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2Q FY2009 Results Briefing

FrenckenFrencken Group LimitedGroup Limited

2Q FY20092Q FY2009Results PresentationResults Presentation

International Contract Manufacturer to CapitalEquipment and Consumer Industries

International Contract Manufacturer to CapitalInternational Contract Manufacturer to CapitalEquipment and Consumer IndustriesEquipment and Consumer Industries

14 August 200914 August 2009

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New Group Operating StructureNew Group Operating Structure

Financial ReviewFinancial Review

2Q092Q09

1H091H09

Business Review and OutlookBusiness Review and Outlook

MechatronicsMechatronics DivisionDivision

EMS DivisionEMS Division

Questions and AnswersQuestions and Answers

AGENDA

Frencken Group Limited

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New Group Operating Structure


Frencken Group LimitedFrencken Group Limited

Mechatronics Division

Asia

Group operating structure following acquisition of ETLA in May 2009

Frencken Europe B.V.Frencken Europe B.V.

FrenckenMechatronics B.V.

Machinefabriek Gebrs.Frencken B.V.

Optiwa B.V.

Europe

ETLA LimitedETLA Limited

Frencken Mechatronics(M) Sdn.Bhd.

ETLA Technologies(Wuxi) Co., Ltd.

EMS Division

Precico Group Sdn. Bhd.Precico Group Sdn. Bhd.

Precico ElectronicsSdn. Bhd.

Precico Sdn. Bhd.

Merit Process Sdn. Bhd.

ETLA LimitedETLA Limited

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2Q09 Results – Financial Overview


• Attributable to negative goodwill from

acquisition of ETLA Group of

• Excluding negative goodwill, net loss was

S$72,000

Net profitNet profit

• In the short term, limited options to align costs to

lower capacity utilisation

• Shift in sales mix

Gross ProfitGross Profit

• Negative goodwill gain has no impact on cash flow

• Cash flow remains healthyNet Cash GeneratedNet Cash Generatedfrom Operationsfrom Operations

• First time consolidation of ETLA Group

(1 month contribution in June 2009 only)

• Slow down across all segments as economy

remains subdued

30%

67%

S$4.7m

230%

RevenueRevenue

S$13.4mil

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6.5

4.7

3.3

3.5

0.9

3.1

3.7

4.1

Others

Automotive

Office

Automation

Telco (Keypad &

Others)

MECHATRONICS (S$ m)

2Q09 - Division Revenue Analysis

EMS (S$ m)

0.0

3.5

11.6

16.8

8.5

3.5

9.7

8.6

3.2

4.0Others

Industrial

Automation

Analytical

Medical

Semiconductor

N. M.N. M.

59%59% 37%37%

2Q08 2Q09Mechatronics

EMS

14%14%


42%42%

26%26%

21%21%

13%13%

71%71%

* N.M. – Not Meaningful

BackBack

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13.4Negative Goodwill

30.3Provisional Fair Value of Net Assets Acquired

16.9

3.0Attributable Expenses

13.9Issued 71,471,067 shares @ S$0.195

Acquisition Consideration

(S$ m)

Acquisition of ETLA – Negative Goodwill


BackBack

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157%5.113.1Profit Before Tax

(67%)8.12.6Gross Profit (GP)

230%4.013.4Net Profit

(30%)58.440.8Revenue

Chg y-o-y2Q082Q09(S$ m)

2Q09 – P&L Snapshot



N.M.20.9%N.M.Effective Tax Rate

(103%)6.9%(0.2%)NP Margin before negative goodwill

(102%)

N.M.

230%230%

4.04

-

4.044.04

(0.07)

13.43

13.3613.36

Analysis of Net Profit

Net Profit before negative goodwill

Negative goodwill

Net Profit after negative goodwillNet Profit after negative goodwill

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Frencken Group Limited2Q09 – P&L Snapshot

18.0

40.4

11.8

5.9

23.1

Division Revenue

2Q08 2Q09

Mechatronics(Europe)

2Q08 2Q09

EMS

2Q08 2Q09

Mechatronics(Asia)

0.9

3.2

-0.9

0.60.1

Division Net Profit*

97%

2Q08 2Q09


2Q08 2Q09

EMS

2Q08 2Q09

Mechatronics(Asia)

194%

*Note: Excludes Investment Division & Negative Goodwill

43%

34%

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1H09 – P&L Snapshot


22%11.113.5Profit Before Tax

(70%)17.75.4Gross Profit (GP)

60%8.413.5Net Profit

(34%)120.179.6Revenue

Chg y-o-y1H081H09(S$ m)


(99%)

N.M.

