On behalf of the Board Directors of Integrated Logistics Berhad, I am pleased to present the Annual report for the year 2016, incorporating the Audited Financial Statements of the Group and the Company for the financial year ended 31 December 2016.
The Group had disposed most of its China operations in 2013 as the economic environment had become increasingly challenging and during the current year, the Group disposed of its remaining logistics operations based in Shanghai, China. With this disposal, the Group’s main logistics interest is in the 9 warehouses at Wujiang, China comprising 76,000 sq metres of floor space. All the warehouses are fully tenanted and generate a steady stream of revenue for the company.
The Group’s associated company, Hengyang Petrochemical Logistics Limited (“Hengyang”), China is currently undergoing restructuring and the Group is optimistic that once restructured, Hengyang will be well placed to face its current challenges.
The warehousing operations undertaken through a 50% joint venture with a local partner in Dubai, UAE continue to be impacted by the slump in oil prices. Although the operations recorded a better financial performance compared to the previous year, the outlook continues to be challenging. The Board is cautiously optimistic that the coming World Expo 2020 to be held in Dubai will generate demand for the Group’s warehouse facilities and contribute to achieving profitability in the coming year.
The Group’s diversification into solar energy ventures is gaining traction and the company has successfully obtained a Letter of Award from the Energy Commission to build a 10MW solar power plant at Bukit Kayu Hitam, Kedah, which is expected to be operational in 2018. This new sector looks promising and the Group is actively pursuing further opportunities in the solar energy industry. We expect to allocate more resources to the solar energy sector in the coming year and to step up the pursuit of such opportunities, the Board has appointed a new executive director, Mr Sam Loh Cheng Keat, who is spearheading the search for opportunities in this sector.
As the new solar ventures require substantial capex, the Board has decided to conserve its cash resources and defer the payment of dividends for the time being. The Board intends to re-commence payment of dividends when the various ventures undertaken generate returns and contribute to a healthy cashflow position once again.
Datuk R. Karunakaran