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Dear Shareholders,

On behalf of the Board of Directors, it is my pleasure to present the Annual Report for the year 2018, incorporating the Audited Financial Statements of the Group and the Company for the financial year ended 31st December 2018.


BUSINESS REVIEW

The Group’s strategic decision to venture into the solar energy business is now beginning to contribute positively to the Group’s revenue. The Group now owns two solar plants with an installed capacity of 11MWac, through its subsidiaries, IL Solar Sdn Bhd (10MWac) and EVN Vision Sdn Bhd (1MWac).

Both solar plants achieved their revenue targets for year 2018 of RM 9.3 million. IL Solar Sdn Bhd has also been acknowledged by Suruhanjaya Tenaga (ST) of having the distinction of being the first solar plant to be commissioned in December 2017 under the Large Scale Solar 1 (LSS1) programme.

The Group’s warehousing operations in Wujiang, China, continue to make a positive contribution to the Group’s earnings. There is continuing demand for warehouse space in the Wujiang area and all the 9 warehouses comprising 76,000 square metres of warehouse space continue to be fully tenanted. As the rental lease with one of its customers is nearing the end of its tenure, the management has successfully renegotiated the lease agreement at a higher rental rate. The management is confident of achieving higher rental yield for the coming financial year.

In respect of Dubai warehousing operations, the Group had on 13 February 2019 announced that it had entered into a Share Sale Agreement with National Trading & Developing Establishment to dispose of ILB’s 50% equity in the loss making operations of Integrated National Logistics DWCLLC (“INL”). INL is operating in an increasingly challenging operating environment and is expected to continue reporting losses in the coming years. The proceeds from the proposed disposal will contribute towards the funding for the Group’s expansion plan which may include (but not limited to) solar renewable energy projects.

Following the industrial accident at Hengyang’s Deqiao operations on 22nd April 2016 which severely impacted Hengyang’s operations, and the participation of a China GLC as an investor – China International Trust Investment Corporation (CITIC) in year 2017, Hengyang had secured the approval from the relevant authorities for renovation works. Repairs and reconstruction works have commenced in 2018 and are currently still continuing.


MOVING FORWARD

During the year, the Malaysian Government announced new initiatives and measures to increase the overall energy contribution from renewable energy sources from 2% currently to 20% by year 2025. In meeting this target, the Government has recently announced that it would undertake an open tender for an estimated RM2 billion worth of projects under the third cycle of the LSS (LSS3) scheme and is targeted to deliver 500MW of electricity generation capacity. Solar power in particular accounts for about 67% of Malaysia renewable energy capacity, will be a key focus to boost the generation of electricity from renewable energy sources.

Given our track record in securing project under LSS1 and the successful completion and commencement of operations ahead of other awardees, the Group will continue to bid for additional solar renewable energy projects. If we are successful, this will further increase our involvement in solar energy projects and hence contribute to our income stream.

The most important asset to any organisation is its people and the Group will continue to strengthen its management team, especially for the solar renewable energy business.

On behalf of the Board, I convey my sincere thanks to the management, employees, business partners, shareholders & stakeholders for their dedication, commitment & strong support in facing the challenges in the past. I am confident that with their continued support & commitment, the Group will overcome the challenges that it currently faces & return to profitability in the coming years.

 

Datuk R. Karunakaran
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Chairman