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FRONTKEN CORPORATION BERHAD
(651020-T)
ANNUAL REPORT
2015
CHAIRMAN’S
STATEMENT
(cont’d)
In building a solid foundation that is sustainable, we not only have
to amass our resources but investments as well to ensure long-term
competitiveness and growth. This is an on-going task for Frontken.
Strategic mergers and acquisitions have been an important
investment factor contributing to the profitable expansion of the
Group. In 2008, we acquired a stake in Ares Green Technology
Corporation (“AGTC”) in Taiwan, in which we currently hold
approximately 68%equity interest. AGTC is a leading company in the
semiconductor industry providing environmental friendly advance
precision cleaning and surface treatment solutions. AGTC has
become one of our core profit contributors making up approximately
39% of total revenue for FYE2015. During the financial year under
review, the management had decided to withdraw its plans in listing
AGTC on the Taiwan Stock Exchange. After full evaluations and
taking all factors into consideration, the management concluded
that it was more practical to delist it from the preparatory board and
continue as a public limited company. Furthermore, the company
is performing robustly despite market sentiments and we are
cautiously optimistic that AGTC will be able to maintain its trending
performance moving forward.
TTES Frontken Integrated Services Sdn Bhd (“TFIS”) was a profitable
acquisition for Frontken in 2014. The vendors of TFIS provided a
cumulative profit guarantee of RM8.0 million for two (2) financial
years combined. TFIS cumulative profit for two (2) financial years
combined of RM8.6 million has exceeded the guaranteed profit
given to the Group at the time of the acquisition. TFIS is a synergetic
addition to the Group bringing in businesses in which the Group’s
technical expertise and capabilities could be leveraged on. This in
turn also increased the scope of works that TFIS could undertake
and thus able to serve our customers better.
MOVING FORWARD AS A GROUP
Frontken has established business presence and operating centres
in Malaysia, Singapore, Taiwan, Philippines, Indonesia and Thailand.
As a Group, each of our centres possesses their own set of skills
and unique technology, which sets us up with an extensive platform
to cover a broad spectrum of services. We have the
flexibility and capability to mobilize our resources
on site with selected technical expertise required
from our respective centres. These combined
elements sets us apart from other industry players
and enables us to maintain a competitive edge as a
leader in our industry.
2016 is expected to be another rocky year for the oil
and gas industry leaving many players in the market
slowing down their project pipeline, restructuring
their business direction and even cutting down
their capital expenditures. As mentioned earlier,
we believe that this will result in an increase in
demand for local services and repairs in which we
are anticipating and preparing for the year ahead.
Acknowledging that the Group’s overall margin will
likely be thinner resulting from possible cost-down
from our customers, we need to be vigilant in our
cost management and continually explore ways to
improve on our efficiency. With the excellent support
frommy colleagues and our robust business strategy
for the year ahead, I am confident that Frontken will
be able to maintain a positive performance for the
financial year ending 2016.
APPRECIATION
I would like to thank our stakeholders for their endless
support and trust in the Company. To my Board of
Directors, your dedication and leadership provided
throughout the years is much appreciated. To our
most valued employees and colleagues, I would like
to express my sincere gratitude and thanks for your
commitment, hard work and dedication to Frontken.
Finally, I would like to thank our clients, associates,
business partners, consultants and bankers for their
continued support, loyalty, advice and trust in us.