Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  Equities  >  Hong Kong Stock Exchange  >  ASM Pacific Technology Limited    522   KYG0535Q1331

ASM PACIFIC TECHNOLOGY LIMITED

(522)
  Report
SummaryChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
SummaryMost relevantAll NewsPress ReleasesOfficial PublicationsSector news

ASM Pacific Technology : ANNOUNCEMENT OF 2019 AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2019

02/25/2020 | 05:49pm EST

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

ASM PACIFIC TECHNOLOGY LIMITED

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 0522)

ANNOUNCEMENT OF 2019 AUDITED RESULTS FOR

THE YEAR ENDED 31 DECEMBER 2019

Powered by Twin Engines, Rising above Challenges

2019

  • Group revenue of US$2.03 billion decreased 18.8% over 2018
  • Net profit of HK$622.4 million decreased 71.9% over 2018
  • Earnings per share of HK$1.52
  • Back-endequipment revenue of US$893.6 million decreased 24.4% over 2018
  • Materials revenue of US$236.4 million decreased 17.8% over 2018
  • SMT solutions revenue of US$896.6 million decreased 12.6% over 2018
  • New order bookings of US$2.02 billion decreased 21.5% over 2018
  • Book to bill ratio of 1.00
  • Cash and bank deposits of HK$2.33 billion at the end of December 2019
    Second Half of 2019
  • Half-yearGroup revenue of US$1.10 billion increased 18.3% over the first half of 2019 and decreased 13.3% over the second half of 2018
  • Net profit of HK$444.1 million increased 149.1% over the first half of 2019 and decreased 45.5% over the second half of 2018
  • Earnings per share of HK$1.08
  • Half-yearBack-end equipment revenue of US$491.6 million increased 22.0% over the first half of 2019 and decreased 8.4% over the second half of 2018
  • Half-yearMaterials revenue of US$128.8 million increased 19.5% over the first half of 2019 and decreased 5.9% over the second half of 2018
  • Half-yearSMT solutions revenue of US$478.9 million increased 14.5% over the first half of 2019 and decreased 19.5% over the second half of 2018
    Fourth Quarter of 2019
  • Group revenue of US$568.0 million increased 7.0% over the preceding quarter and decreased 6.7% over the fourth quarter of 2018
  • Net profit of HK$221.9 million decreased 0.2% over the preceding quarter and increased 4.5% over the fourth quarter of 2018
  • Excluded the restructuring costs and related tax effect of HK$106.9 million in the fourth quarter of 2019 and HK$15.5 million in the fourth quarter of 2018, the Group's net profit represented improvements of 47.9% over the preceding quarter and 44.4% over the fourth quarter of 2018, respectively
  • Earnings per share of HK$0.53
  • Group bookings of US$445.2 million decreased 13.3% and 6.1% over the preceding quarter and the fourth quarter of 2018, respectively
  • Backlog of US$650.6 million as of end 2019 decreased 0.7% over a year ago

1

The Directors of ASM Pacific Technology Limited are pleased to make the following announcement of audited results for the year ended 31 December 2019:

RESULTS

ASM Pacific Technology Limited and its subsidiaries (the "Group" or "ASMPT") achieved a revenue of HK$15.88 billion (US$2.03 billion) in the fiscal year ended 31 December 2019, which was 18.8% lower than the revenue of HK$19.55 billion (US$2.49 billion) in the previous year. The Group's consolidated profit after taxation for the year is HK$622.4 million, which was a decrease of 71.9% from the previous year's net profit of HK$2.21 billion. Basic earnings per share (EPS) for the year amounted to HK$1.52 (2018: HK$5.47).

DIVIDEND AND CLOSURES OF REGISTER OF MEMBERS

We continue to believe in returning excess cash to our shareholders as dividends. After considering the Group's short-term needs and our cash on hand, the Board of Directors has resolved to recommend to shareholders the payment of a final dividend of HK$0.70 (2018: final dividend of HK$1.40) per share. Together with the interim dividend of HK$1.30 (2018: HK$1.30) per share paid in August 2019, the total dividend payment for year 2019 will be HK$2.00 (2018: HK$2.70) per share.

The proposed final dividend of HK$0.70 per share, the payment of which is subject to approval by the shareholders at the forthcoming annual general meeting of the Company to be held on Tuesday, 12 May 2020 ("2020 AGM"), is to be payable on Friday, 29 May 2020 to shareholders whose names appear on the Register of Members of the Company on Tuesday, 19 May 2020.

The Register of the Members of the Company will be closed during the following periods:

  1. From Thursday, 7 May 2020 to Tuesday, 12 May 2020, both days inclusive, during which period no transfer of shares will be registered for the purpose of ascertaining shareholders' entitlement to attend and vote at the 2020 AGM. In order to be eligible to attend and vote at the 2020 AGM, all transfers accompanied by the relevant share certificates must be lodged with the Company's Share Registrar in Hong Kong, Tricor Secretaries Limited at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong, not later than 4:00 p.m. on Wednesday, 6 May 2020; and
  2. From Monday, 18 May 2020 to Tuesday, 19 May 2020, both days inclusive, during which period no transfer of shares will be registered for the purpose of ascertaining shareholders' entitlement to the proposed final dividend. In order to qualify for the proposed final dividend, all transfers accompanied by the relevant share certificates must be lodged with the Company's Share Registrar in Hong Kong, Tricor Secretaries Limited at the abovementioned address, not later than 4:00 p.m. on Friday, 15 May 2020.

2

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

Three months ended 31 Dec

Year ended 31 Dec

2019

2018

2019

2018

(unaudited)

(unaudited)

(audited)

(audited)

HK$'000

HK$'000

HK$'000

HK$'000

Notes

Revenue

2

4,448,899

4,767,696

15,883,042

19,550,590

Cost of sales

(2,902,133)

(3,196,406)

(10,359,167)

(12,113,813)

Gross profit

1,546,766

1,571,290

5,523,875

7,436,777

Other income

14,551

11,648

93,359

96,126

Selling and distribution expenses

(417,914)

(478,461)

(1,590,273)

(1,660,893)

General and administrative expenses

(262,885)

(251,290)

(960,933)

(1,013,345)

Research and development expenses

(445,905)

(424,060)

(1,710,858)

(1,610,225)

Other gains and losses

5

(17,631)

(1,174)

(54,774)

(78,455)

Restructuring costs

6

(109,540)

(19,067)

(109,540)

(19,067)

Finance costs

7

(45,146)

(51,065)

(215,122)

(177,762)

Profit before taxation

262,296

357,821

975,734

2,973,156

Income tax expense

8

(40,434)

(145,606)

(353,356)

(761,428)

Profit for the period

221,862

212,215

622,378

2,211,728

Profit (loss) for the period attributable to:

Owners of the Company

216,458

211,161

619,249

2,216,062

Non-controlling interests

5,404

1,054

3,129

(4,334)

221,862

212,215

622,378

2,211,728

Earnings per share

10

- Basic

HK$0.53

HK$0.52

HK$1.52

HK$5.47

- Diluted

HK$0.53

HK$0.52

HK$1.52

HK$5.44

3

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Three months ended 31 Dec

Year ended 31 Dec

2019

2018

2019

2018

(unaudited)

(unaudited)

(audited)

(audited)

HK$'000

HK$'000

HK$'000

HK$'000

Profit for the period

221,862

212,215

622,378

2,211,728

Other comprehensive income (expense)

  • exchange differences arising on translation of foreign operations, which may be reclassified subsequently to

profit or loss

104,750

(29,632)

(121,415)

(273,227)

- remeasurement of defined benefit

retirement plans, net of tax, which will

not be reclassified to profit or loss

(55,916)

3,400

(55,916)

3,400

- fair value gain on investments in equity

instruments at fair value through other

comprehensive income, which will not

be reclassified to profit or loss

8,020

-

8,020

-

Other comprehensive income (expense) for

the period

56,854

(26,232)

(169,311)

(269,827)

Total comprehensive income for the period

278,716

185,983

453,067

1,941,901

Total comprehensive income (expense) for

the period attributable to:

Owners of the Company

270,770

186,904

452,016

1,948,645

Non-controlling interests

7,946

(921)

1,051

(6,744)

