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Annual General Meeting FY2013
28 October 2013
MICRO-MECHANICS(HOLDINGS) LTD.
2
3.00 pm – 3.20 pm : Presentation
3.20 pm – 3.30 pm : Q&A
3.30 pm – 4.30 pm : AGM Proceedings
4.30 pm : End of AGM
Agenda
CORPORATE HIGHLIGHTS
Mr. Chris Borch, CEOMr. Low Ming Wah, COO
4
Corporate Overview
• Founded in 1983 in Singapore by CEO Chris Borch
• Listed on the Singapore Exchange (Main Board) since 2003
• Design and manufacture high precision tools, parts and assemblies for the semiconductor, medical, aerospace and other high technology industries
• Serve a worldwide base of customers from six facilities in Asia and the USA
• Semiconductor tooling business serves nearly all the chip manufacturers/assembly and test companies
• Committed to generating shareholder returns
“Perfect Parts and Tools. On-Time, Every Time”
5
Worldwide markets | Asia and USA bases
Year-on-Year Growth
Global Customer Base:China
MalaysiaUSA
EuropePhilippines
TaiwanSingaporeThailand
Japan
6
High Precision Tools for Semiconductor A&T
BROAD PRODUCT RANGE backed by strong proprietary know-how
RAISING BARRIERS from developing finer tools in line with chip package miniaturization
CONSUMABLE PRODUCTS require regular replacement
HUNDREDS OF CUSTOMERSin chip assembly & testing sector
FOCUS ON CYCLE TIMEfrom customer inquiry to delivery
Rubber and Plastic Pick-up TipsEjector Needles & Needle HoldersDispensing Nozzles
Wire bond clampsWedgesWire cuttersElectronic Flame Offs
DIE-ATTACH
WIRE-BONDING
Die collets / ultra-fine tools with small holes from 0.10mm and features from 0.05mm. For eutectic die attach, MEMS.
7
Custom Machining & Assembly (CMA)
Year-on-Year Growth
Precision and complex parts / assemblies for Tier-1 capital equipment manufacturers
Semiconductor / Wafer Fabrication
Laser
Medical
Aerospace
24/7 MACHININGMaximising 168 available hoursZero online tool and fixture set-upRepeatable processes
INCREASED COMPETITIVENESSto meet customer needs’ in volatile marketplace
DIVERSIFICATIONinto other high-tech industries
GREATER REVENUE SCALABILITYthan semiconductor tooling business
24/7 MACHINING LINEFactory in the USA
Semiconductorindustry
CUSTOMER DIVERSIFICATION
8
Industry Landscape – Global Chip Industry
Year-on-Year Growth
-10%
-5%
0%
5%
10%
15%
21.0
22.0
23.0
24.0
25.0
26.0
27.0
Jan-
11
Feb
-11
Mar
-11
Apr
-11
May
-11
Jun-
11
Jul-1
1
Aug
-11
Sep
-11
Oct
-11
Nov
-11
Dec
-11
Jan-
12
Feb
-12
Mar
-12
Apr
-12
May
-12
Jun-
12
Jul-1
2
Aug
-12
Sep
-12
Oct
-12
Nov
-12
Dec
-12
Jan-
13
Feb
-13
Mar
-13
Apr
-13
May
-13
Jun-
13
Jul-1
3
Aug
-13
Source: Semiconductor Industry Association
Glo
bal m
onth
ly c
hip
sale
s (U
S$
billi
on) Y
ear-on-Year G
rowth
Jan to June 13 sales up 1.5% yoy; Chip sales continued to improve in July and August 2013
9
Consistent Efforts to Build Value
PRODUCTDevelopment
SERVICE
MARKETINGCUSTOMER VALUE
PRODUCTIVTYIN PEOPLE
MULTI-DIRECTIONALBusiness Planning
STRATEGICThinking and Planning Skills
HIGHER AUTOMATION
OPTIMAL SIZE of Skilled Personnel
24/7 FUNDAMENTALS
IMPROVEQuality, Cost and Cycle Time
based on scalable, repeatable and cost-effective processes
