ANNUAL REPORT 2024 Frontken Corporation Berhad 200401012517 (651020-T)
02 08 32 49 Corporate Information Chairman’s Message Statement of Directors’ Responsibilities Additional Disclosure 03 17 33 50 04 19 41 135 05 22 46 138 06 24 140 142 - Group Corporate Structure Financial Review Corporate Governance Overview Statement Financial Statements Our Vision, Mission and Profile Board of Directors’ Profile Statement on Risk Management and Internal Control List of Properties Our Services Senior Management’s Profile Audit Committee Report Shareholdings Statistics (as at 28 March 2025) Financial Highlights Sustainability Report Warrant Holdings Statistics (as at 28 March 2025) Notice of Annual General Meeting Proxy Form CONTENTS
FRONTKEN CORPORATION BERHAD 200401012517 (651020-T) ANNUAL REPORT 2024 02 CORPORATE INFORMATION AUDIT COMMITTEE Ng Chee Whye (Chairman) Koh Huey Min YM Raja Jastina Adlina Binti Raja Arshad NOMINATION COMMITTEE YM Raja Jastina Adlina Binti Raja Arshad (Chairman) Ng Chee Whye Gerald Chiu Yoong Chian Koh Huey Min REMUNERATION COMMITTEE Ng Chee Whye (Chairman) Koh Huey Min YM Raja Jastina Adlina Binti Raja Arshad COMPANY SECRETARY Mah Li Chen (MAICSA 7022751) (PC No. 202008002006) Ng Wai Pin Chairman / Chief Executive Officer Dr Tay Kiang Meng Executive Director / Chief Scientist / Chief Sustainability Officer Ng Chee Whye Independent Non-Executive Director REGISTERED OFFICE B-11-10 Level 11 Megan Avenue II Jalan Yap Kwan Seng 50450 Kuala Lumpur Tel: (03) 2203 3388 Fax: (03) 2203 3399 Email: lichen@secretariesinc.com HEAD OFFICE 601D, Level 6, Tower D, Uptown 5 No. 5, Jalan SS21/39 Damansara Uptown 47400 Petaling Jaya, Selangor Tel: (03) 7625 1381 / (03) 7625 1598 Email: ir@frontken.com Website: www.frontken.com INVESTOR RELATIONS Tel: (03) 7625 1381 / (03) 7625 1598 Email: ir@frontken.com SHARE REGISTRAR Tricor Investor & Issuing House Services Sdn Bhd Unit 32-01, Level 32, Tower A, Vertical Business Suite Avenue 3, Bangsar South, No. 8, Jalan Kerinchi 59200 Kuala Lumpur Tel: (03) 2783 9299 Fax: (03) 2783 9222 Email: is.enquiry@vistra.com BOARD OF DIRECTORS Gerald Chiu Yoong Chian Non-Independent Non-Executive Director Koh Huey Min Independent Non-Executive Director YM Raja Jastina Adlina Binti Raja Arshad Independent Non-Executive Director AUDITORS Crowe Malaysia PLT 201906000005 (LLP0018817-LCA) & AF 1018 Chartered Accountants Level 16 Tower C Megan Avenue II 12 Jalan Yap Kwan Seng 50450 Kuala Lumpur Tel: (03) 2788 9999 Fax: (03) 2788 9998 STOCK EXCHANGE LISTING Main Market of Bursa Malaysia Securities Berhad Stock Name : FRONTKN Stock Code : 0128 Reuters Code : FRKN.KL Bloomberg Code : FRCB MK
FRONTKEN CORPORATION BERHAD 200401012517 (651020-T) ANNUAL REPORT 2024 03 GROUP CORPORATE STRUCTURE AS AT 24 MARCH 2024 Frontken Corporation Berhad 200401012517 (651020-T) Frontken Malaysia Sdn Bhd 100% Frontken (East Malaysia) Sdn Bhd 100% Frontken (Singapore) Pte Ltd 100% PT Frontken Indonesia 95% Ares Green Technology Corporation 92.5% TTES Frontken Integrated Services Sdn Bhd 45% Frontken Philippines Inc. 99.9% 5% Frontken (Johor) Sdn Bhd 100%
FRONTKEN CORPORATION BERHAD 200401012517 (651020-T) ANNUAL REPORT 2024 04 OUR VISION, MISSION AND PROFILE OUR PROFILE Frontken Corporation Berhad, listed on the Main Market of Bursa Malaysia Securities Berhad, has since its inception in 1996, established itself as a world leading service provider of advanced precision cleaning and surface treatment for semiconductor process chamber parts and repair and maintenance services for the oil and gas industry. The Group uses cutting edge technology including advanced precision cleaning, advanced surface treatment and specialty spray coating to extend the lifespan of the high precision tools/equipment used in the fabrication of wafers, while significantly improving its customer’s process efficiency, operating and maintenance costs. The Group’s continuous focus on research and development helped to improve our customers’ process tool part optimisation. As a result, we were able to constantly exceed customers expectation by re-designing some of the tools to further increase the parts’ shelf life and at the same time reducing impact on the environment. The Group’s customer portfolio comprises key players in the semiconductor, optoelectronics, oil and gas and petrochemical industries around the world. To date, the Group has facilities in Singapore, Malaysia, Taiwan, the Philippines, and Indonesia with 1380 employees. OUR VISION To be the leading service provider in the industry we serve. OUR MISSION To serve our customers with complete satisfaction which includes not only the most competitive price and fastest delivery time but also the highest technical performance and reliability for all our services and products.
