Chairman's Statement
"We strongly believe that it is important for the Group to continuously redefine and develop the right business model to propel the Group forward in the right business direction."
On behalf of the Board of Directors, it is my pleasure to present the Pentamaster Corporation Berhad's Annual Report and Financial Statements of the Group and Company for the financial year ended 31 December 2007.
Financial Results
For the 12 months ended 31 December 2007, the Group's revenue of RM144.1 million represents an increase of 19.5% from RM120.6 million recorded in the previous corresponding period. However, profit after tax decreased to RM3.6 million for the financial year ended 31 December 2007 as compared to RM10.5 million recorded a year ago.
The growth in revenue was mainly attributed to continuous strong demand for its material handling and sortation systems from overseas customers. However, the increase in profit contribution from this automation solutions has been eroded by continuous operating losses caused by slower demand for the Group's semiconductor manufacturing equipment coupled with the additional cost to penetrate the equipment contract manufacturing business which carries a higher fixed costs burden.
Dividend
The Board of Directors of the Company is pleased to recommend for approval of shareholders, a First and Final Tax Exempt Dividend of 8% or 4 sen per share for the year ended 31 December 2007.
Not with standing the fall in reported profits, the Board is of the view that the recommended dividend adequately rewards its shareholders with an appropriate return on their investments. The ability to maintain the high dividend payout will not affect the financial capability of the Group to grow and exploit market opportunities.
Operations Review
During the year under review, we are pleased to highlight that the manufacturing space in the new facility built for equipment contract manufacturing business has been substantially occupied with designated and secured assembly area allocated to OEM (Original Equipment Design) and ODM (Original Design Manufacturing) customers mainly from the semiconductor and medical equipment industries. The higher technical and skills competency level demanded from our machinist, technical and engineering professionals through learning curve effect on manufacturing process improvements over the last 2 years, helped strengthened the Group's capabilities and readiness to market our equipment contract manufacturing services to large global Multi-National Corporations (MNCs). We have been qualified as an approved vendor to a few such MNCs by end 2007 and gearing up for more quality and systems audits by a few more MNCs in 2008. We hope that these MNCs will start to place orders with us in the second half of 2008 which should bring about positive impact to our financial results.
In 2006, we highlighted that the Malaysian Industrial Development Authority (MIDA) has approved Research & Development (R&D) and Training Grant for us to develop the Test and Measurement Systems (TMS) for the electrical and electronics industry. Today, I am delighted to report that we have completed and commercialized a few modules of the TMS while the rest is still being developed according to the R&D plan.
Another major breakthrough came when the Company was appointed as the exclusive designer and manufacturer of Glove Reprocessing Units (GRU) for EcoGlove Limited over a 3 years contract. GRU is a machine that uses cold plasma technology to clean and sterilize the medical gloves for reuse. We have successfully completed the first prototyped GRU and the two first pre-serial GRUs. Commercial production is expected to begin with the receipt of the first purchase order for 3 units of GRU. We have also stepped-up efforts to open up new markets in the Middle East and Eastern Europe as well as carrying out internal reorganization to better position and equip the Group to face various challenges, going forward.
Looking Ahead
Prospects for Asia will depend critically on the extent of the US slowdown. With the current economic uncertainty, we do not foresee strong pick-up in demand for semiconductor manufacturing equipment anytime soon. The pervasiveness of a global economic slowdown, if happens, may also dampen or reduce customers' demand and budget for factory automation which will have an impact on the financial performance in 2008. Barring any unforeseen circumstances, we are ready to face any adversity in business environment with a better and unified workforce and more refined business strategies to pull through 2008 stronger than before. We strongly believe that it is important for the Group to continuously redefine and develop the right business model to propel the Group forward in the right business direction.
Appreciation
On behalf of the Board of Directors, I would like to take this opportunity to thank the management and staff for their dedication and commitment as the Group goes through this challenging period. With the perseverance and teamwork shown, I believe the Group can achieve the desired results. My appreciation also extends to our customers, suppliers, business associates, bankers, relevant authorities and most importantly our shareholders for their continued support and confidence in the Group.
Last but not least, I would like to express my gratitude to my fellow board members for their invaluable insights and contribution throughout the year in review.