ANNUAL REPORT 2014 - listed SDN. BHD. (749166-A) PENTAMASTER INSTRUMENTATION SDN. BHD. (637373-M)...

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Transcript of ANNUAL REPORT 2014 - listed SDN. BHD. (749166-A) PENTAMASTER INSTRUMENTATION SDN. BHD. (637373-M)...

  • ANNUAL REPORT

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  • www.pentamaster.com • Pentamaster Corporation Berhad (572307-U) Annual Report 2014 01

    CONTENTS

    IDENTITY An integrated consulting and automation engineering technology solutions provider.

    We are dedicated to delivering high quality and cost effective products with value-added services. In our effort to meet our mission, we strive to provide benefits and satisfaction to our customers, vendors, employees and the community as a whole.

    MISSION

    To provide world-class automation solutions to companies in the manufacturing, electrical and electronics industries worldwide.VISION

    VISION AND MISSION STATEMENT 01 CORPORATE INFORMATION 02 CORPORATE STRUCTURE 03 CHAIRMAN’S STATEMENT 04 - 06 PROFILE OF DIRECTORS / PRINCIPAL OFFICER 07 - 08 CORPORATE SOCIAL RESPONSIBILITY STATEMENT 09 - 10 FINANCIAL HIGHLIGHTS 11 CORPORATE GOVERNANCE STATEMENT 12 - 21 STATEMENT ON RISK MANAGEMENT & INTERNAL CONTROL 22 - 24 AUDIT COMMITTEE REPORT 25 - 29 OTHER INFORMATION 30 DIRECTORS’ REPORT 31 - 34 DIRECTORS’ STATEMENT 35 STATUTORY DECLARATION 35 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS 36 - 37 STATEMENTS OF FINANCIAL POSITION 38 STATEMENTS OF COMPREHENSIVE INCOME 39 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 40 STATEMENT OF CHANGES IN EQUITY 41 STATEMENTS OF CASH FLOWS 42 - 43 NOTES TO THE FINANCIAL STATEMENTS 44 - 89 SUPPLEMENTARY INFORMATION 90 LIST OF LANDED PROPERTIES 91 ANALYSIS OF SHAREHOLDINGS 92 - 93 NOTICE OF ANNUAL GENERAL MEETING 94 - 96 PROXY FORM Enclosed

  • CORPORATE INFORMATION

    BOARD OF DIRECTORS

    CHUAH CHOON BIN Executive Chairman

    TAN BOON TEIK Executive Director

    GAN PEI JOO Finance Executive Director

    LOH NAM HOOI Non-Executive Independent Director

    SIM SENG LOONG @ TAI SENG Non-Executive Independent Director

    LENG KEAN YONG Non-Executive Independent Director

    AUDIT COMMITTEE

    Chairman SIM SENG LOONG @ TAI SENG Non-Executive Independent Director

    Members LOH NAM HOOI Non-Executive Independent Director

    LENG KEAN YONG Non-Executive Independent Director

    COMPANY SECRETARIES

    LIM KIM TECK (MAICSA 7010844) KONG SOWN KAEY (MAICSA 7047655)

    AUDITORS

    GRANT THORNTON 51-8-A, Menara BHL Bank Jalan Sultan Ahmad Shah 10050 Penang

    HEAD OFFICE

    Plot 18 & 19, Technoplex Medan Bayan Lepas Taman Perindustrian Bayan Lepas, Phase IV 11900 Penang Tel : 04-646 9212 Fax : 04-646 7212 Website : www.pentamaster.com

    REGISTERED OFFICE

    35, 1st Floor, Jalan Kelisa Emas 1 Taman Kelisa Emas 13700 Seberang Jaya, Penang Tel : 04-397 6672 Fax : 04-397 6675

    SHARE REGISTRAR

    SECURITIES SERVICES (HOLDINGS) SDN. BHD. Suite 18.05, MWE Plaza No. 8, Lebuh Farquhar 10200 Penang Tel : 04-263 1966 Fax : 04-262 8544

    BANKERS

    UNITED OVERSEAS BANK (MALAYSIA) BERHAD RHB BANK BERHAD HSBC BANK MALAYSIA BERHAD PUBLIC BANK BERHAD

    STOCK EXCHANGE LISTING

    MAIN MARKET OF THE BURSA MALAYSIA SECURITIES BERHAD Sector : Technology Stock Name : Penta Stock Code : 7160

    Pentamaster Corporation Berhad (572307-U) • www.pentamaster.com Annual Report 201402

  • CORPORATE STRUCTURE

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    60%

    PENTAMASTER TECHNOLOGY (M) SDN. BHD. (336488-H)

    PENTAMASTER ENGINEERING (M) SDN. BHD. (460116-T)

    PENTAMASTER INFORMATION TECHNOLOGY BERHAD (625497-H)

