UMS Holdings Limited

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First Quarter Results Financial Statement And Related Announcement

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Consolidated Income Statement

Consolidated Statement of Comprehensive Income

Consolidated Statement of Comprehensive Income

A statement of financial position

Balance Sheet

Review Of Performance

Financial Review


Revenue for the three months ended 31 March 2018 ("1Q2018") dipped by 10% from S$41.8 million a year ago ("1Q2017") to S$37.5 million. This was due to a 9% dip in revenue from its semiconductor business while sales from its "Others" segment fell 44%. Most of the Group's revenue are denominated in USD and the average exchange rate in 1Q2018 was about 7% lower than that in 1Q2017.

On a sequential basis, revenue in the semiconductor segment for 1Q2018 was stable - easing by just 1% as compared to 4Q2017 while revenue in "Others" segment shrunk by 58% during the period due mainly to lower sales from its water solutions engineering subsidiary, Kalf Engineering Pte Ltd.

Within the semiconductor segment, revenue from Semiconductor Integrated Systems fell 24% to S$18.4 million in 1Q2018 from S$24.2 million in 1Q2017; while revenue from component sales rose by 12% to S$18.7 million vs S$16.7 million in 1Q2017.

Geographically, 1Q2018 revenue in Singapore was lower by 24% as compared to 1Q2017 mainly due to weaker Semiconductor Integrated System sales; while 1Q2018 revenue in US rose 47% as compared to 1Q2017 - driven by higher component sales for new system built. Revenue from Taiwan also increased 16% vs 1Q2017 on the back of higher component spares sales while those in Other regions fell 80% as a result of lower component sales to a customer in China.


Net profit of the Group remained stable at S$11.3 million - up 1% from 1Q2017 - despite lower Group revenue.

The Group's gross material margin in 1Q2018 jumped to 57% from 51% in 1Q2017 as it benefitted from higher component sales vs Integrated Systems sales. Component sales enjoy a higher margin compared to Integrated Systems sales.

The improved gross margin reflects the Group's success in growing its component business to boost its bottom line.

The Group has also slashed its income tax expense by 30% as it booked more profits in its Malaysian subsidiary which enjoys Pioneer Tax incentive in Malaysia. Depreciation charges went down by 9% as some of its fixed assets were fully depreciated. Rental fees were cut by 46% as UMS shifted more of its operations to Malaysia.

The Group also registered a maiden profit contribution of S$16,000 from its newly acquired associate - Catalist-listed JEP Holdings Ltd.

Some of the Group's expenses went up. Personnel costs rose as headcount grew and legal and professional fees increased 38% - arising from the higher sales commission paid to the Group's sales consultant.

Other expenses decreased 6% over last year mainly due to lower upkeep of machinery expenses.

Other charges remained relatively flat at S$1 million mainly due to exchange losses following the depreciation of US dollar against the Singapore dollar during the quarter.

Profits attributable to shareholders edged up 2% to S$11.4 million in 1Q2018 vs $11.2 million in 1Q2017.


UMS continued to generate strong cash flow of $15.2 million in net cash from operating activities and $12.0 million in free cash flow in 1QFY2018.

Bank borrowings were pared down by $2.0 million. The Group's net cash and cash equivalents remained healthy at S$23.8 million as of 31 Mar 2018.

During 1Q2018, the Group made an investment of S$28.2 million for a 28.6% stake in Catalist-listed JEP Holdings Ltd in line with its diversification strategy.


The Group's prospects remain bright in 2018 because of sustained high demand in orders from its key customer. The global semiconductor industry is predicted to continue its strong growth trajectory despite challenges to world economies posed by the ongoing US-China trade dispute.

Total global fab tool spending will increase 9 percent to reach more than $62 billion this year, according to the latest forecast from SEMI, the global industry association serving the manufacturing supply chain for the electronics industry. Spending on tools is forecast to rise an additional 5 percent in 2019, which would mark the fourth straight year of spending increases. (Source: Chip Equipment Sales Remain Strong, SEMI (March 28, 2018))

Going forward, the Group will forge ahead with its expansion plans. It will continue to improve the performance of its Malaysian associate, Allstar Manufacturing Sdn Bhd ("Allstar") as operations will go through restructuring with UMS taking a more active role.

In March 2018, the Group signed an MOU to acquire a 70% stake in a non-ferrous metal alloys specialist, Starke Singapore Pte Ltd. Due diligence is in progress and the acquisition will be funded by internal resources.

This proposed acquisition is in line with UMS' strategy to strengthen its upstream integration, to reap cost savings and enhance business and operational synergies within the Group to achieve a more efficient supply chain to serve global customers.

Barring any unforeseen circumstances, prospects remain bright for FY2018.