FY2023 did not start out well for the technology sector as the big supply built up by companies over the past two years did not meet a matching demand from the world to deplete these resources as a result of Covid-19 pandemic. As a result of the lack of economies of scale, most local technology companies observed a decline in revenue followed by an even sharper drop in profitability as fixed overheads were not able to be cut correspondingly. This was further exacerbated by the increase in wages and utilities cost which together created a very challenging situation where the financial performance of the Group was also not spared from being negatively affected by the above mentioned conditions.

The Group took many mitigating initiatives to reduce the adverse effects, such as headcount optimization through automation, investment in energy efficient equipment, value engineering programs and creative procurement planning. As a result, the Group closed FY2023 with a lower but satisfactory set of financial results under the capable stewardship of our senior management leading their respective areas through this challenging period. We closed FY2023 with revenue of RM131.8 million and achieved a net profit of RM26.4 million, while maintaining our strong cash position at around RM210.1 million with dividend paid out of RM 23.4 million to our shareholders.

One bright spot was the emergence of a strong demand for Artificial Intelligent (“AI”) products and applications, which directly translates to a surge in the need for components such as chips, Graphic Processing Units (“GPU”) and data centers. This led to flow through in terms of new business discussion with customers on some potential products to be produced. As demand for end consumer products continue to remain subdued, we have also started engaging customers for diversification into new areas such as automotive, medical and memory products. The New Product Introduction (“NPI”) team has been working tirelessly to get products into mass production with both existing and new customers. Together with the CEO’s extensive efforts to engage with new customers and secure new businesses, we are expecting to beef up our business portfolios with a combination of existing and new technologies in areas such as bio-sensors, micro-electromechanical systems (“MEMS”), laser modules, medical and automotive products in FY2024. 

Investments were made in FY2023 to purchase equipment such as aluminium wire bonder, 12-inch die attach/back grind/taping machine and auto mould press system to ensure capability readiness of potential and new businesses. We are also in plans to make targeted investments into advanced packaging technology with partners in FY2024 to enable the offering of new products and processes such as Flip Chip Chip Scale Package (“FCCSP”) solution, Wafer Level Chip Scale Package (“WLCSP”), Fan-Out Wafer Level Packaging (“FOWLP”), FlipChipBall Gid Array (“FCBGA”), 2.5D, MEMS and Silicon Photonics.

Cash Position and Dividends

On the balance sheet front, we continue to play the role of being a good steward of thecash position and dividend policy of the company. In this uncertain and challenging business environment, we have been very careful and selective on the Capital Expenditure (“Capex”) to be spent limiting only to the necessary technological upgrades and investments with reasonable Return On Investment (“ROI”) and minimal risks of being near term obsolete, whilst maximizing the use of our excess equipment from strategic load management. 

With this, we also continue to be very geerous to shareholders with handsome dividend payouts of RM23.4 million during the year as follows:

• A third interim single tier ordinary dividend of 1.0 sen per share and a single tier special dividend of 1.0 sen per share, totalling RM13.4 million in respect of the financial year ended 31 December 2022, declared on 23 February 2023 and paid on 23 March 2023.
• A first interim single tier ordinary dividend of 1.0 sen per share, totalling RM6.7 million in respect of the financial year ended 31 December 2023, declared on on 16 June 2023 and paid on 20 July 2023.
• A second interim single tier ordinary dividend of 0.5 sen per share, totalling RM3.3 million in respect of the financial year ended 31 December 2023, declared on declared on 20 November 2023 and paid on 5 December 2023.

Overall, we ended FY2023 with a strong balance of cash and cash equivalents of RM210.1 million.

Environmental, Social and Governance (“ESG”)

Major efforts were put to drive the ESG initiatives of the Group which is led by the Sustainability Steering Committee that oversees the four main segments of Economic, Environment, Social and Governance where each segment is headed by key management personnel in the Group.

On the social front, activities and programs were carried out to ensure compliance to various regulations such as Employment Act 2021, Employee’s Minimum Standard of Housing and Amenities Act and international labour practices and standards. 

In terms of governance, the key activities for FY2023 included enhancement of IT policies and procedures in view of rising cyber threats, Personal Data Protection Act (“PDPA”) and refresher course of Anti-Corruption and Bribery under Malaysian Anti-Corruption Commission (“MACC”) Act.

For environment, the main areas addressed were on the intersection of two segments which is the need of reducing carbon footprint (environment) and the increase in utilities costs (economic). Investments into energy efficient equipment were done as follows to reduce carbon footprint as well as utilities cost:

1. Installation of 300RT Chiller System – Done in December 2023 for GSB’s Building.
2. Investment in Energy Efficient Variable Speed Drive (“VSD”) Air Compressor for ISO – Installed in Q1 2024.
   
   

Besides this, the following activities were also initiated as part of our contributions to help the environment by reducing our carbon footprint:

1. Subscription to Green Energy Tariff (“GET”) which directly reduced our Scope 2 emissions for one of our subsidiaries. Total reduction of Scope 2 emission was 3.7 million kWh which is equivalent to 2.8 million kg CO2.
2. Tree planting project of 40 trees with Majlis Bandaraya Pulau Pinang (“MBPP”) near Queensbay Mall, Penang.
3. Initiatives in Reduce, Reuse, Recycle and Recover (“4Rs”) program.

Prospects and Outlook for FY2024

After almost two years of lacklustre performance in the technology sector due to supply overhang as a result of the transition from Covid-19 pandemic to reopening, there are signs of green shoots appearing in terms of stabilizing and slightly increasing demand for product loadings. This adjustment, while painful, was necessary to pave way for a sustainable recovery going forward.

For GTB, we also had to make painful adjustments in FY2023 to restructure our operating base in view of the expired pioneer status in one of the major subsidiaries, increase in minimum wage and utilities cost. As a result of the various measures that we have taken, together with investments into new equipment to upgrade our capabilities, we are now in a stronger position to take on the many opportunities that are heading our way. These opportunities stem from potential customers looking for manufacturing partners, with the bigger opportunities coming mainly from diversification strategies from Taiwan and China due to the trade and geopolitical tensions arising from US-China relations. After many months of high engagement by our CEO, Business Development Director and NPI team, we are now in the final stages of wrapping up some transfer products from these activities in FY2024.

The closest opportunity for us currently would be the potential transfer of products from an optoelectronics company looking to consolidate some of their production volume from Malaysia and China operations. This represents a big opportunity for GTB and we have started pre-positioning by consolidating production space in our factories.

The collaboration with the Taiwanese partner into advanced packaging technology have also shown good progress in FY2023. Due to the very high capital investment needed and risk involved, the initial collaboration opportunity for synergistic partnership started by drawing on the experience and contacts of both parties to collectively win over new customers. To date, for this joint collaboration, we are in finalization stages to have two potential new customers initiate transfer of memory and automotive products, some of which will start in second half (“2H”) of FY2024. 

On top of this, the NPI team continues to be actively involved with potential customers on new exciting products and together with the progress we have made with existing customers and partners, this has enabled the development pipeline to be very healthy with new projects and products at different stages targeted to go into production in FY2024, 2025 and 2026. For quartz crystal timing devices, we have gone End of Life (“EOL”) with our Japanese customer in Quarter 1, 2023 as the technology has become obsolete. Further to this, we are now working with a new customer to produce MEMs based timing products with small volume builds targeted for 2H of FY2024.

Overall, with the plans and activities we have in place with customers and in the development pipeline, we are excited and optimistic with our prospects for FY2024 and beyond.