Before beginning the message, I would like pay tribute to our outgoing Founder and Executive Chairman Mr. Michael Ng who had decided to retire from the Group after leading the company for 31 years from a humble two employee start up to becoming one of the established OSATs in Malaysia today. As one of the early technopreneurs in Penang, he has demonstrated that with a clear vision, unwavering effort, perseverance and commitment to one’s dreams, we can make our visions areality. The organization expresses our gratitude for all the years of Mr. Michael Ng’s guidance and leadership with the philosophy of humility in all we do at all times, and we wish him all the best and happiness as he enjoyshis golden years.

Year 2022 proved to be challenging even as the world started to emerge from the two-year lockdown resulting from the Covid-19 pandemic. The gradual return to normal life lead correspondingly to an offset of spending in previously high demand areas of electronic devices that were very popular when people were confined to working from home. We also witnessed the start of the Russia-Ukraine war in early year 2022 which eventually wreaked havoc on global supply chain of food and electronic components, a global hike in food, gas prices and inflation which eventually led to aggressive interest hikes by central bankers globally resulting in a slowdown in economic activities.

Notwithstanding the above, the Group managed to close year 2022 with a respectable set of financial results under the capable stewardship of CEO (Ms. Heng Charng Yee) and CFO (Mr. Ng Kok Choon) together with our Vice President of Business and Operations (Ms. Lim Guat Li and Mr. Yip Wai Chee) leading their respective areas through this challenging period. We closed year 2022 with revenues of RM180.1 million and net profit of RM45.5 million, while maintaining our strong cash position at RM201.5 million even after paying out dividends of RM46.9 million to shareholders.

With borders reopening globally, we are starting to see the movement on the New Product Introduction (“NPI”) front that would prove to be an important part of our future growth strategy. The NPI team has been working tirelessly to get products into mass production with both existing and new customers. For the year, we have launched a new generation of light sensor and gesture sensor into mass production as part of our yearly revamp of new products for our European customer. Together with CEO’s extensive efforts to engage new customers and secure new businesses, we expect to see continued expansion of our portfolio into new applications of augmented / virtual reality, wearable devices, LED and etc.

Our focus on Environmental, Social and Governance (“ESG”) related matters over the past few years have also paid off with GTB being included in the FTSE4Good Malaysia Index for the first time. There was much effort by the team in formalizing the group sustainability structure, measuring emissions data and coming up with carbon reduction activities to enable the Group to conduct business in a sustainable manner. We are extremely pleased and proud with this inclusion and would use it asa motivation for continuous improvement in our ESG drive.

Cash Position and Dividend

On the balance sheet front, we continue to play the role of being good stewards of the cash position and dividend policy of the company. In this uncertain and challenging business environment, we have been very careful and selective on the Capital Expenditures (“Capex”) to be spent for only required 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.

Overall, we ended year 2022 with a strong balance of cash and cash equivalents of RM201.5 million.

Corporate Governance and ESG Drive

On the Corporate Planning and Finance front, we have strived to stay abreast with continuous research, update and execution towards compliances to various statutory, regulatory and reporting requirement for Bursa Malaysia, Securities Commission, Inland Revenue Board, Malaysia Accounting Standards Board, Bank Negara as well as the updating and review of our internal risk management procedures and policies.

Major efforts were put to drive the ESG initiatives of the Group, and this was led by CFO who is acting as Chairperson of a newly set up Sustainability Steering Committee which oversees the four main segments of Economic, Environment, Social and Governance where each segment would be headed by key management personnel in the Group. One of the main focuses of the year was to conduct proper internal reviews and implementing actions plans in the areas of foreign workers and compliance with minimum housing standards as required by the Human Resource Ministry.

Our Industry 4.0 initiatives have also contributed significantly on the ESG front with one of the activities of hardcopy lot traveller elimination project seeing savings of 8,000 -10,000 pieces of paper per month in year 2023. This is in addition to an improvement in productivity and reduction in labour headcount through improved manning ratio on the machines as part of the automation in the production lines. The deployment of virtual reality technology to reduce human errors, the analysis of indicators using data and predictive maintenance together with elimination of human handling through Automated Guided Vehicles (“AGV”) would complete our first Industry 4.0 pilot line. This would serve as an important evaluation model for us to proliferate to other areas to improve productivity whilst reducing our dependence on manual labour for our operations.

On the Corporate Social Responsibility (“CSR”) front, we participated in a unique ESG centric project to install solar panels in an orang asli village in Perak. Using technology to brighten up the lives of the orang asli, we organized a company wide participation across various departments to install solar powered devices in every household in the village. This provided lights for their household at night where there were none previously, while also providing charging points for their handphones and conserving the environment and saving money for the villages by reducing the use of petrol for generators that were their main source of power earlier.

Forward focuses of ESG include the securing of revenue growth and customer diversification, the implementation of energy efficient equipment and expansion of renewable energy drive, compliance to labour standards and the enhancement of our cyber security and data privacy protection.

Prospects and Outlook for Year 2023

For the technology sector, global electronics demand is expected to slowdown as companies that had invested heavily over the past two years catering to the strong demand phase will see a cooling down effect as the supply side has now pushed the supply-demand equation back to equilibrium. The coordinated efforts of interest rates hike by central banks globally together with the tightening in the labour market is expected to cause a reduction in demand and consumption of goods, and this would in turn lead to more cautious forecasts and spending by corporates. There are also more insourcing tendencies from our customers as internal factories loadings remain low and more companies looking to be self-sufficient as trade tensions in technology among the world superpowers remains high.

For ourselves, we see limited upside for year 2023 in this scenario, coupled with a full year tax impact of expired pioneer status in the sensors segment, the full impact of increased minimum wages and very significant increase of utilities cost posing as very challenging headwinds. As a result of softer revenue (based on customers forecasts) coupled with an increase in cost, we are expecting to see a significant drop in our profitability for year 2023.

We are putting focus on bringing in new revenue streams through the diversification with smaller customers as revenue gap fills while simultaneously working with our existing customers to expand their product portfolio with us and also to accelerate some of the NPI process which would typically take around 9-12 months to shorten the transition time to revenue generation. This would be complimented with a continued focus on productivity increase, stringent cost controls across the Group and value engineering programs to improve the overall revenue and profit projections for year 2023. There is also a need to evaluate Capex investments to upgrade our technology and equipment to preposition for potential new businesses that require more advanced packaging capabilities in the components and modules today to cater to smaller, more energy efficient and cost effective electronic devices.

According to Allied Market Research, the global smart sensor market was valued at USD37.12 billion in year 2019 and is expected to reach USD91.37 billion by year 2027, to register a Compound Annual Growth Rate (“CAGR”) of 14.30% from year 2020 to year 2027 (https://www.alliedmarketresearch. com/smart-sensors-market). Our experience in manufacturing miniaturized sensors would continue to provide a good base to extend applications as smart sensors would continue to be in high demand in areas like automotive, green buildings and consumer electronics in areas like wearable devices.

In terms of opportunities, the US-China and China-Taiwan frictions present opportunities in the form of companies looking to relocate their operations out of the China and Taiwan regions as risk mitigation purposes. There have been enquiries on these potential relocation opportunities and we are engaging and assessing on these prospects to bring additional revenue and product diversification into GTB.