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

ASM PACIFIC TECHNOLOGY LIMITED

(522)
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ASM Pacific Technology : ANNOUNCEMENT OF 2020 UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2020

07/28/2020 | 06:45pm 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 2020 UNAUDITED INTERIM RESULTS FOR

THE SIX MONTHS ENDED 30 JUNE 2020

Staying Resilient Amid Economic Uncertainty

1H 2020 Group Profitability Improved Year-on-Year

First Half of 2020

  • Group revenue of US$991.6 million improved by 5.9% over the same period last year and decreased by 10.5% compared to the second half of last year
  • Group net profit of HK$390.8 million increased 119.2% as compared with the first six-month period of last year; and decreased 12.0% compared to the second six-month period of last year
  • Group earnings per share of HK$0.95 for the first half of 2020
  • Semiconductor Solutions Segment revenue of US$473.3 million increased 16.6% over the first six- month period of last year and decreased 4.5% compared to the second six-month period of last year
  • Materials Segment revenue of US$125.7 million improved 15.6% over the first six-month period of last year and fell by 3.2% compared to the second half of last year
  • SMT Solutions Segment revenue of US$392.6 million decreased 6.9% and 18.7% over the first six- month period and the second six-month period of last year, respectively
  • 1H new Group order bookings of US$1.14 billion increased 7.4% and 19.0% over the first and second six-month periods of last year, respectively
  • Group order backlog was US$799.9 million as of 30 June 2020
  • 1H Book-to-Bill Ratio was 1.15

Second Quarter of 2020

  • Group revenue of US$557.4 million increased 27.8% and 19.5% over the preceding quarter and the same period last year, respectively
  • Group net profit of HK$365.4 million increased 1,341.5% and 421.8% over the preceding quarter and the same period last year, respectively
  • Group earnings per share of HK$0.89 for the second quarter 2020
  • Group operating profits of HK$495.8 million increased 241.1% and 95.8% over the preceding quarter and the same period last year, respectively
  • Semiconductor Solutions Segment revenue of US$279.0 million increased 43.0% and 33.8% over the preceding quarter and over the same period last year, respectively
  • Materials Segment revenue of US$74.2 million increased 43.2% and 28.2% over the preceding quarter and over the same period last year, respectively
  • SMT Solutions Segment revenue of US$204.2 million increased 8.0% and 2.2% over the preceding quarter and the same period last year, respectively
  • Q2 new Group order bookings of US$472.0 million decreased 29.4% and 21.6% over the preceding quarter and over the same period last year, respectively.
  • Cash and bank deposits of HK$3.59 billion as of 30 June 2020

1

The Directors of ASM Pacific Technology Limited are pleased to make the following announcement of unaudited results for the six months ended 30 June 2020:

RESULTS

ASM Pacific Technology Limited and its subsidiaries (the "Group" or "ASMPT") achieved a revenue of HK$7.70 billion (US$991.6 million) in the six months ended 30 June 2020, which increased 5.9% as compared with HK$7.27 billion (US$927.3 million) for the first six months of 2019 and decreased 10.5% over the preceding six months. The Group's consolidated profit after taxation for the first six months of 2020 was HK$390.8 million as compared with a profit of HK$178.3 million in the corresponding period in 2019 and a profit of HK$444.1 million in the preceding six months. Basic earnings per share (EPS) for the first six months of 2020 amounted to HK$0.95 (first six months of 2019: HK$0.44, second six months of 2019: HK$1.08).

DIVIDEND AND CLOSURE OF REGISTER OF MEMBERS

The Board of Directors of ASM Pacific Technology Limited (the "Company") is pleased to declare an interim dividend of HK$0.70 (2019: HK$1.30) per share, payable to shareholders whose names appear on the Register of Members of the Company on 19 August 2020.

For the purpose of determining shareholders' entitlement to the abovementioned interim dividend, the Register of Members of the Company will be closed from 17 August 2020 to 19 August 2020, both days inclusive, during which period no share transfers can be registered. In order to qualify for the abovementioned interim 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 Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong, not later than 4:00 p.m. on 14 August 2020. Theinterim dividend will be paid on or about 31 August 2020.

2

FINANCIAL HIGHLIGHTS

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS

Three months ended 30 June

Six months ended 30 June

2020

2019

2020

2019

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

HK$'000

HK$'000

HK$'000

HK$'000

Notes

Revenue

2

4,321,249

3,614,774

7,701,537

7,274,789

Cost of sales

(2,800,057)

(2,322,896)

(5,047,435)

(4,742,687)

Gross profit

1,521,192

1,291,878

2,654,102

2,532,102

Other income

10,977

15,106

66,687

29,194

Selling and distribution expenses

(385,526)

(385,694)

(753,090)

(754,115)

General and administrative expenses

(248,489)

(232,978)

(473,408)

(456,436)

Research and development expenses

(391,369)

(419,946)

(786,460)

(829,002)

Other gains and losses

5

(16,956)

(41,515)

(28,682)

(25,307)

Other expenses

6

(25,978)

-

(87,248)

-

Finance costs

7

(40,129)

(41,018)

(79,659)

(127,825)

Profit before taxation

423,722

185,833

512,242

368,611

Income tax expense

8

(58,290)

(115,801)

(121,460)

(190,342)

Profit for the period

365,432

70,032

390,782

178,269

Profit (loss) for the period,

attributable to:

Owners of the Company

365,776

69,429

389,372

179,487

Non-controlling interests

(344)

603

1,410

(1,218)

365,432

70,032

390,782

178,269

Earnings per share

10

- Basic

HK$0.89

HK$0.17

HK$0.95

HK$0.44

- Diluted

HK$0.89

HK$0.17

HK$0.95

HK$0.44

3

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Three months ended 30 June

Six months ended 30 June

2020

2019

2020

2019

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

HK$'000

HK$'000

HK$'000

HK$'000

Profit for the period

365,432

70,032

390,782

178,269

Other comprehensive income (expense)

Exchange differences on translation

of foreign operations, which may be

reclassified subsequently to profit

or loss

73,958

(69,605)

(152,306)

(51,387)

Fair value loss on hedging

instruments designated as cash flow

hedges, which may be reclassified

subsequently to profit or loss

(24,989)

-

(38,654)

-

Other comprehensive income

(expense) for the period

48,969

(69,605)

(190,960)

(51,387)

Total comprehensive income for the

period

414,401

427

199,822

126,882

Total comprehensive income (expense)

for the period attributable to:

Owners of the Company

412,573

(674)

199,015

128,992

Non-controlling interests

1,828

1,101

807

(2,110)

414,401

427

199,822

126,882

4

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At

At

30 June

31 December

2020

2019

(Unaudited)

