Annual Reports and Related Documents::

SANTAK HOLDINGS LIMITED

ANNUAL REPORT 2021

Contents

01	Corporate Profile	85	Additional Information
02	Chairman's Statement	116	Statistics of Shareholdings
05	Corporate Data	118	Notice of Annual General Meeting
06	Corporate Structure	125	Instructions to Shareholders for
			Annual General Meeting in 2021

07 Financial Highlights

Proxy Form

08 Financial Report

This document has been reviewed by the Company's Sponsor, Asian Corporate Advisors Pte. Ltd. (the "Sponsor"). It has not been examined or approved by the Singapore Exchange Securities Trading Limited (the "Exchange") and the Exchange assumes no responsibility for the contents of this document, including the correctness of any of the statements or opinions made or reports contained in this document.

The contact person for the Sponsor is Ms Foo Quee Yin, at 160 Robinson Road, #21-05 SBF Center, Singapore 068914 Telephone number: 6221 0271

Corporate Profile

Established in 1978, the Santak Group is a manufacturing and trading group of companies with 2 divisions i.e. the Precision Engineering Division and the Trading and Distribution Division structured under the holding company, Santak Holdings Limited.

The Precision Engineering Division's main business is in the manufacture of precision machined components specially tailored to meet our customers' requirements. Its clientele include multi-national companies and other main contract manufacturers. Its products are mainly used in hard-disk drives, fibre-optics connectors, oil & gas equipment, medical equipments, sensor devices, consumer electronic devices, optical instrument devices, connectors/contacts as well as computer peripherals.

The Trading and Distribution Division specialises in sourcing and supplying custom-made electronic, electrical and mechanical components/products. It acts as a representative for suppliers in the Asian region and facilitate the supply of these components/ products based on the specifications of customers. Its focus is on security/access control systems, OEM assembly of card readers, contactless smartcards, die-cast & machined parts, metal enclosures and stamped parts, heatsinks, solenoids and coils.

Strategic investments have been made in high precision and automated production machinery in addition to the training and development of the Group's workforce. On-going marketing efforts are supported by manufacturing and engineering expertise, built up over the past 43 years.

Santak Holdings Limited and	1
Subsidiary Companies 2021

Chairman's Statement

On behalf of the Board of Directors, I hereby present the Annual Report and Financial Statements of Santak Holdings Limited (the "Company") and its subsidiary companies (the "Group") for the Financial Year ended 30 June 2021 ("FY2021").

The market in which the Group operates remains competitive and demanding going forward in the current financial year ending 30 June 2022 ("FY2022"), particularly in the midst of the current uncertain and challenging economic and COVID-19 pandemic environment. In addition, challenges remain in terms of pricing and costs as well as foreign exchange volatility as in prior years.

The Group has on 31 December 2020 announced the Completion of the Disposal of its Property in Singapore. In addition, the shift of all of the Group's main machines and equipment from the Singapore Property to our factory in Johor has been completed as at 31 December 2020. Following that, the

Johor factory production is ramping up but constrained by manpower shortages and delays in some machines set up mainly due to the Covid-19 pandemic restrictions. Going forward, the Group's precision engineering production facilities in Johor will continue its recruitment and trainings to further scale up its mass production while our Singapore premises mainly serves as head office, final QA inspections, packing, logistics and warehouse purposes. The Group will also continue its efforts for cost optimization and streamlining of the Group's operations. The Board and the Management will continue to seek opportunities which offer potential growth for the Group and enhancement of value for the Shareholders as and when appropriate.

FY2021 vs FY2020

Review of Income Statement

Revenue decreased by 10.8% from S$13.26 million in FY2020 to S$11.83 million in FY2021. The decrease was mainly due to lower sales derived from the Group's Precision Engineering Division's ("PE") at S$7.89 million, a decrease of S$1.10 million or 12.2% compared to FY2020. The decrease in sales in PE compared to prior year was primarily due to the lower sales arising from weaker demand from its data storage, oil & gas, fibre optics connectors and medical equipment sectors which was partially offset by the stronger demand from the sensor equipment sector. The Group's Trading

• Distribution Division ("T&D") also recorded a lower revenue at S$3.94 million in FY2021, a decrease of S$0.33

million or 7.7% compared to S$4.27 million in FY2020. This decrease was mainly due to lower demand from the security/access control systems business. Similarly, revenue in the half year ended 30 June 2021 ("2HY2021") at S$5.16 million was lower by S$0.81 million or 13.6% when compared to sales of S$5.97 million in the preceding corresponding half year ended 30 June 2020 ("2HY2020"). The Group's gross profit was lower at approximately S$1.63 million in FY2021 compared to approximately S$1.98 million in FY2020 resulting in lower gross profit margin of approximately 13.8% in FY2021 compared to approximately 14.9% in FY2020. This was mainly due to lower economies of scale recorded as a result of the lower turnover recorded in FY2021. Following the completion of the relocation of all of the Group's main machines and equipment from Singapore to the Johor factory in December 2020, the Johor factory production ramped up but constrained by manpower shortages and delays in some machines set up mainly due to the Covid-19 pandemic restrictions. The increase in depreciation expense by approximately S$0.10 million in FY2021 was mainly due to increase in depreciation charge on renovation and electrical installation in the Johor factory as well as higher depreciation expense of right-of-use assets.