    PENTAMASTER SOLUTIONS SDN. BHD. (659962-W)

    PENTAMASTER EQUIPMENT MANUFACTURING SDN. BHD. (749166-A)

    PENTAMASTER INSTRUMENTATION SDN. BHD. (637373-M)

    www.pentamaster.com • Pentamaster Corporation Berhad (572307-U) Annual Report 2014 03

  • CHAIRMAN’S STATEMENT

    GENERAL OVERVIEW

    I am delighted to report that the Group delivered another year of substantial progress with a good set of financials in the year under review albeit the prevailing challenges faced in the industry. Over the course of 2014, we continued to make progress and benefited from the substantial improvement in our operating performance through streamlining the way we do business and managing our cost base. The Group has also participated actively in trade exhibitions to further increase its profile and presence as one of the leading automation solution provider for the global market.

    The greater business outsourcing activities and growing demand for the manufacturing automation solution have created strong demand for our new standard technological solution from our existing and new customer bases. Coupled with the improvement in market condition, we performed better in terms of the Group’s revenue contribution and its profitability as compared to the preceding year. Adding to the positive impact on the overall performance was the decisive stand embraced by the Group to be selective over the type of projects undertaken to improve the overall quality and profile of our business mix. Such initiative is in tandem with the Group’s regard for risk management as an integral part of our business operations.

    As of early December 2014, our Malaysian Ringgit has dipped to approximately RM3.48 per US dollar. While the depreciation of our Ringgit may have caused the loss of confidence in foreign investors and tempting inflationary pressures, the weakening Ringgit is not all gloom and doom for certain sectors in our country. Pentamaster being a manufacturer in an export driven business, the depreciation of the Ringgit to certain extent benefited us.

    The Group’s continuous emphasis and investment in research and development (“R&D”) activities has enabled the Group to widen its range of semiconductor backend process equipment with new and upgraded mechanical and software features. It is important for the Group to continue moving up the automation technology value chain where innovation continues at a relentless pace. In this respect, we are grateful towards MIDA (Malaysian Investment Development Authority) for the R&D grant and support extended to the local companies like us. With the MIDA R&D grant, Pentamaster, being an automated mechanical test handler design house, is given the opportunity to venture into the testing technology together with the automated test handler as a one stop total test solution provider.

    With the emergence of Internet of Things which has arisen on the back of the growing interconnectedness of things, smart electronic devices such as RFID, MEMS Microphone, MEMS Sensor, MEMS Gyro, MEMS Camera module etc are the key driving force behind the semiconductor growth in 2015 and years to come. More sophisticated test solution is required for the manufacturing of these smart devices. The R&D grant from MIDA is timely in assisting us to fulfil our aspiration to become one of the premium test solution providers for the smart devices in the global market.

    FINANCIAL PERFORMANCE

    Our financial performance in 2014 is the best since 2010 and is trending in the right direction. It is worth to note the growth in operating profit of RM7.6 million on the back of RM81.0 million in revenue despite the fact that the Group had to contend with intensified competition. In the year under review, the Group witnessed modest growth in revenue, an increase of 20.3% as compared to RM67.3 million

    Pentamaster Corporation Berhad (572307-U) • www.pentamaster.com Annual Report 201404

  • CHAIRMAN’S STATEMENT (CONT’D)

    in the preceding year. This was primarily attributable to the improvement in market condition and stronger demand for our automated equipment and new standard technological solution from our existing and new customers. Other than the automated equipment operating segment, our contract manufacturing business saw an increase in revenue contribution from the positive acceptance of our product and demand from a larger diversified customer base.

    From a bottom line perspective, the Group closed its financial year with a pre-tax profit of RM7.4 million as opposed to a pre-tax profit of RM3.9 million in 2013 which translated to an increase in earnings per share to 3.40 sen from 1.79 sen a year ago. The improved financial performance in 2014 was mainly driven by the increase in turnover coupled with better product mix secured during the year.

    On the balance sheet front, the Group will continuously minimise its borrowing unless necessary and put continuous effort in adopting prudent cost management via leaner human resource and manufacturing process, implementation of lean methodology and securing businesses of good collection and better profit margin.

    ALIGNMENT

    At present, the Group’s business focus remains in supplying equipment used in the sectors of smart phone, semiconductor, LED and medical glove industries. During the year, we made great progress in positioning our presence and continued to win new orders from world renowned customers from the above mentioned industry sectors. The strategy for the

    Group is to align ourselves with the niche and high- end technological solution projects so as not to be in competition for price value alone.

    There is no doubt that the increasing competitiveness in the industry had put pressures on the entire supply chain. While the margin compression and intense competition is inevitable, I am thankful that the long term relationship established with our vendors saw us working through these challenges with little disruption to our business cost structure. Given the fast evolving customer needs in our industry, it is im