Datasonic Group Berhad Annual Report 2020

4. RISKS RELATING TOOUR BUSINESS AND INDUSTRY The key anticipated or known risks that the Group is exposed to are as follows:- 4.1 Dependency on our major customers A significant portion of our revenues continue to be derived from KDN contracts, specifically from the supply and/or personalisation of theMalaysian e-Passports for JIMand/orMyKad (national identity card) for JPN. Key downside risks include contract discontinuation and fluctuations in orders. Toreducedependencyon thesecustomers/products/services,wehaveexplorednewbusinessopportunities from other sources/avenues/solutions that are related to ICT solutions and are aligned with our business direction. One of the strategies to develop our business is to explore for business opportunities overseas. So far, we have already established our office presence in Jakarta, Indonesia, which started generating revenues since FY19. We have also announced our JV agreements in collaboration with partners identified in the Philippines and theRepublic of Nigeria. However, we have yet to establish physical office operations in the Philippines and the Nigeria, as commitment to do so will be determined only upon the successful bidding of project(s), both of which remain pending and/or in the very early stages of business development and have yet to commence operations. 4.2 Competition with other market players Competition continues to remain inevitable, especially from other market players. To mitigate this risk, we will continue to embark on our core competencies and strategies to deliver highest level of services at competitive costs i.e. to provide integrated system and solutions to maximise the value and returns to our existing customers. This is intended to build our customers’ confidence based on core competencies to improve on public delivery services besides enabling Datasonic to achieve greater market penetration through expansion of our portfolio to include other government ministries or agencies as well as non- governmental sectors in Malaysia, as well as expansion of our business overseas. For Datasonic to reinforce its leading position in the market, it is crucial that we retain our competitive advantage. Hence, we continue to invest in R&D and human capital to create highly secured, integrated and innovative ICT solutions.We have also participated in various tenders, held engagement sessionswith various stakeholders for safeguarding of our business and considered numerous investments in innovative technologies to widen our product/solution offerings, which include but not limited to the following: • Cloud solutions for expanding e-Health; • The joint development of the next generation biometric applications, in collaboration with Digent; • Explore solar business; and • Develop/invest in other technologies Management Discussion & Analysis (Cont’d) DATASONIC GROUP BERHAD I ANNUAL REPORT 2020 (Registration No. 200801008472 (809759-X)) 30