ANNUAL REPORT 2022
Corporate About Us Milestones Datasonic Group Berhad is one of the most prominent security-based ICT solutions providers in Malaysia with excellent track record in mission critical national projects. We pledge to continue to strengthen our core competencies and enhance our capabilities in our pursuit to create maximum values for our customers by providing excellent solutions and services. In this journey without boundaries, we aspire to enrich people’s lives through creative and innovative ICT solutions. • 1999 – 2011: MyKad Personalisation System for the National Registration Department of Malaysia • 2011: Data Centre and Helpdesk for the Immigration Department of Malaysia • 2013: Passport System for the Immigration Department of Malaysia • 2014: Integrated Security and Surveillance System for the Penang State Government • 2015: Passport Chips for the Immigration Department of Malaysia • 2016: Passport Booklets for the Immigration Department of Malaysia • 2018: Public Key Infrastructure, Public Key Directory and Autogates • 2019: Malaysia Automated Clearance System (MACS) • 2021: Facial Live Capture (FLC) Image System for the Immigration Department of Malaysia What We Do ISSUANCE • Identity Card • Passport Booklet • Financial Cards SOLUTIONS • Government • Financial • Security and Surveillance • Cloud-Based System • Big Data Analytics • Telecommunications
Annual Report 2022 01 Our Our Our Vision Mission Strategies To enrich life through creative and innovative Information and Communication Technology solutions. To focus on our customers’ challenges and needs by providing excellent solutions and services in order to consistently create maximum values for customers. To provide advanced, innovative and high quality products and services to customers to meet or exceed their expectations in the fast-changing Information and Communication Technology market by way of extensive Research and Development activities. To customise and deliver integrated solutions and services to maximise investment returns to customers. To continuously conduct in-depth Research and Development for the improvement and invention of innovative and leading edge technologies to stay ahead of the global competition. To recognise, develop and retain our most valuable human capital and to nurture a conducive environment for their success. To develop strong distribution channels and marketing network to increase and widen our market penetration via our resellers and strategic partners in Malaysia and overseas. Scan this QR Code for more information.
Datasonic Group Berhad 02 Datasonic share price performance and volume traded for the period from 1 July 2021 to 1 July 2022 RM0.600 Highest price (18 May 2022) RM0.395 Lowest price (02 December 2021) 112,103,300 Shares Highest volume traded (15 April 2022) 575,300 Shares Lowest volume traded (24 December 2021) 0.550 0.500 0.450 0.400 100M 50M 0M Aug 21 Jul 21 Sep 21 Oct 21 Nov 21 Dec 21 Jan 22 Feb 22 Mar 22 Apr 22 May 22 Jun 22 Jul 22 Price Volume
Annual Report 2022 03 Inside This Report Annual General Meeting 14th 22 Management Discussion & Analysis 18 Chairman’s Statement Fully Virtual Basis SS E Solutions Sdn Bhd via Securities Services e-Portal’s platform at https://sshsb.net.my Wednesday, 14 September 2022 10:00 a.m. About Us 01 About Us 01 Vision and Mission 02 Share Price Performance 04 Financial Highlights 05 Corporate Structure 06 Corporate Information Leadership 08 Directors’ Profile 14 Key Senior Management’s Profile Perspective 18 Chairman’s Statement 22 Management Discussion & Analysis Sustainability 29 Sustainability Statement Governance 46 Corporate Governance Overview Statement 66 Audit Committee Report 73 Statement on Risk Management and Internal Control 80 Additional Compliance Information 82 Directors’ Responsibilities Statement Financial Statements 84 Directors’ Report 90 Statement by Directors 90 Statutory Declaration 91 Independent Auditors’ Report 97 Statements of Financial Position 99 Statements of Profit or Loss and Other Comprehensive Income 101 Statements of Changes in Equity 104 Statements of Cash Flows 106 Notes to the Financial Statements Other Information 183 List of Properties 186 Statistics of Shareholdings and Warrantholdings 192 Notice of Fourteenth Annual General Meeting * Form of Proxy * Personal Data Protection Notice/ Notis Perlindungan Data Peribadi
RM136.43 million Revenue RM10.22 million Profit After Tax (PAT) RM28.69 million Earnings Before Interest, Taxes Depreciation and Amortisation (EBITDA) Included Other Income, excluded Interest Income 0.36 sen Earnings Per Share (EPS) Based on weighted average 2.87 billion of ordinary shares Earnings Before Interest, Taxes Depreciation and Amortisation (EBITDA) (RM million) 2022 2021 2020 28.69 27.03 92.94 Revenue (RM million) 2022 2021 2020 136.43 138.41 247.54 Profit After Tax (PAT) (RM million) 2022 2021 2020 10.22 7.28 60.37 Earnings Per Share (EPS) (sen) 2022 2021 2020 0.36 0.28 2.24 Datasonic Group Berhad 04 Financial Highlights
Annual Report 2022 05 ABOUT US LEADERSHIP PERSPECTIVE SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS Other Information Corporate Structure DATASONIC CORPORATION SDN BHD (Registration No. 198001009852 (63636-X)) Personalisation of smart cards DATASONIC TECHNOLOGIES SDN BHD (Registration No. 199101009313 (219626-X)) Customisation of software and hardware solutions, project management and consultancy DATASONIC SMART SOLUTIONS SDN BHD (Registration No. 200401009261 (647764-K)) Research and development and technical consultancy services DATASONIC MANUFACTURING SDN BHD (Registration No. 199701003312 (418808-K)) Manufacturing of electrical integrated circuit cards or commonly known as smart cards and its related products 100% 100% 100% 100% DATASONIC INNOVATION SDN BHD (Registration No. 201401026924 (1103014-X)) Provision of biometrics solution 100% DATASONIC DIGITAL SDN BHD (Registration No. 201501031952 (1157276-P)) Dormant 100% DATASONIC GRID SDN BHD (Registration No. 201901043506 (1352836-K)) Dormant 25% 100% PT DATASONIC TEKNOLOGI INDONESIA (Registration No. 4017092031103223) Personalisation of smart cards 99% 1% DATASONIC INTERNATIONAL SDN BHD (Registration No. 201601034314 (1205255-U)) Dormant 100% AMALAN FOKUS SDN BHD (Registration No. 201501031947 (1157271-K)) Dormant 100% MEDICLOUD MALAYSIA SDN BHD (Registration No. 20170122145 (1236311-W)) Dormant 100% DATASONIC NEW ZEALAND LIMITED (Registration No. 5489621) Software development services and computer systems design and related activities 100% DATASONIC DIGENT SDN BHD (Registration No. 201901038405 (1347735-U)) Dormant 60% DATASONIC BUSINESS TECHNOLOGIES PHILIPPINES INC. (Registration No. CS201914539) Dormant 39.99% (Registration No. 200801008472 (809759-X)) Investment holding and provision of management services CONSTANT AHEAD SDN BHD (Registration No. 200401017791 (656294-M)) Dormant
