Frontken Corporation Berhad 200401012517 (651020-T) • ANNUAL REPORT 2022 10 CHAIRMAN’S MESSAGE (CONT’D) Paying a sustainable dividend that commensurate with the performance of the Group is something we strive to do for our shareholders. The Company aims to continue to grow the dividend payout at a rate that reflects the growth of its business. In 2022, the Company paid a single interim dividend of 1.6 sen per share and has proposed a second interim dividend of 2.6 sen per share to be approved by its shareholders during its upcoming general meeting. This would bring the total dividend to 4.2 sen per share for the whole year, up 5% from a year ago. If approved, the total payout would amount to approximately RM661 million, representing 54% of the Group’s total net earnings in 2022. We envisage to continue with this sustainable dividend payments taking into consideration a number of factors such as earnings, financial conditions, capital commitments, acquisition related activities and reserves, among others. During the year, the Group continued to generate a positive cash flow of RM142.9 million from our business operations. The Group’s capital expenditure (“CAPEX”) for the year for property, plant and equipment was at RM52.7 million. Despite the additional cash outflows from dividend and CAPEX, the Group’s total cash balance as at 31 December 2022 remained strong at RM339.6 million. OVERALL 2022 After a break of 2 years due to the pandemic, this year, we were finally able to hold our physical executive team meetings where we reviewed individual unit’s past performances, shared updates on how each unit was doing and set targets for the future. During the year, we started seeing more activities as our operations were slowly getting back to normal and supply chain started to normalise. At the same time, our employees have started to return to the office for work and things are looking better again. Despite the pressure of higher material costs and tighter labour conditions, we were able to offset the same with improved productivity and efficiency. OUR WORKFORCE By the end of 2022, we have grew our headcounts by about 10% to 1,320 employees compared to a year ago. We place strong emphasis on developing and encouraging talent while preparing our employees for our future needs. We continued to encourage our employees to acquire new knowledge through continuous learning to enable them to stay on top of the industry trends and to remain competitive in our business. Like every other companies around the world, we strive to be an employer of choice. To that end, we will continue to invest in our people through various performance-based incentives, competitive benefits and skills development programmes that allow for advancement opportunities. During the year, we have also had the approval of our shareholders to implement the Share Grant Plan for the eligible employees of the Group. The share grants are in lieu of bonus and selected employees are given the option of whether to receive cash bonus or shares. We will continue to monitor and make the necessary adjustments to our employee’s compensation so that the same are in line with the current and industrial standards. This include having a compensation package that reflect their achievements based on meeting key performance indicators (in both qualitative and quantitative measures). We believe that it is vital to ensure that all our employees are compensated fairly for their skills and commitment. ENVIRONMENTAL, SOCIAL & GOVERNANCE (“ESG”) AND SUSTAINABILITY FOR A BETTER TOMORROW Our core priorities remained the same; which is to build a business that is strong, resilient, and sustainable. To achieve that, we incorporate strong ESG practices into our business. These good practices play an integral part in our business and hence, we take very seriously our responsibility in this area. We ensure that all our activities and processes adequately address current environmental concerns and at the same time maintaining a sustainable profit. OUR ENVIRONMENT — Our E encompasses protecting biodiversity, maintaining a clean and safe environment, and restoring climate change. We are aware of the impact of the environmental risks that companies are exposed to, from the energy we take in to the waste we produced. Therefore, our goal is to minimise any of these negative impact, with a focus on reducing carbon footprints. Realistically, we cannot stop global warming altogether, but we can play a part in slowing the rate and limiting the amount by preventing pollutions. One of our research and development (“R&D”) focuses has always been to look at areas where we can improve and make positive contributions to our environment. For example, through our efforts, since 2018, we have adopted the equivalent of 2,277,595 KW of electricity using solar energy, an accumulative savings of 307,623 tons of recycled DIwater, and accumulative savings of 381,196 kg of recycled waste in our operations. We have also set a long-term target of reducing our Emissions Intensity - the amount of greenhouse gas emissions for Scope 1, 2 and 3 by at least 50% by 2050; to stabilise emissions with the aim of peaking at around 2050; and to achieve Net Zero Emissions by 2060.
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