Perfect Parts and Tools, On-Time, Every Time
10
Consistent Efforts to Build Value
CMAR&D PROJECT Developing 24/7 Machining
REACHED KEY MILESTONE with 100 parts engineered for production on new 24/7 Machining Line
RANKED AS BEST SUPPLIER by a key customer
APPLY R&D KNOWLEDGEto factories in Asia to enhance productivity
Semiconductor Tooling
meet ing market need forFAST, FLEXIBLE AND
COST-EFFECTIVE MACHINING
Achieve higher level of AUTOMATION AND IMPROVED production processes
Optimizing headcount
594
508
471
415
343
318
Jun-11
Jun-12
Jun-13
Production headcount Total heacount
LATEST UPDATES
11
Shareholder Value
0.81.2
2.4
3.5
5.0 5.0
2.0
3.0 3.0 3.0 3.0
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
8
9
10
FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013
Special dividend
Final dividend
Interim dividend
Dividend per share (cents)
NTA + cumulative dividend
TOTAL DIVIDENDS OF 31.9 CENTS PER SHARE SINCE LISTI NG(~S$44.2 million in total)
NTA and cumulative dividend per share (cents)
12
Corporate Transparency
SINGAPORE CORPORATE AWARDS (companies with market cap of less than S$300M)
2013 Best Investor Relations Award (Silver)2012 Best Managed Board (Gold)2012 Best Investor Relations Award (Silver)2011 Best Investor Relations Award (Silver)2010 Best Investor Relations Award (Bronze)2008 Chief Financial Officer of the Year (Sesdaq)
SECURITIES INVESTORS ASSOCIATION SINGAPORE
2011 Most Transparent Company (Mainboard Small Caps )2010 Most Transparent Company (Mainboard Small Caps )2009 Most Transparent Company (Mainboard Small Caps )2008 Most Transparent Company (Mainboard Small Caps )2006 Corporate Governance Award (Sesdaq)2005 Most Transparent Company (Sesdaq) 2005
ASIAMONEY CORPORATE GOVERNANCE POLL
2010 Best for Shareholders' Rights and Equitable Tre atment in Singapore
2009 Best for Shareholders' Rights and Equitable Tre atment in Singapore
FORBES
2006 Asia 200 Best Under A Billion Companies
GTI - RANKED 18 th
out of 664 listed companies on the SGX
FINANCIAL REVIEWMr. Chow Kam Wing, CFO
14FY: Financial year ending 30 June
Group Revenue
11.7 9.3 11.7 10.4 9.9 11.1
9.09.8
11.48.7 9.3
5.4 10.1
11.1
9.4 9.2
7.0
11.8
11.1
10.3 10.8
0
40
80
120
160
200
240
280
320
0
10
20
30
40
50
60
FY2009 FY2010 FY2011 FY2012 FY2013 1Q14
4Q
3Q
2Q
1Q
33.1
41.0
45.3
38.8 39.2
Group Revenue (S$M)
Global Chip Sales Trend (US$B)
STEADY SALES IN FY2013; 1Q14 SALES UP 12.0%
24.332.9
37.032.5 33.8
9.4
8.8
8.18.3
6.3 5.4
1.7
0
10
20
30
40
50
60
FY2009 FY2010 FY2011 FY2012 FY2013 1Q14
CMA
SemiconductorTooling
Revenue Drivers
Global Chip Sales Trend according to FY. Data from Semiconductor Industry Association (SIA)
15
8.2 7.7 9.6 8.8 8.6 9.4
6.4 8.09.5
7.4 8.13.9
8.09.0
7.7 7.85.8
9.2
8.9
8.6 9.3
FY2009 FY2010 FY2011 FY2012 FY2013 FY2014
4Q
3Q
2Q
1Q
24.3
32.937.0
32.5 33.8
(S$ mil)
Quarterly Revenue By Business SegmentsTOOLING AND CMA SALES IMPROVED IN 1Q14
3.41.6 2.0 1.6 1.3 1.7
2.6
1.8 2.01.4 1.2
1.6
2.12.1
1.61.5
1.2
2.6 2.2
1.71.4
FY2009 FY2010 FY2011 FY2012 FY2013 FY2014
8.88.1 8.3
6.35.4
Semiconductor Tooling CMA(S$ mil)
Semiconductor tooling business Sales in FY2013 and 1Q14 improved in tandem with industry recovery
