|
Chairman's Statement
On behalf of the Board of Directors, I am pleased to present the Annual Report and Audited Accounts of Tasek Corporation Berhad (“the Company”) and its Group for the financial year ended 31st December 2008.
INDUSTRY TREND AND DEVELOPMENT
In line with the Malaysian Government’s decision to liberalise the cement industry, the ceiling price of cement was removed in June, 2008. This allowed manufacturers of cement some room to recover some of their cost of production that the industry had to absorb since 1995. Despite demand for cement in Peninsular Malaysia increasing by about 7.6 per cent in 2008 compared with demand in 2007, the industry is still experiencing some surplus capacity since 1997. Demand for cement in Peninsular Malaysia is dependent largely on construction activities, in particular infrastructural activities and if there is any downturn in the construction industry, such surplus capacity could be prolonged further. Any shortage of construction projects this year would affect the demand for cement.
The Government of Malaysia in its effort to maintain and reinforce economic growth had announced a RM7.0 billion stimulus package in November last year. On top of the RM7.0 billion, the Malaysian Government is set to announce a second stimulus package to further stimulate the economy. The announcement of a cut in tariff for electricity beginning March this year due to lowering of the price of natural gas is a welcome start for the industry. Electricity still remains as one of the major component of energy cost for manufacturers of cement.
FINANCIAL PERFORMANCE
For the financial year ended 31 December 2008, the group achieved profit after tax of RM 75.05 million on total revenue of RM509.80 million. For the six-month financial period ended 31 December 2007, the group made a profit after tax RM37.45 on total revenue of RM203 million. Shareholders' funds for the financial year increased to RM854.21 million from RM 778.73 million previously. At Company Level, the profit after tax for the financial year was RM60.31 million on revenue of RM402.77 million compared with profit after tax of RM78.52 million on revenue of RM176.31 million for the six-month financial period ended 31 December 2007.
The Group profit achieved for the financial year was due to increased revenue attributed to the overall increase and revision in the selling price of cement in June and August of the financial year, higher interest income and share of higher profit from the Company’s associated company, Cement Industries (Sabah) Sdn Bhd. During the financial year, the Group was affected by increased inflationary pressure especially on the cost of transportation, escalating prices of raw materials, fuel and electricity. Improved sales volume and delivery of product mix of sales of cement and clinker and implementation of programmes to improve productivity and efficiency have mitigated these increases in cost.
DIVIDENDS
For the financial year ended 31 December 2008, the Board has recommended a final dividend of 10 sen per share less Malaysian income tax of 25 per cent. Subject to approval of shareholders at the forthcoming Annual General Meeting, the final dividend of 10 sen per share will be payable on 12 June 2009.
CHALLENGES AND PROSPECTS
The Board foresees 2009 may be a tough year for the Group in view of the changed landscape of the global economy. Such concern and the anticipated impact on Malaysia will weigh heavily on the overall sentiment of the domestic construction industry. Correspondingly, the demand for cement and concrete products would be affected thereby dampening the consumption of cement. The Board takes cognisance of the Group’s strong balance sheet and cash flow, however it will continue to take the necessary measures to secure its markets both domestic and export and at the same time push for higher productivity and cost containment within the Group.
During the financial year, the Company has been certified under ISO 14001 and OHSAS 18001 in addition to its existing certification under ISO 9001. With these certifications, the Company is committed to a quality management system (ISO 9001) and committed to its efforts to step up responsibility in its manufacturing footprints and to minimise any adverse impact on the environment (ISO 14001) and safety in its operations (OHSAS 18001).
The 12th Collective Agreement with the Cement Industry Employees Union is in its second year and the Management continues to enjoy good and cordial relationship with the Union.
The proposed acquisition of the building materials business from Hong Leong Asia Ltd was terminated mutually by the Company and Hong Leong Asia Ltd as some of the conditions precedent had yet to be fulfilled and will not be fulfilled by the prescribed cut-off date. During the last quarter of the financial year, the Board received a notice of conditional take-over offer from Hartwell Pte Ltd, a wholly-owned subsidiary of Hong Leong Asia Ltd at an offer price of RM3.80 per share. The offer closed on 20 January, 2009 and the Company is now a 72.63 per cent subsidiary of Hong Leong Asia Ltd.
During the last quarter of the financial year, the Board received a notice of conditional take-over offer from Hartwell Pte Ltd, a wholly-owned subsidiary of Hong Leong Asia Ltd at an offer price of RM3.80 per share. The offer closed on 20 January, 2009 and the Company is now a 72.63 per cent subsidiary of Hong Leong Asia Ltd.
CHANGES IN BOARD OF DIRECTORS
On behalf of the Board, I welcome Dato’ Khoo Peng Lai who joined the Board as Independent Non-Executive Director during the financial year. Our Non-Executive Director, Mr. Tan Saik Hock has resigned as a member of the Board of Directors and as a member of the Board Audit and Risk Management Committee. Together with the Board, I wish to express our sincere appreciation to Mr. Tan Saik Hock for his valuable contributions during his tenure with the Board and the Board Audit and Risk Management Committee.
ACKNOWLEDGEMENT
On behalf of the Board of Directors, I would like to thank our shareholders, investors, distributors, business partners, transporters, management and staff, bankers, the Union and other stakeholders for their valued support to the Company and the Group. We look forward to your continuing support for the year ahead.
DATUK DR. HUSSEIN AWANG
Independent Non-Executive Chairman
19th February 2009
|
|
