Founder & Executive Chairman’s Message Print E-mail

ChairmanMessage

FY2017 turned out to be a tale of two halves for Globetronics Technology Bhd. The first half saw us putting the final pieces of the groundwork that we have started since year 2016 to pre-position ourselves for a breakthrough in operational and financial performance as we geared up to transition from our more matured product platforms to the next generation platforms. Perfectly role modelled, led, guided, groomed and motivated by our Group CEO Dato’ HL Heng who singlehandedly and selflessly devoted his complete heart-and-soul plus year-long-7x24-weeks in passionately leading and motivating our whole Group’s workforce and resources whose fired-up and winning spirit led our group to close FY2017 with a record-breaking profit-after-tax in the fourth quarter of the year!!

Our Group started FY2017 with a projected capital expenditure (”CAPEX”) of RM60 million for a set of new sensor components that would be incorporated into new smart devices later on in the year. The end product was then successfully launched when more CAPEX were needed to support the steep ramp to satisfy our customer’s needs. Our Group ended up spending a total of RM107 million in CAPEX for the year in support of the high demand of new sensors components as well as in the ramping up of existing products on top of some expansion in the LED and quartz crystal timing devices. The cumulated investment of RM107 million in CAPEX resulted in a steep volume ramp starting in Q3 2017 followed by a further surge in volumes from the sensors segment going into Q4 2017 which contributed to our Group’s significant improvement in financial performance for Year 2017, with revenues of RM305 million and a net profit of RM51.1 million, representing approximately 41% and 99% increase respectively over FY2016 numbers. Dividend payouts to shareholders totalled RM45.4 million for FY2017 which translates into approximately 89% of the net profit for the year. Year-end cash-flow position remained healthy at RM116 million partly supported by USD12 million of revolving credit facilities in part-financing of the Group’s huge CAPEX expansion plan. Our Group also successfully applied for and received approval from MIDA for an extension of Pioneer Status (tax free holiday) to our Group’s Sensors Division (GMSB) for another 5 years till 30 June 2022!

FY2017 was also a successful year for our Corporate Planning and Finance teams which have done an impeccable job in their continuous research, education and seamless applications towards ensuring compliance to a host of revamped statutory disclosure and reporting requirements set by Bursa Malaysia, Securities Commission, Companies Commission of Malaysia, Inland Revenue Board, Malaysian Accounting Standards Board, Bank Negara, etc.

On top of all these, intense activities and road-shows in enhancing investors relations and communications were carried out by our Group CFO together with our Corporate Director who trotted the globe making more than 50 road-shows and presentations to Fund Managers mostly in Asia Pacific with local and foreign institutional shareholders, thus delivering a much healthier balance of foreign institutional shareholders increasing from 9.3% last year to 14.4% this year while witnessing our Group’s market capitalization rising from RM1 billion last year to RM1.9 billion this year.

Organizationally, our Group have also made great strides in enhancing and solidifying our Group’s Business Sustainability and Corporate Governance (”CG”) drives with a holistic approach aligned to the global international standards on Environmental, Social and Governance (”ESG”) fronts -- as further elaborated in our Sustainability and Corporate Governance Overview Statements as well as a separate CG Report disclosed to Bursa Malaysia and published in Globetronics Technology Bhd’s website upon the submission of this annual report to Bursa Malaysia. Just as important, our Group continued to make excellent progress in developing and grooming various levels of succession candidates in the Leadership, Technical, Human Resources and Business Sustainability paths including the readiness of our Group’s CEO/COO succession-candidate. Each of our Group’s three (3) Product Divisions is now fully managed by two (2) hands-on and well-exposed Business/Operations Directors.

At this juncture, it is imperative for me on behalf of our Board of Directors, Management and Staff to convey our highest levels of respect, gratitude & appreciation to our passionate and dedicated CEO in leading and motivating our entire group of fully committed and well aligned workforce towards delivering such a set of stellar results in FY2017! By the same token, our Management team would like to convey our heartfelt gratitude and sincerest appreciation to each of our Board members for their meticulous guidance, timely support and invaluable motivation provided to our Management team in bringing the very best out of our Group through all these past years.

