Letter to Shareholders

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.

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 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 leadingedge 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.