Message from Executive Chairman
Dear Shareholders,
The financial year ended 31 December 2010 (“FY2010”) ranks as one of the most rewarding and transformational since our inception. Coming after the wrenching global financial crisis, we recorded a record-high net profit growth. In the same year we completed a major acquisition which now positions us as a significant global player in the specialised field of stepper motors and car clocks, a market which has great potential.
FINANCIAL HIGHLIGHTS
At the onset let me highlight the key aspects of our financial performance. We recorded net profit after tax of $9.7 million for FY2010. A 726% increase over $1.2 million a year earlier, it is the highest in our history. This sterling performance was due to several factors.
Sales increased in all our manufacturing facilities due to sustained pent-up demand for plastic injection moulding, mould design and fabrication which started in the second half of 2009 following recovery of the financial crisis. All our business divisions – automotive, cameras, office, automation and industrial and household appliances, – recorded higher turnover.
The newly acquired stepper motors and car clocks business – grouped under the automotive sector, our main revenue driver – contributed nine months of revenue in the year under review, amounting to $13.5 million. For the whole of FY2010, our revenue grew 68% to $76.4 million from $45.4 million in FY2009.
Our FY2010 net profit included a negative goodwill of $4.0 million arising from the acquisitions from The Swatch Group of Switzerland. In short, the acquisition has been independently valued at $4.7 million higher than the estimated purchase consideration of $5.9 million. After adjusting for amortisation and deferred tax, this one-off negative goodwill added $4.0 million to the FY2010 bottom line.
Earnings per ordinary share (on fully diluted weighted average basis) rose to 3.88 cents from 0.63 cent in FY2009. Our financial position remains strong with cash and cash equivalents increasing to $8.8 million as at the end of FY2010 compared to $8.1 million a year earlier.
DIVIDEND
In view of the exceptional financial performance, the Directors have proposed a first and final dividend of 0.15 cent per share and a special dividend of 0.20 cent per share, representing approximately 9% of the net profit of FY2010.
STRATEGIC OVERVIEW AND OUTLOOK
The pent up demand which continued into FY2010 is expected to spill over into FY2011, albeit at a slower pace. Apart from securing new customers in the year under review, we have embarked on a new chapter with entry into stepper motors and car clocks business. Since the acquisition, we have been integrating the new business with our existing operations and aggressively marketing to promote the Swiss-designed, Asian manufactured, JST (Juken Swiss Technology) brand. Backed by the senior managers and researchers based in our Switzerland-based Research and Development (“R&D”) facility, Juken is continuing to develop new stepper motors with more advanced applications.
The acquisition of stepper motors and car clocks business has propelled us to a world stage of stepper motor industry and enlarged our automotive division, increasing our presence in fast-growing automotive markets in China and India. With this new business, our automotive segment has increased to consist of 49% of the Group FY2010 revenue, as compared to 37% in FY2009.
During the year, we installed a fully automated assembly machine for stepper motors at our Singapore manufacturing plant in Loyang which can produce eight million motors per annum, increasing our total production capacity by 20%. And a new plant in Jakarta, Indonesia, began operation in May 2010.
OUTLOOK AND FUTURE GROWTH
The automotive industry continues to grow rapidly in Asia especially in our key markets China and India. Tier-1 automotive OEM suppliers are increasing their businesses in these two countries where we have established our presence. Our foot-holds in these two countries position us well to support their increasing activities.
We expect our automotive division to perform better in FY2011 when we will recognise the full 12 months’ contribution from the stepper motors and car clocks business. We will continue to integrate this new business with the existing manufacturing and marketing operations in the region to improve efficiencies and win new customers.
While sales are expected to improve, we expect market challenges such as foreign exchange and fluctuations in crude oil price which will affect the price of our primary raw material – plastic resin. We are cautiously optimistic of FY2011 financial performance and will continue to focus on cost and operational efficiencies.
APPRECIATION
It has been an exciting and rewarding year in which so many people have contributed in one way or another. I want to welcome our new colleagues in Switzerland and China who have joined the extended Juken family I want to thank our dedicated management and staff, the board of directors for their guidance, our customers and business partners for their continuous support, and not least, shareholders for your unrelenting trust and faith in the company.
