Annual Report 2024

is to be a strategic global partner for successful global companies, providing a full range of integrated manufacturing services.

is to deliver the best in-class manufacturing solutions to step up our customers' manufacturing processes to produce quality products.

CORPORATE PROFILE

Incorporated in Singapore on January 17, 2001, UMS Integration Limited ("UMS") is a one-stop strategic integration partner providing equipment manufacturing and engineering services to Original Equipment Manufacturers of semiconductors and related products. The Group has three core business segments - Semiconductors, Aerospace and Others (mainly Materials Distribution).

The Group's semiconductor business is focused on front-end semiconductor equipment contract manufacturing. It is also involved in complex electromechanical assembly and final testing devices. The products we offer include modular and integration systems for original semiconductor equipment manufacturing.

Through our key subsidiaries - Catalist-listed JEP Holdings Limited and Starke Singapore Pte Ltd, UMS is also in the business of manufacturing high precision aircraft parts for the fast-growing aerospace industry and materials distribution of high quality metals and solutions for a variety of demanding industrial applications.

Headquartered in Singapore, the Group has production facilities in Singapore, Malaysia and California, USA.

UMS was named in the Forbes Best under a Billion list for two consecutive years - 2022 and 2023 - as one of the top-performing

public companies with less than US$1 billion (S$1.38 billion) in yearly sales in the Asia-Pacific region. On October 7, 2022, UMS was also named Runner-Up of the Most Transparent Company Award 2022, Technology Category in the SIAS' Investors Choice Awards 2022.

UMS was also named winner of the prestigious Centurion Club Award 2023.

UMS was added to the MSCI Global Small Cap Index in February 2023.

UMS is a constituent of FTSE ST Singapore Shariah Index since 2018.

UMS is also ranked as one of the top-10 constituents of the MSCI Singapore Investable Market (IMI) Islamic Index in 2025.

The Group changed its name from UMS Holdings Limited to UMS Integration Limited on 5 September 2024 to better reflect the identity and status of the Group following its Secondary Listing, and to distinguish it from similarly named companies in Malaysia. The name change will also strengthen the Group's profile as an integrated comprehensive service provider for global chip companies.

Dear Shareholders,

On behalf of the Board of Directors, we are pleased to present the Annual Report of UMS Integration Limited ("UMS" or "the Group") for the financial year ended 31 December 2024 ("FY2024"). In last year's annual report, I provided the outlook that global semiconductor sector could see some near-term softness due to surplus inventories issues. Our 2024 semiconductor segment sales ended the year 21% lower.

Our Semiconductor Integrated System sales fell 48% and Component sales declined 24% in 1QFY2024, mainly due to the high inventory of one of our key customers. However, our sales resumed quarterly growth since then.

Overall, UMS's semiconductor business recorded a revenue of S$204.6 million, as compared to S$260.0 million in FY2023. In terms of profitability, UMS remained profitable and recorded a net attributable profit of S$40.6 million for FY2024, a 32% decrease from S$60.0 million in FY2023. Despite the lower profits, the Group generated a positive operating cash flow of S$56.4 million and free cash flow of S$24.1 million in FY2024.

As such, we are able to continue the tradition of rewarding our shareholders every quarter. The Board of Directors is therefore pleased to propose a final dividend of TWO (2.0) Singapore cents per share. Subject to shareholders' approval, this will bring the total dividends declared and proposed for FY2024 to 5.2 Singapore cents per share.

Our prospects in FY2025 remain bright as we speed up the production ramp-up for our new customer in our new Penang facilities. The prevailing global air travel boom will continue to lift the performance of our Aerospace business.

Luong Andy

Chairman and Chief Executive Officer

Strategic Diversification

The Group's strategy has always been to widen its customer base and seek opportunities to diversify its business portfolio. The lower off take by our key customer in 2024 underscores the importance of achieving this strategic goal.

In this regard, I am pleased to report that our efforts have yielded good results.

The Group's new 300,000 square feet production facility at Penang Science Park North has commenced volume production for its new customer and expects significant improvement in delivery, supported by strong order flow as production ramps up. The Group is also working on several NPIs (new product introductions) from its new customers as new product families are forecast to rise in the coming months.

Built at a cost of about RM250 million, the new plant is focused on medium and large format products, special processes and modular assembly of products for its new customer. Our strategic intent is to focus on critical products which are difficult to fabricate, requires very high precision and quality standards, i.e. very high barrier of entry to reduce competition.

With the combined production and engineering capabilities of UMS and our subsidiary, Catalist-listed JEP Holdings Limited, we can improve operational synergies and are now in a better position to

further entrench ourselves in the precision engineering industry and offer more integrated value-added engineering services for equipment manufacturers.

Outlook

The semiconductor industry is expected to start 18 new fab construction projects in 2025, according to SEMI's latest quarterly World Fab Forecast report. The new projects include three 200mm and fifteen 300mm facilities, the majority of which are expected to begin operations from 2026 to 2027.

