Corporate Profile
Financials
Quarterly Financial Statements and Dividend Announcement For Period Ended 30 September 2008
Profit & Loss
Balance Sheet
Review of Performance
Overview
Group revenue for 3Q2008 closed at S$39.5 million, which represented a 20% decrease from 3Q2007 mainly due to lower global equipment demands. The Group achieved a 5% increase in sales as compared to 2Q2008. This increase was contributed mainly by the SSP Division.
The Group reported a net loss of S$2.0 million in 3Q2008 as compared to a profit of S$2.2 million in 3Q2007 and a loss of S$14.6 million in 2Q2008. In 3Q2008, efforts were stepped up to drive down manufacturing and operating costs through efficiency and yield improvements as well as organisational streamlining. As at 30 Sep 2008, the Group's staff headcount was reduced by about 25% from last financial year-end. Results from measures taken in executing the turnaround plan helped reduce the net operating loss excluding impairment/provisions by 55% from S$4.9 million in 2Q2008 to S$2.2 million in 3Q2008.
The Group's revenue for 9M2008 was S$128.0 million as compared with S$139.9 million in 9M2007, a decrease of S$11.9 million or 9% year-on-year. The decrease in revenue was mainly due to lower revenue from the SSP Division (S$7.6 million) and Precision and System Integration ("PSI") Division (S$3.8 million) as a result of the global slowdown in consumer demands and price reduction pressures. Revenue from the Group's Materials and Services ("MNS") Division was fairly stable.
In 9M2008, the Group reported a net loss of S$17.2 million as compared to a profit of S$3.1 million in 9M2007. The bulk of the S$17.2 million loss incurred comprised S$9.7 million impairment losses recorded in 2Q2008 for slowmoving/ obsolete stocks as well as bad/doubtful debts. Net loss excluding impairment/provisions was S$7.7 million in 9M2008.
The Group as at 30 September 2008 had net assets of S$64.0 million and a net debt-to-equity ratio of 0.50. Despite net losses reported in current financial period, operating cash flows for 3Q2008 and 9M2008 remained positive at S$2.1 million and S$4.5 million respectively. Investing cash outflow was S$4.4 million in 9M2008. Cash and cash equivalents at the end of 30 September 2008 stood at S$9.1 million.
Segmental Analysis
Substrates and System Packaging (SSP)
SSP Division was the Group's largest revenue contributor, accounting for 57.7% and 52.6% of the Group's revenue in 3Q2008 and 9M2008 respectively. The Division recorded year-on-year reduction in revenue of 6% in 3Q2008 and 10% in 9M2008. Overall decrease was attributable to lower demand for substrates from major European customers. SSP Division's revenue in 3Q2008 posted a 14% increase from 2Q2008.SSP Division - excluding Qualitek
SSP Division, excluding Qualitek, posted a profit of S$0.5 million in 3Q2008 as compared to S$0.7 million recorded in 3Q2007. Excluding R&D cost and asset impairment, its operating profit of S$1.2 million in 3Q2008 was a turnaround from S$0.7 million loss in 2Q2008 on the back of higher revenue and stringent cost reduction measures.The Division suffered a loss of S$5.0 million in 9M2008 as compared to a profit of S$4.9 million in 9M2007. Included in the S$5.0 million loss in 9M2008 was R&D cost of S$2.1 million (9M2007: S$2.7 million) and asset impairment of S$4.2 million (9M2007: S$0.1 million). The asset impairment of S$4.2 million mainly related to allowance for/write off of slow-moving and obsolete stocks as well as bad/doubtful debts recognised in 2Q2008. At the operating level, year-on-year profit margin was adversely affected by stiff competition and price pressures amidst weakened USD and higher material costs. Lower yield as a result of change in product mix as the Division ramped up sales to customers in Taiwan/China also contributed to the lower profitability. Excluding R&D cost and asset impairment, profit for 9M2008 was S$1.4 million (9M2007: S$7.6 million).
SSP Division - Qualitek
Qualitek's revenue was S$2.9 million in 3Q2008 and S$9.2 million in 9M2008. The operating loss in 3Q2008 was S$1.5 million which was 38% lower than the operating loss of S$2.4 million reported in 2Q2008. Actions taken to improve operating yield and manufacturing efficiency contributed mainly to the results improvement. The loss reported for 9M2008 was S$7.0 million, including S$0.7 million of impairment loss.Precision and System Integration (PSI)
The Group's PSI Division revenue was S$9.6 million in 3Q2008 and S$39.2 million in 9M2008. These represented a 47% year-on-year decrease for 3Q and a 9% year-on-year decrease for 9M. The decrease was mainly due to lower equipment sales arising from a slow down in customer's capital spending which was experienced since 2Q2008.With declining sales since 2Q2008, the Division reported a second consecutive quarter of loss in 3Q2008. PSI Division's loss was S$1.6 million in 3Q2008 as compared to a profit of S$3.0 million in 3Q2007 and a loss of S$4.7 million in 2Q2008. In 9M2008, excluding asset impairment of S$3.6 million (9M2007: S$0.1 million) and R&D costs, the Division posted an operating profit of S$1.4 million as compared to an operating profit of S$2.6 million in 9M2007. The operating profit in 9M2008 was largely contributed by high equipment sales realised in 1Q2008.
Materials and Services (MNS)
Revenue from MNS Division remained fairly stable at S$7.1 million in 3Q2008 and S$21.4 million in 9M2008, posting a marginal 2% year-on-year decrease for both 3Q and 9M.The Division posted a profit of S$1.0 million in 3Q2008, which included a foreign exchange gain of S$0.3 million. (3Q2007: Profit S$0.3 million, net of foreign exchange loss of S$0.3 million). It recorded a profit of S$0.4 million in 9M2008 as compared to a profit of S$1.7 million in 9M2007. Included in the profit for 9M2008 was impairment loss of S$0.9 million (9M2007: S$0.2 million). Excluding the impairment loss, the Division achieved an operating profit of S$1.3 million in 9M2008 despite rising material costs and price reduction pressures.
For the Third Financial Statement, please click here for details.For the Second Quarter 2008 Financials, please click here.