Pentamaster International: Rapport annuel 2020


Notre mission

Nous nous engageons à fournir des solutions de haute qualité et rentables avec les dernières technologies, ainsi qu'à fournir des services à valeur ajoutée à nos clients et des avantages à nos fournisseurs, à nos employés et à la communauté dans son ensemble.

CONTENU

Numéro de page

Vision et mission

1

Information d'entreprise

2

Structure d'entreprise

3

Déclaration du président

4

Discussion et analyse de la direction

6

Résumé financier

17

Directeurs et cadres supérieurs

18

Rapport de gouvernance d'entreprise

23

Rapport des administrateurs

39

Le rapport du vérificateur indépendant

52

État consolidé du résultat net et des autres éléments du résultat global

58

État consolidé de la situation financière

59

État consolidé de l'évolution des capitaux propres

61

État consolidé des flux de trésorerie

62

Notes aux états financiers consolidés

64

INFORMATION D'ENTREPRISE

CONSEIL D'ADMINISTRATION

Administrateurs exécutifs

Chuah Choon Bin (Président) Gan Pei Joo

Directeur non-exécutif Leng Kean Yong

Administrateurs non exécutifs indépendants Chuah Jin Chong

Chan May May

Sim Seng Loong à Tai Seng

COMITÉ DE VÉRIFICATION

Sim Seng Loong à Tai Seng (Président) Chan May May

Leng Kean Yong

COMITÉ DES RÉMUNÉRATIONS

Sim Seng Loong à Tai Seng (Président) Chuah Jin Chong

Leng Kean Yong

COMITÉ DE NOMINATION

Chuah Jin Chong (Président)

Sim Seng Loong @ Tai Seng Chan mai mai

AUDITEUR

Grant Thornton Hong Kong Limited Experts-comptables certifiés

12e étage

28 Hennessy Road Wanchai

Hong Kong

HONG KONG BRANCH SHARE REGISTRAR AND TRANSFER OFFICE

Tricor Investor Services Limited

Niveau 54, Hopewell Centre 183 Queen's Road East Hong Kong

BUREAU D'INSCRIPTION

PO Box 309, Ugland House Grand Cayman, KY1-1104 Îles Caïmans

SIÈGE SOCIAL ET PRINCIPAL LIEU D'AFFAIRES EN MALAISIE

Parcelle 18 et 19, Technoplex

Medan Bayan Lepas

Taman Perindustrian Bayan Lepas Phase IV, 11900 Penang Malaisie

PRINCIPAL LIEU D'AFFAIRES À HONG KONG

Salle 1901, 19 / F, Lee Garden One 33, avenue Hysan

Causeway Bay Hong Kong

BANCAIRES PRINCIPAUX

Bank of China (Hong Kong) Limited Malayan Banking Berhad

United Overseas Bank (Malaisie) Berhad AmBank (M) Berhad

Banque publique Berhad

SITE WEB D'ENTREPRISE

www.pentamaster.com.my

SECRÉTAIRE DE LA SOCIÉTÉ

Tsui Sum Yi

CODE DE STOCK

1665

STRUCTURE D'ENTREPRISE

Au 31 décembre 2020

Pentamaster International Limited 檳 傑科達 國際 有限公司

(MC-323853)

(Îles Caïmans)

100%

Technologie Pentamaster

(M) Sdn. Bhd. 199501007290 (336488-H)

(Malaisie)

100%

Pentamaster Instrumentation Sdn. Bhd. 200301034952 (637373-M)

(Malaisie)

100%

Pentamaster Equipment Manufacturing Sdn. Bhd. 200601029409 (749166-A)

(Malaisie)

100%

Pentamaster MediQ

Sdn. Bhd. 202001017008 (1373328-W)

(Malaisie)

40%

Penang Automation Cluster Sdn. Bhd. 201601021441 (1192380-V)

(Malaisie)

100%

Équipement Pentamaster

Fabrication, INC.

(82-4120867)

(NOUS.)

100%

TP Concept Sdn. Bhd. 201001040387 (924312-H)

(Malaisie)

DÉCLARATION DU PRÉSIDENT

Chers actionnaires,

Une autre année s'est écoulée et nous avons la chance d'avoir survécu à une année 2020 très difficile et pleine de crise sanitaire! Alors que la pandémie pose toujours une menace à l'échelle mondiale, nous espérons que 2021 nous fournira une lueur d'espoir que nous pourrons tous surmonter.

L'année 2021 est l'année où Pentamaster Group célèbre son 30ème anniversaire depuis sa création en 1991. L'année 2021 est également le 18ème anniversaire de Pentamaster Corporation Berhad de cotation à Bursa Malaysia et le 3ème anniversaire de la cotation de Pentamaster International Limited à la Bourse de Hong Kong. Nous sommes très reconnaissants à nos pionniers et à tous ceux qui nous ont accompagnés depuis le début, qui ont ouvert la voie et posé des bases solides pour notre Groupe. Aujourd'hui, Pentamaster Group a évolué et est l'un des principaux fournisseurs mondiaux d'équipements et de systèmes d'automatisation avancés. Avec la vitesse et l'ampleur des progrès technologiques d'aujourd'hui, Pentamaster en tant que groupe ne restera jamais complaisant et défiera toujours la convention. Le Groupe continuera à être assez audacieux pour explorer de nouvelles idées avec des innovations et des approches lui permettant de rester pertinent et de rester à la pointe de l'industrie pour de plus grandes hauteurs.

Au cours du premier semestre 2020, les tensions commerciales entre les États-Unis et la Chine et la pandémie mondiale de COVID-19 ont posé des défis et des pressions importants sur nos opérations quotidiennes, avec des restrictions de voyage mondiales en place, aggravées par une interruption de la chaîne d'approvisionnement. Cela a malheureusement eu un impact sur la performance financière du Groupe l'année dernière, le chiffre d'affaires du Groupe s'étant contracté de 14,1% à 418,6 millions de MYR et son bénéfice après impôts ayant diminué de 13,3% à 113,9 millions de MYR.

Malgré ces développements, nous sommes heureux de constater que notre activité de commandes clients a bien résisté au quatrième trimestre 2020 et jusqu'à la date de reporting. Cela a été notre résultat en diversifiant nos solutions pour répondre à des segments plus larges de l'industrie et avec de nouvelles demandes ou commandes de vente générées par les équipements d'assemblage / d'essai des transistors bipolaires à porte isolée («IGBT») pour les marchés des véhicules électriques («EV») et les nouveaux Matériel de test Electro-Opto pour le secteur 5G / smartphone. Néanmoins, nous espérons que l'année à venir 2021 sera une meilleure année, malgré les restrictions de voyage et les verrouillages actuels imposés par les pays respectifs dans le monde.

Pour soutenir notre trajectoire de croissance à long terme, Pentamaster continuera à progresser et à transformer notre modèle commercial et nos portefeuilles – pour les perspectives à moyen et long terme. L'année dernière 2020, nous avons créé Pentamaster MediQ Sdn. Bhd. ("PDSB") pour se lancer dans la fabrication de dispositifs médicaux à usage unique. Des dépenses d'investissement de 60 millions de MYR seront allouées au cours des trois prochaines années pour la modernisation de nos usines existantes à Batu Kawan et l'installation de deux équipements de lignes de production dédiés à la fabrication de ces dispositifs médicaux à usage unique qui comprend des traiteurs intraveineux et Aiguilles pour stylo à double sécurité. Notre objectif est d'obtenir notre usine de fabrication certifiée ISO13485 d'ici 2021 tout en ciblant la certification des produits de la Malaysia Devices Authority (MDA) ou de la FDA (Food and Drug Administration) des États-Unis d'ici la fin de 2021 ou le début de 2022.

En outre, afin de poursuivre son expansion mondiale et de maintenir le soutien et les relations de nos clients, le Groupe renforcera encore sa présence dans la région pour les segments clés suivants:

  • • Capteur intelligent électro-opto

  • • Semi-conducteur automobile

  • • Dispositifs médicaux à usage unique

  • • Produits de consommation et industriels

DÉCLARATION DU PRÉSIDENT (a continué)

Au fil des ans, Pentamaster Group a développé de nombreuses nouvelles solutions dans les segments d'activité des équipements de test automatisés («ATE») et des solutions d'automatisation d'usine («FAS») destinés aux industries susmentionnées. Couplé à la croissance des industries EV et 5G, le segment d'activité ATE a contribué pour environ 67,6% au chiffre d'affaires du Groupe. Dans ce contexte, le plan d'expansion régionale deviendra plus répandu. De même, avec l'adoption de l'Industrie 4.0 dans l'industrie manufacturière, la contribution au chiffre d'affaires des segments d'activité FAS au Groupe a également bondi de 64,0% d'une année sur l'autre, réitérant encore la nécessité pour nous d'élargir notre présence dans la région.

Bien que la pandémie de COVID-19 ait posé de sérieux défis, elle a également ouvert une opportunité passionnante pour Pentamaster. Avec la récente accélération de la demande d'achat en ligne pour le commerce électronique, les canaux de distribution multicanaux émergents, la mondialisation des réseaux de chaîne d'approvisionnement et l'adoption accrue de centres de micro-exécution, nous constatons une demande et des opportunités croissantes dans le secteur des systèmes d'automatisation d'entrepôt («WAS»). Depuis 2018, Pentamaster Group a investi environ 15 millions de MYR pour développer des robots mobiles autonomes, un trieur à grande vitesse, un élévateur, un logiciel de gestion d'entrepôt (WMS) et un réseau d'entrepôts étendu (WAWN) qui pourraient interconnecter et surveiller efficacement les réseaux mondiaux de la chaîne d'approvisionnement. Avec cela, il complète notre offre de produits holistiques i-Hub qui nous permet de capturer et d'être prêt pour le marché en croissance du commerce électronique.

Un récent rapport d'étude de marché indique que le marché de l'automatisation des entrepôts augmentera de plus du double, passant de 13,0 milliards de dollars en 2018 à 27,0 milliards de dollars d'ici 2025, à un taux de croissance annuel composé de 11,7% entre 2019 et 2025. La transformation du secteur de la vente au détail vers l'automatisation des entrepôts a démarré. une vitesse élevée récemment et une accélération des commandes en ligne qui en résulte pour à peu près tout. Alors que les détaillants sont confrontés au défi de faire face à un volume toujours croissant de commandes et à une demande croissante de livraison du dernier kilomètre, les WAS deviennent rapidement des technologies essentielles pour le marché du commerce électronique en ligne rapide et concurrentiel. Je dois dire que le développement de notre i-Hub est opportun et qu'il répondra à l'exigence d'automatisation des entrepôts avec ses fonctionnalités qui amélioreront la précision, la sécurité, l'efficacité et l'optimisation en termes de temps et d'espace.

Appréciation

Au nom du conseil d'administration de la société, je remercie l'équipe Pentamaster pour son dévouement et son travail acharné pendant cette période difficile. Nous apprécions pleinement l'engagement et le soutien continus de nos membres du conseil d'administration, de nos fournisseurs et de nos actionnaires. Nous sommes reconnaissants à notre Dieu pour la bénédiction et la protection pendant la pandémie mondiale COVID-19.

Le Seigneur vous gardera de tout mal, Il veillera sur votre vie;

Le Seigneur veillera sur vos allées et venues, maintenant et pour toujours.

Merci.

Dieu vous protège.

BAC CHUAH CHOON Président et directeur exécutif

25 février 2021

DISCUSSION ET ANALYSE DE GESTION

RAPPORT D'ACTIVITÉ

L'année 2020 a été très perturbatrice par la pandémie sans précédent de COVID-19 avec son effet omniprésent provoquant une propagation mondiale et entravant ainsi la situation économique mondiale avec la déclaration d'urgences de santé publique dans de nombreux pays et régions. Avec l'imposition de verrouillages mondiaux par les gouvernements respectifs à travers le monde, couplée aux restrictions de voyage mondiales et à la suspension de certaines activités commerciales, le Groupe est entré dans le premier semestre 2020 en embrassant l'énorme quantité de défis et de pressions induits par la pandémie. Si le Groupe a réussi à augmenter ses capacités de main-d'œuvre avec l'assouplissement progressif du lock-out en Malaisie au cours du second semestre, la situation existante n'a pas fourni au Groupe le niveau de production optimal requis. Ayant continuellement enregistré des revenus et des bénéfices records au cours des trois dernières années, il est regrettable que le Groupe ne soit pas épargné par les ravages du COVID-19 qui a eu un impact négatif sur la performance opérationnelle et financière du Groupe.

Le chiffre d'affaires du Groupe au cours de l'année s'est contracté de 14,1% à 418,6 millions de MYR, tandis que son bénéfice après impôts a diminué de 13,3% à 113,9 millions de MYR. Alors que la baisse du chiffre d'affaires et des bénéfices a été largement impactée par le segment électro-optique du Groupe (anciennement le segment des télécommunications) au lieu de la pandémie, le Groupe a connu une croissance d'une année sur l'autre dans tous ses autres segments d'activité avec un mix de revenus plus sain. et contribution aux bénéfices. Il est à noter que le Groupe a prôné l'importance de diversifier sa base de revenus en augmentant son exposition à d'autres segments d'activité et de ne pas être trop dépendant d'un seul segment, ce qui a quelque peu amorti l'impact de la crise pandémique en 2020. Le résultat de ces efforts de diversification ne sera pas rendu possible sans une connaissance en temps opportun des opportunités et des exigences du marché, associée à son engagement en faveur des investissements et des activités de recherche et développement («R&D») pour élargir son portefeuille de produits et élargir ses marchés accessibles. Alors que le marché technologique mondial évolue avec l'effet drastique du COVID-19, le Groupe engagera en permanence une telle approche commerciale pour établir un mélange optimal afin de ne pas être trop dépendant d'un seul segment d'activité.

En allant de l'avant avec le prochain catalyseur du monde technologique de la 5G, de la détection optique, de la conduite autonome, de l'EV et de l'intelligence artificielle («IA»), les progrès actuels de diversification du Groupe sont sur la bonne voie. Malgré la baisse du chiffre d'affaires du segment électro-optique en 2020, ce segment est resté la principale source de revenus du Groupe avec la demande de clients d'une zone géographique plus large pour ses solutions de test personnalisées principalement tirée par son exposition à l'écosystème optoélectronique et à la technologie de détection 3D. En ce qui concerne le segment automobile, l'exposition du Groupe dans ce segment s'élève à 20,1% du chiffre d'affaires total du Groupe, soit une croissance de 19,5% par rapport à 2019. Cette croissance est louable alors que le Groupe a fait ses progrès et s'est étendu sur ce segment avec ses capacités technologiques couvrant les modules de puissance composés à base de carbure de silicium («SiC») et de nitrite de gallium («GaN»).

Le chiffre d'affaires du segment des produits de consommation et des produits industriels a augmenté de 68,4% par rapport à 36,5 millions de MYR en 2019. Cette croissance du chiffre d'affaires a été principalement due au système de fabrication robotique automatisé intelligent («i-ARMS») du Groupe, où sa demande a été soutenue par le tendances et adoption croissante de l’Industrie 4.0. Dans le contexte de l'exposition au chiffre d'affaires du Groupe dans le segment des semi-conducteurs, le Groupe a connu une croissance de 67,5% d'une année sur l'autre. L'augmentation du chiffre d'affaires a été attribuée à l'augmentation de la demande pour les équipements de traitement des tests du Groupe pour l'industrie des semi-conducteurs, où les principaux facteurs qui ont motivé le sentiment étaient le changement de modèle de dépenses des consommateurs du monde entier causé par le «travail à domicile» de la pandémie. tendance qui semble avoir dynamisé le segment des puces intégrées. Au cours de l'année, l'élargissement de l'exposition du Groupe dans le segment des dispositifs médicaux a connu le taux de croissance du chiffre d'affaires le plus élevé de 348,9%, le Groupe ayant diversifié son implication et renforcé ses capacités dans le secteur médical avec l'acquisition de TP Concept Sdn. Bhd. («TP Concept») en 2019.

Dans le contexte d'une situation de marché externe très complexe et volatile, le Groupe est d'avis qu'il a surmonté les défis avec une exécution opportune et efficace de ses stratégies de diversification de sa base de revenus et d'exposition à des segments industriels plus larges, mais pas rapidement. assez pour contrer la pandémie sans précédent de COVID-19 qui est arrivée trop vite et trop radicalement. Néanmoins, avec la capacité et la capacité technologiques actuelles, le Groupe continuera à se positionner pour rester agile et travailler sur ses fondamentaux commerciaux pour accélérer encore sa différenciation technologique.

Le tableau suivant présente la répartition des revenus par segment de clientèle pour les segments ATE et FAS:

Par industrie

Pour l'année terminée le 31 décembre

2020

2019

MYR'000

%

MYR'000

%

Électro-optique (anciennement connu sous le nom de

télécommunications)

177 978

42,5

337 394

69,3

Automobile

84 146

20,1

70 419

14,4

Produits de consommation et industriels

61 481

14,7

36 498

7,5

Semi-conducteur

57 794

13,8

34 494

7,1

Équipement médical

37 182

8,9

8 283

1,7

418 581

100,0

487 088

100,0

Vous trouverez ci-dessous la répartition des revenus en fonction de la destination des expéditions, où la Chine, Singapour, la Malaisie, Taïwan et le Japon étaient les cinq principaux marchés d'expédition du Groupe en 2020. Il convient de mentionner que les revenus des cinq principales destinations d'expédition sont tombés à environ 86,8. % du chiffre d'affaires du Groupe contre 91,4% il y a un an, indiquant une couverture géographique des expéditions plus diversifiée.

Par envoi

Pour l'année terminée le 31 décembre

2020

2019

MYR'000

%

MYR'000

%

Chine

132 044

31,5

66 624

13,7

Singapour

84 372

20,2

239 028

49,1

Malaisie

68 419

16,3

27 242

5,6

Taïwan

49 216

11,8

80 132

16,4

Japon

29 149

7,0

3 431

0,7

États Unis

22 668

5,4

6 221

1,3

Philippines

8 673

2,1

32 105

6,6

Corée

5 768

1,4

399

0,0

Thaïlande

5 471

1,3

19 197

3,9

Allemagne

5 459

1,3

8 126

1,7

Autres

7 342

1,7

4 583

1.0

418 581

100,0

487 088

100,0

ANALYSE FINANCIER

Revenu

Le chiffre d'affaires du Groupe a diminué d'environ 14,1%, passant de 487,1 millions de MYR en 2019 à 418,6 millions de MYR en 2020. Il est regrettable de constater la baisse globale du chiffre d'affaires en 2020 après avoir annoncé une croissance du chiffre d'affaires d'une année sur l'autre au cours des trois dernières années. consécutivement depuis la cotation de la société. L'impact de la pandémie dans la conjoncture économique actuelle a freiné l'activité globale du Groupe compte tenu de la nature de l'activité du Groupe et du traitement comptable adopté dans la reconnaissance de son chiffre d'affaires. En conséquence, le Groupe a connu une baisse de son chiffre d'affaires annuel en raison d'une moindre contribution au chiffre d'affaires du segment ATE au cours de l'année. Cependant, la baisse des revenus a été partiellement compensée par la croissance des revenus du segment FAS. Les segments ATE et FAS ont représenté chacun environ 67,6% et 32,4% du chiffre d'affaires total du Groupe, contre respectivement 86,7% et 13,3% en 2019.

Revenu

2020

2019

Fluctuation

MYR'000

MYR'000

%

A MANGÉ

292 386

431 222

-32,2

SAF

138 311

84 311

64,0

Segment ATE

Avec un taux de contribution au chiffre d'affaires de 67,6%, le segment ATE a continué à contribuer à la plus grande part du chiffre d'affaires et du résultat global du Groupe. Le chiffre d'affaires de ce segment a diminué de 138,9 millions de MYR à 292,4 millions de MYR au cours de l'année par rapport à 2019. La baisse du chiffre d'affaires d'environ 32,2% de ce segment est principalement attribuable au report de la comptabilisation des revenus en temps opportun, principalement en raison de impact de la pandémie où le Groupe a subi une perturbation de son activité de fabrication, de sa chaîne d'approvisionnement, de l'expédition de projets, de ses services logistiques et de sa reconstitution des stocks. L'imposition de restrictions de déplacements massives à l'échelle mondiale, en particulier au cours du premier semestre de l'année, a encore entravé l'installation sur site des projets, ce qui a constitué une étape importante pour la reconnaissance des revenus. Malgré la baisse du chiffre d'affaires au sein du segment ATE, le Groupe a connu au cours de l'année une base de revenus plus diversifiée provenant d'autres segments auxquels le Groupe était exposé. Un exemple est la croissance de la traction des revenus de l'industrie automobile de plus de 50,0% dans le segment ATE par rapport à 2019.

