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(*Extracted From Annual Report 2017)
Dear Fellow Shareholders,
On behalf of the Board and Company, I would like to report on the Group’s performance for FY2017.
The Group has done significant restructuring work in 2017 and acquired new businesses in the construction and property industry. We propose to diversify into other businesses to carry on new activities including investments in real property, investments in property-related businesses, trading of property which includes the acquisition and sale of property; the rental and leasing of property and property management activities.
For a start, we had ceased operations and surrendered the Kampung Minyak (“KM”) Oil Field in 2017. Despite the hard work and effort put into the KM Oil Field over the years, weak economic climate in the Indonesian Oil Exploration sector persisted and the Company could not bear further losses in the oil field. We thus saw a dip in revenue for FY2017.
In addition, the Group had closed off non-profitable and inactive business units, which included two subsidiaries UniTEQ Energy Services Pte. Ltd. and Acrux Procurement Singapore Pte. Ltd., that were both struck off in 2017.
In Indonesia, the Group is disposing Prima Petrolium Service (“PPS”) but this will be subject to various approvals being obtained.
The objective of all the work done in 2017 is to allow the Company more options to grow its profits, with the intention to exit the SGX watch-list.
Below are further updates on the business of the Company:
OIL AND GAS BUSINESS
Currently, the Group still retains minority ownership (10%) of the Gunung Kampung Minyak Ltd (“GKM”) Oil Field in Indonesia for further assessment in 2018.
DIVERSIFY INTO OTHER BUSINESSES INCLUDING PROPERTY AND CONSTRUCTION BUSINESS
In July 2017, the Company‘s wholly-owned subsidiary, CPHL (HK) Limited (“CPHL”) incorporated Premier Mirach Sdn. Bhd. in partnership with PRG Construction Sdn Bhd (“PCSB”) to jointly pursue property and construction projects in Malaysia and possibly other parts of Asia. CPHL and PCSB holds 75% and 25% shareholding in Premier Mirach Sdn.Bhd. (“PMSB”) respectively.
LOW COST HOUSING PROJECT
In October 2017, PMSB was awarded a construction project for the proposed construction and development of 213 units single-storey terrace houses in West Malaysia for a gross development value (“GDV”) of MYR 20,500,000 (approximately S$6,587,254). The First Project has commenced work in January 2018 and is expected to be completed over 29 months.
TOWNHOUSE DEVELOPMENT PROJECT
On 1 November 2017, PMSB entered into a conditional partnership agreement with Pacific Vintage Sdn. Bhd. (“PVSB”) for the purposes of undertaking the Second Project awarded to PVSB. The Second Project relates to the development of individual residential unit of townhouses in West Malaysia. The GDV of the Second Project is estimated at MYR 34,000,000 and the project is expected to commence in the second quarter of FY2018.
AGRICULTURE LAND (THE “PROPOSED INVESTMENT”)
On 13 February 2018, CPHL entered into a memorandum of understanding with RCL Kelstar Sdn. Bhd. (“RCL”) to acquire 70% equity interest in RCL in Malaysia with the Kelantan State Economic Development Corporation. The proposed investment provides the Company with the potential opportunity to participate in a new business.
The aggregate proposed investment value of the project is MYR 21,000,000 and is considered a major transaction under Rule 1014 of the Singapore Exchange Securities Trading Limited (“SGX-ST”) listing manual. Accordingly, the Company intends to seek shareholders’ approval, at the shareholders meeting.
SGX-ST GRANT OF THE EXTENSION OF TIME TO EXIT FROM THE WATCH-LIST
The Company wishes to put on record to shareholders the SGX-ST’s grant of the extension of the watch-list cure period to 28 February 2019 to meet the financial exit criteria as set out in Rule 1314 of the Main Board Listing Manual of the SGX-ST (“Listing Manual” and “SGX-ST 28 February 2019 Extension Grant”). The SGX-ST 28 February 2019 Extension Grant was announced by the Company on 31 August 2017.
The Group recorded total revenue of US$0.056 million in FY2017, compared to a total revenue of US$0.596 million in FY2016. This was due to only two months of oil production before the cessation of production at the KM Oil Field in February 2017.
The Company believes that the diversification into the new businesses will provide benefits to the Group and is in line with the Company’s strategy to return the Company to profitability. The Board believes that the financial performance and position of the Company will be strengthened by the new businesses, thus, creating and enhancing shareholders’ value as well as increasing market capitalisation of the Company.STATUS REPORT FOR THE USE OF PROCEEDS FROM PLACEMENT AND CONVERTIBLE LOANS ISSUE IN 2013
The following table is the status report for the use of proceeds from drawdown of Loans Issue passed by resolutions on 9 October 2013. The Company has raised a total of US$37.46 million from the placement and the loans issued in 2014.
|Net proceeds from drawdown of loans and placement||37.46|
|Less use of proceeds:|
|Repayment of senior bonds due April 2014||17.44|
|Investment in 10% stake in Gunung Indah Lestari Limited||3.00|
|Loan to Gunung Indah Lestari Limited||0.93|
|Exploration, drilling and testing activities at KM Oil Field||5.26|
|Working Capital (staff/office cost, production cost)||10.38|
|Capital expenditure at KM Oil Field||0.45|
|Balance from net proceeds||0.00|
STATUS REPORT FOR THE USE OF PROCEEDS FROM PLACEMENT ISSUE IN 2017
The following table is the status report for the use of proceeds from the share placement passed by resolutions on 7 November 2017. The Company has raised a total of US$1.27 million in November 2017.
|Net proceeds from drawdown of placement||1.27|
|Less use of proceeds:|
|Investment in 75% stake in Premier Mirach Sdn. Bhd.||0.18|
|Property and construction projects||0.36|
|Balance from net proceeds||0.73|
Seeking to grow steadily, I would like to thank Mirach employees for their dedication and contribution to the Company as we venture into new possibilities. We sincerely appreciate all the support from stakeholders and shareholders.
Executive Chairman and Chief Executive Officer
3 April 2018