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(*Extracted From Annual Report 2019)
On behalf of the Board of Directors, it gives me great pleasure to present the Group’s performance for FY2019.
The Company maintained its profitability for the financial year 2019. Diversification remains our key strategy. After our ventures in the property construction and development, agriculture development and management services industries in recent years, in 2019, we continued to diversify our businesses and acquired a new subsidiary, Smart Life International Investment Group Co. , Limited (“Smart Life”) in Hong Kong. Smart Life then acquired Hu Bei ZeGang Supply-Chain Limited (“Hu Bei ZeGang”), a company incorporated in The People’s Republic of China, which specialises in e-commerce, trading of agriculture products and construction material etc. as well as provision of internet information services.
Below are further updates on the business of the Company:
AGRICULTURE DEVELOPMENT BUSINESS UPDATE
Our Malaysian subsidiary, RCL Kelstar Sdn. Bhd. (“RCL”), has provided an update on the multi-crop agriculture land development with 50 years concession on a total area of approximately 5,500 acres.
As at 31 December 2019, RCL has entered into five separate cooperation agreements with business partners, for the purpose of developing a multi crop agriculture development project on approximately 2,750 acres or 50% of the concession land. The cooperation allows the business partners to engage in the planting, cultivation and harvesting of approved plant species.
RCL will provide services and work with the business partners to facilitate the operations and development of the agriculture land and in turn collect management fees from these business partners.
During the financial year, as a result of revised contractual terms in three cooperation agreements, the bearer plants and corresponding deferred revenue figures of the Group have been reversed.
Additionally, RCL has completed the logging activities and successfully obtained the Use Permit on 19 July 2020, for the first block of concession land.
MANAGEMENT SERVICES BUSINESS
Our wholly-owned subsidiary Mirach HP Management Pte. Ltd. (“MHPM”) provides business and management consultancy services. MHPM is currently working with partners in Malaysia to provide marketing and sales consultancy for their business development, and hopes to acquire more human resource along the way to further develop its business.
CONSTRUCTION AND LOW COST HOUSING PROJECT
The first construction project in West Malaysia was delayed in 2019 for a considerable amount of time due to a restructuring exercise and PMSB has been in discussion with the relevant parties towards a recovery plan since 2019. The discussions were delayed due to the Movement Control Order (“MCO”) which was imposed by the government of Malaysia on 18 March 2020. PMSB has signed a final settlement agreement with the developer on 25 August 2020.
Due to the unexpected continuous delay of the second construction project, PMSB held discussions with the developer and both parties have mutually agreed to cancel the Partnership Agreement in relation to the development of individual residential unit of townhouses in West Malaysia. No cost will be incurred by the Group as a result of this cancellation.
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 selfsustaining.
DIVERSIFY INTO TRADING BUSINESS
As part of the Group’s plans to diversity into the online trading business, the Group acquired full equity interest in Smart Life International Investment Group Co. , Limited (“Smart Life”), in Hong Kong on 3 June 2019.
On 11 November 2019, Smart Life acquired a 30% equity interest in Hu Bei ZeGang, a company which specialises in e-commerce, trading of agriculture products and construction material etc. as well as provision of internet information services. For the financial year ended 31 December 2019, the Group recorded a US$294,000 share of profit from Hu Bei ZeGang.
The Group recorded total revenue of US$3.344 million in FY2019, compared to US$3.711 million in FY2018. After further diversification, the Group continues to solidify its financial performance in 2019. The revenue from 2019 was mainly contributed by the operational cooperation with business partners in the agriculture business. Additionally, the newly incorporated e-commerce and trading business has also began its operation in 4Q2019. With the continuity of future operational cooperation with business partners in the agriculture and the development of the newly incorporated e-commerce and trading business, the Board believes that the Group will continue to grow, and barring unforeseen circumstances, create and enhance shareholders’ value.
STATUS REPORT FOR THE USE OF PROCEEDS FROM PLACEMENT ISSUE IN 2019
For the placement of shares in 1Q2019, the Company raised US$3.11 million in total. The amount from the proceeds has been fully utilised as at 28 August 2020. The list below summarised the usage of the proceeds.
|Net proceeds from placement||3.11|
|Less use of proceeds:|
|Payment to vendors||0.27|
|Provision of working capital within the Group||2.84|
|Balance as at 28 August 2020||-|
EXIT FROM THE WATCH-LIST
The Company and management remain focused on getting the Company out of both the financial criteria watchlist watchlist (“Financial Watchlist”) and the Minimum Trading Price criteria Watch-List (MTP Watch-List). Management will continue to work hard on current and future business plans to enhance the performance of the Group.
In 2Q2019, we welcomed Mr Chen Chengyuan to the Board as Executive Director and Vice Chairman and Mr Chen Yizhong as Non-Executive and Non-Independent director. Chengyuan’s vast experience in the area of trading, logistics, sales and marketing on digital platforms has benefited the Board in the review processes for our businesses in China. Yizhong is a veteran in the agriculture industry and have broad knowledge of processes and products in the industry, his guidance and reviews has contributed immensely to the Board. In February 2020, following the resignation of Mr Liu Kaichun as Chief Executive Officer, Mr Chen was redesignated as Vice Chairman and Chief Executive Officer of the Group.
In 2Q2019, we also welcomed Mr Liu Kaichun to the Management Team as our new Chief Executive Officer. Kaichun’s expertise in commodity trading and the e-commerce industry is truly a boon to the company. Additionally, his local knowledge of China is also an advantage to the Group. However, due to personal reason Kaichun has left the Company in February 2020. Despite the short duration of his service, on behalf of the Board and the Company, I would like to take this opportunity to express our gratitude towards Kaichun for his contributions to the Company as Chief Executive Officer.
Last but not least, I would also like to thank all management and staff in the Group for another year of hard work, and hope that we can continue to contribute to the Company.
We sincerely thank all our stakeholders for their strong support all these years.
CHAN SHUT LI, WILLIAM
28 August 2020