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Chairman Statement

Chairman

Dear Shareholders:

On behalf of the Board of Directors, I am pleased to present to you the Annual Report and Audited Financial Statements of the Group and the Company for the financial year ended 31 May 2015 (“FY2015”).

Performance

The Group underwent a challenging time during the period under review. Being a major chemical player regionally, the fall in crude oil prices largely affected the overall results of the Group. Revenue decreased to RM1.55 billion in FY2015 compared to RM1.86 billion in the previous financial year ended 31 May 2014 (“FY2014”). Correspondingly, profit before taxation (“PBT”) decreased to RM29.7 million in FY2015 compared to RM43.8 million in FY2014.

The Group posted a net profit attributable to shareholders of RM2.2 million in FY2015 compared to RM9.6 million in FY2014. This contributed to consolidated net earnings per share of 1.00 sen in FY2015 compared to 4.42 sen in FY2014. Consolidated net assets per share rose to RM1.30 as at 31 May 2015 compared to RM1.27 as at 31 May 2014.

Review of Operations

The Agricultural and Industrial Chemicals Division posted revenue of RM1.27 billion in FY2015 compared to RM1.58 billion in FY2014 while segmental profit fell to RM27.6 million in FY2015 compared to RM43.1 million in FY2014. Lower prices of petrochemical products resulted in a decline in revenue although there was an increase in the actual sales volume. The agricultural chemical business faced falling demands in FY2015 worldwide which resulted in severe price competition and erosion of profit margins.

The Polymer Division posted higher revenue of RM128.4 million compared to RM118.7 million achieved in FY2014. The improved sales performance was mainly attributable to higher revenue from our sub-soil drainage products for the export market and also higher contribution from our manufacturing plant in Surabaya, Indonesia. Accordingly, the Division recorded a higher segmental profit of RM14.1 million compared to RM10.7 million recorded in FY2014.

Revenue posted by the Logistics Division declined to RM22.8 million in FY2015 compared to RM40.4 million in FY2014. The tank farm business remained stable in FY2015, but the transportation business faced stiff competition and high operational costs. Consequently, the Division posted a lower segmental profit of RM3.8 million in FY2015 compared to RM24.0 million in FY2014. Included in FY2014 was the one-off gain of RM20.1 million from the sale of Sinsenmoh Transportation Pte Ltd, a wholly-owned subsidiary of Ancom Logistics Berhad.

The Media Division posted a higher revenue of RM114.8 million in FY2015 compared to RM107.4 million in FY2014. Segmental profit improved to RM7.5 million in FY2015 from RM1.3 million in FY2014, with higher revenue, a disposal gain from investments coupled with lower impairments incurred. The Division continued to expand its media offerings in the out-of-home advertising space and is now a major player in the advertising industry.

The Investment Holding Division and others incurred an aggregated segmental loss of RM25.0 million in FY2015 compared to RM27.1 million in FY2014. The lower segmental loss was primarily due to lower corporate expenses in the investment holding company.

Future prospects

The continued weakness in the ringgit and in commodity prices is negatively affecting the domestic economy. The Board expects this situation to largely remain for the financial year ending 31 May 2016. To maintain our competitiveness in the current market situation, the Management is reviewing the business for better operational efficiencies and to optimise resources.

Barring any unforeseen circumstances, the Board is of the view that the financial performance and prospects of the Group will be satisfactory in the next financial year.

Appreciation

The Board wishes to express its appreciation to the shareholders for their unwavering loyalty and support. The Board also wishes to thank its valued customers, suppliers, bankers, business associates and the regulatory authorities for their continued assistance and co-operation.

Last but not least, the Board wishes to express its heartfelt gratitude to the Management and staff of the Group for their continuous dedication and commitment.

Dato' Johari Razak
Non-Executive Chairman
16 October 2015
Petaling Jaya,
Selangor Darul Ehsan

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