Datasonic Group Berhad 06 Corporate Information BOARD OF DIRECTORS General Tun (Dr) Mohamed Hashim bin Mohd Ali (Rtd) Independent Non-Executive Chairman Dato’ Wan Mohd Safiain bin Wan Hasan Independent Non-Executive Deputy Chairman Encik Wan Zalizan bin Wan Jusoh Managing Director Mr Chia Kok Khuang Deputy Managing Director Encik Safian bin Mohd Yunus Executive Director Dato’ Sri Sharifuddin bin Ab Ghani Independent Non-Executive Director Dato’ Wan Ibrahim bin Wan Ahmad Independent Non-Executive Director Dato’ Ibrahim bin Abdullah Independent Non-Executive Director Mr Yee Kim Shing @ Yew Kim Sing Independent Non-Executive Director Cik Noor Suhaila binti Saad Independent Non-Executive Director Encik Azrul bin Yahaya Non-Independent Non-Executive Director AUDIT COMMITTEE Mr Yee Kim Shing @ Yew Kim Sing Chairman Independent Non-Executive Director Dato’ Wan Mohd Safiain bin Wan Hasan Member Independent Non-Executive Deputy Chairman Dato’ Wan Ibrahim bin Wan Ahmad Member Independent Non-Executive Director Encik Azrul bin Yahaya Member Non-Independent Non-Executive Director NOMINATION AND REMUNERATION COMMITTEE Dato’ Sri Sharifuddin bin Ab Ghani Chairman Independent Non-Executive Director Dato’ Ibrahim bin Abdullah Member Independent Non-Executive Director Cik Noor Suhaila binti Saad Member Independent Non-Executive Director RISK MANAGEMENT COMMITTEE Dato’ Wan Mohd Safiain bin Wan Hasan Chairman Independent Non-Executive Deputy Chairman Dato’ Sri Sharifuddin bin Ab Ghani Member Independent Non-Executive Director Cik Noor Suhaila binti Saad Member Independent Non-Executive Director
Annual Report 2022 07 ABOUT US LEADERSHIP PERSPECTIVE SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS Other Information EMPLOYEES’ SHARE OPTION SCHEME COMMITTEE Encik Wan Zalizan bin Wan Jusoh Chairman Managing Director Mr Chia Kok Khuang Member Deputy Managing Director Encik Safian bin Mohd Yunus Member Executive Director Dato’ Wan Ibrahim bin Wan Ahmad Member Independent Non-Executive Director Puan Talya Zholeikha binti Abu Hanifah Member Executive Vice President, Human Capital Development COMPANY SECRETARY Niu Chew Wei (MAICSA 7022900) (SSM Practising Certificate Registration No. 202008001346) HEAD OFFICE Level 6, Bangunan Setia 1 No. 15, Lorong Dungun Damansara Heights 50490 Kuala Lumpur Tel No. : (603) 2632 9699 Fax No. : (603) 2011 3560 Website : www.datasonic.com.my REGISTERED OFFICE Level 6, Bangunan Setia 1 No. 15, Lorong Dungun Damansara Heights 50490 Kuala Lumpur Tel No. : (603) 2632 9699 Fax No. : (603) 2011 3560 REPORTING ACCOUNTANTS AND AUDITORS Crowe Malaysia PLT 201906000005 (LLP0018817-LCA) & AF 1018 Level 16, Tower C Megan Avenue II 12, Jalan Yap Kwan Seng 50450 Kuala Lumpur Tel No. : (603) 2788 9999 Fax No. : (603) 2788 9998 SHARE REGISTRAR Securities Services (Holdings) Sdn Bhd Registration No. 197701005827 (36869T) Level 7, Menara Milenium Jalan Damanlela Pusat Bandar Damansara Damansara Heights 50490 Kuala Lumpur Tel No. : (603) 2084 9000 Fax No. : (603) 2094 9940/(603) 2095 0292 STOCK EXCHANGE LISTING Listed on the Main Market of Bursa Malaysia Securities Berhad on 3 September 2012 Stock Name/Code : DSONIC/5216 Stock Sector : Technology Stock Sub-Sector : Digital Services INVESTOR RELATIONS Capital Front Sdn Bhd (Registration No. 199601007634 (379980-U)) Email : info@capitalfront.biz PRINCIPAL BANKER AmBank Islamic Berhad (Registration No. 199401009897 (295576-U)) 24th Floor, Bangunan AmBank Group No. 55, Jalan Raja Chulan 50200 Kuala Lumpur Tel No. : (603) 2036 2633 Fax No. : (603) 2072 4360 Corporate Information
Datasonic Group Berhad 08 Directors’ Profile General Tun (Dr) Mohamed Hashim bin Mohd Ali (Rtd) Independent Non-Executive Chairman General Tun (Dr) Mohamed Hashim bin Mohd Ali (Rtd) holds a Diploma in Advanced Business Management from Harvard Business School. He was conferred an honorary doctorate by the University of Salford, United Kingdom, in 1999 and an honorary doctorate by the National Defence University of Malaysia in October 2012. Prior to his entry into the corporate world, General Tun (Dr) Mohamed Hashim was the Chief of Defence Forces of the Malaysian Armed Forces where he chalked up 40 years of dedicated service. During his tenure at the Malaysian Armed Forces, he had initiated the reorganisation and modernisation of the Army. He is the Chairman of Fusang Exchange Ltd and he also sits on the Board of the Institute of Strategic and International Studies (ISIS Malaysia) – a Malaysian think tank responsible for formulating policies and conducting research for national and international issues. Nationality / Age: Malaysian / 87 Gender: Male Date of Appointment: 27 June 2011 Length of Service: 11 years
