Frontken Berhad Annual Report 2019

10 Frontken Corporation Berhad (651020-T) ANNUAL REPORT 2019 Chairman’s Message (cont’d) Being a dedicated specialist in the maintenance and repair services of rotating equipment it enabled us to be ever ready to support our customers during this time. We are focused on growing our engineering business in the years to come. To do that we will be leveraging on the Group’s resources, maintain capital discipline and focus on productivity improvements. We will continue to leverage on the Group’s wealth of expertise and know-how to maximise return on our assets. Barring any unforeseen circumstances, we believe the performance of the Group’s engineering business will continue to improve going forward. Frontken Malaysia In 2019, Frontken Malaysia saw a jump in its operating profit to RM12.6 million from RM5.0 million a year ago, an improvement of 153% or RM7.6 million year on year. This increase was primarily due to the pick-up in business in our engineering units across Malaysia. The performance of the Group’s engineering units in Malaysia, namely Frontken (East Malaysia) Sdn Bhd (“FEM”), TTES Frontken Integrated Services Sdn Bhd (“TFIS”) and Frontken (Johor) Sdn Bhd far exceeded the expectation we set at the beginning of 2019. TFIS continued to participate in turn around/shutdown works while expanding its capability for broader work scope and beyond the traditional market it is in. Demand for our services in equipment repair and maintenance work had also increased steadily with the somewhat more stable crude oil price. In late 2019, TFIS was appointed as one of the panel contractors for the provision of manpower supply and mechanical rotating equipment services and parts for Petronas Group of Companies. TFIS has also expanded its market, leveraging on available resources from the Group’s other subsidiaries such as FEM to deliver on our integrated strategy and provide a solid framework for join projects. Moving forward, we aim to offer a more complete range of services to our customers leveraging on the success achieved in 2019. The Group’s semiconductor operation in Kulim, Melaka and Kuching continued to perform steadily in a fairly challenging market. This year, we saw a slight slowdown from our hard disk drive (“HDD”) customers but luckily that was offset by increased business fromour customers in the semiconductor, photovoltaic and OLED industries. However, 2019 continued to be a busy year as we were qualified for more new parts by our existing customers and also some new customers that helped generated new sales for that unit. That business was further boosted by new development and increase of wafer box cleaning by one of our customers’ new wafer fabrication facilities. The continued efforts on cost reduction and profit growth also resulted in an improved margin from operational efficiency that contributed to the bottom line of that unit. To maintain our dominance in the market and to further drive growth, we continued to explore more new service offerings such as fabrication of process kits and cleaning of new parts amongst others. We are also in the final stages of being qualified by another overseas HDD customer which will contribute positively to this business unit in 2020. We will take advantage of the multiple opportunities in this growing market and hope to capture new customers and leverage on our Group’s expertise and experience. Frontken Taiwan - Ares Green Technology In 2019, the Group’s subsidiary in Taiwan, Ares Green Technology Corporation (“AGTC”) again contributed a substantial portion of the Group’s profit. AGTC delivered an operating profit of RM57.1 million, up 16% from FYE2018. Revenue was also up by 2% to RM189.5 million from a year ago. This is a result of not just reducing cost but also through a series of well-planned out strategies including tweaking our business model, training and developing talents, constantly improving operational efficiency to ensure greater control over operations. During the year, we continued to strengthen what we were already doing well and at the same time reduced our focus on the less profitable area of our business, namely the TFT-