Chairman's Statement
Extracted from Annual Report 2010
Dear Shareholders,
On behalf of the Board of Directors (“Board’), I am pleased to present the Annual Report and Financial Statements of SMR Technologies Berhad (“SMRTECH”) for the financial year ended 31 December 2010
PERFORMANCE REVIEW
For the financial year ended (“FYE”) 31 December 2010, the Group’s recorded a revenue of RM11.79 million representing an increase of approximately 56.28% from RM7.55 million recorded in the previous financial year.
The Group posted a net profit for the year of RM0.14 million increased compared with the previous year's net loss of RM2.52 million in FYE 2009.
This is significant turnaround for the group given the losses over the past two years. The efforts to restructure, rationalise and review the operations over the entire year in 2009 have led to positive results. In 2009, the group achieved the ISO 9000:2008 certification and implemented a project management and customer relations management systems. The Group will continue to remain focused in creating value for shareholders.
PROSPECT & OUTLOOK
While the Group continued to focus on buoyant economies in the Middle East, particularly the GCC countries: Bahrain, U.A.E., Qatar, Saudi Arabia and Sudan in North Africa, Malaysia remained as a principal market given the several new initiatives announced by the government to develop a high income economy. The Economic Transformation programme and the Government Transformation programme are expected to focus on creating a talented workforce. The demand for talent is expected to result in a demand for the Group’s solutions.
We have maintained lean operations through a partner network rather than our own offices in overseas locations. This has been the learning from the past experiences such as the disposal the US subsidiary in order to manage the losses there, We have also ensured we are not too dependent on any one country or one product to ensure we are not caught by unexpected events beyond our control.
We have commercialised most of our products. The focus is on optimising the value from R & D rather than investing any further except when it has been absolutely essential.
The company is always scanning the environment for opportunities. We have looked at the Malaysian and the Middle East opportunities and the market potential in emerging countries like India and Indonesia. The last year saw us engaged in several projects. The efficient management of projects was made possible because of the project management and the quality culture created in 2009.
The year 2010 was a significant one for the Group as we secured several large projects with the Ministry of Education, Government of Malaysia; Ministry of Works, Bahrain; Qatar Foundation; Ministry of Interior (Abu Dhabi Police); Petro Rabigh, Saudi Arabia; Petrodar, Sudan; AGFund, Saudi Arabia, Authority for Information & Technology, Brunei; There were numerous other projects both local and overseas with the private sector too.
With the demand for talent on the rise, the Group is totally confident of the demand for its solutions. As Asia’s one stop technology based HRD solutions provider, the Group is confident of the demand for its solutions and the Group’s profitability in the future,
SMR Gulf WLL, the subsidiary of SMR HR Technologies Sdn. Bhd has in 2010 increased its paid up capital and equity interest from 49% to 99%. The former local partner exited and a new local partner has one percent equity now. Recently, an internal restructure resulted in SMRT owning it 99% of SMR Gulf WLL. With positive demand in Middle East countries, the Group expects Middle East operations to continue to contribute positively towards its results for year 2011.
With the growing demand for our solutions, the Group expects its financial performance to be positive. Barring any unforeseen circumstances, the Group expects to perform better in 2011.
INDUSTRY TRENDS & DEVELOPMENT
With the continuing talent challenges faced by organisations, there have been several private and public sector initiatives to ensure maximum employment and competitiveness. There is no longer any doubt that it is talent that adds value to an organisation.
R & D EXPENSES
For the FYE 2010, the R&D expenses was at RM680, 930 capitalised to Development Cost. Most of the products have been commercialised in this year and only 4 more products are at commercialisation stage.
The Group has restructured and reclassified the products to meet immediate needs and market demands. This has been described in detail in the Products & Services page 9.
CORPORATE DEVELOPMENT
The following are some of the major corporate developments during the year:| 11 January 2010 | SMR Learning and Development Sdn. Bhd., a subsidiary of SMRTECH changed its company name to SMR HR Group. Sdn. Bhd. |
| 12 April 2010 | The Company completed the disposal of 100% equity interest in SMR USA Inc comprising 1,000 ordinary shares of USD1.00 each to Mr Murugappan Kalaimani for a total cash consideration of USD1.00. The disposal resulted in SMR USA ceasing to be a wholly-owned subsidiary of the Company. |
| 3rd May 2010 | The Company proposed to establish and implement an employees’ share option scheme (“ESOS”) of up to 20% of the issued and paid-up capital of the Company at any point in time, for eligible employees of the Company and/or its subsidiaries. On 21st May 2010, Bursa Securities had vide its letter dated 20th May 2010 given its approval for the listing of such number of additional new ordinary shares of RM0.10 each, representing up to 20% of the issued and paid-up ordinary share capital of SMRT. |
| 5 May 2010 | The Company acquired the remaining 25,000 ordinary shares of RM1.00 each in SMR HR Group Sdn Bhd representing approximately 0.92% of the total issued and paid-up share capital of SMR HRG, for a cash consideration of RM25, 000 from Business Management Systems (WA) Pty Ltd, a company incorporated in Australia. The acquisition resulted in SMR HRG becoming a wholly-owned subsidiary of the Company. |
| 13 July 2010 | SMR Gulf WLL increased its paid-up capital from Bahrain Dinars (“BD”) 20,000 to BD 50,000 by capitalising the debts owing to its shareholders, namely SMR HRT and Tatweer Management Systems WLL ("Tatweer"). |
| 19 July 2010 | SMR HRT acquired 250 shares of BD1.00 (equivalent to RM8.63) each, representing 50% of the total issued and paid-up share capital of SMR Gulf from Tatweer for a total cash consideration of BD250. The acquisition resulted in SMR Gulf being a 99%-owned subsidiary of SMR HRT. |
| 30 July 2010 | SMR HRT entered into a contract for the provision of consultancy service for the development of Technical Career Ladder & Competency Assessment System to Petrodar Operating Company ("PDOC") using HRDPower software in Khartoum, Sudan. The Contract Sum is US Dollar 128,400.00. |
| 6 August 2010 | SMR HRT awarded and accepted a Letter of Award from Authority For Info-Communications Technology Industry Of Brunei Darussalam (AITI) for the supply, delivery, installation, configuration, commission and provision of warranty and maintenance of AITI's HRMS in Brunei Darussalam for a software customisation project. The Contract Sum is Brunei Dollar 130,200.00. |
| 19 August 2010 | SMR Gulf W.L.L. awarded and duly accepted the Letter of Award from the Ministry of Works of the Government of the Kingdom of Bahrain for the implementation of the Succession Management System. The Contract Sum is Bahrain Dinars 98,250.00. |
| 22 September 2010 | SMR HR Group Sdn Bhd awarded a 3 years contract by the Ministry Of Education (MOE) for direct recruitment and management of English Language Teaching Consultants and implementation of In-Service Teachers Training for English Language Teachers in primary schools under the MOE as a Teaching English as a Second Language Teacher Capacity Enhancement Project. The Contract sum is approximately RM89,500,000-00. |
APPRECIATION
On behalf of the Board, I would like to:
- Thank all our business partners, valuable customers, suppliers, bankers, government agencies and regulatory authorities for the continued support and confidence
- Thank the key management and staff for their dedicated commitment and contribution throughout the year.
Finally, I would also like to record a note of thanks to my fellow Board members for their invaluable contributions and guidance to the Group. It is my belief that they will continue to serve you, our shareholders, well in this challenging economic environment.
R. Palan Ph.D., A.P.T.
Ph.D., A. P.T., FBILD (UK), J.B.K. (Kuching), D.P.M.P. (Perak)
Group Chairman and CEO