L'exposition croissante du Groupe au segment automobile résulte de la demande du marché pour ses équipements de manutention d'essais, principalement pour les dispositifs de gestion de puissance et de puissance basés sur MLCC (multicouches céramiques), IGBT, SiC et GaN. Alors que l'IGBT a été la solution d'électrification dominante, en particulier pour ses applications haute tension et courant élevé, la pénétration du Groupe dans l'IGBT est opportune avec son portefeuille de produits élargi qui couvre des solutions de bout en bout allant de l'assemblage à l'inspection finale et au test.

Au cours de l'année, l'industrie électro-optique était encore dominante dans le segment ATE avec son taux de contribution aux revenus d'environ 50,0%, dérivé d'un portefeuille de produits plus diversifié et complexe couvrant, entre autres, des solutions de test pour VCSEL (Vertical Cavity Surface-Emitting Laser), capteur de magnétomètre 3D, capteur de lumière structuré 3D, capteur de temps de vol 3D et autres applications pertinentes dans le cadre de solutions de détection optique et photonique. Un portefeuille de produits aussi diversifié était le résultat des efforts continus du Groupe pour faire une percée technologique grâce à son implication constante à la pointe de l'avancement technologique dans le segment électro-optique, compte tenu des mises à niveau courantes des smartphones et de ses périphériques. En outre, le Groupe a également continué à assister à la charge volumique de sa solution de test personnalisée dans les capteurs d'ambiance et de proximité compte tenu de la large gamme d'applications de produits finis de ces capteurs.

Le Groupe continue d'être témoin d'un vaste potentiel et d'opportunités dans le segment ATE, en particulier avec la convergence des capteurs, des réseaux et des technologies Web, associée à une accélération de l'adoption de la 5G dans les smartphones. Une telle intégration avec des fonctionnalités d'intelligence artificielle intégrées propulsera les ventes de nouveaux matériels et appareils à l'avenir et stimulera l'élan des progrès technologiques dans divers secteurs qui fourniront une plate-forme de croissance pour le segment ATE du Groupe.

Segment FAS

Pour l'exercice clos le 31 décembre 2020, le segment FAS a connu une augmentation substantielle de sa contribution au chiffre d'affaires du Groupe, cette division enregistrant 138,3 millions MYR contre 84,3 millions MYR réalisés en 2019, soit une croissance de 64,0% d'une année sur l'autre. . L'augmentation du chiffre d'affaires est principalement attribuable à l'adoption croissante de l'automatisation pour les processus activés par l'Industrie 4.0 et l'IoT (Internet des objets) qui ont vu la demande croissante d'i-ARMS, une solution propriétaire hautement personnalisée du Groupe pour automatiser les processus de fabrication ou de production. ligne de diverses industries grâce à son système de manutention intelligent et à sa technologie robotique

À l'impact positif de la contribution au chiffre d'affaires au sein du segment FAS s'ajoutent les effets de la contribution de TP Concept suite à l'intégration complète et à la consolidation de son activité au sein du Groupe, après l'acquisition en septembre 2019. La croissance de l'exposition au chiffre d'affaires du secteur médical de plus de 300,0% en 2020 par rapport à 2019 témoigne du fort engagement du Groupe à étendre sa présence sur le segment en constante croissance des dispositifs médicaux.

La croissance de la taille du marché de l'automatisation des usines est attribuée à l'accent mis sur l'automatisation industrielle et l'utilisation optimale des ressources compte tenu de la hausse du coût de la main-d'œuvre et de la transition rapide de l'industrie vers la fabrication intelligente. Compte tenu de cette tendance à la révolution industrielle et de son avancement actuel vers l'intelligence artificielle et la numérisation, le Groupe estime que la demande du segment FAS restera robuste dans l'année à venir.

marge brute

Le Groupe a réalisé une marge brute de 33,5% au cours de l'année contre 36,8% en 2019. La contraction globale de la marge brute du Groupe résulte principalement de la diminution des économies d'échelle réalisées au cours de l'année sous l'effet de la baisse du chiffre d'affaires. reconnu pour le segment électro-optique. Bien que la baisse de la marge bénéficiaire brute ait été enregistrée, il convient de noter que la marge bénéficiaire brute globale a été dérivée d'un portefeuille de produits plus diversifié du Groupe couvrant des segments industriels plus diversifiés au cours de l'année.

Autre revenu

Les autres revenus du Groupe sont passés de 14,3 millions de MYR en 2019 à 10,5 millions de MYR en 2020. Au cours de l'année, le Groupe a enregistré un gain net sur les variations de juste valeur des contrats de change à terme («gain net sur dérivé») d'environ 0,9 million MYR. Simultanément, le Groupe a également enregistré un gain net de change d'environ 1,8 million MYR. Ce gain net sur dérivé et ce gain net de change totalisant 2,7 millions de MYR ont été comptabilisés dans les autres produits au cours de l'exercice. En 2019, le gain net sur dérivé s'est élevé à 7,2 millions de MYR tandis que le Groupe a enregistré une perte nette de change de 5,4 millions de MYR.

Dépenses administratives

Les frais administratifs du Groupe comprennent principalement les mouvements de change, les honoraires professionnels et les frais de personnel administratif. Au cours de l'année, les frais administratifs ont diminué de 19 millions de MYR, passant de 45,9 millions de MYR en 2019 à 26,9 millions de MYR. Cela était principalement dû aux facteurs suivants:

  • (i) un gain net de change a été réalisé au cours de l'exercice par rapport à une perte nette de change de 5,4 millions de MYR en 2019; et

  • (ii) une baisse des coûts de personnel administratif de 11,1 millions de MYR au cours de l'année (2019: 28,7 millions de MYR) en raison de la diminution des incitations du personnel en raison de la baisse des bénéfices déclarés.

La diminution des coûts ci-dessus a été partiellement compensée par:

  • (i) montant plus élevé de la provision pour perte de crédit nette attendue («ECL») sur les créances commerciales de 6,1 millions de MYR enregistrée au cours de l'exercice par rapport aux 3 millions de MYR encourus en 2019; et

  • (ii) augmentation des coûts d'entretien et de maintenance du matériel de bureau de 0,3 million de MYR en raison de l'augmentation des effectifs.

Bénéfice de l'année

Le Groupe a enregistré un bénéfice net de 113,9 millions MYR en 2020, soit une baisse de 13,3% par rapport à un bénéfice net de 131,4 millions MYR réalisé en 2019. En conséquence, l'EBITDA du Groupe (bénéfice avant intérêts, impôts, dépréciations et amortissements ) pour 2020 s'élevait à 122,5 millions MYR contre 143,8 millions MYR enregistrés en 2019, soit une baisse de 14,8%. Le bénéfice de base par action est passé de 8,21 MYR sen en 2019 à 7,12 MYR en 2020.

Liquidité, ressources financières et structure du capital

Le Groupe a continué de maintenir un fonds de roulement solide à 363,6 millions MYR au 31 décembre 2020 (2019: 305,4 millions MYR). Au milieu de la pandémie en cours et des vents contraires économiques globaux, le Groupe a continué de générer une trésorerie nette d'exploitation positive de 59,7 millions MYR au cours de l'année, contre 141,4 millions MYR l'année précédente. La trésorerie et les équivalents de trésorerie s'élevaient à 300,3 millions de MYR au 31 décembre 2020 contre 304,0 millions de MYR en 2019. Au 31 décembre 2020, le Groupe disposait de facilités bancaires de 19,5 millions de MYR sous la forme de prêts à terme et de transactions commerciales. installations, sur lesquelles le Groupe avait utilisé 3 millions de MYR pour financer en partie l'achat de terrains à bail pour la deuxième usine de production du Groupe à Batu Kawan, Penang. Le ratio d'endettement du Groupe (calculé sur la base du total des dettes divisé par le total des capitaux propres) s'établit à 0,6% au 31 décembre 2020 (2019: 0,8%).

Passifs éventuels

Au 31 décembre 2020, le Groupe n'avait aucun passif éventuel significatif.

Exposition au change

Le Groupe est exposé au risque de change en raison de ses activités de négociation normales, les ventes et, dans une certaine mesure, les achats étant principalement effectués en dollars américains. Le Groupe détient également d'autres actifs et passifs financiers libellés en devises. Ce ne sont pas les devises fonctionnelles et de reporting du Groupe auxquelles se rapportent les transactions.

Dans le cadre de la politique de trésorerie du Groupe visant à gérer son risque de change, le Groupe a conclu des contrats de change à terme en plus de maintenir des comptes bancaires libellés en dollars américains afin de minimiser les effets des fluctuations défavorables des taux de change sur ses états financiers.

Gage d'actif

Au 31 décembre 2020, le terrain à bail du Groupe d'un montant de 4 827 000 MYR (2019: 4 911 000 MYR) a été nanti pour garantir un prêt bancaire.

Salariés et rémunération

La Société reconnaît ses employés comme l'un des atouts les plus importants du Groupe. La Société croit fermement à l'embauche des bons talents, à la formation et à la fidélisation de ces employés talentueux grâce à des programmes de rémunération compétitifs. Par ailleurs, le Groupe s'est engagé à organiser régulièrement des programmes de formation externes et internes pour améliorer les compétences, les connaissances et l'expérience professionnelle des collaborateurs.

Au 31 décembre 2020, le nombre total d'employés à temps plein du Groupe est passé à 612 (2019: 539).

Investissements importants détenus, acquisitions et cessions importantes de filiales et plans futurs d'investissements importants ou d'immobilisations

Hormis ceux présentés dans ce rapport, il n'y a pas eu d'autres investissements significatifs détenus, ni d'acquisitions ou de cessions significatives de filiales au cours de l'année. Hormis ceux divulgués dans ce rapport, il n'existait aucun plan autorisé par le conseil pour d'autres investissements importants ou des ajouts d'immobilisations à la date du présent rapport.

Utilisation du produit de l'inscription

Les actions de la Société ont été inscrites avec succès au Conseil principal de la Bourse de Hong Kong Limited (la «Bourse») le 19 janvier 2018 au prix d'offre de 1,00 $ HK par action («Cotation»). Le produit (net des frais d'inscription) de l'inscription s'est élevé à environ 171,3 millions de dollars de Hong Kong (équivalant à environ 92,6 millions de MYR). Conformément à l'utilisation proposée du produit net telle qu'énoncée dans la section intitulée «Plans futurs et utilisation du produit» du prospectus de la Société daté du 29 décembre 2017 (le «Prospectus»), le produit net utilisé par le Groupe sur les la date de cotation de la Société le 19 janvier 2018 (la «Date de cotation») jusqu'au 31 décembre 2020 sont les suivantes:

Utilisation du produit de la date de cotation jusqu'à

Utilisation du produit net

Investissements en capital et coûts liés à la nouvelle usine de production et à l'agrandissement de l'usine de production existante

Expansion des affaires dans la région de la Grande Chine

Création d'un bureau en Californie, États-Unis

Activités de marketing, de marque et de promotion

Fonds de roulement

Le total

Montant du produit net

31 décembre

Inutilisé

Inutilisé

affecté

2020

montant

proportion

Millions de dollars HK Millions MYR

Millions MYR

Millions MYR

%

45,8

20,6

5,6

9.7

63,4

1,7

9.2

82,9

9.7

10,5

84,8 45,8

38,1 20,6

28,2 15,3

Noter

3,1 1,7

17,1 9,2

171,3

92,6

Noter:

Ce produit non utilisé sera utilisé au cours des cinq prochaines années à compter de la date d'inscription.

Les Administrateurs n'ont connaissance d'aucun changement important dans l'utilisation proposée du produit à la date du présent rapport. Le produit net inutilisé et le calendrier d'utilisation prévu ci-après seront appliqués de la manière conforme à celle mentionnée dans le Prospectus. Le calendrier prévu était basé sur la meilleure estimation et hypothèse des conditions futures du marché et du développement de l'industrie faites par le Groupe à la date du présent rapport.

RÉALISATIONS EN 2020

FORBES – Le meilleur d'Asie sous un milliard

Le Groupe est fier d'être inscrit sur la liste Forbes des meilleurs sous un milliard d'Asie pour une quatrième année consécutive en 2020 pour ses performances d'entreprise exceptionnelles.

THE EDGE – Billion Ringgit Club

Le Groupe s'est à nouveau vu décerner le prix The Edge Billion Ringgit Club en 2020 pour la plus forte croissance du bénéfice après impôts sur trois ans dans la catégorie Secteur technologique. C'est la deuxième année consécutive que le prix est décroché par le Groupe.

RISQUES OPÉRATIONNELS ET FINANCIERS

Risques opérationnels

Impact de la pandémie COVID-19

Avec l'escalade rapide de la pandémie COVID-19 à travers le monde, ce qui a entraîné l'imposition de certaines mesures sans précédent telles que les restrictions de voyage mondiales et la suspension de certaines opérations et activités commerciales, la pandémie COVID-19 a considérablement réduit l'activité économique mondiale et provoqué une volatilité et des perturbations importantes dans marchés financiers mondiaux.

La pandémie COVID-19 et les mesures prises par de nombreux pays à travers le monde ont un impact certain sur les opérations commerciales du Groupe et pourraient continuer à avoir un impact négatif sur les activités commerciales du Groupe et ses résultats financiers et opérationnels en fonction de la situation et de la durée de la pandémie ainsi que l'efficacité des traitements et vaccins disponibles. Suite à l'épidémie initiale du virus, le Groupe a connu des restrictions forcées de sa capacité opérationnelle, des perturbations de sa chaîne d'approvisionnement, des restrictions logistiques et de déplacement qui ont essentiellement retardé le calendrier de livraison de ses projets et le processus d'achat de machines dans une certaine mesure.

Le Groupe suivra de près l'évolution de la situation du COVID-19, évaluera et réagira activement à ses impacts sur la situation financière et les résultats d'exploitation du Groupe conformément aux exigences des autorités compétentes.

Dépendance vis-à-vis de la direction clé et du personnel expérimenté

Notre succès et notre croissance sont dans une large mesure attribuables aux stratégies et à la vision de notre président et aux contributions de nos directeurs exécutifs et de notre équipe de direction, qui jouent un rôle important dans les opérations quotidiennes de notre Groupe. Alors que nous nous efforçons de fournir un package de rémunération compétitif à notre personnel et de veiller à ce qu'il soit récompensé de manière appropriée, la concurrence pour le personnel compétent dans notre secteur est intense.

As part of the long term plan to nurture and retain its key management and employees, the Company's immediate holding company, Pentamaster Corporation Berhad ("PCB") implemented the share award scheme during the Company's Listing in recognising the contributions made by key management and employees as well as to incentivise and retain them for continual operation, growth and future development of the Group. On 1 April 2020 (the "Adoption Date"), the Company adopted a share award scheme (the "Scheme") which is valid and effective for a term of ten years commencing on the Adoption Date to serve as part of the Group's employee retention program in retaining its existing employees and to attract suitable personnel for further development of the Group. Additionally, the Group continuously grooms younger members of the management staff and other employees to participate in the management of the Company. It is also the current practice of the Group to not depend on one person to perform an important job function to prevent dependency on any particular person. Emphasis is placed on team work and all important projects will have backup personnel.

Risk relating to technological obsolescence

Technology obsolescence is one of our business' inherent risks. The rapid development of technology prompts swift changes in customers' demand and requirements. Our technological products and solutions, may potentially be rendered obsolete due to the rapid evolution and emergence of new and/or substitute technology.

The Group seeks to minimise these risks by actively and continuously pursuing technology innovation and advancement, industry best practices and strategic business alliances to address the increasing sophisticated needs of its customers. The Group also provides continuous staff development to align their skills and knowledge with the requirements of the latest technology in the automation and semiconductor industries.

Continuous efforts are constantly made to increase the efficiencies of the R&D function for the development of new products and to strategically develop a continuing effective and dynamic management team to ensure the continued improvement of the Group's performance. Also, the Group's regular participation in overseas exhibition provides opportunities for us to understand the latest market requirement and keep abreast of current technological changes.

Competition risk

We face keen competition from many international and local competitors of various business scales. Technology, product quality, pricing, proximity to customers, services and breadth of products and/or solutions offered are the key areas of competition for our business. Many of our customers are multinational companies in Malaysia and overseas where the selection of equipment for their manufacturing processes are based on stringent criteria such as high quality automation equipment, good after sales service support, competitive pricing and also dependability of the products.

The Group's R&D effort and value innovation to venture into high-end technology for smart devices and i-ARMS had enabled the Group to achieve its product differentiation in this marketplace. Having our own software development team is also one of the competitive edges against our competitors. Emphasis is also placed on continuous quality checking to ensure the products meet customers' requirement and are of high quality.

Excellent after sales service to our customers has always been the priority of the Company. As the Group's products are customised automation solutions made according to specification required by customers, after sales service is crucial to ensure smooth running of customers' operations.

Intellectual property

The rights to use the technology behind the various design and manufacturing processes in our business and industry as well as the protection of proprietary knowledge, technology and processes developed by our Group are crucial to our continuous success and development. If our technology is infringed by way of unauthorised copying, use or imitation, our competitive advantage, sales and reputation may be affected.

To mitigate the risk, the Group has submitted applications to register several of its trademarks and affirmed the relevant statutory declarations in respect of the copyrights of certain software products. All the employees are also required to sign a non-disclosure agreement (NDA) to protect the Company's interest.

Financial risks

The Group's financial risks are set out in Note 40 under the notes to the consolidated financial statements.

PROSPECTS

Looking ahead into 2021, there are many uncertainties in the global economic situation which may be exacerbated by the ongoing threat of COVID-19 pandemic. It remains an observance year with both challenges and opportunities abound where rapid and fluid development in the technology world have to be closely monitored by the Group with the timeliness in reacting to challenges and capturing the opportunities that emerge. Despite having to continue to confront a raft of external and internal challenges under the influence of the pandemic which are all beyond the control of the Group, the immediate focus of the Group is to advocate the strict adherence to health and safety Standard Operating Procedures ("SOPs") in its new sphere of working environment to minimise further disruption to its business operations.

Generally, the Group anticipates a better performance in 2021 based on the positive growth momentum deriving from several catalysts and trends influencing both the ATE and FAS segment. Against the backdrop of COVID-19 gradually becoming the "new normal", the market trend of technology convergence into our daily lives will continue and become more prevalent. The global smartphone and hardware devices market is expected to rebound with 5G deployment, smart sensors adoption and evolution playing an integral role following the disruption in 2020. What is apparent is that these new developments will continue to present new opportunities for the Group for its position as an integrated and customised solution provider.

The electrification of the transportation and the automotive industries have been one of the major trends and development of the century. Such dynamic e-mobility can be seen moving at an accelerating pace across developed nations in achieving zero carbon emission in accordance to the Paris Accord. Particularly China's 2025 plan in achieving full electrification of public sector vehicles and transportation, the country has an allocation of capital expenditure of approximately RMB52.0 billion specifically for the IGBT market in addition to power modules that are SiC and GaN-based has further supported the Group's deeper penetration into the automotive market through its product diversification which proves timely and encouraging. Not to mention other types of innovations involving ADAS (advanced driver assistance systems), LiDAR (light detention and ranging) application and other emergence of smart vehicle electronic devices, the Group anticipates the proliferation of EV and autonomous driving will continue to provide impetus to the Group's exposure in the automotive industry.

Additionally, the Group has been actively developing new business activity within the medical device segment with the incorporation of PDSB. PDSB was established by leveraging on the technical expertise of TP Concept to produce single-use medical devices for the healthcare industry, and the Group aims to grow this segment in the near term. Currently, the Group has earmarked approximately MYR60.0 million to be spent over the next three years to facilitate its new business venture which includes the set up cost for the production facility of PDSB and the related cost involved in carrying out the R&D activity of the single-use medical devices.

The Group operates in an increasingly competitive landscape where new businesses and technological trends are emerging. With that, the Group is prudently optimistic that year 2021 will be a promising year with plentiful business opportunities in this dynamic yet challenging market. While the extent of the future impact of COVID-19 pandemic on the Group's operational and financial performance is dependent on many factors outside the Group's control, the Group will remain focused and steadfast in building an outstanding technology platform which encompass bold technology investment in product innovation to be in line with its vision in providing world class automation solutions.

