Dear Shareholders,

On behalf of the Board of Directors of Integrated Logistics Berhad (ILB), I am pleased to present the Annual Report for the year 2010, incorporating the Audited Financial Statements of the Group and the Company for the financial year ended 31 December 2010.

 

PERFORMANCE REVIEW

The year 2010 marked a milestone in the Group's business direction. On the 12 March 2010, the Company signed a Share Sale Agreement to divest its entire Malaysian operations to AWH Equity Holdings Sdn Bhd for a total consideration of RM 170.0 million. This deal was completed in October 2010.

As the Malaysian business environment became increasingly challenging in the late 1990s, the Group began to seek out new growth areas and identified China as having attractive growth potential.

The Group succeeded in gaining a foothold in China, and prior to the divestment, the operations there were already contributing to two-thirds of Group Revenue.

With this divestment, the Company is gradually utilising the sale proceeds for investments overseas and new revenue contributions are gradually expected to more than make up the shortfall in revenue from the divestment of the Malaysian operations.

The Group recorded an improved performance in 2010. Although revenue for the year under review was slightly lower at RM 178.9 million compared with RM 187.0 million in the previous year, it was mainly due to the disposal of the Malaysian operations where the exercise was completed on 1 October 2010.

The Group pre-tax profit amounted to RM 25.5 million compared to RM 10.4 million previously, mainly due to an exceptional gain of RM13.7 million arising on the sale of the Malaysian operations, giving earnings per share of 10.8 sen compared with a loss of 2.2 sen previously.

 

SHARE BUY-BACK

During the financial year ended 31st December 2010, the Company purchased a total of 7,417,400 ordinary shares of RM1-00 each of the issued share capital from the open market at an average price of RM0.978 per share. The total consideration for the share buy-back was RM 7,255,528 and was financed by internally generated funds.

On 15 June 2010, a total of 9,025,100 treasury shares costing RM 7,674,945 were distributed to the shareholders pursuant to a share dividend for the financial year ended 31 December 2009 on the basis of 1 treasury share for every 20 existing ordinary shares of RM1.00 each held.

The market value of the share dividend at the distribution date was RM 8,483,594.

All the shares purchased during the financial year ended 31st December 2010 have been retained as treasury shares, and the total number of shares retained as treasury shares as at 31 December 2010 was 9,731,400 ordinary shares of RM100 each.

 

DIVIDENDS

The Board is pleased to recommend for shareholders approval, a first and final dividend of 3.5 sen per share less 25% income tax and a special dividend of 5.0 sen per share less 25% income tax for the financial year ending 31 December 2010.

 

REVIEW OF OPERATIONS

MALAYSIA

Upon completion of the disposal of the Group's Malaysia operations in October 2010, Malaysia operation has minimal contribution towards the turnover and profitability of the Group.

CHINA

The total revenue of the Group's operations in China increased by 5% to RM11 9.9 million in 2010. During the year, the Group has expanded its logistics operations to Beijing, Chongqing, and Xiamen. The expansion will further enhance the logistics network of the Group in China.

With the expansion during the year, the Group's operations in China covers strategic cities including Shenzhen, Shanghai, Beijing, Chongqing, Xiamen, Wujiang and Xinxiang.

In view of the relatively high economic growth in China, the Group expects its China operations to continue to contribute positively to the earnings of the Group.

DUBAI

The Group's investment in Dubai is vide its joint controlled entity, Integrated National Logistics DWC LLC. The construction of a warehouse with coldroom facilities is expected to be completed by the fourth quarter of 2011.

 

PROSPECTS

CHINA

China's GDP growth is projected to continue at sustainable growth rate exceeding 7% over the next 5 years. The China Government's policies in stimulating domestics consumption is expected to increase the demand for logistics services across China.

After the completion of the disposal of the Malaysia operations, the Group has additional resources for the expansion in strategic logistics markets in China.

With the establishment of geographically strategic operations of the Group's logistics network in China, the Board is confident that the turnover and profitability of the China operations will increase in the coming years.

DUBAI

The Group's investment in Dubai is located strategically in close proximity to the Dubai Jebel Ali Port and is well positioned to serve as the regional distribution centre in the Middle- East. The warehouse is expected to contribute positively to the Group's earnings upon its completion in the fourth quarter of 2011.

 

ACKNOWLEDGEMENTS

Arising out of the sale of the Malaysian operations, the Executive Director in charge, Mr Chin Then Yoon, retired from the Group after a career spanning 37 years.

On behalf of the Board, I would like to place on record ILB's appreciation to Mr Chin Then Yoon for his long dedicated service during his years with the Group. The Board wishes him success in his future endeavours.

I also wish to express ILB's appreciation to the management and staff of the Group for their continuing dedication, commitment and diligence during the year. Our sincere appreciation is also extended to our valued customers, business associates, shareholders and other stakeholders.

 

Datuk Karownakaran @ Karunakaran
...........................................................
Chairman