278,716

185,983

453,067

1,941,901

4

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 31 December

2019

2018

HK$'000

HK$'000

Notes

Non-current assets

Property, plant and equipment

2,916,415

2,850,450

Right-of-use assets

1,632,626

-

Investment property

53,645

56,206

Goodwill

1,047,851

1,057,816

Intangible assets

1,190,072

1,305,622

Prepaid lease payments

-

126,732

Other investments

93,471

56,355

Deposits paid for acquisition of property,

plant and equipment

92,888

40,672

Rental deposits paid

32,888

42,033

Deferred tax assets

384,624

355,210

Other non-current assets

19,979

16,343

7,464,459

5,907,439

Current assets

Inventories

6,291,276

6,541,939

Trade and other receivables

11

4,710,170

6,324,901

Prepaid lease payments

-

3,863

Derivative financial instruments

3,482

1,852

Income tax recoverable

49,604

44,134

Pledged bank deposits

-

2,054

Bank deposits with original maturity of more

than three months

9,053

9,198

Bank balances and cash

2,317,543

2,240,022

13,381,128

15,167,963

Current liabilities

Trade liabilities and other payables

12

2,670,411

3,165,478

Advance payments from customers

861,766

718,694

Derivative financial instruments

9,295

32,697

Lease liabilities/obligations under finance leases

188,633

410

Provisions

283,696

330,933

Income tax payable

97,134

533,701

Convertible bonds

13

-

2,224,652

Bank borrowings

321,364

786,021

4,432,299

7,792,586

Net current assets

8,948,829

7,375,377

16,413,288

13,282,816

5

CONSOLIDATED STATEMENT OF FINANCIAL POSITION - continued

At 31 December

2019

2018

HK$'000

HK$'000

Capital and reserves

Share capital

40,889

40,667

Dividend reserve

286,227

569,340

Other reserves

11,301,200

11,557,541

Equity attributable to owners of the Company

11,628,316

12,167,548

Non-controlling interests

3,376

(6,893)

Total equity

11,631,692

12,160,655

Non-current liabilities

Lease liabilities/obligations under finance leases

1,362,169

736

Retirement benefit obligations

260,551

171,515

Provisions

53,024

48,528

Bank borrowings

2,722,118

473,740

Deferred tax liabilities

233,788

250,783

Other liabilities and accruals

149,946

176,859

4,781,596

1,122,161

16,413,288

13,282,816

6

Notes:

1. Principal accounting policies

The consolidated financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards ("HKFRSs") issued by the Hong Kong Institute of Certified Public Accountants (the "HKICPA"). In addition, the consolidated financial statements include applicable disclosures required by the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited ("Listing Rules") and by the Hong Kong Companies Ordinance.

The consolidated financial statements have been prepared on the historical cost basis except for the derivative financial instruments, other investments (classified as financial equity instruments at fair value through other comprehensive income) and certain financial liabilities which are measured at fair value at the end of each reporting period. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

New and amendments to HKFRSs that are mandatorily effective for the current year

The Group has applied the following new and amendments to HKFRSs and an interpretation issued by the HKICPA for the first time in the current year:

HKFRS 16 HK(IFRIC) - Int 23 Amendments to HKFRS 9 Amendments to HKAS 19 Amendments to HKAS 28 Amendments to HKFRSs

Leases

Uncertainty over Income Tax Treatments

Prepayment Features with Negative Compensation Plan Amendments, Curtailment or Settlement Long-term Interests in Associates and Joint Ventures Annual Improvements to HKFRSs 2015 - 2017 Cycle

HKFRS 16 "Leases"

The Group has applied HKFRS 16 for the first time in the current year. HKFRS 16 superseded Hong Kong Accounting Standard ("HKAS") 17 "Leases", and the related interpretations.

As a lessee

When recognizing the lease liabilities for leases previously classified as operating leases, the Group has applied incremental borrowing rates of the relevant group entities at the date of initial application. The weighted average incremental borrowing rate applied is 3.57%.

7

1.

Principal Accounting Policies - continued

At

1 January

2019

Operating lease commitments disclosed as at

HK$'000

31 December 2018

1,982,665

Lease liabilities discounted at relevant incremental

borrowing rates

1,515,515

Add: Lease extension options reasonably certain

to be exercised

159,672

Less: Recognition exemption - short-term leases

(13,352)

Recognition exemption - low-value assets

(excluding short-term leases of low-value assets)

(8,692)

Lease liabilities relating to operating leases recognized

upon application of HKFRS 16

1,653,143

Add: Obligations under finance leases recognized at

31 December 2018

1,146

1,654,289

Analyzed as

Current

173,333

Non-current

1,480,956

1,654,289

The carrying amount of right-of-use assets for own use as at 1 January 2019 comprises the

following:

Right-of-use

Notes

assets

Right-of-use assets relating to operating leases

HK$'000

recognized upon application of HKFRS 16

1,587,266

Reclassified from prepaid lease payments

(a)

130,595

Adjustment included in property, plant and

equipment under HKAS 17

- Restoration and reinstatement costs

(b)

27,652

Adjustment on rental deposits at 1 January 2019

(c)

11,540

1,757,053

8

1. Principal Accounting Policies - continued

The following table summarizes the impacts of transition to HKFRS 16 on retained profits at 1 January 2019.

Impacts of

adopting

HKFRS 16

Notes

at 1 January 2019

HK$'000

Retained profits

Right-of-use assets relating to operating leases

recognized upon application of HKFRS 16

1,587,266

Lease liabilities relating to operating leases

recognized upon application of HKFRS 16

(1,653,143)

Adjustment on rental deposits at 1 January 2019

(c)

(35)

Adjustment on prepaid and accrued lease payments

(e)

13,360

Tax effects

12,342

Impacts at 1 January 2019

(40,210)

The following adjustments were made to the amounts recognized in the consolidated statement of financial position at 1 January 2019. Line items that were not affected by the changes have not been included.

Impacts on assets, (liabilities) and (reserve) as at 1 January 2019

Carrying

Carrying

amounts

amounts

previously

under

reported at

Impacts of

HKFRS 16

31 December

adopting

at 1 January

Notes

2018

HKFRS 16

2019

HK$'000

HK$'000

HK$'000

(Audited)

(Restated)

Deferred tax assets

355,210

12,342

367,552

Property, plant and equipment

2,850,450

(27,652)

2,822,798

Right-of-use assets

-

1,757,053

1,757,053

Prepaid lease payments - non-current

(a)

126,732

(126,732)

-

Prepaid lease payments - current

(a)

3,863

(3,863)

-

Rental deposits paid

(c)

42,033

(11,575)

30,458

Trade and other receivables

(d)

6,324,901

(1,651)

6,323,250

Trade liabilities and other payables

(e)

(3,165,478)

15,011

(3,150,467)

Lease liabilities - current

-

(172,923)

(172,923)

Lease liabilities - non-current

-

(1,480,220)

(1,480,220)

Retained profits

(10,414,081)

40,210

(10,373,871)

9

  1. Principal Accounting Policies - continued Notes:
    1. Upfront payments for leasehold lands for own used properties were classified as prepaid lease payments as at 31 December 2018. Upon application of HKFRS 16, the non-current and current portion of prepaid lease payments amounting to HK$126,732,000 and HK$3,863,000 respectively were reclassified to right-of-use assets.
    2. In relation to the leases of offices that the Group acts as lessee, the carrying amount of the estimated costs of reinstating the rented premises previously included in property, plant and equipment amounting to HK$27,652,000 as at 1 January 2019 were included as right-of-use assets.
    3. Before the application of HKFRS 16, the Group considered refundable rental deposits paid as rights and obligations under leases to which HKAS 17 applied under other receivables. Based on the definition of lease payments under HKFRS 16, such deposits are not payments relating to the right to use of the underlying assets and were adjusted to reflect the discounting effect at transition. Accordingly, HK$11,540,000, HK$35,000 and HK$11,575,000 were adjusted to right-of-use assets, retained profits and refundable rental deposits paid, respectively.
    4. Prepayments for rent
      These relate to prepaid lease expense for leases of properties before the expense incurred. The carrying amount of the prepaid lease expenses as at 1 January 2019 was adjusted to right-of-use assets at transition.
    5. Rent-freeperiod
      These relate to accrued lease liabilities for leases of properties in which the lessors provided rent-free period. The carrying amount of the lease incentive liabilities under trade liabilities and other payables as at 1 January 2019 was adjusted to right-of-use assets at transition.
  2. SEGMENT INFORMATION
    The Group has three (2018: three) operating segments: development, production and sales of (1) back-end equipment, (2) surface mount technology ("SMT") solutions and (3) materials. They represent three major types of products manufactured by the Group. The operating segments are identified on the basis of internal reports about components of the Group that are regularly reviewed by Company's Chief Executive Officer, the chief operating decision maker ("CODM"), for the purpose of allocating resources to segments and assessing their performance. The Group is organized and managed around the three (2018: three) major types of products manufactured by the Group. No operating segments have been aggregated in arriving at reportable segments of the Group.

