GTC : 1H05 Results

Results for 1H05 fm SGX,

Singapore, September 5, 2005 – Newly-listed Global Testing Corporation Limited (“GTC” or the “Group”), a company specialising in mixed signal and logic IC testing, today reported that revenue was down 12% to US$11.7 million for the quarter ended June 30, 2005 (“2QFY2005”), compared to 2QFY2004. Net profit decreased by 55% to US$2.5 million, compared to US$5.4 million recorded in the previous corresponding period.

On a half-yearly basis, Group revenue was down 14% from US$23.4 million in 1HFY2004 to US$20.0 million in 1HFY2005. Net profit declined 67% to US$2.5 million in 1HFY2005 from US$7.6 million in 1HFY2004. Mr Yang said: “On the back of a strong 2QFY2004 performance which coincided with the peak of the last semiconductor cycle, our interim results were impacted during the half year under review. This is in line with our earlier guidance in our IPO prospectus that Group’s net profit is expected to be lower year-on-year for the first half of FY2005, compared to the previous corresponding period. New designs for mobile handsets and digital handheld devices fueled volume growth and inventory build-up.”

On a sequential basis, Group revenue rose to US$11.7 million in 2QFY2005, up 42% from US$8.3 million in 1QFY2005. The Group’s net profit surged 6025% to US$2.5 million in 2QFY2005. Mr Yang commented: “Our strong growth in the second quarter of 2005 compared to the first quarter was driven by the rapid recovery in the semiconductor industry. We also successfully increased our revenue share for some of our existing major fabless customers such as Realtek and Sunplus.”

Capital expenditure (“capex”) committed in 2QFY2005 was US$12.8 million, principally for new capabilities and production equipment. Total capex committed in 1HFY2005 was US$15.8 million.

Gross margin for 2QFY2005 remains at a healthy level of 43.8% compared to 55.1% in the previous corresponding period, despite a decrease in utilization rate in 2QFY2005. However, the Group’s gross margin improved on a sequential basis from 33.1% in 1QFY2005 to 43.8% in 2QFY2005. This was mainly due to the Group’s better product and improved machine utilization rates, which rose from 56% in 1QFY2005 to 80% in 2QFY2005.

Basic earnings per share registered was 0.35 US cent in 2QFY2005. Net asset value per share was 11.38 US cents as at June 30, 2005.

Growth Strategies

Going forward, the Group believes that its growth in 3QFY2005 will be driven by increased wafer testing opportunities as its customers are guiding for a rapid increase in total wafer volume during the period. The demand for consumer IC testing, such as DVD chips, STB chips, HDD (hard disk drive) controller IC, gaming applications IC and LAN IC, is also expected to be strong.

Mr Yang said: “We expect our gross margin in 3QFY2005 to improve further with higher machine utilization rates, compared to the average of 80% recorded in 2QFY2005, as well as increasing wafer testing volume from major foundry customers and improving average selling prices. We expect these positive trends to continue, based on our customers’ current forecasts.”

Going forward, the Group intends to embark on a concerted sales strategy to focus on the provision of higher margin wafer sorting of mixed signal semiconductors to fabless companies and integrated device manufacturers. “We plan to leverage on our strong capabilities in wafer sorting and consumer mixedsignal IC testing to tap on these opportunities brought about by the growth in the trend of outsourcing semiconductor testing services by IDMs and fabless companies,” added Mr Yang. In addition, the Group plans to extend its capabilities to meet the demand for testing of larger wafers such as 12 inch (300 mm) wafers. The Group intends to utilize part of its IPO proceeds to purchase new factory premises, plant and equipment and construct ancillary facilities to handle this demand.

Comments - Results bad compared to last year, but improved fm Q1 and expected to improve further in Q3. At least, still profitable