FINANCIAL SUMMARY

RESULTS (Audited)

Revenu

Profit before taxation Profit after taxation Profit attributable to: Owners of the Company Non-controlling interests

ASSETS AND LIABILITIES

Total des actifs

Total liabilities Net assets

DIRECTORS AND SENIOR MANAGEMENT

EXECUTIVE DIRECTORS

Mr. Chuah Choon Bin ("Mr. Chuah"), aged 60, was appointed as our Director on 12 June 2017 and was re-designated as our Executive Director on 5 September 2017. Mr. Chuah was subsequently re-designated as the Chairman on 19 December 2017. He currently sits on the board of PCB as the non-executive chairman and non-executive director. PCB is currently listed on the Main Market of Bursa Malaysia and is the Controlling Shareholder of the Company. He also holds directorship in all the subsidiaries of the Group.

Prior to setting up the Group, he served as an automation engineer for National Semiconductor and Intel Technology Malaysia. With his vast experience in the design and manufacturing of automation equipment and vision inspection system, he has developed the Group to its present level of success, from a simple automation house to a high technology group specialising in providing factory automation equipment and systems and information communication technology solutions to industrial and commercial customers.

Under his leadership, the Company achieved the following recognitions:

  • (i) ranked in the top 200 in the Forbes 2020, 2019, 2018 & 2017 Best Under a Billion list of companies that are publicly listed in the Asia Pacific region;

  • (ii) awarded The Edge Billion Ringgit Club, under the category of the Highest Returns to Shareholders Over Three Years for technology sector in 2020 and 2019 and the Highest Growth in Profit After Tax Over Three Years for technology sector in 2019;

  • (iii) awarded the Focus Malaysia Best Under Billion Awards 2018 for the Best Revenue Growth, Best Enterprise Value Growth and Overall Winner category, and Focus Malaysia Best Under Billion Awards 2017 for the Best Return on Assets category; et

  • (iv) recipient of the Enterprise 50 Award 2002 organised by Accenture and SMIDEC and Quality Management Excellence Award 2003 for the category of local company with annual sales turnover exceeding MYR25 million to MYR200 million at the Industry Excellence Award 2003 organised by Ministry of International Trade and Industry.

For his personal recognition, he won the First Malaysian Ernst & Young Emerging Entrepreneur of the Year Award Malaysia 2002.

Currently, he is the board member of Penang Charis Hospice Home and Penang Automation Cluster Sdn. Bhd.. Mr. Chuah sits as the chairman of SJK Kwang Hwa school and he is also appointed to the school board as director for Chung Ling High School, Heng Ee High School and Phor Tay High School. In 2021, he is appointed as the Penang Wawasan Open University Education Foundation Member and Penang i4.0 Seed Fund Evaluation Committee Member.

Mr. Chuah is a co-founder of PCB and its subsidiaries including our Group (the "Pentamaster Group"). He graduated with a bachelor's degree in engineering with honours in May 1985 and a master's degree in engineering majoring in electrical and electronics in May 1989, both from the University of Auckland, New Zealand.

Mr. Chuah is the brother in-law of Ms. Gan Pei Joo, the Executive Director and the chief financial officer of the Company.

Ms. Gan Pei Joo ("Ms. Gan"), aged 45, was appointed as our Director on 12 June 2017 and was re-designated as our Executive Director on 5 September 2017. She was appointed as an executive director of PCB on 19 March 2021. She is also the chief financial officer and holds directorship in all the subsidiaries of the Group.

She commenced her career at PricewaterhouseCoopers in 2000 and was last served as a senior associate in 2003 after having acquired extensive auditing and consulting exposure to companies in various industries. She joined Pentamaster Group as the group accountant in 2003 and held various positions prior to her promotion as the group financial controller in 2009. Ms. Gan is primarily responsible for the overall management, corporate affairs, finance, treasury, control functions and budgeting of the Group. She also sits on the environment, social and governance (ESG) committee as well as risk management committee of the Group.

She graduated with a bachelor's degree of commerce majoring in accounting from Curtin University of Technology, Perth, Australia in February 1999. She was admitted as a member of the Certified Practising Accountants, Australia and a Chartered Accountant from the Malaysian Institute of Accountants in July and November 2002, respectively.

Ms. Gan is the sister in-law of Mr. Chuah Choon Bin, the Executive Director and the Chairman of the Group.

NON-EXECUTIVE DIRECTOR

Mr. Leng Kean Yong ("Mr. Leng"), aged 46, was appointed as our Director on 7 August 2017 and was re-designated as our non-executive Director on 5 September 2017. He is a member of the audit committee and the remuneration committee of the Company. He currently sits on the board of PCB as a non-executive independent director.

Mr. Leng has been in the finance and marketing field for over 20 years. He is highly experienced in the areas of business strategy, ranging from financial matters to business planning and marketing. He has successfully executed projects for small-medium sized industries to listed companies on Bursa Malaysia Securities Berhad, the Australian Securities Exchange and The Stock Exchange of Hong Kong Limited as well as projects for multinational corporations. Such projects encompass IPO exercise, industry research report, the development of a 5-year business plan, marketing strategy blueprint, customer relationship management implementation, market entry and feasibility studies, and mergers and acquisitions evaluations.

At present, Mr. Leng is also one of the Directors at Crowd Sense Sdn. Bhd. (which operates under the brand name of Cofundr), a recognised market operator for peer-to-peer financing registered with the Securities Commission Malaysia. He was previously a Director at L3 Consulting Sdn. Bhd. and Project Director for Synovate Sdn. Bhd., and prior to that, a senior manager for ACNielsen Malaysia Sdn. Bhd. ("ACNielsen"). During his tenure at ACNielsen, he was awarded with three ACNielsen awards for his contribution in successfully implementing and executing key strategies for the firm's local operations. He started his career with BBMB Securities Sdn. Bhd. and he has also advised and managed discretionary fund for private companies and high net worth individuals.

He graduated from the Western Michigan University (cum laude), the United States, with a bachelor in business administration degree in April 1996. He also holds various other certifications through training and updates in the fields of marketing obtained throughout his career with the various global marketing research consultancy firms.

INDEPENDENT NON-EXECUTIVE DIRECTORS

Mr. Sim Seng Loong @ Tai Seng ("Mr. Sim"), aged 54, was appointed as our independent non-executive Director on 19 December 2017. He is also the chairman of the audit committee and the remuneration committee and a member of the nomination committee of the Company. He is primarily responsible for supervising and providing judgment to our Board.

He started his career with Ernst & Young for 15 years before joining R.K. & Associates as a lead partner in 2004. He subsequently joined Eaton Industries Pty Ltd (Australia) as accounting manager and later transferred to Shanghai Eaton Engine Components Ltd (China) as financial controller. Upon returning to Malaysia in January 2012, he was appointed as chief operating officer and chief financial officer for The BIG Group Sdn. Bhd.. In January 2014, he joined Petrol One Resources Berhad as its chief financial officer and remained with the group until January 2019.

From December 2016 to July 2020, Mr. Sim served as an independent director of Jack-in Group Limited, a company listed on the Australian Securities Exchange (ASX: JIP). Currently, he sits on the board of Nova Wellness Group Berhad ("Nova"), a company listed on the Main Market of Bursa Malaysia Securities Berhad (stock code: 0201) as an independent non-executive director. He is also the chairman of audit committee and risk management committee of Nova. In September 2020, Mr. Sim was appointed as an independent non-executive director of Ramssol Group Berhad ("Ramssol"). He is also the chairman of audit committee for Ramssol.

He is a Chartered Accountant under Malaysian Institute of Accountants, a Certified Public Accountant of Malaysia Institute of Certified Public Accountants and a member of the Certified Practising Accountants of Australia. He also holds various other certifications through training and updates in the fields of accountancy and taxation obtained throughout his career.

Dr. Chuah Jin Chong(蔡仁鐘)("Dr. Chuah"), aged 59, was appointed as our independent non-executive Director on 19 December 2017. He is also the chairman of the nomination committee and a member of the remuneration committee. He is primarily responsible for supervising and providing independent judgment to our Board.

Dr. Chuah has over 30 years of professional experience in the medical industry since he was registered as a medical practitioner in Queensland, Australia in 1988 and New Zealand in 1989. From December 1991 to July 2003, he was employed by the Hospital Authority in Hong Kong and retired as an associate consultant in the department of anaesthesia in the Queen Elizabeth Hospital, Hospital Authority. He is currently a registered medical practitioner in Hong Kong.

Dr. Chuah graduated from the University of Queensland, Australia, with the degree of bachelor of medicine and bachelor of surgery in December 1987. He was admitted as a fellow of the Hong Kong Academy of Medicine in the specialty of Anaesthesiology and a fellow of the Australian and New Zealand College of Anaesthetists in May 2001 and June 2001, respectively.

Ms. Chan May May ("Ms. Chan"), aged 55, was appointed as our independent non-executive Director on 19 December 2017. She is also a member of the audit committee and the nomination committee. She is primarily responsible for supervising and providing independent judgment to our Board.

She has over 20 years of experience in the legal field. She is currently the chief executive officer of ZICO Insource Inc. since July 2015, which is engaged in the provision of insourcing and consultancy services relating to legal, human resource and communications. Ms. Chan was the head of group corporate communication in Dialog Group Berhad from December 2012 to January 2015. Prior to that, she worked at Media Chinese International Ltd., a company listed on both the Stock Exchange (stock code: 685) and Bursa Malaysia Securities Berhad (stock code: 5090). From July 2017 to October 2020, she served as an independent non-executive director of BGMC International Limited, a company listed on the Main Board of the Stock Exchange (stock code: 1693).

Ms. Chan graduated from the University of Malaya in Malaysia with a degree of bachelor of laws with honours in August 1990. She has been admitted to the Malaysian Bar since March 1991.

SENIOR MANAGEMENT

Hon Tuck Weng Operation Director

Mr. Hon Tuck Weng ("Mr. Hon"), aged 50, has been the operation director since May 2007 and is primarily responsible for overseeing the daily operation of our management information system, quality assurance and control, facilities and internal control functions. He started his career as the software programmer of Pentamaster Technology (M) Sdn. Bhd., a direct wholly-owned subsidiary of the Company in March 1995. Mr. Hon has more than 25 years of experience in automation solutions industry.

Mr. Hon graduated with a higher diploma in computer studies, moderated and assessed by the University of Humberside in United Kingdom, in September 1993. He later obtained a postgraduate certificate in engineering business management from the University of Warwick, United Kingdom, in June 2011 through a distance learning course.

Teoh Siow Khiang

Senior General Manager

Mr. Teoh Siow Khiang ("Mr. Teoh"), aged 64, has been the senior general manager of Pentamaster Instrumentation Sdn. Bhd., a direct wholly-owned subsidiary of the Company ("Pentamaster Instrumentation") since January 2017. He is primarily responsible for overseeing the daily operations of Pentamaster Instrumentation. He joined as a general manager of Pentamaster Instrumentation in January 2006.

He started his career with Hitachi Semiconductor Sdn. Bhd. as a TTL & CMOS IC test Engineer in 1983. He later joined Hewlett Packard as a LED test specialist engineer and expanded the role to be R&D Engineer in LED development. In 1999, he joined the Agilent Technology, a spin-off of Hewlett Packard Company, as an Instrument NPI engineering manager. He was in the pioneer team in setting up the electronics measurement instrument manufacturing operation in Penang. He was subsequently promoted to senior manager.

Mr. Teoh obtained an honours class bachelor's degree of engineering majoring in electrical and a master's degree of engineering from University of Malaya in June 1982 and July 1991, respectively.

Teh Eng Chuan

Chief Operating Officer – automated test equipment division

Mr. Teh Eng Chuan ("Mr. Teh"), aged 47, has been the chief operating officer of Pentamaster Technology (M) Sdn. Bhd.

("Pentamaster Technology") since January 2015. Mr. Teh is primarily responsible for overseeing the daily operations of Pentamaster Technology. He joined as a vision software engineer of Pentamaster Technology in January 1996 and has over 20 years of experience in the machine vision, design and control. Mr. Teh completed a course of higher diploma in computer science in Kolej Damansara Utama (currently known as KDU Penang University College), Malaysia, in April 1995.

Ng Chin Keng

Chief Operating Officer – factory automation solutions division

Mr. Ng Chin Keng ("Mr. Ng"), aged 42, has been the chief operating officer of Pentamaster Equipment Manufacturing Sdn. Bhd., a direct wholly-owned subsidiary of the Company ("Pentamaster Equipment") since January 2015. Mr. Ng is primarily responsible for overseeing the daily operations of Pentamaster Equipment. He joined as an automation software programmer in January 2000. Mr. Ng obtained a bachelor's degree of science in computing and information systems with honours from University of Lincolnshire & Humberside, United Kingdom, in July 2001.

You Chin Teik

Vice President of new business development

Mr. You Chin Teik ("Mr. You"), aged 44, is the vice president of new business development and is primarily responsible for overseeing the research and development activities of our Group. He joined our Group as a vision engineer in January 1998. Mr. You obtained a higher diploma in computer studies from Kolej Damansara Utama (currently known as KDU Penang University College), Malaysia, in February 1998. He later obtained a degree of master of business administration from University of South Australia, Australia, in March 2009 through a distance learning course.

Ong Thean Lye

Chief Operating Officer – medical devices division

Mr. Ong Thean Lye ("Mr. Ong"), aged 61, is currently the chief operating officer of Pentamaster MediQ Sdn. Bhd.

("Pentamaster MediQ") since its inception in 2020. He is primarily responsible for overseeing the daily operation of Pentamaster MediQ in the development of the medical devices business.

Mr. Ong started with Intel Technology Sdn. Bhd. as quality and reliability engineer from 1986 to 1990 before venturing into information technology business. He was a director of Walta Engineering Sdn. Bhd. from 2012 to 2018 and TP Concept Sdn. Bhd. from 2018 to 2020. Currently, Mr. Ong is the director of Walta Centre of Excellence (WCOE) Sdn. Bhd. and a member of the Industrial Advisory Panel (IAP) of the Electrical Engineering Technology Faculty of University Malaysia Perlis (UniMAP).

Mr. Ong graduated with a first class honours in his bachelor degree in applied science majoring in electronic technology in 1986 and later a master degree in the business administration (MBA) in 1996, where both the degrees are from University Science of Malaysia (USM).

CORPORATE GOVERNANCE REPORT

The Board recognises the importance of good corporate governance and the need to ensure that it is observed and practised throughout the Group. The Group strives to attain and maintain good corporate governance practices and is committed to achieving high standard of corporate governance and business ethics to safeguard the interests of shareholders of the Company and to enhance corporate value and accountability.

CORPORATE GOVERNANCE PRACTICES

The shares of the Company have been listed on the Main Board of the Stock Exchange on the Listing Date. The Company has adopted the Corporate Governance Code and Corporate Governance Report (the "CG Code") contained in Appendix 14 of the Rules governing the Listing of Securities on the Stock Exchange (the "Listing Rules") since the Listing Date. During the year and up to the date of this annual report, the Company has complied with all the applicable provisions of the CG Code. Other than disclosed below, the Company reviews its corporate governance practices regularly to ensure compliance with the CG Code.

BOARD OF DIRECTORS

Board composition

The Board is structured with a view to ensuring it is of a high calibre and has a balance of key skills and knowledge so that it works effectively as a team and individuals or groups do not dominate decision-making.

As at the date of this annual report, the Board comprises two executive Directors, one non-executive Director and three independent non-executive Directors. Details of their composition by category are as follows:

Executive Directors:

Mr. Chuah Choon Bin (Président)

Ms. Gan Pei Joo

Non-executive Director

Mr. Leng Kean Yong

Independent non-executive Directors

Dr. Chuah Jin Chong

Ms. Chan May May

Mr. Sim Seng Loong @ Tai Seng

Biographical details of the Directors are set out in the section headed "Directors and Senior Management" of this annual report. None of the members of Board is related to one another, save and except that Ms. Gan Pei Joo, the executive Director, is the sister-in-law of Mr. Chuah Choon Bin, the chairman and executive Director.

Roles and responsibilities of the Board

The Board is responsible for guiding and monitoring the Company and oversees the Group's businesses, strategic decisions and performance and is collectively responsible for promoting the success of the Company by directing and supervising its affairs. The Board delegates the day-to-day management of the business to the executive Directors and the management team. However, certain functions are specifically reserved for the Board which include the following:

  • • in conjunction with management, establishing a vision and strategies for the Group;

  • • approving the Group's annual business plan and budget;

  • • approving specific items of material capital expenditure, major acquisitions, investments and disinvestments;

  • • appointing Directors to the Board;

  • • approving any significant changes to accounting policies;

  • • approving public announcements, including financial statements;

  • • approving any interim dividends and recommending any final dividends to Shareholders;

  • • approving all circulars, statements and corresponding documents sent to Shareholders;

  • • approving the terms of reference and membership of Board Committees;

  • • approving Company policies which may be developed from time to time;

  • • providing leadership and strategic directions for the Group;

  • • overseeing the proper conduct of the business;

  • • ensuring prudent and effective controls and risk management system; et

  • • Overseeing the development and implementation of shareholder communication policy.

Chairman and Chief Executive

The CG Code provision A.2.1 requires that the roles of chairman and chief executive be separate and not performed by the same individual to ensure there is a clear division of responsibilities between the running of the Board and the executives who manage the business.

Mr. Chuah Choon Bin who is the chairman of the Board of the Company, provides leadership and is responsible for ensuring that the Board is functioning properly with good corporate governance practices and procedures. The Chairman also ensures that Board discussions are conducted in a manner that all views are taken into account before a decision is made.

The Company currently has not appointed any chief executive. The day-to-day management of business has been properly delegated to different individuals by the Board.

Ms. Gan Pei Joo, being the executive Director, is responsible for the overall management, corporate affairs, finance and control functions and budgeting of the Company. With the support of the senior management, the executive Directors have the general responsibility for day-to-day management of the Group's business, implementation of the policies of the Board and making operational decisions. The Board is regularly provided with adequate, complete and reliable information of the Company in a timely manner, which includes but not limited to, the recent development and prospects of the Group. Therefore, the Board considers that there is sufficient balance of power and authority between the Board and the management of the Company, and that power is not concentrated in the hands of any one individual.

Non-executive Directors and Independent non-executive Directors

The role of the non-executive Directors is to bring independent and objective judgment to the Board which mitigates risks arising from conflict of interest or undue influence from interested parties and protects the interest of minority shareholders. The Board recognises that it is important to periodically assess whether a Director who is designated as independent continue to satisfy such designation. Towards this end, an assessment of independence in accordance with the independence guidelines set out in Rule 3.13 of the Listing Rules is carried out on each of the independent non-executive Directors annually by every other member of the Board.

After the assessment, all independent non-executive Directors fulfil the independence requirements set out in Rule 3.13 of the Listing Rules. The Company has received written annual confirmation from each of the independent non-executive Directors in respect of his/her independence in accordance with the independence guidelines set out in Rule 3.13 of the Listing Rules. The Company considers all independent non-executive Directors to be independent. In compliance with Rule 3.13 of the Listing Rules, the Company has appointed three independent non-executive Directors, representing more than one-third of the Board.

Each of the non-executive Director and independent non-executive Directors has signed a letter of appointment with the Company for a term of three years. The term of appointment of each Director is subject to retirement by rotation and re-election at annual general meeting in accordance with the Articles of Association of the Company and the Listing Rules.

Board diversity policy

The Board has adopted a board diversity policy at a board meeting held on 19 December 2017. The Company recognises and embraces the importance and benefit to achieve diversity on the Company's Board to corporate governance and the Board's effectiveness. It endeavours to ensure that the Board has the appropriate balance of skills, experience and diversity of perspectives necessary to enhance the effectiveness of the Board and to maintain high standards of corporate governance. Board nomination and appointments will continue to be made on merit basis based on its business needs from time to time while taking into account diversity. Selection of Board candidates shall be based on a range of diversity perspectives with reference to the Company's business model and specific needs, including but not limited to gender, age, race, language, cultural background, educational background, industry experience and professional experience.

