Financials Reports

First Quarter Results Financial Statement And Related Announcement

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Condensed Interim Financial Statements For First Quarter and Three Months Ended 30 September 2025

Condensed Interim Consolidated Statement Of Profit Or Loss And Other Comprehensive Income For The First Quarter And Three Months Ended 30 September 2025

Condensed Interim Statements Of Financial Position

Review Of Performance

Review Of Profit And Loss

Group Revenue

For the three months ended 30 September 2025 ("1QFY2026"), the Group reported revenue of S$16.7 million, marking a 2.9% year-on-year ("yoy") increase from S$16.2 million for 1QFY2025. The growth was led by continued momentum in the consumable tools segment. On a quarter-on-quarter ("qoq") basis, revenue remained stable at S$16.7 million, compared to 4QFY2025.

Revenue breakdown by segment

For 1QFY2026, the Group's consumable tools segment delivered a 7.9% yoy increase in sales to S$13.7 million, marking a 13-quarter high. This growth was primarily driven by a favourable product mix. On a qoq basis, segment sales rose 5.2% to S$13.7 million (4QFY2025: S$13.1 million).

Consumable tools remained the Group's core business segment, contributing 82.2% of the Group's revenue for 1QFY2026.

Sales from the Group's Wafer Fabrication Equipment ("WFE") segment decreased by 15.3% yoy to S$3.0 million for 1QFY2026 (1QFY2025: S$3.5 million), impacted by material delays and shortages. While new orders rose 20.1% qoq to S$4.0 million, fulfilment challenges persisted for 1QFY2026. Consequently, WFE contributed 17.8% to the Group's revenue for 1QFY2026.

The WFE segment primarily serves customers based in USA, Singapore, and Malaysia.

By geographical segments, the Group recorded a 19.3% yoy increase in sales from China to S$6.1 million for 1QFY2026. China remained the Group's largest market, contributing 36.2% of the Group's revenue. The sustained growth reflects the continued success of the Five-Star Factory initiative, which leverages the Group's decentralised structure and close customer engagements.

Sales in Malaysia rose 5.6% yoy to S$3.0 million, accounting for 17.9% of the Group's revenue. Singapore posted a 9.4% yoy increase to S$1.5 million, representing 8.8% of the Group's revenue for 1QFY2026.

Sales in the Philippines and Taiwan grew modestly, rising 1.8% and 1.7% yoy to S$906k and S$919k respectively for 1QFY2026.

Gross Profit (GP) Margin

The Group's gross profit grew 4.5% yoy to S$8.6 million for 1QFY2026, with gross profit margin improving to 51.5% from 50.7% for 1QFY2025. The improvement was supported by scale efficiencies, as sales from the consumable tools segment reached a 13-quarter high.

On a qoq basis, gross profit grew 5.0% yoy to S$8.6 million (4QFY2025: S$8.2 million), with margin expanding to 51.5% from 49.0% for 4QFY2025.

Other income, Distribution Expenses, Administrative Expenses, Other Operating Expenses and Net Finance Expense

For 1QFY2026, the Group's other income decreased by 35.1% yoy to S$71.4k (1QFY2025: S$110.1k), following the cessation of rental income from October 2024.

Distribution expenses decreased by 0.9% yoy to S$775.5k (1QFY2025: S$782.7k) mainly due to lower commission payouts.

Administrative expenses rose by 6.4% yoy to S$2.6 million for 1QFY2026 (1QFY2025: S$2.4 million), primarily due to subscription cost and investments in IT security services and compliance reporting. Other operating expenses decreased by 1.2% yoy to S$878.7k for 1QFY2026 (1QFY2025: S$889.4k), attributable to a reduction in headcount at MMUS.

Finance expense fell 39.6% yoy to S$105.0k for 1QFY2026 (1QFY2025: S$173.7k), mainly due to lower US Dollar exchange loss.

In aggregate, the Group's administrative, distribution and other operating expenses (net of other income) was 25.1% of revenue, or S$4.2 million, consistent with 1QFY2025. Amid dynamic business conditions, the Group continues to exercise prudent cost management with active oversight of its cost structure.

Profit before Tax and Net Profit

As a result of the above, the Group's profit before tax increased by 6.3% yoy to S$4.4 million for 1QFY2026 (1QFY2025: S$4.2 million).

Income tax expenses increased by 16.6% yoy to S$1.3 million for 1QFY2026 (1QFY2025: S$1.1 million), reflecting higher profit contributions from jurisdiction with elevated tax rates, such as China. The Group's effective tax rate increased to 28.4% for 1QFY2026, up from 25.9% for 1QFY2025, and included a provision of S$125k for withholding tax on dividends to be remitted to Singapore from various overseas subsidiaries.

