The Year in Review
2017 saw a challenging environment for the Group’s businesses in the region. The Group continues concentrating its efforts on the existing businesses, and the focus going forward will be on creating stable revenue base, optimising operational efficiency and cost effectiveness. As the coal market picks up moving forward, the Group has identified business opportunities and has actively made plans to direct its resources towards the shipping and barging business.
On the thermal energy front, we marked a key milestone in June 2016 by acquiring PT Kariangau Power (“PT KP”). It has continuously provided electricity to its customers in the Kariangau industry area of Balikpapan, East Kalimantan, Indonesia as well as to the Indonesian national power company, PT Perusahaan Listrik Negara (Persero). In FY2017, the Group has consolidated its full-year results to our income statement, that provides the Group with a more diversified revenue base.
Despite the coal price fluctuation in FY2017, the Management had been working diligently to mitigate the impact of fluctuation in costs to the end customers. The management and our operational teams are committed to closely monitor and control the operating costs to ensure the resilience and competitiveness of the plant. Our goal is to operate and maintain PT KP as a sustainable business that delivers long-term value and growth in the region.
In 2017, we continued to make progress in our property development arm in China. Zhong Tian Construction Group Co., Ltd has been steadily continuing its construction works for the Ningbo Yinzhou Manhattan Tower. It has completed the trial for bored piling works, and thereafter the diaphragm wall and grout works between the diaphragm wall and the adjacent buildings in FY2017. The preparation works for the bored piling and pile testing have been carefully carried out with our team’s supervision to ensure the progress in FY2018.
This iconic tower will be a 56-storey building, which sits on land area of approximately 24,000 square meters and will have built-up area of approximately 250,000 square meters. The approximately 260-meter tall building will be one of the tallest buildings in Ningbo City. The aggregate construction period is approximately five years.
Strategically located in the South Commercial Park in Yingzhou District in Ningbo City, Zhejiang province, this development will cater to the South Business District which is primed to be an emerging commercial hub in Ningbo City with a large proportion of mid to mid-upper office properties and retail facilities.
We believe that this will be a landmark that will change the skyline of Yingzhou District, and we are very excited about its potential. Ningbo City is the second largest city in Zhejiang, and one of the most important in the Yangtze River Delta. Given its continued rapid development and growth, the demand for quality commercial space remains strong. We are confident that this project will be well-received, and upon completion, should add a new source of revenue stream to the Group.
Our Indonesia shipping and barging operations turned in improved revenue records as the coal market has been enjoying a modest upturn in the region. In FY2016, we have entered into a sale and purchase agreement with a third-party industry player to transfer 22 tugs and 22 barges for a purchase consideration of IDR 170,580,000,000 (“Proposed Disposal”). The Proposed Disposal has not been completed yet. We have been working to broaden the income portfolio by widening our customer base. As part of our on-going fleet renewal exercise, we will continue to evaluate our existing assets and replace by newer and larger capacity fleet. Good progress was also made in our pipeline of new projects. We will continue to strengthen our passion in shipping and barging business as the overall coal market takes off.
On the mining front, the Group holds 25% shareholding interests in Giantminer, which owns 100% of China-based mining company, Urumqi Jinshi Huilong Mining Co., Ltd (“UJHM”), which holds mining exploration permits in three concession areas covering a total of 26.99 sq km in Tuoli County, Tacheng Area, Xinjiang Uygur Autonomous Region, PRC. We took this strategic step after evaluating our plans, and believe that this is in the best interests of the Group and our shareholders. The applications for renewal of the permits have been submitted and the preparation works. We will make further announcements as and when there are any material developments.
We have continued to deepen our presence and grow our income base in these regions. These various corporate achievements would not have been possible without the commitment and hard work of our management and staff, to whom I express my deepest appreciation. To my fellow board directors, thank you for your guidance and insightful leadership.
Finally, I want to thank all our business partners and shareholders for their support. We will continue to strive towards delivering long term sustainable growth for the Group.
Liow Keng Teck
27 March 2017