The Board will review the board diversity policy on a regular basis to ensure its continued effectiveness. During the year and as at the date of this annual report, the Board comprises six Directors, two of which are female. The following table further illustrates the diversity of the Board members as of the date of this annual report.

Name of Director

Age Group

Educational Background

Professional Experience

40-49

50-59

60-69

Engineering

Law

Accountancy and finance

Medicine

Engineering

Law

Accountancy and finance

Medicine

Mr. Chuah Choon Bin

Ms. Gan Pei Joo

Mr. Leng Kean Yong

Mr. Sim Seng Loong@Tai Seng

Dr. Chuah Jin Chong

Ms. Chan May May

✓ ✓

✓ ✓ ✓

✓ ✓ ✓

✓ ✓ ✓

Each of the Board members possessed different educational background and professional experience including engineering, law, accountancy and finance and medicine. The Board is characterised by significant diversity in terms of gender, age, education background and professional experience.

Board committee

The Board has established three committees, namely the audit committee (the "Audit Committee"), remuneration committee (the "Remuneration Committee") and nomination committee (the "Nomination Committee") on 19 December 2017, to oversee particular aspects of the Group's affairs. Each of the three committees has sufficient resources and its specific terms of reference that are approved by the Board, relating to its responsibilities, duties, powers and functions, which are posted to the Stock Exchange's website and the Company's website.

The board committees will regularly report to the Board on decisions or recommendations made.

Audit committee

The Company has established the Audit Committee pursuant to a resolution of the Board passed on 19 December 2017 with written terms of reference in compliance with the CG Code and Rules 3.21 of the Listing Rules. The Audit Committee is primarily responsible for (i) reviewing and monitoring the financial reporting, risk management and internal control systems of the Company, (ii) making recommendations to the Board on the appointment and removal of external auditors; (iii) performing the Company's corporate governance functions; and (iv) to monitor continuing connected transactions (if any).

The Audit Committee currently consists of the non-executive Director, namely Mr. Leng Kean Yong and two independent non-executive Directors, namely Mr. Sim Seng Loong @ Tai Seng and Ms. Chan May May. Mr Sim Seng Loong @ Tai Seng who is the chairman of the Audit Committee holds the appropriate professional qualifications as required under Rules 3.10(2) of the Listing Rules.

Pursuant to the terms of reference of the Audit Committee, Audit Committee meeting shall be held at least twice every year or more frequently if circumstances require. During the year ended 31 December 2020, four Audit Committee meetings were held, among other things, to review and consider the followings:

  • (a) reviewed the quarterly, interim and annual financial results of the Company as well as its results announcement and subsequently presented the relevant reports to the Board for approval before its subsequent release to Stock Exchange's website and the Company's website;

  • (b) monitored the Group's financial controls, internal control and risk management systems;

  • (c) reviewed the external auditors' management letter and any material queries or issues raised by the auditor; et

  • (d) reviewed the remuneration, qualifications and independence of the external auditor.

Remuneration committee

The Company has established the Remuneration Committee pursuant to a resolution of the Board passed on 19 December 2017 with written terms of reference in compliance with the CG Code. The primary duties of the Remuneration Committee are (i) to review and make recommendations to the Board on the Company's policy and structure for all directors' and senior management's remuneration; (ii) to review the Group's policy on expense reimbursements for the Directors and senior management; (iii) to make recommendations to the Board on the remuneration of non-executive Directors; and (iv) to consider salaries paid by comparable companies, time commitment and responsibilities and employment conditions elsewhere in the Group.

The Remuneration Committee currently consists of one non-executive Director, Mr. Leng Kean Yong, and two independent non-executive Directors, namely Mr. Sim Seng Loong @ Tai Seng (Chairman) and Dr. Chuah Jin Chong.

Pursuant to the terms of reference of the Remuneration Committee, Remuneration Committee meeting shall be held at least once every year. During the year ended 31 December 2020, one Remuneration Committee meeting was held to review and make recommendation to the Board regarding the remuneration packages of Directors and senior management for the directors and senior management.

Details of the Directors' remuneration for the year are set out in Note 11 to the consolidated financial statements. The remuneration of the senior management of the Group by band for the year ended 31 December 2020 is set out below:

Number of senior

Remuneration bands

management

HK$1,000,001 to HK$1,200,000

4

HK$0 to HK$1,000,000

2

6

Nomination committee

The Company has established the Nomination Committee pursuant to a resolution of the Board passed on 19 December 2017 with written terms of reference in compliance with the CG Code. The primary duties of the Nomination Committee are (i) to review the structure, size and composition (including the skills, knowledge, experience and diversity of perspectives) of the Board at least annually; (ii) to identify individuals suitably qualified to become Board members; (iii) to assess the independence of independent non-executive Directors; (iv) to make recommendations to the Board on the appointment or re-appointment of Directors; and (v) to review the policy on Board diversity.

The Nomination Committee currently consists of all three independent non-executive Directors, namely Dr. Chuah Jin Chong (Chairman), Mr. Sim Seng Loong @ Tai Seng and Ms. Chan May May.

Pursuant to the terms of reference of the Nomination Committee, Nomination Committee meeting shall be held at least once every year. During the year ended 31 December 2020, one Nomination Committee meeting was held, among other things, to review and consider the followings:

  • (a) the retirement and re-nomination of directors for re-election at the forthcoming annual general meeting of the Company;

  • (b) the independence of the independent non-executive directors;

  • (c) the Board structure, size, composition and board diversity (including skills, knowledge and experience etc.); et

  • (d) the effectiveness of the related Board Diversity Policy and the Director's Nomination Policy.

Nomination policy

The Board has adopted a nomination policy which set out the criteria and process in the nomination and appointment of Directors. The policy stipulates the key selection criteria of the Company for the nomination of Directors as set out below.

  • (a) character and integrity;

  • (b) qualifications including professional qualifications, skills, knowledge and experience that are relevant to the Company's business and corporate strategy;

  • (c) willingness to devote adequate time to discharge duties as a Board member and other directorships and significant commitments;

  • (d) requirement for the Board to have independent directors in accordance with the Listing Rules and whether the candidates would be considered independent with reference to the independence guidelines set out in the Listing Rules;

  • (e) the Company's Board Diversity Policy and any measurable objectives adopted by the Nomination Committee for achieving diversity on the Board; et

  • (f) such other perspectives appropriate to the Company's business and succession planning and where applicable, may be adopted and/or amended by the Board and/or the Nomination Committee from time to time for nomination of Directors and succession planning.

The Board has the relevant procedures for Directors' nomination which are pursuant to Listing Rules and the articles of association of the Company (the "Articles of Association"). The details are set out in the section headed "Appointment and re-election of Directors" in this annual report.

Attendance Records of Meetings

The attendance of each Director at Board meetings, Audit Committee meeting, Remuneration Committee meeting, Nomination Committee meeting and general meeting during the year is set out in the following table:

Board Meeting

Audit Committee meeting

Remuneration

Committee meetingNomination Committee meeting

General meeting

Number of meetings held during the year

4

4

1

1 1

Name of Directors

Number of meetings attended/Number of meetings entitled to attend

Executive Directors

Mr. Chuah Choon Bin (Président)

Ms. Gan Pei Joo

4/4 4/4

4/4 4/4

1/1 1/1

1/1 1/1

1/1 1/1

Non-executive Director

Mr. Leng Kean Yong

4/4

4/4

1/1

1/1 1/1

Independent non-executive Directors

Dr. Chuah Jin Chong

Ms. Chan May May

Mr. Sim Seng Loong @ Tai Seng

4/4 4/4 4/4

4/4 4/4 4/4

1/1 1/1 1/1

1/1 1/1

1/1 1/1

1/1 1/1

Corporate Governance Functions

The Audit Committee is responsible for performing the corporate governance functions in compliance with the code provision D.3.1 of the CG Code, and discussed (a) to develop and review an Company's policies and practices on corporate governance and make recommendations to the Board; (b) to review and monitor the training and continuous professional development ("CPD") of the Directors and senior management; (c) to review and monitor the Company's policies and practices on compliance with legal and regulatory requirements; (d) to develop, review and monitor the code of conduct and compliance manual (if any) applicable to employees and the Directors; and (e) to review the Company's compliance with the code and disclosure in this Corporate Governance Report.

Appointment and re-election of Directors

Each of the executive Directors has entered into a service contract with the Company and is appointed for a specific term of three years unless terminated by not less than three months' notice in writing served by either the executive Director or the Company. The non-executive Director and each of the independent non-executive has entered into a letter of appointment with the Company and is appointed for a specific term of three years.

The Company uses a formal and transparent procedure for the appointment, election and removal of Directors, which is set out in the Articles of Association and is led by the Nomination Committee, which will make recommendations on appointment of new Directors to the Board for approval.

Potential new Board members are identified on the basis of skills and experience which, in the opinion of the Directors, will enable them to make a positive contribution to the performance of the Board.

The procedures and process of appointment, re-election and removal of Directors are laid down in the Articles of Association. The Nomination Committee is responsible for reviewing the Board composition, developing and formulating the relevant procedures for nomination and appointment of Directors, monitoring the appointment and succession planning of Directors and assessing the independence of independent non-executive Directors.

All Directors are subject to retirement and re-election in accordance with the Articles of Association. Pursuant to the Articles of Association, one-third of all Directors (whether executive or non-executive) shall retire from office by rotation provided that every Director shall be subject to retirement by rotation and re-election at each annual general meeting at least once every three years.

The Articles of Association provides that any Director appointed by the Board to fill a casual vacancy in the Board shall hold office only until the first general meeting of the Company or as an addition to the existing Board, shall hold office only until the next following annual general meeting of the Company after his/her appointment and shall then be eligible for re-election.

Full details of changes in the Board during the year and up to the date of this annual report are provided in the section of this annual report headed "Directors' Report".

Continuous professional development

According to code provision A.6.5 of the CG Code, all Directors should participate in continuous professional development to develop and refresh their knowledge and skills. This is to ensure that their contribution to the Board remains informed and relevant. The Directors recognise the need to continue to undergo relevant training programs to update their knowledge and enhance their skills where relevant to enable them to sustain their active participation as a board member. During the year ended 31 December 2020, the Directors participated in the following training:

Name of Directors

Type of trainings

Executive Directors Chuah Choon Bin Gan Pei Joo

A, B, C A, B, C

Non-executive Director Leng Kean Yong

A, B, C

Independent non-executive Directors Chuah Jin Chong

  • A: attending seminars and/or conferences and/or forums

  • B: attending in-house training relating to the ongoing compliance obligations, corporate governance and other related topics

  • C: reading newspapers, journals, Company's newsletters and updates relating to the economy, general business, automotive industry or Directors' duties and responsibilities, etc.

Directors' and Officers' insurance

The Company has arranged appropriate insurance cover in respect of potential legal actions against its Directors and Officers.

Model Code for Securities transactions

The Company has adopted the Model Code for Securities Transactions by Directors of the Listed Issuers (the "Model Code") as set out in Appendix 10 to the Listing Rules as its own code of conduct regarding Directors' securities transactions (the "Securities Dealing Code"). Specific enquiry has been made with all the Directors and all of them confirmed that they have complied with the Model Code and the Securities Dealing Code during the year and up to the date of this annual report.

AUDITOR'S REMUNERATION

The amount of fees charged by the Company's external auditor, Grant Thornton Hong Kong Limited ("GTHK") generally depends on the scope and volume of the external auditors' work performed.

For the year ended 31 December 2020, the remuneration paid or payable to GTHK in respect of the statutory audit services and non-audit services for our Group are as follows:

Services rendered

HK$

Audit service

650,000

Non-audit services

Total

650,000

COMPANY SECRETARY

Ms. Tsui Sum Yi, a manager, Corporate Services of Vistra (Hong Kong) Limited, an external service provider, has been engaged by the Company as its company secretary to support the Chairman, the Board and the Board Committees by ensuring good information flow and that the Board policy and procedures are followed. The primary contact person of the Company is Ms. Gan Pei Joo, the executive Director of the Company.

Ms. Tsui undertook at least 15 hours of relevant professional training annually to update her skills and knowledge.

DIRECTORS' RESPONSIBILITY IN RESPECT OF THE FINANCIAL STATEMENTS

It is the responsibility of the Directors to prepare the financial statements for each financial year which give a true and fair view of the state of affairs of the Group and of the Company as at the end of the financial year and of the results and cash flows of the Group and of the Company for the financial year then ended.

The Directors consider that, in preparing the financial statements, the Group has adopted appropriate accounting policies, consistently applied and supported by reasonable and prudent judgements and estimates. The Directors also consider that all applicable approved accounting standards have been complied with and confirm that the financial statements have been prepared on a going concern basis.

The Directors were not aware of any material uncertainties relating to events or conditions that might cast significant doubt upon the Company's ability to continue as a going concern. The responsibility of the external auditors is to form an independent opinion, based on their audit, on those consolidated financial statements prepared by the Board and to report their opinion to the shareholders. The independent auditor's report by external auditor, GTHK, about their reporting responsibility on the consolidated financial statements of our Group is set out in the independent auditor's report of this annual report.

RISK MANAGEMENT AND INTERNAL CONTROL

The Board acknowledged they are responsible for the adequacy and effectiveness of the Group's risk management and internal control system through the Audit Committee. The Board recognises the importance of good corporate governance and is committed to maintaining a sound system of internal control and risk management. This includes the establishment of an appropriate control environment and risk management framework, processes and structures and continually reviewing the adequacy and integrity of the said systems to safeguard shareholders' investment and the Group's assets.

The system of risk management and internal control covers finance, operations, management information systems and compliance with relevant laws, regulations, policies and procedures. There is an ongoing process to identify, evaluate and manage significant risk faced or potentially to be encountered by the Group. The process is regularly reviewed by the Board.

Due to the limitations that are inherent in any system of internal controls, these systems are designed to manage, rather than eliminate the risk of failure to achieve business objectives and it can only provide reasonable and not absolute assurance against material misstatement or loss. The Audit Committee reviews and monitors the scope, issues, results and action plans in relation to or arising from the internal and external audits. The Audit Committee also assists the Board in fulfilling its oversight and corporate governance roles in the Group's risk management and internal controls as well as effectiveness of the internal audit functions.

Both the Audit Committee and the Board review the effectiveness of the risk management function and deliberate on the risk management and internal control frameworks, functions, processes and reports on a regular basis. The framework is continually monitored to ensure it is responsive to the changes in the business environment and clearly communicated to all levels.

The key features of the risk management and internal control systems of the Group are described under the following headings:

Risk management and internal control structure

The Board has established a risk management committee (the "RMC") which comprises the Chairman, chief financial officer and senior management to assist in monitoring the risk management process within the Group and is responsible for the establishment and the maintenance of a framework of risk management for the Group.

The Group has an established internal control structure and is committed to evaluating, enhancing and maintaining the structure to ensure effective control over the Group's business operations and to safeguard the value and security of the Group's assets. There is a clearly defined operating structure with lines of responsibilities and delegated authority in place to assist the Board to maintain a proper control environment. The control structure and environment are supported by the following activities:

  • (a) an organisation structure with clearly defined lines of responsibility, authority and accountability;

  • (b) documented internal policies, guidelines, procedures and manuals, which are updated from time to time;

  • (c) regular Board, RMC and management meetings where information is provided to the Board and management covering financial performance and operation;

  • (d) quarterly review of financial results by the Board and Audit Committee;

  • (e) regular training and development programmes attended by employees with the objective of enhancing their knowledge and competency; et

  • (f) ongoing review on the system of internal controls by an independent internal audit function. Results of such review are reported to the Audit Committee, which in turn reports to the Board.

Risk management process

The Group has an ongoing risk management process that involve, amongst others, (i) an annual risk identification and analysis exercise which involve assessment of the consequence and likelihood of risks and the development of risk management plans for mitigating such risks; and (ii) an annual review of the implementation of the risk management plans. This process is reviewed and monitored by RMC.

For the year under review, the RMC is assisted by the senior management team from various divisions to effectively embed risk management and control into the corporate culture, processes and structures within the Group. The RMC has identified and reviewed the major business risk factors affecting the Group and derive risk management strategies to manage and mitigate the risks identified. The review covered all material controls, including financial, operational and compliance controls. The following factors were considered in the risk assessment:

  • (a) the nature and extent of risks facing the Group;

  • (b) the extent and categories of risk which it regards as acceptable for the Group to bear;

  • (c) the likelihood of the risks concerned materializing; et

  • (d) the Group's ability to reduce the incidence of risks that may materialise and their impact on the business.

Moreover, the internal audit function of the Company assists Audit Committee and RMC to monitor the internal governance of the Company and provides independent assurance as to the adequacy and effectiveness of the Company's risk management and internal control systems.

For the year ended 31 December 2020, the Board conducted a review of the effectiveness of the risk management and internal control system, which covered the areas of financial, operational, compliance and risk management. The Board considered the system of the Group to be adequate and effective during the year. As at the date of this annual report, the Group has engaged an independent internal control consultant to review the adequacy and effectiveness of the Group's internal control system. The results and findings of such review from internal control consultant were directly reported to the Audit Committee. Going forward, the Directors will continue to regularly assess and review the effectiveness of the Group's risk management and internal control system.

DISCLOSURE OF INSIDE INFORMATION

The Group acknowledges its obligation under the Securities and Futures Ordinance and the Listing Rules, and the overriding principle that inside information should be announced immediately when it is the subject of a decision.

The Company makes reference to the "Guideline on Disclosure of Inside Information" issued by the Securities and Futures Commission of Hong Kong in 2012 in handling and dissemination of inside information. The Company has also established and implemented procedures for responding to external enquiries about the Group's affairs. Executive Directors or other senior management staff nominated by the Board as well as the Company Secretary of the Company are authorised to communicate with parties outside the Group.

SHAREHOLDERS' RIGHTS

An annual general meeting of the Company shall be held each year and at the place as may be determined by the Board. Each general meeting other than an annual general meeting, shall be called an extraordinary general meeting ("EGM").

Procedures for shareholders to convene an EGM

Pursuant to the Articles of Association, EGM may be convened on the written request of any two or more Shareholders deposited at the principal place of business of the Company in Hong Kong or, in the event the Company ceases to have such a principal place of business, the registered office specifying the objects of the meeting and signed by the requisitionists, provided that such requisitionists held as at the date of deposit of the request not less than one-tenth of the paid up capital of the Company which carries the right of voting at general meetings of the Company.

EGM may also be convened on the written requisition of any one member which is a recognised clearing house (or its nominee(s)) deposited at the principal office of the Company in Hong Kong or, in the event the Company ceases to have such a principal office, the registered office specifying the objects of the meeting and signed by the requisitionist, provided that such requisitionist held as at the date of deposit of the requisition not less than one-tenth of the paid up capital of the Company which carries the right of voting at general meetings of the Company.

If the Board does not within 21 days from the date of deposit of the requisition proceed duly to convene the meeting to be held within a further 21 days, the requisitionist(s) themselves or any of them representing more than one-half of the total voting rights of all of them, may convene the general meeting in the same manner, as nearly as possible, as that in which meetings may be convened by the Board provided that any meeting so convened shall not be held after the expiration of three months from the date of deposit of the requisition, and all reasonable expenses incurred by the requisitionist(s) as a result of the failure of the Board shall be reimbursed to them by the Company.

Procedures for putting forward proposals at shareholders' meetings

There are no provisions in the Articles of Association allowing Shareholders to put forward new resolutions at general meetings. Shareholders who wish to make proposals or move a resolution may, however, convene an EGM in accordance with the "Procedures for shareholders to convene an EGM" set out above.

Procedures for putting enquiries to the Board

Shareholders may at any time send their enquiries and concerns in writing to the Board, which contact details are as follows:

Pentamaster International Limited Plot 18 & 19, Technoplex

Medan Bayan Lepas

Taman Perindustrian Bayan Lepas Phase IV, 11900 Penang Malaysia

Telephone: (+604) 646 9212 Fax: (+604) 646 7212

E-mail:investor.relation@pentamaster.com.my

COMMUNICATION WITH SHAREHOLDERS AND INVESTORS

The Board adopted a shareholders' communication policy at a board meeting held on 19 December 2017. The Board and senior management recognise their responsibilities to represent the interests of all shareholders and to maximise shareholder value. Communication with shareholders and accountability to shareholders is a high priority of the Company. The Company has established various and a wide range of communication channels with the shareholders with the objective of ensuring that the shareholders have equal and timely access to information about the Company in order to enable the shareholders to exercise their rights in an informed manner and allow them to engage actively with the Company. The channels include general meetings, annual reports, interim reports and quarterly reports, notices and circulars, announcements, and all the published disclosures submitted to the Stock Exchange. In addition, the Company updates its website from time to time to provide the shareholders with information of the Company's recent development.

