notes to the financial - WTK Holdings Berhad

FINANCIAL PERFORMANCE
chairman's statement
“
DEAR SHAREHOLDERS,
The Group registered a turnover level at RM555 million, a 32%
decrease from RM812 million in 2008 which resulted to loss after
tax of RM1 million (2008: profi t after tax of RM48 million). This is
mainly attributed by the timber division. Consequently, the Group
recorded a loss per share (EPS) of 0.2 sen from earnings per share
of 11.1 sen in 2008.
REVIEW OF OPERATIONS
Timber
The year in review saw a signifi cant drop in both turnover and net
profi ts. On a year-on-year basis, turnover and net profi ts drop by
approximately 35% and 105% respectively as a result of drop in
both sales volume and selling prices of its products. Sales volume
for both logs and plywood dropped by 18% and 34% respectively,
whilst selling prices for both products dropped approximately
13%. This is due to the global fi nancial crisis of 2008 which was
triggered by a liquidity crisis in the United States banking system
that resulted in the collapse of large fi nancial institutions and
downturns in stock markets around the world.
Japan, a major traditional timber market, saw its housing starts
fell to 788,410 homes, 28% lower than 2008 level of 1,100,000
homes. This is the lowest level since 751,429 homes recorded in
1964. The country’s total import volume of tropical hardwood
plywood from Indonesia and Malaysia dropped by 17% compared
to 2008, to 1,888,912cbm.
The Group key export markets for its round logs remain to be
India (72%), Japan (7%), Vietnam (7%) and the remaining
14% to China, Taiwan and other Asian countries. Japan, which
”
imports approximately 60% of its tropical hardwood plywood
requirements from Malaysia, remains the biggest market for the
Group’s plywood products. Japan makes up approximately 92% of
the Group’s plywood market, the remaining is to Taiwan.
“On behalf of the Board of Directors, I am pleased to present the Annual Report and Audited
Financial Statements of the Group for the fi nancial year ended 31 December, 2009.”
During the year in review, one of the Group’s three plywood
mills obtained its chain-of-custody certifi cation approved by the
Certifi cation Panel of SIRIM QAS International Sdn Bhd under the
Malaysian Timber Certifi cation Scheme (MTCS). The remaining two
plywood mills are expected to obtain its certifi cation sometime in
year 2010.
The Group, as at 31 December 2009, has planted 4,500 hectares
of forest plantation and 5,300 hectares of oil palm plantation. The
forest plantation mainly consists of prime, fast-growing species
such as Acacia Mangium Superbulk, Acacia Hybrid, Albizia and the
indigenous Kelempayan species. Majority of these species may be
used for manufacturing of plywood at the Group’s plywood mills.
As for the oil palm plantation, it has started scout harvesting in
July 2009 and is expected to contribute signifi cantly in year 2012
onwards.
Non-Timber
ANNUAL REPORT 2009
The non-timber manufacturing and trading division of the Group
was not spared the negative eff ect of the fi nancial and economic
crises. Both revenue and profi ts dropped signifi cantly as compared
to 2008. Whilst input costs have stabilized, the demand from key
export market remained slow. The Group embarked on a threepronged
approach to focus on its core products, streamlining
supply chain and strengthening branding and diff erentiating the
Group’s brand-names. This has helped the Group to withstand the
already stiff competition within its industry.