FRONTKEN CORPORATION BERHAD 200401012517 (651020-T) ANNUAL REPORT 2025 14 CHAIRMAN’S MESSAGE (CONT’D) The outlook for engineering support services remains cautious given ongoing geopolitical uncertainties and market volatility. While maintenance requirements are expected to sustain baseline demand, activity levels may vary depending on developments in the broader operating environment. Just like what we are doing for our other business segment, we will continue to focus on operational efficiency, cost optimisation and selective project opportunities to maintain performance. TTES Frontken Integrated Services (“TTES”) TTES recorded lower revenue and reduced profitability in FY2025, primarily due to the deferment of several major project deliveries to 2026. Projects that commenced during the year are on track for completion in 2026 and are expected to support a revenue recovery. Despite the temporary slowdown, TTES continued to strengthen its service capabilities and broaden its offerings. Strategic collaboration with local and international partners was deepened, complementing in-house technical expertise and expanding the range of solutions available to customers. These partnerships are expected to open new work categories and reinforce long-term competitiveness. Capital investment during the year was measured and targeted at growth-related initiatives and efficiency upgrades. For FY2026, planned investments include improvements to existing service centres and the establishment of a new service centre in East Malaysia to strengthen coverage and enhance responsiveness. The oil and gas sector remains inherently volatile, facing pressures from global economic conditions, competition and supply chain uncertainties. In response, TTES will continue to diversify its market exposure, strengthen execution discipline and focus on productivity improvements to protect margins. For FY2026, priorities include accelerating delivery of existing work orders, maximising utilisation of current and newly enhanced assets and expanding participation in new project categories. Frontken (Singapore) Pte Ltd (Engineering) The Singapore engineering division experienced a softer year in FY2025, with revenue declining from the prior year and falling below expectations mainly due to reduced work scopes from several key oil and gas customers as well as lower service and repair activities. Operationally, manpower availability remained a persistent challenge. Replacing skilled technical personnel particularly in specialised roles requires time and remuneration expectations remain elevated in a competitive labour market. Higher raw material prices for certain jobs also affected cost structures, although these were mitigated through pricing adjustments. Entering FY2026, this business unit is encouraged by early signs of recovery in the oil and gas sector with stronger activity at the start of the year. Contract renewal discussions and expanded service scope negotiations are ongoing. Beyond its traditional oil and gas base, the unit continues to pursue opportunities in marine, electronics and other industrial segments with several potential longterm projects. This division remains focused on restoring momentum by strengthening core customer relationships, broadening its industry exposure and enhancing operational efficiency to support sustainable performance. Frontken Philippines Inc. (“FPI”) FPI delivered stable financial performance in FY2025, broadly in line with expectations. Revenue in local currency term improved year-on-year supported by increased participation in maintenance and specialised engineering works while profitability was sustained through disciplined cost management and operational efficiency. Business activity in FY2025 was primarily driven by power generation and oil and gas industries where FPI executed critical works including turbine and generator overhauls, diaphragm and valve servicing and precision machining across geothermal, gas-powered and upstream energy facilities. Fabrication, machining and specialised maintenance activities within the oil and gas sector contributed to revenue stability with early customer engagement enabling it to align resources and capabilities ahead of drilling and production-related requirements. Looking ahead, FPI expects the power generation and oil and gas sectors to remain the primary drivers of activity in FY2026. Development opportunities in coal-fired and hydroelectric power plants, ongoing drilling activities, gas field developments and the transition of LNG facilities into steady-state operations are anticipated to support a pipeline of larger and more technically demanding scopes. FPI will continue to strengthen its execution capabilities, deepen customer and technology partner relationship and invest in workforce development to position itself for higher-value opportunities. As the Philippines economy grows, demand for electricity, fuel and water is expected to sustain service and maintenance requirements across critical infrastructure.
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