CHAIRMAN'S STATEMENT


Dear Shareholders,

On behalf of the Board of Directors, it is my great 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 2018

The global economy continues to grow at a moderate pace amid a fragile demand and lessened trade flows. There are growing downside risks to the global growth, predominantly due to factors related to trade policy uncertainty and weakening financial market sentiments.

According to Bank Negara Malaysia’s (BNM) Annual report 2018, the Malaysian economy expanded at a more moderate pace of 4.7% in 2018 (2017: 5.9%, 2016: 4.2%). Despite a positive start to 2018, the economy subsequently was confronted with several external and domestic challenges. Major policy and political shifts, arising partly from the global trade tension and the historic change of the government in Malaysia, became sources of uncertainty for the economy. Unanticipated supply disruptions in the mining and agriculture sectors, as well as commodity exports adversely affected Malaysia’s economic performance, resulting in larger-than-expected moderation in growth.

The Group has performed moderately last year. The excess supply of CPO in the market coupled with the anti-palm oil campaign gaining momentum in EU nations has resulted in a lower CPO price. The effect to MCB is lower revenue from oil palm plantation despite of a higher FFB production. Apart from plantation sector, timber logging has contributed to the Group turnover and cash flow throughout the year. During the year, we have not resumed our iron ore production due to the continued depressed price. Despite the short term adversities, we are confident to deliver better performance especially in medium and longer term for the benefit of both shareholders and other stakeholders.



GROUP’S PERFORMANCE

During the year under review, the Group recorded revenue RM16.12 million and profit after taxation of RM3.71 million compared to revenue of RM13.21 million and profit after taxation of RM1.04 million in the previous year. Our wholly-owned subsidiary, Mentiga Plantation Sdn Bhd recorded a loss after taxation of RM2.58 million compared to a profit of RM0.69 million the previous year.


PROSPECTS

We anticipate our FFB production to further improve this year as more area becomes matured and having successfully secured sufficient number of FFB harvesters. We are in the midst of complying with Malaysian Sustainable Palm Oil (“MSPO”) requirement. We anticipate to secure MSPO certification by June this year. Contrary to scientific facts, negative campaigns by some EU nations that palm oil is bad for health and rapid oil palm cultivations are damaging to the environmental have some negative impact on demand for CPO. The industry requires concerted efforts and appropriate responses by the palm oil producing countries, industry players and trade associations. We thrust that the government is able to counter this misconception. Additionally, we have high hope that the government will be successful in its effort to penetrate new markets in Pakistan and African countries. Barring further decline in CPO price we foresee better revenue from plantation sector albeit a lower margin.

Our diversification effort in Plantation sector is gaining momentum. We had commitments from several parties to participate in our durian farm project in our plantation land both in Jerantut and Sungai Lembing, Pahang. We hope to diversify our product risks without having to sacrifice our projected profitability in the plantation sector. This product diversification strategy is still within the Group earlier plan to strengthen plantation division to become the main long term income contributor.

We are optimist that we will be able to resume our iron ore mining this year as our mining licence in one mining site has been renewed and the prevailing price of iron ore is within profitable range.

Apart from the above, we anticipate positive contribution from our development project in Bandar Pusat Jengka, Pahang. In addition, we anticipate income from timber extraction and trading in timber related products.



DIVIDEND

As the Group need to allocate financial resources judiciously, we give priority to develop our oil palm estates to strengthen our income producing assets. Accordingly, the Board is not recommending any dividend payment for the year.



ACKNOWLEDGEMENT

On behalf of the Board, I wish to convey my greatest appreciation to the management and staff for their diligence, dedication, loyalty and contribution towards achieving profitability during this difficult year. I wish also to express my gratitude to the shareholders, financiers, business associates, regulatory authorities and other stakeholders for their 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.



Wassalam,

sign
YAB Dato’ Sri DiRaja Haji Adnan bin Haji Yaakob
SDSA., SSAP., DSAP., DGSM.
Chairman

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