CMA business Sales in FY2013 affected by slower business conditions. Revenue recovered in 1Q14 on the back of higher customer orders
0%
20%
40%
60%
80%
100%
FY2009 FY2010 FY2011 FY2012 FY2013 FY2014
CMA
SemiconductorTooling
Percentage of Revenue
16
Revenue by Geographical Market
Singapore, 6%
Malaysia, 23%
Philippines, 9%Thailand,
5%
China, 21%
USA, 15%
Europe, 5% Japan, 3% Taiwan, 10%Rest of
world, 3%
Sales Breakdown for FY2013
DIVERSIFIED REVENUE STREAMS
MAJOR MARKETS FOR SEMICONDUCTOR
TOOLING
KEY MARKET FOR CMA
Sales Breakdown for 1Q14
Singapore, 8%
Malaysia, 22%
Philippines, 9%Thailand,
5%
China, 24%
USA, 14%
Europe, 6% Japan, 2%Taiwan, 8%
Rest of world, 2%
17
Gross Profit Margin
38.8%
47.5%
45.9%
46.3%
49.1%
51.3%
0% 10% 20% 30% 40% 50% 60%
FY2009
FY2010
FY2011
FY2012
FY2013
1Q14
Group GPM
54.2%
59.2%
53.7%
53.4%
55.8%
56.7%
-3.8%
-0.4%
11.3%
9.7%
6.3%
20.7%
-10% 10% 30% 50% 70%
FY2009
FY2010
FY2011
FY2012
FY2013
1Q14
CMA
Semiconductortooling
GPM by Business Segments
Semiconductor toolingGPM improved to 55.8% in FY2013 and 56.7% in 1Q14 despite the constant price pressures typical of the industry
CMA FY2013 GPM affected by low capacity utilisation1Q14 GPM improved to 20.7% due to increased sales and improved productivity
MARGIN EXPANSION IN FY2013 AND 1Q14
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Group Net ProfitFY2013 PROFIT INCREASED 21.4%. 1Q14 PROFIT JUMPED 83.9%
2.11.4 2.0
1.2 1.22.2
0.20.7
1.8
0.7 1.0
-1.4
1.3
1.6
0.91.4
-0.4
1.4
1.4
1.4
1.5
FY2009 FY2010 FY2011 FY2012 FY2013 FY2014
4Q
3Q
2Q
1Q
0.5
4.8
6.8
4.2
5.1
(S$ mil) Net Profit After Tax
34.1%
31.2%
26.8%
31.4%
31.4%
27.0%
0% 10% 20% 30% 40%
FY2009
FY2010
FY2011
FY2012
FY2013
1Q14
Operating Expenses - Administrative, distribution and other operating expenses (inclusive of other income)
Operating Expenses / Revenue
Operating expenses / revenueExpense ratio declined in 1Q14 due to tight rein on expenses, coupled with increased sales and other income
Net profitFY2013 profit improved on higher GPMIncrease in 1Q14 profit due mainly to higher sales and GPM
19
Operating Cash Flow and CAPEX
4.1
8.7 8.7 8.9 8.8
2.2
0
2
4
6
8
10
FY2009 FY2010 FY2011 FY2012 FY2013 1Q14
(S$ mil)
3.03.6
6.7 6.5
2.6
0.3
2.93.5
6.4 6.2
1.6
0.10
1
2
3
4
5
6
7
8
9
10
FY2009 FY2010 FY2011 FY2012 FY2013 1Q14
Capex Net Capex
(S$ mil)Track record of healthy
operating cash flow CAPEX
Net Capex – Capex less proceeds from disposal of fixed assets
20
30 Sep 2013 30 June 2013
Cash Cash and cash equivalents S$11.2M S$9.2M#
Gearing Total borrowings Nil Nil
Trade Receivables
(Outstanding > 90days) / Total trade receivablesBad debt expense
0.2%S$8k
0.2%Nil
Inventory Inventory / Sales Inventory write-off
5.0%S$21k
5.5%S$72k
Equity Shareholders’ equityNAV per share
S$39.6M28.52 cents
S$37.9M#
27.29 cents#
# Paid dividends of S$4.2M (Final dividend for FY2012 and interim dividend for FY2013)
Balance Sheet
OUTLOOKMr. Chris Borch, CEOMr. Low Ming Wah, COO
22
Industry Outlook
Global Chip Sales (US$ mil) Growth
0
100000
200000
300000
400000
2012 2013 2014 2015
IntegratedCircuitsSensors
Optoelectronics
