Chairman's Statement

Indeed 2019 was a tough year for the Group. The Group’s performance was impacted as a result of impairments at the Heavy Industries, Plantation and Property Divisions, as well as accelerated amortisation at the Pharmaceutical Division. Despite the fact that there was revenue growth, the Group posted a loss for the financial year due to accounting requirements. Nevertheless, as a forward-looking company, we are focused on strengthening our prospects and have charted a new course for the transformation of the Group in order to deliver value in the long-term to our shareholders.

The global economy registered a weaker growth of 2.4% in 2019, as a result of impacted trade and investment. Prolonged trade tensions between China and the US led to increased policy uncertainty and put pressure on international trade. This impacted both emerging markets and developing economies. Malaysia’s GDP growth moderated to 4.3% during the year. Key factors impacting growth were supply disruptions, particularly in the commodity sector. However, the domestic economy continued to be supported by private sector spending and growth in the services and manufacturing sectors.

Despite the challenging economic environment, the Group recorded a higher revenue of RM10.3 billion. Nevertheless, due to the impairments and accelerated amortisation, Boustead recorded a loss of RM1.3 billion for the financial year. Given the fact that profitability was impacted, Boustead was unable to fulfil its dividend policy in order to preserve cash flow and ensure the sustainability of the business. Net assets per share came in at RM1.84 while shareholders’ funds stood at RM3.7 billion for the year ended 31 December 2019.

People are a key pillar of growth. Only with strong and capable talent will we be able to propel the Group forward. Towards this end, Boustead’s talent development initiatives are geared towards cultivating a workforce that is fully engaged and aligned with the Group’s aspirations. Alongside this, the Group’s recruitment programmes allow for the injection of new talent as we move forward to expand our pool of highly skilled employees.

Sustainability not only ensures the future of the Group, it also allows us to grow in a responsible manner and contribute positively in social and environmental contexts. This is aptly illustrated by our sustainability theme for 2019, ‘Improving Today for a Better Tomorrow’.

Demonstrating Boustead’s commitment, this year’s Sustainability Report is more comprehensive, with a view towards increasing the transparency of the Group’s reporting. In addition, Boustead’s sustainability priorities have been aligned in accordance with the United Nations’ sustainable development goals. Details of the Group’s progress and achievements for the year as well as plans ahead are contained in Boustead’s standalone Sustainability Report, which accompanies this Annual Report.

The COVID-19 pandemic has expanded across national borders impacting economies around the world. The pandemic is expected to have a prolonged impact on the global economy, particularly on worldwide supply chains.

Without a doubt, the pandemic will take its toll on the local economy. However, the stringent measures in place, namely the Government’s implementation of a systematic series of movement control orders is expected to play an important part in curbing the spread of the COVID-19 pandemic.

Acknowledgement

Boustead welcomed new members to the Board in 2019, namely Dato’ Sri Amrin Awaluddin as Managing Director/Chief Executive Officer, as well as Lieutenant General Dato’ Fadzil Mokhtar (R), Dato’ Nonee Ashirin Dato’ Mohd Radzi, Mr Abraham Verghese and Mr Loong Caesar, who were appointed as Independent Non-Executive Directors. We also welcomed Encik Izaddeen Daud, who joined the Board as an Independent Non-Executive Director on 18 May 2020. The Group will certainly benefit from their distinguished backgrounds and broad experience.

My deepest appreciation to the Group’s previous Chairman, Gen. Tan Sri Dato’ Seri Panglima Mohd Ghazali Hj. Che Mat (R), who provided steadfast guidance for almost 30 years of service to the Group. In addition, the Group bids farewell to long-standing members Dato’ Sri Ghazali Mohd Ali, Dato’ Wira (Dr.) Megat Abdul Rahman Megat Ahmad, Datuk Azzat Kamaludin and Datuk Francis Tan Leh Kiah who have left the Board during the year. We wish them all the best moving forward.

The Board would like to express our gratitude to our management team for their dedicated efforts, as well as to all employees for their hard work throughout the year.

Our sincere appreciation to our major shareholder, Lembaga Tabung Angkatan Tentera for placing their trust in us. Equally important, we would like to thank our shareholders, financiers, business associates, consultants and the regulatory authorities for their continued support.

Dato’ Seri Mohamed Khaled Nordin
Chairman

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