Dear Shareholders,

On behalf of the Board of Directors (the “Board”) of mDR Limited (the “Company”, and together with its subsidiaries, the “Group”), I am pleased to present to you our annual report for the financial year ended December 31, 2018.

Singapore’s economy grew by 3.2% in 2018 (2017 : 3.6%). The year was marked by rising trade conflicts, deceleration in economic growth, and looming Brexit - events which posed uncertainties and volatility in global markets including in Singapore. The Group however successfully navigated through the market uncertainties and volatility, and recorded a stable S$2.49 million in profits for the year.

2018 was a key milestone in the Group’s transformative journey. Shareholders approved the Company’s diversification in two new business segments in April 2018 - Investment and Property. Subsequently, the Company successfully completed the Rights cum Warrants issue in June 2018. The Rights Issue registered a subscription rate of 66.16% and we raised $31.2 million from the Rights subscription and $35.8 million from the exercise of Tranche 1 Warrants. Thereafter, in September 2018 shareholders approved the first major transaction under the Investment Business and also a new Constitution of the Company. The Directors (including myself, Ong Ghim Choon, Zhang Yanmin, Mark Leong and Ian Oei) subscribed for their entitlement of the Rights Issue in full. In aggregate, directors and Group employees invested $33.2 million under the Rights subscription and the exercise of Tranche 1 Warrants.


Group’s year-on-year revenue from continuing operations decreased by $10.2 million to $264.87 million.

Revenue contribution from Distribution Management Solutions (“DMS”) division decreased by $9 million to $232.85 million. This was 4% lower than DMS’s FY2017 revenue of $241.76 million. DMS achieved lower revenue largely due to a decline in the distribution and retail sales of accessories, lower revenue from franchisee operations, prepaid cards sales, and handsets distribution.

Year-on-year revenue from After Market Solutions (“AMS”) division decreased by $1.8 million to $24.24 million, primarily due to lower repair volumes. This was 7% lower than AMS’s FY2017 revenue of $26.03 million.

Digital Inkjet Printing for Out-Of-Home Advertising Solutions (“DPAS”) division’s revenue was $6.15 million, compared to 2017 revenue of $7.25 million.

The Group recorded $1.6 million in revenue from the investment division (classified under other income in FY2017), $1.31 million from dividend income and $0.32 million from loan interest income. Dividend income grew 236% from $0.39 million in FY2017. Group’s gross profit margin from dividend income is 100% and such income is tax free. For the year 2018, approximately $33 million of investment assets generated $1.31 million of dividend income. MDR ended the year with an investment portfolio of $84.92 million but has since divested its position in M1 of nearly $20 million and currently has about $65.18 million of income generating investment assets.

The Group’s financial position strengthened with total net tangible assets of $127.50 million as at December 31, 2018 (2017 : $62.84 million). As at December 31, 2018, the Group maintained a healthy cash balance of $8.45 million.


Singapore Operations

The Group is one of the largest distributor, retailer and aftermarket service provider of mobile phones in Singapore. The DMS division currently operates and manages an island wide network of retail outlets in Singapore comprising 9 Singtel stores (including 3 franchised stores), 9 M1 stores and 3 Samsung concept stores at Plaza Singapura, VivoCity and Westgate. In addition, the Group manages 3 service centres of Samsung at Plaza Singapura, VivoCity and Westgate. An additional Samsung service centre is expected to be operational from April this year at Causeway Point. We opened 2 new M1 stores at Bukit Panjang Plaza and Waterway Point, and a Singtel store is due to open at Poiz Centre in April this year.

AMS business remains an important revenue stream of the Group in its business ecosystem. The AMS division currently provides its suite of aftermarket services both for Samsung and Sony.

We expanded into cosmetics business in October 2018. Group’s subsidiary, VT Cosmetics Pte Ltd has opened two outlets, one at Plaza Singapura and the other at Jurong Point. VT business is slowly building the VT brand in Singapore and the region. The Group will monitor VT sales closely to assess the growth and viability of the VT business in Singapore and the region.

DPAS’s Operations

The DPAS operations under Pixio Sdn. Bhd. (“Pixio”) continues to contribute positively to the Group’s revenue. Pixio’s business last year was affected by the weak economic growth and a slowdown of local business activities in Malaysia after the 2018 General Election. Pixio is working on expanding its customer base to grow its revenue stream.


