FRONTLINE COVER FA 070606 CR2.indd

frontline technologies corporation ltd
annual report 2006 7
Accel Frontline has filed for Initial Public Offering (“IPO”)
with the Bombay Stock Exchange and National Stock
Exchange. If successful, Accel Frontline’s IPO in India would
strengthen our brand name, provide access to local capital
market in India and help propel our growth further as we
look to expand our operations into the United States and
develop a stronger presence in the Middle East region,
in places such as United Arab Emirates, Saudi Arabia and
Bahrain. The eventual listing is subject to the approvals by
the relevant authorities and prevailing market conditions.
ASEAN Business
Singapore and Malaysia
The Group also continued to make headway into
Singapore and Malaysia.
Frontline secured several large contracts, including an
Outsourcing contract with a major insurance company. We
also secured another infrastructure management contract
with a leading hospital. Frontline recorded several key
wins in the professional and managed services segments
with significant deals won in the education, financial and
telecommunication sectors.
We have acquired 100% interest in PSA Corporation’s
fully-owned subsidiary, Dalian BHR Consultancy Services
Co Ltd (“DBHR”), now renamed BHR-Frontline Technologies
(Dalian) Company Limited (“BHR-Frontline”). With a fiveyear
IT outsourcing services contract worth $20 million,
Frontline will bring its proven Outsourcing process
methodologies and consultancy experience to fulfill PSA
Corporation’s application development and management
needs. BHR-Frontline continues to provide employment
prospects for all the 170 staff of DBHR.
Frontline Malaysia made strides in the education industry
with a multi-million win to provide Universiti Putra
Malaysia with a multi-faceted operating system that will
enhance its infrastructure security and manageability, and
minimise the need for users to create multiple identities on
multiple systems.
Philippines
The year witnessed our Philippines operations securing
wins in the government and telecommunications sectors.
In October 2005, the Group increased our stake in Sun
Microsystems Philippines Ltd, from 25% to 51%. This move
will further strengthen our presence in Asia and allow us
to realise the untapped potential in Philippine’s growing
IT market as we continue to grow our presence in the
telecommunications and financial services sectors, and
keep our foothold in the government arena.
Thailand
Our associate company in Thailand, G-Able, recorded a
growth of 72.8% in revenue, achieving $145.9 million
in FY2006 compared to $84.4 million in FY2005. G-Able
continues to grow its services offerings, maintaining a
strong presence in the banking and telecommunications
sectors with new IT infrastructure and services deals with
major customers in these industries. In FY2006, G-Able
was awarded a large contract by Kasetsart University to
plan and design a mission-critical infrastructure system,
which include a disaster recovery solution to enhance the
stability, security and reliability of the system to render IT
services within the university.
A Stronger Financial Position
The Group’s balance sheet and cash position remain strong
with cash and cash reserves standing at a healthy $32.7
million, with $7.1 million cash generated from operations
during the financial year. This is after payment of
approximately $4 million in dividends in December 2005.
Net total assets (NTA) of the Group have grown to $104.3
million or 12.66 cents per share, compared to 12.54 cents
per share in FY2005. Earnings per share improved from 0.63
cent in FY2005 to 0.89 cent in FY2006, a marked increase of
41.3%. Of the NTA of 12.66 cents per share, approximately
4 cents or 31.4% are backed by cash.
Providing Good Returns to Shareholders
The Group has achieved three consecutive years of profit
earnings since FY2004 and attaining profit growth year on
year. NTA has grown similarly over the last three years. The
Group has proposed a first and final dividend of 0.6 cent
per share for FY2006 made in December 2005.
The Board of Directors is pleased to announce a dividend
policy payout of at least 30% of net profit for FY2007 to
FY2010. The Board will review, and if appropriate, revise
the dividend policy regularly to accommodate the Group’s
future cash needs.
Exciting Times Ahead
As we extend our footprint within the region through our
growth strategy as outlined above, our ability to scale
ourselves quickly by leveraging on our regional operations
to enjoy cost arbitrage will yield significant advantage for
growth. Independent market research firms such as IDC
and Gartner Research have forecasted an annual growth
rate of 8.6% for the IT industry in Asia, driven by explosive
growth in countries such as India and China, which are
expected to contribute some 63% of total IT spending in
the region.