60%60%

8.44

-

8.448.44

0.05

13.43

13.4813.48

Analysis of Net Profit

Net Profit before negative goodwill

Negative goodwill

Net Profit after negative goodwillNet Profit after negative goodwill

(25%)23.9%18.0%Effective Tax Rate

(99%)7.0%0.1%NP Margin before negative goodwill

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1H09 – Group Revenue Analysis


6.5

6.2

7.8

14.7

7.0

0.0

24.8

33.4

19.75.9

16.9

3.2

6.9

7.9

7.3

5.6

2.3

23.5

Others

Automotive

Office Automation

Telco (Keypad & Others)

Others

Industrial Automation

Analytical

Medical

Semiconductor

Breakdown by Business Segment

4%

MECHATRONICS (S$ m)

EMS (S$ m)

Breakdown by Division:Mechatronics – 71%EMS – 29%

Medical

Semiconductor

Telco (Keypad &Others)

Automotive

Office Automation

30%

10%

9%

7%

Analytical

21%

70%70%

Others

3%

Others

9%

IndustrialAutomation

7%

30%30%

32%32%

1%1%

N.M.N.M.

47%47%

7%7%

13%13%

62%62%

1H08 1H09Mechatronics

EMS


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1H09 – P&L Snapshot


35.1

84.9

23.1

5.9

50.6

Division Revenue

1H08 1H09


1H08 1H09

EMS

1H08 1H09

Mechatronics(Asia)

8.0

0.70.8 0.6

-1.3

Division Net Profit*

1H08 1H09


1H08 1H09

EMS

1H08 1H09

Mechatronics(Asia)

*Note: Excludes Investment Division & Negative Goodwill

40%

34%

90%

300%

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Working Capital Management


14.3

31.5

43.2

30 Jun09

19.9Trade Payables *

41.6Trade Receivables *

46.0Inventories *

31 Dec08

(S$ m)

128131

9991

30 Sep 08 31 Dec 08 31 Mar 09 30 Jun 09

113110

8687

7782

6776

62

6154

72

50

100

150

30 Sep 08 31 Dec 08 31 Mar 09 30 Jun 09

Cash Conversion Cycle (Days) *

Turnover Days *

Payables

Receivables

Inventories

2.9

1.8

4.7

Q209

3.7Free cash flow

0.8Capital expenditure

4.5Net cash flow fromoperations

Q208(S$ m)

Cash Conversion Cycle (Days) = Days sales outstanding + Days inventoryoutstanding – Days payables outstanding

* Excluding ETLA Group

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Frencken Group LimitedStrong Balance Sheet

179.7201.8Shareholders’ equity

0.231.1Total borrowings

45.850.9Total cash and cashequivalents

39.745.6Cash and cash equivalents

6.15.3Short-term funds with afinancial institution

31 Dec08

30 Jun09

Balance Sheet (S$ m)

0.4%15.4%Gross gearing (%)

2.77

2.77

0.02

4.19

EPS (S$ cents)

- Before negative goodwill

- After negative goodwill

58.4953.65Net asset value per share(S$ cents)

YTDJun 08

YTDJun 09

Financial Indicators

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EMS Division

MechatronicsMechatronics DivisionDivisionBusiness Review & OutlookBusiness Review & Outlook

Business Review & Outlook


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5.9

141.6157.3

171.3

50.6

FY2006 FY2007 FY2008 1H09

23.1

5.927.5

34.3

38.140.4

2Q08 3Q08 4Q08 1Q09 2Q09

Sales


Currency: SGD million

Mechatronics Europe

Mechatronics Asia

1 month revenue contribution fromAsia operations

Sales from Europe operations waslower by 43% y-o-y and 16% q-o-q

2Q09 Review

• Sales declined 28% y-o-y but rose5% q-o-q

• Global demand for capitalequipment remained weak

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Net Profit and Net Profit Margin


