In FY2015, we celebrated the fifth anniversary of our listing on SGX Mainboard which happened to coincide with Singapore’s SG50 Jubilee Celebrations. It was also the year that the Group was able to grow on a more solid footing, thanks to the completion of the warehousing section of our Cogent 1.Logistics Hub at the end of 2014. Our capacity for warehousing income generation had significantly grown as a result, paving the way for greater resilience in the performance of our integrated logistics business. During the course of FY2015, we had realised the earnings potential of our integrated logistics hub as incrementally larger warehouse space began generating business income – at least 96% of the warehouse space were income generating by mid-FY2015.
Moving forward, the container depot section of Cogent 1.Logistics Hub is expected to have its roof-top gantry crane system completed by the fourth quarter of 2016, following the appointment of an international crane specialist, Konecranes Pte Ltd, to realise the full potential of the integrated logistics hub.
OUR PERFORMANCE IN FY2015
In FY2015, our Group achieved a full-year net profit attributable to shareholders of S$25.5 million, an increase of 3% over that of the previous year. Excluding the exceptional gains from the disposal of property, plant and equipment, the Group’s net profit for FY2015 would have outperformed that of the previous year by 40%, rising from S$17.8 million (FY2014) to S$25.0 million (FY2015). The improvement was driven by healthy topline growth coupled with effective management of business overheads amidst the challenging business environment.
Group revenue in FY2015 rose 9% to S$129.2 million, led by contribution from the Warehousing and Property Management Services, in particular, those from Cogent 1.Logistics Hub. The Automotive Logistics Management Services posted a 17% jump in revenue to S$27.5 million, driven by the robust demand for vehicle storage and transportation services to cater for the rising number of imported vehicles. The Container Depot Management Services turned in 14% higher revenue of S$22.6 million on the back of higher volume of container repairs and storage while Transportation Management Services reported 9% lower revenue of S$28.2 million as a result of declining trucking volume from certain industries.
We are pleased to propose a first and final cash dividend of 1.88 Singapore cents per ordinary share in respect of FY2015. This is lower than the 2.58 Singapore cents per ordinary share (excluding special dividend of 1.18 Singapore cents) paid out in respect of FY2014 in view of the expected near-term financial commitment for the upcoming Jurong Island chemical logistics facility project.
BUSINESS OUTLOOK AND GROWTH PROSPECTS
In Singapore today, land limitation remains an issue of significant concern plaguing businesses at large. Looking back, we are glad that we pushed ahead with our decision to develop the integrated logistics hub which can operate in a highly land-productive and cost-effective manner. Valued at S$450 million (based on an independent valuation in August 2015), our facility has been patented for its innovative design in numerous countries including but not limited to the United States, Europe, China, Hong Kong, Japan and Singapore. We believe that it will serve as a springboard for strategic expansion overseas, especially in countries that value land productivity.
On 12 October 2015, Cogent accepted the letter of intent issued by the Singapore Economic Development Board to develop, own and operate a similar multi-purpose logistics hub to support the manufacturing operations on Jurong Island. This facility will occupy up to 6 hectares of land on Jurong Island, and has a total built-up area of about 1.6 million square feet – which is the same size as the current integrated logistics hub
We are excited about working on this strategic project. We hope it will help to position the Group favourably in Singapore’s logistics industry, especially given the strong sustainable logistics demand in the high-growth energy and chemical sector in Jurong Island.
On our Malaysian operations, the Phase 1 construction of our first warehouse and container depot facilities on a 536,659 square feet land in Port Klang Free Zone was completed on 29 December 2015. Operations have commenced in January 2016 with the warehouse section fully utilised. With the successful launch of our Phase 1, we will further strengthen our foothold in Malaysia and shall proceed with our Phase 2 (final phase) within this year. This involves the construction of a warehouse on an adjacent plot of 419,482 square feet.
In spite of the current economic uncertainty around the world, we believe Cogent will be able to weather any adverse economic headwinds reasonably well given the strength of its core business fundamentals. Moving ahead, we strive to take Cogent to its next level of growth within and beyond Singapore.
CORPORATE SOCIAL RESPONSIBILITY
While we celebrate our achievements, we are mindful that Cogent desires to be remembered for having a heart of compassion for the community around us. As a Group, we are grateful to Singapore and the community here for the opportunity to grow our businesses from strength to strength. We truly believe that as our community thrives, our Group flourishes.
At the official opening of Cogent 1.Logistics Hub on 22 February 2016, which marked a significant and auspicious milestone for us, we presented a S$168,888.88 hongbao to two charities, namely, The Straits Times School Pocket Money Fund and The Business Times Budding Artists Fund. The former reaches out to children from low-income families by helping them through school, while the latter provides training in the arts for children and youths in similar family circumstances.
Earlier in 2015, the Group had donated S$100,000 to these two charities on the occasion of SG50 as well as Cogent’s fifth anniversary as a listed company on the Singapore Exchange. We also contributed S$110,000 towards Yu Neng Primary School’s outreach event, Pay-It-Forward, which raised funds for ChildAid, a children’s charity concert jointly organised by The Straits Times and The Business Times.
The Group also donated S$255,000 to St Luke’s Eldercare for its Bukit Timah Eldercare Project that helped to purchase wireless motion tracking systems for some 100 households in the Bukit Timah precinct that had elderly either staying alone at home or who were alone during the day when their family members were at work.
We are thankful that, in FY2015, we managed to outperform FY2014 despite the challenging business environment. We are in a robust position because of our sound business fundamentals and the hard work that our team has put in. Moving ahead towards our next growth phase amidst the economic challenges, we need the support of all our stakeholders. The year ahead for Cogent will no doubt be filled with obstacles. However, we believe that every cloud has a silver lining. We are hopeful that our strategic decisions to differentiate Cogent from the rest of the competition will allow us to grow from strength to strength.
We would like to take this opportunity to wish all our stakeholders a rewarding year ahead!
by Tan Yeow Khoon, Executive Chairman and Benson Tan, Executive Director & CEO