Corporate
Home > Corporate > Management Statement > Group Managing Director
GROUP MANAGING DIRECTOR STATEMENT

On behalf of the Board of Directors, I hereby report on the performance of Oilcorp Berhad and its subsidiary companies (“Oilcorp” or “the Group”) for the financial year ended 31 December 2009.

FINANCIAL PERFORMANCE

Oilcorp posted lower revenue of RM242.9 million compared to RM346.8 million in the previous financial year. The net loss for the year is RM461.8 million. The results of the operations of the Group and of the Company during the financial year have been substantially affected by the items disclosed in the Directors’ Report to the Financial Statements on page 42, arising from the Company being designated as an Affected Listed Issuer pursuant to paragraph 2.1 (f) of the Amended Practice Note 17/2005 (“PN17”), as disclosed in Note 42(c) to the financial statements.

CORPORATE DEVELOPMENT

On 23 September 2009, Oilcorp announced that it has become an Affected Listed Issuer pursuant to Practice Note 17/2005 (“PN17”) of the Main Market Listing Requirements (“LR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”). Pursuant to PN17 of the LR, Oilcorp is required to regularise its financial conditions and level of operations on a consolidated basis within a stipulated time frame of 12 months failing which it may be regarded as a listed issuer that does not warrant continued trading and/or listing. Since then Oilcorp has been actively involved in negotiations with its lenders and also working out proposals for the regularisation plan for the Group.

On 7 January 2010, Oilcorp announced that Public Investment Bank Berhad has been appointed as the Company’s Principal Adviser for the proposed restructuring exercise of Oilcorp.

REVIEW OF OPERATIONS

The global economy has been experiencing some major challenges in the recent years. The subprime crisis in USA eventually led to credit crunch worldwide and the Group was not spared. Financial institution lenders were tightening their credit lines given to the Group and our efforts for refinancing were also made difficult. As such, the Group faced severe cash flow strain and eventually was unable to meet its commitments. On 18 September 2009, when the Group was unable to meet an interest payment due under a Collateralised Loan Obligation Programme, the Group announced a Default in Payment pursuant to Practice Note 1/2001 of Bursa Securities’ LR. Further, as the Group was unable to provide a Solvency Declaration to Bursa Securities, the Group announced that it has become an Affected Listed Issuer pursuant to PN17.

Oil and Gas

The Oil and Gas Division is one of the contributors to the revenue to the Group. Over the years, the Group has completed many contracts to the satisfaction of clients so much so that we were awarded additional contracts from our clients.

The Group is now focusing its efforts to complete the Tangga Barat Cluster project and Kumang Cluster project with a contract value of approximately RM100 million that was awarded to the Group on June 2008. The project with a total weight of approximately 6000MT consists of 2 Jackets, 2 tripods, 2 flares boom, 2 BSF and 3 inters connecting bridges. The Group, despite all odds being under PN17, is still committed to complete this project and anticipates to complete the project by end of June 2010 at its fabrication yard. The loadout is thereafter to be confirmed by our client.

We are confident, judging from our past creditable performance, our Oil and Gas Division and Offshore Fabrication Yard in Pulau Indah will still be a force to be reckoned with when the Group completes its corporate and debt restructuring and exits from PN17 classification.

The Oil and Gas business will continue to be the key area of contribution both revenue and profitability wise. The Group’s focus and resources will be geared towards this direction.

Properties and Resort Development

The Properties and Resort Management Division has had many challenges in the year 2009 in view of the current global financial crisis and the slowdown in the properties market. The Group’s status of being under PN17 has also affected sales of its properties.

Tiara Beach Resort, Port Dickson

Tiara Beach Resort has been able to be a major tourist attraction due to its close proximity to Klang Valley and the ability to provide a wide range of facilities for customer of various age groups. The resort will continue to upgrade the services and facilities to the satisfaction of the group of loyal customers.