12.9

18.9

15.2

FY2006 FY2007 FY2008 1H09

Asia net profit margin : 9.7%

Europe net profit margin : 0.4%

Europe net profit margin : 1.6%

Asia net profit margin : 9.7%

Division Net Profit: -79%Currency: SGD million

0.6*

0.1

Mechatronics Asia

Mechatronics Europe

NP margin 7.9% 8.3% 5.3% 2.7% 2.3%

0.6*

0.8

NP margin 10.7% 11.0% 8.2% 2.5%

0.7

1.8

3.23.2

2Q08 3Q08 4Q08 1Q09 2Q09

*For the month of June 2009

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Sales Analysis – Medical Segment


9.56

13.78

16.4018.00

16.78

2Q08 3Q08 4Q08 1Q09 2Q09

23.4

67.8

57.7

42.5

FY2006 FY2007 FY2008 1H09


2Q09 Review

• Sales declined 42% y-o-y and 30% q-o-q dueto continuous depressed market conditions

Europe

• Sales was lower by 43% y-o-y and 31% q-o-q

• Lower sales to an existing customer as wellas the continued delay in the marketintroduction of a new product for anexisting customer

Asia

• Starting from a low base with emergingbusiness potential for the Singapore andChina operations

• Engaging in the imaging and in-vitrodiagnostic product segment

0.13*

0.1*


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Sales Analysis – Semiconductor Segment


Europe

• Sales down 65% y-o-y but up 24% q-o-q

• No significant increase in 2Q09 due tocontinued depressed market conditions

Asia

• Revenue derived mainly from back-endsemiconductor equipment which saw someincrease in orders

8.53

5.64

3.58

2.382.95

0.57

2Q08 3Q08 4Q08 1Q09 2Q09

5.3

29.0

55.8

47.4

FY2006 FY2007 FY2008 1H09


2Q09 Review


• Growth impacted by prolonged cyclical downturnof semicon equipment industry

• Includes one month contribution from Asiaoperations

0.6


*

*

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Sales Analysis – Analytical Segment


Europe

• Sales down 33% y-o-y and 7% q-o-q

• Slight decline from 1Q09 due to the impactof adverse market conditions and changein product mix of an existing customer

Asia

• Growing sales contribution of this productsegment from the Singapore operations

• In line with product segment diversificationefforts

11.65 11.5210.96

8.357.79

0.81

2Q08 3Q08 4Q08 1Q09 2Q09

16.1

47.345.6

37.3

FY2006 FY2007 FY2008 1H09

2Q09 Review:


• Sales growth impacted by adverse marketconditions and change in product mix

• Slight growth in sales due to inclusion of onemonth contribution of Asia operations


0.8


*

*

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Sales Analysis – Industrial Automation Segment

Mechatronics Division (Asia)

Asia

• New business segment

• Sales contribution mainly from datastorage and pharmaceuticalpackaging equipment

• While sales for June 09 was high, thissegment is subject to high volatilityfrom month to month.

3.21

2Q09

3.2

1H09


2Q09 Review


*

*

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New Project Plans


Analytical

Semiconductor

Medical

MechatronicsEurope

• New development project formarket introduction targeted formid 2010

•Ongoing development project - commercialproduction expected by 4Q09

•Ongoing design & developmentproject for lithography equipment

•New project for next generationdual lane automated PCB assembly

•Ongoing engagement in next generation

(EUV) Lithography tools

•2 new development projects –commercial productionanticipated in 2010

•Redesign project for enhancement of an existingproduct

Analytical

Semiconductor

Medical

MechatronicsAsia

•Ongoing qualification of new parts and modulesfor customer’s new product transfer to Singapore

•Commenced qualification of a range ofmodules for an existing customer

•Engaging in prototype parts of 2new diagnostic products forcustomer’s design centres inEurope and USA

• Increasing production in Wuxi, China ofimaging modules in 2H09 for an existingcustomer

• Increasing volume production of parts ofexisting in-vitro diagnostic product to beassembled in the USA

Ind Automation •Development projects for new automationstations for an existing customer

•Advanced evaluation stages ofnew project for sheetmetalmodules for a new customer

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Strategic Initiatives


Strategic Initiatives

Market Segments

• Accelerate and enhance design and development capability and capacity in Europe tosupport the enlarged manufacturing facilities in Asia

• Strengthen New Product Introduction (NPI) team in Asia for smooth transfer of projects fromcustomers and also within the Group

• Accelerate sales expansion opportunities via strategic partnerships with existing and newcustomers by leveraging the Group’s value chain proposition and enlarged geographicalfootprint