10

2. SEGMENT INFORMATION - continued Segment revenues and results

An analysis of the Group's revenue and results by operating and reportable segment is as follows:

Three months ended 31 Dec

Year ended 31 Dec

2019

2018

2019

2018

(unaudited)

(unaudited)

(audited)

(audited)

HK$'000

HK$'000

HK$'000

HK$'000

Segment revenue from external customers

Back-end equipment

2,026,073

1,828,624

7,003,454

9,259,791

SMT solutions

1,906,260

2,470,237

7,026,715

8,035,577

Materials

516,566

468,835

1,852,873

2,255,222

4,448,899

4,767,696

15,883,042

19,550,590

Segment profit

Back-end equipment

178,182

165,004

476,611

2,010,791

SMT solutions

278,032

298,654

926,604

1,274,552

Materials

9,816

3,333

58,316

113,745

466,030

466,991

1,461,531

3,399,088

Interest income

5,179

4,885

23,660

31,003

Finance costs

(45,146)

(51,065)

(215,122)

(177,762)

Unallocated other income (expenses)

12,026

(1,470)

13,696

(557)

Unallocated net foreign exchange losses and

fair value change of foreign currency

forward contracts

(37,232)

(2,300)

(92,200)

(86,142)

Unallocated general and administrative

expenses

(35,696)

(40,153)

(127,912)

(173,407)

Unallocated adjustment on contingent

-

-

consideration for acquisitions

6,675

21,621

Restructuring costs

(109,540)

(19,067)

(109,540)

(19,067)

Profit before taxation

262,296

357,821

975,734

2,973,156

Segment profit %

Back-end equipment

8.8%

9.0%

6.8%

21.7%

SMT solutions

14.6%

12.1%

13.2%

15.9%

Materials

1.9%

0.7%

3.1%

5.0%

No analysis of the Group's assets and liabilities by operating segments is disclosed as they are not regularly provided to the CODM for review.

The accounting policies of the operating segments are the same as the Group's accounting policies. Segment results represent the profit before taxation earned by each segment without allocation of interest income, finance costs, unallocated other income (expenses), unallocated net foreign exchange losses and fair value change of foreign currency forward contracts, unallocated general and administrative expenses, unallocated adjustment on contingent consideration for acquisitions and restructuring costs.

All of the segment revenue derived by the segments is from external customers.

11

2. SEGMENT INFORMATION - continued

Other segment information (included in the segment profit or loss or regularly provided to the CODM)

Year ended 31 December 2019

Unallocated

general and

administrative

expenses/

Back-end

SMT

restructuring

equipment

solutions

Materials

costs

Consolidated

HK$'000 HK$'000 HK$'000

HK$'000

HK$'000

Amounts regularly provided to

CODM:

Additions of property, plant and

equipment

385,206

141,587

153,586

-

680,379

Additions of intangible assets

25

4,323

-

-

4,348

Amounts included in the measure of

segment profit:

Amortization for intangible assets

46,044

61,906

-

-

107,950

Depreciation for property, plant and

equipment and right-of-use assets

400,942

208,178

122,854

1,379

733,353

Depreciation for investment

property

1,331

-

-

-

1,331

Impairment loss recognized in

respect of property, plant and

equipment and right-of-use assets

-

-

-

67,763

67,763

(Gains) losses on disposal/write-off

of property, plant and equipment

(4,579)

(87)

397

-

(4,269)

Research and development expenses

1,115,166

587,599

8,093

-

1,710,858

Share-based payments

146,052

16,263

12,402

21,322

196,039

12

2. SEGMENT INFORMATION - continued

Other segment information (included in the segment profit or loss or regularly provided to the CODM) - continued

Year ended 31 December 2018

Unallocated

general and

Back-end

SMT

administrative

equipment

solutions

Materials

expenses

Consolidated

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

Amounts regularly provided to

CODM:

Additions of property, plant and

equipment

- Additions during the year

536,266

149,270

142,441

-

827,977

- Arising from acquisitions of

subsidiaries

121,685

3,252

-

-

124,937

Additions of intangible assets

- Additions during the year

484

14,828

-

-

15,312

- Arising from acquisitions of

subsidiaries

657,664

207,034

-

-

864,698

Amounts included in the measure of

segment profit:

Amortization for intangible assets

55,623

53,856

-

-

109,479

Depreciation for property, plant and

equipment

257,908

112,828

89,967

-

460,703

Depreciation for investment

property

1,360

-

-

-

1,360

Release of prepaid lease payments

2,685

370

808

-

3,863

(Gains) losses on disposal/write-off

of property, plant and equipment

(10,891)

94

1,643

-

(9,154)

Research and development expenses

979,681

622,242

8,302

-

1,610,225

Share-based payments

201,582

24,190

18,542

44,717

289,031

13

2. SEGMENT INFORMATION - continued Geographical information

The information of the Group's non-current assets by geographical location of assets are detailed below:

Non-current assets

At 31 December

2019

2018

HK$'000

HK$'000

Mainland China

1,727,785

1,319,513

Europe

1,182,435

864,511

- Germany

766,115

475,830

- Portugal

179,498

188,645

- United Kingdom

172,282

173,268

- Others

64,540

26,768

Hong Kong

945,130

312,251

Singapore

944,722

1,040,409

Malaysia

612,431

433,780

Americas

481,378

446,354

- United States of America ("USA")

474,208

442,573

- Others

7,170

3,781

Korea

20,658

4,667

Taiwan

9,901

10,462

Others

14,073

6,111

5,938,513

4,438,058

Note: Non-current assets excluded unallocated goodwill, other investments and deferred tax assets.

14

2. SEGMENT INFORMATION - continued Geographical information - continued

The Group's revenue from external customers by location of customers are detailed below:

Revenue from external customers

Year ended 31 December

2019

2018

HK$'000

HK$'000

Mainland China

6,412,768

8,021,217

Europe

2,552,102

3,082,821

- Germany

923,484

1,154,340

- Hungary

222,348

265,605

- France

147,245

239,718

- Romania

155,685

179,981

- Poland

88,748

106,512

- Others

1,014,592

1,136,665

Americas

1,462,226

1,409,523

- USA

1,080,690

914,301

- Mexico

218,978

307,607

- Others

162,558

187,615

Malaysia

1,046,089

1,469,408

Hong Kong

941,408

1,493,132

Japan

676,598

375,111

Taiwan

598,900

855,496

Vietnam

594,927

463,056

Korea

497,801

530,725

Thailand

437,494

739,305

Philippines

328,166

364,868

India

153,021

538,257

Singapore

114,078

160,943

Others

67,464

46,728

15,883,042

19,550,590

No individual customer contributes to more than 10% of the total revenue of the Group for the year.

15

3. ANALYSIS OF QUARTERLY SEGMENT REVENUE AND RESULTS

Segment revenue from external customers

Back-end equipment

SMT solutions

Materials

Segment profit

Back-end equipment

SMT solutions

Materials

Interest income

Finance costs

Unallocated other income

Unallocated net foreign exchange (losses)

gain and fair value change of foreign currency forward contracts

Unallocated general and administrative expenses

Unallocated adjustment on contingent consideration for acquisitions

Restructuring costs

Profit before taxation

Segment profit %

Back-end equipment

SMT solutions

Materials

Three months ended

31 December

30 September

30 June

31 March

2019

2019

2019

2019

(unaudited)

(unaudited)

(unaudited)

(unaudited)

HK$'000

HK$'000

HK$'000

HK$'000

2,026,073

1,823,371

1,616,814

1,537,196

1,906,260

1,843,864

1,549,704

1,726,887

516,566

492,119

448,256

395,932

4,448,899

4,159,354

3,614,774

3,660,015

178,182

178,996

66,558

52,875

278,032

226,349

208,825

213,398

9,816

18,251

19,777

10,472

466,030

423,596

295,160

276,745

5,179

6,337

6,261

5,883

(45,146)

(42,151)

(41,018)

(86,807)

12,026

716

954

-

(37,232)

(14,196)

(47,977)

7,205

(35,696)

(31,488)

(32,304)

(28,424)

6,675

2,013

4,757

8,176

(109,540)

-

-

-

262,296

344,827

185,833

182,778

8.8%

9.8%

4.1%

3.4%

14.6%

12.3%

13.5%

12.4%

1.9%

3.7%

4.4%

2.6%

16

3. ANALYSIS OF QUARTERLY SEGMENT REVENUE AND RESULTS - continued

Segment revenue from external customers

Back-end equipment

SMT solutions

Materials

Segment profit

Back-end equipment

SMT solutions

Materials

Interest income Finance costs

Unallocated other (expenses) income

Unallocated net foreign exchange (losses) gains and fair value change of foreign currency forward contracts

Unallocated general and administrative expenses

Restructuring costs

Profit before taxation

Segment profit %

Back-end equipment

SMT solutions

Materials

Three months ended

31 December

30 September

30 June

31 March

2018

2018

2018

2018

(unaudited)

(unaudited)

(unaudited)

(unaudited)

