Message from Executive Chairman
Following the year of 2021, the year 2022 remained challenging to the Company despite the gradual recovery of the economy from the COVID-19 pandemic. The Group recorded a net loss of S$3.5 million due to the absence of revenue generated from the Company’s business of property development and investment as well as the newly acquired grocery business.
The COVID-19 pandemic has continued to affect our joint venture with Apex Development Public Company Limited (“Apex”) in Grand Bay Hotel Co., Ltd (“Grand Bay”) to jointly develop the Sheraton Phuket Grand Bay Resort (the “Sheraton Resort”) in Phuket, Thailand and the efforts to conclude the procurement of construction loans and other viable financing options. With the ease of COVID-19 restrictions in Thailand, the Group and its JV partner, Apex, are continually assessing their options, including among others, seeking funding with favourable terms to resume the development of the Grand Bay Project. We shall update the shareholders on the status of the Grand Bay Project and meaningful details of fixed milestones and timeline to completion.
SIGNIFICANT CORPORATE DEVELOPMENT
During the financial year, the total issued share capital of the Company increased from 1,326,306,667 shares to 1,392,973,333 shares resulting from the issuance and allotment of a total 66,666,666 new ordinary shares in the Company on 16 November 2022 pertaining to the first tranche of consideration shares in the total issued share capital of the Company as consideration for the proposed acquisition of Songmart Holdings Sdn. Bhd. (“Songmart Holdings”), which was issued to the shareholders of Songmart Holdings.
On 28 October 2022, the Company fully acquired all the ordinary shares of Songmart Holdings, representing 100% of the entire issued and paid-up capital of Songmart Holdings. Songmart Holdings is principally engaged in the business of trading of foodstuff, groceries, sundry goods and daily necessities under the brand “Tan Lee Heng” as well as the operation of mini-marts and convenience stores under the brand “Songmart”, and a premium supermarket under the brand “Granville” in Johor, Malaysia.
Despite the prolonged volatility in the tourism and hospitality sector, the Board of Directors of the Company (the “Board”) remains positive of the prospects in the business of property development and the Company is discussing work plans with various parties, to move forward on the Sheraton Resort.
For the supermarket sector, due to the rising inflationary pressures and the competition in the industry, the financial results as of 31 December 2022 of Songmart Holdings and its subsidiaries was in a loss-making position, which is not favourable to the Company. Songmart Holdings and its subsidiaries did not achieve the profit target for the financial year ended 31 December 2022 (“FY2022”) as stipulated in the Share Sale Agreement entered into between the Company and Tan Lee Heng (M) Sdn Bhd, Fourseas Capital Sdn Bhd and Fourseas Holdings Sdn Bhd (collectively, the “SPV Shareholders”) on 12 July 2021.
As announced in March 2023, Songmart Holdings and its subsidiary, Songmart Malaysia Sdn Bhd, had received two notices of demand in respect of overdue sums owing to a bank in Malaysia. In light of the notices of demand as well as Songmart Holding’s business performances in FY2022, the Company is planning the divestment all of the properties owned by Songmart Holdings to generate cashflow with potential plans to exit the supermarket business, should favourable terms for such proposed transaction be reached.
As highlighted in the auditors’ report, a disclaimer of opinion has been issued by the auditors on the Group’s accounts for FY2022. The auditors highlighted, among others, that due to incomplete accounting records, insufficient information and explanations provided by the management of Songmart Group throughout the audit process, the component auditors have encountered various challenges and difficulties in completing the audit of the consolidated statement of financial position of Songmart Group. We would like to emphasize that extensive approaches and efforts will be undertaken to address the audit issues in the next audit, taking into consideration, among others, the bases identified in the auditor’s report.
On behalf of the Board and management, we would like to thank our business partners, customers and shareholders for their unwavering support and staunch faith in the Group over the years. We look forward to growing the Group’s new business strategically to provide greater value to our shareholders.
MR CHANG WEI LU
Executive Chairman 13 April 2023