On behalf of the Board of Directors, it is my pleasure to present the Annual Report and the Audited Financial Statements of Mentiga Corporation Berhad and its Subsidiaries (‘the Group’) for the financial year ended 31st December 2014.
The global economy expanded at a moderate pace in 2014, with uneven growth across and within regions. The downside risks to global economy re-emerged towards the second half of the year due to the rising concerns over the growth prospects of commodity-producing emerging economies amid the significant decline in the prices of oil and other commodities.
The Malaysian economy recorded a stronger growth of 6% in 2014 (2013: 4.7%). Growth was driven by continued strength in private domestic demand, and further lifted by improvement in external trade performance. In particular, net exports turned around to contribute positively to growth in 2014 after seven consecutive years of negative contribution, as Malaysian exports benefitted from the recovery of advanced economies and sustained demand from the regional economies.
This year will be a very challenging year for the Malaysian economy. Real GDP growth is projected to moderate, depending on the magnitude of fluctuations in crude oil prices and also movements of the ringgit exchange rate against currencies of Malaysia major trading partners. Commodity terms of trade (CTOT) shock, ringgit depreciation and anticipated higher interest rates environment are expected to adversely affect Malaysia’s domestic macroeconomic fundamentals, particularly in the short-term.
The Group is expected to be adversely affected by the expected continued downward trend of prices of certain commodities especially iron ore, palm oil and timber related products. These are economic sectors that we are involved in and rely on as main sources of income. Despite the short term adversities, we are confidence to deliver better performance especially in medium and longer term for the benefit of both shareholders and other stakeholders.
During the year under review, the Group recorded revenue of RM10,228,446 and profit for the financial year of RM636,933 compared to revenue of RM16,942,918 and profit for the financial year of RM25,885,964 (Operation profit : RM5,696,589, Gain on disposal of Pekan Land : RM20,189,375) in the previous year. The drop in revenue for the current financial year were due to significant drop of contribution from mining.
We anticipate a much lower contribution from mining activities in 2015 judging from the continued declining trend of iron ore price. The reference price of iron ore fine 62% fe (CFR Tianjin Port) had declined from USD 135 per metric ton on 31/12/2013 to USD 68 per metric ton on 31/12/2014. The downward trend of price movement is expected to continue beyond 2015.
We will continue our focus to develop our land into oil palm estates. The development of 1,064 hectares of land in Penor had been hampered by the recent flood. Nevertheless, the land is expected to completely planted by June 2015. We target to commence the planting programme on the remaining land with total land area of 3,904 hectares in the last quarter 2015. In total, we will have 7,100 hectares of planted land by 2016 and could expect a steady income stream from plantation sector from 2019 onwards.
As the Group is at critical stage of planting programme to ensure better earnings in the future, the Board has decided to conserve cash to ensure the Group has positive cash flow. As such, the Board proposed that no dividend be paid for financial year ended 31 December 2014.
On behalf of the Board, I wish to convey my appreciation to the management and staff for their diligence, dedication, loyalty and contribution towards achieving profitability during the difficult year. I wish also to express my gratitude to the shareholders, financiers, business associates, regulatory authorities and all stakeholders for the continued support and confidence for the Group. Finally, I would like to express my appreciation to the Board Members for their contributions and unwavering support during the year. I look forward for their continued enthusiasm, wisdom and cooperation in guiding the Group through the challenges in the year ahead.
YAB Dato’ Sri DiRaja Haji Adnan bin Haji Yaakob
SDSA., SSAP., DSAP., DGSM.
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