WITH OPPORTUNITY COMES COMPLEXITY In December 2022, I assumed the role of Executive Chairman of DNeX, bringing with me the experience and knowledge I had gained from my two years as Group Managing Director. While I retain oversight and influence over the day-to-day operations of the Group, my responsibilities are now more high-level in nature – including spearheading our long-term strategic direction, forging international partnerships and maintaining strong stakeholder relationships. This change in role came at a time of great transformation for the Group. After being a prominent but locally focused player primarily focused on the IT market, we had ventured into the burgeoning semiconductor industry with the acquisition of a 60 per cent stake in SilTerra Malaysia Sdn Bhd (“SilTerra”) while increasing our stake in Ping Petroleum Limited (“Ping”) to 90 per cent, marking our entry as a majority owner into the UK energy market. These breakthrough developments unleashed new possibilities for the Group and duly contributed to a remarkable improvement in our financial performance in FY2022. However, they also placed us squarely in the unforgiving geopolitical and macroeconomic nexus, exposing us to a wider range of risks that have added complexity to our operating environment. During FY2023, these risks had a material effect on our performance as a business, and nowhere was this more apparent than in our Technology division. With SilTerra serving a 100 per cent overseas client base, the Russia-Ukraine conflict and US-China trade war exacerbated supply chain disruptions and created uncertainty in the market, negatively affecting performance. Moreover, the technology downcycle – evidenced by reduced demand for personal computers (“PCs”) and smartphones – drove the division’s revenue further downwards. Our Energy division, meanwhile, suffered a regulatory shock due to the UK government’s decision to implement an Energy Profits Levy (“EPL”) on the exceptional profits of oil and gas players. This resulted in an additional deferred tax liability of RM143.2 million, significantly affecting the division’s annual profitability and altering its prospects moving forward. Having transitioned from being a local to a global player, we accept that these downside impacts are part and parcel of our business – they are necessary risks that come with the opportunity that our widened, multi-sectoral reach provides us. However, it is also clear that in order to thrive amidst our new circumstances, we must embrace new ways of doing business; approaches that minimise risk, drive agility to capture emerging opportunities and empower our people to be drivers of positive change. I am proud to say that our journey on this front is progressing strongly, and throughout the rest of this statement I shall delve deeper into what we are doing to position DNeX for long-term prosperity. I am proud to say that our journey on this front is progressing strongly, and throughout the rest of this statement I shall delve deeper into what we are doing to position DNeX for long-term prosperity. STRATEGICALLY DIVERSIFYING OUR PORTFOLIO With our widened presence exposing us to a wider range of industry-specific risks, we are strategically diversifying our portfolio by investing in emerging opportunities with considerable growth potential. In our Technology division, we continue to see the benefits of our foresighted foray into micro-electromechanical system (“MEMS”) technologies and Silicon Photonics (“SiPh”), which are emerging technologies that command higher average selling prices and offer greater profit margins. These leadingedge technologies boast vast applications in emerging sectors such as electric vehicles (“EVs”) and high-performance computing (“HPC”), positioning us to capitalise on global digital transformation and the shift to low-carbon transport. Presently, we are undergoing product testing and qualification with new customers in these fields, with our efforts to capture this exciting opportunity supported by an expansion of SilTerra’s capacity. Meanwhile, in response to the UK’s new energy tax regime, we pivoted to focus on the opportunities presented in Malaysia’s upstream oil and gas sector. Leveraging our strong reputation as a safe and environmentally responsible operator, Ping secured three Production Sharing Contracts (“PSC”) with PETRONAS under the Malaysia Bid Round 2022 (“MBR 2022”) – for the Meranti Cluster, A Cluster and Abu Cluster. While these fields will take time and considerable investment to develop and monetise, they offer strong upside potential and, most importantly, enable us to focus our business within a more favourable market that is oriented towards growth in the oil and gas sector. Integrated Report 2023 05
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