MIECO CHIPBOARD BERHAD 12849-K MIECO CHIPBOARD … filemieco chipboard berhad 12849-k laporan...
Transcript of MIECO CHIPBOARD BERHAD 12849-K MIECO CHIPBOARD … filemieco chipboard berhad 12849-k laporan...
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RTMIECO CHIPBOARD BERHAD
ANNUAL REPORT 2010
MIECO CHIPBOARDBERHAD
The MIECO Story 04Group Corporate Structure 06
Corporate Information 07Board of Directors 08
Board of Directors’ Profile 10Letter to Our Shareholders 14
Surat kepada Pemegang Saham 20Review of Operations 26
Engaging with Our Communities in 2010 30Group Corporate Calendar 32
InSIDE COnTEnTS
34 Financial Highlights
36 Share Performance
38 Corporate Governance Statement
42 Audit Committee Report
45 Statement on Internal Control
47 Financial Statements
110 Analysis of Shareholdings
114 List of Properties
115 notice of Annual General Meeting
118 Statement Accompanying notice of Annual General Meeting
Form of Proxy
MIECO’S GROWTH HAS COME FROM ITS COMMITMEnT TO THREE OPERATInG FUnDAMEnTALS – A HIGH QUALITY PRODUCT, An EXCELLEnT DELIVERY PROCESS, AnD A STROnG FOCUS On CUSTOMER SERVICE
04 | THE MIECO STORY MIECO AnnUAL REPORT 2010
Thirty eight years after its inception,
MIECO has cemented its position as
a world leader in the manufacture of
particleboards with a special emphasis
on the production of high quality,
value-added wood based products.
MIECO’s growth has come from
its commitment to three operating
fundamentals- a high quality product,
an excellent delivery process, and a
strong focus on customer service.
MIECO attained the ISO 9002 Quality
Management System in 1998 and
subsequently upgraded to the ISO
9001:2000 in 2002. In 2004, MIECO
became the first company in the
Malaysian wood-panel industry to receive
the prestigious BS En ISO 14001:1996
Environmental Management System.
In line with this, MIECO attained the
certification for the OSHAS 18001:1999
in 2005. The BS En ISO 9001:2000 was
upgraded to ISO 9001:2008 in early 2010.
The integration of EMS ISO 14001:2004
and OHSAS 18001:2007 in the same year
proved MIECO’s commitment to being a
responsible manufacturer and employer
in the areas of environment, health and
safety.
MIECO has three factories located in
Semambu, Gebeng and Kechau Tui,
Pahang with a combined capacity of more
than 900,000 cubic meters per annum.
MIECO also has one of the single largest
particleboard lines in the Asia-Pacific
region, located at its latest plant in
Kechau Tui, which started production in
March 2005. The plant attained the BS
En ISO 9001:2000 Quality Management
Systems in June 2005. MIECO products
are marketed in more than 20 countries
around the world, and its global reach
now covers northern Asia, Southern Asia,
the Indian Subcontinents, the Middle
East as well as some parts of Africa and
Australasia.
Having started out as a dedicated
particleboard producer in 1976, MIECO
has now developed and expanded
into value-added products such as
MIECO Decorative MFC, Electron Beam
Foil Chipboard (EBFC), Polymer Faced
Chipboard (PFC), MIECO Worktops, MIECO
Direct Post Formed (DPF) Boards as well
as value added services and DIY Furniture
THEMIECO STORY
| 05THE MIECO STORYMIECO AnnUAL REPORT 2010
under the MIECO Livin’ Style brand name.
All MIECO products conform to
international standards such as European
Community BS En 312 Standard
applicable for both moisture-resistant
and non-moisture resistant boards with
Super E0 E0, E1 and E2 formaldehyde
emission levels. MIECO E1 products have
been further refined to meet the United
States’ CARB Phase 1 & 2 requirements
for conformance to low formaldehyde
emissions.
In light of its commitment to the
environment and to meet the needs and
expectations of customers, MIECO has
been certified the Japanese Industrial
Standards, JIS 5908 since April 2009,
evidence of MIECO’s product reliability
for the Japanese market. In addition,
MIECO has started to sell products
certified with California Air Resource
Board (“CARB”) Phase II since January
2011, demonstrating compliance of
MIECO’s composite wood products with
California Code of Regulations for the
US market. Since April 2009, MIECO
has offered customers and consumers
the option to choose products from
environmentally and socially responsible
and economically viable forestry through
our products certified for Programme for
the Endorsement of Forest Certification
(PEFC). MIECO’s melamine laminated
products have attained Singapore
Green Label Certification endorsed by
the Singapore Environment Council
certifying our products’ minimal impact
to overall environment, right from raw
materials to the manufacturing process,
composition, health impact and finally
the disposal of the product.
