Operating and Financial Review

extracted from the Annual Report 2024

Operational Review

In FY2024, the Group demonstrated a remarkable recovery, achieving an 86.6% increase in net attributable profit to S$3.1 million, with revenue of S$56.9 million. This strong performance was driven by a robust rebound in global aviation demand, along with the Group’s strategic efforts to enhance cost management and operational efficiency. While the semiconductor sector remained challenging due to ongoing demand fluctuations, the Group’s diversified approach and targeted investments in core business areas allowed it to successfully navigate these challenges. As a result, the Group improved its financial position and solidified its market position for sustainable growth.

The Group’s profit before tax increased by 72.8% to S$3.6 million, compared to S$2.1 million in FY2023. This increase was driven by improved profit margins and a foreign exchange gain of S$1.0 million. However, revenue declined by 2.1% due to the global slowdown in semiconductor demand, particularly impacting the Equipment Manufacturing and Trading & Others segments. Despite these challenges, the Group maintained profitability across all business segments, demonstrating resilience, adaptability, and a strategic focus on strengthening core operations.

The Group’s financial performance was further enhanced by its disciplined approach to cost management. This proactive strategy helped mitigate the impact of lower revenue from specific segments, resulting in reduced cost of sales and selling expenses. Consequently, the Group delivered a stronger bottom line. The Group’s commitment to operational efficiency and resource optimization continued to be key pillars supporting its financial health and profitability.

Precision Machining

The Precision Machining segment was one of the standout performers in FY2024. Revenue in this segment increased by 17.4% to S$34.2 million, up from S$29.1 million in FY2023. This growth was primarily driven by a 16.0% increase in aerospace sales, which reached S$26.3 million. This performance was bolstered by the ongoing recovery in the global aerospace sector, particularly the surge in air travel and rising demand for aircraft. These trends provided a solid foundation for the Group to expand its market share in the aerospace industry.

The surge in air travel will drive strong demand for new aircraft. According to Airbus’s regional market forecast, has forecast that the Asia-Pacific aviation sector will require 19,500 new aircraft over the next 20 years. This represents 46% of the global requirement, which is expected to reach around 42,430 new aircraft by 2043.¹

The electronic components business within the Precision Machining segment also performed well, posting a revenue increase from S$6.3 million in FY2023 to S$7.8 million in FY2024. This was driven by steady demand for key electronic components. Overall, the Precision Machining segment contributed significantly to the Group’s top-line growth and profitability, positioning it as the primary revenue driver.

Equipment Manufacturing

The Equipment Manufacturing segment encountered challenges in FY2024, with sales declining by 25.9% to S$14.7 million, down from S$19.9 million in FY2023. This decline was primarily due to reduced global demand for semiconductors, adversely impacting the segment’s performance. Despite the weaker demand, the segment remained profitable, posting a modest profit of S$0.1 million, though this was a decrease from S$0.6 million in the prior year.

In response to market dynamics, the Group is strategically shifting its focus from back-end to frontend semiconductor manufacturing processes. This transition aims to better align with evolving customer needs and industry trends. By enhancing front-end manufacturing capabilities, the Group seeks to improve product quality and performance, reduce production costs, and strengthen its competitive position in the semiconductor industry.

According to Deloitte, the semiconductor industry is set for a much better 2025, with projected sales reaching US$697 billion, representing an 11.2% year-overyear growth.² By strategically focusing on front-end manufacturing, the Group aims to capitalize on these industry trends and position itself for sustainable growth in the evolving semiconductor market.

Trading and Others

The Trading & Others segment maintained a relatively stable performance in FY2024, with a slight revenue decrease of 12.6% to S$8.0 million. Despite the dip in sales, the segment remained profitable, contributing S$1.2 million in profit compared to S$1.3 million in FY2023. The Group’s proactive strategy to explore new markets and diversify its customer base enabled this segment to maintain profitability, despite weaker global demand for industrial manufacturing equipment.

The Group’s focus on expanding its product offerings and increasing market reach is expected to continue driving growth in this segment, particularly as it navigates challenges in the broader industrial equipment market. The Group remains committed to further strengthening its trading operations and exploring new business opportunities in emerging markets.

Financial Review

Financial Performance

In FY2024, the Group achieved a net attributable profit of S$3.1 million on revenue of S$56.9 million, representing an 86.6% increase in profit. Revenue remained relatively stable, declining by 2.1% from S$58.1 million in FY2023. Group profit before tax for the year increased by 72.8% to S$3.6 million from S$2.1 million in FY2023. The Group’s bottom line largely benefited mainly due to a foreign exchange gain of S$1.0 million, as well as the improved performance of its aerospace business.

Group revenue experienced a 2.1% decline, totalling S$56.9 million compared to S$58.1 million in FY2023. This decrease is largely due to subdued performances in the Equipment Manufacturing and Trading & Others segments, which were adversely affected by a slowdown in the semiconductor market during the year. In contrast, the Precision Machining segment remained resilient, with stable sales growth supported by stronger contributions from the aerospace and electronic components businesses compared to FY2023.

