Sarin Technologies Ltd.sarin.listedcompany.com/newsroom/20130217_221206_U77_A... · 2013. 2....
Transcript of Sarin Technologies Ltd.sarin.listedcompany.com/newsroom/20130217_221206_U77_A... · 2013. 2....
Sarin Technologies Ltd.
Corporate Presentation
February 2013
m
Disclaimer
This presentation may contain statements regarding the business of Sarin Technologies Ltd and its subsidiaries (the “Group”) that are of a forward looking nature and are therefore based on management’s assumptions about future developments. Such forward looking statements are typically identified by words such as ‘believe’, ‘estimate’, ‘intend’, ‘may’, ‘expect’, and ‘project’ and similar expressions as they relate to the Group. Forward looking statements involve certain risks and uncertainties as they relate to future events. Actual results may vary materially from those targeted, expected or projected due to numerous factors.
Potential risks and uncertainties include such factors as general economic conditions, foreign exchange fluctuations, interest rate changes and regulatory developments. Such factors that may affect the Group’s future financial results are detailed in our listing prospectus / circulars, listed in this presentation, or in the management discussion and analysis section of the company’s result report and filing with the SGX. The reader is cautioned to not unduly rely on these forward-looking statements. We do not undertake any duty to publish any update or revision of any forward looking statements. We will announce all material information about the Group on the SGXNET in accordance with the rules of the SGX-ST Listing Manual.
The information contained in this presentation has not been independently verified. No representation or warranty expressed or implied is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained in this presentation. Neither Sarin Technologies nor any of its affiliates, advisers or representatives shall have any liability whatsoever for any loss arising, whether directly or indirectly, from any use or distribution of this presentation or its contents.
This presentation is for information only and does not constitute an invitation or offer to acquire, purchase or subscribe for shares in Sarin Technologies.
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Agenda
3
Executive Summary
Results Update
New Products Update
Trends & Prospects
Appendices
Business Overview
Products
4
Executive Summary
Sarin is the global leader in the development and provider of solutions for the evaluation, planning, manufacturing and finishing of rough diamonds and is now launching systems and services which could significantly change the wholesale and retail polished diamond trade
Record performance in FY2012: revenues rose 10% to US$63.8m and net profit grew 20% to US$20.8m
Recurrent revenue increased to over 25% of group revenue in FY2012 as total installed base of GalaxyTM family systems expanded to just over 95 at year end
Final dividend of US cent 1.25 per share declared, dividend payout for FY2012 totaled US cents 4.50 per share (payout ratio approximately 75%); The Board has decided to increase the dividend policy to US cents 1.50 per share every six months
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Results Update
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5-Year Results Summary
(US$’000) FY2008 FY2009 FY2010 FY2011 FY2012
Revenues 33,149 21,382 45,663 57,803 63,750
Gross Profit 21,130 12,479 29,350 38,281 43,388
Net Profit 1,594 1,528 11,111 17,366 20,755
Gross Profit Margin 63.7% 58.4% 64.3% 66.2% 68.1%
Net Profit Margin 4.8% 7.1% 24.3% 30.0% 32.6%
Cash and investments (no debt) 12,010 20,863 28,270 33,946 36,787
EPS (US cents, fully diluted)* 0.50 0.46 3.30 5.12 6.03
Annual Dividend (US cents)* 0.64 0.64 1.60 2.60 4.50
6 * Adjusted for bonus issue in May 2012
FY2012 Results Summary
-5
0
5
10
15
20
25
30
35
40
45
50
55
60
65
Revenue Gross Profit Operating Profit
Pre-tax Profit Tax Net Profit
63.8
43.4
24.5 24.5
(3.8)
20.8
57.8
38.3
21.3 21.4
(4.1)
17.4
FY2012 FY2011
(US
$ m
)
%
change +10% +13% +15% +14% (7%) +20% 7
Sequential Quarterly Results Summary
14.2
11.7
9.5
7.4
4.33.1
4.33.0
(0.5) (0.5)
3.8
2.5
-5
0
5
10
15
Revenue Gross Profit Operating Profit Pre-tax Profit Tax Net Profit
Q4 2012 Q3 2012
(US
$ m
)
%
change +21% +27% +40% +43% +3% 51%
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Q4 2012 Results Summary
-5
0
5
10
15
Revenue Gross Profit Operating Profit
