1H18 Results Presentation 29 January 2018 perfect parts and tools, - PowerPoint PPT Presentation

1H18 Results Presentation 29 January 2018

perfect parts and tools, on time, every time Business & Industry Chris Borch, CEO Low Ming Wah, COO 2 Micro-Mechanics 1H18 Results Presentation

Corporate Overview • Founded in 1983 in Singapore • Design and manufacture high precision tools and parts used in process-critical applications for the wafer- Our Mission is… fabrication and assembly processes of the semiconductor industry Perfect Parts and Tools On • Serve a worldwide base of customers from five facilities in Time, Every Time Asia (Singapore, Malaysia, China, Philippines) and the USA • More than 600 active customers Based on Scalable, Repeatable and Cost-Effective Processes • Listed on the Singapore Exchange (Main Board) since 2003 • Committed to generating shareholder returns 3 Micro-Mechanics 1H18 Results Presentation

Business Model HIGH PRECISION, PROCESS-CRITICAL Parts and Tools for Semiconductor Industry Proprietary consumable tools used Contract manufacturing of precision in the assembly and testing of parts used in process-critical semiconductors , such as die-attach applications for the wafer and wirebonding tools fabrication industry PRODUCTS IDMs, Semiconductor assembly Leading wafer fabrication and test service providers equipment manufacturers CUSTOMERS HIGH PRECISION AND QUALITY | SHORT CYCLE TIME | | WORLDWIDE SUPPORT | VALUE > COST CUSTOMER VALUE 4 Micro-Mechanics 1H18 Results Presentation

Strategy - Focus on Key Customer Outcomes End-user market demands flow through our Semiconductor Customers to Us SEMICONDUCTOR MARKET CUSTOMERS Mobility + Performance “On-demand! Wafer Fab & Chip Low Cost!” CONSUMER Assembly Miniaturization + Reliability + Precision + KEY CUSTOMER OUTCOMES Flawless Quality + DESIGN Align to customer (and market) needs Scalability DELIVERY On time, Every time in Less time PRECISION Finer features, smaller tolerances RELIABILITY Flawless Quality, 0 PPM COST Globally Competitive; Price < Value 5 Micro-Mechanics 1H18 Results Presentation

Strategy - Focus on Key Customer Outcomes NANO PRECISION - the “Nano” world of semiconductor manufacturing MICRO-MECHANICS : CUSTOMERS’ Prepared for “Nano” world Requirements for with Capital and Tools & Parts Engineering Resources The “NANO” world of semiconductor Smaller features with MORE COMPLEX manufacturing tighter tolerances design and manufacturing Greater precision CONTINUOUSLY DEVELOP (Higher repeatability) advanced machining processes Towards zero defect SUPPORTING PROCESSES Trend: Devices < 10 – new materials, testing, nanometers Micro-cleanliness cleaning & packaging Human hair = 100,000 nanometers 6 Micro-Mechanics 1H18 Results Presentation

Industry Review Global Monthly Chip Sales (US$ B) YOY Growth 40.0 30% Worldwide chip sales in November 2017 reached • the highest-ever monthly sales of US$37.7 billion 35.0 25% 30.0 20% Global semiconductor sales for the five-month • period from July to November 2017 increased 25.0 15% 22.6% , compared to the same period in 2016 20.0 10% World Semiconductor Trade Statistics (WSTS) • 15.0 5% expects worldwide chip sales to reach a record US$408.7 billion in 2017, up 20.6% from 2016 10.0 0% WSTS projects semiconductor sales to increase • 5.0 -5% another 7% in 2018 0.0 -10% Source: Semiconductor Industry Association 7 Micro-Mechanics 1H18 Results Presentation

Industry Review Three-month average of worldwide billings of North American equipment manufacturers (US$ B) YOY Growth 2.5 80% 70% 2.0 60% 50% 1.5 40% 1.0 30% 20% 0.5 10% 0.0 0% Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 SEMI projects 35.6% increase in worldwide sales of new semiconductor manufacturing equipment Sales to reach US$55.9B in 2017, exceeding previous • Source: SEMI market high of US$47.7B in 2000 Expects 7.5% sales growth in 2018 • 8 Micro-Mechanics 1H18 Results Presentation

1H18 Results Snapshot RECORD FIRST-HALF NET RECORD FIRST-HALF HIGHER GROSS PROFIT PROFIT REVENUE MARGIN S$9.1M S$33.3M 58.7% 34.6% 21.1% 2.3ppt MARKET CAPITALISATION ZERO BORROWINGS INTERIM DIVIDEND S$333.7M S$22.4M 4.0 cents 22 JAN 2018 IN CASH PER SHARE 9 Micro-Mechanics 1H18 Results Presentation

Dividend Performance HIGHER INTERIM DIVIDEND OF 4 CENTS PER SHARE FOR 1H18 Total dividend payout since listing - 57.9 CENTS per share DIVIDEND PER SHARE (CENTS) 8.0 6.0 5.0 5.0 5.0 4.0 3.5 3.0 3.0 3.0 3.0 3.0 2.4 2.0 Special dividend 1.2 0.8 Final dividend Interim dividend DIVIDEND PAYOUT RATIO FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 29% 35% 61% 63% 83% 78% 513% 87% 61% 99% 81% 54% 58% 70% 75% Dividend Policy of Not Less Than 40% of Earnings* 10 Micro-Mechanics 1H18 Results Presentation *subject to Board approval and expected capital requirements

perfect parts and tools, on time, every time Financial Review Chow Kam Wing, CFO 11 Micro-Mechanics 1H18 Results Presentation