The annual general meeting of the Company will provide a forum for the Board and the shareholders to communicate. The Board will answer questions raised by shareholders at the annual general meeting. At the meeting, separate resolution will be proposed by the Chairman for each issue and voting on each resolution will be conducted by poll. The results of the poll will be posted on the respective websites of the Stock Exchange and the Company on the same day of the meeting.

The Company has been striving to maintain high transparency and communicate with the shareholders and the investors of the Company through diversified communication channels. The Company holds press conferences and analyst briefing sessions from time to time to provide the latest business information of the Company to the investors.

CONSTITUTIONAL DOCUMENTS

There were no significant changes in the constitutional documents of the Company during the year.

DIRECTORS' REPORT

The Directors are pleased to present their report and the audited consolidated financial statements of the Group for the year ended 31 December 2020.

CORPORATE INFORMATION AND LISTING

The Company was incorporated in the Cayman Islands as an exempted company with limited liability on 12 June 2017 under the Companies Law. The Company's shares were listed on the Main Board of the Stock Exchange on 19 January 2018.

PRINCIPAL ACTIVITIES

The Company is an investment holding company and has not carried out any business since its incorporation.

Details of the principal activities of its subsidiaries are set out in note 18 to the consolidated financial statements. There were no significant changes in the nature of the Group's principal activities during the year ended 31 December 2020.

BUSINESS REVIEW

A review of the business of the Group during the year, an analysis of the Group's financial performance during the year using key performance indicators, a discussion on the Group's future business development and a description of the risks and uncertainties that the Group may be facing are set out in the section headed "Chairman's statement" and "Management Discussion and Analysis" on pages 4 to 5 and pages 6 to 16 of the annual report respectively. The financial risk management objectives and policies of the Group are set out in Note 40 to the consolidated financial statements. In addition, discussions on the Group's environmental policies, relationships with its key stakeholders and compliance with relevant laws and regulations which have a significant impact on the Group are illustrated in pages 42 to 43 of the annual report. These discussions form part of this directors' report.

The analysis of the principal activities and geographical locations of the operations of the Group are set out in note 5 to the consolidated financial statements.

RESULTS AND APPROPRIATIONS

The results of the Group for the year ended 31 December 2020 and the financial position of the Group at that date are set out in the consolidated financial statements on pages 58 to 63.

DIVIDEND POLICY

The Company has adopted a dividend policy ("Dividend Policy") on 27 February 2019 with the aim to set out the principles and guidelines that the Company intends to apply in relation to the declaration, payment or distribution of its net profits as dividends to the shareholders of the Company.

The Board has the discretion to declare and distribute dividends to the Shareholders, subject to the Articles of Association and all applicable laws and regulations. In proposing any dividend payout, the Board shall also take into account, inter alia, the Group's operations, earnings, financial condition, working capital requirements, future expansion plans and other factors it may deem relevant and appropriate. Any final dividend for a financial year declared by the Company must be approved by an ordinary resolution of the shareholders at an annual general meeting of the Company and must not exceed the amount recommended by the Board.

The Dividend Policy will be reviewed from time to time and there is no assurance that a dividend will be proposed or declared in any specific period. The Company's Dividend Policy is available on the Company's website.

FINAL DIVIDEND

In respect of the year ended 31 December 2020, the Board recommends the payment of a final dividend of HK$0.02 per share ("Final Dividend") subject to approval of the shareholders at the forthcoming annual general meeting of the Company.

ISSUE OF BONUS SHARES

The Board proposes to make a bonus issue of one new share for every two shares held (2019: Nil) to shareholders whose names appear on the register of members of the Company on Tuesday, 22 June 2021 (the "Bonus Shares"). The relevant resolution will be proposed at the forthcoming annual general meeting of the Company, and if passed and upon the Listing Committee of the Stock Exchange granting the listing of and permission to deal in such new shares, share certificates for the Bonus Shares will be posted on Wednesday, 7 July 2021. For details, please refer to the Company's announcement dated 16 March 2021.

ANNUAL GENERAL MEETING AND CLOSURE OF THE REGISTER OF MEMBERS

The forthcoming annual general meeting of the Company ("AGM") will be held on Thursday, 10 June 2021. The register of members of the Company will be closed for the following periods:

  • a) For the purpose of determining shareholders who are entitled to attend and vote at the AGM, the register of members of the Company will be closed from Monday, 7 June 2021 to Thursday, 10 June 2021 (both days inclusive), during which period no transfer of Shares will be registered. In order to qualify for the attendance and voting at the AGM, all properly completed transfer forms accompanied by the relevant share certificates must be lodged with the Company's branch share registrar in Hong Kong, Tricor Investor Services Limited, at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong not later than 4:30 p.m. on Friday, 4 June 2021.

  • b) For determining the entitlement to the Final Dividend, the register of members of the Company will be closed from Friday, 18 June 2021 to Tuesday, 22 June 2021, both days inclusive, during which period no transfer of shares of the Company will be registered. In order to qualify for the Final Dividend, all transfer of shares accompanied by the relevant share certificates and properly completed transfer forms must be lodged with the branch share registrar of the Company in Hong Kong, Tricor Investor Services Limited at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong, for registration not later than 4:30 p.m. on Thursday, 17 June 2021.

  • c) For the purpose of determining shareholders' entitlement to the Bonus Shares, the register of members of the Company will be closed from Friday, 18 June 2021 to Tuesday, 22 June 2021 (both days inclusive), during which period no transfer of Shares will be registered. In order to qualify for the Bonus Shares, all transfers of Shares accompanied by the relevant share certificates must be lodged with Tricor Investor Services Limited, the Hong Kong branch share registrar of the Company, at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong for registration not later than 4:30 p.m. on Thursday, 17 June 2021.

SHARE CAPITAL

Details of the movements in the share capital of the Company are set out in Note 26 to the consolidated financial statements.

DISTRIBUTABLE RESERVES

Distributable reserves of the Company as at 31 December 2020, calculated under Companies Law, Cap. 22 (Laws 3 of 1961 as consolidated and revised) of the Cayman Islands, amounted to approximately MYR128,239,000 (2019:

MYR148,391,000)

DONATIONS

During the year under review, the Group made charitable donations amounting to MYR31,000 (2019: MYR199,000).The rest of the donations amounting to MYR114,000 were made through Pentamaster Corporation Berhad which is the immediate holding company of the Company.

PROPERTY, PLANT AND EQUIPMENT

During the year, the Group acquired property, plant and equipment totalling approximately RM40.9 million (2019: RM14.0 million). Details of the movements in the property, plant and equipment of the Group during the year ended 31 December 2020 are set out in note 14 to the consolidated financial statements of this annual report.

UPDATE ON PROFIT GUARANTEE IN RESPECT OF THE ACQUISITION OF 100% EQUITY INTEREST OF TP CONCEPT

References are made to (i) the announcement of the Company dated 26 September 2019 in relation to the acquisition of 100% equity interest in TP Concept and (ii) the announcement of the Company dated 25 February 2021 in relation to the extension of profit guarantee period. Unless otherwise defined, capitalised terms used herein shall have the same meanings as those defined in the said announcements of the Company.

Based on the financial statement of TP Concept for FYE 2020 and FYE 2021, the Vendors do not expect the Aggregate PAT of TP Concept to meet the Aggregate Profit Guarantee.

Given the reasons for the Shortfall were mainly due to the extraordinary and unexpected circumstances caused by the COVID-19 pandemic which were beyond the control of the Vendors, and considering the business prospect of TP Concept, Pentamaster Equipment Manufacturing Sdn. Bhd. and the Vendors (the "Parties") have entered into a supplemental share sale agreement on 25 February 2021 (the "Supplemental Agreement") to extend the Profit Guarantee Period for the Vendors to fulfill the Aggregate Profit Guarantee. The Parties have mutually agreed that the Aggregate PAT to be used for determining the Aggregate Profit Guarantee shall be the Aggregate PAT of TP Concept for FPE 2019, NFYE 2020, NFYE 2021 and NFYE 2022 ("Extended Profit Guarantee Period").

In summary, with the extension of Profit Guarantee Period, the Aggregate PAT in respect of TP Concept for FPE 2019,

NFYE 2020, NFYE 2021 and NFYE 2022 shall not be less than MYR12,000,000. In the event the Aggregate PAT cannot be achieved during the Extended Profit Guarantee Period, the Vendors shall be liable to pay the shortfall to the Purchaser up to MYR12,000,000.

Save as disclosed elsewhere in this annual report, there is no material subsequent event undertaken by the Company or by the Group after 31 December 2020 and up to the date of this annual report.

FIVE YEAR FINANCIAL SUMMARY

A summary of the published results and assets and liabilities of the Group for the last five financial years, as extracted from the audited consolidated financial statements and the Prospectus of the Company, is set out in page 17 of this annual report. This summary does not form part of the audited consolidated financial statements of the Group.

ENVIRONMENTAL POLICIES AND PERFORMANCE

The industry that we operate in is subject to domestic and foreign health, safety and environmental laws and regulations. In order to ensure compliance with the applicable laws and regulations, our Group has established an internal policy to monitor and control health and work safety issues. Our Group's internal health and safety officer and committee are responsible for the development and implementation of health and safety rules as well as a safe system of work. Their responsibilities include carrying out studies on the trend of accident and its prevention, reviewing the effectiveness of our current health and safety system and making recommendations to our management for any improvement on relevant policies. Health and safety inspection will also be carried out by our management once every quarter. In addition, information, instruction and supervision relating to health and safety issues are provided to all of our employees and any jobs with potential safety issue. Training sessions including emergency first-aid are provided to emergency response team and employee safety and health committee and fire drill is carried out at least once a year within the Group.

In respect of environmental matters, it is our Group's policy to ensure appropriate response to any situations involving leakage of chemicals or hazardous gas emission as well as prevention or mitigation of the environmental impacts associated with the above situations. Further, we also dispose of our scrap materials and electrical wastes through companies approved by the government to handle such items. Below are some initiatives undertaken by the Group during the year:

3R Concepts (Reduce, Reuse and Recycle)

The Group remains committed in ensuring that it plays its role in sustaining a greener environment. During the year under review, the Group continued with the recycling and waste management initiative whereby recycle bins are provided to spur waste segregation for proper recycling and disposal purposes. Our employees are educated on the concept of "Reduce, Reuse and Recycle" which is an excellent way of saving energy and conserving the environment.

"Cost With No Waste" initiative

The Group is committed to make efficient use of its resources by not producing unnecessary wastage. The Group has implemented "Cost With No Waste" initiative since 2016 in ensuring no unnecessary wastage and impact in the ecosystem where it operates in.

During the year, the Group did not record any material violation of any health, work safety and environmental laws and regulations applicable to our operations that resulted in claim or penalty imposed on our Group. Our Group has complied with the relevant environmental laws and regulations in all material respects.

As required by the Listing Rules, the Company is required to report on environmental, social and governance ("ESG") information of the Group on an annual basis and regarding the same period covered in this annual report. The Company will publish the ESG report on the websites of the Company and the Stock Exchange in due course.

STAKEHOLDERS' ENGAGEMENT

Stakeholders are defined as parties that have interest in the Group and can either affect or be affected by the Group's business activities. We conduct periodic engagement with our various stakeholders because we recognise that their perspectives are important in helping the Group to prioritise the actions for continuous sustainability improvement of the Group.

The following table summarises the Group's key stakeholders and how the Group engages them:

Stakeholders

Method of Engagement

Shareholders

Annual General Meetings

Corporate communication and investor relations

Employees

Employees briefings

Open communication via internal channels such as in-house emails and open door

policy

Customers

Customers' surveys and feedbacks

Face to face meetings

Suppliers

Suppliers' audit

Suppliers' feedbacks

Suppliers' meetings

Gouvernement

Compliance with government legislative framework

Communities

Meeting with local communities

COMPLIANCE WITH APPLICABLE LAWS AND REGULATIONS

To the best of the Directors' knowledge, information and belief, having made all reasonable enquiries, our Group has complied in material respects with the relevant laws and regulations that have a significant impact on the business and operation of our Group during the year and up to the date of this annual report.

DIRECTORS

The Directors of the Company during the year and up to the date of this report are as follows:

Executive Directors

Mr. Chuah Choon Bin (Président)

Ms. Gan Pei Joo

Non-executive Director

Mr. Leng Kean Yong

Independent non-executive Directors

Dr. Chuah Jin Chong

Ms. Chan May May

Mr. Sim Seng Loong @ Tai Seng

Pursuant to the Articles of Association, one-third of the Directors for the time being (or, if the number of Directors is not a multiple of three, the number nearest to but not less than one-third) shall retire from office by rotation, provided that every Director shall be subject to retirement at an annual general meeting at least once every three years.

Any Director appointed to fill a casual vacancy shall, hold office only until the next following general meeting of the Company and such Director shall then be eligible for re-election at the relevant general meeting by the Shareholders. In the upcoming annual general meeting, all the Directors will retire and be subject to re-election.

BIOGRAPHICAL DETAILS OF DIRECTORS AND SENIOR MANAGEMENT

Biographical details of the Directors and the senior management of the Group are set out in the section headed "Directors and Senior Management" of this annual report.

CHANGE IN THE DIRECTORS' INFORMATION PURSUANT TO RULE 13.51B OF THE LISTING RULES

The change in Directors' information as required to be disclosed pursuant to Rule 13.51B(1) of the Listing Rules is set out below:

  • – Ms. Gan Pei Joo, an executive Director, has been appointed as an executive director of PCB with effect from 19

    March 2021.

  • – Mr. Sim Seng Loong@Tai Seng, an independent non-executive Director, resigned as independent director of Jack-in Group Limited, a company listed on the Australian Securities Exchange (ASX: JIP) with effect from 27 July 2020.

    Also, he has been appointed as an independent non-executive director of Ramssol Group Berhad with effect from 15

    September 2020.

  • – Ms. Chan May May, an independent non-executive Director, resigned as independent non-executive director of BGMC International Limited, a company listed on the Main Board of the Stock Exchange (stock code: 1693) with effect from 7 October 2020.

DIRECTORS' SERVICE CONTRACTS

Each of the Directors has entered into a service agreement with the Company on 19 December 2017 for an initial term of three years commencing from the Listing Date. Either party may terminate the service agreement by giving to the other not less than three months' prior notice in writing at any time during the initial term. None of the Directors who are proposed for re-election at the annual general meeting has an unexpired service agreement with the Company which is not determinable by the Company within one year without payment of compensation, other than statutory compensation.

DIRECTORS' INTERESTS IN TRANSACTIONS, ARRANGEMENTS OR CONTRACTS OF SIGNIFICANCE

Save as disclosed in note 38 to the consolidated financial statements, there was no transaction, arrangement or contract of significance to which any of the Company's holding company, subsidiaries or fellow subsidiaries was a party and in which a director of the Company or a connected entity of the director of the Company had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the year.

MANAGEMENT CONTRACTS

The Company did not enter into any contract, other than the contracts of service with the directors or any person engaged in the full-time employment of the Company, by which a person undertakes the management and administration of the whole, or any substantial part of any business of the Company during the year.

DIRECTORS' INTERESTS IN COMPETING BUSINESS

During the year, none of the Directors or their respective close associates (as defined under the Listing Rules) had any interests (other than their interest in the Company or its subsidiaries) in any business which competed or may compete, either directly or indirectly, with the business of the Group or any other conflicts of interests with the Group.

CONTROLLING SHAREHOLDERS' INTEREST

Save as disclosed in this report, no contracts of significance were entered into between the Company or any of its subsidiaries and any Controlling Shareholders or any of its subsidiaries or any contracts of significance for the provision of services to the Company or any of its subsidiaries by any Controlling Shareholders or any of its subsidiaries.

TAX RELIEF AND EXEMPTION OF HOLDERS OF LISTED SECURITIES

The Company is not aware of any tax relief or exemption available to the Shareholders by reason of their respective holding of the Company's securities.

DIRECTORS' REMUNERATION AND FIVE HIGHEST PAID INDIVIDUALS

Details of the Directors' remuneration and the five highest paid individuals in the Group during the year are set out in Note 11 to the consolidated financial statements.

DIRECTORS' AND CHIEF EXECUTIVE'S INTERESTS AND SHORT POSITIONS IN SHARES AND UNDERLYING SHARES OR DEBENTURES OF THE COMPANY, ANY SPECIFIED UNDERTAKING OF THE COMPANY OR ANY ASSOCIATED CORPORATION

As at 31 December 2020, the interests and short positions of the Directors and chief executives of the Company in the shares, underlying shares and debentures of the Company and its associated corporations, within the meaning of the SFO, as recorded in the register maintained by the Company pursuant to section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 of the Listing Rules (the "Model Code"), were as follows:

(i) Interest in the Company

Approximate

(ii)

Number of

percentage of

Shares

shareholding

(Note 1)

17,740,800(L)

1.11%

5,085,696(L)

0.32%

112,000(L)

0.01%

Interest in an associated corporation of the Company

Approximate

associated

Number of

percentage of

Name of Director corporation Capacity

Shares

shareholding

(Note 1)

139,920,120(L)

19.64%

138,510(L)

0.02%

486(L)

0.00%

Name of Director

Capacité

Mr. Chuah Choon Bin

Beneficial ownerMs. Gan Pei Joo

Beneficial ownerDr. Chuah Jin Chong

Beneficial owner

Name of

Mr. Chuah Choon BinPCB

Beneficial owner

Interest in spouse (Note 2)Ms. Gan Pei Joo

PCB

Beneficial owner

Remarques:

  • 1. The letter "L" denotes the person's long position in the Shares.

  • 2. Mr. Chuah Choon Bin is deemed under the SFO to be interested in the 138,510 shares in PCB held by his spouse.

Save as disclosed above, as at 31 December 2020, none of the Directors or chief executive or any of their spouses or children under 18 years of age, has any interest or short position in the shares, underlying shares or debentures of the Company or any of its specified undertakings or other associated corporations which were notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which he will be taken or deemed to have under the SFO), or was required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein or which was required, pursuant to the Model Code.

SUBSTANTIAL SHAREHOLDERS' INTERESTS AND SHORT POSITIONS IN THE SHARES, UNDERLYING SHARES OF THE COMPANY

So far as the Directors are aware, as at 31 December 2020, the interests and short positions of the persons, other than the Directors or chief executive of the Company, in the shares and underlying shares of the Company as recorded in the register required to be kept by the Company under section 336 of the SFO were as follows:

ApproximateNumber ofName of Shareholder

Capacité

Shares (Note)

percentage of shareholding

PCB

Beneficial owner

1,009,535,993(L)

63.10%Save as disclosed above, as at 31 December 2020, the Directors are not aware of any person who had an interest or short position in the shares and the underlying shares of the Company which would require to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept by the Company pursuant to section 336 of the SFO.

Note: The letter "L" denotes the person's long position in the Shares.

EQUITY-LINKED AGREEMENTS

The Company has not entered into any equity-linked agreement (as defined in section 6 of the Companies (Director's Report) Regulation (Chapter 622D of the laws of Hong Kong)).

DEED OF NON-COMPETITION

A deed of non-competition dated 20 December 2017 has been entered into by PCB (the "Controlling Shareholder") in favour of the Company (the "Deed of Non-Competition"). Pursuant to the Deed of Non-Competition, the Controlling Shareholder has undertaken to the Company that it shall not, and will procure its close associates not to, among other matters, directly or indirectly engage, participate, or hold any right or interest in any companies or be involved in any business which is or may be in competition with the business of the Group from time to time. Details of the Deed of Non-Competition are set out in the sub-section headed "Non-Competition Undertakings" in the section headed "Relationship with our Controlling Shareholder" of the Prospectus.

The Company has received an annual declaration in writing from the Controlling Shareholder confirming that it had complied with the non-competition undertakings provided to the Company under the Deed of Non-Competition. The independent non-executive Directors have reviewed the status of compliance and enforcement of the Deed of Non-Competition and confirmed that all the undertakings thereunder have been complied with for the year ended 31 December 2020.

