FRENCKEN GROUP LIMITED
ANNUAL REPORT 2015
06
CHAIRMAN’S STATEMENT
(CONT’D)
Group revenue eased 7.1% to S$439.4 million in FY2015
due to overall softer demand conditions owing to the
weak business environment, a substantial decline in sales
in the office automation segment following the cessation
of a product line, and the unfavourable impact of the Euro
currency’s depreciation against the Singapore Dollar.
While the Group’s net profit attributable to equity holders
(PATMI) decreased 18.8% to S$9.2 million in FY2015, the
decline was mainly caused by exceptional items amounting
to S$6.0 million. In fact, the Group’s profit before income
tax and exceptional items of S$20.7 million was an
increase of 25.4% from S$16.5 million in FY2014. If the
exceptional items are excluded, the Group would have
recorded a 25.9% increase in PATMI to S$15.2 million in
FY2015, compared to S$12.1 million in FY2014, as both
the Mechatronics and IMS Divisions registered higher net
profit contributions.
Frencken also continues to exhibit a sound financial
position. At the end of FY2015, the Group had cash and
cash equivalents of S$14.7 million and a relatively low
net debt-to-equity ratio of 18.3%. Shareholders’ equity
amounted to S$203.6 million, which is equivalent to a net
asset value of 50.3 cents per share.
Since listing on the SGX-ST in 2005, the Group has
consistently paid an annual dividend of at least 30% of
net profit attributable to equity holders. For FY2015, the
Board of Directors has recommended to pay a first and
final tax-exempt (one-tier) dividend of 0.75 cent per share,
which translates into a pay-out ratio of approximately
33%. Upon approval by shareholders at the forthcoming
Annual General Meeting on 28 April 2016, the dividend
will be paid on 13 May 2016.
Outlook and Strategy
Looking ahead, the operating environment in the high-
technology manufacturing sector is expected to be
challenging in 2016. Due to the uncertainty hanging over
the global economy, end-users in the key markets that the
Group serves are likely to maintain a cautious approach.
Notwithstanding these headwinds, our management’s
goal for FY2016 is to set the Group on the path towards
delivering profitable growth in coming years. To achieve
this, the Group will be focusing on operational strategies to
attain execution excellence at our two business divisions.
At the same time, the Group plans to continue working on
initiatives to leverage our global presence, optimise and
right-size our organizational structure as well as stream-
line our operations.
The Mechatronics Division made progress on several
fronts as it continued to strengthen existing customer
relationships, secure new customers, improve its
technological know-how and launch new products. Despite
the difficult macroeconomic backdrop, the division has
been steadily gaining recognition in the high-technology
capital equipment sector for its global capabilities to
provide support for global customers to address their
target markets. For FY2016, the Mechatronics Division’s
focus will be on rolling out initiatives to gain additional
strategic customers and sales, as well as further enhance
its execution capabilities and cost efficiencies with the aim
of raising customer satisfaction and improving margins.
