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Monday, 30 April 2007

Armarda's AGM on 28th April 2007

I was glad to learn from this AGM that Armarda's joint venture with FESCO group will start contributing profit to Armarda's consolidated profit as early as 2Q 2007, i.e. sometime in August 2007.

More light was also shed regarding the joint venture. FESCO group's HR business involved handling all contract staff for many companies operating in China. i.e. Any company that wished hire general staff, would have to approach FESCO and provide the budget and the number of staff required. FESCO will take care of the hiring, the legal issues and the administrative matters such as pay. FESCO group used to enjoyed a monopoly but not anymore. However, since FESCO group is 100% state owned and had been in the business for almost 20 years, their contacts was extensive. Hence it should be logical to assume its business would not disappear overnight.

Armarda's joint venture with FESCO group involved setting up an IT subsidiary (45% owned by Armarda) just to provide IT services for FESCO, e.g. running of data centre, call centres. This subsidiary should enjoy a recurring income and not a one-off contract. However, FESCO group only gave the subsidiary exclusive right to provide IT service to FESCO group for 5 years. In the worst case scenario, this right might not be renewed. Hence, Armarda, through the subsidiary, should be able to enjoy increased stream of income for at least 5 years, beginning as soon as 2Q 2007.

Thus this cigar butt might had some good puff remaining after all.

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