FRONTKEN CORPORATION BERHAD 200401012517 (651020-T) ANNUAL REPORT 2024 05 OUR SERVICES Semiconductor Advanced Precision Cleaning Advanced Precision cleaning and surface treatment of vacuum processes equipment parts in the semiconductors and TFT industries. Decontamination of newly manufactured parts and routine maintenance. Kit management of semiconductor manufacturing components. Advanced Surface Treatment & Specialty Coating Advanced Surface treatment services include thermal spray coatings, arc spray coatings, precision anodisation and precision texturing and polishing. Protection, lifetime extension, performance and efficiency improvements via advance surface treatment technology such as cold build up treatment, plating, plating & conversion coating, and specialised plasma transferred arc welding. Engineering Rotating Equipment Equipment maintenance and overhaul, mechanical fitting & assembly, dynamic balancing, heat treatment, on site machining, metal stitching, and laser alignment.
FRONTKEN CORPORATION BERHAD 200401012517 (651020-T) ANNUAL REPORT 2024 06 FINANCIAL HIGHLIGHTS 2020 368,319 450,222 517,183 500,149 133,343 168,156 193,212 188,358 219,907 569,205 0 100,000 200,000 300,000 400,000 500,000 600,000 2021 2022 2023 2024 2020 0 50,000 100,000 150,000 200,000 250,000 2021 2022 2023 2024 81,968 104,504 123,292 111,951 136,806 2020 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 2021 2022 2023 2024 114,253 149,866 174,790 167,066 198,430 2020 0 50,000 100,000 150,000 200,000 250,000 2021 2022 2023 2024 Earning before interest, tax, depreciation and amortisation (RM’000) Net profit (RM’000) Revenue (RM’000) Profit before tax (RM’000) 2020 2021 2022 2023 2024 SEGMENTAL REVENUE – BY LOCATION (RM’000) Taiwan 240,504 310,419 347,368 327,758 383,372 Malaysia 51,776 63,856 88,848 93,133 102,456 Singapore 59,666 60,000 66,509 64,064 65,935 Others 16,373 15,947 14,458 15,194 17,442 368,319 450,222 517,183 500,149 569,205 SEGMENTAL REVENUE – BY INDUSTRY (RM’000) Semiconductor 311,374 378,685 413,322 383,174 437,213 Oil & Gas 42,451 50,419 82,500 97,459 106,319 General* 14,494 21,118 21,361 19,516 25,673 368,319 450,222 517,183 500,149 569,205 * Comprises power generation, marine, steel, cement, wood processing, pulp & paper, printing, agriculture, industrial manufacturing, food, construction and other sectors.
FRONTKEN CORPORATION BERHAD 200401012517 (651020-T) ANNUAL REPORT 2024 07 FINANCIAL HIGHLIGHTS (CONT’D) 2020 2021 2022 2023 2024 SUMMARISED GROUP FINANCIAL POSITION AS AT 31 DECEMBER (RM’000) Non-Current Assets 175,361 257,937 300,195 307,538 293,582 Current Assets 442,910 460,699 505,626 577,887 694,961 Total Assets 618,271 718,636 805,821 885,425 988,543 Share capital 118,925 118,441 118,441 118,441 155,607 Treasury shares (663) (4,747) (4,747) (3,739) (3,739) Share application money - - - - 16,108 Reserves 321,733 387,162 434,775 526,465 552,588 Shareholders’ Equity 439,995 500,856 548,469 641,167 720,564 Non-Controlling Interests 27,039 34,225 39,454 46,735 52,343 Total Equity 467,034 535,081 587,923 687,902 772,907 Non-Current Liabilities 12,826 22,295 31,999 31,109 27,829 Current Liabilities 138,411 161,260 185,899 166,414 187,807 Total Liabilities 151,237 183,555 217,898 197,523 215,636 Total Equity and Liabilities 618,271 718,636 805,821 885,425 988,543 2020 2021 2022 2023 2024 SUMMARISED GROUP CASH FLOWS YEAR ENDED 31 DECEMBER (RM’000) 2020 2021 2022 2023 2024 Net Cash Flows From Operating Activities 119,733 138,775 142,863 143,999 166,626 Net Cash Flows For Investing Activities (11,900) (86,212) (58,685) (8,708) (12,773) Net Cash Flows For Financing Activities (33,949) (61,084) (50,629) (71,801) (19,974) Net Increase/(Decrease) in Cash and Cash Equivalents 73,884 (8,521) 33,549 63,490 133,879 Effect of Exchange Differences 6,248 11,079 (8,467) 13,440 (30,659) Cash and Cash Equivalents at Beginning of Year 219,669 299,801 302,359 327,441 404,371 Cash and Cash Equivalents at End of Year 299,801 302,359 327,441 404,371 507,591 2020 2021 2022 2023 2024 FINANCIAL ANALYSIS Turnover Growth 8.4% 22.2% 14.9% -3.3% 13.8% Profit Before Tax Growth 18.7% 31.2% 16.6% -4.4% 18.8% Net Profit Growth 18.5% 27.5% 18.0% -9.2% 22.2% Pre-tax Profit Margin 31.0% 33.3% 33.8% 33.4% 34.9% Net Profit Margin 22.3% 23.2% 23.8% 22.4% 24.0% Return on Average Shareholders’ Equity 20.1% 22.2% 23.5% 18.8% 20.1% Return on Average Total Assets 14.5% 15.6% 16.2% 13.2% 14.6% Earnings Per Share (Sen) - Basic * 5.2 6.7 7.8 7.1 8.7 - Diluted ^ 5.2 # 6.7 # 7.8 # 7.1 8.6 * The earning per share have been adjusted to reflect the bonus issue of two for every one existing ordinary share which was completed on 30 April 2021. ^ The Group has not issued any dilutive potential ordinary shares and hence, the diluted earnings per share is equal to the basic earnings per share. # The potential conversion of warrants is anti-dilutive as its exercise price is higher than the average market price of the Company’s ordinary shares during the current financial period and hence, the diluted earnings per share is equal to the basic earnings per share.