(Audited)

HK$'000

HK$'000

Notes

Non-current assets

Property, plant and equipment

2,716,824

2,916,415

Right-of-use assets

1,534,122

1,632,626

Investment property

51,960

53,645

Goodwill

1,042,359

1,047,851

Intangible assets

1,135,693

1,190,072

Other investments

99,664

93,471

Deposits paid for acquisition of property,

plant and equipment

140,012

92,888

Rental deposits paid

26,822

32,888

Deferred tax assets

450,968

384,624

Other non-current assets

18,136

19,979

7,216,560

7,464,459

Current assets

Inventories

6,655,924

6,291,276

Trade and other receivables

11

4,298,223

4,710,170

Derivative financial instruments

11,943

3,482

Income tax recoverable

79,537

49,604

Bank deposits with original maturity of more

than three months

9,021

9,053

Bank balances and cash

3,580,050

2,317,543

14,634,698

13,381,128

Current liabilities

Trade liabilities and other payables

12

2,735,517

2,670,411

Advance payments from customers

1,258,212

861,766

Derivative financial instruments

41,648

9,295

Lease liabilities

178,852

188,633

Provisions

301,070

283,696

Income tax payable

81,976

97,134

Bank borrowings

1,192,136

321,364

5,789,411

4,432,299

Net current assets

8,845,287

8,948,829

16,061,847

16,413,288

5

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION - continued

At

At

30 June

31 December

2020

2019

(Unaudited)

(Audited)

HK$'000

HK$'000

Capital and reserves

Share capital

40,889

40,889

Dividend reserve

286,227

286,227

Other reserves

11,247,783

11,301,200

Equity attributable to owners of the Company

11,574,899

11,628,316

Non-controlling interests

4,183

3,376

Total equity

11,579,082

11,631,692

Non-current liabilities

Lease liabilities

1,278,016

1,362,169

Retirement benefit obligations

240,289

260,551

Provisions

53,423

53,024

Bank borrowings

2,501,302

2,722,118

Deferred tax liabilities

254,934

233,788

Other liabilities and accruals

154,801

149,946

4,482,765

4,781,596

16,061,847

16,413,288

6

Notes:

1. Principal accounting policies

The condensed consolidated financial statements have been prepared on the historical cost basis except for the derivative financial instruments, other investments (classified as equity instruments at fair value through other comprehensive income) and certain financial liabilities which are measured at fair value at the end of reporting period.

Other than changes in accounting policies resulting from application of new and amendments to Hong Kong Financial Reporting Standards ("HKFRSs") and application of certain accounting policies which became relevant to the Group, the accounting policies and methods of computation used in the condensed consolidated financial statements for the six months ended 30 June 2020 are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2019.

In addition, the Group has applied the following accounting policy for hedging instrument recognized during the current interim period.

Hedge accounting

The Group designates certain derivatives as hedging instruments for cash flow hedges.

At the inception of the hedging relationship the Group documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the hedging instrument is highly effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk.

Assessment of hedging relationship and effectiveness

For hedge effectiveness assessment, the Group considers whether the hedging instrument is effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk, which is when the hedging relationships meet all of the following hedge effectiveness requirements:

  • there is an economic relationship between the hedged item and the hedging instrument;
  • the effect of credit risk does not dominate the value changes that result from that economic relationship; and
  • the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually hedges and the quantity of the hedging instrument that the entity actually uses to hedge that quantity of hedged item.

If a hedging relationship ceases to meet the hedge effectiveness requirement relating to the hedge ratio but the risk management objective for that designated hedging relationship remains the same, the Group adjusts the hedge ratio of the hedging relationship (i.e. rebalances the hedge) so that it meets the qualifying criteria again.

Cash flow hedges

The effective portion of changes in the fair value of derivatives and other qualifying hedging instruments that are designated and qualify as cash flow hedges is recognized in other comprehensive income and accumulated under the heading of hedging reserve, limited to the cumulative change in fair value of the hedged item from inception of the hedge. The gain or loss relating to the ineffective portion is recognized immediately in profit or loss, and is included in the 'other gains and losses' line item.

7

1. Principal accounting policies - continued

Amounts previously recognized in other comprehensive income and accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss, in the same line as the recognized hedged item. Furthermore, if the Group expects that some or all of the loss accumulated in the hedging reserve will not be recovered in the future, that amount is immediately reclassified to profit or loss.

Discontinuation of hedge accounting

The Group discontinues hedge accounting prospectively only when the hedging relationship (or a part thereof) ceases to meet the qualifying criteria (after rebalancing, if applicable). This includes instances when the hedging instrument expires or is sold, terminated or exercised. Discontinuing hedge accounting can either affect a hedging relationship in its entirety or only a part of it (in which case hedge accounting continues for the remainder of the hedging relationship).

For cash flow hedge, any gain or loss recognized in other comprehensive income and accumulated in equity at that time remains in equity and is recognized when the forecast transactions is ultimately recognized in profit or loss. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognized immediately in profit or loss.

Application of new and amendments to HKFRSs

In the current interim period, the Group has applied the Amendments to References to the Conceptual Framework in HKFRSs and a number of amendments to HKFRSs issued by the Hong Kong Institute of Certified Public Accountants (the "HKICPA"), for the first time, which are mandatory effective for the annual period beginning on or after 1 January 2020 for the preparation of the Group's condensed consolidated financial statements.

Except as described below, the application of the Amendments to References to the Conceptual Framework in HKFRSs and the amendments to HKFRSs in the current period has had no material impact on the Group's financial positions and performance for the current and prior periods and/or on the disclosures set out in these condensed consolidated financial statements.

1.1 Impacts of application on Amendments to Hong Kong Accounting Standard ("HKAS") 1 and HKAS 8 "Definition of Material"

The amendments provide a new definition of material that states "information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity." The amendments also clarify that materiality depends on the nature or magnitude of information, either individually or in combination with other information, in the context of the financial statements taken as a whole.

The application of the amendments in the current period had no impact on the condensed consolidated financial statements. Changes in presentation and disclosures on the application of the amendments, if any, will be reflected on the consolidated financial statements for the year ending 31 December 2020.

8

1. Principal accounting polices - continued

1.2 Impacts and accounting policies on application of Amendments to HKFRS 9, HKAS 39 and

HKFRS 7 "Interest Rate Benchmark Reform"

1.2.1 Accounting policies

Hedge accounting

For the purpose of determining whether a forecast transaction (or a component thereof) in a cash flow hedge is highly probable, the Group assumes that the interest rate benchmark on which the hedged cash flows (contractually or non-contractually specified) are based is not altered as a result of interest rate benchmark reform.