HK$'000

HK$'000

HK$'000

HK$'000

1,828,624

2,374,612

2,846,659

2,209,896

2,470,237

2,188,313

1,826,282

1,550,745

468,835

603,592

597,536

585,259

4,767,696

5,166,517

5,270,477

4,345,900

165,004

481,791

861,855

502,141

298,654

435,720

339,534

200,644

3,333

26,296

44,870

39,246

466,991

943,807

1,246,259

742,031

4,885

7,404

9,134

9,580

(51,065)

(45,695)

(44,322)

(36,680)

(1,470)

460

453

-

(2,300)

(85,381)

(25,521)

27,060

(40,153)

(40,044)

(59,506)

(33,704)

(19,067)

-

-

-

357,821

780,551

1,126,497

708,287

9.0%

20.3%

30.3%

22.7%

12.1%

19.9%

18.6%

12.9%

0.7%

4.4%

7.5%

6.7%

17

  1. DEPRECIATION AND AMORTIZATION
    During the year, depreciation and amortization amounting to HK$511.8 million (2018: HK$460.7 million), HK$221.5 million (2018: nil), HK$1.3 million (2018: HK$1.4 million) and HK$108.0 million (2018: HK$109.5 million) were charged to profit or loss in respect of the Group's property, plant and equipment, right-of-use assets, investment property and intangible assets, respectively.
  2. OTHER GAINS AND LOSSES

Year ended 31 December

2019

2018

HK$'000

HK$'000

The gains and losses comprise:

Net foreign exchange losses

(37,404)

(21,020)

Losses on fair value change of foreign

currency forward contracts

(54,796)

(65,122)

Gains on disposal/write-off of property,

plant and equipment and right-of-use

assets

4,079

9,154

Gain (loss) on contingent consideration

for acquisitions

21,621

(2,220)

Others

11,726

753

(54,774)

(78,455)

6. RESTRUCTURING COSTS

During the year ended 31 December 2019, the Group recorded a restructuring cost of HK$109,540,000 related to the shift of lead frame operations from Singapore to Malaysia and the discontinuation of the Molded Interconnect Substrate ("MIS") business which was a part of Materials segment business. The restructuring costs are primarily related to impairment of property, plant and equipment of HK$56,897,000, estimated compensation to employees of HK$23,552,000 and impairment of right-of-use assets of HK$10,866,000.

During the year ended 31 December 2018, the Group incurred a restructuring cost of HK$19,067,000 related to the discontinuation of the solar business which was a part of SMT Solutions segment business. The restructuring costs are mainly related to estimated compensation to employees of HK$8,400,000 and written off of property, plant and equipment of HK$8,000,000.

18

7. FINANCE COSTS

Year ended 31 December

2019

2018

HK$'000

HK$'000

Interest on bank borrowings

87,322

25,792

Interest on convertible bonds (note 13)

35,951

147,822

Interest on lease liabilities/obligation under

finance leases

57,187

42

Loans arrangement fee

23,617

-

Others

11,045

4,106

215,122

177,762

8.

INCOME TAX EXPENSE

Year ended 31 December

2019

2018

HK$'000

HK$'000

The charge (credit) comprises:

Current tax:

Hong Kong

37,879

76,874

PRC Enterprise Income Tax

61,079

119,420

Other jurisdictions

227,241

481,327

326,199

677,621

Under(over) provision in prior years:

Hong Kong

81,151

105,552

PRC Enterprise Income Tax

(17,247)

1,853

Other jurisdictions

(25,771)

(885)

38,133

106,520

Deferred tax credit

(10,976)

(22,713)

353,356

761,428

  1. On 21 March 2018, the Hong Kong Legislative Council passed The Inland Revenue (Amendment) (No. 7) Bill 2017 (the "Bill") which introduced the two-tiered profits tax rates regime. The Bill was signed into law on 28 March 2018 and was gazetted on the following day. Under the two-tiered profits rates regime, the first HK$2 million of profits of the qualifying group entity will be taxed at 8.25%, and profits above HK$2 million will be taxed at 16.5%. The profits of group entities in Hong Kong not qualifying for the two- tiered profits tax rates regime will continue to be taxed at the flat rate of 16.5%. Accordingly, starting from the year ended 31 December 2018, the Hong Kong profits tax is calculated at 8.25% on the first HK$2 million of the estimated assessable profits for the qualifying group entity and at 16.5% on the estimated assessable profits above HK$2 million.

19

8. INCOME TAX EXPENSE - continued

  1. Under the Law of the People's Republic of China (the "PRC") on Enterprise Income Tax (the "EIT Law") and Implementation Regulations of the EIT Law, the Enterprise Income Tax rate of the Group's subsidiaries in the PRC is 25% (2018: 25%), except for ASM Technology China Limited ("ATC"). On 28 October 2015, ATC was recognized as an advanced technology service enterprise ("ATSE") by the Chengdu Science and Technology Bureau for a period of 3 years, i.e. from 2015 to 2017. ATC passed the ATSE re- assessment launched by Sichuan Science and Technology Bureau in May 2018 and obtained a new ATSE Certificate in July 2018. According to the tax circular Caishui [2017] No. 79 (for the year ended 31 December 2018: Caishui [2017] No. 79), ATC, as an ATSE, is subject to Enterprise Income Tax at a reduced income tax rate of 15%. The renewed ATSE recognition has no expiry date while ATC shall keep proper records for its fulfilment of recognition criteria as an ATSE.
  2. On 12 July 2010, the Singapore Economic Development Board ("EDB") granted a Pioneer Certificate ("PC") to ASM Technology Singapore Pte Ltd. ("ATS"), a principal subsidiary of the Company, to the effect that profits arising from certain new back-end equipment and lead frame products are exempted from tax for a period of 10 years effective from the dates commenced between 1 June 2010 and 1 January 2012 across specified products, subject to fulfillment of certain criteria during the relevant periods.
    On 12 July 2010, EDB also granted ATS an International Headquarters Award ("IHA") to the effect that certain income arising from qualifying activities conducted by ATS, excluding income from business transactions with companies or end customers in Singapore, are subject to a concessionary tax rate of 5% for a period of 10 years from 1 January 2011, subject to fulfillment of certain criteria during the relevant period.
    Income of ATS arising from activities not covered under the abovementioned incentives is taxed at the prevailing corporate tax rate in Singapore of 17% (2018: 17%).
  3. The calculation of current tax of the Group's subsidiaries in Germany is based on a corporate income tax rate of 15.00% (2018: 15.00%) plus 5.50% (2018: 5.50%) solidarity surcharge thereon for the assessable profit for the year. In addition to corporate income tax, trade tax is levied on taxable income. The applicable German trade tax (local income tax) rates for the Group's subsidiaries in Germany vary from 13.970% to 17.150% (2018: 14.380% to 17.150%) according to the municipal in which the entity resides. Thus the aggregate tax rates were between 29.795% to 32.975% (2018: 30.210% to 32.975%).
  4. Taxation for other jurisdictions is calculated at the rates prevailing in the relevant jurisdictions.

As disclosed in prior years, the Group received letters from the Hong Kong Inland Revenue Department (the "HKIRD") seeking information relating to Hong Kong Profits Tax and other tax affairs of certain subsidiaries of the Company. The enquiries might have led to significant additional tax being charged on profits from some overseas subsidiaries in respect of source of income as concerned that have not previously been included in the scope of charge for Hong Kong Profits Tax or significant tax adjustments to companies currently subject to Hong Kong Profits Tax.

Based on professional advice that the Company has sought, the Group considered that it would be more beneficial for the Group from a commercial perspective to settle the tax dispute with the HKIRD on a compromised approach. In this regards, the Group submitted via its tax advisor a settlement proposal to the HKIRD. The HKIRD accepted the settlement proposal and issued revised assessment for the years of assessment 2000/01 to 2017/18 in December 2019.

20

8. INCOME TAX EXPENSE - continued

In the settlement proposal, key tax adjustments are: i) certain profits earned offshore by the subsidiaries were deemed as profits arising in or derived from Hong Kong; and ii) notwithstanding that the profits earned by the Hong Kong subsidiaries should be at least accepted as arm's length from Transfer Pricing perspective, additional profits were deemed to be earned by Hong Kong subsidiaries; iii) deductions on prescribed fixed assets and depreciation allowances on fixed assets used in China manufacturing sites were disallowed. As at 31 December 2018, the Group held tax reserve certificates amounting to HK$381,166,000. During the year ended 31 December 2019, tax reserve certificates amounting to HK$20,264,000 were purchased and HK$397,602,000 were utilized by offsetting the tax liabilities. As at 31 December 2019, the remaining balance amounted to HK$3,828,000 would be refunded by the HKIRD.