CONFIRMATION OF INDEPENDENCE

The Company has received from each of the independent non-executive Directors an annual confirmation of independence pursuant to Rule 3.13 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules"). The Company considers all of the independent non-executive Directors to be independent.

EMOLUMENT POLICY

The emolument policy for the employees of the Group is set up by the Remuneration Committee on the basis of their merit, qualifications and competence. The emoluments of the directors of the Company are determined by the Remuneration Committee, having regard to the Group's operating results, individual performance and comparable market statistics.

RETIREMENT SCHEMES

The Group operates a defined contribution Employees Provident Fund Scheme for employees in Malaysia. Particulars of these schemes are set out in note 2.19 to the consolidated financial statements.

As prescribed by the Employees Provident Fund ("EPF"), the Group's employees employed in Malaysia who are Malaysian are required to join the EPF scheme. The total costs charged to profit or loss amounting to MYR6,196,000 (2019: MYR5,384,000) represent contributions paid to the retirement benefits scheme by the Group.

PURCHASE, SALES OR REDEMPTION OF SECURITIES

Neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's listed securities except that the trustee of the Scheme, pursuant to the terms of the rules and trust deed of the Scheme, purchased on the Stock Exchange a total of 5,880,000 Shares at a total consideration of approximately HK$10.6 million (equivalent to approximately MYR5.8 million) during the year ended 31 December 2020.

PERMITTED INDEMNITY PROVISION

Subject to the applicable laws, every director of the Group's companies shall be entitled to be indemnified by the relevant company against all costs, charges, losses, expenses and liabilities incurred by him or her in the execution and discharge of his or her duties or in relation thereto pursuant to their respective Articles of Associations.

Such provisions were in force during the course of the financial year ended 31 December 2020 and remained in force as of the date of this report. The Company has maintained liability insurance to provide appropriate cover for the directors of the Company and its subsidiaries.

RELATED PARTY TRANSACTIONS

Details of related party transactions of the Group during the year ended 31 December 2020 are disclosed in note 38 to the consolidated financial statements. Save as mentioned in the section "Continuing Connected Transactions" below, other related party transactions did not constitute connected transactions and continuing connected transaction as defined in chapter 14A of the Listing Rules.

CONTINUING CONNECTED TRANSACTIONS

The Group had entered into the following continuing connected transactions with its connected persons.

Trademark Licence Agreement

On 19 December 2017, Pentamaster Technology (M) Sdn. Bhd., a direct wholly-owned subsidiary of the Company ("PT"), entered into a trademark licence agreement (the "Trademark Licence Agreement") with PCB, pursuant to which PT granted to PCB an irrevocable right to use the trademarks (the "Trademarks"), for use in PCB Group's day-to-day business on a non-transferable, non-exclusive and royalty-free basis, for an indefinite term until PCB ceases to be a Controlling Shareholder.

As the Trademarks have been widely adopted in all the businesses and activities managed and operated by the Pentamaster Group and are generally known and recognised by the public, the Trademarks have become an important means of promoting the Pentamaster Group's brand and image and a key icon in all of the Pentamaster Group's external promotion and marketing activities. The continual use of the Trademarks will ensure the continuity of the brand and image of the Pentamaster Group, thereby ensuring the long-term development and continuity of the Pentamaster Group's business. Having considered the foregoing, our Directors consider that it is reasonable to license the Trademarks to PCB to enable it to sustain the PCB Group's business operations and an indefinite duration of the agreement (until PCB ceases to be a Controlling Shareholder) is justifiable. Our Directors are of the view that the Trademark Licence Agreement has been entered into on normal commercial terms which are fair and reasonable and in the interests of the Pentamaster Group and our Shareholders as a whole.

As the applicable percentage ratios for the Trademark Licence Agreement is expected to be less than 0.1% on an annual basis, such transaction is fully exempt from the reporting, annual review, announcement, circular, independent financial advice and the independent shareholders' approval requirement under Rule 14A.76(1) of the Listing Rules.

Lease agreements in respect of office premises

On 19 December 2017, PT as landlord entered into two lease agreements, one with each of PCB and Pentamaster Smart Solution Sdn. Bhd. ("PSS"), a subsidiary of PCB respectively, as tenant (together the "Lease Agreements"), pursuant to which PT agreed to lease the premises situated at Plot 18 & 19, Technoplex, Medan Bayan Lepas, Taman Perindustrian Bayan Lepas, Phase IV, 11900 Penang, Malaysia to each of PCB and PSS for office use (the "Office Premises").

The Lease Agreements have a term of three years commencing from the Listing Date. On 1 October 2018, PT entered into two revised lease agreements with PCB and PSS respectively. The revised lease agreements had a term of 15 months until 31 December 2019. The revised lease agreements were subsequently extended until 31 December 2020. The rental to be paid to PT under each of the Lease Agreements was negotiated on an arm's length basis and on normal commercial terms determined based on the historical rental for the Office Premises and the prevailing market rent of similar premises.

Since the transactions contemplated under the Lease Agreements are similar in nature, such transactions should be aggregated pursuant to Rule 14A.81 of the Listing Rules. As the highest applicable percentage ratio for the Lease Agreements in aggregate calculated for the purpose of Chapter 14A of the Listing Rules is less than 5.0% and the annual consideration is less than HK$3.0 million, such continuing connected transactions are within the de minimis threshold stipulated in the Rule 14A.76(1) of the Listing Rules and fully exempt from the reporting, annual review, announcement, circular, independent financial advice and the independent shareholders' approval requirement under Rule 14A.76(1) of the Listing Rules.

MAJOR CUSTOMERS AND SUPPLIERS

The percentages of sales and purchases for the year attributable to the Group's major customers and suppliers are as follows:

Sales

Purchases

At no time during the year, the Directors, their associates or any Shareholders (which to the knowledge of the Directors own more than 5.0% of the Company's share capital) has any interest in these major customers or suppliers.

CORPORATE GOVERNANCE

Details of the Company's corporate governance practices are set out in the section headed "Corporate Governance Report" in this annual report.

PRE-EMPTIVE RIGHTS

There are no provisions for pre-emptive rights under the Articles of Association or the laws of the Cayman Islands, which shall oblige the Company to offer new shares on a pro-rata basis to existing shareholders.

SUFFICIENCY OF PUBLIC FLOAT

Based on information that is publicly available to the Company and within the knowledge of the Directors, at least 25% of the Company's total number of issued share was held by the public as at the date of this report.

AUDITORS

The consolidated financial statements for the year ended 31 December 2020 have been audited by GTHK, who will retire at the forthcoming AGM and being eligible, offers themselves for re-appointment. A resolution for the re-appointment of GTHK as auditors of the Company will be proposed at the forthcoming AGM. There has been no change of auditor of the Company since the Listing Date.

INDEPENDENT AUDITOR'S REPORT

TO THE MEMBERS OF

PENTAMASTER INTERNATIONAL LIMITED (incorporated in the Cayman Islands with limited liability)

OPINION

We have audited the consolidated financial statements of Pentamaster International Limited (the "Company") and its subsidiaries (collectively, the "Group") set out on pages 58 to 136, which comprise the consolidated statement of financial position as at 31 December 2020, and the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 2020, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards ("IFRSs") issued by the International Accounting Standards Board (the "IASB") and have been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance.

BASIS FOR OPINION

We conducted our audit in accordance with International Standards on Auditing ("ISAs") issued by the International Auditing and Assurance Standards Board ("IAASB"). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (the "IESBA Code"), and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Revenue recognition

Refer to notes 2.17, 4.1 and 5 to the consolidated financial statements

The Key Audit Matter

How the matter was addressed in our audit

The revenue recognition from the automated test equipment and factory automation solutions segments depends on the nature of the contractual arrangement with the customer and this could impact the point at which the control is transferred and service is rendered to the customer. The revenue from these activities amounted to approximately MYR419 million. We have identified revenue recognition as a key audit matter as there is a risk that revenue maybe incorrectly recognised as different contractual arrangements with customers will result in different timing in which revenue can be recognised.

Our audit procedures in relation to revenue recognition included:

  • – Evaluating the assessment performed by management on compliance with revenue recognition policies.

  • – Obtaining an understanding of the Group's revenue recognition processes and their application and thereafter testing controls on the occurrence of revenue.

  • – Performed analytical procedures on the trend of revenue recognised to identify for any abnormalities.

  • – On a sampling basis, we have performed substantive testing to verify that revenue recognition criteria are being properly applied.

  • – Assessing the correct period for the revenue recognised by testing cut-off through assessing sales transactions taking place at either side of the end of reporting period as well as checking credit notes and sales returns issued after the reporting period.

KEY AUDIT MATTERS (continued)

Provision for expected credit losses of trade receivables

Refer to notes 2.12, 4.2 and 21 to the consolidated financial statements

The Key Audit Matter

How the matter was addressed in our audit

The Group has significant exposure to credit risk arising from its trade receivables as at 31 December 2020.

Our audit procedures in relation to impairment of trade receivables included:

Assessing expected credit losses of trade receivables requires the management's judgement and uses of estimates in determining the probability of default occurring by considering the ageing of receivable, historical loss experience and forward-looking information.

  • – Obtaining an understanding of:

    • (i) the Group's control over the trade receivables' collection process;

    • (ii) how the Group identifies and assess the impairment of trade receivables; et

    • (iii) how the Group makes the accounting estimates for impairment.

  • – Evaluating the application of group policy for calculating the expected credit loss.

  • – Considering the ageing of the trade receivables.

  • – Evaluating techniques and methodology in the expected credit loss approach against the requirements of IFRS 9.

  • – Evaluating the reasonableness of the forward-looking adjustments made to reflect current and forecast future economic conditions with the assistance of our valuation experts.

  • – Assessing the estimated future cash flows by examining the historical repayment records, historical loss rate of receivables, information regarding the current creditworthiness and any significant changes in credit quality of the debtors and evidence of subsequent settlements.

  • – Comparing the assumptions used to estimate the provision for impairment with the available industry data.

  • – Assessing the operating effectiveness of control policies over ongoing internal credit quality assessments.

OTHER INFORMATION

The directors are responsible for the other information. The other information comprises all the information in the 2020 annual report of the Company, but does not include the consolidated financial statements and our auditor's report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

RESPONSIBILITIES OF DIRECTORS FOR THE CONSOLIDATED FINANCIAL STATEMENTS

The directors are responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with IFRSs issued by the IASB and the disclosure requirements of the Hong Kong Companies Ordinance, and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the directors are responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

The directors are assisted by the Audit Committee in discharging their responsibilities for overseeing the Group's financial reporting process.

AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. We report our opinion solely to you, as a body, in accordance with our agreed terms of engagement and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

  • • Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

  • • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.

  • • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

  • • Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.

  • • Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

  • • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated with the Audit Committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Grant Thornton Hong Kong Limited

Certified Public Accountants

Level 12

28 Hennessy Road Wanchai

Hong Kong

25 February 2021

Chiu Wing Ning

Practising Certificate No.: P04920

The notes on pages 64 to 136 are an integral part of these consolidated financial statements. Details of dividends proposed for the year are set out in note 13.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2020

Other receivables, deposits and prepayments 22

ASSETS

Non-current assets

Property, plant and equipment 14

Leasehold land 15

Bonne volonté 16

Intangible assets 17

Interest in an associate 19

Actifs courants

Inventories 20

Trade receivables 21

Other receivables, deposits and prepayments 22

Amount due from ultimate holding company 38(d)

Amount due from a fellow subsidiary 38(d)

Derivative financial assets 23

Other investments 24 Tax recoverable

Trésorerie et équivalents de trésorerie 25

Total des actifsEQUITY AND LIABILITIES

EQUITY

Share capital 26

Reserves 27

Total equity

2019 MYR'000

78,088

7,476

4,495

30,985

4,062

21,461

146,567

59,458

61,692

4,253

2

6

2,395 –

29

303,955

431,790

578,357

8,054 430,869

438,923

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued)

As at 31 December 2020

Passifs courants

Trade payables 28

Other payables, accruals and provisions 29

Contract liabilities 30

Amount due to a fellow subsidiary 38(d)

Non-current liabilities

Deferred income 32

Other payables, accruals and provisions 29

Deferred tax liabilities 33

Responsabilités totalesTotal equity and liabilities

Bank borrowing 31 Provision for taxation

LIABILITIES

2019 MYR'000

31,478

40,023

49,559 –

3,362

1,968

126,390

2,072 5,598 5,374

13,044

139,434

578,357

Gan Pei Joo

Chuah Choon Bin

Director

Director

The notes on pages 64 to 136 are an integral part of these consolidated financial statements.

Shares held for share award scheme

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Equity attributable to owners of the CompanyShare capital MYR'000 (note 26)

Share (the premium* "Scheme")*

MYR'000 MYR'000 (note 27) (note 36)

Capital reserve* MYR'000 (note 27)Retained profits* MYR'000 (note 27)Proposed final dividend* MYR'000 (note 13)

Total MYR'000

As at 1 January 2019

8,054

84,936

44,477

170,479 12,433 320,379

Profit and total comprehensive income for the year

(note 13)

As at 31 December 2019 and

1 January 2020

– – –

– – –

– – –

– –

131,381

(404)

– 131,381

(12,433)

13,032

(12,837)

8,054

84,936

44,477

288,424

13,032 438,923

Transactions with owners: Purchase of shares for share award scheme (note 36)

(5,849)

– (5,849)

(5,849)

– (5,849)

Profit and total comprehensive income for the year

(note 13)

– – –

– – –

– – –

  • – 113,921

    (418)

  • – (16,672)

(13,032)

16,672

113,921

(13,450)

As at 31 December 2020

8,054

84,936

(5,849)

44,477

385,255

16,672

533,545

*The total of these balances represents "Reserves" in the consolidated statement of financial position.

The notes on pages 64 to 136 are an integral part of these consolidated financial statements.

CONSOLIDATED STATEMENT OF CASH FLOWS

Cash flows from operating activities Profit before taxation

Adjustments for:

Amortisation of intangible assets Amortisation of leasehold land Deferred income released

Depreciation of property, plant and equipment Gain on disposal of property, plant and equipment Gain from changes in fair value of foreign currency forward contracts Gain on disposal of other investments

Loss from changes in fair value of other investments Interest expenses

Bank interest income

Inventory written downs – addition Inventory written downs – reversal Expected credit loss ("ECL") allowance on trade receivables – current year

ECL allowance on trade receivables – reversal Property, plant and equipment written off Intangible assets written off

Provision for warranty – current year Provision for warranty – reversal Share of results of an associate Unrealised loss on foreign exchangeOperating profit before working capital changes Decrease in inventories

Increase in receivables Increase/(Decrease) in payables Decrease in contract liabilities

Net change in a fellow subsidiary's balanceCash generated from operations Interests paid

Tax paid

Tax refunded

Net cash from operating activities

CONSOLIDATED STATEMENT OF CASH FLOWS (continued)

Cash flows from investing activities Bank interest received

Acquisition of a subsidiary, net of cash acquired Proceeds from disposal of property, plant and equipment Purchase of intangible assets

Purchase of property, plant and equipment Proceeds from disposal of other investments Acquisition of other investments

Acquisition of redeemable convertible preference shares of an associate Investment in an associate

Trésorerie nette utilisée dans les activités d'investissement

Cash flows from financing activities

Advance from/(Repayment to) ultimate holding company Repayment of term loan

Repayment of finance lease liabilities Dividends paid to owners of the Company Purchase of shares for share award schemeNet cash used in financing activitiesNet (decrease)/increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Effect of foreign exchange rate changes

Cash and cash equivalents at the end of the yearNote

25

The notes on pages 64 to 136 are an integral part of these consolidated financial statements.

2019 MYR'000

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. GENERAL INFORMATION

Pentamaster International Limited (the "Company") was incorporated in the Cayman Islands on 12 June 2017 as an exempted company with limited liability under the Companies Law. The address of its registered office is Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104 Cayman Islands. The address of its principal place of business is Plot 18 & 19, Technoplex, Medan Bayan Lepas, Taman Perindustrian Bayan Lepas, Phase IV, 11900 Penang, Malaysia.

The Company's shares were listed on the Main Board of The Stock Exchange of Hong Kong Limited (the "Stock Exchange") on 19 January 2018.

The Company is an investment holding company and has not carried out any business since its incorporation. The Company and its subsidiaries (collectively, the "Group") are principally engaged in (i) designing, development and manufacturing of standard and non-standard automated test equipment; (ii) designing, development and installation of integrated factory automation solutions and (iii) manufacturing and assembling of medical machines and manufacturing of die casting parts.

The Company's immediate holding company is Pentamaster Corporation Berhad ("PCB"), a company incorporated in Malaysia with its shares listed on the Main Market of Bursa Malaysia Securities Berhad. As at 31 December 2020, the directors regard PCB as the ultimate holding company.

These consolidated financial statements for the year ended 31 December 2020 were approved for issue by the board of directors on 25 February 2021.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  • 2.1 Basis of preparation

    These annual consolidated financial statements on pages 58 to 136 have been prepared in accordance with International Financial Reporting Standards ("IFRSs"), the collective term of which includes all applicable individual International Financial Reporting Standards, International Accounting Standards ("IASs") and Interpretations issued by the International Accounting Standards Board (the "IASB").

    The consolidated financial statements also comply with the applicable disclosure requirements of the Hong Kong Companies Ordinance and include the applicable disclosure requirements of the Rules Governing the Listing of Securities on the Stock Exchange ("Listing Rules").

    The significant accounting policies that have been used in the preparation of these consolidated financial statements are summarised below. These policies have been consistently applied to all the years presented unless otherwise stated. The adoption of new or amended IFRSs and the impacts on the Group's financial statements, if any, are disclosed in note 3.

    These consolidated financial statements have been prepared on the historical cost basis except derivative financial assets and other investments in equity securities and redeemable convertible preference shares which are stated at fair values. The measurement bases are fully described in the accounting policies below.

    The consolidated financial statements are presented in Ringgit Malaysia ("MYR"), which is the functional currency of the Company and its subsidiaries, and all values are rounded to the nearest thousands ("MYR'000"), except when otherwise indicated.

    It should be noted that accounting estimates and assumptions are used in the preparation of the consolidated financial statements. Although these estimates are based on management's best knowledge and judgement of current events and actions, actual results may ultimately differ from those estimates. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 4.

  • 2.2 Basis of consolidation

    The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries made up to 31 December each year. The financial statements of the subsidiaries are prepared for the same reporting period as the Company, using consistent accounting policies.

    Subsidiaries are entities, including structured entities, controlled by the Group. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

    The Group controls an entity when it is exposed, or has rights, to variable returns through its power over the entity. Potential voting rights are considered when assessing control only when such rights are substantive. The Group considers it has de facto power over an investee when, despite not having the majority of voting rights, it has the current ability to direct the activities of the investee that significantly affect the investee's return.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

  • 2.2 Basis of consolidation (continued)

    Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

    Non-controlling interests at the end of the reporting period, being the equity in a subsidiary not attributable directly or indirectly to the owners of the Company, are presented in the consolidated statement of financial position and consolidated statement of changes in equity within equity, separately from equity attributable to the owners of the Company. Non-controlling interests in the results of the Group is presented in the consolidated statement of profit or loss and other comprehensive income as an allocation of the profit or loss and the comprehensive income for the year between non-controlling interests and the owners of the Company.

    The Group treats all changes in its ownership interest in a subsidiary that do not result in a loss of control as equity transactions between the Group and its non-controlling interest holders. Any difference between the Group's share of net assets before and after the change, and any consideration received or paid, is adjusted to or against the Group's reserve.

    When the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests.

    Investment in subsidiaries is measured in the Company's statement of financial position at cost less any impairment loss, unless the investment is classified as held for sale or distribution. The cost of investment includes transaction costs.

    The results of subsidiaries are accounted for by the Company on the basis of dividends received and receivable at the reporting date. All dividends whether received out of the investee's pre or post-acquisition profits are recognised in the Company's profit or loss.

  • 2.3 Business combinations

    Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.

    Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

  • 2.3 Business combinations (continued)

    Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer's previously held equity in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed. If, after assessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value on the acquirer's previously held interest in the acquiree (if any), the excess is recognised immediately in profit or loss as bargain purchase gain.

    Where the consideration the Group transfers in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and considered as part of the consideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with the corresponding adjustments being made against goodwill or gain on bargain purchase. Measurement period adjustments are adjustments that arise from additional information obtained during the measurement period about facts and circumstances that existed as of the acquisition date. Measurement period does not exceed one year from the acquisition date. The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified.