FRONTKEN CORPORATION BERHAD 200401012517 (651020-T) ANNUAL REPORT 2024 08 CHAIRMAN’S MESSAGE Dear Shareholders, Welcome to our Annual Report 2024. On behalf of the Board of Directors, I am pleased to present to you the Annual Report and Audited Financial Statements of the Frontken’s group (the “Group”) for the financial year 2024 (“FY2024”). As part of this Annual Report, we have also included the Management Discussion and Analysis to provide our shareholders with a more insightful and informative details of the Group’s operation and performance. I am pleased to report that for FY2024 Frontken managed to deliver a strong set of numbers despite a dynamic and challenging global landscape. Our commitment to excellence has enabled us to achieve robust financial results and at the same time further strengthened our position in the industry. MANAGEMENT DISCUSSION AND ANALYSIS A YEAR OF GROWTH Financial performance In FY2024, we achieved a record revenue of RM569.2 million, marking a 14% increase from the previous year. Our net income rose by 22% to RM136.8 million, resulting in an improved profit margin of 24%, up from 22% in FY2023. The improved bottom line was attributable to the Group’s higher revenue, prudent cost management and continual enhancement of processes leading to better production efficiency. In recognition of our strong performance and commitment to delivering shareholders value, the Board declared a second single tier dividend of 2.0 sen per share for FY2024. The entitlement and payment dates were set for 27 March 2025 and 21 April 2025 respectively. This brings the total dividend payment of 3.7 sen per share for the whole year and total payout amounting to approximately RM58.6 million, representing 43% of the Group’s total net earnings. The Board is committed to maintaining a sustainable dividend payment after taking into account its other business obligations. During the year, the Group continued to generate a positive cash flow of RM166.6 million from its business operations. The Group’s capital expenditure (“CAPEX”) for the year for property, plant and equipment was at RM24.8 million. Despite the additional cash outflows from dividend and CAPEX, the Group’s total cash balance as at 31 December 2024 remained strong at RM514.9 million.
FRONTKEN CORPORATION BERHAD 200401012517 (651020-T) ANNUAL REPORT 2024 09 46 52 66 93 115 133 168 193 188 220 14% 19% 18% 20% 22% 29% 34% 36% 37% 37% 38% 39% 2013 *2014 *2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 191 223 251 262 297 327 340 368 450 517 500 569 2013 *2014 *2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 REVENUE FY2013 - FY2024 EBITDA FY2013 - FY2024 (RM, in million) (RM, in million), (EBITDA margin %) 0.5 19 20 27 36 57 74 88 114 135 124 151 0.2% 8% 10% 12% 17% 22% 24% 25% 26% 25% 27% PAT FY2013 - FY2024 (RM, in million), (PAT margin %) 42 26 2013 *2014 *2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 8% CAGR +21% CAGR +10% CAGR +69% * Note: Excluded the one-off ATB project for a like-for-like comparison. CHAIRMAN’S MESSAGE (CONT’D)
FRONTKEN CORPORATION BERHAD 200401012517 (651020-T) ANNUAL REPORT 2024 10 OVERALL 2024 2024 has been a year of significant achievements for Frontken, marked by record financial performance and growth across both our business segments. Our unwavering focus on operational excellence, strategic investments and responsiveness to market demands has allowed us to strengthen our position as a leading service provider in the industries we serve. Our subsidiary in Taiwan, which serves the semiconductor industry, played a crucial role in driving our growth. The increasing complexity of semiconductor manufacturing and the rising need for electronics have led to higher demand for our services. We successfully expanded our capacity and optimised our operations to support our customers’ growing requirements, reinforcing our position as a trusted partner in the industry. Similarly, our operations in Singapore and Malaysia continued to contribute positively, benefiting from continued demand in the semiconductor sector. Innovation and R&D remained a core focus throughout the year. We continued to invest in automation, process improvements and new technologies to enhance our service offerings and improve operational efficiency. Our ongoing efforts in sustainability and environmental responsibility also continued, aligning with our customers’ increasing emphasis on green production and cleaner processes. In addition to our semiconductor business, our engineering division continued to deliver steady performance. The recovery of the oil and gas (“O&G”) sector and increased repair and maintenance activities in key markets had provided us with opportunities for growth. We leveraged our expertise in the precision engineering space and specialty proprietary coatings to serve our customers across the O&G, energy and other general industries. That said, 2024 was not without its challenges. Global economic uncertainties, inflationary pressures and geopolitical tensions created a volatile business environment. Additionally, supply chain disruptions and rising costs posed hurdles, requiring us to take proactive measures to maintain operational efficiency and costeffectiveness. Despite these challenges, our ability to adapt and our commitment to innovation enabled us to navigate the challenges effectively. OUR WORKFORCE During the year, we continued to invest in training and development to empower our workforce, equipping them with the skills and knowledge to excel in an ever-evolving industry. Through various learning programmes, workshops and leadership development initiatives, we continued to foster a culture of growth, innovation and excellence. We have always believed that when our people are well trained, they not only produce higher quality results the first-time round, but also the process of self-improvement keeps them motivated and better able to take on their daily challenges. Apart from providing development and growth opportunities, we believe that it is vital to ensure that all our employees are compensated fairly for their skills and commitment. We continued to monitor and make the necessary adjustments to our employees’ compensation so that they are at least in line with the industry standards. This includes having a compensation package that reflect their achievements based on meeting key performance indicators in both qualitative and quantitative measures. ENVIRONMENTAL, SOCIAL, AND GOVERNANCE (“ESG”) AND SUSTAINABILITY We recognise that good ESG practices are essential for sustainable business growth and risk management. ESG is not just a compliance requirement but it is a fundamental part of our growth strategy. Over the years, we have been progressively incorporating ESG considerations into our operations, particularly in our environmental initiatives, employee welfare and corporate governance practices. We believe that this