Frontken Berhad Annual Report 2018

8 Frontken Corporation Berhad (651020-T) ANNUAL REPORT 2018 Chairman’s Message MANAGEMENT DISCUSSION AND ANALYSIS Review 2018 2018 was a banner year for our semiconductor business as we posted another year of growth in terms of revenue and profit. For us, this was important as it showed that we are a trusted partner to our customers. This in turn will facilitate the creation of a long-term sustainable partnership. Hopefully, this will translate into more business for our Group and in turn enhance the value to our shareholders. In addition, the Group’s continuous investment in research and development (“R&D”) enabled us to provide quick response to our customers’ needs, increasing their capacities while also reducing operational cost. Of course, we could not have done it without our valuable and experienced colleagues that provided the operational expertise that is required in our business. Over the last few years, we have made considerable efforts in empowering our employees wherever they are located, for instance, by establishing a structured career framework/path and increasing the scope and quality of our training, among other things. Consequently, the Group’s semiconductor business in Taiwan, Singapore and Malaysia saw strong improvements in their respective businesses with an increase in revenue of 14.5%, 26.0% and 16.9% (based on their local currency) respectively compared to FYE2017. While the semiconductor business delivered respectable numbers, our engineering business continued to struggle although we saw some light at the end of the tunnel towards the second half of the year. Like many other businesses, we managed to overcome some of the challenges we faced during the course of the year. During the downturn over the last couple of years in the oil and gas industry, we worked diligently on our cost reduction strategies and improve productivity in all areas of our operations. The efforts and perseverance paid off as can be evidenced by the recovery of our engineering business. Premised on that, we are cautiously optimistic that the positive momentum for our engineering business will continue in the coming year. Dear valued shareholders, This was a most exciting and exceptional year for us in that we enjoyed another record breaking year in terms of performance and profitability. It was not only a celebration of good results but also a significant change in the Group’s shareholding structure. We were fortunate to be able to continue to grow in a fairly volatile market with increasing commodity prices and geopolitical uncertainty. While these uncertainties challenged us, they also helped propel our progress. In fact, the ability of our team to leverage on change as a means for progress is a competitive advantage and one of the key factors to our steady and consistent performance. In short, it was a challenging, gratifying and invigorating year for all of us and, in particular, for myself. On behalf of the Board of Directors, it is my great pleasure to present to you the Annual Report and Audited Financial Statements of the Group and its subsidiaries for the financial year ended 31 December 2018 (“FYE2018”). As part of this Annual Report, we include the following Management Discussion and Analysis to provide our shareholders with a more insightful and informative details of the Group’s operations and performance.