Innotek- FY2010 Results

• Revenue 15.1% higher at S$415.9 million in FY10; 4Q’10 revenue increased 6.8% to S$99.0 million on higher sales of stamping components and Frame products
  

• Net profit for FY10 rose 134.1% to S$17.8 million from S$7.6 million in FY09,reflecting cost and operational improvements. FY10 EPS of 7.75 cents is 138.5% higher than 3.25 cents in FY09
  

• Proposes final dividend of 5.0 cents per share, unchanged for third year

• Financial position remains strong – Group net cash position of S$56.6 million as at 31 December; also holds 19.6 million treasury shares

SINGAPORE, 25 February 2011 –InnoTek Limited (“InnoTek” or “the Group”)
announced today that its net profit after tax for the financial year ended 31 December 2010 (“FY10”) rose 134.1% to S$17.8 million from S$7.6 million in FY09 on higher sales and continued cost and operational improvements.

For the third year in a row, the SGX Mainboard-listed company also declared a first and final dividend of 5.0 cents per share.

InnoTek’s net profit was achieved on revenue of S$415.9 million in FY10, 15.1% higher than S$361.4 million in FY09, as its wholly owned Mansfield Manufacturing Company Limited (“MSF”) recorded improved sales from stamping products due to stronger demand for TV components.

Revenue from the precision components and sub-assembly segment rose to S$375.4 million in FY10 from S$323.5 million in FY09. Apart from higher sales of TV components, frame sales from its Dutch subsidiary Exerion PrecisionTechnology Holding B.V. also rose to S$40.5 million in FY10 from S$37.9 million in FY09 due to higher demand for printing and medical equipment components.

MSF’s FY10 net profit was S$11.1 million higher than FY09 due to higher sales and re-classification of a factory building from property, plant and equipment to an investment property, resulting in lower depreciation and reversal of S$2.7 million impairment loss provided for in FY09. MSF also wrote-back a S$1.2 million provision after collecting doubtful debts provided for in FY09.

On the other hand, MSF’s FY09 bottom-line was affected by a one-time provision of S$2.0 million relating to employees’ severance and end-of-contract payments and provision of S$1.4 million of doubtful debts.

The Company reported a loss of S$2.5 million due to lower interest income in FY10 and a one-off reversal of tax provision in FY09 following tax exemption for certain overseas interest income remitted between 22 January 2009 and 21 January 2010. However, this was mitigated by S$0.6 million gain from disposal of an investment which had been fully provided for in FY07.

For the quarter ended 31 December 2010 (“4Q’10”) InnoTek’s net profit after tax increased 35.1% to S$4.0 million from S$3.0 million in 4Q’09, revenue also rose 6.8% to S$99.0 million from S$92.7 million.

Earnings per share rose to 7.75 cents in FY10 from 3.25 cents in FY09. Net asset backing per share as at 31 December 2010 stood at 85.4 cents compared to 85.8 cents as at 31 December 2009 following payment of dividend in May 2010 amounting to S$11.4 million and acquisition of treasury shares in FY10 amounting to S$4.8 million.

The Group’s financial position remains healthy, with net cash position of S$56.6 million or 24.9 cents per share, comprising cash and cash equivalents of S$89.5 million less total borrowings of S$32.9 million, as at 31 December 2010. To enhance shareholder value, InnoTek purchased a further 1.2 million treasury shares in 4Q’10, bringing the total treasury shares held to 19.6 million.

To reward shareholders, the Group has proposed a first and final one-tier tax exempt dividend of 5.0 cents per share, unchanged for three years in a row. The FY10 dividend represents 64% of net profit.

The directors expect Q1’11 demand for office automation and automotive components to sustain but demand for TV components to soften. As such, Q1’11performance is expected to be challenging.

“In the absence of any unforeseen circumstances, we expect the Group to remain profitable in FY11 as we continue to focus on cost management and improving efficiency to mitigate the impact of inflationary cost and the rising Chinese Yuan. Additionally, the Group is diversifying its products and customer base,” said InnoTek Group Managing Director Mr Yong Kok Hoon.
“In line with the Group’s long-term growth strategy, we will continue to actively pursue appropriate merger and acquisitions opportunities. We will maintain our cautious stance, focusing on earnings-accretive businesses, and stringently evaluate feasible investment proposals,” he added.