is important to us as it aligns with the Group’s long-term sustainability strategy, operational resilience and corporate responsibility. Environmental – We acknowledge the importance of reducing our carbon footprint. To that end, we have implemented various energy efficient processes and waste management strategies to minimise our environmental impact. During the year, we continue to measure and reduce greenhouse gas (“GHG”) emissions associated with our operation. We strive to minimise energy consumption in our workplace and at the same time improve on our operational performance in the areas of GHG emissions and energy, waste and water usage. In 2024, through our efforts and continued collaboration with our customers, since 2018, we have adopted the equivalent of 4.7 million KW of electricity using solar energy, an accumulative savings of 492.7 thousand tonnes of recycled DI-Water and accumulative savings of 462.5 thousand kg of recycled waste in our operations. Our goal is to implement energyefficient processes and reducing carbon emissions across all facilities. The long-term target is to reduce our Emissions Intensity which is to stabilise emissions with the aim to achieve Net Zero Emissions by 2050. CHAIRMAN’S MESSAGE (CONT’D)
FRONTKEN CORPORATION BERHAD 200401012517 (651020-T) ANNUAL REPORT 2024 11 Social – We believe that the social aspect of ESG begins within our own organisation. Our employees are at the heart of our operations and we are committed to treating them with fairness, respect, and dignity. Over the years, we have upheld a strong track record in both health and safety and enforced a zero-tolerance policy against all forms of forced labour; resulting in a workplace that values equal opportunities. We actively encourage continuous learning and development while implementing key policies such as diversity and inclusion, among others. To safeguard our workforce, we conduct risk assessments, implement protective measures and establish mitigation plans to manage potential hazards. We firmly believe that fostering a positive work environment and high employee morale will translate into enhanced productivity. In 2024, we achieved an employee retention rate of 98.2%, surpassing our internal target by 3%. Through our Corporate Social Responsibility initiatives, we continued to make a positive impact on the communities we serve. We extended support to those in need, both financially and emotionally by offering meaningful opportunities that empower individuals. Our initiatives include providing internships to students from local/various universities and offering employment opportunities to individuals with health conditions and physical challenges. We believe that by addressing specific needs, we can help rebuild confidence and promote self-sufficiency, ultimately contributing to a more inclusive society. Governance – The Board remains steadfast in upholding the principles outlined in the Malaysian Code on Corporate Governance, ensuring that ethical business practices and transparency remain at the core of our operations. We are committed to fostering strong and effective relationships with stakeholders while safeguarding the rights and interests of our shareholders. In line with this commitment, we have established a robust governance framework that includes various policies and best practices aligned with our corporate values and long-term sustainability objectives. Beyond our internal governance measures, we extended our commitment to ethical business practices by engaging proactively with suppliers, customers, and key stakeholders to uphold ESG principles. Our adherence to responsible selling practices and fair procurement policies ensures transparency, competitiveness and ethical decision-making throughout our supply chain. Separately, we also actively engaged with our institutional shareholders through regular dialogues and participation in investor briefings to ensure open communication and transparency. Additionally, we have established a dedicated shareholder platform on our corporate website, enabling investors to seek clarifications and stay informed about our governance and business developments. For further insights into our governance framework, the Corporate Governance Overview Statement is available on page 33 of this Annual Report. Additional governancerelated policies and reports can also be accessed on our website at www.frontken.com. Commitment to Sustainability Goal – In driving our sustainability agenda, we benchmark our progress against internationally recognised frameworks, including the Global Reporting Initiative (GRI) Framework, the United Nations Sustainable Development Goals (UN SDGs), the Responsible Business Alliance (RBA) Framework and the Bursa Malaysia FTSE Russell ESG Model Framework. For example, our commitment to responsible business practices is reflected in our alignment with 12 out of the 17 UN SDGs, with a continued focus on expanding our contributions towards achieving the global objectives. We hope to further align with these frameworks and make meaningful progress toward a more sustainable and responsible future. Further details on the Group’s Sustainability initiatives and achievements for FY2024 are available at the Sustainability section of this Annual Report and the full report on our website at www.frontken.com. CHAIRMAN’S MESSAGE (CONT’D)
FRONTKEN CORPORATION BERHAD 200401012517 (651020-T) ANNUAL REPORT 2024 12 Awards and Recognition In 2024, the Group emerged as a winner for The Edge Billion Ringgit Club for “Highest Returns to Shareholders Over Three Years” under the Technology Sector. Additionally, the Group’s subsidiaries also received numerous recognitions and awards from our customers and local authorities in areas including excellent business performance and ESG initiatives. This award is a testament to the hard work and dedication of our team. We are grateful for this recognition and are inspired to achieve greater heights. Photo courtesy of the Edge Malaysia The Edge Malaysia ESG Awards 2024 Most Improved Performance Over Three Years Above RM5B Market Capitalisation Silver One of the Awards received by our subsidiary for Production Support One of the Awards received by our subsidiary for Best Cleaning Supplier Photo courtesy of the Edge Malaysia The Edge Billion Ringgit Club Awards ceremony in FY2024 CHAIRMAN’S MESSAGE (CONT’D) Our commitment to sustainability was recognised with various accolades, including winning The Edge Malaysia ESG Awards under the category “Most Improved Performance Over Three Years” in 2024. In addition to that, we were also included in the FTSE4Good Bursa Malaysia Index and FTSE4Good Bursa Malaysia Shariah Index. This is an encouragement for us to do better and continue to pursue our long-term objectives in this area. We believe that we can make a sustainable impact in our business while providing the best value to our stakeholders.