Assessment of hedging relationship and effectiveness

In assessing the economic relationship between the hedged item and the hedging instrument, the Group assumes that the interest rate benchmark on which the hedged cash flows and/or the hedged risk (contractually or non-contractually specified) are based, or the interest rate benchmark on which the cash flows of the hedging instrument are based, is not altered as a result of interest rate benchmark reform.

Cash flow hedges

For the purpose of reclassifying the cumulative gain or loss recognized in hedging reserve in order to determine whether the hedged future cash flows are expected to occur, the Group assumes the interest rate benchmark on which the hedged cash flows (contractually or non- contractually specified) are based is not altered as a result of interest rate benchmark reform.

1.2.2 Transition and summary of effects

The amendments had no impact on the condensed consolidated financial statements of the Group.

2. Segment information

The Group has three (2019: three) operating segments: development, production and sales of (1) semiconductor solutions (formerly knowns as 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 the 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 (2019: three) major types of products manufactured by the Group. No operating segments have been aggregated in arriving at reportable segments of the Group.

Segment results represent the profit before taxation earned by each segment without allocation of interest income, finance costs, unallocated other income and other losses, unallocated net foreign exchange loss and fair value change of foreign currency forward contracts, unallocated general and administrative expenses, unallocated adjustment on contingent consideration for an acquisition and other expenses.

9

2. Segment information - continued

Segment revenue and results

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

Six months ended 30 June

2020

2019

(Unaudited)

(Unaudited)

HK$'000

HK$'000

Segment revenue from external customers

Semiconductor solutions

3,676,203

3,154,010

SMT solutions

3,049,307

3,276,591

Materials

976,027

844,188

7,701,537

7,274,789

Segment profit

Semiconductor solutions

420,202

119,433

SMT solutions

284,979

422,223

Materials

73,923

30,249

779,104

571,905

Interest income

10,697

12,144

Finance costs

(79,659)

(127,825)

Unallocated other income and other losses

(5,307)

954

Unallocated net foreign exchange loss and fair value

change of foreign currency forward contracts

(24,117)

(40,772)

Unallocated general and administrative expenses

(81,228)

(60,728)

Unallocated adjustment on contingent consideration for

an acquisition

-

12,933

Other expenses

(87,248)

-

Profit before taxation

512,242

368,611

Segment profit %

Semiconductor solutions

11.4%

3.8%

SMT solutions

9.3%

12.9%

Materials

7.6%

3.6%

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

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

10

2. Segment information - continued

Geographical analysis of revenue by location of customers

Revenue from external customers

Six months ended 30 June

2020

2019

(Unaudited)

(Unaudited)

HK$'000

HK$'000

Mainland China

3,391,398

2,925,505

Europe

967,190

1,329,508

- Germany

263,477

477,702

- Hungary

91,020

112,550

- Austria

78,430

75,836

- Romania

60,582

63,363

- France

49,009

72,667

- Others

424,672

527,390

Taiwan

660,622

338,567

Americas

644,770

581,724

- United States of America

434,776

401,003

- Mexico

109,001

89,737

- Canada

8,901

45,696

- Others

92,092

45,288

Hong Kong

497,408

337,029

Malaysia

391,608

467,535

Japan

337,589

86,050

Korea

232,161

208,539

Thailand

219,004

211,967

Vietnam

128,907

441,036

Philippines

123,339

189,052

Singapore

56,683

81,884

Others

50,858

76,393

7,701,537

7,274,789

11

3. Analysis of quarterly segment revenue and results for the three months ended 30 June 2020

Segment revenue from external customers

Semiconductor solutions

SMT solutions

Materials

Segment profit

Semiconductor solutions

SMT solutions

Materials

Interest income Finance costs

Unallocated other income and other losses 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 an acquisition Other expenses

Profit before taxation

Segment profit %

Semiconductor solutions

SMT solutions

Materials

Three months ended

30 June 31 March 30 June

2020 2020 2019 (Unaudited) (Unaudited) (Unaudited)

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

2,163,336

1,512,867

1,616,814

1,583,156

1,466,151

1,549,704

574,757

401,270

448,256

4,321,249

3,380,288

3,614,774

335,683

84,519

66,558

158,615

126,364

208,825

58,079

15,844

19,777

552,377

226,727

295,160

6,412

4,285

6,261

(40,129)

(39,530)

(41,018)

(2,598)

(2,709)

954

(16,377)

(7,740)

(47,977)

(49,985)

(31,243)

(32,304)

-

-

4,757

(25,978)

(61,270)

-

423,722

88,520

185,833

15.5%

5.6%

4.1%

10.0%

8.6%

13.5%

10.1%

3.9%

4.4%

12

4. Profit before taxation

Six months ended 30 June

2020

2019

(Unaudited)

(Unaudited)

HK$'000

HK$'000

Profit before taxation has been arrived at after

charging (crediting):

Depreciation for property, plant and equipment

253,624

248,195

Depreciation for right-of-use assets

107,903

107,485

Depreciation for investment property

652

677

Amortization for intangible assets

50,741

57,584

Government grants (included in other income)

(48,605)

(8,759)

  1. Other gains and losses
    During the period, included in other gains and losses are mainly net gain on disposal/write-off of property, plant and equipment of HK$1.5 million (for the six months ended 30 June 2019: HK$2.6 million), net foreign exchange loss and fair value change of foreign currency forward contracts of HK$24.1 million (for the six months ended 30 June 2019: HK$40.8 million) and adjustment on contingent consideration for an acquisition of HK$nil (for the six months ended 30 June 2019: HK$12.9 million).
  2. Other expenses

Six months ended 30 June

2020

2019

(Unaudited)

(Unaudited)

HK$'000

HK$'000

Restructuring costs

2,513

-

Other expenses (Note)

84,735

-

87,248

-

Note: During the period, certain expenses of HK$84.7 million directly related and attributable to COVID-19 event are classified as a separate line item under other expenses. Of these, HK$52.7 million were attributable to staff, space and depreciation expenses which the Group had to bear even though the affected plants were not operational in compliance with the respective government mandated closure of the plants and another HK$32.0 million were incremental costs incurred such as additional transport arrangements, higher freight costs and costs of procuring personal protective equipment to ensure the safety and health of our staff.

