SCC Holdings Berhad Annual Report 2019

9 SCC Holdings Berhad | Annual Report 2019 SEGMENTAL BUSINESS REVIEW/REVIEW OF OPERATING ACTIVITIES Our business structure is divided into 3 segments: Revenue Prospect Animal Health Products Division (“AHPD”) Revenue contribution from AHPD decreased by RM1.66m or 5.1%. Its total revenue contribution for the year represented approximately 47.1% of the Group’s total revenue. The decrease is mainly due to lower market price of the amino acid which is 17.25% lower compared with average prices of 2018. The pathogen control products posted a growth of 15.9% while feed additives products contracted by 9.8%. Domestically, according to statistic data from Department of Veterinary Services Malaysia, Malaysia had achieved self-sufficiency in livestock products for both poultry meat and chicken eggs since 2013 with 90.35% self-sufficient rate for pork in 2019. The livestock industry has a market size of approximately RM17 billion which 90% of the market control by a few big players. Penetrating into their supply network would require a lot of hard work and time consuming. The industry will also be affected by various diseases such as animal influenza etc. that could impact the productions and income of the customers. However, we have maintain very good relationship and with good quality products, also the non-antibiotic awareness by the consumers had ignite market players to look into better quality products and solutions to replace anti-biotic used for livestock industry. We have a range of very good products and also experiences in providing solutions to customers and thus a good opportunity for us to broaden our customer base in coming future. The division will continue to source new products to complement its existing range of products to enhance its product portfolio. Foodservice Equipment Division (“FSED”) The segment saw an increase in revenue of RM0.82m and improved approximately 2.43% from FYE 2018 and contributed 52.8% to the overall revenue of the Group. The increase is mainly due to rapid expansion and replacement programs of some major customers for foodservice equipment which improved by 26.7% compared with 2018. The food supplies revenue dropped 3.2% compared with 2018 due to new supplies agreement with longer supply periods but lower price had been agreed with a major customer. Statistic report from Department of Statistic Malaysia shows that the retail sector growth 7.52% y-o-y in a market worth RM537 billion in 2019 compared with 2018. Retail food and beverage (F&B) segment contributed for almost RM31 billion or 5.78% in 2019 in that sector. We foresee a continuous growth in F&B segment in Malaysia which would increase demand of foodservice equipment and food supplies for coming years. However, due to the impact from COVID-19, we would expect negative impact to the performance of the division as many would try to avoid mass gathering or crowded places for the first half of 2020. Food Manufacturing (“SCCFM”) The food manufacturing arm of the group had passes on all domestic sales and marketing to its sister company during the year. This is reflected in the accounts as its revenue dropped from RM209,000 in 2018 to merely RM69,000 in 2019. We received favorable responses for our in house developed food premixes and caramel products both domestically and overseas and started to receive orders from overseas customers for our food supplies from Cambodia, Singapore and Myanmar. The China markets development had been disrupted by the COVID-19 event and all progresses had been halted. management discussion and analysis (cont’d)