FRONTKEN CORPORATION BERHAD 200401012517 (651020-T) ANNUAL REPORT 2024 13 BUSINESS OVERVIEW Semiconductor The global semiconductor industry experienced a recordbreaking year in 2024, with total sales reaching US$627.6 billion, marking a 19.1% increase from US$526.8 billion in 2023, as reported by the Semiconductor Industry Association (“SIA”). According to SIA President and CEO John Neuffer, this milestone represents the industry’s highest-ever annual sales, surpassing the US$600 billion mark for the first time, with double-digit growth projected for 2025. Semiconductors remain the foundation of modern technology, powering innovations in AI, generative AI, communications, medical devices, advanced transportation and defence applications1. For the Group, we witnessed a similar trend with our semiconductor business achieving solid year-on-year growth. Throughout the year, our R&D team worked closely with customers to support their advancements in leadingedge semiconductor technology. As chip evolves to smaller technology nodes, demand for high-precision chamber process parts cleaning has become increasingly stringent, making near-zero particle contamination more critical than ever. Therefore, ensuring the highest quality standards is crucial. We continued to enhance quality control through advanced metrology systems and automated data analytics to maintain exceptional process reliability. At the same time, we are continuously exploring new innovations and enhance existing processes, including in the area of ESG, where we integrate more environmentally friendly materials and automate some key steps of our operations. The advanced precision cleaning process is intricate, involving 50 - 60 meticulous steps for each component. As always, our processes continue to evolve to keep up with our customers’ demand. To improve productivity and cost-effectiveness, we made incremental improvement in our workflows, leading to higher efficiency and optimised performance. Additionally, we collaborate with customers in their innovation journeys, applying new methodologies and developing customised solutions to support their technological roadmaps. The Group has built a strong presence in major semiconductor markets including Taiwan, Singapore, and Malaysia. Moving forward, we will continue to strengthen our position in these markets by expanding capacity organically to meet the rising demand. Simultaneously, we remain committed to investing in R&D, particularly in automation and advanced cleaning technologies, to further enhance throughput and efficiency. As we strive to become the global leading service provider in semiconductor surface treatment/precision cleaning, we have to explore new strategic markets. The United States, a key semiconductor innovation hub, presents a compelling opportunity as major semiconductor companies scale up their manufacturing capacities there. Similarly, Europe’s semiconductor sector is also evolving rapidly under the European Chips Act, making it an attractive market for our services. Japan, home to some of the largest chip manufacturers, remains another key region for expansion. To that end, we are actively pursuing opportunities with strategic partners for potential collaboration in the markets where we do not yet have a physical presence. Should these discussions materialise, it will provide direct access to these new markets and thus strengthen our global footprint. We will continue to keep our shareholders updated on these developments through official company announcements. An employee in the chemical lab An employee putting a fixture into the oven Engineering 22% 78% Semiconductor Revenue in (%) in FY2024 CHAIRMAN’S MESSAGE (CONT’D) Source: 1 From SIA website
FRONTKEN CORPORATION BERHAD 200401012517 (651020-T) ANNUAL REPORT 2024 14 Taiwan – In FY2024, AGTC achieved a revenue of RM383.4 million, reflecting a strong 17% year-on-year growth. This performance was primarily driven by the recovery in demand and the production ramp-up of our key semiconductor customers. The semiconductor market experienced a resurgence in 2024, with investments in advanced node manufacturing and capacity expansions. AGTC played a crucial role in supporting this growth by providing highprecision cleaning services and specialty coating essential for semiconductor manufacturing equipment. Throughout the year, we made significant operational advancements across both of our Taiwan facilities, focusing on process optimisation, automation, and quality enhancement. These improvements have reinforced AGTC’s leadership in high-precision cleaning services, ensuring that we continue to meet the stringent cleanliness and performance requirements demanded by nextgeneration semiconductor technologies. To further support customer expansion plans and meet the growing demand, in March 2025 AGTC acquired a new 3,800 sqm plot of land (Plant 3), near its existing Plant 1, for approximately RM23.0 million. The management is in the planning stage for this proposed new state of the art facility. With this new facility, we will be able to better support our customer with its latest technology nodes. In 2024, AGTC also achieved an important milestone by celebrating its 25th anniversary. We also took the opportunity to acknowledge and reward quite a number of our colleagues that have been with us for the last 25 years. Their unwavering commitment and contributions have been instrumental in our success and we look forward to building a stronger future together as we continue expanding AGTC’s capabilities and reinforcing its position as a key player in the semiconductor ecosystem. Frontken Singapore (Semicon) – In FY2024, our semiconductor division in Singapore recorded low doubledigit growth, supported by a gradual recovery in customer demand and a price adjustment exercise implemented during the year. To counter rising operational costs, we successfully renegotiated contracts to realign pricing for specific parts, ensuring a more sustainable cost structure. This initiative, coupled with efficiency enhancements, contributed to an overall improvement in profitability. Despite these positive developments, we continue to face challenges, particularly in managing rising labour and material costs, as well as a tightening talent pool. The competitive labour market in Singapore remains a key concern, as recruiting and retaining skilled professionals in the semiconductor sector is increasingly difficult. To mitigate these risks, we focused on workforce optimisation by streamlining our teams, implementing automation in key processes and continuously improving operational efficiency to enhance margins. Looking ahead, preliminary feedback from our customers suggests optimism for 2025, with expectations of higher fab utilisation rates and increased order volumes. The anticipated ramp-up in customer production activity in Singapore is expected to