logo
blank
header

 
blank
blank
INVESTOR RELATIONS
Message from Executive Chairman
Annual Reports
blank
blank
  blank
Message from Executive Chairman

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


Site Map  |  Copyright 2006 Equation Corp Limited . CRN 197501110N . All Rights Reserved  
 
footer