FRENCKEN GROUP LIMITED
ANNUAL REPORT 2015
10
BUSINESS REVIEW
For the 12 months ended 31 December 2015 (“FY2015”),
Group revenue decreased 7.1% to S$439.4 million due to
lower sales recorded at both the Mechatronics and IMS
Divisions.
Approximately 36.9% of the Group’s sales in FY2015
were translated from Euro to Singapore Dollar. The Euro
depreciated approximately 9.6% against the Singapore
Dollar in FY2015. At the same exchange rates as those
prevailing in FY2014, the Group’s revenue for FY2015
would have been S$456.5 million, 3.4% lower than the
revenue of S$472.7 million in FY2014.
The Mechatronics Division contributed 62.3%, and the
IMS Division accounted for the remaining 37.7% of Group
revenue in FY2015.
Notwithstanding lower revenue, the Group’s gross
profit increased by 2.1% to S$67.3 million in FY2015.
Correspondingly, the gross profit margin expanded
to 15.3% from 14.0% in FY2014.
This was lifted mainly
by the IMS Division which achieved better gross profit
margin. The Mechatronics Division registered a steady
gross profit margin in FY2015.
Other income, net of other operating expenses, increased
by 11.1% to S$4.8 million due mainly to higher foreign
exchange gains.
Selling and distribution expenses in FY2015 decreased
11.6% year-on-year to S$11.2 million, attributable to lower
headcount, reductions in sales commission and marketing/
promotion expenses. Administrative and general expenses
decreased to S$39.0 million in FY2015 from S$39.9 million
in FY2014. Finance costs remained stable at S$1.5 million
in FY2015.
The Group recorded profit before income tax and
exceptional items of S$20.7million in FY2015, representing
an increase of 25.4% from S$16.5 million in FY2014. This
was driven by higher profit contributions from both the
IMS and Mechatronics Divisions.
During the year, the Group incurred exceptional items
amounting to S$6.0 million. Approximately S$1.3 million
was attributable to indemnity compensation and post-
contractual remuneration to SNECI SAS following the
non-renewal of an agency contract with SNECI SAS by
the Group’s subsidiary in Penang. The Group also incurred
impairment loss of deferred development costs of S$2.3
million, and impairment loss of S$0.2 million in relation
to its investment in MTIC Holdings Pte Ltd. The winding
up of subsidiaries in Malaysia and China also resulted in
a non-cash exceptional loss amounting to S$2.2 million.
Upon dissolution of these subsidiaries, the Group had to
recognise the attributable foreign exchange translation
losses to the income statement from the foreign currency
translation reserves maintained on the balance sheet.
Group Financial
Performance in
FY2015