9. DIVIDENDS

Year ended 31 December

20192018

HK$'000 HK$'000

Dividend recognized as distribution during the year

Interim dividend for 2019 paid of HK$1.30

(2018: HK$1.30) per share on 406,671,333

(2018: 404,425,433) shares

528,673

525,753

Final dividend for 2018 paid of HK$1.40

(2018: final dividend for 2017 paid of HK$1.30)

per share on 406,671,333 (2018: 404,425,433) shares

569,340

525,753

1,098,013

1,051,506

Subsequent to the end of the reporting period, a final dividend of HK$0.70 (2018: final dividend of HK$1.40) per share in respect of the year ended 31 December 2019 has been proposed by the directors of the Company and is subject to approval by the shareholders in the forthcoming annual general meeting.

Year ended 31 December

2019

2018

HK$'000

HK$'000

Dividend proposed subsequent to the end of the

reporting period

Proposed final dividend for 2019 of HK$0.70

(2018: HK$1.40) per share on 408,895,533

(2018: 406,671,333) shares

286,227

569,340

21

10. EARNINGS PER SHARE

The calculation of the basic and diluted earnings per share attributable to the owners of the Company is based on the following data:

Three months ended 31 Dec

Year ended 31 Dec

2019

2018

2019

2018

(unaudited)

(unaudited)

(audited)

(audited)

HK$'000

HK$'000

HK$'000

HK$'000

Earnings for the purpose of calculating

basic and diluted earnings per share

(Profit for the period attributable to

owners of the Company)

216,458

211,161

619,249

2,216,062

Three months ended 31 Dec

Year ended 31 Dec

2019

2018

2019

2018

(unaudited)

(unaudited)

(audited)

(audited)

Number of shares

Number of shares

(in thousand)

(in thousand)

Weighted average number of ordinary

shares for the purpose of calculating

basic earnings per share

406,739

404,580

406,533

404,900

Effect of dilutive potential shares:

- Employee Share Incentive Scheme

2,195

2,353

2,096

2,310

Weighted average number of ordinary

shares for the purpose of calculating

diluted earnings per share

408,934

406,933

408,629

407,210

Note: Convertible bonds were fully redeemed on 28 March 2019 upon maturity. The calculation of diluted earnings per share for the three months ended 31 December 2018, for the year ended 31 December 2018 and 31 December 2019 did not assume the conversion of the Company's outstanding convertible bonds because the assumed conversion would result in an increase in diluted earnings per share.

22

11. TRADE AND OTHER RECEIVABLES

At 31 December

2019

2018

HK$'000

HK$'000

Trade receivables (Note)

4,324,297

5,497,113

Value added tax recoverable

198,590

277,198

Tax reserve certificate recoverable

3,828

381,166

Other receivables, deposits and prepayments

183,455

169,424

4,710,170

6,324,901

The following is an aging analysis of trade receivables net of allowance for doubtful debts presented based on the due date at the end of the reporting period:

Not yet due (Note) Overdue within 30 days Overdue within 31 to 60 days Overdue within 61 to 90 days Overdue over 90 days

At 31 December

20192018

HK$'000 HK$'000

2,947,345 4,028,545

579,536 658,525

388,540 327,609

91,654 147,338

317,222 335,096

4,324,297 5,497,113

Note: The amount included notes receivables amounting to HK$778,536,000 (2018: HK$1,250,430,000) are held by the Group for future settlement of trade receivables. All bills received by the Group are with a maturity period of less than one year.

Rental deposits paid were adjusted upon the initial application of HKFRS 16. Details of the adjustments are set out in note 1.

Credit policy:

Before accepting any new customer, the Group assesses the potential customer's credit quality and pre-sets maximum credit limit for each customer. Limits and credit quality attributed to customers are reviewed regularly. Payment terms with customers are mainly on credit together with deposits received in advance. Invoices are normally payable within 30 days to 60 days of issuance, except for certain well established customers, where the terms are extended to 3 to 4 months or more.

As at 31 December 2019, included in the Group's trade receivables balance are debtors with aggregate carrying amount of HK$1,376,952,000 (2018: HK$1,468,568,000) which are past due as at the reporting date. The Group considers the information developed internally or obtained from external sources and considered that the debtor is likely to pay its creditors, including the Group, and the past due balances are therefore, not considered as in default.

23

12. TRADE LIABILITIES AND OTHER PAYABLES

Trade payables Deferred income (Note) Accrued salaries and wages Other accrued charges Accrual for tax-related expense

Payables arising from acquisition of property, plant and equipment

Consideration payable for acquisition Contingent consideration for acquisitions Other payables

At 31 December

20192018

HK$'000 HK$'000

1,406,438 1,329,947

104,991 130,944

294,719 332,172

475,557 758,990

  • 168,400

139,421 151,978

  • 28,330
    29,489 20,036

219,796 244,681

2,670,411 3,165,478

Note: The amounts mainly represent the spare credits that grant customers the right to purchase certain amounts of spare parts for free, which are contract liabilities.

Accrued lease payments were adjusted upon initial application of HKFRS 16. Details of the adjustments are set out in note 1.

The following is an aging analysis of trade payables presented based on the due date at the end of the reporting period:

At 31 December

2019

2018

HK$'000

HK$'000

Not yet due

1,145,346

954,686

Overdue within 30 days

165,684

194,825

Overdue within 31 to 60 days

53,644

100,480

Overdue within 61 to 90 days

22,238

47,032

Overdue over 90 days

19,526

32,924

1,406,438

1,329,947

The average credit period on purchases of goods ranges from 30 to 90 days. The Group has financial risk management policies in place to ensure that all payables are settled within the credit timeframe.

24

13. CONVERTIBLE BONDS

On 28 March 2014, the Company issued convertible bonds due 2019 in an aggregate principal amount of HK$2,400,000,000. Interest of 2.00% per annum will be paid semi-annually in September and March, respectively.

The convertible bonds may be converted into ordinary shares of the Company, at the option of the holder thereof, at any time on and after 8 May 2014 up to the close of business on the day falling ten days prior to 28 March 2019 (the "Maturity Date") (both days inclusive) or if such convertible bonds shall have been called for redemption before the Maturity Date, then up to and including the close of business on a date no later than seven days prior to the date fixed for redemption thereof, at an initial conversion price of HK$98.21 per share (subject to adjustment for among other things, consolidation and subdivision of shares, capitalization of profits or reserves, right issues, distributions and certain other dilutive events). Details of the adjustments to conversion price of the convertible bonds were set out in the Company's announcements dated 13 May 2015, 11 May 2016, 17 August 2017 and 14 May 2018.

The Company may, having given not less than 30 nor more than 60 days' notice (the "Redemption Notice"), redeem in whole, but not in part, of the convertible bonds at the principal amount together with interest accrued on such redemption date, provided that:

  1. at any time after 28 March 2017 and prior to the Maturity Date, the closing price of an ordinary share of the Company, for 20 out of the 30 consecutive trading days immediately prior to the date upon which the Redemption Notice is given, was at least 130% of the conversion price, or
  2. at any time, prior to the date the Redemption Notice is given, at least 90% in principal amount of the convertible bonds has already been converted, redeemed or purchased and cancelled.

The bond holder may request immediate redemption of the convertible bonds at their principal amount then outstanding together with accrued interest upon occurrence of certain events. Details of the issue of convertible bonds were set out in the Company's announcement dated 4 March 2014.

None of the convertible bonds was redeemed or converted during the year ended 31 December 2018 and for the period from 1 January 2019 to the Maturity Date. The convertible bonds was fully redeemed on 28 March 2019. The convertible bonds equity reserve of HK$250,249,000 was transferred to retained profits upon redemption.

25

13. CONVERTIBLE BONDS - continued

The movements of the liability component and equity component of the convertible bonds for the year are set out below:

Liability

Equity

component

component

Total

HK$'000

HK$'000

HK$'000

At 1 January 2018

2,133,727

250,249

2,383,976

Interest charge during the year (note 7)

147,822

-

147,822

Interest paid

(45,000)

-

(45,000)

At 31 December 2018 and 1 January 2019

2,236,549

250,249

2,486,798

Interest charge during the year (note 7)

35,951

-

35,951

Interest paid

(22,500)

-

(22,500)

Redemption on 28 March 2019

(2,250,000)

(250,249)

(2,500,249)

At 31 December 2019

-

-

-

Liability component of the convertible bonds is analyzed for reporting purposes as:

At 31 December

2019

2018

HK$'000

HK$'000

Current liabilities

Interest payable on convertible bonds

(included in trade liabilities and other payables)

-

11,897

Convertible bonds

-

2,224,652

-

2,236,549

26

REVIEW

GROUP RESULTS

Group:

FY 2019

2H 2019

Q4 2019

YoY

HoH

YoY

QoQ

YoY

Bookings (US$m)

2,021.2

-21.5%

959.0

-9.7%

-12.2%

445.2

-13.3%

-6.1%

Revenue (US$m)

2,026.6

-18.8%

1,099.3

+18.3%

-13.3%

568.0

+7.0%

-6.7%

Gross Margin

34.8%

-326 bps

34.8%

-5 bps

-73 bps

34.8%

+3 bps

+181 bps

Net Profit (HK$m)

622.4

-71.9%

444.1

+149.1%

-45.5%

221.9

-0.2%

+4.5%

Net Profit Margin

3.9%

-739 bps

5.2%

+271 bps

-304 bps

5.0%

-36 bps

+54 bps

In 2019, the semiconductor industry went through a slowdown largely due to global economic uncertainties amid the trade war and weaker demand from some end-markets such as Optoelectronics and Automotive.