Competition in the telco industry is expected to continue to intensify with the entry of the 4th operator and the various mobile virtual network operators (“MVNOs”). However it is anticipated that the growth in value added services, enterprise business and digitisation by existing telcos will underpin the future growth and revenue of telco products and services. This is also reflected in the changing patterns of sales of various products and services. For example, while the sales of pre-paid cards have generally declined, the sales of post-paid products and services have shown improvements. Overall, we expect DMS’s performance to remain muted in 2019 in view of the customary factors, being the distribution business’s high reliance on the success of the newer flagship mobile phone models from the principals, overheads and competition. However, with our experience in the telecommunications sector and long established relationship with business partners and principals, overall we remain optimistic about the future outlook of the DMS business.

The Group has successfully deployed the proceeds of $67 million raised from the Rights cum Warrants issue in marketable securities (as at March 15, 2019) and $9.9 million as working capital to purchase inventories. We expect that dividend income from invested marketable securities will continue to be the main stream of revenue for the Investment division, and a main driver of profits and cashflow for the Group. Our investment portfolio return for 2018 was negative 6.8%, outperforming STI’s return of negative 9.82%, and other key index returns, for example, FTSE All-Share Index (negative 10.42%) and FTSE ST Catalist (negative 34.13%). Including dividends, our investment portfolio return for 2018 was negative 4.9%, outperforming STI’s return of negative 6.5% (including dividends), and other key index returns, for example, FTSE All-Share Index (-6.75% including dividends) and FTSE ST Catalist (-31.95% including dividends). The investment team believes that a severe financial crisis is likely on the horizon and is in the process of building a fixed income portfolio of short duration corporate credits to protect capital while generating a respectable yield. We also believe our equity portfolio to withstand market volatility given its low 0.578 5-year beta and defensive allocation. The dividend yield for our investment portfolio as at December 31, 2018 is 6.37%.

The Group is yet to venture into the Property business, due to lack of attractive real estate assets at our preferred valuation. We are patient investors and will likely find compelling distressed opportunities after a financial crisis. Nonetheless, the Group currently has securitized exposure to real estate assets via SGX listed securities at deep discount to tangible book value. Currently, the equity portfolio has 41% exposure to real estate.

Management is highly optimistic of the Company’s potential in terms of value creation and benefits for its shareholders and various stakeholders. Overall, we believe, MDR is now a stronger company with a scaled-up balance sheet, an established telecommunication distribution and retail business, printing business, and a growing investment business. The Group is also actively exploring potential investment opportunities to build new revenue streams and improve shareholders’ returns. Apart from its income producing portfolio investments, MDR will seize special situation deals which require active management and the expected risk-return hurdle of these opportunities are expected to be higher.

The Group has made the great leap forward with a resolute determination. We are committed to maintain the forward momentum to accelerate growth and create shareholder value and to improve the profitability and visibility of the Company. The progress made in 2018 is just the first step towards an exciting journey from an evolution into a transformation for the Group and all shareholders.


We believe dividend payments are the ultimate tangible evidence of good corporate governance. For year 2018, MDR improved its corporate governance ranking up from 242 (in 2017) to 67 (in 2018) (out of 589 SGX listed companies in the General Category) in the Singapore Governance and Transparency Index 2018 and we are proud to share that our rankings were even higher than some of the blue-chip constituents of the STI i.e. Genting Singapore, Golden Agri-Resources, Thai Beverage and Yangzijiang Shipbuilding. The Board is pleased to propose a final dividend amount of up to $2 million for shareholders’ approval at the forthcoming annual general meeting. The dividend translates to about 80.26% of the Group’s net profits in 2018, and is 33.33% higher than last year’s dividend. Upon shareholders’ approval, the final dividend will be paid on May 23, 2019. Barring any unforeseen event, the Company is committed to achieve better performance and a higher dividend payment for 2019.


MDR commenced its first earnings call with shareholders/ analysts/media on March 1, 2019. Moving forward, Bloomberg will publish audio file and transcript of the earnings calls. We believe high corporate transparency is essential to existing and potential shareholders, but more importantly, we believe investor relations is a two-way communication dialogue, and management encourages feedback in order to continue operating at an optimal level for all stakeholders. On an on-going basis, MDR will schedule earnings call every quarter.


On behalf of the Board and management, I express my sincere thanks to all our shareholders, business partners and customers, for their support and confidence in us. I would also like to extend my heartfelt appreciation to my fellow Directors, management and employees of the Company for their dedication, efforts and teamwork that has contributed to the Group’s continued success. We look forward to a bright and successful year ahead.

Edward Lee
Executive Chairman
29 March 2019