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OPERATING RESULTS
During the financial year ended 30 April 2007, the Group recorded improved revenue of RM467.87 million compared to RM402.39 million in the previous year. The 16.3% increase in revenue was a record for the Group and mainly attributed to higher export sales from the Malaysian operation in line with the global economic growth, in particular the Asian and the surrounding regions. The Group recorded a higher profit before tax of RM31.4 million compared to a profit before tax of RM18.1 million in the preceding financial year, a record increase of 73%. The increase reflects the favorable product mix achieved and the higher sales volume during the financial year.
This set of good results are attributed to the continued aggressive export drive and the introduction of several new series of highly efficient and competitive chillers and other compressorised products by the Group’s Malaysian operations which saw another year of double digit growth of its export sales by more than 73% over the export sales achieved in the previous financial year.
CORPORATE DEVELOPMENT
On 8 December 2006, AgromashHolding B.V. (“Agromash”), a company incorporated in The Netherlands, announced via a press notice that it had on 7 December 2006 entered into the Sale & Purchase Agreement (“SPA”) with, inter-alia, certain subsidiaries of Berjaya Corporation Berhad and Tan Sri Dato’ Seri Vincent Tan Chee Yioun (collectively “the Vendors”) to acquire an aggregate of 57,046,414 Dunham-Bush (Malaysia) Bhd Shares representing approximately 62.78% of the issued and paid-up share capital of the Company for a purchase consideration of RM199,662,449 or RM3.50 per Company’s Share to be satisfied entirely in cash (“the Acquisition”).
The Acquisition was completed on 30 April 2007 and the consequent mandatory take-over offer for the remaining voting shares in the Company not owned by Agromash upon completion of the Acquisition (“Offer”) closed on 1 June 2007. As a result of the Acquisition, the Offer and the subsequent purchase, Agromash now holds 98.07% of the voting shares of the Company. Agromash is principally an investment holding company for machinery producing assets. The principal activities of Agromash’s subsidiaries include production, development, maintenance, distribution and general trade in agricultural and forestry and other types of machinery and equipment.
The Agromash Group is one of the largest producers of machinery in Russia. Agromash controls manufacturing assets in Russia and the Commonwealth of Independent States such as OJSC “Tractor Company “VgTZ”, OJSC “Industrial Corporation “The Krasnoyarsk Harvester” and JSC “Industrial Corporation “The Altai Motor Plant”. Agromash Group’s production enterprises manufacture agricultural machinery, diesel motors and other kinds of machinery. Agromash also owns 80% of a Danish forest machinery manufacturer, Silvatec Skovmaskiner A/S.
RESEARCH AND DEVELOPMENT
The Malaysian research and development engineering group is working closely with their counterpart engineers from our Hartford Compressor manufacturing facility in USA, continue to develop new products and upgrade its existing product lines to meet the stringent international standards and industry requirement of higher efficiency, environmental friendly products and which are also cost competitive in the global market.
During the year under review, the team successfully designed, tested, upgraded and introduced the following new products into the market:
| 1. |
A new series of HXWC Water-Cooled Semi-Hermetic Horizontal Screw Compressor Water Chillers with capacity range from 750 kW to 2625 kW for R134a refrigerant was introduced. The chiller performance is certified by the USA Air-Conditioning and Refrigeration Institute (ARI). R134a is another refrigerant used in this series with ARI certification. |
| 2. |
The existing WCFX series of Water-Cooled Vertical Screw Compressor Water Chillers is extended its capacity range up to 2573 kW. Total 11 additional models were introduced with the combination of 2 larger new vertical hermetic screw compressors. |
| 3. |
The new series of AFVX Air-Cooled Vertical Screw Chillers with capacity range from 298 kW to 1820 kW were introduced using R134a refrigerant. This provides an alternative refrigerant to the existing R22 chillers. |
| 4. |
The new ACHDX Air-Cooled Screw Chillers with capacity range from 193 kW to 858 kW were introduced as an alternative direct expansion chiller to the existing flooded chiller lines. These products use the new refrigerant R407C, R134a or R22. |
| 5. |
The revised ACPSB-P-HP Air-Cooled Single Package Reversible Heat-Pump with heating capacity from 10 kW to 430 kW and cooling capacity from 9 kW to 396 kW using high efficiency scroll compressors. This revision includes the large capacity units which are mainly exported to South Africa, Europe and Russia. |
PROSPECTS AND STRATEGY
The Group’s strategic thrusts continue to focus on the global niche markets in the areas of high tonnage HVAC chiller products, where capability and ability of customization to orders hold the competitive edge, and supplemented by its related products, as well as marketing HVAC system-in-total with its patented thermal storage energycost- savings Ice-Cell products. The short term prospect of the Group’s revenue and profitability will remain steady and is expected to grow in line with the current availability of the Group’s production facilities and financial resources.
With the change of controlling shareholders to Agromash, the Group’s growth strategy shall expand to include acquisition of related HVAC business in wider scope and geographical areas.
In the longer term, the Group aims to have a significant presence in all the major regions and countries so that we may be better placed to tap the potential of these markets as well as to provide the required pre and post sales support.
The Group will continue to focus on research and development, not only to improve efficiency and reliability of its existing product lines but also to introduce new and innovative products for the demanding global market. Among the Group’s priorities for the current year are the continuous training and upgrading of the employees’ skill, knowledge and expertise as well as improving efficiency.
ACKNOWLEDGEMENTS
On behalf of the Board, I would like to extend the Group’s gratitude and appreciation for the past support of our previous shareholders and directors, support from the current shareholder, customers, business partners, financiers, bankers and other relevant authorities. Our sincere thanks also go to the management and staff for their commitment and dedication towards the Group.
YEO SEK CHIONG
Executive Chairman
20 September 2007
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