MIECO is also committed to the
development of its more than 800
employees, and to building long-lasting
mutually rewarding partnerships with
its customers and stakeholders around
the world. It is this commitment that
has made MIECO a true global Malaysian
champion.
MIECO IS ALSO COMMITTED TO THE DEVELOPMEnT OF ITS MORE THAn 800 EMPLOYEES, AnD TO BUILDInG LOnG-LASTInG MUTUALLY REWARDInG PARTnERSHIPS WITH ITS CUSTOMERS AnD STAKEHOLDER COMMUnITIES AROUnD THE WORLD. IT IS THIS COMMITMEnT THAT HAS MADE MIECO A TRUE GLOBAL MALAYSIAn CHAMPIOn.
GROUPCORPORATE STRUCTUREAS AT 25 APRIL 2011
Listed on Bursa Malaysia Securities Berhad
MIECOMANUFACTURING SDN BHD100%
MIECOMARKETINGSDN BHD100%
MIECO CHEMICALSSDN BHD100%
MIECO CHIPBOARDBERHAD
MIECO WOOD PRODUCTSSDN BHD100%
MIECOREFORESTATIONSDN BHD100%
TUDORCAPITALSDN BHD100%
MIECO WOODRESOURCESSDN BHD100%
CORPORATEInFORMATIOn
MIECO MARKETING (S) PTE LTD100%
ASPIREBENCHMARKSDN BHD100%
MIECO INTERNATIONAL(H.K.) LIMITED 100%
Board Of Directors
Dato’ Mohamed Moiz Bin J M Ali Moiznon-Independent non-Executive Chairman
Dato’ Yong Seng YeowManaging Director
Dato’ Jaganath Derek Steven Sabapathynon-Independent non-Executive Director
Lt. Gen. (R) Dato’ Seri Mohamed Daud Bin Abu BakarIndependent non-Executive Director
Dato’ Dr Amarjit Singh A/L Santokh Singh Independent non-Executive Director
Mr Vijeyaratnam A/L V. Thamotharam Pillay Independent non-Executive Director
Mr Low Kim Sengnon-Independent non-Executive Director
Registered Office
Level 10 Menara BRDB285 Jalan Maarof, Bukit Bandaraya59000 Kuala Lumpur, MalaysiaTel : 603 - 2688 2888Fax : 603 - 2284 3988
Bursa Malaysia Stock Number
MIECO 5001
International SecuritiesIdentification Number (ISIN)
MIECO MYL5001OO002
Reuters Code
MIEC. KL
Secretary
Ho Swee Ling MAICSA no. 7009936
Registrars
Metra Management Sdn Bhd30.02, 30th Floor, Menara Multi-PurposeCapital Squareno. 8 Jalan Munshi Abdullah50100 Kuala Lumpur, MalaysiaTel : 603 - 2698 3232Fax : 603 - 2698 0313
Auditors
Messrs PricewaterhouseCoopers
Bankers
Alliance Bank Malaysia BerhadAmBank (M) BerhadOCBC Bank (Malaysia) BerhadMalayan Banking BerhadHSBC Bank Malaysia Berhad
BOARD OFDIRECTORS
DATO’ JAGANSABAPATHYnOn - InDEPEnDEnTnOn - EXECUTIVEDIRECTOR
DATO’ MOHAMED MOIZnOn - InDEPEnDEnTnOn - EXECUTIVECHAIRMAn
DATO’ S Y YONGMAnAGInGDIRECTOR
MR T VIJEYARATNAMInDEPEnDEnTnOn - EXECUTIVEDIRECTOR
DATO’ SERI MOHAMED DAUDInDEPEnDEnTnOn - EXECUTIVEDIRECTOR
DATO’ DR AMARJITInDEPEnDEnTnOn - EXECUTIVEDIRECTOR
MR KS LOWnOn - InDEPEnDEnTnOn - EXECUTIVEDIRECTOR
10 | BOARD OF DIRECTORS’ PROFILE MIECO AnnUAL REPORT 2010
BOARD OFDIRECTORS’ PROFILE
Dato’ Mohamed Moiz Bin J M Ali Moiz,non-Independent
non-Executive Chairman
Dato’ Mohamed Moiz Bin J M Ali Moiz,
a Malaysian, aged 50, was appointed to
the Board on 14 november 2000 and
as Chairman on 15 August 2002. He
graduated with a Bachelor of Science
Degree in Business Administration and
International Finance in 1985. He joined
Timbco Sdn Bhd, a company involved in
timber trading, processing and forestry
management, as Project Manager from
1985 to 1986. In 1987, he was appointed
as Chief Executive Officer of the Tradium
group of companies, which has interests
in property development, fashion
retailing, manufacturing, F & B and equity
investments. In 1999, he was appointed as
Chief Executive Officer of Effective Capital
Sdn Bhd, a company which successfully
undertook the migration of the CLOB
securities from the Central Depository
(Pte) Limited in June 2000.