7. Finance costs

Interest on bank borrowings Interest on convertible bonds Interest on lease liabilities Others

Six months ended 30 June

20202019

(Unaudited) (Unaudited)

HK$'000 HK$'000

45,871 36,276

  • 35,951
    26,062 28,731
    7,726 26,867
    79,659 127,825

13

8. Income tax expense

Six months ended 30 June

2020

2019

(Unaudited)

(Unaudited)

HK$'000

HK$'000

The charge (credit) comprises:

Current tax:

Hong Kong

12,740

22,318

PRC Enterprise Income Tax

38,092

14,673

Other jurisdictions

125,568

154,188

176,400

191,179

(Over) underprovision in prior years

(7,367)

59,116

169,033

250,295

Deferred tax credit

(47,573)

(59,953)

121,460

190,342

Current tax:

  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 tax rates regime, the first HK$2 million of profits of qualifying group entity will be taxed at 8.25%, and profits above HK$2 million will be taxed at 16.5%. Hong Kong Profits Tax of the qualified entity is calculated in accordance with the two-tiered profits tax rates regime. The profits of other 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%.
  2. 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% for the six months ended 30 June 2020 (for the six months ended 30 June 2019: 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 six months ended 30 June 2019: 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.

14

8. Income tax expense - continued

  1. 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. ATS and EDB are currently in discussion to terminate the PC.
    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 IHA incentives is taxed at the prevailing corporate tax rate in Singapore of 17% (for the six months ended 30 June 2019: 17%).
  2. The calculation of current tax of the Group's subsidiaries in Germany is based on a corporate income tax rate of 15.00% (for the six months ended 30 June 2019: 15.00%) plus 5.50% (for the six months ended 30 June 2019: 5.50%) solidarity surcharge thereon for the assessable profit for the period. 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 14.192% to 17.150% (for the six months ended 30 June 2019: 14.380% to 17.150%) according to the municipal in which the entity resides. Thus the aggregate tax rates were between 30.017% and 32.975% (for the six months ended 30 June 2019: between 30.210% and 32.975%).
  3. Taxation for other jurisdictions is calculated at the rates prevailing in the relevant jurisdictions.

The deferred tax credit is mainly related to the tax effect of temporary difference between the tax base of certain assets and liabilities and the carrying value of the assets and liabilities. The balance mainly includes deductible temporary differences arising from retirement benefit obligations, provisions, inventories, trade receivables, right-of-use assets and lease liabilities.

The Group received letters from the Hong Kong Inland Revenue Department (the "HKIRD") in prior years seeking information relating to Hong Kong Profits Tax and other tax affairs of certain subsidiaries of the Company. The enquiries might lead 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.

15

  1. Income tax expense - continued
    In the settlement proposal, key tax adjustments are: i) certain profits earned offshore by the subsidiaries were demand 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. During the year ended 31 December 2019, additional tax reserve certificates amounting to HK$20.3 million were purchased and HK$397.6 million were utilized by offsetting the tax liabilities. As at 31 December 2019, the remaining balance amounted to HK$3.8 million as disclosed in note 11 has been refunded by the HKIRD during the period ended 30 June 2020.
  2. Dividends

Six months ended 30 June

2020

2019

(Unaudited)

(Unaudited)

HK$'000

HK$'000

Dividend recognized as distribution during the period

Final dividend for 2019 paid of HK$0.70

(2019: final dividend for 2018 paid of HK$1.40)

per share on 408,895,333 (2019: 406,671,333) shares

286,227

569,340

Dividend declared after the end of the interim reporting period

Interim dividend for 2020 of HK$0.70

(2019: HK$1.30) per share on 408,895,533

(2019: 406,671,333) shares

286,227

528,673

The dividend declared after 30 June 2020 will be paid to the shareholders of the Company whose names appear on the Register of Members on 19 August 2020.

10. Earnings per share

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

Six months ended 30 June

2020

2019

(Unaudited)

(Unaudited)

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)

389,372

179,487

16

10. Earnings per share - continued

Number of shares

(in thousands)

Six months ended 30 June

2020

2019

(Unaudited)

(Unaudited)

Weighted average number of ordinary shares

for the purpose of calculating basic earnings per share

408,799

406,554

Effect of dilutive potential shares:

- New/Initial Employee Share Incentive Scheme

511

883

Weighted average number of ordinary shares for the

purpose of calculating diluted earnings per share

409,310

407,437

11. Trade and other receivables

At

At

30 June

31 December

2020

2019

(Unaudited)

(Audited)

HK$'000

HK$'000

Trade receivables (Note)

3,800,710

4,324,297

Value added tax recoverable

240,874

198,590

Tax reserve certificate recoverable

-

3,828

Other receivables, deposits and prepayments

256,639

183,455

4,298,223

4,710,170

The following is an aging analysis of trade receivables net of allowance for credit losses 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

At

30 June

31 December

2020

2019

(Unaudited)

(Audited)

HK$'000

HK$'000

2,815,049

2,947,345

406,178

579,536

206,053

388,540

112,801

91,654

260,629

317,222

3,800,710

4,324,297

Note: The amount included notes receivables amounting to HK$700,759,000 (31 December 2019: HK$778,536,000).

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 from issuance, except for certain well established customers, where the terms are extended to 3 to 4 months or more.

17

12. Trade liabilities and other payables

Trade payables Deferred income (Note) Accrued salaries and wages Other accrued charges

Payables arising from acquisition of property, plant and equipment

Contingent consideration for an acquisition Other payables

At

At

30 June

31 December

2020

2019

(Unaudited)

(Audited)

HK$'000

HK$'000

1,653,698

1,406,438

92,879

104,991

281,033

294,719

425,930

475,557

98,059 139,421

  • 29,489
    183,918 219,796

2,735,517 2,670,411

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.

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

At

At

30 June

31 December

2020

2019

(Unaudited)

(Audited)

HK$'000

HK$'000

Not yet due

1,165,930

1,145,346

Overdue within 30 days

198,770

165,684

Overdue within 31 to 60 days

145,311

53,644

Overdue within 61 to 90 days

62,181

22,238

Overdue over 90 days

81,506

19,526

1,653,698

1,406,438

The average credit period on purchases of goods ranges from 30 to 90 days.

18

REVIEW

Business Overview

Despite a challenging first half of 2020 caused by the COVID-19 pandemic, the Group managed to register a year-on-year ("YoY") growth in revenue and profit. Multiple factors drove the first half revenue performance of the Group. These factors included 5G infrastructure built up, localization of the China semiconductor supply chain and strong position of the Group in Advanced Packaging.

This COVID-19 pandemic has rapidly transformed global workforce norms into a new normal comprising "Work-From-Home" and "Work-In-Office" telecommuting arrangements. The Group has benefited from this phenomenon with YoY increase in revenue recorded from our customers serving the Mobility, Communications and Information Technology segments. Optoelectronics and Power Management segments turned in very strong revenue performance for this first half-year relative to the same period last year. In first half of 2020, the global economy went through a steep economic downturn triggered by the COVID-19 pandemic and the lockdowns instituted in multiple countries. Compared with the same period last year, the effects of these developments dampened shipments to our customers serving the end-markets for Automotive and Industrial, especially in the US and the Eurozone; and for the CMOS Image Sensors ("CIS") market.

