Integrated Logistics Group (“the company”) has been providing logistics services since 1973, and had grown to be one of the largest warehousing and logistics operators in Malaysia. Since then, the Group had extended its warehousing and logistics operations to provide services to multinational companies in the People’s Republic of China (“PRC”) and Dubai.
As a leader in total logistics solutions, the company has earned international recognition for its professionalism and continues to aim to offer multinational companies quality services through fully integrated logistics management. However, in view of the challenging economic conditions in this sector the company is also diversifying into the solar energy sector.
Analysis of Financial Results
For the financial year ended 31 December 2016, the company recorded a lower revenue of RM21.65 million, as compared with RM31.48 million in the previous year. The decline in revenue is mainly due to the disposal of subsidiaries, ISH Logistics (Shanghai) Limited and ISH Cargo Services (HK) Company Limited, completed on the 8 July 2016. The revenue recorded from the disposed subsidiaries was lower at RM7.29 million compared with RM19.88 million in the previous year.
The net profit for the year amounted to RM 3.77 million as compared with a net loss of RM13.22 million in the previous year. The net profit is mainly from the gain on disposal of subsidiaries amounting to RM14.41 million. The reversal of impairment loss of RM15.82 million on investment in associate, Hengyang Petrochemical Logistics Limited, also contributed to the Net Profits for the year.
Review of Operations
i) Warehousing in Wujiang, PRC
The warehouses in the PRC are located in Jiangsu Wujiang Fenhu Economic Development Zone. During the year, the company had invested RM68.9 million in 3 new blocks of warehouses & with this expansion, the company has 9 blocks of warehouses with total built-up area of 76,000 square metres in one location, making the company the largest warehousing operator in the Wujiang region.
The warehouses have been fully tenanted and are a source of regular revenue for the company. The company continues to look for opportunities to expand the Wujiang warehousing business.
ii) Warehousing in UAE, Dubai
The warehouse complex in Dubai, occupies a total built-up area of 45,000 square metres with a total capacity of 80,000 pallet positions & has seen an improvement in its performance during the year. The coming 2020 World Expo to be held in Dubai South & the opening of the new Dubai International airport, would generate a higher demand for warehousing facilities in the coming years, which would in turn benefit the Dubai warehouse operations.
iii) (iii) Solar Energy
With the current logistics operations in the PRC & Dubai, the company continues to maintain its core business base in the logistics & warehousing field. However, in view of the increasingly competitive business environment, the company has decided to diversify into new areas to generate new sources of income & reduce its dependence on the existing logistics operations. One area identified is the solar energy industry which offers prospects of a steady long term income stream.
As part of this diversification plan, the company had in 2015 acquired 100% equity interest in EVN Vision Sdn Bhd which had approval from the Sustainable Energy Development Authority (SEDA) to build a 1MW Solar Photovoltaic Plant. This plant successfully commenced initial operations in December 2016 with commercial operations expected to commence by April 2017.
During the year, the company ventured further into this sector & its subsidiary, IL Solar Sdn Bhd, submitted a bid to build a 10MW solar power plant in Bukit Kayu Hitam, Kedah on a 31 hectare site which had been acquired for RM 30 million. The company was successful in its bid and on the 21 March 2017, received a letter of Award for the project from the Energy Commission. The project is slated for completion by the end of 2017 & is scheduled to commence operations in 2018.
The Integrated Group has its main core business as a logistics company & will continue to maintain and further improve on its logistics businesses in the PRC and Dubai. This will help ensure a high quality of service to our customers which would in turn help ensure that the businesses would continue to remain profitable.
More resources will be allocated to the promising solar energy sector which is seen as a new growth area for the company & offers steady long term revenue streams.