Management Discussion and Analysis – Performance Review DAGANG NeXCHANGE BERHAD 70 GROUP FINANCIAL REVIEW Information Technology While revenue from our IT segment remained stable during FY2023, the division’s bottom line was impacted by gaps in cost efficiencies. Under the leadership of our new Group Chief Operating Officer, significant attention has been directed over the past year towards addressing these gaps and fostering greater internal synergies to bolster our financial resilience. With Dagang Net and SealNet both offering comparable trade facilitation services to the public and private sectors, respectively, we have initiated efforts to consolidate our B2G and B2B operations to enhance efficiencies and unlock synergies. While this consolidation is expected to be completed by the end of 2024, Dagang Net has already taken proactive efforts to reduce costs, achieving a reduction in external fees by RM3 million during FY2023. Concurrently, in conjunction with the consolidation exercise, we have established a new IT Strategy and Transformation Department to spearhead the procurement of large-scale IT projects that harnesses the combined expertise and resources of Dagang Net, SealNet and IAC. REVENUE RM291.2 million EBITDA RM56.6 million OPERATING PROFIT RM22.1 million Overview of Financial Position Notwithstanding our FY2023 financial results, the Group has upheld our consistent track record of delivering a positive operating cash flow and remains in a healthy financial position to progress towards our growth ambitions. Our total assets have increased marginally to RM4,641.9 million, with cash and cash equivalents standing at RM670.0 million. Through careful management of our loans and borrowings, which saw a slight contraction to RM297.4 million, we have maintained a healthy gearing ratio of 0.2 times, providing adequate financial leverage for our ongoing diversification and expansion initiatives. Meanwhile, our net assets per share have dipped from RM0.74 in the past financial year to RM0.69, while our losses during FY2023 resulted in a net loss per share of 3.80 sen. Capital Management The Group remains steadfast in its commitment to investing in the business to foster growth while maintaining a careful balance to ensure adequate resources are allocated to support both stability and expansion. Our primary focus remains on reinforcing financial governance and discipline, alongside the continuous development of our human capital to empower them in driving our ambitious goals forward. Our total capital expenditure for FY2023 amounted to RM809.2 million. Major investments undertaken during the year included the 20% expansion of our manufacturing capacity at SilTerra, alongside funding for Ping’s development activities at the Anasuria and Avalon oil fields. In FY2023, our focus was on reinvesting in innovation and the Group’s growth prospects, laying a strong foundation for the future. While dividends were not distributed, this strategic approach has positioned us for continued success and value creation. Future dividend payouts will remain guided by our Dividend Policy, under which dividends of up to 50% of net profits attributable to shareholders may be distributed, provided that our reinvestment commitments for sustainable growth take precedence and the Group maintains a robust cash position. Challenges To Performance and Risk Mitigation The Group is dedicated to embracing a prudent and calculated strategy in our expansion endeavours, leveraging past experiences to navigate future challenges more effectively. Internally, we are spearheading a transformation initiative aimed at identifying and rectifying competency gaps to strengthen both our financial and operational foundations. In our Technology segment, the expansion of our portfolio into emerging technologies is paving the way for significant revenue opportunities once our MEMS and silicon photonics products complete testing and qualification with global customers. This additional revenue stream will serve as a crucial buffer against potential downturns in semiconductor demand. Moreover, the segment has maintained a diversified
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