Annual Report 2022 09 ABOUT US LEADERSHIP PERSPECTIVE SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS Other Information Managing Director and Chairman of Employees’ Share Option Scheme Committee Directors’ Profile Dato’ Wan Mohd Safiain bin Wan Hasan was appointed Deputy Chairman of the Company on 29 November 2013. He holds a Diploma in Business Administration from the Cambridge International University, United States. He began his career in 1974 as a Government Security Officer, and held this position till 1986, while working with the Malaysian Ministry of Home Affairs and the Prime Minister’s Department. In 1986, he assumed the position of Deputy Chief Government Security Officer of the Prime Minister’s Department and was promoted to Chief Government Security Officer in 1996. He was responsible for providing advisory on protective security measures to the Federal Government ministries and departments and also at the state level. He retired from civil service in December 2002 and joined PQM Consultancy and Management Services Sdn Bhd as Chief Executive Officer (2003-2006). He was also responsible for overseeing the collaboration of training programmes between the Government of New South Wales, Australia, and the Open University of Malaysia. He also held the position of the Honorary Member of the Royal Council of Terengganu (2006-2009) and the Comptroller of the Royal Household, Istana Negara (2006-2008). He holds directorships in several private limited companies and does not hold any directorship in other public companies and listed companies. Encik Wan Zalizan bin Wan Jusoh holds a Bachelor of Science in Business Administration, majoring in Finance, from the University of Nebraska-Lincoln, United States of America, and a Diploma in Banking Studies from Universiti Teknologi MARA, Malaysia. Encik Wan Zalizan was previously Chief Executive of Menteri Besar Incorporated (Terengganu) and also served as Group Chief Executive Officer of Terengganu Incorporated Sdn Bhd (TI) from 2015 to 2016. Prior to joining the Terengganu state investment arm, he was attached to Export-Import Bank Malaysia Berhad (Exim Bank) as Chief Operating Officer from 2012 to 2015. Encik Wan Zalizan has a long standing career with Maybank Group, and held various managerial positions, including senior leadership, from 1994 until 2011. He does not hold any directorship in other public companies and listed companies. 76 Years Old 52 Years Old Date of Appointment: 27 June 2011 Length of Service: 11 years Date of Appointment: 24 February 2021 Length of Service : 1 year Independent Non-Executive Deputy Chairman, Chairman of the Risk Management Committee and member of the Audit Committee Dato’ Wan Mohd Safiain bin Wan Hasan Encik Wan Zalizan bin Wan Jusoh
Datasonic Group Berhad 10 Encik Safian bin Mohd Yunus Executive Director and member of Employees’ Share Option Scheme Committee Directors’ Profile Mr Chia Kok Khuang holds a Bachelor of Science in Microelectronics from Campbell University, North Carolina, United States of America, and an Advanced Diploma in Science of Microelectronics from Tunku Abdul Rahman College. Mr Chia has ventured into a broad range of engineering and software realms throughout his 18 years of career development. His extensive experience in design and development covers a broad range, including system, application, board and chip. Mr Chia works alongside the executive team of the most established Identity Document and Solutions Company of this region. He specialises in security and identity technology and is responsible for leading the R&D department on design and development of solutions related to identity management, border control, deep learning, biometric technologies, etc. He does not hold any directorship in other public companies and listed companies. Encik Safian bin Mohd Yunus graduated with a Diploma in Information Technology from SAL Group of Colleges, Malaysia. He began his career as Development Engineer with Team Partner Group, France in 2000 after which he joined Ivoli Sdn Bhd as a Technology Consultant where he led the implementation of key projects and operations and maintenance of networks for both international and local companies, such as MCI Worldcom, Sprint Corporation and Jaring. In addition, his involvement in planning TPMNet network migration activities has provided him with the skills and experience of working in a high pressure environment early on in his career. In 2012, Encik Safian became the Executive Director of Ridds and Partner Sdn Bhd, a business consulting firm, which he established to provide corporate and strategic business advisory services focusing on small and medium enterprises. The services include starting up new business ventures, business expansion and taxation consultancy as well as business turnaround, acquisition and divestment activities. With his expertise and business acumen, he joined Jasamerin Energy Ventures Sdn Bhd, a 51% subsidiary incorporated by Marine and General Berhad (formerly known as Silk Holdings Berhad) in 2017 as Business Development Director. His primary role and function is to explore opportunities in the oil and gas sector and strengthen the company’s financial position to become a leader in the upstream oil and gas industry. He does not hold any directorship in other public companies and listed companies. 44 Years Old 47 Years Old Date of Appointment: 29 March 2021 Length of Service: 1 year Date of Appointment: 29 March 2021 Length of Service: 1 year Mr Chia Kok Khuang Deputy Managing Director and member of Employees’ Share Option Scheme Committee
Annual Report 2022 11 ABOUT US LEADERSHIP PERSPECTIVE SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS Other Information Dato’ Wan Ibrahim bin Wan Ahmad Independent Non-Executive Director, Chairman of the Nomination and Remuneration Committee and member of the Risk Management Committee Directors’ Profile Dato’ Sri Sharifuddin bin Ab Ghani holds a Master of Human Resources Management from Universiti Utara Malaysia and a Diploma in Police Science from Universiti Kebangsaan Malaysia. He was formerly with the Royal Malaysia Police for a period of 40 years and retired as the Commissioner of Police Pahang in April 2017. During his tenure at the Royal Malaysia Police, he served in various positions including the Assistant Commissioner of Police, Temerloh, and Deputy Superintendent of Police “Pasukan Gerakan Khas”, Bukit Aman. He is an Independent Non-Executive Director of Pasdec Holdings Berhad. Dato’ Wan Ibrahim bin Wan Ahmad graduated from University of Malaya in 1972 with a Bachelor of Arts (Hons). He began his career in the Ministry of Information as an Assistant Secretary in 1972 before assuming the position of Assistant Administrator of Hospital University in University of Malaya in 1976, Principal Assistant Secretary of the Education Service Commission in 1978, Deputy Director of the Public Service Department in 1985 and Deputy Director General of the National Anti-Drug Agency from 1997 to 2001. From 2002 to 2003, he was appointed Director General of the National Anti-Drugs Agency (“NADA”). In 2003, he was promoted as the Director General of the National Registration Department (NRD). He retired from the civil service in 2005 and was appointed Advisor to Cito Holdings Sdn Bhd and Dibena Enterprise Sdn Bhd. He does not hold any directorship in other public companies and listed companies. 