AmanahRaya Corporate Towers and D’ Tiara Hotel Suite, Brickfields

The project boasts good transportation links with the rest of Kuala Lumpur and beyond being situated near KL Sentral, Malaysia’s main transport hub. The project comprises the construction of two tower blocks, namely a 33 storey corporate tower and a 33 storey hotel/residence suites. The six storey podium which the towers share will provide over 900 parking bays and central facilities including restaurants, seminar rooms, a health and wellness centre and a swimming pool.

The Division has entered into a joint venture with Amanahraya Development Sdn. Bhd. (“Amanahraya”), a unit of the Ministry of Finance. AmanahRaya has underwritten the sale of the corporate tower and is funding the construction of the said project. The current progress is at 40% completion. Unfortunately, the Group’s status of being under PN17 has also affected sales of the properties.

Subsequent to the financial year, on 22 March 2010, the Group announced that its wholly-owned subsidiary, D’Tiara Corp Sdn. Bhd. (“D’Tiara”) has entered into a conditional Share Sale Agreement with Amanahraya to dispose the entire issued and paid-up share capital of its wholly-owned subsidiary, Magic Coast Sdn. Bhd. (“Magic Coast”) for a consideration of RM29.0 million. The rationale for the transaction is that since Oilcorp is an Affected Listed Issuer pursuant to PN17, purchasers will have difficulty in procuring end financing and thus affecting the sales of the development. For continuity of the development, D’Tiara has entered into this agreement to dispose Magic Coast to its Joint Development partner, Amanahraya.

D’Tiara Leisure and Health Resort, Genting Sempah

The project involves the construction of a leisure and health resort with 20 resort-linked villas and land for the construction of a further 47 villas. The leisure resort facility will consist of three storey clubhouse, which will be equipped with a reception area, restaurant, swimming pool, health spa and other facilities and amenities. All the necessary approvals have been obtained for the development of the resort.

However, in view of the current situation, the Group has decided to change the concept to be a gated and guarded community living with resort lifestyle. The Group plans to develop this project as part of its turnaround restructuring scheme.

D’Tiara Waterfront Resort, Pulau Indah

The project involves the construction of a hotel, leisure and resort development on the seafront with a waterpark, resort villas, retail centre and entertainment outlets located on approximately 107 acres of land.

As the Group is under PN17 and do not have the funds to meet the balance payments for the said land, and also to commence development of the project, the Group had on 15 December 2009 announced that its subsidiary, Anjur Vista Sdn. Bhd. entered into a Sale and Purchase Agreement with Logiston Sdn. Bhd. to dispose a parcel of land held under PN 7932, Lot 74081, Mukim of Klang, Daerah Klang, Negeri Selangor (“property”) for a consideration of RM4.0 million.

FISHERIES

Konsortium Perikanan Nasional Berhad (“KPNB”) embarked on the activities of Fish Trading, Trap Fishing and Purse Seiner Fishing during the financial year 2009. Unfortunately, such activities required further funding support from Oilcorp and with the situation of the Group being under PN17, we could not persevere and business operations declined.

CHANGE OF BOARD COMPOSITION AND MANAGEMENT

Encik Mohamed Taib bin Dato’ Mahmood our honourable Chairman, retired as a director of the Company at the conclusion of the Eighth Annual General Meeting held on 29 June 2009. We hereby record our sincere appreciation for his valuable advice to the Group over the years. The Group has not filled the Chairman post since his retirement.

The Group also bid farewell to Independent Non-Executive Directors, Y.Bhg. Raime bin Unggi and Mr. Sim Ti on 18 September 2009 and the Deputy Group Managing Director Ir. Ang Choong Hug on 8 January 2010. We would also like to record our gratitude and appreciation for their contribution during their tenure as board members.

We welcome our new board members, Dato’ Aripin bin Mokhtar and Mr. Low Peck Lim who were appointed as Independent Non-Executive Directors on 9 December 2009 and 2 December 2009 respectively.

DIVIDENDS

The Directors do not recommend the payment of any dividend for the financial year ended 31 December 2009.

FUTURE OUTLOOK

The Group expects its restructuring plans to be implemented only in the year 2011 and as such expects the current unfavourable financial position of the Group to affect its performance for the financial year 2010. We believe with our continued perseverance, we can enjoy the fruits of our labour in 2011 and beyond.