support our business growth and in delivering a better performance. Frontken Malaysia (“FMSB”) – FMSB oversees precision cleaning operations across Kulim, Melaka, and Kuching. FY2024 was challenging, particularly for our Kulim facility, which experienced a fire incident in May 2024. Although the fire was swiftly contained and no employees were injured, operations were disrupted. However, thanks to our strategic emergency response plan, we promptly redirected orders to our backup facilities in Kuching and Singapore to ensure minimal disruption to our customers. While this resulted in some operational inconvenience, our proactive measures enabled us to retain all customer accounts and fulfill orders without major delays, demonstrating our resilience and strong customer commitment. However, the additional costs associated with this incident, including shipping, handling, and operational adjustments, placed pressure on our profit margins, leading to a decline in overall profitability. While a net insurance claim of RM2.2 million during the year helped offset some repair costs and loss of profits, it did not fully cover the broader financial impact. Thankfully, the facility was fully operational by October. We anticipate a steady recovery as our customers continue their expansion plans. The growth is expected to be driven by mass production of wide bandgap technology from our customer’s third wafer fab. Additionally, our ongoing collaborations with contract and equipment manufacturers are expected to further bolster our business. Engineering Throughout 2024, oil prices remained volatile due to various global factors, including fluctuating market conditions, shifting demand, and geopolitical tensions. Despite these challenges, our engineering division delivered a strong performance, achieving growth in both revenue and profitability. This was primarily driven by increased maintenance activities and a greater need for engineering support services, all of which contributed to our growth. Beyond sustaining growth through our traditional O&G operations, we continued to enhance our capabilities by diversifying our service offerings. By integrating specialty coating technologies and expanding our repair and maintenance services, we successfully captured new business opportunities and strengthened our competitive edge. Our resilience in this sector was underpinned by strong fundamentals, strategic long-term partnerships with customers and our ability to adapt to evolving market conditions, enabling us to drive steady business growth. CHAIRMAN’S MESSAGE (CONT’D)
FRONTKEN CORPORATION BERHAD 200401012517 (651020-T) ANNUAL REPORT 2024 15 Looking ahead to 2025, we anticipate continued demand for our engineering support services, fueled by rising global energy consumption and increased exploration and production activities. While challenges such as supply fluctuations and geopolitical uncertainties remain, we are cautiously optimistic about the year ahead. TTES Frontken Integrated Services (“TTES”) – In 2024, TTES continued to deliver a strong performance, achieving a year-on-year revenue and bottom-line growth. These results were primarily driven by an increased supply of original equipment manufactures’ parts and services, along with accelerated delivery of in-house works. Additionally, our ongoing expansion of service offerings further contributed to the overall improved performance. By leveraging the Group’s collective resources, we penetrated new products markets, enhanced productivity and strengthened our partnerships with both customers and suppliers. Apart from an upsurge in activities at our facility in Kemaman, we also observed a steady increase in orders at our facility in Pengerang. We aspire to be the most sought-after, reliable, and efficient one-stop service centre in the O&G industry, covering all aspects of maintenance, Engineering, Procurement, Construction & Commissioning and turnaround support. While we remain optimistic about sustaining our performance in 2025, we acknowledge that unforeseen fluctuations in the O&G market may pose challenges. Nonetheless, with our strategic initiatives in place, we are confident in our ability to navigate the evolving landscape and achieve sustainable performance. Frontken Singapore (Engineering) – Our engineering business in Singapore too, experienced a profit growth in 2024. This improvement was driven by securing higher margin jobs and receiving steady recurring orders from its O&G customers. Despite the positive performance, we encountered persistent challenges in workforce management, competitive pricing pressure, higher operational cost among others. Nonetheless, we successfully navigated these obstacles by optimising resource allocation, crosstraining skilled employees to enhance production efficiency and diversifying our project portfolio. The sector is expected to maintain its momentum through 2025, with a steady pipeline of projects from our existing clients. We anticipate an increase in thermal spray processes from both existing and new customers. Demand for rotating equipment and static components from petrochemical complexes in Jurong Island are expected particularly with planned maintenance shutdowns in the pipeline. Additionally, the confirmed turnaround projects this year will further bolster our revenue stream. As before, every new year is navigated with prudence. In 2025, our focus will be on expanding into new markets such as consumer product manufacturing while maintaining a strong presence in O&G and petrochemicals, enhancing partnerships with contract manufacturers and improving operational efficiency by addressing workforce challenges and investing in skills development. With these initiatives in place, we are confident in our ability to sustain our business performance in the coming year. Frontken Philippines (“FPI”) – In 2024, we achieve a revenue of RM17.4 million, an increase of 15% and an operating profit of RM3.6 million, up 71% compared to the year before. FPI’s financial performance demonstrates strong growth trajectory and ability to translate revenue gains into significantly higher profitability. The substantial improvements indicate that beyond revenue expansion, the company has successfully strengthened its financial foundation through strategic cost management, operational enhancements, and effective market positioning. In 2024, power generation industry was a key growth driver, securing major projects from both existing and new customers with core services including diaphragm repairs, generator testing and precision machining. To meet rising demand, FPI maximised the utilisation of Vertical Lathe and Cold Metal Transfer Welding Machines, optimising asset use and reinforcing our reputation as a trusted service provider. Despite a projected slowdown in O&G activities, we maintained strong engagement in the sector by securing fabrication projects from our customers in preparation for their upcoming drilling operations. Additionally, we have successfully penetrated the water utility industry through pump overhauling projects. FPI’s growth was driven by tailored engineering solutions, workforce development, and process standardisation. By continuously adapting to market needs and expanding our expertise, FPI is well-positioned for steady growth and innovation across diverse industries. Moving forward, we will continue to enhance our competency through comprehensive training initiatives and strategic partnerships with industry and technology experts. These efforts are integral to our goal of becoming recognised as experts in our field of services, ensuring that we deliver topnotch solutions and remain at the forefront of the industries we serve. CHAIRMAN’S MESSAGE (CONT’D)
