Operations Review

The year under review underscores the Group's resilience and competence in managing market risks while pursuing diversified growth trajectories that provide sustainable long-term value to shareholders. The Group continues its efforts to strengthen its vertical integration capabilities and enhance its production capacities. These initiatives help to cement our position as a strategic manufacturing partner to our customers.

Review on Business Segments

Semiconductor

The Group's semiconductor business remains the core activity of the Group. Our main strategic thrusts were all focused on this segment.

The semiconductor business comprises of two key segments - components and integrated systems.

For the year under review, the major revenue driver was its components sales. Revenue from components sales climbed 10% from S$110.2 million in FY2024 to S$121.2 million in FY2025, reflecting increased demand from both our existing and new key customers. Semiconductor Integrated System sales dipped 1% to S$93.5 million in FY2025 from S$94.4 million in FY2024. However, quarterly momentum improved in 4QFY2025, signaling strengthening customer demand.

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

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.

The Group also invested heavily to upgrade the manufacturing capabilities of other Group companies. The Group's capital investments demonstrate the foresight and commitment to enhance its capabilities to enable it to capture new opportunities in the global market's transition to smaller, more complex threedimensional devices and packages and support its key customers' growth strategies.

The Group invested more than S$155 million in the last four years to expand its manufacturing capabilities to get ready for the expected production ramp up for its key customers.

The Group continues to face challenges in manpower. Our Malaysia operation continues to face talent shortage even though the severity has improved as compared to last year. We continue to make efforts to improve staff retention and factory automation to overcome these challenges. We will be introducing an employee share plan to help improve staff recruitment and retention.

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

Aerospace

The Aerospace segment experienced some softness in FY2025 due to delivery timing adjustments. Revenue in its Aerospace segment declined 7% from S$26.3 million in FY2024 to S$24.6 million in FY2025.

However, global air travel demand continues to strengthen, and industry forecasts project record passenger volumes in 2026. According to IATA, the number of air travelers is expected to rise 4.4% to 5.2 billion in 2026 with passenger loads reaching an all-time high. In the Asia-Pacific - the largest market globally - passenger load factors are projected to reach another record of 84.4% despite a slower recovery in international traffic.

We remain confident in the medium-term recovery trajectory of this segment.

Others

Revenue in its Others segment grew 4% from S$11.2 million in FY2024 to S$11.7 million in FY2025, mainly due to revenue recognition of several completed projects under the Group's water treatment company Kalf Engineering Pte Ltd ("Kalf").

Kalf has received several orders during the year. It has also secured the partnership of several industry players who are willing to collaborate on the projects and fund the project working capital. We are evaluating the merits of the arrangement and has put on hold the decision to wind down the business.

Our material stockist Starke Singapore performed satisfactorily during the year. On 2 March 2026, the Group acquired the remaining 30% of the issued and paid-up share capital of Starke. Following completion of the acquisition, Starke became a wholly owned subsidiary of the Group.

Financial Review

UMS Group achieved a net attributable profit of S$41.6 million for the financial year ended 31 December 2025 ("FY2025"), a 2% increase from the net profit of S$40.6 million accomplished in the previous year ended 31 December 2024 ("FY2024").

Revenue

Revenue in FY2025 improved 4% to S$251.1 million from S$242.1 million in FY2024 as sales in the Group's Semiconductor segment and Others segment grew 5% and 4% respectively. The increase was moderated by a 7% decline in Aerospace sales during the period under review.

Semiconductor Integrated System sales dipped 1% to S$93.5 million in FY2025 from S$94.4 million in FY2024. Revenue from component sales climbed 10% from S$110.2 million in FY2024 to S$121.2 million in FY2025.

Apart from Singapore and the USA, sales improved in all the Group's key geographical markets.

Compared to FY2024, revenue in Malaysia surged 91% in FY2025 on more orders from the new key customer while sales in Taiwan and Others leapt 10% and 40% respectively. Both Singapore and US reported sales decline of 4% and 21% respectively.

Profitability

The Group posted higher profits in FY2025. Net profit before tax rose 7% to S$50.3 million in FY2025 from S$46.8 million in FY2024 while net profit edged up 5% to S$43.6 million from S$41.6 million in FY2024.

The Group's profitability benefitted from lower expenses and better margins as its gross material margin in FY2025 rose to 54% from 51% in FY2024 mainly due to a change in product mix as well as lower expenses.

The Group's bottom line was however affected by a loss of S$2.4 million on Other Credits/Charges - from a gain of S$2.6 million last year. This decline is mainly due to the swing from an exchange gain of S$3 million to an exchange loss of S$0.7 million in 2025, S$1.2 million in stock written off partially offset by S$1.0 million gain from disposal of fixed assets.

Depreciation expenses also jumped 26% mainly due to addition of machineries. Income tax expenses also increased in line with higher profits.

Reflecting the improved performance, Group Earnings per Share (EPS) rose to 5.85 cents in FY2025 from 5.74 cents in FY2024 while Net Asset Value per share (NAV) grew to 60.35 cents from 58.88 cents during the same period.

Balance Sheet

Cash and Bank Balances / Bank borrowings
The net decrease in cash and cash equivalents by S$36.1 million (after netting-off bank borrowings) was mainly due to purchase of property, plant and equipment, higher inventory purchases and payment of dividends during the period partially offset by the net cash generated from operating activities.

Trade and other receivables
Trade receivables and other current assets decreased by S$13.9 million mainly due to lower down-payment to suppliers of property, plant and equipment during the current year.

Inventories
The increase in inventories by S$42.8 million was mainly due to higher material purchases as compared to prior year.

Trade and other payables
Trade and other payables increased by S$7.4 million mainly due to higher purchases as compared to prior year.

Cash Flow

The Group continued to generate positive net cash of S$39.7 million (vs FY2024: $55.2 million) from operating activities in FY2025. Free cash flow fell to S$2.1 million (from S$22.9 million in FY2024) - attributed mainly to higher inventory balance and capex to fund the Group's expansion in Penang to support the expected production ramp up in the coming year.

During the year, the Group also paid out S$35.5 million in dividends.

Net cash decreased from S$79.2 million on 31 Dec 2024 to S$43.1 million during the period under review.

Dividend and Bonus Issue

In view of the Group's performance and in recognition of shareholders' support, the Board has proposed a final dividend of 2.0 Singapore cents per ordinary share (tax-exempt one-tier) for FY2025, notwithstanding the 1 for 4 bonus share issue completed at the beginning of this year. This brings the total dividend proposed and declared to 5.0 Singapore cents per share which includes dividends already paid out in each preceding quarter from 1Q2025 to 3Q2025.

The Group had allotted and issued Bonus Shares in January 2026 on the basis of ONE (1) bonus share for every FOUR (4) existing ordinary shares. This epitomizes the strong fundamentals of UMS' business model as well as the management's commitment to reward the shareholders for their continuous support.

Secondary listing in Bursa Malaysia

The Group was successfully listed in Bursa Malaysia on 1 August 2025. For this corporate exercise, UMS won the IFN (Islamic Finance News) Equity and Equity-Linked Deal of the Year 2025 award.

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.

During the year, the Group is listed as one of companies on the SGX iEdge Singapore Next 50 Index which aims to track the performance of the next 50 largest companies listed on the SGX Mainboard, beyond the 30 largest companies by market capitalization.

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.