Despite the challenging economic conditions, ASMPT made good progress during the year as a result of successfully implementing a range of initiatives such as focusing on higher growth markets and realigning operations to reduce costs. The Group managed to re-establish momentum in its business in the second half of the year with a strong 18.3% revenue growth and 149.1% improvement in net profit over the first half of the year.

In the 4th quarter, the Back-end Equipment Segment revenue increased quarter-on-quarter ("QoQ") and year-on-year ("YoY"), which was better than our guidance. SMT Solutions Segment revenue achieved QoQ growth, which was better than guidance but YoY declined as guided. Materials Segment performed in line with guidance with revenue growth for both QoQ and YoY. Group bookings declined 13.3% QoQ due to seasonal pattern and the decline was in line with guidance.

Group gross margin for the 4th quarter at 34.8% was flat QoQ, which was better than our guidance. On a YoY basis, it improved 181 bps. On a full year basis, Group gross margin was lower compared with prior year mainly due to lower revenue and production capacity utilization in all the three segments and higher revenue contribution from the SMT Solutions Segment, which had a lower gross margin compared to the Back-end Equipment Segment.

A restructuring cost was booked in the 4th quarter. The restructuring cost relates to the relocation of the lead frame operations from Singapore to Malaysia and discontinuation of the MIS business (see page 31, "Restructuring Impact"). The restructuring cost comprised mainly impairment of property, plant and equipment, compensation to employees and other costs. If this restructuring cost of HK$106.9 million (tax-effected) was excluded, the net profit for the 4th quarter and full year would have been HK$328.7 million and HK$729.2 million respectively.

Diverse Customer Base

Having a diverse customer base continues to add value to the Group's business. In 2019, no single customer accounted for over 10% of the Group's revenue. Our top five customers combined contributed

15.3% (2018: 18.0%) of the Group's revenue and 80% of the Group's revenue came from 200 (2018: 166) customers.

27

REVIEW - continued

The Group's top 20 customers came from different market segments including the world's leading Information and Communication Technology Infrastructure and Smart Devices provider, Integrated Device Manufacturers, Tier-1 Outsourced Semiconductor Assembly and Test companies ("OSATs"), major OSATs in China, camera modules manufacturers, top Electronics and Manufacturing Services providers and automotive components suppliers. Among them, 5 were SMT Solutions Segment customers and 4 were common for the Back-end Equipment and SMT Solutions Segments.

The acquisition of NEXX has also introduced a new customer base comprising leading substrate makers into the top 20 customer mix.

Geographically, China (inclusive of Hong Kong), Europe, the Americas, Malaysia and Japan were the top five markets for the Group in 2019.

By application market, the Mobility, Communications and IT segment remains the largest application market by revenue in 2019. While second half of the year revenue from all other application markets declined YoY, Mobility, Communications and IT segment recorded a strong double-digit growth attributable mainly to the demand from China and 5G infrastructure build-up. Automotive segment was the second largest application market despite a slowdown of the automotive industry.

Value-added Acquisitions

The Group also recorded good progress from businesses that it acquired over the past few years, in particular, ASM NEXX, which provides advanced deposition tools to the Advanced Packaging market, and Critical Manufacturing, which provides Manufacturing Execution System software solutions. Both made a significant achievement by turning in profits in FY2019.

The Catalysts for Growth

There are several factors contributing to our out-performance of the market in FY2019 and these factors are expected to continue to drive our business momentum.

Demand levels in our major markets are expected to improve. In China, there is a perceptible momentum from local companies to localize their production amid an escalating trade war. This move is also supported by government policies, which advocate for supply chain localization.

The other immediate growth driver is the deployment of 5G infrastructure and the advent of 5G smartphones. The acceleration of these factors is propelling the industry - not only because of the direct impact on semiconductor chip demand - but also due to the wider benefits the 5G wireless technology on global businesses and economies.

For the longer-term outlook, innovations enabled by 5G such as Augmented and Virtual Reality ("AR/VR"), autonomous vehicles, and Internet of Things will drive the increase in economic activities. These drivers will push up the demand for semiconductors.

Furthermore, Advanced Packaging and Heterogeneous Integration are shifting the value-add from the front-end to the back-end of the semiconductor industry. Our investment in Advanced Packaging is bearing fruit.

28

REVIEW - continued

Startups Pioneering Technologies of Tomorrow

With the accelerating pace of technological change, ASMPT has made investments in startups a key part of its corporate strategy.

In 2019, the Group invested in a 3D laser printing company based in Israel whose cutting-edge technology may potentially disrupt the SMT printing industry.

In 2018, the Group invested in a Silicon Valley startup whose technology allows high speed x-ray inspection of advanced semiconductor packages. This will help make 100% real time inspection possible for Advanced Packaging.

Such investments would accelerate ASMPT's access to innovation that could be integrated into its portfolio offerings in the future.

Strengthening Competitive Position

ASMPT continues to focus on building a strong business foundation and have the financial wherewithal to continue to strengthen its portfolio and position in the industry. Its relentless innovation in key growth areas combined with the acquisitions and investments made in new technologies has enabled it to improve its competitive position against competitors.

Specifically, the Group has market leading positions in:

  • CMOS Image Sensors ("CIS") - As camera technology and multiple cameras continue to be the key selling points for smartphones, ASMPT is well-poised to capture this increasing demand;
  • Advanced Packaging - The proliferation of advanced logic, AI, high performance computing and 5G-driven applications will drive demand for our Advanced Packaging tools; and
  • Power Management Semiconductor - Used in a wide array of applications for mobile devices, consumer goods, industrial and automotive.

The Group has also invested in several other new technologies such as:

  • Silicon Photonics - through the acquisition of AMICRA Microtechnologies to capture demand for future data center bandwidth growth and next generation 5G deployments;
  • Industrial Internet of Things - through the acquisition in Critical Manufacturing to capture demand for SMART Factory software solutions and connected smart machines. The Group is also working with an advanced analytics company to jointly develop and promote a smart solution that will help semiconductor and electronics manufacturers capture, analyze and operationalize high volumes of data and apply sophisticated analytics to analyze risk, optimize processes and predict failure;
  • Mini and Micro LED Solutions - to capture demand for devices that require mini or micro LED such as those used in indoor and outdoor displays, smart watches and AR/VR; and
  • Automated Optical Inspection - tools that registered billings growth of more than 4 times YoY due primarily to demand from CIS customers for inspection of foreign particles and bonding quality.

29

REVIEW - continued

In summary, the Group's enhanced and broadening product portfolio is key to driving its business momentum. ASMPT is prepared to take advantage of all these new developments as it has created an unparalleled product and solution portfolio through internal development, investments and acquisitions over the past few years. The Group has a resilient and balanced portfolio of businesses, strong capabilities and a good position in some of the world's fastest growing markets.

BACK-END EQUIPMENT SEGMENT

FY 2019

2H 2019

Q4 2019

YoY

HoH

YoY

QoQ

YoY

Bookings (US$m)

910.8

-27.6%

441.0

-6.1%

-11.2%

178.6

-31.9%

-23.2%

Revenue (US$m)

893.6

-24.4%

491.6

+22.0%

-8.4%

258.7

+11.1%

+10.8%

Gross Margin

41.1%

-472 bps

42.1%

+203 bps

-128 bps

40.8%

-263 bps

-226 bps

Segment Profit (HK$m)

476.6

-76.3%

357.2

+199.1%

-44.8%

178.2

-0.5%

+8.0%

Segment Profit Margin

6.8%

-1,491 bps

9.3%

+549 bps

-611 bps

8.8%

-102 bps

-23 bps

In 2019, this segment contributed 44.1% (2018: 47.4%) of the Group's total revenue. It continued to hold the No. 1 position in the global market, a position it first attained in 2002. It has also further widened the revenue gap with the closest rival.

On a full year basis, gross margin of this segment was adversely impacted because of lower revenue and lower manufacturing capacity utilization. However, demand momentum for traditional tools, in particular Wire Bonders, started to pick up in the second half of the year. Traditional tools typically have lower margins compared to Advanced Packaging and CIS tools. This coupled with higher IC and LED but lower CIS customer mix pulled down the gross margin for the 4th quarter.