FRONTKEN CORPORATION BERHAD 200401012517 (651020-T) ANNUAL REPORT 2024 16 LOOKING AHEAD As we look ahead, we remain focused on strengthening our position as a leading provider of advanced precision cleaning and specialty coating solutions for the semiconductor industry and a “one stop shop” for our engineering services. With the continued expansion of global semiconductor manufacturing and the increasing complexity of chip technologies, we see significant opportunities to grow alongside our customers by enhancing our capabilities, increasing capacity and expanding our market reach. In our core markets – Taiwan, Singapore and Malaysia, we will continue to invest in automation, process innovation and capacity expansion to meet rising demand while improving efficiency and throughput. At the same time, we are actively exploring new strategic markets to support the industry’s evolving needs. The United States, Europe, Japan and potentially India present key opportunities, given the increasing focus on semiconductor self-sufficiency and capacity expansion in these regions. Additionally, we will continue to invest in research and development to advance our cleaning technologies, ensuring that we remain at the forefront of the industry. While we recognise the challenges posed by global economic uncertainties, we remain cautiously confident in our long-term growth strategy. With our strong technical expertise, commitment to operational excellence and close partnership with our customers and original equipment makers, we are well-positioned to capitalise on emerging opportunities and create sustainable value for our stakeholders. APPRECIATION I would like to take this opportunity to thank our Board of Directors for their continuous guidance, strategic advice and steadfast support throughout the year. To my team, thank you for your dedication and hard work. Your commitment to excellence and continuous improvement has been instrumental in driving the success of our Group. In November last year, I received the sad news of the demise of one of our key senior managements, Mr. George Lagos, the President of Frontken Philippines who have been in the Company for the last 21 years. We have lost a competent and exceptional personality that has helped shape the Company with great commitment and made significant contribution. It has been a real honour and privilege to have made his acquaintance and worked with him. To our valued customers, I would like to extend my gratitude for your continued partnership and confidence in us. We remain committed to delivering the highest quality solutions and look forward to strengthening our collaboration for our mutual success. To our business associates, various ministries, government agencies and regulators of the countries where we operate in, we appreciate your support and trust that you have given to us. Lastly, I would like to express our sincere appreciation to all our stakeholders for your unwavering support and trust in us. Your contributions play a vital role in our journey toward sustainable growth. As we move forward, we remain committed to building on our achievements, embracing new opportunities and delivering excellence in everything we do. Thank you for being part of our journey, and we look forward to achieving greater milestones together. CHAIRMAN’S MESSAGE (CONT’D)
FRONTKEN CORPORATION BERHAD 200401012517 (651020-T) ANNUAL REPORT 2024 17 FINANCIAL REVIEW REVENUE The Group’s revenue of RM569.2 million for FY2024 was 14% higher than that achieved in the previous year driven by overall better performance from the Group’s core businesses. REVENUE (by location) 2024 RM’000 % 2023 RM’000 % % change in revenue Taiwan 383,372 67 327,758 65 17 Malaysia 102,456 18 93,133 19 10 Singapore 65,935 12 64,064 13 3 Others 17,442 3 15,194 3 15 Total 569,205 100 500,149 100 14 REVENUE NET PROFIT 500,149 111,951 167,066 188,358 124,339 37.7% 2023 2023 2023 2023 2023 2023 2024 2024 2024 2024 2024 2024 569,205 136,806 198,430 219,907 151,081 38.6% PROFIT BEFORE TAX EBITDA PROFIT AFTER TAX EBITDA MARGIN 14% 22% 19% 17% 22% 0.9% RESULTS OF OPERATIONS in RM’000 Taiwan continued to be the largest contributor, accounting for 67% of the total revenue with a notable 17% growth. Volume in the semiconductor space continued to grow due to higher demand and strong orders from our customers which benefited our Taiwan subsidiary. Meanwhile, the Group’s local business also experienced higher orders from various contracts for its maintenance and repair services of mechanical rotating equipment. In the Philippines, revenue increased by 15% driven by additional projects from power industry.
FRONTKEN CORPORATION BERHAD 200401012517 (651020-T) ANNUAL REPORT 2024 18 EARNINGS In 2024, the Group achieved another remarkable performance with a historical high in both top and bottom lines. The Group’s earnings before interest, tax, depreciation and amortisation (“EBITDA”) for FY2024 was at RM219.9 million, a 17% increase from the preceding financial year. The Group’s profit after tax of RM151 million was also at its highest, with an increase of 22% compared to last year. NET CASH FREE CASH FLOW 383,877 129,890 411,473 15,244 2023 2023 2023 2023 2024 2024 2024 2024 486,144 141,820 507,154 26,155 WORKING CAPITAL CAPITAL EXPENDITURE 27% 9% 23% 72% The significant growth in profitability was attributable to higher revenue from the Group’s core businesses, including the semiconductor and oil and gas industries, alongside effective cost management. Additionally, the Group’s profit attributable to shareholders also grew by 22% to RM137 million compared to last year. Consequently, the Group’s basic earnings per share increased from 7.12 sen in FY2023 to 8.67 sen in FY2024, reflecting strong financial performance and value creation for shareholders. CASH FLOWS in RM’000 The free cash flow increased from RM129.9 million to RM141.8 million in FY2024 mainly due to higher cash generated from operations. The net cash generated from operating activities in FY2024 increased to RM166.6 million