• Strengthen overall manufacturing capability in Asia to capitalise on new opportunities in key andemerging markets

• Build up global sourcing, procurement and total supply chain – seek out best value componentsand strategic suppliers worldwide to enhance Group’s overall competitiveness

Medical

Analytical

Semiconductor


Others – such as energy and environment

Medical

Analytical

Semiconductor


Others – such as energy and environment

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EMS Division

EMS DivisionEMS DivisionBusiness Review & OutlookBusiness Review & Outlook

EMS DivisionBusiness Review & Outlook

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182.1165.1

54.0

161.3

FY2006 FY2007 FY2008 1H2009

42.547.2

34.0

25.928.1

2Q08 3Q08 4Q08 1Q09 2Q09

-3.0

5.19.7

27.5

-2.0-1.0

-0.3

3.82.2

Net Profit Margin

2Q08 5.2%

3Q08 8.1%

4Q08 -0.9%

1Q09 -4.0%

2Q09 -7.1%

EMS DivisionSales and Net Profit

Net Profit Margin

FY2006 15.1%

FY2007 5.9%

FY2008 3.2%

1H2009 -5.6%

Revenue: -34%

Net Profit: -190%

Revenue

Net profit

Currency: RM million

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Sales Analysis – Keypad Segment

EMS Division

122.1

84.1

58.3

15.8

FY2006 FY2007 FY2008 1H09

8.127.71

10.10

18.17

13.71

2Q08 3Q08 4Q08 1Q09 2Q09

-41%


+5%

2Q09 Review:

• No significant recovery in 2009

• Order visibility remains very shortwhile volatility remains high

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22.5

29.2

37.9

17.4

FY2006 FY2007 FY2008 1H09

8.958.44

9.4610.01

11.33

2Q08 3Q08 4Q08 1Q09 2Q09

Sales Analysis – Office Automation Segment

EMS Division


-21%

+6%

2Q09 Review:

• Growth hampered by depressedmarket conditions

• Delay in the commercial productionof a new industrialisation project

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Sales Analysis – Automotive Segment

EMS Division

6.3

17.4

32.2

13.5

FY2006 FY2007 FY2008 1H09

7.39

6.135.59

11.41

8.60

2Q08 3Q08 4Q08 1Q09 2Q09

-14%


+21%

2Q09 Review:

• Some increase in orders seen forproducts destined for the USA market

• Improving order inflow but stillsignificantly below original projections

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Project Plans

EMS Division

Keypad •Production capacity realigned and capped atapproximately 50% of FY2008 level

•Continue to experience delays innew model/project launches

Office

Automation

•Commercial production of one major ongoingindustrialisation projects to commence in late 3Q09 –albeit at a lower quantity

•The other project remains on track for commercialproduction in 4Q09

•Commencement of a newindustrialisation project in 3Q09with target for commercialproduction in mid 2011

Automotive •Commercial production of two new module assemblyprojects commenced in early 3Q09 – but turnover willnot be significant until early 2010

•New industrialisation project in thepipeline with tooling launchexpected at the end of FY2009and target commercial productionin 2Q 2011

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Safe Harbour for Forward-Looking Statements

ElectroTech Investments Limited

This presentation contains certain statements that are not statements of historical fact, i.e. forward-looking statements. Investors can identifysome 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 that these words are not the exclusive means of identifying forward- looking statements.These forward-looking statements are based on current expectations, projections and assumptions about future events. Although FrenckenGroup Limited believes that these expectations, projections, and assumptions are reasonable, these forward-looking statements are subject tothe risks (whether known or unknown), uncertainties and assumptions about Frencken Group Limited 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 we conduct business or expectto 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 our customers’ industries 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 not occur and actual resultsmay differ materially from those expressly or impliedly anticipated in these forward-looking statements. Investors are advised not to placeundue 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. Frencken Group Limited’sbusiness, financial conditions, results of operations and prospects may have changed since that day. Frencken Group Limited has noobligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except asrequired by law.

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ThankThank YouYou

Frencken Group LimitedEnd of Presentation

Investor Relations ContactOctant Consultingtel (65) 6220 [email protected] or [email protected]

Frencken Group LimitedPlot 410, Lorong Perusahaan 8BPrai Industrial EstatePrai 13600, MalaysiaWebsite : www.electrotechgroup.com

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