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Dear Shareholders,

On behalf of the Board of Directors, I am pleased to present the Annual Report for the year 2017, incorporating the Audited Financial Statements of the Group and the Company for the financial year ended 31st December 2017.

Following the industrial accident at Hengyang’s Deqiao operations in April 2016 which severely impacted Hengyang’s operations, the Group’s associated company, Hengyang Petrochemical Logistics Limited (Hengyang) has secured the participation of a China GLC as an investor - China International Trust Investment Corporation (CITIC). We are confident that with CITIC’s participation, Hengyang has access to ample funds to restructure its operations & strengthen measures against accidents and fire-hazards, which will augur well for the future.

Hengyang had secured the approval of the authorities for renovation works. Plant repairs and reconstruction will commence in the near future with completion by May 2018. Commercial operations will commence upon relevant authorities.

The Dubai warehousing operations are under Integrated National Logistics (INL), a 50:50 Joint Venture with a local Dubai partner, National Trading & Developing Establishment (NTDE). The sharp slump in world oil prices since 2015 continues to seriously impact INL’s operations. Demand for warehousing and coldroom services has seen a sharp decline and to date does not show signs of recovery. In the near term, the Board expects this situation to continue and the Dubai operations are expected to continue facing difficulties in the coming financial year. There is cautious optimism though that the Dubai Expo 2020 will generate an increased demand for warehousing & coldroom services in Dubai & INL’s operations expect to benefit from such increased demand.

As the difficulties precipitated by the lack of demand for INL’s facilities are continuing, the Board is evaluating various proposals regarding the future of the Dubai operations and is not averse to serious proposals to dispose its investment in this venture.

The Group’s warehousing activity in Wujiang, China continues to make a positive contribution to the Group’s earnings. There is high 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. The management is confident of achieving higher earnings when the rental leases expire and are renewed at significantly higher rates in the coming years.

As part of the Board’s efforts to diversify the Group’s sources of revenue, the Group has diversified into the solar energy business. During the year, the Group successfully completed the installation and commissioning of the Bukit Kayu Hitam 10 MW a.c solar power project. I am pleased to inform that the 10 MW a.c solar power project was the first Large Scale Solar program to be completed under Suruhajaya Tenaga’s bidding cycle 1. The plant has been successfully energised in December 2017 with commercial operations commencing on 22 December 2017.

With the successful completion of the Bukit Kayu Hitam project, as at the end of the 2017 financial year, the Group had installed capacity of 11 MW a.c. This includes the 1 MW a.c project undertaken by wholly owned subsidiary EVN Vision Sdn Bhd where commercial operations began in December 2016. The completion of these projects will contribute positively to Group revenue and profitability in the next financial year.

As the renewable energy sector can provide a steady long-term income stream, the Group is working to further increase its investment in this sector. The experience gained in the two solar installations completed to date will stand the Group in good stead in evaluating and undertaking new solar ventures.

As such, the Company is not in a position to pay any dividends at the current time and no dividend is recommended for the year under review. The Board is confident of improved financial results in the next few years and will endeavour to resume dividend payments soonest possible.

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

 

Datuk R. Karunakaran
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Chairman