65 Years Old 72 Years Old Date of Appointment: 5 February 2020 Length of Service: 2 years Date of Appointment: 27 June 2011 Length of Service: 11 years Dato’ Sri Sharifuddin bin Ab Ghani Independent Non-Executive Director and member of the Audit Committee and Employees’ Share Option Scheme Committee
Datasonic Group Berhad 12 Mr Yee Kim Shing @ Yew Kim Sing Directors’ Profile Independent Non-Executive Director and member of the Nomination and Remuneration Committee Independent Non-Executive Director and Chairman of the Audit Committee Dato’ Ibrahim bin Abdullah graduated from the National University of Malaysia (UKM) in 1981 with a Bachelor of Arts (Geography). He joined the Public Service as an Assistant Secretary at the Ministry of Home Affairs in December 1981 and held various positions at the Ministry of Home Affairs, the Prime Minister’s Department, JAKIM, Langkawi District, and the Immigration Department of Malaysia. His last position was as the Deputy Director General of the Immigration Department until June 2017. He does not hold any directorship in other public companies and listed companies. Mr Yee Kim Shing graduated from the University of Melbourne in 1960 with a Bachelor of Commerce. He is a member of the Malaysian Institute of Accountants (MIA), the Institute of Chartered Accountants Australia and the Institute of Certified Public Accountants of Singapore. He was a practising accountant for more than 26 years and retired as a senior partner at Ernst & Whinney (now known as Ernst & Young) in 1990. He is an Independent Non-Executive Director and Chairman of the Audit Committee of Pacific & Orient Berhad. 65 Years Old 84 Years Old Date of Appointment: 5 February 2020 Length of Service: 2 years Date of Appointment: 27 June 2011 Length of Service: 11 years Dato’ Ibrahim bin Abdullah
Annual Report 2022 13 ABOUT US LEADERSHIP PERSPECTIVE SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS Other Information Encik Azrul bin Yahaya Cik Noor Suhaila binti Saad Directors’ Profile ADDITIONAL INFORMATION ON THE BOARD OF DIRECTORS Family Relationship with any Director and/or Major Shareholder None of the Directors have family relationship with any other Directors and/or Major Shareholders of the Company. Conflict of Interest None of the Directors have any conflict of interest with the Company. Independent Non-Executive Director, member of the Nomination and Remuneration Committee and Risk Management Committee Non-Independent Non-Executive Director and member of the Audit Committee Cik Noor Suhaila binti Saad holds a Master of Law (LLM) from University of Malaya and a Bachelor of Law from the National University of Malaysia (UKM). An accomplished lawyer with over 23 years of experience in the legal field and business, she also runs her own firm. Her expertise ranges from land matters, property and conveyancing to intellectual property, corporate, commercial and banking law. Complimenting her skills and expertise, she is also a registered trademark agent, notary public and commissioner for oaths and holds various key positions in a number of private companies in Malaysia. She does not hold any directorship in other public companies and listed companies. Encik Azrul bin Yahaya graduated with a Diploma in Investment Analysis and a Bachelor of Business Administration (Hons) Islamic Banking from Universiti Teknologi MARA. He is currently the Head of Operations of Urusharta Jamaah Sdn Bhd (“UJ”). He is a part of UJ pioneer team that is responsible for the operations of asset under management worth over RM8.5 billion. He is also a member of the Management Executive Committee (MEC) of UJ. He has vast experience in the financial industry specialising in investment operations, treasury, performance measurement, portfolio valuation, financial system implementation, data analysis and reporting. He spent the early years of his career in several foreign and local financial companies in various capacities. His more than decade-long career has seen him transformed into a technology savvy leader who has involved in many digitalisation initiatives, such as Robotic Process Automation (“RPA”), data analytics, systems integration and many more that have helped reduce business costs and improve business processes and efficiency. Prior to joining UJ, he was the Head of Client Experience and Investment Operations Manager of Hong Leong Asset Management. Prior to that, he worked with the Royal Bank of Canada Investor & Treasury Services as the Fund Accounting Manager serving the Dublin region. He does not hold any directorship in other public companies and listed companies. 48 Years Old 35 Years Old Date of Appointment: 5 February 2020 Length of Service: 2 years Date of Appointment: 31 May 2021 Length of Service: 1 year Conviction for Offences (within the past five (5) years, other than traffic offences) None of the Directors have any conviction for offences (other than traffic offence, if any) and have not been imposed of any public sanction or penalty by the relevant regulatory bodies during the financial year. Number of Board Meetings attended in the financial year ended 31 March 2022 The details of the Directors’ attendance at Board meetings are set out on page 55 of the Annual Report.