After deducting income tax expenses, the Group's net profit grew 2.7% yoy to S$3.2 million (1QFY2025: S$3.1 million), with net profit margin maintained at 18.9%. On a qoq basis, net profit remained stable at S$3.2 million, with margin comparable to 19.0% for 4QFY2025.

Correspondingly, the Group's earnings per share increased by 2.7% yoy to 2.27 cents for 1QFY2026 (1QFY2025: 2.21 cents).

Other comprehensive income

Foreign currency translation differences from foreign operations resulted in a gain of S$363.8k in 1QFY2026 (1QFY2025: loss of S$279.2k). The variance was principally attributable to the appreciation of the Chinese yuan, US dollar and Malaysian ringgit against Singapore dollar by 1.9%, 1.2% and 1.3% respectively.

Balance Sheet

The Group continues to maintain a resilient financial position. As at 30 September 2025, total assets stood at S$64.4 million, with shareholders' equity of S$52.7 million. Cash and bank balances amounted to S$27.2 million and the Group remained debt-free with no bank borrowings.

Long Term Assets

As at 30 September 2025, non-current assets decreased to S$20.2 million compared to S$21.2 million as at 30 June 2025.

Trade Receivables

Trade receivables as at 30 September 2025 decreased to S$12.3 million from S$12.5 million as at 30 June 2025. Of this, S$22k was outstanding for 90 days or more (30 June 2025: S$2k). There were no bad debts written off during the period.

Trade & Other Payables

As at 30 September 2025, the Group's trade payables totalled S$1.1 million (30 June 2025: S$797k), with a minimal amount outstanding for 30 days or more (30 June 2025: S$1.1k).

Non-trade payables and accrued expenses remained stable at approximately S$0.5 million and S$4.0 million respectively (30 June 2025: S$0.6 million and S$4.3 million).

Long term liabilities

The Group maintained its deferred tax liabilities at S$1.4 million as at both 30 September 2025 and 30 June 2025, reflecting a consistent tax position across the reporting period.

Inventory

The Group continued to uphold disciplined inventory management practices to optimise stock levels and minimise obsolescence risks, in line with its ongoing commitment to Operational Excellence under the Five-Star Factory initiative. As at 30 September 2025, inventory stood at S$3.6 million, representing 5.4% of sales (30 June 2025: S$3.1 million, or 4.8% of sales). Inventory written off totalled S$24k for 1QFY2026, compared to S$99k for 1QFY2025.

Capital Expenditure

In line with its disciplined approach to capital management, the Group continues to invest selectively in growth- related capital expenditure, guided by prevailing market conditions and evolving business needs.

The Group's capital expenditure for 1QFY2026 amounted to S$346k. This mainly comprised purchases of computers and software in Philippines, Malaysia, Singapore and USA, as well as renovation works in USA.

Looking ahead, the Group expects to invest approximately S$4.0 million in growth and replacement capital expenditure. These investments will focus on upgrading plant, machinery and equipment across the Group's five factories to enhance production capacity and support localised capabilities, in line with the industry trend towards supply chain localisation. To maintain strategic flexibility and responsiveness to market dynamics, the Group will review its capital expenditure plans on a half-yearly basis. This approach enables timely recalibration of resources towards emerging capabilities and operational priorities, ensuring the Group remains well-positioned to anticipate and respond to industry shifts.

Cash Flow Analysis

The Group continues to demonstrate financial resilience, underpinned by a stable working capital cycle and disciplined cash flow management. For 1QFY2026, the Group generated net cash from operations of S$4.5 million (1QFY2025: S$4.1 million). After deducting net cash used for investing activities of S$305k and net cash used for financing activities of S$407k, the Group delivered S$3.8 million in free cash flow (1QFY2025: S$2.8 million). As at the end of 1QFY2026, the Group's cash and bank balances stood at S$27.2 million, providing a strong foundation to support strategic investments and operational agility.

Commentary On Current Year Prospects

Sector performance and outlook

The global semiconductor industry saw robust sales growth in 1QFY2026 despite macroeconomic and trade volatilities brought by tariff negotiations during the period. According to the Semiconductor Industry Association ("SIA"), global semiconductor sales grew by 20.6% yoy to US$62.1 billion in July 2025 and 21.7% yoy to US$64.9 billion in August 2025, driven by strong memory and logic demand.

Against this backdrop, the Group delivered a resilient performance in 1QFY2026, led by sales from its consumable tools segment, which grew 7.9% yoy to a 13-quarter high of S$13.7 million.

Looking ahead, the World Semiconductor Trade Statistics* ("WSTS") expects the global semiconductor market to grow by 9.9% yoy to US$800 billion in 2026. While the Group remains encouraged by this outlook, it remains vigilant in light of ongoing uncertainties resulting from sector-specific tariff threats. The Group has also observed that these developments have had indirect impacts of tariffs on its customers, most notably through rising material costs. The Group continues to monitor the evolving landscape closely and remains focused on enabling its customers' success amid a dynamic and uncertain environment

*Note: WSTS forecasts global semiconductor sales, and while the Group's manufacturing of high precision tools and parts is part of the semiconductor industry's supply chain, the Group's performance in specific business segments during any particular time period may not always correlate with the general sales trend of the semiconductor industry.