    Changes in the value of the previously held equity interest recognised in other comprehensive income and accumulated in equity before the acquisition date are reclassified to profit or loss when the Group obtains control over the acquiree.

    If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date.

  • 2.4 Associate

    An associate is an entity over which the Group has significant influence, which is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control of those policies.

    In the consolidated financial statements, an investment in an associate is initially recognised at cost and subsequently accounted for using the equity method. Any excess of the cost of acquisition over the Group's share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the associate recognised at the date of acquisition is recognised as goodwill. The goodwill is included within the carrying amount of the investment and is assessed for impairment as part of the investment. The cost of acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed and equity instruments issued by the Group, plus any costs directly attributable to the investment. Any excess of the Group's share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognised immediately in profit or loss in the determination of the Group's share of the associate's profit or loss in the period in which the investment is acquired.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

  • 2.4 Associate (continued)

    Under the equity method, the Group's interest in the associate is carried at cost and adjusted for the post-acquisition changes in the Group's share of the associate's net assets less any identified impairment loss, unless it is classified as held for sale (or included in a disposal Group that is classified as held for sale). The profit or loss for the year includes the Group's share of the post-acquisition, post-tax results of the associate for the year, including any impairment loss on the investment in associate recognised for the year. The Group's other comprehensive income for the year includes its share of the associate's other comprehensive income for the year.

    Unrealised gains on transactions between the Group and its associate are eliminated to the extent of the Group's interest in the associate. Where unrealised losses on assets sales between the Group and its associate are reversed on equity accounting, the underlying asset is also tested for impairment from the Group's perspective. Where the associate uses accounting policies other than those of the Group for like transactions and events in similar circumstances, adjustments are made, where necessary, to conform the associate's accounting policies to those of the Group when the associate's financial statements are used by the Group in applying the equity method.

    When the Group's share of losses in an associate equals or exceeds its interest in the associate, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate. For this purpose, the Group's interest in the associate is the carrying amount of the investment under the equity method together with the Group's long-term interests that in substance form part of the Group's net investment in the associate.

    After the application of equity method, the Group determines whether it is necessary to recognise an additional impairment loss on the Group's investment in its associate. At each reporting date, the Group determines whether there is any objective evidence that the investment in associate is impaired. If such indications are identified, the Group calculates the amount of impairment as being the difference between the recoverable amount (i.e. higher of value in use and fair value less costs of disposal) of the associate and its carrying amount. In determining the value in use of the investment, the Group estimates its share of the present value of the estimated future cash flows expected to be generated by the associate, including cash flows arising from the operations of the associate and the proceeds on ultimate disposal of the investment.

  • 2.5 Property, plant and equipment

    Property, plant and equipment are initially stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset.

    The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the profit or loss during the financial period in which they are incurred.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

  • 2.5 Property, plant and equipment (continued)

    Buildings erected on leasehold land (which meet the definition of right-of-use assets) are depreciated on a straight line basis over the lease period of the land of 60 years. Depreciation on other property, plant and equipment is calculated on the straight line method to write off the cost of each asset to its residual value over its estimated useful life at the following annual rates:

    Machineries and equipment

    Furniture, fittings and office equipment Computers

    10% – 33.33% 10% – 20% 20% – 33.33%

    Electrical installation 10%

    Motor vehicles 20%

    Construction in progress represents assets under construction, and which are not ready for commercial use at the end of the reporting period. Construction in progress is stated at cost, and is transferred to the relevant category of assets and depreciated accordingly when the assets are completed and ready for commercial use. Construction in progress is not depreciated until the assets are ready for their intended use.

    The residual value, useful life and depreciation method are reviewed at the end of each reporting period to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment.

    Fully depreciated items of property, plant and equipment are retained in the accounts until the items are no longer in use.

    Upon the disposal of an item of property, plant and equipment, the difference between the net disposal proceed and its carrying amount is recognised in profit or loss.

  • 2.6 Goodwill

    Set out below are the accounting policies on goodwill arising on acquisition of a subsidiary. Accounting for goodwill arising on acquisition of investment in an associate is set out in note 2.4.

    Goodwill arising in a business combination is recognised as an asset at the date that control is acquired (the acquisition date). Goodwill is measured as the excess of the aggregate of the fair value of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over the Group's interest in the net fair value of the acquiree's identifiable assets and liabilities measured as at the acquisition date.

    If, after reassessment, the Group's interest in the fair value of the acquiree's identifiable net assets exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer's previously held equity interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.

    Goodwill is stated at cost less accumulated impairment losses. Goodwill is allocated to cash-generating units and is tested annually for impairment (see note 2.9).

    On subsequent disposal of a subsidiary, the attributable amount of goodwill capitalised is included in the determination of the amount of gain or loss on disposal.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.7 Leases

(a) Definition of a lease and the Group as a lessee

At inception of a contract, the Group considers whether a contract is, or contains a lease. A lease is defined as 'a contract, or part of a contract, that conveys the right to use an identified asset (the underlying asset) for a period of time in exchange for consideration'. To apply this definition, the Group assesses whether the contract meets three key evaluations which are whether:

  • • the contracts contain an identified asset, which is either explicitly identified in the contract or implicitly specified by being identified at the time the asset is made available to the Group;

  • • the Group has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the period of use, considering its rights within the defined scope of the contract; et

  • • the Group has the right to direct the use of the identified asset throughout the period of use. The Group assess whether it has the right to direct 'how and for what purpose' the asset is used throughout the period of use.

For contracts that contains a lease component and one or more additional lease or non-lease components, the Group allocates the consideration in the contract to each lease and non-lease component on the basis of their relative stand-alone prices. However, for leases of properties in which the Group is a lessee, the Group elected not to separate non-lease components and will instead account for the lease and non-lease components as a single lease component.

Measurement and recognition of leases as a lessee

At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the condensed consolidated statement of financial position. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the underlying asset at the end of the lease, and any lease payments made in advance of the lease commencement date (net of any lease incentives received).

The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term unless the Group is reasonably certain to obtain ownership at the end of the lease term. The Group also assesses the right-of-use asset for impairment when such indicator exists.

At the commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.7 Leases (continued)

  • (a) Definition of a lease and the Group as a lessee (continued) Measurement and recognition of leases as a lessee (continued)

    Lease payments included in the measurement of the lease liability are made up of fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable payments based on an index or rate, and amounts expected to be payable under a residual value guarantee. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payment of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate.

    Subsequent to initial measurement, the liability will be reduced for lease payments made and increased for interest cost on the lease liability. It is remeasured to reflect any reassessment or lease modification, or if there are changes in in-substance fixed payments. The variable lease payments that do not depend on an index or a rate are recognised as expense in the period on which the event or condition that triggers the payment occurs.

    When the lease is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the right-of-use asset is already reduced to zero.

    The Group has elected to account for short-term leases using the practical expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these leases are recognised as an expense in profit or loss on a straight-line basis over the lease term. Short-term leases are leases with a lease term of 12 month or less.

    Refundable rental deposits paid are accounted for under IFRS 9 and initially measured at fair value. Adjustments to fair value at initial recognition are considered as additional lease payments and included in the cost of right-of-use assets.

  • (b) The Group as a lessor

    As a lessor, the Group classifies its leases as either operating or finance leases.

    A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of the underlying asset, and classified as an operating lease if it does not.

    The Group also earns rental income from operating leases of its buildings. Rental income is recognised on a straight-line basis over the term of the lease.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.8 Intangible assets (other than goodwill)

Acquired intangible assets are recognised initially at cost. After initial recognition, intangible assets with finite useful lives are carried at cost less accumulated amortisation and any accumulated impairment losses. Amortisation for intangible assets with finite useful lives is provided on straight-line basis over their estimated useful lives. Amortisation commences when the intangible assets are available for use. The following useful lives are applied:

Development expenditure

5 années

Computer software

2 – 5 years

Technical know-how

10 years

The assets' amortisation methods and useful lives are reviewed, and adjusted if appropriate, at each reporting date.

Research and development expenditure

Research expenditure on internal projects is recognised as an expense when it is incurred.

Expenditure incurred on projects to develop new products is capitalised as development costs when the Group can demonstrate:

  • – the technical feasibility of completing the asset so that it will be available for use or sale;

  • – its intention to complete and its ability to use or sell the asset;

  • – how the asset will generate future economic benefits;

  • – the availability of resources to complete the project; et

  • – the ability to measure reliably the expenditure during the development.

Development costs which do not meet these criteria are recognised in profit or loss as incurred.

Capitalised development costs comprise direct attributable costs incurred for development. Capitalised development costs, considered to have finite useful lives, are stated at cost less accumulated amortisation and any accumulated impairment losses. Development costs are amortised using the straight-line basis over the commercial lives of the underlying products from the commencement of the commercialisation of the products.

The amortisation period and method are reviewed at the end of each reporting period to ensure that the expected useful lives of the assets are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of intangible assets.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

  • 2.8 Intangible assets (other than goodwill) (continued)

    Computer software

    The cost of computer software licences are capitalised as an intangible asset. Costs include their purchase prices and any directly attributable costs of preparing the assets for their intended use. These costs are amortised on a straight line basis over the period the asset is expected to generate economic benefits.

    Cost associated with developing computer software programs that will generate probable future economic benefits from the use thereof are recognised as intangible assets. Costs comprised all directly attributable development costs including an appropriate portion of relevant overheads. Computer software development cost is amortised when the asset is available for use over the period the asset is expected to generate economic benefits.

    Technical know-how

    Technical know-how acquired in a business combination are recognised at fair value at the acquisition date. They have a finite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method over the expected life of these intangible assets.

  • 2.9 Impairment of non-financial assets

    The following assets are subject to impairment testing:

    • • Goodwill arising on acquisition of a subsidiary;

    • • Intangible assets;

    • • Property, plant and equipment (including right-of-use assets); et

    • • The Company's interests in subsidiaries and associate

    Goodwill and other intangible assets with indefinite useful life or those not yet available for use are tested for impairment at least annually, irrespective of whether there is any indication that they are impaired. All other assets are tested for impairment whenever there are indications that the asset's carrying amount may not be recoverable.

    An impairment loss is recognised as an expense immediately for the amount by which the asset's carrying amount exceeds its recoverable amount. Recoverable amount is the higher of fair value, reflecting market conditions less costs of disposal, and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessment of time value of money and the risk specific to the asset.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.9 Impairment of non-financial assets (continued)

For the purposes of assessing impairment, where an asset does not generate cash inflows largely independent from those from other assets, the recoverable amount is determined for the smallest group of assets that generate cash inflows independently (i.e. a cash-generating unit). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level. Goodwill in particular is allocated to those cash-generating units that are expected to benefit from synergies of the related business combination and represent the lowest level within the Group at which the goodwill is monitored for internal management purpose and not be larger than an operating segment.

Impairment losses recognised for cash-generating units, to which goodwill has been allocated, are credited initially to the carrying amount of goodwill. Any remaining impairment loss is charged pro rata to the other assets in the cash generating unit, except that the carrying value of an asset will not be reduced below its individual fair value less cost of disposal, or value in use, if determinable.

An impairment loss on goodwill is not reversed in subsequent periods. In respect of other assets, an impairment loss is reversed if there has been a favourable change in the estimates used to determine the asset's recoverable amount and only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

2.10 Inventories

Inventories are carried at the lower of cost and net realisable value.

Cost of all inventories are determined on the first-in, first-out basis.

The cost of inventories includes expenditure incurred in acquiring the inventories and other costs incurred in bringing them to their existing location and condition. In the case of finished goods and work-in-progress, cost includes direct labour and attributable production overheads.

Net realisable value represents the estimated selling price less all estimated costs to completion and costs to be incurred in marketing, selling and distribution.

2.11Financial instruments

Recognition and derecognition

Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument.

Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all of its risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 2.11Financial instruments (continued)

Classification and subsequent measurement of financial assets

Financial assets, other than those designated and effective as hedging instruments, are classified into the following categories:

In the periods presented, the Group does not have any financial assets categorised as FVOCI.

The classification is determined by both:

All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other financial items, except for impairment of receivables which is presented within administrative expenses.

Subsequent measurement of financial assets Debt investments

Financial assets at amortised cost

Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVTPL):

  • – they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows; et

  • – the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding.

After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, promissory note, amounts due from ultimate holding company and a fellow subsidiary, trade and majority of other receivables fall into this category of financial instruments.

Financial assets at fair value through profit or loss (FVTPL)

Financial assets that are held within a different business model other than 'hold to collect' or 'hold to collect and sell' are categorised at FVTPL. Further, irrespective of business model financial assets whose contractual cash flows are not solely payments of principal and interest are accounted for at FVTPL. All derivative financial instruments fall into this category, except for those designated and effective as hedging instruments, for which the hedge accounting requirements under IFRS 9 apply.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 2.11Financial instruments (continued)

Subsequent measurement of financial assets (continued)

Debt investments (continued)

Equity investments

Investments in equity securities and redeemable convertible preference shares are classified as FVTPL.

Dividends from these investments in equity instruments and redeemable convertible preference shares are recognised in profit or loss when the Group's right to receive the dividends is established. Dividends are included in the "other income" in profit or loss.

Classification and subsequent measurement of financial liabilities

The Group's financial liabilities include borrowings, amount due to a fellow subsidiary, trade and other payable.

Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Group designated a financial liability at FVTPL.

Subsequently, financial liabilities are measured at amortised cost using the effective interest method.

All interest-related charges and, if applicable, changes in an instrument's fair value that are reported in profit or loss are included within finance costs or finance income.

Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.

Amount due to a fellow subsidiary, trade and other payable

Amount due to a fellow subsidiary, trade and other payable are recognised initially at their fair value and subsequently measured at amortised cost, using the effective interest method.

Derivative financial instruments

The Group enters into derivative financial instruments such as foreign currency forward contracts to manage its exposure to foreign currency risks.

Derivatives are initially recognised at fair value at the date the derivative contract is entered and are subsequently remeasured to their fair value at the end of the reporting period. The resulting gain or loss is recognised in profit or loss immediately.

A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value is recognised as a financial liability. A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realised or settled within 12 months. Other derivatives are presented as current assets or current liabilities.

The Group has not designated any derivatives as hedging instruments.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.12Impairment of financial assets

IFRS 9's impairment requirements use more forward-looking information to derive impairment using the expected credit loss ("ECL") approach. Instruments within the scope included loans and other debt-type financial assets measured at amortised cost and trade receivables.

The Group first identifying a credit loss event. Instead the Group considers a broader range of information when assessing credit risk and measuring ECL, including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.

In applying this forward-looking approach, a distinction is made between:

  • – financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low credit risk ('Stage 1') and

  • – financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk is not low ('Stage 2').

'Stage 3' would cover financial assets that have objective evidence of impairment at the reporting date.

'12-month ECL' are recognised for the first category while 'lifetime ECL' are recognised for the second category.

Measurement of the ECL is determined by a probability-weighted estimate of credit losses over the expected life of the financial instrument.

Trade receivables

For trade receivables, the Group applies a simplified approach in calculating ECL and recognises a loss allowance based on lifetime ECL at each reporting date. These are the expected shortfalls in contractual cash flows, considering the potential for default at any point during the life of the financial assets. In calculating the ECL, the Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors such as external indicators surrounding the economic environment in which the debtor is operating.

To measure the ECL, trade receivables have been grouped based on shared credit risk characteristics and the days past due.

Other financial assets measured at amortised cost

The Group measures the loss allowance for other receivables equal to 12-month ECL, unless when there has been a significant increase in credit risk since initial recognition, the Group recognises lifetime ECL. The assessment of whether lifetime ECL should be recognised is based on significant increase in the likelihood or risk of default occurring since initial recognition.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 2.12Impairment of financial assets (continued)

Other financial assets measured at amortised cost (continued)

In assessing whether the credit risk has increased significantly since initial recognition, the Group compares the risk of a default occurring on the financial assets at the reporting date with the risk of default occurring on the financial assets at the date of initial recognition. In making this assessment, the Group considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort.

In particular, the following information is taken into account when assessing whether credit risk has increased significantly:

  • – an actual or expected significant deterioration in the financial instrument's external (if available) or internal credit rating;

  • – significant deterioration in external market indicators of credit risk, e.g. a significant increase in the credit spread, the credit default swap prices for the debtor;

  • – existing or forecast adverse changes in regulatory, business, financial, economic conditions, or technological environment that are expected to cause a significant decrease in the debtor's ability to meet its debt obligations; et

  • – an actual or expected significant deterioration in the operating results of the debtor.

Irrespective of the outcome of the above assessment, the Group presumes that the credit risk has increased significantly since initial recognition when contractual payments are more than 365 days past due, unless the Group has reasonable and supportable information that demonstrates otherwise.

Despite the aforegoing, the Group assumes that the credit risk on a debt instrument has not increased significantly since initial recognition if the debt instrument is determined to have low credit risk at the end of each reporting period. A debt instrument is determined to have low credit risk if it has a low risk of default, the borrower has strong capacity to meet its contractual cash flow obligations in the near term and adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfill its contractual cash flow obligations.

For internal credit risk management, the Group considers an event of default occurs when (i) information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors, including the Group, in full (without taking into account any collateral held by the Group); or (ii) the financial asset is 365 days past due.

Detailed analysis of the ECL assessment of trade receivables and other financial assets measured at amortised cost are set out in note 40.2.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.13Cash and cash equivalents

Cash comprises cash in hand, cash at bank and demand deposits with banks. Cash equivalents are short term and highly liquid investments with original maturities of three months or less that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. For the purpose of the consolidated statement of cash flows presentation, cash and cash equivalents include bank overdrafts which are repayable on demand and form an integral part of the Group's cash management.

  • 2.14 Contract liabilities

    A contract liability is the obligation to transfer goods or services to a customer for which the Group has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Group transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue (see note 2.17) when the Group satisfies its performance obligation under the contract.

  • 2.15 Government grants

    Government grants, including non-monetary grants, shall not be recognised until there is reasonable assurance attaching to the grants will be complied with and the grants will be received.

    Grants related to assets are set up as deferred income and recognised as income on a systematic basis over the estimated useful lives of the assets. Grants related to expenses are recognised as income in the period the grants become receivable. Grants related to future costs are deferred and recognised in the profit or loss in the same period as the related costs.

2.16Provision for liabilities and warranty costs

Provisions for liabilities are recognised when the Group has a present (legal or constructive) obligation as a result of a past event, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditure expected to be required to settle the obligation. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

Provision for warranty costs is made in respect of goods sold and still under warranty at the end of the reporting period based on the terms of warranty and historical claim experience.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.17 Revenue recognition

Revenue arises mainly from the sales of goods and rendering of services.

To determine whether to recognise revenue, the Group follows a 5-step process:

  • 1. Identifying the contract with a customer

  • 2. Identifying the performance obligations

  • 3. Determining the transaction price

  • 4. Allocating the transaction price to the performance obligations

  • 5. Recognising revenue when/as performance obligation(s) are satisfied

In all cases, the total transaction price for a contract is allocated amongst the various performance obligations based on their relative stand-alone selling prices. The transaction price for a contract excludes any amounts collected on behalf of third parties.

Revenue is recognised either at a point in time or over time, when (or as) the Group satisfies performance obligations by transferring the promised goods or services to its customers.

Where the contract contains a financing component which provides a significant financing benefit to the customer for more than 12 months, revenue is measured at the present value of the amount receivable, discounted using the discount rate that would be reflected in a separate financing transaction with the customer, and interest income is accrued separately under the effective interest method. Where the contract contains a financing component which provides a significant financing benefit to the Group, revenue recognised under that contract includes the interest expense accreted on the contract liability under the effective interest method.

Further details of the Group's revenue and other income recognition policies are as follows:

Sales of equipment

Revenue from sale of equipment usually includes the customised system/equipment and installation. The sale of the customised system/equipment and installation service are considered as one performance obligation because the promises to transfer customised system/equipment and provide installation service are not capable of being distinct and they are highly interrelated.

Revenue is recognised upon shipment or at delivery destination point, provided that the product meets the performance acceptance criteria which is normally carried out prior to shipment. Under certain circumstances, customer acceptance is conducted at customer's site i.e. to ensure that the equipment purchased can be integrated with the customer's existing production flow. Under such circumstance, revenue is only recognised once customer acceptance has been received at customer's site.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

  • 2.17 Revenue recognition (continued)

    Sales of equipment (continued)

    The Group considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated (e.g., warranties). In determining the transaction price for the sale of customised system/equipment, the Group considers the effects of variable consideration, the existence of significant financing components, non-cash consideration, and consideration payable to the customer (if any).

