive; Scalability Time in Less Time Price < Value PRECISION Finer features, smaller tolerances Requires Nano Precision! Human Hair = 100,000 nanometers Micro-Mechanics FY2017 Results Presentation
Focusing on Key Customer Outcomes The “Nano” world of semiconductor manufacturing Micro-Mechanics : Customers’ Prepared for “Nano” world Requirements for with Capital and Tools & Parts Engineering Resources The “NANO” world of semiconductor Smaller features with More complex design and manufacturing tighter tolerances manufacturing Greater precision Continuously develop (Higher repeatability) advanced machining processes Towards zero defect Supporting processes – Trend: Devices < 10 new materials, testing, nanometers Micro-cleanliness cleaning & packaging Micro-Mechanics FY2017 Results Presentation
Industry Review Three-month average of worldwide billings of North American equipment manufacturers (US$ B) YOY Growth Gartner Says Worldwide Semiconductor Capital 2.5 80% Spending Is Forecast to Grow 10.2 Percent in 2017 70% • Growth rate is up from the previous quarter's 2.0 forecast of 1.4%, due to continued aggressive 60% investment in memory and leading-edge logic which is driving spending in wafer-level equipment 50% 1.5 40% ($ Millions) 1.0 2016 2017 2018 2019 2020 30% Semiconductor 70,568.9 77,794.5 77,443.5 71,814.8 73,239.5 20% Capital Spending 0.5 10% Growth 9.1% 10.2% -0.5% -7.3% 2.0% 0.0 0% Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Source: Gartner, 2 August 2017 Source: SEMI Micro-Mechanics FY2017 Results Presentation
Industry Review Global Monthly Chip Sales (US$ B) YOY Growth 35.0 30% • Global semiconductor industry experienced 25% 30.0 robust growth during the first six months of 2017 20% • 25.0 Semiconductor sales of US$190.5 billion during 15% the first half of 2017 were 20.8% higher than the 20.0 same period in 2016. 10% 15.0 • World Semiconductor Trade Statistics (WSTS) 5% raised its 2017 sales growth forecast to 11.5% 10.0 from 6.5% previously – this reflects expected 0% growth in all major categories, led by memory 5.0 -5% products. 0.0 -10% Source: Semiconductor Industry Association Micro-Mechanics FY2017 Results Presentation
Corporate Milestones • Record revenue and profit in FY2017 • USA operations achieved turnaround in 4Q17 • Received two Gold Awards for Best Managed Board and Best Investor Relations at the Singapore Corporate Awards 2017 • Received a Special Commendation Award at the Singapore Governance and Transparency Forum 2017 • Higher Singapore Governance and “Transparency and good governance are more than just ticking boxes. Indeed, accurate, complete and timely Transparency Index (SGTI) score of 92 points information is the foundation for sound decision making – not to rank 19th out of 606 companies listed on just for investors – but for everyone at Micro-Mechanics from the SGX the board room to the shop floor.” Micro-Mechanics FY2017 Results Presentation
Dividend Performance HIGHER DIVIDENDS OF 8 CENTS FOR FY2017 Brings total dividend payout since our listing to 53.9 CENTS per share Dividend Policy of Not Less Than 40% of Earnings* 75% of Net Profit Dividend per share (cents) 8.0 6.0 5.0 5.0 5.0 3.5 3.0 3.0 3.0 3.0 3.0 2.4 2.0 1.2 Special dividend 0.8 Final dividend Interim dividend Micro-Mechanics FY2017 Results Presentation *subject to Board approval and expected capital requirements
FINANCIAL CHOW KAM WING, CFO REVIEW Micro-Mechanics FY2017 Results Presentation
FY2017 in Review FY2017 P&L Overview (S$ million) KEY RATIOS & STATISTICS 11.7% REVENUE GROWTH 57.2 GROSS PROFIT GROWTH 12.8% 24.4 PBT GROWTH 17.9% 32.9 0.7 NET PROFIT GROWTH 24.2% 15.1 GROSS PROFIT MARGIN 57.4% 18.5 14.8 NET PROFIT MARGIN 25.8% 3.7 EARNINGS PER SHARE 10.62 cents 0 RETURN ON EQUITY 27.0% CASH S$23.4M Zero DEBT FY: Financial year ending 30 June N.B. Due to rounding, some totals may not correspond with the sum/subtraction of separate figures. Micro-Mechanics FY2017 Results Presentation