Currently, Dato’ Mohamed Moiz also
sits on the boards of Bandar Raya
Developments Berhad (Chairman) and
several other private limited companies.
He is a member of the Executive
Committee of the Company.
Dato’ Mohamed Moiz is a deemed major
shareholder of the Company by virtue of
his interest in Ambang Sehati Sdn Bhd.
DATO’ YONG SENG YEOW,Managing Director
Dato’ Yong Seng Yeow, a Malaysian,
aged 58, was appointed as Executive
Director on 1 January 1994. He was
subsequently redesignated as Managing
Director on 1 January 2007. Dato’ Yong
has over 25 years of experience in sales
and marketing in building materials and
furniture industries.
Currently, Dato’ Yong also sits on the
boards of Century Logistics Holdings
Berhad and several subsidiaries in the
Mieco Chipboard Berhad Group. He is a
member of the Executive Committee of
the Company.
Dato’ JaganathDerek Steven Sabapathy,non-Independent
non-Executive Director
Dato’ Jagan Sabapathy, a Malaysian,
aged 54, was appointed to the Board
on 15 September 1999. He attended
Edinburgh University in the United
Kingdom and holds a Master of Arts
majoring in Corporate Finance and
International Trade. Upon graduation in
1981, he joined a leading London firm of
Chartered Accountants, Price Waterhouse,
where he articled and qualified as a
Chartered Accountant.
Dato’ Jagan returned to Malaysia in 1984
and joined KPMG Peat Marwick. He was
admitted a Partner of KPMG Malaysia and
a Director of Peat Marwick Consultants in
1990.
Whilst at KPMG Peat Marwick, he was
involved in a wide range of assignments
covering audit, investigations,
management consultancy and corporate
finance, in Malaysia, the ASEAn
countries, north America and Europe.
He sat on a variety of KPMG International
Committees including committees for
Mergers and Acquisitions, Privatisation
and Management Consultancy. He was
also an examiner for the professional
examinations of the Malaysian Association
of Certified Public Accountants.
He left the partnership in late 1994
and took up a senior appointment with
a Malaysian public listed plantation
company. At the end of 1995, he left
and led a group of Australian and British
investors to successfully privatise the
overseas operations of Tasmania’s Hydro
Electric Commission. He joined the boards
of Prime Utilities Berhad and Indah Water
Konsortium Sdn Bhd, Malaysia’s privatised
national wastewater utility in September
1997 as Managing Director, a position he
held to August 1999.
Currently, Dato’ Jagan also sits on the
boards of Bandar Raya Developments
Berhad (Chief Executive Officer) and
several subsidiaries in the Bandar Raya
Developments Berhad Group. He is a
member of the Executive Committee,
Remuneration Committee and nomination
Committee of the Company.
| 11BOARD OF DIRECTORS’ PROFILEMIECO AnnUAL REPORT 2010
Mr VijeyaratnamA/L V. Thamotharam Pillay,Independent non-Executive Director
Mr Vijeyaratnam A/L V. Thamotharam
Pillay, a Malaysian, aged 59, was appointed
to the Board as non-Independent non-
Executive Director on 1 October 2007.
He was subsequently redesignated as
Independent non-Executive Director on
23 February 2010. He is a member of the
Audit Committee of the Company.
