Chairman's Statement

Dear Shareholders

The ongoing economic recession has had considerable impact on the semiconductor industry with sales declined steeply worldwide. It entered the first half of year 2009 prepared to witness a back-to-back decline in revenue fueled by a deepening economic slowdown. However, the global semiconductor industry started looking up and been enjoying a pick up in business since the second quarter giving rise to the improvement in manufacturing activities especially in the Asia Pacific region. While it is true that the semiconductor market is relatively mature and recession impacted, the Group remains optimistic that it will still be the primary contributor to the Group's revenue.

In order for Pentamaster to thrive and remain relevant, the Group has diversified its business to weather downturns since three years ago. Apart from focusing on existing products, the Group started to invest in developing new automation solution products for industries other than semiconductor such as medical, food & beverage, RFID (Radio Frequency Identification) and LED (Light Emitting Diodes). I am delighted to see that our efforts in research and development(R&D) have started to bear fruits resulted in the Group steering ahead of the competition. The contribution from these four sectors starting year 2010 is visible with our continuous innovation.

In line with our vision to provide world class automation solutions in the global market, we remained focused on achieving productivity enhancements and operational efficiencies to ensure consistent production of cost effective and top quality products. We are proud to report that our export remains more than 70% our total revenue while 90% of our customers are multinational companies. We gained continuous recognition especially those who are the US fortune 500 companies who in turn make us their strategic partners.

Financial Results

Despite having to confront the challenges in year 2009, the Group achieved better financial results based on revenue of RM73.4 million which slipped from RM103.9 million in the preceding year. The Group closes its financial year with a loss before tax of RM7.3 million as opposed to a loss before tax of RM26.6 million in 2008. For the last three quarters of 2009, the Group exhibited improvements in revenue which in turn resulted in positive profit generated attributable largely to the recovery of customers' demand for automation solution in the manufacturing sector driven by the rebound in the second half of the year. the incremental sales orders translated into higher capacity utilization coupled with the Group's effort in streamlining its operations contributed to better absorption of fixed cost and thus benefiting the bottom line.

The results were within expectations considering the much challenged economic situation.


The Board of Directors does not recommend any dividend payment for the financial year ended 31 December 2009.

Business Prospects And Challenges

Year 2010 is anticipated to witness modest growth in revenue. Favourable signs are being received especially from the semiconductor sector. However, this growth comes only in comparison to the depressed levels of 2009, a year when semiconductor market conditions faced an unprecedented type of downturn.

The Group has always remained vigilant against the market competition which in turn propelled Pentamaster to develop new range of products venturing into niche markets applications. One such product is the Glove Reprocessing Unit (GRU) which caters for customers in the healthcare industry. GRU allows users to reprocess gloves using a fully automated reprocessing and testing system up to seven times compared to the normal single use conventional gloves available in the market at the moment. Apart from being recyclable, the latest testing technology is used to ensure the gloves are pinhole proof. The selling point of this concept is its potential to innovate the rubber glove industry by offering an alternative to glove users, fitting in with the requirement of the much-touted blue ocean business strategy. We have just started commercialization of these machines and our capacity is still small at the moment.

As environment issues have become more of a concern today, semiconductor devices are being made to reduce power consumption, reduce heat dissipation, capture solar energy, and create more efficient lighting solutions and so forth. The Group acknowledged that the Green technology market is growing in importance. For the past three years, Pentamaster has invested its resources in Green technology whereby extensive amount of research and development has been carried out in automated equipments for LED, Solar manufacturing, Solar Trackers and new cost effective semiconductor test handler.

However, the overall mood in the semiconductor industry is of cautions optimism. Visibility into customers' demand continues to remain unclear even for the short term. The biggest challenge faced is the delivery of equipments in shorter lead time as end customers' investment in equipments are often for immediate use basically with no forecast or visibility beyond five months. As the market become more and more competitive with aggressive pricing compounded by the increased expectation from customers looking for cost effective solution with shorter return of investment, it is important for Pentamaster to continue to strive to design and manufacture machines that meets the specification. There has to be continuous effort for the Group to reinvent itself by leaps and bounds to face and suit the changing environment, challenges and demands.

The industry has come a long way since the last downturn. Past experience has been put to good use this time around. While the Group has not been spared from the impacts of the global financial crisis, the Group has taken steps in streamlining the workforce and embarking on cost rationalization and cost reduction measures to contain its operating expenses as well as striving for operational excellence which will lower its cost of production of quality equipment. Through these exercises, we are much leaner, agile and efficient today in terms of human resources, business and manufacturing processes.

In conclusion, recovery remains fragile but prospects for this year are much more encouraging than they were a year ago. The Group will continue to leverage on its core strengths and competences built over the years. Barring any unforeseen circumstances, the Group expects to achieve better results in 2010.


On behalf of the Board, I would like to express my deepest appreciation to the management and staff for their unwavering efforts and untiring contributions in discharging their duties. Also, I would like to convey our gratitude to all of our dedicated suppliers who continue to support for the success of the Group.

I also extend my gratitude to our customers, business partners, government agencies and authorities, and the investing community including our shareholders for their continuous support and confidence in the Group. I believe that our teamwork spirit will help to propel the Group forward confidently and transform Pentamaster to be the supplier of choice for our customers.

Finally, I take this opportunity to thank our Board members for their constant guidance, valuable advice and support.

Chuah Choon Bin
Executive Chairman