compared with RM144.0 million in FY2023; in alignment with growth in profit. The net cash outflow for financing activities was RM20.0 million in year 2024 as compared to RM71.8 million in year 2023 mainly due to the RM53.3 million received from our warrant holders upon exercise their warrants. Net cash used for investing activities increased from RM8.7 million in the preceding financial year to RM12.8 million in FY2024 mainly due to increase in capital expenditure. FINANCIAL POSITION The Group’s financial position has further strengthened with its shareholders’ fund improving from RM641.2 million to RM720.6 million as of 31 December 2024, an increase of 12%. The Group’s total assets were RM988.5 million as of 31 December 2024, an increase of 12% from RM885.4 million a year ago. This was primarily due to the increase in the Group’s cash and bank balances and fixed deposits with licensed banks by RM89.4 million and also an increase in trade receivables by RM21.6 million. The Group’s liabilities increased by RM18.1 million to RM215.6 million as of 31 December 2024 mainly from increase in trade and other payables. FINANCIAL REVIEW (CONT’D)
FRONTKEN CORPORATION BERHAD 200401012517 (651020-T) ANNUAL REPORT 2024 19 BOARD OF DIRECTORS’ PROFILE NG WAI PIN Chairman / Chief Executive Officer • Aged 59, Male, Malaysian • Appointed to the Board on 10 April 2006 Ng Wai Pin, formerly a Senior Independent Non-Executive Director of Frontken Corporation Berhad (“FCB”), was redesignated as the Chairman / Chief Executive Officer / Managing Director of the Company on 19 January 2012. He holds a Bachelor of Laws degree from University of Auckland and was admitted to the roll of barristers and solicitors of the High Court of New Zealand in 1989. He then continued practising as a barrister and solicitor in a leading legal firm in Auckland for a number of years before returning to Malaysia where he joined Shook Lin & Bok, a legal firm in Kuala Lumpur. He was admitted as an Advocate and Solicitor of the High Court of Malaya in 1993. He later became a Director and Chief Executive Officer of an oil and gas services company listed on Bursa Malaysia Securities Berhad with regional operations, before returning to private practice in law. From September 2005 to February 2009, he was the Chief Operating Officer of a company listed on the Singapore Exchange Limited and was seconded as the Chief Executive Officer of a company listed on the Australian Stock Exchange. He is also the Executive Chairman of Ares Green Technology Corporation, a public company in Taiwan, R.O.C., a subsidiary of FCB. He has no family relationship with any other Directors or major shareholders of the Company. He has not been convicted of any offences within the past five years. He has no conflict of interest with the Company. DR TAY KIANG MENG Executive Director / Chief Scientist / Chief Sustainability Officer • Aged 60, Male, Singaporean • Appointed to the Board on 10 April 2006 Dr Tay Kiang Meng holds a Bachelor of Engineering (First Class Honours) in Manufacturing Systems Engineering from University of Portsmouth, and a Master of Science in Advanced Manufacturing Systems and a PhD in Engineering from Brunel University, United Kingdom. He is responsible for research and development leading the Group’s technology roadmap, spearheading research and development (“R&D”) activities, formalising the Group’s quality systems, developing critical manufacturing technologies for FCB’s semiconductor technology and advanced materials engineering, and exploring new technology opportunities for the Group. He has more than 20 years of professional experiences in technology development, R&D, and has led some of the most significant technology innovations in semiconductorrelated manufacturing technology and advanced materials engineering. An engineer and scientist by training, Dr Tay began his professional R&D experience with research think tank, Gintic Institute of Manufacturing Technology, Singapore. Dr Tay has received honours and awards in many of his academic, research and technology development work. Dr Tay also sits on the board of the FCB’s subsidiary, Ares Green Technology Corporation. He has no family relationship with any other Directors or major shareholders of the Company. He has not been convicted of any offences within the past five years. He has no conflict of interest with the Company.
FRONTKEN CORPORATION BERHAD 200401012517 (651020-T) ANNUAL REPORT 2024 20 NG CHEE WHYE Independent Non-Executive Director • Aged 59, Male, Malaysian • Appointed to the Board on 31 July 2019 • Chairman of Audit Committee and Remuneration Committee, Member of Nomination Committee Ng Chee Whye is a Chartered Accountant with the Chartered Accountants Australia and New Zealand and holds a Bachelor of Commerce degree from the University of Canterbury, New Zealand. He began his professional career with KPMG Peat Marwick in Auckland, New Zealand, gaining experience with clients from varied industries. Following which, he relocated closer to home to assume varied Senior Finance roles with various IT related entities in Singapore and Malaysia, namely HewlettPackard Singapore (Pte) Ltd, Creative Technology Ltd and Electronic Data Systems IT Services (M) Sdn Bhd. He subsequently moved on to assume Chief Financial Officer roles with various Wealth Advisory and Fund Management entities at Prudential Fund Management Bhd, AXA Financial Services and Nexus Financial Services Pte Ltd. He has no family relationship with any other Directors or major shareholders of the Company. He has not been convicted of any offences within the past five years. He has no conflict of interest with the Company. GERALD CHIU YOONG CHIAN Non-Independent Non-Executive Director • Aged 51, Male, Singaporean • Appointed to the Board on 31 July 2019 • Member of Nomination Committee Gerald Chiu Yoong Chian holds a BA (First Class Honours) in Engineering and Master’s in Engineering (with distinction), both from the University of Cambridge, United Kingdom. He joined Dymon Asia Capital in 2012, helped establish Dymon Asia Private Equity (“DAPE”), and is a member of DAPE’s investment committee. DAPE is focused on making private equity investments in Small and Medium Enterprises in South East Asia, and aims to contribute both capital and expertise to the companies it invests in. DAPE’s current funds are Fund I (SGD300 million), Fund II (USD450 million) and Fund III (USD650 million). DAPE has offices in Singapore, Malaysia and Thailand, and has invested in 35 companies and exited 13 companies in the region across these geographies. He has no family relationship with any other Directors or major shareholders of the Company. He has not been convicted of any offences within the past five years. He has no conflict of interest with the Company. BOARD OF DIRECTORS’ PROFILE (CONT’D)
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