SEMI also reported that the Wafer Fab Equipment segment is forecast to see 2.8% growth in 2025 and to increase 15% to $69.3 billion in 2026, driven by increasing demand for leading- edge technology, the introduction of new device architectures including the transition to gate-all-around (GAA), and increased capacity expansion purchases.

Memory-related capital expenditures are projected to see significant increases through 2026 supported by increasing demand for HBM for AI deployment and ongoing technology migration. NAND equipment sales are expected to witness a 47.8% expansion to $13.7 billion in 2025 and 9.7% growth to $15.1 billion in 2026. Meanwhile, DRAM equipment sales are projected to see robust year - on - year growth of 10.4% and 6.2% in 2025 and 2026, respectively.

According to the Semiconductor Industry Association (SIA), the global semiconductor market which experienced its highest-ever sales year in 2024, topping $600 billion in annual sales for the first time, is forecast to achieve double-digit market growth for 2025. It also added that as semiconductors enable virtually all modern technologies - including medical devices, communications,

defence applications, AI, advanced transportation, and countless others, the long-term industry outlook is "incredibly strong."

Both the Group's two major global semiconductor customers have given positive outlook guidance for 2025, riding on the acceleration of AI investment and demand worldwide.

The aviation industry is also flying high on the wings of the global boom in air travel.

According to IATA, the number of air travellers around the world is expected to surpass five billion for the first time in 2025 as travel becomes increasingly affordable. Total revenues in the industry are set to exceed US$1 trillion for the first time this year, at US$1.007 trillion.

Our prospects in FY2025 remain bright as we speed up the production ramp-up for our new customer in our new Penang facilities. The prevailing global air travel boom will continue to lift the performance of our Aerospace business.

With our strong fundamentals and financial position, we are well-poised to capitalise on these upbeat industry trends to deliver positive returns to shareholders.

We will continue to make investments across our key business segments to support our long-term growth plans while remaining prudent in managing market volatility and business risks.

During the year, we changed our Company name from "UMS Holdings Limited" to "UMS Integration Limited" in connection with our proposed Secondary Listing on Bursa, Malaysia. The aim of the name change was to better reflect the identity and status of the Group following its Secondary Listing, and to distinguish it from similarly named companies in Malaysia. The Group has submitted an application to the Securities Commission Malaysia on 31 December 2024 to seek its approval for, amongst others, the Proposed Secondary Listing.

Appreciation

I would like to express my heartfelt gratitude to our Board members for their invaluable contributions.

I would also like to especially thank Ms. Gwendolyn Gn who will not be seeking re-election at the forthcoming Annual General Meeting, for her support and contribution to the Company over the years.

I would also take the opportunity to convey our deepest appreciation to our management and staff for their contributions and commitment to always rise up to challenges.

Our appreciation also extends to our customers, business partners, associates and shareholders for their continued support and belief in us. I am confident that the solid foundation, strong partnerships and competent team will propel the Group to greater heights.

The Group's results are driven primarily by semiconductor capital equipment spending and related services to support key technology transitions or to increase production volume to meet worldwide demand for semiconductors.

The semiconductor equipment sector has been showing tepid growth in recent years. The overhang from the U.S.-China trade war has also created constraints for our key customer's ability to ship its products to China. This has affected the Group's semiconductor business which recorded a lower revenue of S$204.6 million, as compared to S$260.0 million in FY2023.

The Group's strategy has always been to widen its customer base and seek opportunities to diversify its business portfolio. The lower off take by our key customer in 2024 underscores the importance of achieving this strategic goal.

OPERATIONS REVIEW

Our diversification efforts have yielded good results. The Group's new 300,000 square feet production facility at Penang Science Park North has commenced volume production for its new customer and expects significant improvement in delivery, supported by strong order flow as production ramps up. The Group is also working on several NPIs (new product introductions) from its new customers as new product families are forecast to rise in the coming months.

Built at a cost of about RM250 million, the new plant is focused on medium and large format products, special processes and modular assembly of products for its new customer. Our strategic focus is on critical products which are difficult to fabricate, requires very high precision and quality standards, i.e. very high barrier of entry to lower competition.

To be successful, we need to overcome challenges in manpower. Our Malaysia operation faces severe talent shortage as there are many investments in Penang competing for talent. We are now working on strategies to improve staff retention and factory automation to overcome these challenges.

We have also continued to maximize the synergies arising from the combined production and engineering capabilities of UMS and our subsidiary, JEP. We are now in a better position to further entrench ourselves in the precision engineering industry and offer more integrated value-added engineering services for equipment manufacturers.

Performance of Group subsidiaries and associates

The Group's aerospace segment performed well in FY2024. Sales in this segment rose 16% to S$26.3 million in FY2024 compared to S$22.7 million in FY2023. Profit for this segment also improved substantially, mainly due to higher sales with better margins compared to the previous year.

Sales in the Others segment fell 35% mainly due to weaker material and tooling distribution business which was affected by the general business slowdown.

Kalf Engineering Pte Ltd ("Kalf"), our water and chemical engineering solutions company, did not manage to complete any project in FY2024. The decision to dispose or wind down the business after completing installation and commissioning of current on-hand projects remains unchanged.