Datasonic Group Berhad 14 Key Senior Management’s Profile Mr Chia Kok Khuang holds a Bachelor of Science in Microelectronics from Campbell University, North Carolina, United States of America, and an Advanced Diploma in Science of Microelectronics from Tunku Abdul Rahman College. Mr Chia has ventured into a broad range of engineering and software realms throughout his 18 years of career development. His extensive experience in design and development covers system, application, board and chip. Mr Chia works alongside the Encik Wan Zalizan bin Wan Jusoh holds a Bachelor of Science in Business Administration, majoring in Finance from the University of NebraskaLincoln, United States of America, and a Diploma in Banking Studies from Universiti Teknologi MARA, Malaysia. Encik Wan Zalizan was previously Chief Executive of Menteri Besar Incorporated (Terengganu) and also served as Group Chief Executive Officer of Terengganu Incorporated Sdn Bhd (TI) from 2015 to 2016. Prior to joining the Terengganu state investment arm, he was attached to the Export-Import Bank Malaysia Berhad (Exim Bank) as Chief Operating Officer from 2012 to 2015. Encik Wan Zalizan has a long standing career with Maybank Group, and held various managerial positions, including senior leadership, from 1994 until 2011. He does not hold any directorship in other public companies and listed companies. executive team of the most established Identity Document and Solutions Company of this region. He specialises in security and identity technology and is responsible for leading the R&D department on design and development of solutions related to identity management, border control, deep learning, biometric technologies, etc. He does not hold any directorship in other public companies and listed companies. 52 Years Old Date of Appointment: 24 February 2021 Length of Service: 1 year 44 Years Old Date of Appointment: 29 March 2021 Length of Service: 1 year Mr Chia Kok Khuang Deputy Managing Director of Datasonic Group Berhad and Director of subsidiaries Encik Wan Zalizan bin Wan Jusoh Managing Director of Datasonic Group Berhad and Director of subsidiaries
Annual Report 2022 15 ABOUT US LEADERSHIP PERSPECTIVE SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS Other Information Key Senior Management’s Profile Datuk Haji Ab Hamid bin Mohamad Hanipah began his career as a government security officer in 1978 and left the civil service as Deputy Director General of Chief Government Security Office (CGSO), Prime Minister’s Department, in April 2014. He attended several management and security courses at the Royal Institute of Public Administration (RIPA) in London, INTAN Kuala Lumpur and special branch school. He has contributed vastly in the development of Information and Communications Technology (ICT) Encik Safian bin Mohd Yunus graduated with a Diploma in Information Technology from SAL Group of Colleges, Malaysia. He began his career as Development Engineer with Team Partner Group, France, in 2000 after which he joined Ivoli Sdn Bhd as a Technology Consultant where he led the implementation of key projects and operations and maintenance of networks for both international and local companies, such as MCI Worldcom, Sprint Corporation and Jaring. In addition, his involvement in planning TPMNet network migration activities has provided him with the skills and experience of working in a high pressure environment early on in his career. In 2012, Encik Safian became the Executive Director of Ridds and Partner Sdn Bhd, a business consulting firm, which he established to provide corporate and strategic business advisory services focusing on small and medium enterprises. The services include starting up new business ventures, business expansion and taxation consultancy as well as business turnaround, acquisition and divestment activities. With his expertise and business acumen, he joined Jasamerin Energy Ventures Sdn Bhd, a 51% subsidiary incorporated by Marine and General Berhad (formerly known as Silk Holdings Berhad) in 2017 as Business Development Director. His primary role and function is to explore opportunities in the oil and gas sector and strengthen the company’s financial position to become a leader in the upstream oil and gas industry. He does not hold any directorship in other public companies and listed companies. Security Policy and protective security covering training, directives of ICT Security and formulating manual Malaysian Public Sector Management of Information and Communications Technology Handbook (MyMis). He headed the security team during the planning and construction of government complexes in Putrajaya. He is a Director at Safe Shield Security Sdn Bhd. He does not hold any directorship in other public companies and listed companies. 47 Years Old 68 Years Old Date of Appointment: 29 March 2021 Date of Appointment: 1 June 2014 Length of Service: 1 year Length of Service: 8 years Encik Safian bin Mohd Yunus Executive Director of Datasonic Group Berhad and Director of subsidiaries Datuk Haji Ab Hamid bin Mohamad Hanipah Director of Datasonic Technologies Sdn Bhd
Datasonic Group Berhad 16 Key Senior Management’s Profile Mr Chew Chi Hong is the Group’s Chief Corporate Officer. He graduated from the University of Hertfordshire, United Kingdom, in 1999, with a Bachelor of Arts, majoring in Marketing. He has more than 20 years of working experience in the Information and Communications Technology (ICT) industry in semiconductors and smart card technology. His career spans a wide portfolio from sales and marketing, corporate planning and strategic development to operations management. Encik Md Diah bin Ramli graduated from Institut Teknologi MARA in 1983 with a Diploma in Applied Science majoring in Planting Industry and Management. He attended the Cranfield Global CEO Programme at Cranfield University School of Management, Bedfordshire, UK, and is a member of the Cranfield University Alumni. He began his career as a Plantation Assistant Manager at Harrisson Malaysian Plantation Berhad in 1983. Subsequently, he joined FELCRA Settlers Cooperatives in 1985 as a Project and Marketing Assistant Manager. In 1992, he joined Dibena Enterprise Sdn Bhd in Sales and Marketing, and he was promoted to Senior Manager in 2004. He has vast experience through his involvement in various business and management portfolio within the Group. In 2005, he was appointed Executive Director of Dibena Enterprise Sdn Bhd, the promoter and substantial shareholder of Datasonic Group. He was a Director of Datasonic Group from 2011 until 2019. Currently, he is a Director of Datasonic Technologies Sdn Bhd, a wholly owned subsidiary company of the Group. He does not hold any directorship in other public companies and listed companies. He joined Datasonic as Senior Manager in Corporate Planning and Strategic Development in 2006 and was subsequently promoted to Chief Operating Officer in 2007. His responsibilities include overseeing the Group’s strategic planning, corporate exercises and overall operations of Datasonic Group of Companies. He does not hold any directorship in other public companies and listed companies. 61 Years Old 45 Years Old Date of Appointment: 17 January 2008 Date of Appointment: 15 February 2006 Length of Service: 14 years Length of Service: 16 years Encik Md Diah bin Ramli Director of Datasonic Technologies Sdn Bhd Mr Chew Chi Hong Chief Corporate Officer
