Frontken Berhad Annual Report 2019

11 Frontken Corporation Berhad (651020-T) ANNUAL REPORT 2019 Chairman’s Message (cont’d) LCD precision cleaning, so that we can shift our attention to areas that we believe will have higher potential for sustainable growth. We continued to undertake R&D and joint development on our best-known method/cleaning processes with our customers and technology partners from the early stages of each new nodes. Consequently, this enabled us to be chosen as a partner to our customers for their critical cleaning in their most advanced technology nodes ie N16 and below. As a result, our parts precision cleaning business for leading edge chips had increased over the years. We believe this trend will continue to account for a greater share of AGTC’s overall revenue in the coming years. In addition to our advanced precision cleaning business, we are also looking at expanding our other product offerings such as advanced coating and parts supply as part of our growth strategies. Our investment and commitment to producing consistent high quality end results has always been an important differentiator for us. Besides enhancing our operational efficiency, we were able to continue to provide innovative methods and cost-effective solutions to help meet customers’ need and solve their problems during the transition to the next technology node. We also continued to support our customers by providing them with value-adding capabilities, quick response time and impeccable service. This is evidenced by the many recognitions and awards presented to us by our customers over the years including achieving the highest grade recognition during their annual audit of our facility and strict compliance and adherence to their very strict international requirements. AGTC continues to work on various sustainability initiatives including the adoption of ESG policies. From an environmental perspective, by way of an example in 2019, we decided to upgrade our existing waste-water treatment facility for better efficiency in energy use, improving process outcomes and minimising impact to the environment. This new improved waste-water treatment is expected to be ready in 2020. In addition to better serve our customers, we will continue to focus on making necessary investment in AGTC so that it will be well-equipped to cater to the increasing demand while enhancing our capabilities to meet the most stringent quality requirements of our customers. During 2019, the Group also increased its shareholding in AGTC from 89.6% in the year before to 90.9%. We believe our increased shareholding will further drive the long-term value of the Group. Frontken Singapore Frontken Singapore Pte Ltd (“FSPL”) recorded an operating profit of RM24.0 million in FYE2019 from RM18.4 million or a 30% increase compared to a year ago. This is a most commendable set of results in light of the very challenging business environment particularly with manpower shortages and tight foreign labor policies that are in place in Singapore. Notwithstanding that, we are still seeing very encouraging activities from our customers with their proposed expansion plans and continual growth in the country. We are already in talk with our customers to handle their potential new business for the coming years. In 2019, revenue for FSPL’s semiconductor business was mainly driven by its existing customer as our advanced precision cleaning service continued to be a key driver. As with all our other R&D activities, we were engaged in various formal and informal collaboration with our customers, co-create and jointly develop new processes for our customers’ next generation tools as well as to optimise production and process costs. Moving forward, we believe that our business will continue to grow, spurred by continual spending in the most advanced nodes and expansion plans by our customers. As for our engineering business in Singapore, the changes implemented in recent years are continuing to bear fruits. We are seeing significant step up in the operational efficiency which have translated into better financial performance and losses have significantly narrowed. The engineering unit