(Extracted from Annual Report 2018)
IT IS A PRIVILEGE TO REPORT ON A PIVOTAL YEAR IN WHICH WE DELIVERED ON PLANS TO SECURE AND BUILD THE FUTURE OF MENCAST.
Riding out the Storm
At the onset of the downturn in the oil and gas markets, Mencast moved swiftly to prepare for what we anticipated would be protracted weakness in our industry.
The first of the initiatives was to aggressively reduce surplus capacity, right-size costs and cut surplus overheads.
The second was to strengthen our balance sheet and liquidity through recycling capital and selectively disposing non-core assets. We are part way through this program, and plans are in place to dispose off the remaining parcel of non-core assets over the next two years.
We also entered into and had productive discussions with our bankers, leading to a debt restructuring agreement being concluded on 1st February 2019. This agreement supports plans to strengthen our liquidity position.
The last and most important long term initiative is securing prosperity of Mencast through building new business opportunities.
Building the Future
Mencast has identified a number of new business opportunities that leverage our existing strengths in MRO, environmental remediation and the recycling of waste products. Such businesses have a high sustainability component as they provide deep social, economic and environmental benefits to businesses and their stakeholders. Our strong relationships and distribution capabilities in Asia and across the globe position us to benefit from the growing demand for such services.
The first major business added is our dredging and reclamation business. Carried out through a 51% subsidiary, this generated over twelve million dollars of revenue in FY2018.
Demand for these services is driven by Singapore’s ongoing land reclamation works. Thus, as well as being complementary to our existing business, the dredging and reclamation business has good growth prospects. Contracts in this business are typically significant in size and long-term, bringing both growth and diversification to our revenue streams.
Innovation at the Forefront
Innovation is the most important differentiating factor in business today and Mencast Innovation Centre Pte. Ltd. (“MIC”) has been established as an incubator that provides mentorship, facilities and networking opportunities for growth companies synergistic with our Group. MIC was awarded a grant by Enterprise Singapore (formerly Spring Singapore) under the “Startup SG Accelerator” program and provides a focused platform for innovation and growth.
The power of AI and digitalization
Artificial Intelligence (“AI”) is having an enormous impact on business. McKinsey, the renowned consultancy, has estimated that AI will generate $3.5T to $5.8T of value across 19 industries.(1)
Machine learning is the area of AI that has the greatest near-term impact on business. Developed from the realization that computers could be designed to self-learn, improvements in prediction algorithms, processing power and data sets has driven enormous advances in the field of machine learning. Machine learning is the critical technology behind the development of self-driving cars, data analytics, virtual assistants, image and facial recognition.
Mencast is partnering with PhDsoft, an established company that uses machine learning to accurately predict the degradation and corrosion of complex assets over time. This technology has a strong sustainability component as it enhances asset life and uptime while reducing accident risk. This robust and proven technology has been used by super oil major companies.
Our strategic plan for Mencast is gaining momentum, but will take time to bring to full fruition. Our management and staff are working tirelessly to realise opportunities and we thank them for their efforts and resilience in responding to the market challenges. I also take this opportunity to thank my fellow directors, business partners and stakeholders for their unstinting support.
With your support I am confident that the best is yet to come.
Sim Soon Ngee Glenndle
Executive Chairman and Chief Executive Officer