Datasonic Group Berhad Annual Report 2021

DATASONIC GROUP BERHAD 24 Notwithstanding the arduous conditions, we are delighted to share that we have secured a few projects in FY2021. One of them includes the contract extension for Malaysia Automated Clearance System (“MACS”) of foreigner e-gates with facial recognition system at the Malaysia-Singapore entry / exit point to Jabatan Imigresen Malaysia (“JIM”). The project was successfully delivered last year with completion of deployment of 16 Foreigner MACS e-Gates to JIM and in early February 2021, we have received contract extension for the supply of additional six (6) units of e-gate for the said project. Furthermore, the Group had also received the award for the supply, installation, commissioning, technical and maintenance support services with one (1) year warranty period for additional four (4) lanes of bidirectional e-gate with facial recognition system at Custom, Immigration and Quarantine (“CIQ”) Complex at Desaru, Johor for JIM, which we would be completing the deployment by the third quarter of 2021. In addition to the above, despite the MCOs, the Group has continued to render our services to provide hardware and software maintenance services for e-gates, Public Key Infrastructure and Public Key Directory as part of our obligatory role and deliverables in our passport contract. As at 31 March 2021, our outstanding order book stood at RM411 million, which would last for the upcoming three (3) to five (5) years. It is noteworthy to point out that more than 35% of our total contracts on hand remain outstanding. Meanwhile, we are also in the midst of streamlining our production process and obtaining the Intergraf certification for our manufacturing plant in Petaling Jaya. Intergraf is the trade association promoting and protecting the interests of the printing industry. The Group has made additional investments into this facility to enhance site readiness and acquired new machineries and system in order to produce polycarbonate components locally in Malaysia. As a result, wewill be able to carry out in-house production of the polycarbonate data page materials required for the manufacturing of MyKad and passport. This will enable us to benefit from cost savings, improvement in production efficiency with shorter lead time, reduction in dependency over external vendors as well as lowered risk on exposure to foreign exchange. Ultimately, this will further establish ourselves as a prominent security- related ICT solutions provider. We are pleased to share that both our manufacturing plants in Petaling Jaya and Klang continued to operate as usual during the subsequent versions of the MCOs; including the second and third MCO (“MCO 2.0” and “MCO 3.0”). The Group undertook extra precautionary measures to safeguard all our employees and ensure our operation continue to run smoothly and uninterrupted. BUSINESS REVIEW Despite the adequate contingency plans and precautionary measures undertaken, our businesswas negatively affected by the movement restrictions and border closures due to the pandemic. The deliveries of passports had been kept at a much slower rate inevitably, as there was no urgency in passport renewal as a result of the international travel restrictions. Compounded by the temporary closure and shortened working hours of Government agencies, orders for MyKad were also significantly reduced. Nevertheless, we see this as a temporary setback as the issuance and renewal of these documents are still required in the future. MANAGEMENT DISCUSSION & ANALYSIS Figure 2 - Datasonic’s in-house designed e-gate with facial recognition system at Malaysia / Singapore entry / exit point