Chairman's Message

(*Extracted From Annual Report 2018)

Dear Fellow Shareholders,

On behalf of the Board of Directors, it gives me great pleasure to present the Group’s performance for FY2018.

After years of struggle and hard work, we have finally managed to return the Company to profitability for the financial year 2018. Our turnaround strategy was to diversify our business further, following our first foray into the property and construction industry in 2017. In 2018, we acquired RCL. We also provided management services to various operational partners. In Indonesia, the Group had wound down most of its oil and gas business, except for a minority stake in Gunung Kampung Minyak in South Sumatra.

Below are further updates on the business of the Company:

RACE TO EXIT FROM THE WATCH-LIST

The Company and management firmly believe that, getting the Company out of both the financial criteria watchlist (“Financial Watchlist”) and the minimum trading price criteria watchlist and ensuring that the shares of the Company will continue to be publicly traded, will be in the best interests for all shareholders. As announced by the Company on 4 March 2019, the Company is pleased to inform shareholders that the Company is close to satisfying the requirements as stated under Rule 1314 of the Main Board Listing Manual of the SGX-ST. The Company has applied to seek a further extension of time in order to meet the exit requirements of the Financial Watchlist (Shareholders can refer to the Company’s announcements dated 28 February and 4 March 2019).

DIVERSIFY INTO AGRICULTURE DEVELOPMENT BUSINESS

On 18 July 2018, the Group completed the acquisition of 70% equity in RCL Kelstar Sdn. Bhd (“RCL”), which enabled it to participate in a new agriculture development project in Malaysia.

RCL was incorporated to hold the business of a multi-storey agricultural development project (“Project”) in Malaysia with the Kelantan State Economic Development Corporation (“KSEDC”). RCL has secured the right to jointly develop the Project together with KSEDC. The Project is a multi-crop agriculture land development with 50 years concession on a total area of approximately 5,500 acres.

AGRICULTURE BUSINESS UPDATE

As at 31 December 2018, RCL had entered into three separate cooperation agreements with business partners, whereby the partners are allowed to cultivate, harvest or sell durian trees and fruits (mainly Musang King durian trees) on approximately 1650 acres or 30% of the concession land. RCL will provide management services to these partners and in turn collect management fees from these partners. In FY2018, RCL generated revenue of MYR11.615 million (approximately US$2.877 million) through the provision of management services to the partners, and RCL will continue to bill the partners progressively as it fulfils its obligations in the next twelve months. RCL will further look for other business partners to cultivate the land separately.

MANAGEMENT SERVICES BUSINESS

Eyeing on Singapore’s position as a gateway for financial, business and management gateway for Asian business, the Group on 28 March 2018 formed a wholly-owned subsidiary, Mirach HP Management Pte. Ltd. (“MHPM”), to provide business and management consultancy services. The first job was to work with partners in Malaysia to provide marketing and sales consultancy for their business development. The Company hopes to acquire more human resource along the way to develop this business.

CONSTRUCTION AND LOW COST HOUSING PROJECT

Our Malaysian subsidiary, Premier Malaysian Sdn. Bhd. (“PMSB”), has provided an update on the construction and development of 213 units single-storey terrace houses in West Malaysia State of Perak which was awarded to PMSB for a gross development value (“GDV”) of MYR 20.500 million (approximately US$5.034 million). As of 31 December 2018, the percentage of construction for the low cost housing project situated in the Malaysia State of Perak is 14.4% and generated US$0.730 million revenue. The Group expects to complete the project in April 2020, with progressive billings to continue in the next twelve months.

OIL AND GAS BUSINESS

Currently, the Group still retains minority ownership (9%) of Gunung Kampung Minyak Ltd (“GKM”) Oil Field in Indonesia, as the business is currently self-sustaining.

CORPORATE DIRECTIONS

The Group recorded total revenue of US$3.711 million in FY2018, compared to a total revenue of US$0.056 million in FY2017. This was driven mainly by the Group’s new businesses. The new business has contributed in returning the Company to profitability. The Board believes that with future operational cooperation with business partners in the agriculture business, the Group will continue to grow, and barring unforeseen circumstances, create and enhance shareholders’ value.

While developing the agriculture business, I would like to inform shareholders that we are also looking to diversify further into other businesses and are currently negotiating with various parties, with the intention to solidify the financial performance of the Group. However, we have not finalised any agreement as yet.

STATUS REPORT FOR THE USE OF PROCEEDS FROM PLACEMENT ISSUE IN 2017

For the placement of shares in 2H2017, the Company raised US$1.27 million in total. The amount from the proceeds have been fully utilised as at 19 March 2019. The list below summarised the usage of the proceeds.

  USD' million
Net proceeds from drawdown of loans and placement 1.27
Less use of proceeds:
Investment in 75% stake in Premier Mirach Sdn. Bhd. 0.18
Property construction and development projects 0.62
Working capital for the Group 0.47
Balance as at 19 March 2019 0

STATUS REPORT FOR THE USE OF PROCEEDS FROM PLACEMENT ISSUE IN 2018

For the placement of shares in 3Q2018, the Company raised US$4.05 million in total. The amount from the proceeds have been fully utilised as at 19 March 2019. The list below summarised the usage of the proceeds.

  USD' million
Net proceeds from drawdown of placement 4.05
Less use of proceeds:
Investment in RCL Kelstar Sdn. Bhd. 3.33
Provision of working capital to RCL Kelstar Sdn. Bhd. 0.72
Balance as at 19 March 2019 0

STATUS REPORT FOR THE USE OF PROCEEDS FROM PLACEMENT ISSUE IN 2019

For the placement of shares in 1Q2019, the Company raised US$3.13 million in total. The amount from the proceeds unutilised as at 19 March 2019 amounted to US$2.77 million. The list below summarised the usage of the proceeds.

  USD' million
Net proceeds from drawdown of placement 3.13
Less use of proceeds:
Payments to the Vendors 0.27
Working capital for subsidiary (RCL Kelstar Sdn. Bhd.) 0.09
Balance as at 19 March 2019 2.77

ACKNOWLEDGEMENT

On behalf of the Board and the Company, I would like to take this opportunity to thank Mr Richard Tan Kheng Swee for his contributions to the Board as lead independent director. Richard left the Board in April 2018 to attend to his personal career.

In 2Q2018 , we welcome Mr Loo Cheng Guan to the Board as the new lead independent director and Mr Wee Cheng Kwan as the non-executive and non-independent director. Cheng Guan is a veteran in the capital market and private equity industry, and we have since benefitted from his reviews and advice and look forward to his further contributions to the Board. Cheng Kwan’s expertise in construction work and local Malaysian knowledge is also a boost to the Board’s review processes for our Malaysian business.

Last but not least, I would like express my sincere appreciation to our fellow shareholders and stakeholders for their unwavering support in the past year, and all our colleagues for their dedication and hard work.

William Chan
Executive Chairman and Chief Executive Officer
3 April 2019