In line with the strong global demand for high performance computing devices for data center and 5G related applications, Advanced Packaging delivered excellent results for billing performance in the first half of this year compared to the first half of last year. These bright spots combined to enable the Group to weather the global macro-economic headwinds posed by the convergence of both COVID-19 pandemic and US-China trade tensions.

Group Results

Group

1H 2020

Q2 2020

HoH

YoY

QoQ

YoY

Bookings (US$m)

1,140.9

+19.0%

+7.4%

472.0

-29.4%

-21.6%

Revenue (US$m)

991.6

-10.5%

+5.9%

557.4

+27.8%

+19.5%

Gross Margin

34.5%

-29 bps

-34 bps

35.2%

+169 bps

-54 bps

Net Profit (HK$m)

390.8

-12.0%

+119.2%

365.4

+1,341.5%

+421.8%

Net Profit Margin

5.1%

-9 bps

+262 bps

8.5%

+771 bps

+652 bps

1H 2020 Group Review

Despite challenging economic conditions in the first half of 2020, the Group had delivered revenue of US$991.6 million, which was a YoY revenue growth of 5.9% compared to the same period last year. Group bookings for the first half of the year amounted to US$1.14 billion, representing an increase of 7.4% compared to the first half of last year. The book-to-bill ratio for the first six months of this year came in at

1.15. Group net profit was HK$390.8 million, an increase of 119.2% over the same period last year. The Group ended the first half with a Backlog of US$799.9 million.

19

REVIEW - continued

During the first half of this year, the Group's top five markets consist of China (inclusive of Hong Kong) (50.5%), Europe (12.6%), Taiwan (8.6%), the Americas (8.4%) and Malaysia (5.1%). Our top five markets collectively accounted for 85.2% of the Group's revenue and 80% of the Group's revenue was attributable to 136 customers. The Group's top 20 customers came from different market segments including the world's leading telecommunication and information technology 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, automotive components suppliers and leading substrate makers. Among them, four were SMT Solutions Segment customers and eight were common for the Semiconductor Solutions and SMT Solutions Segments. The Group's diverse customer base remains one of key competitive advantages that allowed us to withstand this current period of uncertainty well and eventually emerge stronger, relative to the competition.

In light of ongoing economic headwinds, the Group undertook a series of Group-wide initiatives to control cost. These included a Group-wide salary freeze, tight headcount control and close monitoring on discretionary spending. The Group's solid balance sheet provides the foundation to withstand this period of economic uncertainty and beyond.

Q2 2020 Group Review

The Group achieved billings of US$557.4 million during the second quarter, representing increases of 27.8% and 19.5% for quarter-on-quarter ("QoQ") and YoY comparison respectively. This came in slightly above the mid-point of the revenue guidance of US$500 million to US$580 million issued in our 2020 first quarter results announcement. All three business segments had delivered both QoQ and YoY revenue growth for the second quarter. Revenue for both Semiconductor Solutions Segment and Materials Segment in particular registered double-digit percentage growth of 33.8% and 28.2% YoY respectively in the second quarter. The detailed business segment analysis would be discussed in the later parts of the announcement.

Group bookings in the second quarter amounted to US$472.0 million, representing decreases of 29.4% and 21.6% for both QoQ and YoY respectively. The subdued bookings for Semiconductor Solutions and SMT Solutions Segment was a reflection of overall dampened business sentiments over the uncertainties triggered by the COVID-19 pandemic.

The Group delivered close to the mid-point of the Q2 gross margin guidance in its 2020 first quarter results announcement. The gross margin for the Group improved by 169 bps QoQ to 35.2% on the back of QoQ increase in gross margin for both the Semiconductor Solutions Segment and Materials Segment. Group net profit was HK$365.4 million in the second quarter of this year which was an increase of 421.8% over the same period last year.

20

REVIEW - continued

Semiconductor Solutions Segment Review

Semiconductor

1H 2020

Q2 2020

Solutions Segment

HoH

YoY

QoQ

YoY

Bookings (US$m)

536.5

+21.7%

+14.2%

226.9

-26.7%

-8.1%

Revenue (US$m)

473.3

-4.5%

+16.6%

279.0

+43.0%

+33.8%

Gross Margin

42.2%

+16 bps

+219 bps

42.9%

+162 bps

+211 bps

Segment Profit (HK$m)

420.2

+17.6%

+251.8%

335.7

+297.2%

+404.3%

Segment Margin

11.4%

+215 bps

+764 bps

15.5%

+993 bps

+1,140 bps

During the second quarter of this year, billings of the Semiconductor Solutions Segment amounted to US$279.0 million, representing increases of 43.0% and 33.8% for QoQ and YoY respectively. The Semiconductor Solutions Segment contributed 50.1% to the Group's billings during the second quarter. Billings of the Semiconductor Solutions Segment for the first six months of this year were US$473.3 million, representing an increase of 16.6% against the same period a year ago and a slight decrease of 4.5% comparing to the preceding six months ("HoH"). The Q2 segment billings strong YoY growth was underpinned by Advanced Packaging, Optoelectronics and IC/Discrete segments. CIS had experienced a YoY decline mainly due to the soft demand for smartphones and also the high base compared to the previous year. The advanced packaging deposition tools for RDL (redistribution layer) and copper build-up applications from NEXX had delivered strong billings growth compared to the same period last year. The on-going market ramp for the High Performance Computing applications continue to drive the strong performance from NEXX. Other than NEXX, the traditional wire bonders and die bonders delivered relatively strong YoY Q2 revenue growth despite the challenging business environment.

New order bookings for the Semiconductor Solutions Segment in the second quarter were US$226.9 million. For the first six months of this year, the Semiconductor Solutions Segment achieved new order bookings of US$536.5 million, representing a significant increase of 14.2% comparing to the same period last year; and a rise of 21.7% comparing to the preceding six months. The Q2 segment bookings saw a QoQ decline of 26.7%. This decline largely attributed to the high base achieved in the Q1 bookings. On the YoY basis, Q2 segment bookings saw a slight decrease of 8.1%, despite the confluence of the pandemic and trade war dampening overall business sentiment. CIS's Q2 bookings were weaker comparing to the same period last year. Advanced Packaging, Optoelectronics and IC/Discrete Q2 relatively stronger bookings helped to offset the weakness in CIS's Q2 bookings. The Q2 bookings for NEXX products remain the brightest spot in this segment with YoY booking growth of around 2x.

