FRENCKEN GROUP LIMITED
ANNUAL REPORT 2014
10
BUSINESS REVIEW
As a result, the Mechatronics Division’s contribution to Group
revenue increased to 63.3% in FY2014, from 61.6% in FY2013.
Correspondingly, the IMS Division’s share of Group revenue
declined to 36.7% in FY2014, from 38.4% previously.
TheGroupderives its revenue fromadiversifiedbaseof industries
comprising analytical, medical, semiconductor, industrial
automation, automotive, consumer & industrial electronics and
office automation segments. The top four segments in terms
of revenue contribution in FY2014 were automotive (23.9%),
analytical (20.1%), semiconductor (14.6%) and medical
(14.4%).
The Group’s gross profit (GP) eased 1.4% to S$66.0 million in
FY2014 from S$66.9 million in FY2013. GP margin was lower
at 14.0% as compared to 15.1% in the previous year. While
the Mechatronics Division maintained a relatively stable GP
margin in FY2014, GP margin of the IMS Division softened
due to depreciation of the Euro against the Malaysian Ringgit,
increased operational costs and shift in sales mix.
Other income decreased by 18.5% to S$5.5 million in FY2014
from S$6.8 million in FY2013, due mainly to lower foreign
exchange gain.
For the 12 months ended 31 December 2014
(“FY2014”), Group revenue increased 6.3%
to S$472.7 million, driven mainly by higher
revenue recorded at theMechatronics Division.
Group Financial
Performance in
FY2014
In FY2014, the Group’s operating expenses (selling
and distribution, administrative and general, and other
operating expenses) rose by 9.9% to S$53.7 million from
S$48.9 million previously. Selling and distribution expenses
increased 10.8% to S$12.6 million due mainly to higher
transport and freight costs, as well as the inclusion of
expenses from NTZ International Holding B.V. (“NTZ”)
which the Group acquired in January 2014. Administrative
and general expenses increased 8.4% to S$39.9 million,
attributable mainly to the inclusion of NTZ’s related
expenses, increase in staff costs and higher export tax and
duties. Other operating expenses increased to S$1.2 million
in FY2014 from S$0.7 million in FY2013, contributed mainly
by higher foreign exchange losses.
Finance costs in FY2014 decreased 29.6% to S$1.6
million following the repayment of the loan to finance the
Group’s acquisition of Juken Technology Limited in October
2013. The Group incurred expenses for exceptional items
amounting to S$0.7 million in FY2014, compared to
S$0.4 million in FY2013. The exceptional items in FY2014
comprised impairment loss of S$0.5 million for a financial
asset, available-for-sale in respect of the Group’s investment
in MTIC Holdings Pte. Ltd. and impairment loss of S$0.2
million on goodwill of a subsidiary in the Mechatronics
Division.
