OPERATIONS
& FINANCIAL REVIEW
The Group continued its effort to
streamline its operations and improve
on its operational efficiencies amid
a challenging macro business
environment for the financial year
ended 31 May 2015 (“FY2015”).
During the year, the Group’s wholly-
owned subsidiary, Wuzhou Xing Jian
Ready-mix Co., Ltd (
梧州市星建混
凝土有限公司
) successfully tendered
for a piece of land of 29,640 square
metres at Wuzhou City, Guangxi
Autonomous Region in China, with
a tender price of RMB7.35 million.
This piece of land, intended for a
cement mixing plant to produce
and manufacture environmentally-
friendly lightweight bricks, building
materials and cement products, is
currently under construction. This
investment complements the Group’s
earlier acquisition of Ever Flourish
Development (HK) Co., Limited in
September 2013, which in turn
owns 40% of Maoming City Hung Ji
Construction Materials Co., Ltd. (
茂
名市宏基建材有限公司
) (“Maoming”)
which also owns and operates a
factory producing and manufacturing
environmentally-friendly lightweight
bricks, building materials and
cement products. The completion of
the cement mixing plant in Wuzhou
City, together with Maoming’s
existing factory, will strengthen the
Group’s infrastructural logistics
segment and allows the Group to
ride on the growth of the continued
industrialisation and urbanisation in
China.
The Group carried out a Rights Issue
during FY2015, raising net proceeds
of S$12.6 million. The aim of the
Rights Issue was to raise funds to pay
for the carrier vessel, for repayment
of the Group’s borrowings as well as
for working capital purposes. The
construction of the 83,000m
3
liquid
natural gas carrier vessel through its
joint venture, Steadfast (HK) Co., Ltd,
(“Steadfast”) has commenced and is
expected to complete by 2016.
As it expands its logistics capabilities,
the Group also sought to streamline
certain operations that were not
profitable. It acquired the remaining
40% stake in GKE & Mohseng Pte.
Ltd. (“GKEMS”), a company set up to
provide mobile crane rental services,
from the joint venture party, and
ceased the crane service operations.
The Group also disposed its 60%
stake in GKE Air Logistics Pte Ltd,
a company principally involved in
the provision of freight forwarding,
packing and crating services and
other transportation support.
With the streamlining, the Group
will be able to focus its efforts on
strengthening its capabilities as an
integrated logistics service provider,
while delivering better shareholder
value.
For FY2015, GKE’s third party
logistics business formed the bulk
of its operations. Under its shipping
logistics business, the carrier vessel
that is still under construction
by its 50% joint venture with
Steadfast, whereas contribution to
its infrastructural logistics business
is currently from its associate,
Maoming.
14
GKE CORPORATION LIMITED
ANNUAL REPORT 2015