The Semiconductor Solutions Segment achieved gross margins of 42.9% and 42.2% during the second quarter and the first half of this year, respectively, which represented improvements of 211 bps and 219 bps YoY, respectively. This segment achieved a segment profit of HK$335.7 million in the second quarter of this year, an increase of 404.3% YoY, and HK$420.2 million for the first half of this year, an increase of 251.8% YoY. The gross margin for first half was driven mainly by higher volume effect, positive results from our productivity drive, product mix and continuous cost reductions in our manufacturing operations.

21

REVIEW - continued

Materials Segment Review

Materials Segment

1H 2020

Q2 2020

HoH

YoY

QoQ

YoY

Bookings (US$m)

167.3

+25.2%

+59.3%

78.4

-11.8%

+32.7%

Revenue (US$m)

125.7

-3.2%

+15.6%

74.2

+43.2%

+28.2%

Gross Margin

13.5%

+409 bps

+250 bps

16.9%

+838 bps

+546 bps

Segment Profit (HK$m)

73.9

+163.4%

+144.4%

58.1

+266.6%

+193.7%

Segment Margin

7.6%

+479 bps

+399 bps

10.1%

+616 bps

+569 bps

This quarter Materials Segment bookings remained at a high level although QoQ bookings declined by 11.8% after 5 consecutive quarters of QoQ booking growth. This is an indicator that the demand for semiconductor devices remain healthy. On a YoY basis, Q2 Materials Segment bookings rose by 32.7%. Over the first six months of this year, bookings of the Materials Segment amounted to US$167.3 million. This was an improvement of 25.2% and 59.3% against the preceding six months period, and the corresponding period of last year respectively. The first half bookings for Materials Segment was a record. In the second quarter, billings of our Materials Segment amounted to US$74.2 million, representing QoQ and YoY improvements of 43.2% and 28.2% respectively. The Materials Segment contributed 13.3% to the Group's billings during the second quarter. Billings of the Materials Segment for the six-month period amounted to US$125.7 million, representing a decrease of 3.2% against the preceding six months and an increase of 15.6% comparing to the same period a year ago.

The Materials Segment achieved gross margins of 16.9% and 13.5% during the second quarter and the first half of this year, respectively, representing improvements of 546 bps and 250 bps YoY respectively. This segment achieved a segment profit of HK$58.1 million in the second quarter, an increase of 193.7% YoY, and HK$73.9 million in the first half of this year, an increase of 144.4% YoY. The gross margin improvement this year compared to last year for Materials Segment was underpinned by higher volume effect and discontinuation of the loss-making Molded Interconnect Substrate business in 2020.

SMT Solutions Segment Review

SMT Solutions

1H 2020

Q2 2020

Segment

HoH

YoY

QoQ

YoY

Bookings (US$m)

437.1

+13.7%

-10.3%

166.6

-38.4%

-43.7%

Revenue (US$m)

392.6

-18.7%

-6.9%

204.2

+8.0%

+2.2%

Gross Margin

31.8%

-225 bps

-409 bps

31.3%

-101 bps

-616 bps

Segment Profit (HK$m)

285.0

-43.5%

-32.5%

158.6

+25.5%

-24.0%

Segment Margin

9.3%

-410 bps

-354 bps

10.0%

+140 bps

-346 bps

Billings of our SMT Solutions Segment amounted to US$204.2 million in the second quarter, representing increases of 8.0% and 2.2% compared to the first quarter of this year and the same period a year ago, respectively. The SMT Solutions Segment contributed 36.6% to the Group's billings in the second quarter of this year. During the six-month period, billings of our SMT Solutions Segment were US$392.6 million, representing decreases of 18.7% HoH and 6.9% YoY.

22

REVIEW - continued

New order bookings for the SMT Solutions Segment in the second quarter fell by 38.4% and 43.7% QoQ and YoY, respectively. Bookings in Q2 were at US$166.6 million. New order bookings for the first six- month period of this year amounted to US$437.1 million, which represented an increase of 13.7% as compared to the preceding six months and a decrease of 10.3% as compared to the corresponding period of last year. As expected, bookings for the SMT Solutions Segment decreased from the high level achieved in the preceding quarter. Weak Q2 segment bookings of SMT Solutions Segment were the results of overall market weakness in Automotive and Industrial applications. Nevertheless, this segment benefitted from the 5G related investments in China in the first half of 2020. Another bright spot in this segment is System-in- Package which is expected to deliver sustained and long-term returns to the Group.

The Segment gross margins of 31.3% and 31.8% during the second quarter and first half of this year respectively were impacted by the decline in revenue for Automotive and Industrial applications market and the relatively larger China customer base that we served this year compared to last year.

COVID-19 Situation Update

With the outbreak of COVID-19 in the early part of 2020, the Group formed a Group BCP ("Business Continuity Plan") Committee to steer its global efforts in managing the COVID-19 situation with an emphasis on employee safety and business continuity. The Committee's efforts have ensured that the Group is in compliance with local authorities' guidelines and restrictions while helping at the same time, as a responsible corporate citizen, the communities in which we operate fight the outbreak.

In our principal manufacturing facilities in China, effectively 100% of our employees have returned to work after the lifting of various travel restrictions that had been imposed since the extended Chinese New Year holiday period. We have recovered a big portion of lost capacity in Q1 through productivity improvement and working overtime.

At the start of Q2 2020, the two primary production facilities in Malaysia and Singapore were initially affected. By the middle of May 2020, our Malaysia factory had returned to full production workforce. The Singapore government gradually re-opened business from 2 June 2020 and our workforce in Singapore continued to be on the alert to the evolving situation. In both locations, production capacity has been restored to normal levels. In countries in Europe and the USA where we have operations, there are various types of restrictions and stay-in-shelter orders. We managed to continue our business operations through a combination of flexible work arrangements. Our global production setup has also helped us manage the disruptions without impact on customer orders.

In this quarter, certain expenses of HK$23.4 million directly related and attributable to COVID-19 event are classified as a separate line item under Other Expenses. Of these, HK$5.0 million were attributable to staff, space and depreciation expenses that the Group had to bear even though the affected plants were not operational in compliance with the respective government mandated closure of the plants. Another HK$18.4 million concerned incremental costs incurred such as additional transport arrangements, higher freight costs and costs of procuring personal protective equipment to ensure the safety and health of our staff.

23

REVIEW - continued

Strategic Value-added Acquisitions

The Group recorded excellent progress from businesses that it acquired over the past few years. ASM NEXX, in particular, has begun to contribute significantly to the Group's revenue with its suite of deposition tools for Advanced Packaging. As a result, the Group is very proud to announce that ASM NEXX has the largest installation of panel plating tools serving our customers for High Performance Computing applications to date.

