Annual Report 2023 43 MANAGEMENT DISCUSSION & ANALYSIS Customer Concentration Risk Given our reliance on contracts secured from government agencies, the loss of a major customer or contract without securing new customers to offset the loss would have significant adverse effects on our business. Nevertheless, as a leader in the industry, Datasonic has a strong track record of delivering products and services in a timely manner and possess extensive technical knowledge in providing effective ICT solutions. By prioritising customer satisfaction, we have gained a competitive edge over our peers and successfully retained our customers. Furthermore, we are constantly exploring new business prospects and opportunities that align with our business strategies and core competencies, particularly in the area of digital transformation, to enhance our revenue stream. Operational Disruptions We are dependent on our operations including our manufacturing facilities to run smoothly and efficiently as any disruptions may have an adverse impact on Datasonic’s performance. As part of our mitigation efforts, we have taken up insurance policies to provide adequate coverage against the risk of fire, burglary and personal accidents for our workers. However, there are external business risks that are beyond our control such as natural disasters, pandemics, riots and general strikes that may materially and negatively affect our operations. PROSPECTS FOR FY2024 The new financial year ahead (FY2024) is anticipated to remain challenging on the back of heightened market ambiguities arising from ongoing macroeconomic issues and global economic growth is forecasted to moderate in 2023. Back home, while Bank Negara Malaysia (“BNM”) is projecting the gross domestic product (“GDP”) growth to slow down, it is still expecting a growth of 4.5% in 2023 as compared to the high growth base of 8.7% in 2022. At Datasonic, we remain steadfast in the execution of our strategic plans with prudent management despite the headwinds. We have identified several pockets of growth that we can leverage on to further grow our business. Demand for Passports Remains on an Upwards Trend Given that there are high number of passports that have already expired or with less than six (6) months validity from expiration, the demand for passports is anticipated to remain on an upwards trajectory. Datasonic has enhanced our capacity and capabilities to ensure uninterrupted, timely and quality delivery to our client and public. On a related note, we will be gradually ramping up the production of our in-house manufacturing of polycarbonate data page and growing the number of Malaysian passports that is 100% made in Malaysia. ANTICIPATED OR KNOWN RISKS Competition Risk and Ability to Secure New Projects As one of the leaders in the information and communication technology (“ICT”) solution and e-government services industry, Datasonic faces ongoing competition. This is due in part to the fact that much of our revenue is derived from contractual arrangements, which necessitate competitive bidding processes to secure or extend contracts with clients. To continously overcome this challenge, we have developed core competencies that enable us to provide world-class integrated solutions and excellent service at competitive rates. This approach has allowed us to consistently maximise value for our customers, expand our product and solutions portfolio and gain greater market share. Simultaneously, Datasonic consistently strengthens our position in the industry through human capital development and ongoing R&D to drive innovation. *changed FYE from 31 Dec to 31 Mar Dividend Per Share (Sen) Dividend (RM mln) 5.0 9.5 2.0 2.0 3.0 3.0 1.1 0.6 17.2 56.7 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 21.2 40.2 33.8 54.0 54.0 40.5 27.0 23.6 4.5 4.0 4.0 2.5
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