Group Revenue HIGHEST EVER REVENUE IN FY2017 Global Chip Sales Group Revenue (S$ mil) Trend (US$B) 70 380 60 57.2 330 52.2 51.3 50 • 15.4 Revenue increased 11.7% in FY2017 280 43.9 12.9 13.0 38.8 39.2 40 • Quarterly revenue hit a record S$15.4 11.7 230 14.2 million in 4Q17 – reflecting strong growth of 10.3 10.8 13.4 12.5 30 the global semiconductor industry since the 10.6 start of 2017 180 9.4 9.2 4Q 14.2 20 12.2 12.9 3Q 10.5 8.7 9.3 130 2Q 10 1Q 13.6 13.0 13.4 11.1 10.4 9.9 0 80 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 Global Chip Sales Trend according to FY. Data from Semiconductor Industry Association (SIA) N.B. Due to rounding, some totals may not correspond with the sum of separate figures. Micro-Mechanics FY2017 Results Presentation
Group Revenue DIVERSIFIED REVENUE STREAMS FY2017 FY2016 Country % change S$ mil S$ mil Sales Breakdown for FY2017 Singapore 4.7 3.0 58% Taiwan, 9% Europe, 4% Japan, 2% Malaysia 10.6 12% 11.9 USA, 16% Rest of world, Philippines 4.6 10% 5.1 2% Thailand 1.1 45% 1.6 Singapore, China 14.8 14.3 4% 8% Philippines, USA 9.1 7.9 16% 9% Europe 2.4 (8%) 2.2 Malaysia, 21% Japan 1.0 17% 1.1 Thailand, 3% 5.0 1% Taiwan 5.0 Rest of China, 26% 1.7 1.4 19% world Total 57.2 51.3 12% Higher sales to all markets except Europe. Sales to China would have been higher if not for the translational impact of 5% depreciation of the RMB against the SGD. Micro-Mechanics FY2017 Results Presentation
Gross Profit Margin Gross Margin STEADY GROSS PROFIT MARGIN 57.4% 56.9% 55.0% 50.7% 49.1% 46.3% • Higher gross profit margin in FY2017 attributed to higher capacity utilisation, as well as cost, productivity and cycle time improvements Gross profit margin is one of the results that matters most – It reflects the value we help to create for our customers , and our ability to develop and deliver a cost-effective outcome FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 Micro-Mechanics FY2017 Results Presentation
Profitability FY2017 PROFIT UP 24.2% TO RECORD LEVEL (S$ mil) Net Profit After Tax Operating Expenses / Revenue 16.0 14.8 FY2017 25.1% 14.0 4.6 12.0 11.9 12.0 FY2016 26.2% 2.8 2.9 10.0 FY2015 25.5% 3.5 7.7 8.0 2.7 3.7 FY2014 28.5% 2.4 6.0 5.1 3.4 2.7 4.2 1.8 4Q 1.5 2.7 4.0 FY2013 31.4% 1.4 3Q 1.4 1.4 0.9 2.0 2Q 3.6 1.0 3.4 0.7 2.8 FY2012 31.4% 2.1 1Q 1.2 1.2 0.0 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 0% 5% 10% 15% 20% 25% 30% 35% Operating Expenses - Administrative, distribution and other N.B. Due to rounding, some totals may not correspond with the sum of operating expenses (inclusive of other income) separate figures. Micro-Mechanics FY2017 Results Presentation
Personnel BUILDING A LEAN MANPOWER STRUCTURE Profit Before Tax per head Headcount (S$) 520 45,000 40,000 508 500 39,800 • Lean manpower structure as a by-product 35,000 36,400 of our improvement initiatives 480 34,400 30,000 471 • Added 34 people during FY17 – mainly 460 465 25,000 461 non-supervisory and production roles to 20,000 440 447 strengthen manufacturing and delivery 21,100 responsiveness 15,000 431 420 14,700 • 10,000 Intend to continue automating operations 11,400 400 and building improved processes 5,000 380 - FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 Headcount at end of FY PBT per head Micro-Mechanics FY2017 Results Presentation
Cash Flow CASH-FLOW GENERATIVE OPERATIONS Track record of healthy net cash from operating activities (S$ mil) (S$ mil) CAPEX 20 20 18.1 18 18 16.3 16 16 14.1 14 14 12 12 10.8 10 10 8.9 8.8 8 8 6.6 6.5 6 6 5.1 4.9 4.1 4 4 2.6 2 2 0 0 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 Micro-Mechanics FY2017 Results Presentation
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