Last but not least, on behalf of Globetronics Technology Bhd and our group of companies I would like to thank each and everyone of our shareholders and stakeholders for your unfailing support and encouragement all through our Group’s exciting journey over the past years.

Financials / Dividends

In spite of the record high CAPEX-spending of RM107 million in FY2017, we continued to hold firm to our belief and philosophy of always rewarding our shareholders with the highest amount of dividends that our Group’s cash-flow position would allow. Over three tranches of dividend payments, RM45.4 million was distributed to our shareholders which amounted to 89% of our net profit for FY2017:

  1. First interim and special dividend of 5 sen per share amounting to RM14.1 million on 29 March 2017;
  2. Year 2016’s single tier final and special dividend of 5 sen per share amounting to RM14.2 million on 4 July 2017; and
  3. Second interim and special dividend of 6 sen per share amounting to RM17.1 million on 21 November 2017.

Dividend2017

Environment / Social / Governance Initiatives

Since Globetronics’ inception nearly 26 years ago, our Group have always held firm to our strong commitment of striving to be a good corporate citizen and a valuable asset in any communities and countries in which we operate in. In our Group’s pro-activeness towards achieving excellence in our ESG fronts, we focus on benchmarking or modelling our applications after the best of global standards especially along key focus areas of environmental protection, conservation of natural resources, corporate social responsibilities (“CSR”) that spread and share love and protection for all humans and lives on earth.

Details of our Group’s passionate adoptions and applications of ESG drives are further discussed and elaborated in the following sections under Sustainability Statement in pages 20 to 25 and Corporate Governance Overview Statements in pages 30 to 33 of this report.

Initiatives

Prospects and Outlook

The advent of Internet-of-Things ("IoT"), which connect a whole new set of devices to the cloud via the sensors on the ground to servers in the cloud, as enabling technology, has transformed individual lives and enterprise technologies in our world like never before.

According to Gartner report dated January 2017, 8.4 billion connected things will be in use worldwide in 2017, up 31 percent from 2016, and will reach 20.4 billion by year 2020. Total spending on endpoints and services will reach almost $2 trillion in 2017:

IoT

Latest technologies like virtual reality ("VR"), artificial intelligence ("AI"), augmented reality ("AR"), autonomous vechicles, drones, advanced medical/ health probe sensors, etc are all part and parcel connected to and under the umbrella of IoT. At the end of Year-2017 our world's population has reached 7.6 billion people which would mean that on average there would be 1.1 connected devices for each person on earth and it is now estimated that by year 2020, this ratio of connected devices per person in the world be 2.5 times more!

Since the key product/component platforms that our Group engage in are in sensors, timing devices as well as LEDs, they are all necessary and integral parts of the products/components in IoT-products. It thus goes without saying that the above mentioned speed of  growth of IoT/connected devices is great news to the technology industry that we participate in. While this is fantastic news and outstanding prospects for the technology industry, there is a flip side to this "speed of growth" which is the "speed of change" that comes into the picture at the same time. In our market place today this change is often times caused by what our industry termed as "market cannibalization" which essentially means that a company's sales performance of its existing and related products are "cannibalized" by the sales and demand of a new product entirely.

Closer to home, our Group had just come out of the last quarter (Q4) of FY2017 with a set of highly respectable top and bottom-line results. Just when we were all excited and charged up to continue on the volume-raping momentum of Q4 2017 through to the second half (2H) of FY2018 in which another set of new generation products would be ready for our expected second half 2H FY2018 changeover, came the news of a "pre-matured-changeover" in one of our existing-high-volume-runners to its next generation replacement, resulting in an unexpected short-term-gap in our Group's strong business performance from March to May of FY2018.

It is fair though to point out here that our Group and our world renowned customers have encountered and successfully sailed through many similar cycles of market-demand-swings like the one mentioned above since our Group's inception, and we are confident that with the many new products/components that are being readied for our Group's 2H 2018 launch, we can look forward optimistically that the 2H 2018 may see the repeat of our strong 2H 2017 business performance while at that same time, another set of new customers/product platforms are being developed as our Group's diversification strategy that should come to fruition in late FY2018 or early FY2019 timeframe.