Pre-tax Profit Tax Net Profit
14.2
9.5
4.3 4.3
(0.5)
3.8
14.1
10.0
5.6 5.7
(0.9)
4.8
Q4 2012 Q4 2011 (U
S$
m)
%
change +1% (6%) (24%) (24%) (45%) (20%)
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Q4 and FY2012 Results Highlights
Revenue rose 10% to US$63.8m and net profit increased 20% to
US$20.8m in FY2012 – a record performance for the Group driven by
Overall positive business sentiments in 1H 2012
Renewed diamond manufacturing activities in India in Q4
Increased GalaxyTM–related market penetration
For Q4 2012 over Q3 2012, revenues improved some 21%, as business
sentiment rebounded
The Group delivered eight GalaxyTM family systems in Q4 2012 and
increased the total installed base of GalaxyTM systems to just over 95 at
year end 2012
GalaxyTM related recurring income increased approximately 50% and boosted total recurring revenue to over 25% of FY2012 revenue
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Dividend
Total dividend payout for FY2012 increased 73% over adjusted total
dividend payout for FY2011
The Board has decided to increase the dividend policy to US cents 1.50
per share every six months (a 50% increase adjusted for May 2012
bonus issue) subject to semi-annual Board approval, AGM approval and
other conditions
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US cent/share FY2012 FY2011 FY2011
(adj*)
Interim 1.25 1.25 1.00
Special interim 2.00 1.00 0.80
Final 1.25 1.00 0.80
Total 4.50 3.25 2.60
* Adjusted for 1-for-4 bonus issue effected in May 2012
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Revenue Breakdown by Geographical Segments
Region FY2012
(US$’ 000)
FY2011
(US$’ 000)
y-o-y
Change
FY2012
%
FY2011
%
India 48,789 44,976 + 9% 76 78
Africa 4,871 4,400 + 11% 8 8
Europe 1,661 1,804 (8%) 3 3
N. America 1,102 1,052 + 5% 2 2
Israel 3,150 2,487 +27% 5 4
Others 4,177 3,084 + 35% 6 5
Total 63,750 57,803 + 10% 100 100
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Strong Balance Sheet
(US$ millions) 31 Dec 2012 31 Dec 2011
Non-current Assets 15.3 12.9
- Property, plant & equipment 5.5 2.9
- Intangible assets 9.2 9.5
Current Assets 52.5 48.2
- Inventories 6.8 6.3
- Trade receivables 7.4 6.7
- Cash & bank deposits 36.8 33.9
Current Liabilities 11.1 12.1
- Trade payables 2.0 2.7
Non-current Liabilities 0.6 0.8
- Long term liabilities 0.4 0.7
Shareholders’ Equity 56.1 48.2
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New Products Update
GalaxyTM Family Rollout
Demand for GalaxyTM family of products remains strong in all major industry centres
From just over 50 at year end 2011, the Group has increased the installed base to just over 95 systems by year end 2012
The Group targets to increase pace of GalaxyTM family deliveries in 2013
GalaxyTM XL (Extra Large) systems were shipped to the Israeli, Indian, Belgium and South African service centres in 2012 and early 2013 to broaden the service offerings to customers
An enhanced GalaxyTM system with microscopic quality to detect even very very small inclusions will be available in Sarin’s service centres in Israel and India in Q2 2013, followed by other service centres later in the year
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15
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Optimal Planning with GalaxyTM Inclusion Mapping
Note unique
StrategistTM &
QuazerTM II
pie-cut sawing
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DiaMensionTM HD / InstructorTM / DiaMarkTM HD
DiaMensionTM HD
High-end product for proportion measurement and symmetry
grading of polished diamonds qualified by GIA and AGS
Symmetry grading new business opportunity as previously only
done manually
The InstructorTM software product For the ongoing quality control of the actual polishing process
as the polished diamond is faceted
Unique capability of providing instructions on necessary
corrective actions and/or possible asymmetric enhancements
Almost untapped market potential as the product targets a need
which, until its launch, had not been automated
Further refinement of these products are expected to continue to
drive the growth of Group’s polished diamond grading product line
Sarine LightTM
With increasing demand for prettier diamonds, Light Performance parameters (brilliance, fire, scintillation/sparkle and symmetry) are becoming accepted as understandable consumer-oriented criteria
In December 2010, Sarin acquired the Light Performance Technology (LPT), a system that enables the automatic, independent and accurate measurement of a polished diamond’s appearance