Annual Report 2022 17 ABOUT US LEADERSHIP PERSPECTIVE SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS Other Information Key Senior Management’s Profile Puan Norreen binti Mohd Salim joined Datasonic as Chief Internal Auditor on 11 November 2012. She graduated from Universiti Utara Malaysia in 2006 with a Bachelor of Accountancy. She is an Associate Member of the Institute of Internal Auditors Malaysia (“IIAM”) and a Chartered Accountant of the Malaysian Institute of Accountants (“MIA”). She has more than 15 years’ experience in internal audit and risk-based advisory services. She began her career in 2006 at Ernst & Young under Risk Advisory Unit for more than six (6) years. During her employment with Ernst & Young, she has performed and led various risk-based advisory services to clients in various industries, including internal audit, risk Madam Chuah Huei Jiun joined Datasonic as Assistant Financial Controller of Datasonic Group on 1 December 2011 and was subsequently appointed Chief Financial Officer on 1 March 2013. She is a fellow member of the Association of Chartered Certified Accountants (ACCA) (UK), and a member of the Malaysian Institute of Accountants (MIA). She started her career in 2001 at a public accounting firm. She has extensive experience in statutory audits of public listed companies and private limited companies in various industries, financial due diligence on merger and acquisition exercises, bonds issuances and corporate exercises for a Main Market listed company and reverse takeover of a ACE Market listed company. She does not hold any directorship in other public companies and listed companies. management, due diligence and entitylevel controls review, investigative audits, quality assurance review on internal audit functions, review and development of policies and procedures, development of financial control framework and Sarbanes Oxley 404. She is leading the internal audit function to provide independent and objective assurance on the adequacy and effectiveness of the internal control system, risk management and governance processes of Datasonic Group. She does not hold any directorship in other public companies and listed companies. 39 Years Old 43 Years Old Date of Appointment: 11 November 2012 Date of Appointment: 1 December 2011 Length of Service: 10 years Length of Service: 11 years ADDITIONAL INFORMATION ON THE KEY SENIOR MANAGEMENT Family Relationship with any Director and/or Major Shareholder None of the Key Senior Management has family relationship with any other Directors and/or Major Shareholders of the Company. Conflict of Interest None of the Key Senior Management has any conflict of interest with the Company. Conviction for Offences (within the past five (5) years, other than traffic offences) None of the Key Senior Management has any conviction for offences (other than traffic offence, if any) and has not been imposed of any public sanction or penalty by the relevant regulatory bodies during the financial year. Puan Norreen binti Mohd Salim Chief Internal Auditor Madam Chuah Huei Jiun Chief Financial Officer
Datasonic Group Berhad 18 Chairman’s Statement Dear Valued Shareholders, On behalf of the Board of Directors, it is my pleasure to present to you the Annual Report of Datasonic Group Berhad (“Datasonic”) for the financial year ended 31 March 2022. GENERAL TUN (DR) MOHAMED HASHIM BIN MOHD ALI (RTD) Independent NonExecutive Chairman
Annual Report 2022 19 ABOUT US LEADERSHIP PERSPECTIVE SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS Other Information Chairman’s Statement INDUSTRY OVERVIEW Governments and businesses were better prepared as they entered the second year of the Coronavirus disease (“COVID-19”) pandemic. Despite new variants such as Delta and Omicron throwing a curveball, the global economy recorded commendable growth with the continued rollouts of stimulus packages. The International Monetary Fund (“IMF”) estimated the world economy to grow by 5.9% in 2021 as compared to a contraction of 3.3% in 2020. Back home, Malaysia managed to achieve good momentum in the first half of the year despite the imposition of the second movement control order (“MCO 2.0”) in the early months. However, the introduction of the full MCO (“FMCO”) in the second half of 2021 had a greater bearing on the health of the local economy. Among the restrictions imposed were international and interstate travel bans, closure of non-essential services, limited operating hours, and workforce constraints. Collectively, these have adversely affected businesses nationwide. In response, having understood the businesses and rakyat’s concerns on livelihood, the Government put in place the National Recovery Plan (“NRP”) as an exit strategy from the crisis. This, together with the successful National COVID-19 Immunisation Programme, has put our country back on course for recovery. As a result, Malaysia’s gross domestic product (“GDP”) expanded 3.1% in 2021 versus a contraction of 5.6% in 2020, according to Bank Negara Malaysia (“BNM”). BUSINESS AND FINANCIAL HIGHLIGHTS It was an onerous year for us at Datasonic as we had to navigate through the arduous business operating landscape once again. The situation was exacerbated by the spill over effects of the pandemic, which led to supply chain disruptions, rising raw materials and commodity prices, and labour and raw material shortages. In turn, this further added to the market uncertainties and making it more challenging to manoeuvre around. On a positive note, Datasonic was well-prepared for the said challenges, as our comprehensive business continuity plan (“BCP”) was already in place from the year before and our team was better-prepared to address the situation. Throughout the various MCOs enforced, we are delighted to share that there were no major disruptions to our business and manufacturing facilities. Datasonic continued to be fully compliant with the Standard Operating Procedures (“SOPs”) imposed by the authorities. This drove our profit attributable to the owners of the Company (“net profit”) to RM10.2 million in FY2022 from RM7.3 million a year ago. FY2022 Profit After Tax RM10,225 million FY2022 Earnings Per Share 0.36 Sen