    Revenue from rendering of services

    Revenue from rendering of services is recognised when services are rendered.

    Rental income from operating leases

    Rental income from operating lease is recognised over the term of the lease on a straight-line basis.

    Interest income

    Interest income is recognised on a time proportion basis using the effective interest method. For financial assets measured at amortised cost that are not credit-impaired, the effective interest rate is applied to the gross carrying amount of the asset.

  • 2.18 Borrowing costs

    Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is necessary to complete and prepare the asset for its intended use or sale. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale.

    Other borrowing costs are expensed in the period in which they are incurred. Borrowing costs consist of interest and other costs that the Group incurred in connection with the borrowing of funds.

  • 2.19 Employee benefits

    Short term benefits

    Wages, salaries, bonuses and social security contributions are recognised as an expense in the financial year in which the associated services are rendered by employees of the Group. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences, and short term non-accumulating compensated absences such as sick leave are recognised when the absences occur.

    Defined contribution plans

    As required by law, companies in Malaysia make contributions to the national pension scheme, the Employees Provident Fund ("EPF"). Such contributions are recognised as an expense as incurred.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.20Share-based employee compensation

The Group operates equity-settled share-based compensation plans for remuneration of its employees.

All employee services received in exchange for the grant of any share-based compensation are measured at their fair values. These are indirectly determined by reference to the equity instruments awarded. Their value is appraised at the grant date and excludes the impact of any non-market vesting conditions (for example, profitability and sales growth targets).

All share-based compensation is recognised as an expense in profit or loss over the vesting period if vesting conditions apply, or recognised as an expense in full at the grant date when the equity instruments granted vest immediately. If vesting conditions apply, the expense is recognised over the vesting period, based on the best available estimate of the number of equity instruments expected to vest. Non-market vesting conditions are included in assumptions about the number of equity instruments that are expected to vest. Estimates are subsequently revised, if there is any indication that the number of equity instruments expected to vest differs from previous estimates.

For the share award scheme, the Group purchase its own shares through the trustee of the share award scheme from the open market for the shares to be vested under the share award scheme. The shares purchased by the Group that are not yet vested for this share award scheme were recorded as treasury shares and recorded as "Shares held for share award scheme" as a deduction under equity. Upon vesting of the awarded shares, the related costs of the purchased shares are reduced from the "Shares held for share award scheme", and the related fair value of the awarded shares are debited to share-based compensation reserve with the difference charged/credited to retained profit.

2.21 Income tax

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that it relates to a business combination or items recognised directly in equity or other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities in the statement of financial position and their tax bases. Deferred tax liabilities are generally recognised for all taxable temporary differences.

Deferred tax is not recognised for temporary differences arising from the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the end of the reporting period.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.21 Income tax (continued)

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at the end of each reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Unutilised reinvestment allowance and investment tax allowance, being tax incentives that is not a tax base of an asset, is recognised as a deferred tax asset to the extent that it is probable that the future taxable profits will be available to set-off against the unutilised tax incentive.

2.22Foreign currency transactions

Transactions in foreign currencies are translated into the functional currency of the Group at exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are translated to the functional currency at the exchange rate at that date.

Non-monetary assets and liabilities measured at historical cost in a foreign currency at the end of the reporting period are translated to the functional currency at the exchange rate at the date of the transaction except for those measured at fair value shall be translated at the exchange rate at the date when the fair value was determined.

Exchange differences arising from the settlement of foreign currency transactions and from the translation of foreign currency monetary assets and liabilities are recognised in profit or loss.

Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the period except for the differences arising on the translation of non-monetary items in respect of which gains or losses are recognised directly in other comprehensive income.

2.23Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, against the share capital account.

2.24 Segment reporting

An operating segment is a component of the Group that engages in business activities from which it may earn revenue and incur expenses, including revenue and expenses that relate to transactions with any of the Group's other components. An operating segment's operating results are reviewed regularly by the chief operating decision maker, who in this case are the executive directors of the Group, to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

  • 2.25 Structured entity

    The Group controls a structured entity, the trust constituted by the trust deed, which is set up solely for the purpose of purchasing, administering and holding the Company's shares for an employees' share award scheme (see note 2.20). As the Group has the power to direct the relevant activities of the trust and it has the ability to use its power over the trust to affect its exposure to returns, the assets and liabilities of trust are included in the consolidated statement of financial position and the Company's shares held by the trust are presented as a deduction in equity as "Shares held for share award scheme".

  • 2.26 Related parties

    A related party is a person or entity that is related to the Group. A related party transaction is a transfer of resources, services or obligations between the Group and its related party, regardless of whether a price is charged. A party is considered to be related to the Group if:

    Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity.

3.

ADOPTION OF NEW AND AMENDED IFRSS

New and amended IFRSs that are effective for annual periods beginning or after 1 January 2020

In the current year, the Group has applied for the first time the following amended IFRSs issued by the IASB, which are relevant to the Group's operations and effective for the Group's consolidated financial statements for the annual period beginning on 1 January 2020:

Amendments to IFRS 3

Amendments to IFRS 9, IAS 39 and IFRS 7

Amendments to IAS 1 and IAS 8

Definition of a Business

Interest Rate Benchmark Reform Definition of Material

The adoption of the new and amended IFRSs had no material impact on how the results and financial position of the Group for the current and prior periods have been prepared and presented.

Issued but not yet effective IFRSs

At the date of authorisation of these consolidated financial statements, the following new and amended IFRSs have been published but are not yet effective, and have not been adopted early by the Group.

IFRS 17

Insurance Contracts and related amendments3

Amendments to IFRS 9, IAS 39, IFRS 7,

Interest Rate Benchmark Reform – Phase 21

IFRS 4 and IFRS 16

Amendments to IAS 16

Property, Plant and Equipment – Proceeds before

Intended Use2

Amendments to IAS 37

Onerous Contracts – Cost of Fulfilling a Contract2

Amendments to IFRSs

Annual Improvements to IFRS Standards 2018-20202

Amendments to IAS 1

Classification of Liabilities as Current or Non-current3

Amendments to IFRS 10 and IAS 28

Sale or Contribution of Assets between an Investor and its

Associate or Joint Venture4

Accounting Guideline 5 (Revised)

Merger Accounting for Common Control Combination5

Amendments to IFRS 3

Reference to the Conceptual Framework5

Amendments to IFRS 16

Covid-19-Related Rent Concessions6

  • 1 Effective for annual periods beginning on or after 1 January 2021

  • 2 Effective for annual periods beginning on or after 1 January 2022

  • 3 Effective for annual periods beginning on or after 1 January 2023

  • 4 Effective date not yet determined

  • 5 Effective for business combination/common control combination for which the acquisition/combination is on or after the beginning of the first

  • annual period beginning on or after 1 January 2022

  • 6 Effective for annual periods beginning on or after 1 June 2020

The directors of the Company anticipate that the application of other new and amended IFRSs will have no material impact on the results and the financial position of the Group.

4. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS

The preparation of consolidated financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

4.1 Judgements made in applying accounting policies

There are no significant areas of critical judgement in applying accounting policies that have any significant effect on the amount recognised in the consolidated financial statements other than the following:

Revenue recognition

Revenue from sales of goods and rendering service are recognised at the point in time when control of the goods is transferred and service is rendered to the customer. The management has made judgements of identifying the performance obligations and estimating the point of revenue recognition under difference contractual agreements.

The details of revenue during the years ended 31 December 2020 and 2019 are disclosed in note 5.

4.2 Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

Useful lives of depreciable assets

Machineries and equipment are depreciated on a straight line basis over their estimated useful lives. Management estimates that the useful life of the machineries and equipment to be between 3 to 10 years. Changes in the expected level of usage and technological developments could impact the economic useful lives and residual values of machineries and equipment. However, if there were such changes, the impact to the profit or loss would be negligible in view of the low carrying amount of the machineries and equipment as at the end of the reporting period.

The carrying amount of property, plant and equipment as at 31 December 2020 and 2019 is disclosed in note 14.

4. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)

4.2 Key sources of estimation uncertainty (continued)

Impairment of property, plant, and equipment, leasehold land and intangible assets

The Group performs an impairment review as and when there are impairment indicators to ensure that the carrying amount of property, plant and equipment, leasehold land and intangible assets do not exceed their recoverable amount. The recoverable amount represents the present value of the estimated future cash flows expected to arise from the cash generating units to which the assets belongs. Therefore, in arriving at the recoverable amount, management exercises judgement in estimating the future cash flows, growth rate, product life cycle and discount rate. The carrying amounts of property, plant and equipment, leasehold land and intangible assets as at 31 December 2020 and 2019 are disclosed in notes 14, 15 and 17, respectively. No impairment losses are provided for property, plant and equipment, leasehold land and intangible assets during the years ended 31 December 2020 and 2019.

Provision for ECL of trade receivables

The Group uses a provision matrix to calculate ECL for trade receivables. The provision rates are based on days past due for groupings of various customer segments that have similar loss patterns.

The provision matrix is initially based on the Group's historical observed default rates. The Group will calibrate the matrix to adjust the historical credit loss experience with forward-looking information. For instance, if forecast economic conditions are expected to deteriorate over the next year which can lead to an increased number of defaults in the manufacturing sector, the historical default rates are adjusted. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.

The assessment of the correlation between historical observed default rates, forecast economic conditions and ECL is a significant estimate. The amount of ECL is sensitive to changes in circumstances and of forecast economic conditions. The Group's historical credit loss experience and forecast of economic conditions may be different from of customer's actual default in the future, such difference will impact the carrying amount of trade receivables and credit losses in the periods in which such estimate has been changed.

The carrying amount of trade receivables as at 31 December 2020 and 2019 and details of movement in impairment of trade receivables during the current and prior years are disclosed in note 21.

Inventories

Inventories are measured at the lower of cost and net realisable value. In estimating net realisable values, management takes into account the most reliable evidence available at the time the estimate is made. Possible changes in these estimates could result in revisions to the valuations of inventories. The carrying amount of inventories as at 31 December 2020 and 2019 are disclosed in note 20.

5. REVENUE AND SEGMENT REPORTING

5.1 Revenue

The Group's principal activities are disclosed in note 1 to these consolidated financial statements. The Group's revenue from external customers recognised during the year is as follows:

Invoiced value of goods sold less returns and discounts Service rendered

2019 MYR'000 479,068 8,020

487,088

Disaggregation of revenue from contracts with customer

The Group derives revenue from the transfer of goods and services at a point in time in the following customers' segment for both the automated test equipment segment and factory automation solutions segment:

Automated test equipment

Factory automation solutions

Timing of revenue recognition – At a point in time

2019 MYR'000

319,674

44,958

32,309

25,547 –

422,488

10,951

8,283

17,720

25,461

2,185

64,600

487,088

487,088

5. REVENUE AND SEGMENT REPORTING (continued)

5.2 Segment information

Business segments

The Group has two reportable segments which comprised its major business segments. These business segments are involved in different activities and are managed by segment managers who report directly to the Group's executive directors. The reportable segments are as follows:

  • (i) Automated test equipment:

    Designing, development and manufacturing of standard and non-standard automated equipment.

  • (ii) Factory automation solutions:

Designing, development and installation of integrated factory automation solutions.

Inter-segment transactions have been accounted for on a basis that is consistent with the Group's accounting policies.

No other operating segments have been aggregated to form the above reportable segments. Investment holding and other activities are not considered as reporting segment and the related financial information has been included under "Adjustment".

The Group's executive directors monitor the performance of the business segments through regular discussions held with the segment managers and review of internal management reports. The performance of each business segment is evaluated based on the segment's profit or loss which is measured on a basis not significantly different from the profit or loss included in the consolidated financial statements.

5.

REVENUE AND SEGMENT REPORTING (continued)

5.2 Segment information (continued)

Year ended 31 December 2020

Other information

Additions to non-current assets Depreciation and amortisation Deferred income released

Gain on disposal of other investments ECL allowance on trade receivables – addition – reversal

Inventory written downs to net realisable value – addition – reversal

Gain from changes in fair value of foreign currency forward contracts Loss from changes in fair value of other investments

Unrealised loss/(gain) on foreign exchange Provision for warranty – current year – reversal Property, plant and equipment written-off Intangible assets written off

Revenu

External customers Inter-segment revenue

422,488 64,600

8,734 19,711

(28,445)

(i)

487,088 –

Revenu total

431,222

84,311

487,088

Résultats Segment results Interest income Interest expenses

Share of results of an associate

128,758 6,313

8,334

(3,735) 133,357

430 6,743

(186) – (186)

(734) (734)Profit before taxation Taxation

134,885

(7,755)

8,764

(44)

139,180

(7,799)Profit for the year

127,130

8,720

131,381

Les atouts Segment assets Interest in an associate Cash and cash equivalentsTotal des actifs

189,301 – 251,769 441,070

101,690 – 15,745

117,435

(20,651) 270,340

4,062 4,062

36,441 303,955

578,357

Liabilities Segment liabilities Bank borrowing Provision for taxation Deferred tax liabilities

102,733

79,874

(53,877) 128,730

3,362 – 3,362

1,959 9 1,968

5,374 5,374

Responsabilités totales

108,054

85,257

139,434

5.

REVENUE AND SEGMENT REPORTING (continued)

5.2 Segment information (continued)

Year ended 31 December 2019

Other information

Additions to non-current assets Depreciation and amortisation Deferred income released Gain on disposal of property, plant and equipment

ECL allowance on trade receivables Inventory written downs to net realisable value – addition – reversal

Gain from changes in fair value of foreign currency forward contracts Unrealised loss on foreign exchange Provision for warranty – current year – reversal Property, plant and equipment written-off

Note to segment information:

(i)

Automated test equipment MYR'000

19,875 3,708 (183)

(96) 997

2,474 (405)

(6,207)

438 816 (667)

2

Inter-segment revenues are eliminated on consolidation.

Factory automation solutions MYR'000

Adjustment

MYR'000

Total MYR'000

33,494 810

523 53,892

(82) 4,436

(69) (252)

82 (14)

2,022 3,019

23 2,497

(30) (435)

(998) (7,205)

908

1,457 2,803

50 866

(69) (736)

1

3

5.

REVENUE AND SEGMENT REPORTING (continued)

5.2 Segment information (continued)

Geographical Information

Revenue information based on the geographical location of customers are as follows:China Singapore United States Malaysia Taiwan Japan

Republic of Ireland Korea

Germany Philippines Others

All non-current assets (other than financial instruments) of the Group are located in Malaysia.

Information about major customers

2019

MYR'000

39,123

257,512

9,320

26,421

68,670

31,026

18,653

399

8,126

18,205

9,633

487,088

Revenue from each of the major customers, which amounted to 10% or more of the total revenue, is set out as below:

2020

2019

MYR'000

MYR'000

Customer A1

78,903

256,121

Customer B2

N / A

50,886

  • 1 Revenue from the Group's automated test equipment segment and factory automation solutions segment.

  • 2 Revenue from the Group's automated test equipment segment. Revenue from this customer in current year did not exceed 10% of the Group's revenue.

N/A: Revenue from this customer during the respective year did not exceed 10% of the Group's revenue.

6. OTHER INCOME

Bank interest income Deferred income released Net gain on foreign exchange

Gain on disposal of property, plant and equipment

Gain from changes in fair value of foreign currency forward contracts Gain on disposal of other investments

Government subsidies (note)

Rental income from operating leases Others

2019

MYR'000

6,743

252 –

14

7,205 – –

89

29

14,332

Note:

Funding support were received from the government of Malaysia under Enhanced Wage Subsidy Programme ("WSP") during the year ended 31 December 2020. The purpose of WSP is to support employers in their operations and to retain employees. There were no unfulfilled conditions or contingencies relating to these government grants.

7. EMPLOYEE BENEFITS EXPENSES (including directors' emoluments)

8.

2020

2019

MYR'000

MYR'000

Salaries, allowances, commission and bonuses

45,825

58,108

Contribution to EPF

6,196

5,384

Employee insurance scheme

47

42

Social security organisation contribution

586

725

52,654

64,259

FINANCE COSTS

2020

2019

MYR'000

MYR'000

Interests on bank borrowing

117

186

9. PROFIT BEFORE TAXATION

Profit before taxation is arrived at after charging/(crediting):

Amortisation of intangible assets Amortisation of leasehold land Auditor's remuneration Deferred income released

Depreciation of property, plant and equipment ECL allowance on trade receivables – current year – reversal

Gain from changes in fair value of foreign currency forward contracts Gain on disposal of other investments

Gain on disposal of property, plant and equipment Loss from changes in fair value of other investments Inventory written downs to net realisable value – current year – reversal

Net (gain)/loss on foreign exchange

Lease charges of short term leases and leases with lease term shorter than 12 months as at initial application of IFRS 16

  • – Factory

  • – Hostel

  • – Office

Property, plant and equipment written off Intangible assets written off

Provision for warranty – current year – reversal

10. TAXATION

The Group is subject to income tax on an entity basis on profits arising in or derived from the jurisdictions in which members of the Group are domiciled and operated.

Pursuant to the rules and regulations of the Cayman Islands, the Company is not subject to any income tax in the Cayman Islands.

Malaysian Income Tax has been provided at the statutory tax rate of 24% for the year ended 31 December 2020 (2019: 24%) on the estimated chargeable income arising in Malaysia.

10. TAXATION (continued)

Taxation in the consolidated statement of profit or loss and other comprehensive income represents:

Malaysian income tax Current year

Over/(Under) provision in prior years

Overseas income tax Current year

Deferred tax Current yearThe reconciliation of tax expense of the Group is as follows:Profit before taxationIncome tax at Malaysian statutory tax rate Share of results of an associate

Income not subject to tax Exempt pioneer income (note (i)) Expenses not deductible for tax purposes Difference in overseas profits tax rates Deferred tax movement not recognised

Utilisation of unabsorbed tax losses and capital allowances Over/(Under) provision in prior years

10. TAXATION (continued)

Remarques:

  • (i) Certain subsidiaries of the Group have been granted pioneer status under the Promotion of Investments Act, 1986 by the Malaysian Industrial Development Authority which exempts 100% of statutory income in relation to production of certain products. The effective period of the relevant pioneer status is ten years starting from April 2016 subject to renewal before the fifth anniversary of its effective date.

  • (ii) The deferred tax assets not recognised as at the end of the reporting period prior to set-off are as follows:

    Depreciation allowance

    Unabsorbed tax losses and capital allowances Others

    2019 MYR'000

    1,527 (2,862)

    240

    (1,095)

  • (iii) The unabsorbed tax losses accumulated up to year of assessment 2018 can be carried forward until year of assessment 2025. From year of assessment 2018, the unabsorbed tax losses can be carried forward for seven consecutive years of assessment immediately following that year of assessment and the unabsorbed capital allowances can be carried forward indefinitely pursuant to the gazetted Finance Act 2018.

    The unabsorbed tax losses of the Group will expire in the following years of assessment ("YA"):

2020

2019

MYR'000

MYR'000

YA 2025

(9,654)

(11,925)

YA 2027

(54)

(9,708)

(11,925)

PENTAMASTER INTERNATIONAL LIMITED

Annual Report 2020

11. DIRECTORS' EMOLUMENTS AND FIVE HIGHEST PAID INDIVIDUALS'

EMOLUMENTS

11.1 Directors' emoluments

Directors' and chief executive's emoluments, disclosed pursuant to the Listing Rules, section 383(1) of the Hong Kong Companies Ordinance and Part 2 of the Companies (Disclosure of Information about Benefits of Directors)

Regulation, is as follows:

Year ended 31 December 2020

Salaries, allowances

and benefits

Contribution

Frais

in kind

Bonuses

to EPF

Total

MYR'000

MYR'000

MYR'000

MYR'000

MYR'000

Executive directors:

Chuah Choon Bin

43

1,978

400

2,421

Gan Pei Joo

43

714

148

905

Non-executive director:

Leng Kean Yong

53

6

59

Independent

non-executive directors:

Sim Seng Loong @ Tai Seng

79

6

85

Chuah Jin Chong

79

4

83

Chan May May

79

5

84

376

2,713

548

3,637


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