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FRONTKEN CORPORATION BERHAD
(651020-T)
ANNUAL REPORT
2015
MANAGEMENT DISCUSSION
AND ANALYSIS
(cont’d)
the company as by tradition Hitachi dispenses its own repair projects
to Hitachi OEM’s only. In 2015, Frontken successfully expanded into
Thailand when we secured a tie-up with Mitsubishi Compressor as
their representing agent.
Moving into 2016, Frontken Singapore is hopeful for a better year as
we move forward with our new operating strategies. We plan to gain
further business opportunities in Malaysia and Brunei in the area of
rotating equipment services and to secure more projects from our
key clients and industry players. However, we remain cautious of the
uncertain market condition and will continue to adjust and anticipate
changes.
CORPORATE ACTIVITIES
Disposable of Subsidiary
During the financial year under review, Frontken disposed of its Hong
Kong and China subsidiaries namely Frontken MIC Co. Limited and
Frontken-MIC (Wuxi) Co. Ltd. The management’s decision to strip of
its China counterpart is strictly to slim down the Group’s loss making
operations.
Change in Major Shareholder
Dr Jorg Helmut Hohnloser, who was previously a major shareholder
of the Group, had on 23 June 2015 disposed his entire interest of
290,991,473 ordinary shares of RM0.10 each (Shares) or 27.8% to
CP Asia Holding GmbH.
Warrants Exercised
On 9 March 2015, the completion of the 42,026,970 warrants
conversion enlarged our share capital to RM105,343,513.
PROSPECTS AND MARKET OUTLOOK
Various research reports has it that 2016 will
continue to be an extremely challenging year for
the Malaysian economy, as downside risks on
the external front continues to increase and even
the global growth forecasts have been revised
downwards by the World Bank.
However, with that said we are cautiously optimistic
for the year ahead now that Frontken is strategically
positioned to capture more opportunities with our
merged capabilities and infrastructure as a Group.
As mentioned earlier, the extreme cost cutting that
oil majors had to undertake will open up more project
opportunities for Frontken, as measures to prolong
and maintain their equipment / assets will be sought
for instead of new capital expenditure. Tapping into
the anticipated increasing demand of services and
repairs – Frontken will be able to leverage on its
industry expertise and garner continuous growth
moving forward.
Staying mindful of the challenging landscape
ahead, Frontken will continue to instill proactive
management and business strategies to ensure
business sustainability and value.