On behalf of the Board of Directors of Euro Holdings Berhad (“EURO”), I am pleased to present to you the Annual Report and Financial Statements of the Group and the Company for the financial year ended 31 December 2017 ( "FY2017")
Economy and Industry Review
The Malaysian economy registered a growth of 5.9% in the fourth quarter of 2017 as private sector spending continued to be the primary driver of growth, bringing the full year’s growth to 5.9%. Major economic sectors, namely services, manufacturing, agriculture and construction, expanded during the year.
According to the Malaysia External Trade Development Corporation (MATRADE), Malaysia’s total trade for 2017 grew by 19.4% to reach RM1.774 trillion, compared to RM1.486 trillion in the previous year. Exports of most product sectors, namely manufacturing, mining and agricultural products, grew by double digit in 2017 with total exports expanding by 18.9% to RM935.39 billion. In 2017, Malaysia exported RM11.4 billion worth of furniture related products, a 6.6% increase from the year before. Our nation remains as the top ten largest furniture exporters in the world.
On 19 July 2017, the Company had announced to undertake a Private Placement exercise of up to 24,300,000 new ordinary shares in the Company (“Placement Shares”), representing up to 10% of the total issued shares of the Company (“Private Placement”).
On 22 August 2017, the Company had completed its Private Placement exercise. A total of 24,300,000 Placement Shares were issued at RM0.18 per Placement Share. The gross proceeds received from the Private Placement was RM4.4 million and approximately RM4.3 million was utilised for working capital of the Group.
EURO recorded a loss after taxation of RM3.5 million for FY2017 as compared to profit after tax was primarily due to lower margin contribution from lower revenue and higher taxation resulting from de-recognition of deferred tax assets during the year.
Loss per share of FY2017 was 1.43 sen as compared to earnings per share of 1.40 sen of the previous year. The shareholders’ equity as at 31 December 2017 increased to RM74.8 million from RM74.0 million of the previous year.
EURO made its brand present on the local and international fronts by participating at the Malaysian International Furniture Fair (MIFF) during March 2017 at Putra World Trade Center in Kuala Lumpur. The international event was participated by 550 exhibitors and nearly 20,000 attendees from 132 countries. EURO was awarded the Merit Award in the Best Presentation Awards.
Our Property Division is aggressively marketing the Damai Vista condominium while the construction works of the project are progressing as scheduled. As of 31 December 2017, the project was 47% completed and 51% of the condominiums were sold.
Outlook & Prospects
The global economy is expected to improve in the medium term. According to the International Monetary Fund’s World Economic Outlook update in January 2018, the world economy is expected to grow at 3.9% in 2018 from 3.7% of the year before. This would spur greater global trade and this would in turn benefit the ASEAN economies. Supported by consumer spending and growing momentum on infrastructure investments, growth of ASEAN-5 are expected at 5.3% in 2018. India, being our largest foreign market, is expected to overcome the temporary disruptions in 2017 and to grow at 7.4% in 2018.
Back to our home front, Malaysia’s real GDP growth is expected to grow at 5.4% in 2018 on the back of sustained consumer spending, public consumption and gross fixed capital information.
The outlook augurs well with EURO’s continued focus in improving our product range and with our devoted team, we will remain resilient to make EURO better and stronger in the ever competitive market.
The Board of Directors (“the Board”) does not recommend any payment of dividend for the year ended 31 December 2017 to conserve cash for working capital requirements and expansion plans of the Group.
On behalf of the Board, I wish to extend our heartfelt gratitude to our suppliers, contractors, bankers and valued shareholders for their invaluable support and also to the relevant government authorities for their continued guidance and assistance. Not forgetting our sincere appreciation to our valued customers and clients who have placed their trust and confidence in EURO.
To the management and staff, I would like to acknowledge their dedicated service and hard work throughout the year. I am confident that they will continue to enhance their performance to face the challenges ahead.
Finally, my gratitude to my fellow Board members for their commitment and invaluable contribution. May we continue to work hand in hand in driving the business forward and promote a sustainable growth for EURO.
Dato' Sri Mohd Haniff bin Abd Aziz
Chairman, Independent and Non-Executive Director