Update on key initiatives for FY2026

The Group has several initiatives in place to enhance its proposition and resilience across the value chain and deliver sustainable long-term value for its shareholders. These include:

1. Advancing the Five-Star Factory initiative
   • Fast, Effective and Local Support to Global Customers: Strengthening the Group's decentralised structure and customer interactions to enable their success and the advancement of the semiconductor industry.
     • The Group is closely engaging with its customers to deepen its understanding of critical pain points and identify higher-value opportunities across the value chain.
     • The Group is also cross-pollinating best practices and in-market domain knowledge across its five facilities for greater collaboration and response to customer needs.
   • Operational Excellence: Leveraging lean engineering and management principles, data and automation to develop fast, flawless and cost-effective manufacturing.
     • The Group continues to maintain disciplined inventory management practices to optimise stock levels and minimise obsolescence risks, as part of its ongoing commitment to Operational Excellence under the Five-Star Factory initiative. As at 30 September 2025, inventory amounted to S$3.6 million, representing 5.4% of sales (30 June 2025: S$3.1 million, or 4.8% of sales). Inventory written off totalled S$24k for 1QFY2026, compared to S$99k for 1QFY2025.
   • Innovation Excellence: Strengthening a culture that promotes fresh thinking and ingenuity that drives product and process innovations and improvements, enables new manufacturing capability, and encourages the adoption of new technologies and methodologies.
     • The Group continued to look for and onboard technical and other talent in 1QFY2026 to support the design and development of new solutions and capabilities.
     • The Group is also continuing to explore investments in next-generation machinery to enable new capabilities and support growing localisation efforts across its manufacturing facilities.
   • High Performance Teams: Building a High Performance Team of talented people with the right skills in the right positions, upskilling the Group's workforce through training programmes, and aligning incentive systems with measurements of progress and performance.
     • The Group has proposed the adoption of the Performance Share Plan 2025 ("PSP 2025") for shareholders' approval at the Extraordinary General Meeting on 30 October 2025.
     • The PSP 2025 is designed to align remuneration of eligible participants with specified performance targets, ensuring strong alignment between individual contributions to excellence, the Group's strategic priorities, and the interests of all shareholders.
   • Workplace Efficiency and Safety: Implementing "8S" practices by all personnel resulting in organised, productive, clean, safe and environmentally responsible operations.
     • As of 1QFY2026, all the Group's facilities continued to make progress toward their internal Five-Star goals.
        
2. Prioritising disciplined capital management anchored by highest standards of corporate governance
   
   The Group continues to exercise disciplined capital management to deliver sustainable long-term shareholder returns. This is supported by the Group's resilient working capital cycle with the ability to consistently generate positive operating and free cash flow. This has strengthened the balance sheet to a net cash position of S$27.2 million with no bank borrowings.
   
   To support sustained business and earnings growth, the Group is investing strategically in capital expenditure to enhance its manufacturing capabilities and productivity. Looking ahead, the Group expects to invest approximately S$4.0 million in growth and replacement capital expenditure for plant, machinery, and equipment to enhance production capacity and support localised capabilities across the Group's five factories, in line with the industry trend towards supply chain localisation. The Group will review capital expenditure on a half-yearly basis to allow for agile calibration of resources towards new capabilities, keeping the Group ahead of industry shifts.
   
   Since listing in 2003, Micro-Mechanics has won nearly 40 awards in recognition of its high standards of corporate governance, quality of disclosure, transparency and investor relations. During 1QFY2026, the Group received the Gold Award for Best Investor Relations (among companies with market capitalisation of less than S$300 million) at the 2025 Singapore Corporate Awards ("SCA"). With this esteemed recognition, the Group remains committed to delivering long-term shareholder returns through sustaining earnings growth, maintaining dividends, and upholding exemplary standards of corporate governance.
   
   

Business outlook

Amid ongoing market volatility and macroeconomic factors beyond management's control, the Group remained focused on advancing its ongoing Five-Star Factory initiative through a bottom-up approach. Since its launch in FY2024, the initiative has consistently delivered positive outcomes, contributing to improved operational and financial performance across the Group. This progress has laid a strong foundation for the Group as it continues to adopt a proactive and agile approach in responding to the fast-evolving industry dynamics. With a clear growth strategy that prioritises disciplined capital management, the Group has established a proven track record of navigating through business cycles as it executes against its ambitions of becoming a leading Next Generation Supplier focused on enabling advanced technologies and driving sustainable long-term value for its shareholders.