Other operating income was approximately S$0.31 million in FY2021,

1. decrease of approximately S$0.49 million mainly due to a decrease of S$0.31 million to S$0.24 million in governments' grants in both Singapore

• Santak Holdings Limited and Subsidiary Companies 2021

Chairman's Statement

and Malaysia for COVID-19 pandemic supports in FY2021 compared to S$0.55 million in FY2020. In addition, there was a foreign exchange gain of approximately S$0.10 million during FY2020 compared to a foreign exchange loss in FY2021 as well as the reclassification from the translation reserve of approximately S$0.09 million to the income statement as a dormant wholly-owned subsidiary of the Company, Santak Electronics Pte. Ltd. was struck off from the Register of Companies pursuant to Section 344 of the Companies Act, Chapter 50 of Singapore in FY2020 which was absent in FY2021.

Other operating expenses decreased by S$0.14 million or 25.3% to S$0.41 million in FY2021 compared to previous year mainly due to the loss in diminution of value of the Property of S$0.33 million in FY2020 in connection with disposal of the Property (as announced on 23 June 2020) which was absent in FY2021. In addition, impairment of right-of-use assets was lower by approximately S$0.06 million in FY2021 compared to prior year. The above decrease was partially offset by foreign exchange loss of S$0.24 million mainly arising from the weakening of USD during FY2021 versus foreign exchange gain registered in FY2020 as disclosed earlier.

The slight decrease in distribution and selling expenses by S$0.08 million or 5.9% to S$1.31 million was mainly due to lower payroll and sales commission expenses in FY2021 in line with the lower turnover. The administrative expenses decreased by S$0.15

million or 8.6% to approximately S$1.63 million in FY2021 compared to S$1.79 million in FY2020 mainly due to the reclassification of manufacturing overhead incurred during Circuit Breaker in Singapore and Movement Control Order in Malaysia from cost of sales to administrative expenses of S$0.14 million in FY2020 decreased by S$0.13 million to S$0.01 million in FY2021.

The increase in financial income in FY2021 arose from interest income from the fixed deposits of S$5 million placed during FY2021. Loss before tax of approximately S$1.45 million was recorded for FY2021 compared to the loss before tax of S$0.99 million in the previous year. The tax expense of S$0.04 million in FY2021 was mainly due to the reversal of prior year deferred tax assets. The loss after tax for FY2021 was approximately S$1.50 million compared to the loss after tax of S$0.83 million for FY2020. The Group's basic and diluted loss per share were both

1. cents for FY2021 versus the prior year basic and diluted loss per share of

1. cents.

Review of Financial Position

The decrease of the right-of-use assets by approximately S$0.22 million as at 30 June 2021 was mainly due to depreciation of right-of-use assets during FY2021. The decrease in deferred tax assets was mainly due to reversal of deferred tax assets brought forward from prior years. The decrease of intangible assets by approximately S$0.02 million as

at 30 June 2021 mainly arose from amortization of intangible assets during FY2021.

The slight decrease in inventories by S$0.13 million to S$1.26 million as at

30 June 2021 compared to S$1.39 million as at 30 June 2020 as well as the decrease in trade receivables by approximately S$0.20 million as at 30 June 2021 versus 30 June 2020 were mainly in line with the lower sales in FY2021.

Other receivables decreased by approximately S$0.21 million as at 30 June 2021 mainly due to receivables of S$0.16 million in governments' grants for the COVID-19 pandemic supports as at 30 June 2020 which was absent as at 30 June 2021 as well as a decrease in deposits by approximately S$0.04 million which primarily comprises deposit for a banker guarantee issued to Malaysian custom authority. The decrease in prepayment by S$0.02 million in FY2021 was mainly due to lower prepayment for professional fees as at 30 June 2021.

The fixed deposits of S$5.00 million and short-term investment in an SGD Money Market Fund of S$1.30 million as at 30 June 2021 were placed with banks in Singapore out of the net proceeds of S$9.94 million (S$10.66 million proceeds received less GST and professional fees payment of S$0.72 million) received from the Completion of Disposal during FY2021. In addition, as a result of the Completion of Disposal, the assets of a subsidiary classified as held for sale of S$10.48 million and

Santak Holdings Limited and	3
Subsidiary Companies 2021