291,562 297,766 312,906 324,903
WSTS Spring 2013 Forecasts
2.1% growth in 2013
5.1% growth in 2014
3.8% growth in 2015
“Global semiconductor sales have now increased for six consecutive months, and the industry is well ahead of last year’s pace, thanks largely to sustained growth in the Americas…… but this week’s government shutdown and a looming debate over the nation’s debt limit threaten to destabilize the economy and disrupt growth,”
-- SIA Press Release, 4 October 2013
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
0
100000
200000
300000
400000
2012 2013 2014 2015
Asia Pacific
Japan
Europe
Americas
Year-on-YearGrowth
291,562 297,766 312,906 324,903
Sources: Semiconductor Industry Association, World Semiconductor Trade Statistics
23
Group Outlook and Plans
OPERATING ENVIRONMENT REMAINS VOLATILE • External headwinds and limited business visibility• Sluggish semiconductor industry growth• Cost, price and delivery lead time pressures
CMA • Developing new knowledge and improving unique
recipe for repeatable, scalable and cost-effective machining
• Building stable customer base in USA
SEMICONDUCTOR TOOLING• Shifting towards automated processes
• Leverage strengths in proprietary design and materials to develop consumable tools for changing market needs
PLANNED CAPEX• Around S$4M for FY2014
• Invest in additional equipment to enhance automation
24
This presentation contains certain statements that are not statements of historical fact, i.e. forward-lookingstatements. Investors can identify 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 thatthese words are not the exclusive means of identifying forward-looking statements. These forward-looking statementsare based on current expectations, projections and assumptions about future events. Although Micro-Mechanics(Holdings) Ltd. believes that these expectations, projections, and assumptions are reasonable, these forward-lookingstatements are subject to the risks (whether known or unknown), uncertainties and assumptions about Micro-Mechanics (Holdings) Ltd. and 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 weconduct business or expect 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 the semiconductor industry 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 notoccur and actual results may differ materially from those expressly or impliedly anticipated in these forward-lookingstatements. Investors are advised not to 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. Micro-Mechanics (Holdings) Ltd.’s business, financial conditions, results of operations and prospects may have changedsince that day. Micro-Mechanics (Holdings) Ltd. has no obligation to update or revise any forward-looking statement,whether as a result of new information, future events or otherwise, except as required by law.
Safe Harbour for Forward-Looking Statements
Micro-Mechanics31 Kaki Bukit PlaceEunos TechparkSingapore 416209www.micro-mechanics.com
Investor Relations ContactOctant ConsultingTel (65) 6296 3583herman@octant.com.sg / lisa@octant.com.sg
MICRO-MECHANICS(HOLDINGS) LTD.
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