WONG KENG YIN, DAVID
Executive Chairman
April 2011
The financial year ended 31 December 2010 (“FY2010”) ranks as one of the most rewarding and transformational since our inception. Coming after the wrenching global financial crisis, we recorded a record-high net profit growth. In the same year we completed a major acquisition which now positions us as a significant global player in the specialised field of stepper motors and car clocks, a market which has great potential.
FINANCIAL HIGHLIGHTS
At the onset let me highlight the key aspects of our financial performance. We recorded net profit after tax of $9.7 million for FY2010. A 726% increase over $1.2 million a year earlier, it is the highest in our history. This sterling performance was due to several factors.
Sales increased in all our manufacturing facilities due to sustained pent-up demand for plastic injection moulding, mould design and fabrication which started in the second half of 2009 following recovery of the financial crisis. All our business divisions – automotive, cameras, office, automation and industrial and household appliances, – recorded higher turnover.
The newly acquired stepper motors and car clocks business – grouped under the automotive sector, our main revenue driver – contributed nine months of revenue in the year under review, amounting to $13.5 million. For the whole of FY2010, our revenue grew 68% to $76.4 million from $45.4 million in FY2009.
Our FY2010 net profit included a negative goodwill of $4.0 million arising from the acquisitions from The Swatch Group of Switzerland. In short, the acquisition has been independently valued at $4.7 million higher than the estimated purchase consideration of $5.9 million. After adjusting for amortisation and deferred tax, this one-off negative goodwill added $4.0 million to the FY2010 bottom line.
Earnings per ordinary share (on fully diluted weighted average basis) rose to 3.88 cents from 0.63 cent in FY2009. Our financial position remains strong with cash and cash equivalents increasing to $8.8 million as at the end of FY2010 compared to $8.1 million a year earlier.
DIVIDEND
In view of the exceptional financial performance, the Directors have proposed a first and final dividend of 0.15 cent per share and a special dividend of 0.20 cent per share, representing approximately 9% of the net profit of FY2010.
STRATEGIC OVERVIEW AND OUTLOOK
The pent up demand which continued into FY2010 is expected to spill over into FY2011, albeit at a slower pace. Apart from securing new customers in the year under review, we have embarked on a new chapter with entry into stepper motors and car clocks business. Since the acquisition, we have been integrating the new business with our existing operations and aggressively marketing to promote the Swiss-designed, Asian manufactured, JST (Juken Swiss Technology) brand. Backed by the senior managers and researchers based in our Switzerland-based Research and Development (“R&D”) facility, Juken is continuing to develop new stepper motors with more advanced applications.
The acquisition of stepper motors and car clocks business has propelled us to a world stage of stepper motor industry and enlarged our automotive division, increasing our presence in fast-growing automotive markets in China and India. With this new business, our automotive segment has increased to consist of 49% of the Group FY2010 revenue, as compared to 37% in FY2009.
During the year, we installed a fully automated assembly machine for stepper motors at our Singapore manufacturing plant in Loyang which can produce eight million motors per annum, increasing our total production capacity by 20%. And a new plant in Jakarta, Indonesia, began operation in May 2010.
OUTLOOK AND FUTURE GROWTH
The automotive industry continues to grow rapidly in Asia especially in our key markets China and India. Tier-1 automotive OEM suppliers are increasing their businesses in these two countries where we have established our presence. Our foot-holds in these two countries position us well to support their increasing activities.
We expect our automotive division to perform better in FY2011 when we will recognise the full 12 months’ contribution from the stepper motors and car clocks business. We will continue to integrate this new business with the existing manufacturing and marketing operations in the region to improve efficiencies and win new customers.
While sales are expected to improve, we expect market challenges such as foreign exchange and fluctuations in crude oil price which will affect the price of our primary raw material – plastic resin. We are cautiously optimistic of FY2011 financial performance and will continue to focus on cost and operational efficiencies.
APPRECIATION
It has been an exciting and rewarding year in which so many people have contributed in one way or another. I want to welcome our new colleagues in Switzerland and China who have joined the extended Juken family I want to thank our dedicated management and staff, the board of directors for their guidance, our customers and business partners for their continuous support, and not least, shareholders for your unrelenting trust and faith in the company.
WONG KENG YIN, DAVID
Executive Chairman
April 2011