Advanced Packaging tools contributed to more than 20% (2018: more than 10%) of the revenue of this segment for this fiscal year. CIS and Advanced Packaging tools collectively contributed to more than 50% of the segment's revenue. Billings for CIS and Advanced Packaging grew YoY despite the soft market condition in 2019.

CIS billings continued its momentum in 2019, brought about by the rising adoption of smartphones with higher resolution cameras, multi-camera, 3D sensing, Time of Flight camera, wide Field of View and telescopic lens features. In fact, full year billings for CIS grew YoY while billings for IC and Discrete and LED declined.

ASM NEXX made a significant contribution to the bookings and billings of the IC and Discrete business in 2019. It has also strengthened ASMPT's position in the Advanced Packaging market. The Group remains confident that its investments in Advanced Packaging over the past few years has put ASMPT well ahead of its peers. Today, ASMPT has become the "go-to" partner of many of our customers who are developing Advanced Packaging solutions.

With effect from FY 2020, we will rename the Back-end Equipment Segment to Semiconductor Solutions Segment. This is to better reflect the inclusion of the ASM NEXX business, acquired in October 2018, which served the mid-end deposition tools market. ASM NEXX has grown to become a significant part of the Group's business in the Group's transition to an integrated hardware and software solutions provider for the semiconductor packaging market.

30

REVIEW - continued

MATERIALS SEGMENT

FY 2019

2H 2019

Q4 2019

YoY

HoH

YoY

QoQ

YoY

Bookings (US$m)

238.7

-2.5%

133.6

+27.2%

+42.4%

70.1

+10.2%

+75.6%

Revenue (US$m)

236.4

-17.8%

128.8

+19.5%

-5.9%

66.0

+5.0%

+10.2%

Gross Margin

10.1%

-135 bps

9.4%

-159 bps

-15 bps

8.5%

-187 bps

+79 bps

Segment Profit (HK$m)

58.3

-48.7%

28.1

-7.2%

-5.3%

9.8

-46.2%

+194.5%

Segment Profit Margin

3.1%

-190 bps

2.8%

-80 bps

+2 bps

1.9%

-181 bps

+119 bps

In 2019, the Materials Segment contributed 11.7% (2018: 11.5%) of the Group's total revenue. This segment recorded four consecutive quarters of QoQ growth in bookings. The semiconductor industry is clearly on the path of recovery.

Gross margin in the 4th quarter was adversely impacted by the increase in commodity price, in particular Copper and Palladium. On a full year basis, gross margin declined, largely due to the drop in revenue.

Restructuring Impact

As part of our ongoing effort to drive for greater efficiencies and to reduce costs, the Group decided to relocate the lead frame operations in Singapore to the newly expanded plant in Malaysia. The relocation of the lead frame operations started in Q1 2020 and is expected to complete by mid-2021. The Group also decided to discontinue the MIS business in Q1 2020 after an extensive evaluation of the competitive landscape of this business. The Group is of the opinion that the conventional substrate has an edge over MIS in terms of price and technical features like finer line spacing and higher I/O's capabilities. This discontinuation is expected to have minimal impact on the Group's revenue. These two initiatives that we have undertaken would have a positive impact on this segment's gross margin and profitability going forward.

SMT SOLUTIONS SEGMENT

FY 2019

2H 2019

Q4 2019

YoY

HoH

YoY

QoQ

YoY

Bookings (US$m)

871.7

-18.7%

384.4

-21.1%

-23.5%

196.6

+4.6%

-2.7%

Revenue (US$m)

896.6

-12.6%

478.9

+14.5%

-19.5%

243.3

+3.4%

-22.8%

Gross Margin

34.9%

-154 bps

34.1%

-184 bps

-28 bps

35.5%

+282 bps

+521 bps

Segment Profit (HK$m)

926.6

-27.3%

504.4

+19.5%

-31.3%

278.0

+22.8%

-6.9%

Segment Profit Margin

13.2%

-267 bps

13.4%

+56 bps

-231 bps

14.6%

+231 bps

+250 bps

This segment contributed 44.2% (2018: 41.1%) to the Group's revenue in 2019. Despite the headwinds of weak economic conditions and the slowdown in automotive demand, the SMT Solutions Segment benefitted from the increase in 5G infrastructure-related investments.

31

REVIEW - continued

However, the higher revenue contribution from China as a result of market share gain for China-branded smartphones and the slowdown of the automotive industry adversely impacted the gross margin of this segment on a full year basis. To mitigate this, this segment has looked at ways to lower its cost of operations. One initiative was to increase the volume of assembly work done in Malaysia after the Group has expanded the plant in Malaysia. The other initiative was to deploy a satellite operation in Hungary to support the assembly operations in Munich, Germany. This segment recorded an improvement in gross margin QoQ and YoY for the 4th quarter due partly to warranty provisions write- back, which indicated that the tools sold were reliable and thus less warranty claims. There was also a one-off charge in Q4 2018 relating to the discontinuation of the Solar business, which pulled down the gross margin in that quarter.

Being the leading supplier of SMT equipment and solutions since 2015, the Group was also the first to launch integrated and open data communication from the individual machine to the line, the factory, and the cloud in 2019. This means electronics manufacturers can now take a step-by-step transformation into an integrated smart factory and meet their Industry 4.0 goals.

LIQUIDITY AND FINANCIAL RESOURCES

Cash and bank deposits as of 31 December 2019 increased slightly by 3.4% to HK$2.33 billion (2018: HK$2.25 billion). During 2019, HK$1.1 billion was paid as dividends (2018: HK$1.05 billion). Capital addition during the period amounted to HK$684.7 million (2018: HK$813.3 million), which was partially funded by the year's depreciation and amortization of HK$621.1 million (2018: HK$575.4 million), excluding the depreciation of right-of-use assets of HK$221.5 million as per HKFRS 16 in the current period. Day sales outstanding decreased to 99.4 days (2018: 102.6 days).

As of 31 December 2019, the current ratio was 3.02 (2018: 1.95), with a debt-to-equity ratio of 26.2%

(debts include all bank borrowings and obligations under finance leases) (2018: 28.7% with debts that included all bank borrowings, convertible bonds and obligations under finance leases). The Group had available banking facilities of HK$2.25 billion (US$289.4 million) in the form of bank loans and overdraft facilities. Bank borrowings, which are mainly arranged to support day-to-day operations and capital expenditure, are denominated in Hong Kong dollars and Euros.

The Company has fully redeemed all the outstanding convertible bonds with the principal amount of HK$2.25 billion (which were denominated in Hong Kong dollars, raised in year 2014 with an annual coupon of 2.00%) upon maturity on 28 March 2019. A syndicated loan of HK$2.5 billion was arranged to finance the redemption of the convertible bonds, and it is a flexible-rate borrowing. The repayment of the syndicated loan will commence from March 2022 to March 2024. The Group shareholders' funds was HK$11.6 billion as at 31 December 2019.

As of 31 December 2019, cash holdings of the Group were mainly in US dollars, Euros, Chinese RMB and Singapore dollars. The Group's SMT Solutions Segment entered into US dollars and Euros hedging contracts to mitigate the foreign currency risks as a significant portion of the production of SMT equipment and its suppliers are located in Europe while a substantial part of the Group's revenue for SMT equipment was denominated in US dollars.

In terms of currency exposure, the Group was moderately exposed. The majority of our sales were denominated in US dollars, Euros and Chinese RMB. On the other hand, disbursements in respect of operating expenses and purchases were mainly in US dollars, Euros and Chinese RMB.

32

LIQUIDITY AND FINANCIAL RESOURCES - continued

The Group is committed to paying dividends that are sustainable and gradually increasing over time while maintaining an optimal capital structure. However, in light of the COVID-19 outbreak situation, the Board recommends a final dividend of HK$0.70 per share, which is HK$0.70 less than what we would have paid if the dividend is sustained at the same level as 2018 final dividend of HK$1.40 per share. The Board opines that it is in the interest of all stakeholders to take a more prudent stance during this exceptional period and will consider paying a higher dividend at a later date when the economic condition improves. This should not be perceived as a departure from the Group's current dividend policy.

The total dividend payout for 2019 is HK$2.00 per share (2018: HK$2.70 per share). This represents a payout ratio of 132% for 2019.

HUMAN RESOURCES

Our people are key in helping our customers to successfully enable the digital world. At ASMPT, we strive to attract, nurture and retain our talented employees through a holistic approach of competitive remuneration packages, long-term employee development and having an inclusive and positive work environment. Other than annual salary reviews, employees receive a range of benefits including medical, training subsidies and team bonding activities that promote camaraderie and strengthen the relationships at work. Discretionary bonus and incentives shares are also granted to eligible employees based on the Group's financial performance and individual staff performance.