The Group acquired ASM AMICRA to enter the high-growth market of Silicon Photonics. Since the acquisition two years ago, ASM AMICRA has integrated well and has begun to contribute to the Group. Currently, ASM AMICRA is the market leader in the high-end packaging and assembly equipment serving the Silicon Photonics application. The Group has confidence that ASM AMICRA is in a prime position to capture demands for data center bandwidth growth and next generation 5G infrastructure deployments for data and telecommunication networks.

The Group took a major step towards its vision of "Enabling the Digital World" when it made a strategic investment in a leading modern Manufacturing Execution Systems ("MES") provider, Critical Manufacturing, two years ago. Recently, the Group made another strategic investment, SKT Max, a Shenzhen-based company to further complement Critical Manufacturing. SKT Max is a well-established Manufacturing Execution System solutions company with a strong presence in mainland China. This latest strategic investment of SKT Max has reinforced the Group's position in the China MES market.

Riding On Global Trends

In China, there is unabated momentum from local companies to localize their production amid escalating US-China trade tensions. This trend toward China localization is further supported by regional and central government policies. The Group stands to benefit from this trend with its strong network in China.

The deployment of 5G infrastructure and the conversion from 4G to 5G smartphones will be a multi-country and multi-year growth story. This long-term growth story will lead to significant demand for semiconductor chips. The Group's comprehensive product and solutions portfolio will allow the Group to directly benefit from this worldwide 5G roll-out.

Over the longer-term time horizon, innovations enabled by 5G, such as Augmented and Virtual Reality ("AR/VR"), autonomous vehicles, Internet of Things ("IoT") and Artificial Intelligence ("AI") will be the cornerstone of global social and economic activities. The confluence of these innovations will drive up the demand for semiconductors exponentially. In similar fashion, the Group stands to benefit directly from this global trend.

With the advent of an AI-enabled world globally, the usual Moore's Law - continuous shrinking and packing more and more transistors into chipsets - will be unsustainable. Advanced Packaging and Heterogeneous Integration are the answers to the limitations imposed by Moore's Law. As such, there is a shift of value-add within the semiconductor equipment ecosystem from the front-end to the back-end to overcome limitations.

The Group's well-timed investments in Advanced Packaging will enable it to ride multi-year upside growth in this segment. The Group is already beginning to enjoy the benefits from this segment. Other than ASM NEXX, the Group's Thermo Compression Bonding solutions have the largest installed base and the Group is very confident that it can continue to expand its product portfolio to further capture this multi-year growth opportunity.

24

REVIEW - continued

Emerging and Disruptive Technologies

Another imperative in the Group's corporate strategy is to identify and seize the opportunity to invest in today's emerging and disruptive technology startups for tomorrow's lead in the marketplace.

The Group made two such strategic investments in the past. In 2019, the Group invested in a 3D laser printing company based in Israel whose cutting-edge technology could potentially disrupt a part of the SMT printing market. One year earlier in 2018, the Group invested in a Silicon Valley startup whose technology allows high speed X-ray inspection of advanced semiconductor packages (up to a 100X faster vs conventional X-ray, using proprietary technology). This is expected to provide the industry's 'production speed' auto X-ray inspection for Advanced Packaging. For both of these strategic investments, the Group is working closely with their management to leverage the Group's resources to accelerate their growth.

These forward-looking investments will accelerate the Group's access to innovation that can be integrated into our product portfolio offerings in the near future. The Group will continue to look out for complementary disruptive and emerging technologies that will support the Group's long-term strategic roadmap.

Reinforcing The Group's Competitive Advantage

The Group continues to invest a significant portion of its annual revenue in Research and Development ("R&D"). These R&D investments are the bedrock for maintaining the Group's competitive advantage over the competition and also strengthening its leadership in a number of markets.

Specifically, the Group has established significant market leadership positions in:

  • CIS - As camera technology, 3D sensing and multiple cameras continue to be the key selling points for smartphones, the Group 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 the Group's suite of Advanced Packaging tools; and
  • Power Management Semiconductor - This is used in a wide array of applications for mobile devices, consumer goods, industrial and automotive.

The Group is poised for market leadership position in the following emerging markets by establishing first- mover advantage:

  • Silicon Photonics - The Group is in the leading position for Silicon Photonics with ASM AMICRA.
  • Industrial Internet of Things - On top of the investments in Critical Manufacturing and SKT Max, the Group is currently collaborating with SAS, a world renowned advanced analytics company to jointly develop and promote a smart solution that will help semiconductor and electronics manufacturers capture, analyze and utilize high volumes of data and apply sophisticated analytics to analyze risk, optimize processes and predict failure.
  • Mini and Micro LED Solutions - The Group's continued investments in mass-bonding and other technologies in this segment will ensure that it will be the first in line and continue to lead and capture demand for devices that require mini or micro LED, such as those used in indoor and outdoor displays, smart watches and AR/VR.

25

REVIEW - continued

  • System-in-Package("SiP") (SMT Advanced Packaging) - The Group has identified this area as the fastest growing business within the SMT Solutions Segment. The vast adoption of advanced SiP in Radio Frequency ("RF") modules in smartphones has been the key driver. With 5G and IoT, more wearables and communication devices feature more compact designs with ever more intense miniaturization, giving rise to increased SiP adoption. Today, the Group is the market leader and winning in the marketplace as our customers acknowledge that our product platforms deliver superior results to their operations. The Group is confident that it will continue to benefit from the SiP business as it is supported by long-termglobal trends.
  • Automated Optical Inspection - The Group's unwavering focus on this segment will enable the
    Group to enjoy the potential surge in demand from CIS and Automotive customers for inspection of foreign particles and bonding quality.
  • Hybrid Bonding Solutions - The Group is pleased to announce that it is collaborating in leading edge technology with a number of industry leaders - one of them being IBM Research - to develop and deliver industry-leading Hybrid Bonding solutions to support complex AI chips. These frontier- focused joint-developments with key technology leaders will ensure that the Group continues to be the leader within the semiconductor ecosystem.

Overall, the Group's enhanced and broadening product portfolio is key to driving not just its business momentum but also its ability to diversify and balance out segmental cyclical risk. The Group is poised to take advantage of all these new developments as it has created an unparalleled products and solutions portfolio through a combination of internal development, investments and acquisitions over the past few years. The Group has a resilient and balanced portfolio of businesses, strong capabilities and leading market position in these fast growing markets.

RESEARCH AND DEVELOPMENT

ASMPT has an unwavering belief in investing in research and development with the objective of remaining at the forefront of technological innovations.

Our strategy reinforces our ability to deliver the best innovative products with differentiated value propositions to our customers. During the past six months, we invested 11.7% of our equipment revenue in R&D. Customers have benefitted from ASMPT's depth and breadth of enabling technologies, strong financial resources and excellent infrastructure support.

