Frontken Corporation Berhad 200401012517 (651020-T) • ANNUAL REPORT 2022 17 We are also collaborating with a new customer to provide spare parts, complete component management, rotor inspection and repair services. For rotating equipment activities, the balancing process will be central to most of the projects undertaken in this area. Additionally, we also saw an increase in frequency of enquiries from the contract manufacturers such as in the electronics sector, an area we can further explore. Frontken Philippines, — The Group’s operation in the Philippines achieved a revenue of RM13.9 million and an operating profit of RM2.0million. Although this is not our best ever performance, it is still a creditable set of numbers considering the operational challenges we faced coupled with reduced business from one of our customers, the only O&G offshore facility in the Philippines. The rising inflation rate in the Philippines that peaked to 8.1% in December 2022 from 3.6% the same time a year ago did not help with our cost as well. Understanding these challenges, we have worked to develop other revenue streams from the target segments that we have identified namely from the power generation, water utilities, manufacturing, mining and cement industries. Considering that these segments produce essential goods, the focus is to establish the same service provision such as the repair centre and manpower call-off contracts. Also, we have continuously put emphasis on improving the competency among our personnel. Cross-training programmes for skilled personnel were implemented to maintain our value-add services to the customers we serve. The simplification of the process, procedures and workflows further improved the efficiency as turnaround times were quicker for the repair works to be completed. The team established inspection and hold points throughout the process to ensure that we maintain the quality whilst improving delivery lead times. The new Vertical Lathe Machine that was purchased in 2021 was fully operational by Q1 of 2022 and has secured additional work for the power industry restoring diaphragms and large-size equipment. During the year, we have also purchased an additional Cold Metal Transfer machine and expect to utilise the same by Q2 of 2023 for both inhouse and onsite works to further enhance our capabilities and improve the lead times of the repair activities. OUTLOOK In the year ahead, like all of you, we too have read that there may be many difficult headwinds created by, among other things, the high inflation rate. Although the negative effects of COVID-19 are slowly ebbing, the ongoing conflict in Europe and trade tension continues. Uncertainties have never been good for business, and we believe we will not be spared. Having said that, we are fortunate to be in the service industry where negative impact, if any, from global economic slowdown will not be too severe on us. We will not rest on our laurel and plans are at foot for us to make changes swiftly should the worst happen. In the face of these challenges, we continue to take a long-term view of the industry and our business, which we believe is still intact. The combination of our strong brand, capabilities, strategies and great team will allow us to look to the future with confidence. I am proud of what we have achieved in the past year and I am confident that we are well-positioned to deliver further success in the future. We remain cautiously optimistic of our business and our abilities to deliver. APPRECIATION This financial result does not happen by chance but rather through the hard work and dedication of everyone in the Group and therefore, I would like to extend my heartfelt thanks to all my colleagues for their relentless sacrifices and commitment during the year. I would also like to take this opportunity to thank our Board of Directors for its continuous guidance, strategic advice and steadfast support throughout the year. We are extremely thankful to our customers that have continually shown their confidence in us by giving us their support, continued business and new opportunities. To our business associates, various ministries, government agencies and regulators of the countries where we operate in, we appreciate your trust and support that you have given to us. Lastly, I would like to thank all our loyal shareholders, for your ongoing support and trust in us. We will continue to do our best in delivering the best return to all of you. CHAIRMAN’S MESSAGE (CONT’D)
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