Extracted from Annual Report 2009
Dear Shareholders,
The financial year ended 30 June 2009 has been a challenging
time for the Group. With the unanticipated global financial
crisis impacting the economic environment, the Group has
shown prudence in securing opportunities. We remain
vigilant and focused on ensuring growth in our businesses
and will pro-actively work out sound and forward-looking
business strategies to meet future challenges amid the
economic turmoil.
Global Business Outlook
The near collapse of the global financial system is of great
significance. Economies around the world have suffered
tremendous contraction in their bottom-line and are not out
of the woods despite the ongoing world economic recovery.
Economists have predicted that sentiments will continue to
remain negative in the coming year as there is still uncertainty
in the institutional financial sector. As predicted by analysts,
the full recovery will take a long and slow process.
The Year in Review
The Group’s businesses have not been spared by the
economic slowdown. The Group has achieved revenue of
$37.9 million, a decrease of 22.3% from $48.8 million in
the previous financial year. Our overall sales on consumer
electronic products were adversely reduced due to low
consumer spending amid the financial crisis. Falling
commodity prices and market conditions have also resulted
in low and weak trading activities, thus impacting our efforts
and volume on electronic waste recycling.
During the financial year, the Group’s 70% owned subsidiary,
Equation Resources Pte. Ltd. (“ERPL”) begun a new business
in the supply and trading of construction materials. Since the
commencement of this trade, ERPL has so far generated
satisfactory revenue of $8.5 million, a key revenue indicator
to the Group’s business.
The Company acquired 1,500,000 ordinary shares or 25%
interest from its minority shareholder at Hinterland Property
Development Pte Ltd (“Hinterland”). The 25% interest is
in addition to the 75% equity, the Company already owns
in Hinterland. Effectually in December 2008, Hinterland is a
wholly owned subsidiary of the Company. The acquisition of
the 25% interest will enable the Group to exercise its fiduciary
responsibility in playing a pivotal role to effectively manage
and control Hinterland and its subsidiary in the property
development business in China.
The net loss attributable to equity holders is $17.6 million in
the financial year in review as compared to a net profit of $0.5
million in the previous financial year.
Share Capital
On 12 March 2009, the Company issued 68,259,385 new
ordinary shares valued at $2 million in the issued share capital
of the Company to Mr. Zheng Zhuan Yao, an appointed
nominee of PT Kawasan Dinamika Harmonitama (“KDH”),
as part of the settlement pursuant to the completion of Sale
and Purchase and Co-operation Agreement entered into
between ERPL and KDH.
On 6 April 2009, the Company issued 392,642,271 new
ordinary shares in the issued and paid-up share capital of the
Company pursuant to a renounceable and non-underwritten
rights issue (“Rights Issue 2009”) at an issue price of $0.02
for each Rights Share on the basis of two (2) Rights Shares
for every five (5) existing shares then held by shareholders.
Net proceeds of $7.6 million were raised from the Rights
Issue 2009. Since the closed of the Rights Issue 2009 until 30
June 2009, an aggregate of $3.7 million proceeds from the
Rights Issue 2009, have progressively been used for general
working capital, business expansion and other acquisitions
and/or investments.
On 18 June 2009, the Company entered into Subscription
Agreements with some private subscribers pursuant to the
issuance of 89,463,221 new ordinary shares at $0.0503
per share in the issued and paid-up share capital of the
Company.
Looking Ahead
The Group continues to face challenges ahead in the current
market environment as there is still much uncertainty over
the timing and shape of recovery of the global economy. The
financial crisis had weakened demand for consumer goods
and had also drastically marked down commodity prices,
thus dampening growth prospects in the consumer electronic
products and e-waste/recycling segments of the Group.
Another avenue for the Group’s growth would be our new
investment in energy audit management. In April 2009,
Equation Energy Pte. Ltd. (“EEPL”) was incorporated as part
of the drive towards the green revolution by putting greater
importance on the reduction of energy consumption to
combat climate changes. EEPL’s expertise is to provide energy
audit and management, marketing of environmental-friendly
systems and providing professional engineering consultancy
for properties and buildings. The Group seeks to create a new
business to help position the Group in the growing energy
related industry given the efforts of government to raise public
awareness of the need to save energy.
In July 2009, the Group entered into a conditional sale
and purchase agreement to acquire Ternary Technologies
Pte. Ltd. (“Ternary”). Ternary is engaged in the Electronic
Manufacturing Services business (“EMS Business”) and
has acquired an exclusive, worldwide licence rights to
exploit commercialising the Anti-Theft technology for digital
electronic products (“Anti-Theft Technology”). The Group
seeks to maximise the value of the electronic business
segment through this strategic acquisition and to spearhead
the Group to venture into Ternary’s existing EMS Business.
The Group envisages investment in the EMS Business will
continue to have growth potential in the near future. The
Group hopes to leverage and benefit from the economy of
scale by proliferating Anti-Theft Technology in the European
markets. Anti-Theft Technology is a technology that is
embedded on consumer products to help retailers to prevent
theft and to save costs incurred from rampant theft of small
electronic device. The completion of acquisition is pending
for shareholder’s approval in an upcoming Extraordinary
General Meeting.
The Group also entered into a Shareholders’ Agreement in July
2009 for the acquisition of 51% in Weekly Marine Services Pte.
Ltd. (“WMPL”). WMPL provides marine services including
rental of crane barges, discharging equipment, stevedoring,
dumping and discharging of sea sand. The Group hopes to
expand into the marine services as we recognise potential
growth in the integration of our existing business segment of
supplying construction materials in ERPL.
We will continue to build, innovate and consolidate our
strength to find new areas of business, apart from focusing
and evaluating opportunities to expand the Group’s current
businesses.
Our continuation in our faith and believe to work diligently on
new developments will continue to motivate our Group to
maximise shareholder value in the years ahead.
Transition to Catalist Regime
On behalf of the Board, we are pleased to confirm that
the Company has appointed KW Capital Pte. Ltd. as its
Continuing Sponsor and successfully transitioned to the
Catalist Sponsor – supervised regime on 2 January 2009.
As part of our compliance to good corporate governance,
Mr Hoon Tai Meng, our former Independent Non-Executive
Director of the Company has resigned from the Board to
eliminate potential conflict of interest with KW Capital Pte.
Ltd.. Mr Hoon is currently a Registered Professional at KW
Capital Pte. Ltd..
The Company wishes to thank Mr Hoon for his contribution
and welcome Mr Lee Teck Leng as our new Independent
Non-Executive Director of the Company. The Board believes
Mr Lee’s strong credential and vast experience would bring
new values to the Group.
Appreciation
We would like to express our heartfelt appreciation to our
shareholders, customers, and business partners for their
continued trust and unwavering support.
Our gratitude also goes to our fellow Board members for
their expertise and invaluable advice.
On behalf of the Board, we thank the Management and staff
for their hard work and dedication which have been essential
in the development of the Group.
Yours sincerely,
On behalf of the Board of Directors
| Ambassador Toh Hock Ghim |
Chng Weng Wah (Eddie) |
| Chairman |
Chief Executive Officer |
30 September 2009