Datasonic Group Berhad 20 Chairman’s Statement Furthermore, we managed to win several contracts in FY2022 despite the tough conditions, which is a testament to the team’s capabilities and track record. All in all, our business fundamentals remained largely intact with all the measures in place alongside prudent management and strict cost discipline. The various MCOs introduced in the financial year under review had impacted our financial performance, as the demand for smart cards and its consumables were affected. Nevertheless, the orders for MyKad and passport recovered very strongly especially in the fourth quarter (“4QFY2022”) of FY2022 and enabled us to close the financial year on a stronger note. This drove our profit attributable to the owners of the Company (“net profit”) to RM10.2 million in FY2022 from RM7.3 million a year ago. On the other hand, revenue in the financial year under review stayed relatively stable on a YoY basis at RM136.4 million. In tandem with our improved performance and long track record of rewarding our shareholders consistently since our listing in 2012, we declared a total dividend of 0.6 sen per share in FY2022, amounting to RM17.2 million. This works out to a dividend payout ratio of 168.6% based on FY2022 net profit. For more detailed analysis of our financial performance, please refer to the Management Discussion and Analysis section of this Annual Report. HUMAN CAPITAL DEVELOPMENT AND RESEARCH AND DEVELOPMENT (“R&D”) Human capital will always be the most valuable asset for Datasonic. Talent plays an instrumental role in growing our business and driving our R&D where our in-house R&D team has developed most of our customised systems and solutions. Therefore, Datasonic has been continuously investing in our talent and R&D regardless of the pandemic. By doing this, it would enable us to preserve and boost our competitive edge and remain as one of the most prominent security-related integrated information and communications technology (“ICT”) solutions providers in Malaysia. We have a robust human capital strategy that involves the hiring, retaining and upskilling of the right talents who are aligned with Datasonic’s culture and goals. In FY2022, we conducted employee engagement activities to gain insights in order to strengthen our human capital development while taking into account our employees’ input. It is also important to point out that there were no retrenchment or salary deductions in FY2022 due to the pandemic. Every year, Datasonic continues to make new breakthroughs in our R&D. Last year, we developed a new generation of e-gates with facial recognition and enhanced multimodal biometric solution with improved efficiency and processes. We are proud to share that these new e-gates have been successfully deployed to the Immigration Department of Malaysia’s checkpoints. As the digital transformation journey gains further traction, our efforts on the design architecture and the revamp of existing processes to digitalise the processes and procedures to adapt to the changing needs and demands have accelerated as well. Datasonic aims to develop more integrated and highsecurity products and solution services for the market that we serve and also potential markets while continuously delivering exceptional quality and delivery services to our customers. SUSTAINABILITY AGENDA Sustainability is core to us at Datasonic, as it is important for us to take into account of the Environmental, Social and Governance (“ESG”) considerations in building a longterm sustainable business. Our business and operational approach must take into account these considerations and adapt and/or change accordingly in order to deliver longterm value to our stakeholders, as we want the actions taken today to build a better tomorrow. We have been channelling more efforts in our sustainability initiatives with the objective of continuous improvement every year. Datasonic has successfully developed several new internal guidelines, which would further improve our ESG initiatives and compliance. Despite this, we are not resting on our laurels and are exploring more ways to enhance ourselves. In the financial year under review, we continued to exercise our corporate social responsibility (“CSR”) and contributed to the local communities. There were a series of donations to charitable causes, which included monetary contribution to registered non-profit retirement and underprivileged homes, school donation drive, and national sports agenda, among others. For more in-depth elaboration on this, kindly refer to the Sustainability Statement section of this Annual Report.
Annual Report 2022 21 ABOUT US LEADERSHIP PERSPECTIVE SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS Other Information Chairman’s Statement LOOKING AHEAD Moving forward, while we anticipate the economic situation to remain challenging, we are keeping an upbeat view on our prospects. The recovery of the Malaysian economy is expected to gain further momentum. BNM has forecasted a GDP growth of 5.3% to 6.3% for 2022 supported by expansion in global demand and higher private-sector expenditure. More importantly, Datasonic is poised to benefit from the reopening of borders given that we are the total solution provider of passports to the Immigration Department of Malaysia. We want to serve our country with pride and continue providing exceptional quality with timely delivery services to avoid any interruptions. Datasonic has been preparing in anticipation to meet the strong demand for passports. At the same time, we foresee the orders for Malaysia National ID (“MyKad”) and its consumables to bounce back firmly in line with the economic recovery. Separately, with international travel gradually returning to normalcy, our business development team has been travelling overseas to meet with existing and potential partners/customers to scale our business. The pandemic has hindered some of our plans and we are now putting everything back on track. On digital transformation, we continue to see vast opportunities for Datasonic given our technical expertise, established track record, and ongoing R&D efforts. As the pandemic gradually makes its way into our rear-view mirror, we expect the digitalisation revolution to accelerate at a faster pace, which augurs well for us. In closing, we are delighted that the worst is behind us and the outlook ahead looks bright for Datasonic. Our focal point continues to be on the smooth delivery with exceptional quality of all our projects and enhancing value for all our stakeholders. Barring any unforeseen circumstances, we are looking forward to a much better year in FY2023. APPRECIATION On behalf of the Board, I would like to extend my heartfelt appreciation to our management and staff for their commitment, hard work and contribution to Datasonic, especially during these demanding times. A huge thank you to all our stakeholders, including but not limited to our customers, business partners, bankers, and suppliers for their unwavering support to Datasonic. To our shareholders, my deepest gratitude goes to you for your patience throughout the difficult period, and for your confidence in us as we continue to grow our business. Next, I wish to welcome our new Board member who joined us in FY2022. Datasonic is pleased to have Encik Azrul Bin Yahaya with us as our Independent Non-Executive Director. He brings with him valuable expertise and experience in the financial industry and digitalisation, which we are confident will contribute positively to the Group. Last but not least, I would like to acknowledge my fellow Board members for their continuous support and wise counsel throughout the year. I have no doubt that our management team, under the leadership of the Board, will steer Datasonic to greater heights as a much brighter future awaits us. General Tun (Dr) Mohamed Hashim bin Mohd Ali (Rtd) Independent Non-Executive Chairman Moving forward, while we anticipate the economic situation to remain challenging, we are keeping an upbeat view on our prospects.