Terms of first commercial agreement relating to Sarine LightTM agreed upon with a significant diamond jewellery retail chain in Asia and initial deployment can be expected in early Q2 2013
The commercial agreement is based on a recurring usage fee charged per Light Performance report generated
Conclusion of additional agreements with other customers can be expected in 2013
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18
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Low Clarity Low Colour Low Cut
Perfect stone -
high Clarity,
Colour and
Cut grades
Sarine LightTM Imagery
Sarine LoupeTM
An imaging system that captures a polished diamond, including its
internal features, in simulated three dimensions
Enables buyers to view it, as if with a traditional loupe, from a multitude
of angles and at varying magnifications, without having the polished
diamond physically in hand
Expected to significantly simplify the buying process of polished
diamonds by reducing costs and time involved for both buyers and
sellers
An additional pilot test is commercing in India and Israel. Commercial
launch of the Sarine LoupeTM system can be expected later in 2013
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Sarine LoupeTM Imagery of Included Stone
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Prospects
Prospects
While economic challenges prevail in Europe, signs of improving economic conditions are emerging in markets such as China, India and the US
GalaxyTM and SolarisTM inclusion mapping enhances demand for Sarin’s other products and contributes to the consolidation of the Group’s leading market share for manufacturing products
New products such as Sarine LightTM, Sarine LoupeTM and similar services (e.g., DAS) address the wholesale and retail trade of polished diamonds – a significant new market segment that is expected to add to the Group’s recurring revenue base
The Group will accelerate sales and marketing efforts in the US following the opening of a new office in New York in 2013; a new GalaxyTM
inclusion mapping service centre will also open there in 2013
A Far East marketing and sales hub will be established in either Hong Kong or SIngapore, possibly in 2013 or early 2014, to expedite the commercialisation of Sarin’s products and services for polished diamonds
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Deliveries of additional GalaxyTM family systems for rough diamond inclusion scanning and mapping to customers
Increased adoption of Sarine LightTM and commercial launch of Sarine LoupeTM
Expand Sarin’s potential markets to the mining and retail segments of the diamond industry
Broaden the Group’s revenue base into polished diamonds trade
Increase the recurrent portion of the revenue stream for the Group
Growth Drivers for Recurring Revenue
Important Catalysts to Future Growth
Benefits to Sarin
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Business Overview
Business Overview
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Established in Israel in 1988, Sarin is a global leader with
proprietary technology specifically designed for and
applied to the diamond industry
Development, manufacture and sales of precision technology
products and services that revolutionise diamond manufacturing,
and the wholesale and retail trade
Major centres of diamond manufacturing and wholesale and retail
trading worldwide: India, China and southern African countries (S.
Africa, Botswana, Namibia), Belgium, Israel, Russia, USA and
Hong Kong
Business
Focus
Market
Focus
The need for technology is driven by pressures on manufacturing
margins, increasing consumer sophistication and demand for
better and prettier diamonds and retail chain positioning and
branding efforts
Adoption of
Technology
Diamond Industry Value Chain
Miners
De Beers concentrates ~ 45% of rough diamonds
worldwide; Botswana; Russia; Zimbabwe; Australia;
Canada; others
Manufacturers
India accounts for > 80% of all stones;
Southern Africa (S. Africa, Botswana and Namibia)
emerging as important centre
Gemmological
Laboratories Strategic customers setting industry standards
Wholesalers Belgium, Israel, USA, Hong Kong
Retailers
• USA > 40% of global retail diamond market
• Hong Kong is second largest market (~25%)
• Chains gaining in importance over shops
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Diamond Industry Value Chain