As of 31 December 2019, the total headcount for the Group was approximately 15,200, which included 1,300 temporary or short-term contract employees and outsourced workers. Of the total workforce, around 1,300 based in Hong Kong, 7,700 in Mainland China, 1,400 in Singapore, 1,300 in Germany, 1,600 in Malaysia, 400 in United Kingdom, 300 in the United States, with the rest based in other parts of the world.

The total manpower costs for the Group in 2019 was HK$4.90 billion, as compared with HK$5.00 billion in 2018.

Collaborating with Educational Institutions

The Group works closely with local universities and technical institutions globally on events, internship programs, scholarship opportunities, sponsorships and lectures to increase students' interest in technology and innovation. The aim is to develop an industry-ready pipeline of talent through inspiring students to start their career with ASMPT.

Developing Careers

We partner with our employees to develop their talents and passions into new opportunities that advance their careers. Our career development framework and tools guide our people through their journey, helping them to discover who they are, identify in which areas they want to grow, and develop an action plan to get there.

In 2019, we continued our strategic investment in developing our leaders. The Group has put in place a succession plan to identify and develop a strong and cohesive leadership team that will lead the group in a sustainable manner. These earmarked high potential executives must undergo job rotation, mentoring and training programs that will prepare them to take over the helm at the right time.

33

HUMAN RESOURCES - continued

Giving Back to Society

The Group also actively encourages employees to proactively give back to the communities in which we operate, through voluntary work and donations. In 2019, the Group devoted approximately 25,000 hours to volunteer work.

PROSPECTS

The Group ended the year with increased optimism that the global semiconductor industry is expected to stage a 2020 recovery and set a high in 2021. There are several other factors contributing to this optimism - pickup in demand from the Chinese manufacturers to localize their supply chains, the accelerated deployment of 5G infrastructure, the roll out of 5G handsets and the progress the Group is making on capturing new market opportunities such as Advanced Packaging, Silicon Photonics, Industrial Internet of Things, mini and micro LED solutions, Power semiconductors, Industry 4.0 solutions and Automated Optical Inspection.

OUTLOOK

January 2020 booking momentum prior to the Chinese New Year ("CNY") was very strong for all the three segments. In fact, SMT Solutions Segment's booking was the highest ever recorded for the month of January. While the booking momentum was certainly tempered by the COVID-19 outbreak, we are still cautiously optimistic that Q1 2020 Group booking would achieve a YoY growth.

The outbreak has certainly hit China's economy hard in the past weeks. The Group's manufacturing and sales operations and supply chains were disrupted as a result. The Group's manufacturing operations in China were shut down during the extended CNY holidays imposed by the Chinese government in its effort to contain the spread of the virus. While we have started to ramp up manufacturing activities, we anticipate that we would lose around 1/3 of our production capacities in China in Q1 2020. On a full year basis, we estimate the impact to be less than 10%.

It is challenging to render a revenue forecast in view that the situation is still evolving. Based on our best estimation at the time of this announcement, we anticipate that Q1 2020 Group revenue will be in the range of between US$370 million to US$450 million, and more than likely the Group will record a loss for Q1 2020.

Unique Window of Opportunity

ASMPT is confident that it is well positioned to take advantage of this unique window of opportunity. Its aggressive early investment approach to be prepared for trends has enabled the Group to improve its competitive position and increase its market opportunities.

ASMPT continues to focus on building a strong business foundation and have the financial wherewithal to continue to strengthen its portfolio and position in the industry.

34

PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES

During the year ended 31 December 2019, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's listed securities except that an independent professional trustee appointed by the Board under the Employee Share Incentive Scheme, pursuant to the terms of the rules and trust deed of the Employee Share Incentive Scheme, purchased on the Stock Exchange a total of 386,400 shares in the Company at a total consideration of approximately HK$33.9 million (excluding ancillary trading fees, costs and expenses directly attributable to the purchase).

CORPORATE GOVERNANCE

The Company has complied with all the code provisions set out in the Corporate Governance Code (the "CG Code") contained in Appendix 14 of the Listing Rules throughout the year ended 31 December 2019.

The Company reviews its corporate governance practices regularly to ensure compliance with the CG Code.

AUDIT COMMITTEE

The audit committee of the Company (the "Audit Committee") comprises three Independent Non- Executive Directors and one Non-Executive Director who together have substantial experience in fields of auditing, legal matters, business, accounting, corporate internal control and regulatory affairs.

REVIEW OF FINANCIAL STATEMENTS

The Audit Committee has reviewed the Group's consolidated financial statements for the year ended 31 December 2019 in conjunction with the Company's external auditor.

SCOPE OF WORK OF MESSRS. DELOITTE TOUCHE TOHMATSU

The figures as set out in the preliminary announcement in respect of the Group's consolidated statement of financial position, consolidated statement of profit or loss, consolidated statement of profit or loss and other comprehensive income and the related notes thereto for the year ended 31 December 2019 have been agreed by the Group's auditor, Messrs. Deloitte Touche Tohmatsu, to the amounts set out in the Group's audited consolidated financial statements for the year. The work performed by Messrs. Deloitte Touche Tohmatsu in this respect did not constitute an assurance engagement in accordance with the Hong Kong Standards on Auditing, Hong Kong Standards on Review Engagements or the Hong Kong Standards on Assurance Engagements issued by the Hong Kong Institute of Certified Public Accountants. Consequently, no assurance has been expressed by Messrs. Deloitte Touche Tohmatsu on the preliminary announcement.

35

BOARD OF DIRECTORS

As at the date of this announcement, the Board comprises Miss Orasa Livasiri (Chairman), Mr. John Lok Kam Chong, Mr. Wong Hon Yee and Mr. Eric Tang Koon Hung as Independent Non-Executive Directors, Mr. Charles Dean del Prado and Mr. Petrus Antonius Maria van Bommel as Non-Executive Directors, and Mr. Lee Wai Kwong, Mr. Stanley Tsui Ching Man and Mr. Robin Gerard Ng Cher Tat as Executive Directors.

On behalf of the Board

Lee Wai Kwong

Director

Hong Kong, 25 February 2020

36

Disclaimer

ASM Pacific Technology Ltd. published this content on 26 February 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 February 2020 22:48:08 UTC


© Publicnow 2020
All news about ASM PACIFIC TECHNOLOGY LIMITED
2020Hong Kong take-private deals set to pick up pace after hitting three-year hig..
RE
2020ASM PACIFIC TECHNOLOGY : Voluntary announcement
PU
2020EXCLUSIVE : Hong Kong-listed semiconductor maker ASM Pacific plans to go private..
RE
2020Asm pacific technology says it is not making plans to go private
RE
2020EXCLUSIVE : Asm pacific technology plans to relist on shanghai's star market for..
RE
2020EXCLUSIVE : Semiconductor equipment maker asm pacific technology in talks with p..
RE
2020ASM PACIFIC TECHNOLOGY LIMITED : Ex-dividend day for interim dividend
FA
2020ASM PACIFIC TECHNOLOGY : Announcement of 2020 unaudited interim results for the ..
PU
2020ASM PACIFIC TECHNOLOGY : Discloseable transaction - strategic joint venture for ..
PU
2020ASM PACIFIC TECHNOLOGY LIMITED : Ex-dividend day for final dividend
FA
More news
Financials
Sales 2020 16 253 M 2 096 M 2 096 M
Net income 2020 984 M 127 M 127 M
Net cash 2020 980 M 126 M 126 M
P/E ratio 2020 49,7x
Yield 2020 1,36%
Capitalization 49 049 M 6 326 M 6 326 M
EV / Sales 2020 2,96x
EV / Sales 2021 2,59x
Nbr of Employees 13 900
Free-Float 74,4%
Chart ASM PACIFIC TECHNOLOGY LIMITED
Duration : Period :
ASM Pacific Technology Limited Technical Analysis Chart | MarketScreener
Full-screen chart
Technical analysis trends ASM PACIFIC TECHNOLOGY LIMITED
Short TermMid-TermLong Term
TrendsBullishBullishNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 21
Average target price 107,43 HKD
Last Close Price 119,40 HKD
Spread / Highest target 21,4%
Spread / Average Target -10,0%
Spread / Lowest Target -53,1%
EPS Revisions
Managers and Directors
NameTitle
Cher Tat Ng Chief Executive Officer & Executive Director
Orasa Livasiri Chairman
Ching Man Tsui Chief Operating Officer
Pei Fen Chou Chief Financial Officer & Executive Director
Yam Mo Wong Chief Technology Officer & Executive VP
Sector and Competitors
1st jan.Capitalization (M$)
ASM PACIFIC TECHNOLOGY LIMITED16.72%5 807
ASML HOLDING N.V.9.63%216 409
LAM RESEARCH CORPORATION15.94%78 849
TOKYO ELECTRON LIMITED14.32%65 754
QORVO, INC.6.63%20 221
ASE TECHNOLOGY HOLDING CO., LTD.20.54%14 935