Dear Valued Shareholders,
On behalf of the Board of Directors of Greenyield Berhad and its Subsidiaries ("Greenyield" or the "Group"), it gives me pleasure to present to you the Annual Report and Audited Financial Statements for the financial period ended 31 December 2019 ("FPE2019")
As announced on 30 May 2019, the financial year end of the Group has been changed from 31 July 2019 to 31 December 2019. Thus, the set of audited financial statements has been made up from 01 August 2018 to 31 December 2019 covering a period of seventeen (17) months.
For the FPE2019, the Group recorded a net profit of RM4.26 million mainly due to the recording of bargain purchase following the completion of the acquisitions of SND Teguh Enterprise Sdn. Bhd. (“SND”) and Pullah PC Daud Sdn. Bhd. (“Pullah”). For the financial year ended 31 July 2018 (“FYE2018”), the net loss was RM0.4 million. The operating environment remains challenging due to continued weakness in the commodity markets which were further impacted by the breakdown in the OPEC+ Alliance, resulting in a plunge in global oil prices. This may eventually lead to a negative impact on the natural rubber prices which will impact the Group. Nevertheless, the Directors, Management team and staff will remain vigilant and are working hard towards resolving and mitigating negative factors.
For the FPE2019, the Group recorded a revenue of RM47.34 million (FYE2018: RM42.52 million). The profit before tax in the FPE2019 was RM4.54 million (FYE2018: RM0.15 million).
The revenue from the plantation business segment in the FPE2019 was RM19.26 million (FYE2018: RM20.20 million). In the case of non-plantation segment, the revenue was RM28.08 million (FYE2018: RM22.32 million).
The outlook for the coming financial year is challenging as the Group expects weak commodity prices to persist while global manufacturing and trade activities are likely to be negatively impacted by the disruptions from the COVID-19 pandemic. However, in the longer term, the Group is optimistic because of the development of new products and markets for the non-plantation segment. In addition, the Group’s investment into rubber estates in Kelantan has started to generate revenue and expected to provide a stable source of recurring income once it reaches maturity.
BUSINESS OUTLOOK AND PROSPECTS
These opportunities include continued new customer acquisitions and new product development in the non-plantation segment, and generating more revenue from rubber plantation ownership as opposed to purely generating revenue from being a supplier to plantations.
On 10 April 2019, the Group announced the completion of the acquisitions of the remaining 70% stakes in SND and Pullah. The Group now holds 100% equity interest in SND and Pullah via Gim Triple Seven Sdn Bhd (“GTS”). Both SND and Pullah are principally engaged in rubber planting and estate management and own the rights to develop and cultivate timber latex clones on 400 hectares each in Gua Musang, Kelantan. The Acquisitions enabled the Group to shift from being a minority shareholder in SND and Pullah to being the sole shareholder in both entities. This is in line with Greenyield’s long term strategy of expanding its business from supplying tools, chemicals, and fertilisers to plantations, to also include plantation ownership. The Acquisitions also increased the plantation landbank controlled by Greenyield from 400 hectares to 1,200 hectares.
The current focus of the Group will be on planting and estate management of the existing 1,200 ectares of rubber plantations in Kelantan. The Group has started to progressively exploit the rubber trees to produce rubber cup lumps for sale to nearby rubber processing factories.
The Board of Directors has on 18 December 2019 approved and declared an interim dividend of 0.20 sen per ordinary share amounting to RM667,480 for the FPE2019 which was paid on 17 January 2020. The Board of Directors do not recommend a final dividend payment for the FPE2019 for conservation of funds for working capital and potential investments in viable assets which are expected to generate future revenue streams. Going forward, the Board of Directors will review the Group’s cash flow affordability in recommending dividend payouts to shareholders.
On 26 September 2019, Givnflow Co. Ltd, a wholly-owned subsidiary of GTS, which in turn is a wholly-owned subsidiary of the Group entered into a Memorandum of Understanding (“MOU”) with SNP Co. Ltd to dispose of the assets attached to the land and transfer the land use right to SNP Co. Ltd, for a total cash consideration of VND 30.082.000.000 (equivalent to approximately RM5,422,300) plus 10% value added tax. The entering into MOU for the Proposed Disposal enables the Group to exit a tough operating environment, to focus production of plant pots in Malaysia, and at a price which is deemed fair and reasonable by the Board. The Proposed Disposal would also enable the Group to conserve cash for future investment and working capital purposes. The asset disposal will not impact the operations of the Group as the manufacturing and marketing of agricultural related systems and products including plastic related products are being undertaken by other subsidiary companies in Malaysia.
I wish to acknowledge the employees whose dedication and perseverance have contributed to the sustained operations of the Group, and ensured its reputation as a trusted and reliable partner to the Companies we served globally. On behalf of the Board, I would like to express our thanks and appreciation to our shareholders, customers, business associates, financiers, suppliers and regulatory authorities for their continued support and understanding extended to us during the financial period.
Dr Zainol Bin Md Eusof