$15.2 billion
Rough
Diamond
Mining
Output
$18.3 billion
Rough
Diamond
Sales
$22.6 billion
Polished
Diamond
Output
$70.8 billion
Retail Sales
of Diamond
Jewellery
Our products increase profits at
all stages of the diamond trade from purchase
of rough stones to sale of polished diamonds
Value of Market in US$ in 2011
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Sarin’s Value Proposition
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Sarin’s Expertise
Challenges
• Need to increase industry players’ profits
• Address issues of quality and beauty
Proprietary precision mechanics, optics, electronics, laser and colour
technology with sophisticated software in computerised systems
Sarin’s Solutions
• Maximise profit from rough diamonds
• Grade quality and beauty polished diamonds according to 4Cs and
light performance
• Solutions to affirm and enhance branding
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Diamond with Inclusion Diamonds without Inclusion
Inclusion
Planned diamonds
Diamonds without inclusions can be worth up to 10x more
No cost effective automated inclusion mapping system existed in the market until the introduction of GalaxyTM 1000
GalaxyTM/SolarisTM offer automated, comprehensive and accurate mapping of inclusions within rough and polished diamonds in a far shorter time compared to currently available techniques
Inclusion Mapping
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Disadvantages Suppliers Technology
Needs windows opened in stone
Done by expert personnel
Limited success on complicated inclusions
Limited to larger inclusion sizes
Very long (hours/days per stone) process
Sarin and
others
Manual
Inclusion
Charting
Expert personnel required - not all
inclusions easily detected, often many
“false positives”
Relatively long process (hour +)
High cost
Others X-Ray
Inclusion Technologies Before GalaxyTM 1000
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No need to preprocess the rough diamond (no “windows”)
Supports most types of stones (even thin mineral-coating)
Automatic; little user-expertise required
Identifies all types and most sizes of inclusions
Relatively fast operation (minutes)
Cost-effective
GalaxyTM / SolarisTM
Automated Inclusion Mapping Technology
How opaque becomes transparent
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GalaxyTM / SolarisTM in Planning
DiaExpertTM Set-up Station DiaMarkTM Z
3-D External
Convex /
Concave
Mapping
Linking inclusion
mapping data and
rough planning to
optimise polished
diamonds’ value
Marking
Internal
Inclusion
Scanning /
Mapping
GalaxyTM
SolarisTM
Products
Rough to Polished Diamond Flow
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Visual
Aids
for Trade
Laser
Inscription
Cut
Finishing Polishing
Sawing
&
Shaping
Planning Inclusion
Mapping
Sa
rin
Pro
du
cts
an
d S
erv
ice
s
DiaScan S+
DiaVision
DiaScribe
Sarine Light Galaxy /
Solaris
Advisor
DiaExpert Eye/
DiaExpert Nano
DiaMark-Z
Instructor
DiaMension
HD
Strategist
&
Quazer II Green
Laser System
Sarine Loupe
Products Introduced Over the Years
DiaMensionTM
DiaExpertTM
& Eye / Nano
DiaMarkTM & Z
DiaScanTM S+
DiaScribeTM
QuazerTM
ColibriTM
GalaxyTM 1000
/ 2000
DiaMensionTM
HD
DiaMobileTM
XL
InstructorTM
SolarisTM 100
DiaExpert TM
Nano 6.5
QuazerTM II
StrategistTM
GalaxyTM HD
DiaMark TM HD
GalaxyTM XL
DAS
Sarine LightTM
GalaxyTM Ultra
AdvisorTM 5.0
DiaExpertTM
Atom
2012 &
beyond 2011 2009
2008 &
prior
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2010
Competitors
Diamond Planning &
Grading Products
Laser Sawing &
Cutting Products
OctoNus (Russia) High-end rough and polish equipment; teamed
with Lexus in India
Lexus (India) Low-end (primarily for quality control) & price-
driven products
Sahajanand Technologies (India) Former Sarin distributor in India – marketing own
equipment
Sahajanand Laser Technology (India) Low-end equipment
OGI Systems (Israel) Price player with international presence
Bettonville (Belgium)
Veteran high-end laser manufacturer
Laxmi (India)
Low-cost/low-end green laser without
cutting/shaping capabilities
S.O.S. (India)
Mainstream infra-red (IR) laser supplier
Sahajanand Technologies (India) Low-end/low-cost IR laser; wide presence
Sahajanand Laser Technology (India)
Low-end/low-cost IR laser; wide presence
OGI Systems (Israel)
Some market presence with a laser
Combined market share of competitors for diamond planning
& grading products is still smaller than Sarin’s (~75%) 37
Thank You
Q & A