Datasonic Group Berhad 22 Management Discussion & Analysis Like the rest of the world, Datasonic experienced its fair share of breakthroughs and challenges throughout the financial year ended 31 March 2022 (“FY2022”), yet positive developments outweighed the negatives. Early signs of healthy recovery were apparent as the team delivered improved results in the fourth quarter (“4QFY2022”) of FY2022. This brought FY2022 profit attributable to the owners of the Company (“net profit”) to RM10.2 million, on the back of RM136.4 million revenue. More excitingly, this has set us up nicely for an exciting FY2023, where the reopening of borders and our country’s transition to endemicity would propel Datasonic to a better position and greater financial performance. BUSINESS REVIEW The operating environment has been taxing as the world continued to grapple with the effects of the COVID-19 pandemic. The health crisis turned into an economic crisis that has been and continued to be detrimental to many businesses worldwide. Likewise, Datasonic has not been spared by the impact arising from the various forms of movement control orders (“MCO”) implemented to curb the pandemic. The third MCO (“MCO 3.0”) and the Full MCO (“FMCO”) brought many industries and businesses to a halt. This led to the temporary closure and shortened working hours at Government agencies, which affected the demand for Malaysia National ID (“MyKad”) and its consumables as well as passport issuance to the public. This was just a temporary setback for Datasonic, as the orders for smart cards have begun to recover towards the end of FY2022, in line with the economic recovery. The Coronavirus disease (“COVID-19”) continued to dominate headlines in 2021 as the world entered into the second year of the pandemic. The world began 2021 on a better footing and higher optimism as global inoculation campaigns sparked hopes of a return to pre-COVID-19 normalcy, but enthusiasm subsided over the course of the year as new variants, geopolitical tensions, and supply chain woes popped up. Nonetheless, signs of economic recovery were still present, albeit at an uneven pace. WAN ZALIZAN BIN WAN JUSOH Dear Esteemed Shareholders,
Annual Report 2022 23 ABOUT US LEADERSHIP PERSPECTIVE SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS Other Information Management Discussion & Analysis On a more positive note, we saw significant pent-up demand for passports as we progressed further into the second half of our FY2022, in tandem with the relaxation of international travel restrictions. Previously, the deliveries of passports were at a much slower rate, as there was no urgency for renewal of passports due to international border restrictions. In the financial year under review, Datasonic completed the delivery of several e-gate projects. We had in March 2021 completed the deployment of 16 e-gates with our own in-house developed facial recognition system to Immigration Department of Malaysia at the Malaysia-Singapore entry/exit points, which is part of the Malaysia Automatic Clearance System (“MACS”) project. Subsequently, Datasonic received a contract extension for the supply of additional six (6) units of e-gates for the MACS project, which was successfully completed by our core R&D, technical and engineering team in November 2021. Following the successful delivery of the abovementioned projects, we have further received a Figure 1: E-gates with facial recognition system at Malaysia-Singapore entry/exit points at Bangunan Sultan Iskandar 1-year contract for the expansion of MACS under the MACS Xp project with additional 20 units of e-gates to be installed at the Immigration Office of Bangunan Sultan Iskandar, Johor. Over at the Custom, Immigration and Quarantine (“CIQ”) Complex at Desaru, Johor, we have also completed the deployment of additional four (4) lanes of our new generation of bidirectional e-gates with facial recognition system in FY2022. Apart from the aforementioned contract, Datasonic has also secured several other projects in FY2022. In June 2021, we clinched a RM39.8 million contract for the comprehensive technical and maintenance services of MyKad’s card personalisation centres at the National Registration Department for a duration of 24 months. More importantly, Datasonic had in November 2021, secured letters of extensions from the Ministry of Home Affairs for the supply of the Malaysian Passport Chips, Passport Documents and Polycarbonate Biodata Pages for a period of 24 months commencing from 1 December 2021 to 30 November 2023. The remaining value of the contract is approximately RM280.0 million at the point of announcement.
Datasonic Group Berhad 24 Management Discussion & Analysis Datasonic takes pride that we have been the sole provider of passport solutions to the Immigration Department of Malaysia since 2016 with an excellent track record. We are grateful for the continuous trust given to us by the Government and will continue to leverage on our expertise, technical know-how and experience to provide exceptional and timely delivery services as we play our part in our country’s national security. Separately, early this year, we have won a RM50.1 million job for the supply of MyKad, MyTentera, MyPOCA raw cards and consumables to National Registration Department for a duration of 12 months and another RM22.5 million contract to provide the services of design, print, supply and deliver of various security documents for a period of 36 months. These wins brought our outstanding order book to RM435 million as at 31 March 2022, providing Datasonic with clear earnings visibility for the coming years. Despite the challenging operating landscape, we remain laser-focused on our research and development (“R&D”) and continuously invest in it. R&D is deeply ingrained in Datasonic, as it enables us to remain at the forefront of our industry while maintaining and enhancing our competitive edges. We are proud that most of our systems and solutions were developed in-house by our more than 100 highly capable R&D and technical staff. Plus, being a past winner of the prestigious Malaysia Cyber Security Company of the Year keeps us motivated to drive greater innovation at Datasonic. In FY2022, Datasonic’s R&D continued to take new steps forward in the innovation front. We have been developing the Electronic Know Your Customer (“eKYC”) system by leveraging on our highly capable inhouse R&D capabilities to test and replicate real industrial demand. We see ample opportunity in this area, which is in line with the acceleration of digital transformation adoption worldwide including Malaysia. Order Book Value RM435 million as at 31 March 2022 Selected System / Solution Developed In-House Strong R&D with Own Patented Solutions Proprietary Smart Card Operating System (with one of the highest certification in the industry) Centralised and Decentralised Smart Card Issuance System ICAO-compliant e-Passport Solutions and Application Systems Financial Instant Issuance (FII) Credit Card Issuance System Automated Multimodal Biometric Border Control System (Facial, Fingerprint, Iris / Eye Recognition) Figure 2: Selected system/solutions developed in-house by Datasonic
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