Geographically, the Group’s key markets showed a mixed performance, with sales rising in Malaysia, Canada, and other markets, while Singapore, China, and the USA posted lower revenue. Sales from Malaysia grew from S$4.9 million in FY2023 to S$7.0 million in FY2024, driven by growth in the Precision Machining and Trading & Others segments. Sales in Canada increased from S$2.6 million in FY2023 to S$2.8 million in FY2024, supported by higher sales in the Precision Machining segment. Sales from other markets also rose from S$2.5 million in FY2023 to S$2.8 million in FY2024.

In contrast, sales in Singapore declined from S$26.2 million in FY2023 to S$24.8 million in FY2024, primarily due to lower revenue from the Equipment Manufacturing and Trading & Others segments. Despite this decline, sales in Singapore still recorded the strongest performance in FY2024. Sales from China fell by 24.4%, from S$7.8 million in FY2023 to S$5.9 million in FY2024, mainly due to a decline in sales in the Trading & Others segment. Sales in the USA also decreased by 4.0%, from S$14.1 million in FY2023 to S$13.6 million in FY2024, driven by lower sales in the Equipment Manufacturing business. In FY2024, the Precision Machining segment delivered revenue growth across all markets.

The cost of sales decreased by 3.3% from S$49.6 million in FY2023 to S$47.9 million in FY2024. The gross margin increased by 1.0% compared to 14.8% in FY2023. This increase was attributed to the Group’s product mix.

Other operating income increased to S$2.1 million from S$0.8 million in FY2023 mainly attributed to gain on the disposal of property, plant and equipment, interest income, dormitory occupancy income and registering foreign exchange gain.

Selling expenses mainly comprise staff costs of the Group’s sales and marketing staff, outward freight, travelling and marketing expenses, and other related expenses. The expenses in FY2024 decreased by 15.4% as compared to FY2023.

Administrative expenses mainly comprise of staff costs, Directors’ fee and compensation, depreciation charge in relation to non-production assets, professional fees, and other office expenses. In FY2024, the increase of 8.4% was mainly due to retirement benefit, upkeep expenses of equipment, staff cost and depreciation expenses.

Finance costs remained relatively stable compared to FY2023, as the Group made loan repayments and reduced its borrowings to mitigate the impact of higher interest rates.

The Group recorded a total income tax expense of S$0.5 million in FY2024 compared to S$0.4 million in FY2023, the increase in the income tax expenses was due to higher profits made during the year.

Reflecting the Group’s performance, earnings per share (“EPS”) for FY2024 increased 86.5% to 0.757 cents from 0.406 cents in FY2023. The Group’s net asset value (“NAV”) per share edged up to 19.4 cents as of 31 December 2024 compared to 18.5 cents as of 31 December 2023.

Balance Sheet

Total non-current assets remained relatively constant compared to FY2023. This was due to additions to property, plant and equipment, net of depreciation of S$5.8 million.

Inventories increased by S$1.0 million from S$20.0 million as at 31 December 2023 to S$21.0 million as at 31 December 2024. The increase was mainly due to higher purchases was made during the year.

Trade and other receivables increased by S$4.7 million from S$16.1 million as at 31 December 2023 to S$20.8 million as at 31 December 2024. The increase was mainly due to fluctuations arising from business volume made by customers.

Trade and other payables increased by S$2.0 million from S$11.5 million as at 31 December 2023 to S$13.5 million as at 31 December 2024. The increase was mainly due to fluctuation arising from business volume made to creditors.

The Group total lease liabilities decreased by S$0.3 million from S$6.0 million as at 31 December 2023 to S$5.7 million as at 31 December 2024. The reduction was due to a repayment in relation of leased property, plant and equipment.

The Group total loans and borrowings decreased by S$17.7 million from S$18.5 million as at 31 December 2023 to S$0.8 million as at 31 December 2024. This decrease was mainly due to term loans repayment for Seletar Aerospace Park (“SAP”) and Loyang Building.

As announced on 24 May 2024, the Group entered into a loan agreement with its ultimate holding company, UMS Integration Limited, for S$13.0 million. This loan was used to fully repay the SAP term loan from DBS Bank Ltd. The reduction in the loan from the ultimate holding company was due to the repayment made during the period.

Deferred tax liabilities increased by S$0.1 million to S$4.9 million in FY2024 from S$4.8 million in FY2023 primarily due to deferred tax expenses arising from the origination and reversal of temporary differences.

Cash Flow

Net cash generated from operating activities increased by S$2.6 million from S$3.4 million in FY2023 to S$6.0 million in FY2024.

During the year, the Group incurred capital expenditure for the purchase of machinery, equipment, and progressive construction costs for its new factory in Penang, Malaysia.

Net cash used in financing activities was for the repayment of term loans and lease liabilities. The Group also pared down its loans - including full repayment of its bank loans for its properties at SAP and Loyang.

The Group’s financial position remained healthy with net cash and cash equivalents of S$12.6 million as of 31 December 2024.

Source: