Annual Reports and Related Documents::

Our mission is to provide our customers with "Perfect Parts and Tools, On Time, Every Time", based on scalable, repeatable and cost-effective manufacturing processes.

01 Chairman's Statement

1. Executive Management Report

1. Awards and Accolades
2. Financial Highlights

1. Board of Directors
2. Executive Officers
3. Financial Contents
4. Corporate Information
5. Sustainability Report

1. Corporate Governance

1. Financial Report

1. Shareholders' Statistics

1. Notice of Twenty-Fifth Annual General Meeting

1. Additional Information for Directors Seeking Re-election Proxy Form

On behalf of our Board of Directors, I am pleased to report that Micro-Mechanics delivered record revenue and profits for the financial year ended 30 June 2021 ("FY2021"). The Group's net profit rose 23.3% to S$18.1 million on revenue growth of 14.8% to S$73.7 million during FY2021.

I am also pleased to announce that the Group is proposing to raise our dividend payment for a third consecutive year. In keeping with our usual practice and policy that dividends should be broadly correlated to the Group's performance, we are proposing to pay a final dividend of 6 cents per share and a special dividend of 2 cents per share. Together with the interim dividend of 6 cents per share, this will raise the Group's total dividend payout to 14 cents per share for FY2021 compared to 12 cents per share for FY2020.

In addition to our long-held belief that it is important to share the Group's success with our shareholders, this decision to raise the total dividend payout again in FY2021 is also a signal that the Board remains confident in the Group's business, strategies and long-term prospects.

Including the proposed final and special dividends for FY2021, Micro-Mechanics would have distributed cumulative dividends of 99.9 cents per share since the Group's listing on the Singapore Exchange in 2003. This translates to a return of about 500% based on dividends alone for shareholders who bought Micro-Mechanics shares at our Initial Public Offering.

In tandem with our efforts to strengthen the Group's business and operations, we have always worked hard to also put good governance at the heart of everything we do. While keeping up with the best practices in compliance and reporting are important, we also see good governance as a methodology for driving performance by aligning the way our people at all levels - from the Board Room to the Shop Floor - make decisions and take actions to enhance and protect stakeholder value. When it comes to assessing good governance, we believe conformance and performance are inseparable.

Over the years, the Group has been able to attain a good ranking in the Singapore Governance and Transparency Index which is the leading index for assessing corporate

governance practices of companies listed on the Singapore Exchange. On 4 August 2021, the Group was once again recognised for our efforts to practice good governance with a ranking of 15th out of 519 companies on the Singapore Exchange. This is no mean feat for a company of our size as the top 20 in this ranking comprise mainly blue-chip companies with large market capitalisations.

Indeed, since becoming a publicly-listed company, Micro-Mechanics has been recognised more than 30 times for our good governance, transparency and investor relations. To us, good governance also means respecting the way investors make decisions as we strive to be transparent and provide accurate, complete and timely information.

In the following pages of this Annual Report, our Executive Management will provide a thorough review of the Group's financial and operational performance in FY2021, as well as discuss the key strategies we are executing for Micro-Mechanics to continue building value for all our stakeholders.

This prolonged COVID-19 pandemic has been a trying time for everyone. The Board is immensely proud of our people for the way they have so willingly and quickly adapted to the many changes that we needed to make and behaved in a responsible manner. We are especially appreciative of the care and consideration our people have shown for their colleagues by being so willing to do all the things that have helped to keep everyone healthy and safe.

In closing, I would like to express my heartfelt appreciation to my fellow directors for their vision, sound judgement and practical advice. And on behalf of the Board, I would like to thank all our customers, business partners and suppliers for their continued support and patronage of Micro-Mechanics.

We look forward to continue working together to build value for all our stakeholders.

Sumitri Menon

Independent Non-Executive Chairman

To all our stakeholders,

For the 12 months ended 30 June 2021 ("FY2021"), Micro-Mechanics achieved a record financial performance with both our revenue and profits showing double-digit gains. Despite facing many challenges, the Group benefited from the resilience of the global semiconductor industry which continued to show steady growth amid the economic headwinds induced by the COVID-19 pandemic.

For FY2021, the Group's net profit improved 23.3% to S$18.1 million on the back of 14.8% growth in revenue to S$73.7 million. The Group also reported our highest-ever quarterly results during the three months ended 30 June 2021 ("4Q21") with net profit rising 21.4% to S$4.8 million on revenue growth of 16.9% to S$19.1 million.

Keeping Safe and Healthy during the Pandemic

Although the COVID-19 pandemic has brought about an unprecedented and challenging period for businesses around the world, we continued to work conscientiously to keep our people safe and ensure full compliance with the health orders and guidelines of the governments in jurisdictions where the Group has operations.

Indeed, we are very proud of our people for the way they have so willingly and quickly adapted to the many changes we needed to make and behaved in a caring and responsible manner. As a result of these efforts, we managed to keep all our plants running and focused on meeting the needs of our customers.

Continuing Our Focus on the Key Fundamentals

Although dealing with the repercussions of a global pandemic is something new for the Group, we have always been mindful of the need to build an organisation that is strong and resilient. Whether it is the adverse impact of a market downturn, introduction of disruptive technology, geopolitical unrest or a host of other unforeseen events, we need to have goals, structures and processes in place that make it easier for the Group to adapt to changes in the operating environment and ensure business continuity. To this end, we intend to continue focusing on a handful of key areas.

Maintaining a Healthy Gross Profit Margin

A key objective for Micro-Mechanics is to ensure a strong and unwavering focus on the value we bring to customers. This means working diligently to understand and meet our customers' requirements and deliver on our mission of Perfect Parts and Tools, On-Time,Every Time. As a single defect can result in disastrous consequences in the precision manufacturing process of semiconductors, our customers need the parts and tools used in their critical processes to be flawless. To achieve this, our goal is to automate our operations around processes that are repeatable, scalable and cost-effective. During FY2021, we invested S$6.8 million primarily for new machines to raise production capacity and enhance manufacturing capabilities of our factories in Singapore and the USA. For FY2022, we estimate a capital expenditure budget of about S$6 million.

As a result of these efforts, the Group's gross profit margin improved to 54.3% in FY2021 from 53.4% in FY2020. We will continue working to strengthen our gross profit margin as we believe it is a key measurement of both the value that customers place in our products, and our competitive strength in the marketplace.

Becoming a Next Generation Supplier

According to a recent forecast from VLSI Research, global chip sales could double to nearly US$1 trillion by 2030 from about US$450 billion in 2020. Indeed, we believe the semiconductor industry is poised for a prolonged period of solid growth as chips become increasingly embedded in nearly every aspect of modern life, from today's smart phones to tomorrow's driverless cars. Hence, Micro- Mechanics' continuing success will hinge on our ability to continue identifying opportunities and prioritising the initiatives and investments that enhance stakeholder value.

As the semiconductor industry develops new equipment and processes for manufacturing chips with device geometries below 10 nano-meters, our customers will increasingly require parts and tools manufactured using improved materials and processes that eliminate defects and variability. In the future, we think only a handful of suppliers may have the capability to meet these stringent requirements. Our goal is to become a leading Next Generation Supplier of parts and tools used in critical processes for semiconductor assembly and wafer-fabrication.

During FY2021, sales at our plant in the USA ("MMUS") increased 21.1% to S$16.5 million. Including depreciation and engineering expenses of S$2.2 million and S$2.5 million respectively, MMUS reported segment earnings of S$1.2 million compared to a loss of about S$0.1 million in FY2020. As we move into FY2022, our operations in the USA will continue working to gain traction and visibility with customers that are leaders in the semiconductor equipment industry.

At MMUS, our main focus is to manufacture parts used in critical wafer-fabrication processes. This business made up approximately 22% of Group revenue in FY2021. The remaining 78% of the Group's revenue was derived from the manufacture of precision tools used in chip-assembly processes. Although there is limited market data from third- parties, we believe the total addressable market for parts and tools used in critical processes for chip-assembly and wafer-fabrication exceeds US$500 million. This provides the Group with ample scope for future growth.

Controlling Overhead Expenses

Maintaining a tight rein on expenses is also a key goal of the Group. This means investing in advanced technologies, working to enhance our facilities with an eye towards raising productivity, and continuing our relentless efforts to strengthen fundamental processes. As a result of these and other initiatives, the Group has performed well during the past few years. Although our total distribution, administrative and other expenses (including other income) increased 10.3% to S$16.8 million in FY2021, these overhead expenses when measured as a percentage of sales, declined to 22.8% compared to 23.7% in FY2020 and 25.4% in FY2019. As we move forward, we intend to continue working to improve this powerful measure of how well our people and resources are used to support the Group's core manufacturing activities.

Driving Performance Through Good Governance

Since becoming a publicly listed company in 2003, we have worked hard to put good governance at the heart of everything we do. Although keeping up with the best practices in compliance and reporting are important, we like to see good governance as a methodology for driving performance by aligning the way our people at all levels - from the Board Room to the Shop Floor - make decisions and take actions to enhance and protect stakeholder

value. In other words, when it comes to assessing good governance, we believe conformance and performance are inseparable.

To this end, it was easy for our Board to agree unanimously about a year ago to continue with quarterly financial reporting after the SGX allowed companies to shift to half- yearly reporting. Given the fast-moving events following the COVID-19 outbreak last year, and not to mention rapidly changing markets, unpredictable advances in technology and uncertain geopolitics, we believe the Group has taken the right reporting approach even though it requires more work. Indeed, we have been recognised more than 30 times for our efforts to practice good governance, transparency and investor relations. This includes being ranked 15th out of 519 companies in the latest Singapore Governance and Transparency Index published on 4 August 2021.

Since our listing on the Singapore Exchange, we have always believed that our job is to focus on the fundamentals of earnings and other important results, and not to get overly concerned with daily share price movements or other short-term market fluctuations. At the end of FY2021, the Group's market capitalization had risen to about S$430 million compared to S$25 million at our initial public offering. We intend to continue focusing on the fundamentals that we believe drive long-term and sustainable shareholder value.

Upon approval by shareholders at our next Annual General Meeting to be held on 29 October 2021, the Group will distribute a final dividend of 6 cents per share and a special dividend of 2 cents per share for FY2021. Together with the interim dividend of 6 cents per share paid in February 2021, this would raise the total dividends for FY2021 to 14 cents per share from 12 cents per share for FY2020. In addition to rewarding shareholders, our decision to raise the total dividend pay-out again in FY2021 is a signal that we remain confident in the long-term prospects of Micro-Mechanics.

Including these distributions in FY2021, the Group would have paid dividends amounting to 99.9 cents per share since becoming a listed company. This translates to a return of about 500% on dividends alone for shareholders who bought Micro-Mechanics shares at our Initial Public Offering.