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Corporate Overview

With the divestment of part of the Group’s warehousing and logistics operations in the last few years and in its effort to diversify the earnings base, the Group has ventured into solar renewable energy business and is currently operating a combine capacity of 11 MWac of solar plants in Malaysia.

Financial Performance

For the financial year ended 2018 (“FYE 2018”), the Group recorded a revenue of RM24.5 million as compared to RM16.3 million in the financial year ended 2017 (“FYE 2017”). The increase in revenue was mainly contributed by the income generated from the 10 MWac solar plant in Bukit Kayu Hitam which commenced operation in December 2017.

The loss after tax of the Group for FYE 2018 increased significantly to RM102.0 million from RM2.6 million as recorded in FYE 2017. This was mainly due to:-

  1. Impairment of shareholders loan and accrued interest on the shareholders loan, arising from the Proposed Disposal of ILB’s 50% equity in Integrated National Logistics DWC-LLC (“INL”), totalling RM75.4 million; and
  2. Additional impairment of RM 8.8 million made on its investment in Hengyang Petrochemical Logistics Limited reflected the drop in the market share price of Hengyang from S$0.295 per share to S$0.199 per share.
Review of Operations
  1. Warehousing in Wujiang, PRC
    The warehousing operations in Wujiang, China comprising a total of 9 warehouses with warehouse space of 76,000 sq. meters, has been reporting a revenue of RM14.9 million in FYE 2018 compared to RM14.5 million in FYE 2017. These warehouses are fully tenanted on long term leases with built-in rental increase clauses. During the year, the management has successfully renegotiated the tenancy agreement with higher rental rate for 3 blocks of its warehouses. With that, the Group is confident of achieving higher rental yield for the coming financial year.

  2. Warehousing in Dubai, UAE
    The warehouse operations of Integrated National Logistics DWC-LLC (“INL”) undertaken in a joint venture with a local partner, National Trading and Developing Establishment (“NTDE”) faced another difficult year as the warehouse occupancy rate remained low during the year. The market in the region still faces many challenges especially with the introduction of excise tax law on tobacco of 100%, energy drinks and carbonated soft drinks of 50%, on 1 October 2017 and Value Added Tax with effective from 1 January 2018 at standard rate of 5%.

    Due to lower projection in demand of warehouse storage, various cost rationalisation exercise had been implemented and as a result of this effort, the share of losses for FYE 2018 was reduced to RM9.9 million compared to RM15.5 million in FYE 2017.

    On 13 February 2019, the Group had announced that it had entered into a Share Sale Agreement with NTDE to dispose its equity interest in INL to NTDE for a cash consideration of AED45.0 million or approximately RM49.8 million based on the exchange rate of AED1.00:RM1.1075 as at 13 February 2019.

    Since INL’s incorporation in 2006 up to FYE 2018, INL’s accumulated losses amounted to AED131.7 million or approximately RM145.9 million. The outlook of INL is not expected to improve in the near future and the Group is expected to inject additional shareholders loan to fund the repayment of INL’s bank loans and operating expenditure.

    In view of the above, the Group has decided to exit from INL and the proceeds from the disposal will contribute towards the funding for the Group’s expansion plan which may but not limited to solar renewable energy projects.

  3. Solar Renewable Energy Projects
    The Group’s foray into the solar renewable energy business is beginning to yield results. The Group is pleased to note that both IL Solar Sdn Bhd’s 10MWac and EVN Vision Sdn Bhd’s 1MWac solar plants achieved its targeted revenue in FYE 2018. This enabled the Group to register an improved financial performance with consistent and sustainable revenues.

    Through the solar plant’s construction and project implementation, the Group has strengthened its management team and is on a steep learning curve in managing the plants efficiently. Apart from that, operational processes have been further enhanced and best practices recorded as the Group readies itself to participate in Large Scale Solar (“LSS”) projects in the future.
Moving Forward

Despite the challenging operating environment, the Group continues to practise prudence and stay focused on delivering growth. The Group remains cognisant of the emerging risks especially the operational risks on the solar renewable energy projects and adopting various measures to manage and mitigate these risks. The Management would like to take this opportunity to thank the Board of Directors, shareholders, clients, business partners, contractors and financiers for their continuous supports.