The Year in Review
I have the pleasure in presenting, on behalf of the Board of Directors of Manhattan Resources Limited (“MRL” or “Company” or together with its subsidiaries, “Group”), the Company’s Annual Report 2018. Year 2018 was a challenging year for the Group. We have initiated several corporate exercises to further improve the performance of the Group.
In December 2018, the renounceable non-underwritten rights issue of up to 568,765,975 Rights Shares at an issue price of S$0.0245 for each Rights Shares (“Rights Issue”) was completed. It provided shareholders with the opportunity to obtain further equity participation in the Company by subscribing for the Rights Shares. The proceeds from the Rights Issue will enable the Group to finance its working capital requirements, including our real estate project, Ningbo Yinzhou Manhattan Tower, by Manhattan Resources (Ningbo) Property Limited (“MRN”), a subsidiary of the Company, in the PRC (“Ningbo Project”).
We have been making progress in our Ningbo Project. We have completed the works for the bored piling and diaphragm walls, and the basement excavation work is expected to commence soon. Ningbo Yinzhou Manhattan Tower will be a 56-storey building, which sits on a land area of approximately 24,000 square meter and which will have a built-up area of approximately 250,000 square meter. The Ningbo Project is located in the South Commercial Park of Yingzhou District in Ningbo City and is currently expected to be completed in 2022.
On the shipping segment, we have completed the disposal of 27 tugs and 25 barges on 9 November 2018. Notwithstanding that the coal and shipping industries may appear to be recovering from economic downturns, we were of the view that the old age of the majority of the vessels (being more than twelve years) makes it cost-ineffective for the Group to continue operating its business in an extremely competitive environment. It is, therefore, appropriate to rationalise the Group’s vessels in the light of industry trends and conditions, so that the Group is able to operate its barging and shipping segment in a more cost-effective manner by using its existing younger fleet; and chartering these vessels to operate and serve its customers. Thereafter, the Directors will be able to devote more time and energy towards existing businesses, identify and explore any new business opportunities which may enhance shareholders’ value.
On the thermal energy segment, we have been continuously providing electricity to the 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). Despite the coal price fluctuation in FY2018, 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 plants. Our goal is to operate and maintain PT KP as a sustainable business that delivers long-term value and growth in the region. We have successfully retired the existing bank facilities which enables our power plant to enjoy lower financial cost in future.
On the mining segment, the Group holds 25% shareholding interests in Giantminer, which owns 100% of China-based mining company, Urumqi Jinshi Huilong Mining Co., Ltd. The applications for renewal of the permits have been submitted for approval. We will make further announcements as and when there are any material developments.
We expect 2019 to be challenging. For the Group’s property development business in the PRC, the investment and operating environment would continue to be challenging as its economic growth is gradually slowing down. Accordingly, the prospects for the PRC property market may be uncertain and challenging for the next twelve months. For the Group’s power plant business in Indonesia, the financial performance of this business segment will continue to be affected by fluctuations in coal price. We will continue to monitor the operational efficiency and cost-effectiveness of the Group’s power plant.
I would also like to express my gratitude to the late Mr Liow Keng Teck, the former board chairman and independent director who passed away on 18 July 2018. Mr Liow’s passing was a great loss to the Company. My fellow directors, our management and staff are deeply saddened by the passing of the late Mr Liow.
Separately, we welcome Mr Lee Fook Choon, to the Board as an Independent Director of the Group with effect from 18 October 2018.
On behalf of the Board, I would like to extend our heartfelt appreciation to our management and employees for their hard work and unwavering loyalty.
Finally, I want to thank all our business partners and shareholders for their continued support and we look forward to the challenges and opportunities that 2019 brings. Thank you.
Low Yi Ngo
Chief Executive Officer/Managing Director
27 March 2019