Research and development expenses for the year-to-date were HK$786.5 million. To date, the Group has obtained more than 1,400 patents on leading-edge technologies.

As of 30 June 2020, the Group operates 10 research and development centres worldwide, namely, in Taoyuan, Hong Kong and Chengdu (China), Singapore, Regensburg and Munich (Germany), Weymouth (United Kingdom), Beuningen (The Netherlands), Porto (Portugal) and Billerica (the United States), with a total of over 2,000 R&D employees.

26

LIQUIDITY AND FINANCIAL RESOURCES

Return on sales was 7.1% for the six-month period of this year (1H 2019: 5.9%). Annualized return on capital employed and on invested capital for the past six months were 7.9% and 9.2% respectively (1H 2019: 6.0% and 4.5%, respectively).

Inventory balance as of 30 June 2020 was HK$6.66 billion, as compared with HK$6.29 billion as of 31 December 2019. Our annualized inventory turn was 2.38 times (1H 2019: 2.17 times).

Cash and bank deposits as of 30 June 2020 were HK$3.59 billion, which was HK$1.26 billion higher than

31 December 2019. Capital expenditure during the period amounted to HK$121.6 million (1H 2019: HK$367.1 million), which was fully funded by the depreciation and amortization of HK$308.1 million (1H 2019: HK$308.7 million), excluding the depreciation of right-of-use assets of HK$107.9 million due to the application of HKFRS 16. Day sales outstanding decreased to 89.8 days from 99.0 days in the 1H 2019.

As of 30 June 2020, the current ratio of the Group was 2.53 (31 December 2019: 3.02), with a debt-equity ratio of 31.9% (debts included all bank borrowings and obligations under finance leases) (31 December 2019: 26.2%). The Group had available banking facilities of HK$1.48 billion as at 30 June 2020 (31 December 2019: HK$2.25 billion) 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, US dollars and Euros.

As of 30 June 2020, the Group had bank borrowings of HK$3.69 billion (31 December 2019: HK$3.04 billion). The bank borrowings are mainly repayable by instalments pursuant to the relevant repayment schedules up to 2024 and an insignificant portion is fixed-rate borrowings.

A syndicated loan of HK$2.5 billion was arranged to finance the redemption of the convertible bonds in March 2019, and it is a variable-rate borrowing. The repayment of the syndicated loan will commence from March 2022 to March 2024. The Group uses interest rate swaps to mitigate its exposure of the cash flow changes of the variable-rate syndicated loan by swapping certain portion of the syndicated loan from the variable rate to fixed rates. The Group shareholders' funds were HK$11.58 billion as at 30 June 2020 (31 December 2019: HK$11.63 billion).

As of 30 June 2020, cash holdings of the Group were mainly in US dollars, Euros and Chinese renminbi. The Group's SMT Solutions Business 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 renminbi. On the other hand, disbursements in respect of operating expenses and purchases were mainly in US dollars, Euros and Chinese renminbi.

Although the Group is committed to paying dividends that are sustainable and gradually increasing over time while maintaining an optimal capital structure, given the current macroeconomic uncertainties created by COVID-19 pandemic, the Board recommends an interim dividend of HK$0.70 per share, which represents a payout ratio of 74%.

27

HUMAN RESOURCES

As of 30 June 2020, the total headcount for the Group globally was approximately 14,900 employees, which included 1,000 temporary, short-term contracted and outsourced employees. Our employees, being our greatest assets, form the bedrock of the Group and it is important to nurture and retain the right talents through various schemes and motivations to help our employees build and strengthen their competencies.

Besides offering competitive remuneration packages and other benefits such as contributions to provident fund schemes and medical benefits, the Group is committed to providing regular and extensive training programs to equip our employees to be future-ready. Discretionary bonuses and incentive shares were also granted to eligible employees based on the Group's financial results and individual performance.

The total manpower cost of the Group for the first six months of 2020 was HK$2.26 billion, as compared with HK$2.28 billion during the same period of 2019.

This year, the Board granted a total of 2,258,300 incentives shares to around 1,600 employees. The vesting period of these incentive shares will end on 15 December 2020.

OUTLOOK

The International Monetary Fund ("IMF") had revised downwards the global full year 2020 growth projections from -3.0% to -4.9% during their June 2020 review. For the second half of 2020, the threat of another wave of infection for COVID-19 and the continued fallout from the worsening US-China tension will remain major concerns globally. In light of the uncertainties in the macro environment, we would not provide guidance for bookings. For revenue, we anticipate revenue for Q3 2020 to be in the range of US$480 million to US$560 million which takes into account the subdued demand for Automotive and weakness in the Eurozone demand.

Despite the uncertainties in the second half of 2020, the Group expects continued demand from Chinese manufacturers to localize their supply chains, accelerated deployment of 5G infrastructure and good 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 and Industry 4.0 solutions to help deliver long term sustainable value to our shareholders.

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 Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited ("Listing Rules") throughout the six months ended 30 June 2020.

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.

28

REVIEW OF FINANCIAL STATEMENTS

The Audit Committee has reviewed the Group's unaudited condensed consolidated financial statements for the six months ended 30 June 2020 in conjunction with the Company's external auditor.

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

During the six months ended 30 June 2020, 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 of Hong Kong Limited a total of 330,300 shares in the Company at a total consideration of approximately HK$26.3 million (excluding ancillary trading fees, costs and expenses directly attributable to the purchase).

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. Benjamin Loh Gek Lim and Mr. Petrus Antonius Maria van Bommel as Non-Executive Directors, and Mr. Robin Gerard Ng Cher Tat, Mr. Guenter Walter Lauber and Ms. Patricia Chou Pei-Fen as Executive Directors.

On behalf of the Board

Robin Gerard Ng Cher Tat

Director

Hong Kong, 28 July 2020

29

Disclaimer

ASM Pacific Technology Ltd. published this content on 29 July 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 July 2020 22:45:10 UTC


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Financials
Sales 2020 16 353 M 2 110 M 2 110 M
Net income 2020 986 M 127 M 127 M
Net cash 2020 187 M 24,2 M 24,2 M
P/E ratio 2020 39,6x
Yield 2020 1,71%
Capitalization 38 988 M 5 030 M 5 030 M
EV / Sales 2020 2,37x
EV / Sales 2021 2,04x
Nbr of Employees 13 900
Free-Float 74,3%
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Mean consensus OUTPERFORM
Number of Analysts 22
Average target price 103,55 HKD
Last Close Price 95,35 HKD
Spread / Highest target 52,1%
Spread / Average Target 8,60%
Spread / Lowest Target -41,3%
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Managers
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
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