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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 31 December 2010.
INDUSTRY TREND AND DEVELOPMENT
The domestic consumption for cement in Peninsular Malaysia for the year reported an estimated increase of about 1.2% from consumption in 2009. In East Malaysia, the consumption of cement for the year increased by about 8% from the previous year. The demand for cement and concrete products in Peninsular Malaysia largely depends on activities in the construction sector, in particular activities on infrastructures. Under the 10th Malaysia Plan (10MP), it was announced that 5% of new roads would be built in concrete. In addition, the announcement by the Government of various projects such as the 100-storey Warisan Merdeka building, the RM36.6 billion Mass Rapid Transit system and other infrastructure projects to be implemented under the Economic Transformation Programme (ETP) augurs well for the construction sector. These initiatives by the Government when implemented would stimulate the increase in demand for the use of cement. It is estimated that demand for cement in Peninsular Malaysia would likely see a growth of about 2% to 3% for the year 2011 while in East Malaysia, consumption of cement would see a growth of about 8%. The Government’s 2011 Budget has projected the Malaysian economy to grow between 5% and 6% for year 2011 to be driven significantly by the private sector. Supported by the implementation of construction projects under the Ninth Malaysia Plan (9MP) and stimulus packages by the Government during the first half of year 2010, the construction sector strengthened 6.3% and for the whole year grew 4.9%. For the year 2011, the construction sector has been projected by the 2011 Budget to grow by 4.4% driven by the ongoing projects such as the KLIA 2, the Second Penang Bridge, SKVE Package 3, the Sabah-Sarawak gas pipeline and the LRT extensions. In addition, the growth will be supported by the implementation of the development projects under the 10MP and the ETP.
FINANCIAL PERFORMANCE
The financial year ended 31 December 2010 saw the Group achieving a profit after tax of RM132.408 million on total revenue of RM553.038 million compared with profit after tax of RM67.125 million on total revenue of RM526.770 million the last financial year. Shareholders’ funds for the financial year increased to RM936.070 million compared with RM908.082 million previously. The profit after tax at Company level for the financial year increased to RM89.137 million on revenue of RM442.523 million from RM62.449 million on revenue of RM421.848 million compared with the previous year.
The Group achieved higher profit after tax attributable to shareholders for the financial year compared with the previous year mainly due to better margins from its local sales of cement and the exceptional gain from disposal of its properties by the Company’s subsidiaries. At Company level, the contributing factors for a higher profit after tax was also due to lower cost of production and higher interest income.
During the year, the Company paid a special dividend of 20 sen per share in addition to its final dividend of 10 sen per share. The Company also completed its capital repayment of 33 sen per share to its shareholders and share consolidation exercise which consolidated a total of its 184,509,300 Ordinary Shares of RM0.67 each and 500,000 6% Cumulative Participating Preference Shares of RM0.67 each into a maximum of 123,621,231 Ordinary Shares of RM1.00 each and 335,000 6% Cumulative Participating Preference Shares of RM1.00 each on the basis of one Ordinary Share of RM0.67 each into 0.67 Ordinary Share of RM1.00 each and 0.67 6% Cumulative Participating Preference Share of RM1.00 each respectively. The exercise was to achieve an efficient capital structure for the Company and to reward shareholders for their support. Further, shareholders are expected to benefit from this value enhancement and improvement to the Company’s long term rate of return.
DIVIDENDS
There were no interim dividends declared and paid during the financial year. For the financial year ended 31 December, 2010, the Board has recommended a final dividend of 30 sen per share less Malaysian income tax of 25% and a special dividend of 50 sen
per share less Malaysian income tax of 25%. Subject to approval of shareholders at the forthcoming Annual General Meeting, such dividends will be payable on 17 June 2011.
CHALLENGES AND PROSPECTS
The Board foresees 2011 as yet another challenging year for the Group in view of higher costs of materials and energy. However, the Board is optimistic that with the implementation of the various development and infrastructure projects under
the Government’s 10MP and ETP, the construction sector will benefit the most from such activities which in turn will increase the demand and consumption of cement and concrete products. The strong balance sheet and cash flow of the Group will put
us in a position to take advantage of the anticipated increase in construction activities resulting from such implementation of projects under the 10MP and ETP. The Board will also continue to look for opportunities to further increase shareholders’ return.
Certified under ISO 14001, OHSAS 18001 and ISO 9001; and ISO 9001:2008 for its ready-mixed concrete subsidiary Tasek Concrete Sdn Bhd, the Group is committed to a quality management system and committed to its efforts to step up
responsibility in its manufacturing footprints and to minimise any adverse impact on the environment and safety in its operations.
The 12th Collective Agreement with the Cement Industry Employees Union had expired on 30 June, 2010. The 13th Collective Agreement has been negotiated, concluded and signed for the next three years to expire on 30 June 2013. The Management
continues to enjoy good and cordial working relationship with the Union and arising from this, look forward to a mutually beneficial year.
CHANGES IN BOARD OF DIRECTORS
On behalf of the Board, I welcome Mr. Lim Eng Khoon who joined the Board as Independent Non-Executive Director during the year. The Board had also appointed Mr. Lim Eng Khoon as member and Chairman of the Board Audit and Risk Management
Committee replacing Dato’ Khoo Peng Lai who resigned as member and Chairman of the Committee in January 2011. Dato’ Khoo has also indicated that he will not be standing for re-election as Director of the Company at the forthcoming Annual General Meeting. In November 2010, Dato’ Teo Tong Kooi resigned as Executive Director and as Director of the Company. Together with the Board, I wish Dato’ Teo Tong Kooi and Dato’ Khoo Peng Lai all the best in their future endeavours.
ACKNOWLEDGEMENT
On behalf of the Board of Directors, I would like to thank our shareholders, investors, distributors, business partners, transporters, management and staff, bankers and the Union for their support to the Company and the Group. We continue to
look forward to your support for the challenging year ahead.
KWEK LENG PECK
Chairman
18th March 2011
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