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Frontken Corporation Berhad (651020-T)
ANNUAL REPORT
2016
Chairman’s
Message
(cont’d)
estimates spending of US$19 billion
on semiconductor equipment and
materials in the Southeast Asia
region for 2015 and 2016. This
uptrend, resulting from the growth
in telecommunications and Internet-
of-Things (“IoT”) technologies, has
enabled our Group’s semiconductor
operations to turn in strong results.
Review of Financial Performance
For FYE2016, Frontken reported
a revenue of RM261.8 million as
compared to RM280.6 million in the
last financial year. The year-on-year
decrease in revenue was the result
of an exceptional revenue derived
from the completion of a project
(“ATB Project”) that was recorded in
FYE2015. If the revenue from the ATB
Project was to be excluded, revenue
for FYE2016 would have been 4.5%
higher year-on-year.
The Group profit before tax (“PBT”)
during the year under review jumped by
a significant 108.4% to RM33.3 million
from RM16.0 million recorded a year
ago. As a result, profit after tax grew to
RM27.3 million from RM9.5 million last
year. The markedly improved profit was
due to stronger contribution from our
semiconductor solutions business in
Taiwan and Malaysia. The Group also
recorded better performance in the
Philippines and Indonesia attributable
to our expanding business portfolio in
these two countries.
From a segmental standpoint,
Frontken’sTaiwanoperations continues
to be the main profit generator as
it contributed 72% to the Group’s
overall operating profit in FYE2016.
This was followed by Malaysia (22%)
and the Philippines (10%). Frontken’s
operations in Indonesia and Singapore
recorded operating losses for the year
under review.
Earnings per share attributable to
equity holders of the company stood at
1.91 sen for FYE2016, up significantly
from 0.39 sen a year ago. Net assets
per share increased slightly to RM0.25
as at 31 December 2016 from RM0.23
as at the corresponding period last
year.
In 2016, Frontken allocated a capital
expenditure of RM9.7 million for
FYE2017 in an effort to improve its
overall operations.
Review of Business Operations
Frontken Malaysia
Frontken Malaysia turned in a strong
performance during the year under
review with an operating profit of
RM7.2 million on the back of a revenue
of RM68.5 million, as compared to an
operating loss of RM3.5 million on a
revenue of RM106.8 million recorded
in the previous financial year.
The improved performance was the
result of stronger contribution from
Frontken Malaysia’s semiconductor
division, which has operations in
Kulim, Kuching and Melaka.
In Kulim, Frontken has maintained its
dominant position as the largest parts
cleaning service provider among the
Group’s Malaysian subsidiaries. In
addition to seeing increased sales
from its semiconductor customers,
Frontken’s Kulim operations also saw
a rebound in business activity from the
solar or photovoltaic (“PV”) industry
throughout 2016.
In the oil and gas sector, the low price
regime affected its related operations
across the board. Frontken TTES
Malaysia, the Group’s engineering
services provider that also holds a
license to supply and provide services
to PetroliamNasional Bhd (“Petronas”),
experienced acute competition and
lower margins in 2016. The company
intends to aggressively manage cost
and venture into power generation and
general industry services to generate
revenue and sustain its current
operations.
In Johor, Frontken’s oil and gas
business was able to secure a new
customer that is a global leader in
the detailed engineering, fabrication
and construction of offshore floating
production storage offloading vessels.
In East Malaysia, Frontken fared better
with increased revenue from new
customers as well as from non-oil and
gas related services.