UMS Group achieved a net attributable profit of S$40.6 million for the financial year ended 31 December 2024 ("FY2024"), a 32% decline from the net profit of S$60.0 million accomplished in the previous year ended 31 December 2023 ("FY2023").

Revenue

Revenue in FY2024 fell 19% to S$242.1 million from S$299.9 million in FY2023 as sales in the Group's Semiconductor segment and Others segment decreased 21% and 35% respectively. The drop was moderated by a 16% rise in Aerospace sales during the period under review.

Semiconductor Integrated System sales decreased 33% to S$94.4 million in FY2024 from S$140.0 million in FY2023. Revenue from component sales dipped 8% to S$110.2 from S$120.0 million during the same period. The Group's Semiconductor segment revenue fell to S$204.6 million in FY2024, compared to S$260.0 million in FY2023 amid a weakening economic environment.

Apart from Malaysia, sales declined in all the Group's key geographical markets.

Compared to FY2023, revenue in Malaysia surged 97% in FY2024 as orders from the new customer increased while sales in Singapore and US fell 23% and 6% respectively. Both Taiwan and Others reported sales declined 36%.

Profitability

The Group posted lower profit in FY2024.

Net profit before tax declined 32% to S$46.8 million in FY2024 from S$68.5 million in FY2023 while net profit and net attributable profit also fell 32% to S$41.6 million from S$61.2 million and S$40.6 million from S$60.0 million respectively.

The decrease in profit was due to lower revenue as well as higher expenses. Depreciation expenses increased 10% mainly due to fixed asset additions. Other expenses also rose 3% as a result of higher professional fees for the Group's secondary listing in Malaysia, as well as higher property and machinery maintenance costs.

The Group also recorded a reversal from S$0.9 million of Other charges to a credit of $2.6 million. Its bottom line benefitted from higher foreign exchange gain as well as gain on disposal of quoted investments, partially offset by lower gain on disposal of fixed assets and higher inventory provision.

Gross material margin in FY2024 grew to 51.0% from 50.1% in FY2023.

Group Earnings per Share (EPS) softened to 5.74 cents in FY2024 from 8.95 cents in FY2023.

Balance Sheet

Cash and Bank Balances / Bank borrowings

The net increase in cash and cash equivalents by S$34.3 million (after netting-off bank borrowings) was mainly due to proceeds from the Group's share placement in 1Q2024 which raised net cash of $49.9 million and net cash generated from operating activities partially offset by purchase of property, plant and equipment and payment of dividends during the period.

Trade and other receivables

Trade receivables and other current assets increased slightly by S$0.5 million mainly due to higher advance payment to suppliers offset by lower sales in the current year.

Inventories

The decrease in inventories by S$1.6 million was mainly due to lower material purchases as compared to prior year.

Trade and other payables

Trade and other payables decreased by S$10.0 million mainly due to lower purchases as compared to prior year.

Cash Flow and Dividend

The Group continued to generate positive net cash from operating activities in FY2024 although its net cash from operating activities eased to S$56.4 million from S$79.8 million in FY2023 due to lower profits. Free cash flow also fell to S$24.1 million down from S$51.1 million in FY2023 - attributed mainly to increased investment in capex to cater to the needs of its new major customer in FY2024.

During the year, the Group also raised net cash of S$49.9 million via a share placement exercise. The Group also repaid $22.0 million of bank borrowings and paid out $38.4 million in dividends during the period.

In view of the Group's performance and in recognition of shareholders' support, the Board has proposed a final dividend of

1. Singapore cents per ordinary share tax-exempt one-tier) for FY2024. This brings the total dividend proposed and declared to

1. Singapore cents per share which includes dividends already paid out in each preceding quarter from 1Q2024 to 3Q2024.

Proposed Secondary listing in Bursa Malaysia

The Group has submitted an application to the Securities Commission Malaysia on 31 December 2024 to seek its approval for, amongst others, the Proposed Secondary Listing.

The secondary listing will allow the Group to broaden UMS' investor reach and widen its investor base; potentially improve the liquidity of the Company's shares through separate trading platforms; and enable UMS to tap into additional platforms for future fund raising and provide it with the flexibility to access different equity markets to raise funds to support the Group's growth.

Investor Relations

The UMS management places great importance on building good relationships with both local and overseas investors, analysts and media, and keeping them updated on our business strategies, financial performance and operations. Official announcements and press releases are filed on the Singapore Exchange ("SGX"), and updated on our website.

Throughout the year, we actively engaged the investment community by participating in investor days with securities firms, group meetings with local and international analysts and fund managers to keep them abreast of our financial performance and business operations.

UMS was named in the Forbes Best under a Billion list for 2022 and 2023 - as one of the top-performing public companies with less than US$1 billion (S$1.38 billion) in yearly sales in the Asia- Pacific region.

UMS was also a named winner of the prestigious Centurion Club Award 2023.

UMS was added to the MSCI Global Small Cap Index in February 2023.