1H18 in Review 1H18 P&L Overview (S$ million) KEY RATIOS & STATISTICS 33.3 REVENUE GROWTH 21.1% GROSS PROFIT GROWTH 26.0% 13.8 PBT GROWTH 32.7% 19.5 0.3 NET PROFIT GROWTH 34.6% 8.3 GROSS PROFIT MARGIN 58.7% 11.6 9.1 2.6 NET PROFIT MARGIN 27.2% EARNINGS PER SHARE 6.53 cents 0 31.7% RETURN ON EQUITY (annualised) CASH S$22.4M DEBT Zero FY: Financial year ending 30 June N.B. Due to rounding, some totals may not correspond with the sum/subtraction of separate figures. 12 Micro-Mechanics 1H18 Results Presentation

Group Revenue RECORD FIRST-HALF REVENUE IN 1H18 Group Revenue Global Chip Sales (S$ mil) Trend (US$B) 4-YEAR REVENUE 70 380 CAGR : 10% 57.2 60 330 52.2 51.3 15.4 50 43.9 12.9 280 13.0 21.1% 1H18 REVENUE 39.2 40 11.7 33.3 10.3% 2Q18 REVENUE 14.2 230 10.8 13.4 12.5 30 10.6 15.6 Higher sales in Singapore, the Philippines, • 9.2 180 4Q China and the USA in 2Q18 vs 2Q17 14.2 12.2 12.9 20 3Q 10.5 2Q18 revenue would have been higher if 9.3 • 2Q 130 not for the translational impact of the 10 17.7 1Q 13.6 13.4 13.0 depreciation of the US dollar and the 11.1 9.9 Philippine Peso by 2.6% and 7.1% 0 80 respectively against the SGD FY2013 FY2014 FY2015 FY2016 FY2017 1H18 Global Chip Sales Trend according to FY. Data from Semiconductor Industry Association (SIA) N.B. Due to rounding, some totals may not correspond with the sum of separate figures. 13 Micro-Mechanics 1H18 Results Presentation

Group Revenue DIVERSIFIED REVENUE STREAMS Sales Breakdown for 1H18 Sales Breakdown for 2Q18 Japan, 2% Japan, 2% Europe, 4% Europe, 4% Taiwan, 7% Taiwan, 6% Rest of Rest of world, 3% world, 2% USA, 17% USA, 19% Singapore, Singapore, 9% 9% Philippines, Philippines, 10% 10% Malaysia, Malaysia, Thailand, 2% 19% 19% Thailand, 2% China, 28% China, 26% TOP 3 MARKETS 1H18 1H17 2Q18 2Q17 Country % change Country % change S$ mil S$ mil S$ mil S$ mil China 9.3 7.1 31% China 4.1 3.6 14% Malaysia 6.4 6.1 5% Malaysia 2.9 3.1 (4%) USA 5.7 3.9 45% USA 3.0 2.2 34% 14 Micro-Mechanics 1H18 Results Presentation

Gross Profit Margin Gross Margin STEADY GROSS PROFIT MARGIN 60.9% 55.0% 56.9% 57.4% 57.3% 55.4% 56.1% 49.1% 50.7% Higher GP margin y-o-y attributed to • higher capacity utilisation, as well as cost, productivity and cycle time improvements Gross profit margin is one of the results that matters most – It reflects the value we help to create for our customers , and our ability to develop and deliver a cost-effective outcome FY2013 FY2014 FY2015 FY2016 FY2017 1Q17 2Q17 1Q18 2Q18 15 Micro-Mechanics 1H18 Results Presentation

Profitability RECORD FIRST-HALF NET PROFIT IN 1H18 Net Profit After Tax Net Profit Operating Expenses / Revenue (S$ mil) Margin 2Q18 24.6% 30.0% 25 27.2% FY2017 25.1% 25.8% FY2016 26.2% 23.2% 25.0% 23.0% 20 FY2015 25.5% FY2014 28.5% 20.0% 17.6% 14.8 15 FY2013 31.4% 12.0 11.9 4.6 15.0% 13.1% 0% 5% 10% 15% 20% 25% 30% 35% 2.8 2.9 9.1 Operating Expenses - Administrative, distribution and 10 other operating expenses (inclusive of other income) 7.7 3.5 10.0% 2.7 3.9 3.7 2.4 5.1 Return on Equity 4Q 3.4 2.7 5 1.5 1.8 2.7 5.0% 40% 3Q 1.4 1.4 31.7% 5.2 3.6 2Q 1.0 3.4 2.8 27.0% 2.1 25.6% 23.7% 1.2 30% 1Q 0.0% 0 FY2013 FY2014 FY2015 FY2016 FY2017 1H18 18.8% 20% 13.5% 34.6% 1H18 PROFIT 10% 16.1% 2Q18 PROFIT 0% FY2013 FY2014 FY2015 FY2016 FY2017 1H18 N.B. Due to rounding, some totals may not correspond with the sum of separate figures. 16 Micro-Mechanics 1H18 Results Presentation

Cash Flow CASH-FLOW GENERATIVE OPERATIONS Track record of healthy net cash from operating activities CAPEX (S$ mil) (S$ mil) 20 20 18.1 18 18 16.3 16 16 14.1 14 14 FY2018 Capex Budget 11.9 12 12 S$10M 10.8 10 10 8.8 4.0 8 8 6.6 5.1 6 6 4.9 4.1 6.0 4 4 2.6 2 2 0 0 FY2013 FY2014 FY2015 FY2016 FY2017 1H18 FY2013 FY2014 FY2015 FY2016 FY2017 1H18 17 Micro-Mechanics 1H18 Results Presentation