On behalf of the Board Directors of Integrated Logistics Berhad (ILB), I am pleased to present the Annual Report for the year 2015, incorporating the Audited Financial Statements of the Group and the Company for the financial year ended 31 December 2015.
The Group recorded a lower revenue of RM31.5 million for the year under review as compared with RM42.4 million in the previous year. The net loss for the year amounted to RM11.9 million as compared with a net loss of RM41.1 million in the previous year which was primarily due to the provision for impairment in value of the investment in Hengyang Petrochemical Logistics Pte Limited (Hengyang).
The Group’s China operations comprise warehousing operations in Wujiang undertaken by the Group’s 65% owned subsidiary, Integrated Etern Logistics (Suzhou) Co. Limited. Under Phases 1 & 2 of the Wujiang project, a total of 6 warehouses had been built which are enjoying full occupancy. To capitalize on the demand for warehouse space, the Group undertook Phase 3 of the project involving 3 additional warehouses, 2 of which were completed during the year and have been fully taken up. The remaining warehouse will be completed and tenanted in the first half of 2016 and upon completion of the Phase 3 warehouses, the Group will have approximately 79,000 sq. metres of warehouse space, all fully taken up.
The Group holds 50% equity of a joint venture company, Integrated National Logistics DWC-LLC (INL). INL provides a wide range of high quality warehouse & coldroom facilities and valued added logistics services catering to customers across the MENA (Middle East & North Africa) region.
INL’s warehouse facilities achieved higher occupancy rates compared to the previous financial year and despite the effects of the oil price plunge since the fourth quarter of financial year 2014, INL is confident higher occupancy rates combined with improved operational efficiencies will contribute to an improved financial performance in the 2016 financial year. The Board is monitoring the situation closely and the management is striving to achieve operational profitability in the next 2 financial years.
The effects of the global economic slowdown continue to be felt. China’s Gross Domestic Product (GDP) growth for 2016 is expected to decline further to 6.5% from 6.9% recorded in 2015. However, the Group is less impacted by the GDP decline as the Wujiang’s warehouses are enjoying full occupancy.
However, the Group’s associate company, Hengyang, has been affected by the slowdown as the demand for its chemical logistics services is not as robust as envisaged. The Board however is confident of seeing improved demand for its services and a corresponding improvement in the turnover and the bottom line in financial year 2016.
Being in the middle of the oil producing Middle East region, the United Arab Emirates has been rather severely impacted by the sharp plunge in oil prices and as a result, GDP growth is expected to decline further to 2.9% from 3.8% recorded in 2015. The Group is redoubling its marketing efforts and combined with improved operational efficiencies, expects to record an improved financial performance in the coming financial year despite the challenging environment.
Dubai will be hosting the World Expo in the year 2020. The Group is optimistic that the build up to the World Expo will see a gradual improvement in demand for logistics services and INL is poised to benefit from the resultant demand in the coming years.
SOLAR ENERGY VENTURE
In its efforts to diversify the earnings base, the Group has during the year ventured into solar energy business by acquiring a company which has relevant authorities approval to set up a 1 MW solar power plant. This 1 MW solar power venture is not expected to make a significant contribution to the earnings of the Group but the experience gained will facilitate the Group’s participation in other solar power ventures which can make a meaningful contribution to Group profitability in future years.
The Board had on the 29 February 2016 declared a single tier interim dividend of 2.5 sen per share in respect of the financial year ending 31 December 2015, payable on the 8 April 2016.
SHARE BUY BACK
During the financial year ended 31 December 2015, the Company purchased a total of 3,378,900 ordinary shares of RM1-00 each of the issued & paid up share capital from the open market at an average price of RM0.787 per share. The total consideration for the share buy-back was RM3,131,527 and was financed by internally generated funds. All the shares purchased during the financial year have been retained as treasury shares and the total number of treasury shares as at 31 December 2015 was 5,288,275 ordinary shares of RM1-00 each.
I wish to express the Board’s appreciation to the management and staff of the Group for their continuing dedication, commitment and diligence during the year. Our sincere appreciation is also extended to our valued customers, business associates, shareholders and other stakeholders.
Datuk R. Karunakaran