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Extracted from Annual Report 2015


As the Chairman of the Board of Directors ("the Board") of MClean Technologies Berhad ("MClean" or "the Company") it is my distinct pleasure to present our 6th Annual Report and the Audited Financial Statements for the financial year ended 31 December 2015 ("FY15"). It has been an eventful year for the Company which saw MClean pursue measured growth through the acquisition of a 55% stake in DWZ Industries Sdn Bhd. ("DWZ"). DWZ is in the business of surface finishing of metal parts for electric and electronic industries, making them a natural fit within the enlarged MClean Group. In addition, the Company's management team was further bolstered through the appointment of an experienced industry veteran as our new Chief Executive Officer ("CEO"). The Board believes that Mr. Lim Han Kiau's extensive experience in both precision cleaning as well as surface finishing will allow him to bring synergy to the enlarged Mclean Group moving forward, as we seek to create value for all our shareholders.

Industrywide, demand for traditional Hard Disk Drives ("HDD") was decidedly flat due to increased integration of Solid State Drives ("SSD") into consumer devices. Overall however, demand for storage solutions continued to remain strong, and despite the many challenges faced by the Company arising from the uncertainties in the global economic climate and a volatile marketplace, I am happy to report that MClean has managed to achieve significantly improved operational and financial performance as reflected in the reports for the period under review. Our utmost priority is to continue the conscious efforts being made by the Board to maintain a steady and sustainable growth trajectory as we continue to look for new acquisition opportunities. Sustainable diversification is key however, so any new expansion efforts will be tempered with strict fiscal responsibility to ensure that we maintain the Company's profitability.

Key Financial Highlights

MClean's strategic business model for the period under review has enabled consistent income generation, driving the Company to record a 67.6% growth in total revenue for FY15, recording RM 57.4 million as compared to RM 34.2 million for the preceding corresponding financial year. This marked increase was due to the Technical Assembly and Services Division resuming operations towards the end of the 1st Quarter of FY15 which we believe will be a key economic driver for MClean in the future. In addition, therewas an increase in contributions of 16.2% from the Surface Treatment & Precision Cleaning Divisionwhich recorded RM 39.8 million for FY15 compared to RM 34.2 million in the previous comparable period fuelled largely by income from DWZ. Gross profit margins also saw positive movement due to higher income from component and tray services as well as improved cost management which was achieved through reductions in sub-contract labour costs. Consequently, Profit Before Tax ("PBT") therefore stood at RM 3.8 million for FY15 compared to a Loss Before Tax ("LBT") of RM 5.6 million in the previous financial year. This translates into an Earnings Per Share ("EPS") of 2.73 sen attributable to the owners of the Company. The Board is optimistic that through MClean's continued efforts to grow our business as well as further develop profit making divisions, that we will be able to improve on our financial viability, moving forward.

Outlook for 2016

Looking ahead to the year to come and beyond, the HDD industry is forecasted to experience a significant segment shift between 2015 to 2018. More than 40% of HDD industry revenue and 45% of HDD petabyte demand is expected be derived from the Enterprise segment by 2018. In contrast, the Personal Computing ("PC") segment overshadowed all other segments in 2015 as it made up more than 55% of unit shipments, and more than 45% of industry petabyte shipments, and revenue.

As this segment shift ensues, Enterprise customers will increasingly influence HDD product road map and technology development plans. Meanwhile, as HDD technology becomes progressively more complex, Enterprise customers will also press for deeper integration of HDD technology at the device level into storage system solutions. Sustained demand will be further driven by the increasing transition to cloud based storage solutions in both commercial as well as personal applications in multiple industries as the Internet of Things ("IoT") becomes more prevalent.

These favourable conditions bode well for the prospects of the Company as demand for increased storage is not expected to wane in the near future. The addition of DWZ meanwhile, will allow MClean to leverage on their lower cost resources and facilities to undertake more projects in new industries. By further diversifying our revenue streams, the Company will be insulated from volatility in a specific industry, ensuring financial stability in pursuit of realising our vision of becoming the World Leader in Surface Treatment Services, specifically Precision Cleaning & Electroplating.


FY15 has been an interesting year for the Company, which has culminated in ‘MClean reaching the stage that we can now pursue further growth responsibly. On behalf of the Board, allow me to extend my heartfelt gratitude to the management team, as well as all our customers, suppliers, business associates, and shareholders for their trust and confidence. It is only through your support and hard work that we have been able to achieve success in what we do. The Board is optimistic that the year ahead will present further opportunities to extend our business while enhancing shareholder value. Exciting times are ahead, so we are committed to upholding our mandate for leadership.

Executive Chairman

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