He is a Fellow of the Institute of Chartered
Accountants in England and Wales and
a member of the Malaysian Institute
of Accountants. Mr Vijeyaratnam has
considerable experience covering areas
of auditing, financial planning, general
management and corporate advisory in
various business environments. He is
currently the Managing Director of his
own corporate advisory and consultancy
company.
Presently, Mr Vijeyaratnam also sits on
the boards of Bandar Raya Developments
Berhad, Multi-Purpose Holdings Berhad,
Eastern & Oriental Berhad and several other
private limited companies in Malaysia.
Lt. Gen. (R) Dato’ SeriMohamed Daud Bin Abu Bakar,Independent non-Executive Director
Lt. Gen. (R) Dato’ Seri Mohamed Daud
Bin Abu Bakar, a Malaysian, aged 75, was
appointed to the Board on 24 March 1997.
He graduated from the world-renowned
Royal Military Academy, Sandhurst,
United Kingdom in December 1956, the
Army Staff College, Camberley, United
Kingdom and the Royal College of Defence
Studies, United Kingdom and has served
the Malaysian Army with distinction for
36 years. During his military career, he
was appointed to various key command
and staff appointments both in the field
headquarters and in the Ministry of
Defence and has also served in various
military committees at national and
international levels.
Currently, Dato’ Seri Mohamed Daud also
sits on the boards of other private limited
companies. He is the Chairman of the Audit
Committee, a member of the Remuneration
Committee and nomination Committee of
the Company.
Dato’ Dr Amarjit SinghA/L Santokh Singh,Independent non-Executive Director
Dato’ Dr Amarjit Singh A/L Santokh Singh,
a Malaysian, aged 61, was appointed to
the Board on 3 April 1997. He graduated
as a Doctor with a degree in Bachelor of
Medicine and Bachelor of Surgery, from
Bombay University, India in 1973. He
also obtained post-graduate certificates
in Sports Medicine and Genito-Urinary
Medicine from the College of General
Practitioners of Malaysia in 1988 and 1989,
respectively. In addition, he is a Fellow
of the Royal Society of Health, United
Kingdom. In 1990 he established his own
practice in Kuala Lumpur.
He is a former national Cricket
Captain and Deputy President of the
Malaysian Cricket Association. He is
also the immediate past President of
the Malaysian Association of Sports
Medicine and has been the Chairman
of the Society of Sports Medicine of the
Malaysian Medical Association.
Dato’ Dr Amarjit is currently a member
of the Audit Committee, Remuneration
Committee and nomination Committee
of the Company.
Mr Low Kim Seng, non-Independent
non-Executive Director
Mr Low Kim Seng, a Malaysian,
aged 56, was appointed to the Board
on 25 April 1991. He is a member of
the Malaysian Institute of Accountants.
Mr Low qualified as a Management
Accountant in 1978 and has working
experience in accounting, corporate
finance and general management. He
worked with two Malaysian public listed
companies prior to joining Bandar Raya
Developments Berhad in 1989 and is
currently the Chief Financial Officer
of Bandar Raya Developments Berhad.
He is also a member of the Executive
Committee of the Company.
notes:
1) Save as disclosed above, none of the Directors has any family relationship with any director and/or major shareholder of the Company.
2) none of the Directors has: • any conflict of interest with the Company. • any conviction for offences within the past ten years.
PRODUCT DEVELOPMEnT HAS ALWAYS BEEn A CORE STRATEGY FOR MIECO, AnD IT WAS nO DIFFEREnT In 2010. WE ROLLED OUT 6 nEW WOOD GRAIn DESIGnS UnDER THE 2010 MIECO DECORATIVE MFC. THESE HAVE BEEn WELL-RECEIVED In THE MARKET, AnD WE AnTICIPATE THEY WILL BE SIGnIFICAnT COnTRIBUTORS TO OUR BOTTOM LInE In 2011.
14 | LETTER TO OUR SHAREHOLDERS MIECO AnnUAL REPORT 2010
LETTER TO OURSHAREHOLDERS
Dear friends and shareholders of MIECO,
In 2010, our wood-based manufacturing business, for the first time in several years, saw some real recovery in demand. This was
indeed a heartening turn of events, coming on the back of several very challenging years. Market conditions in Asia started to
improve, although the United States and Europe, which form our biggest furniture markets, are still facing difficulties.
We made most of the opportunities that came our way in 2010, resulting in our second consecutive year of improved performance.
The tough times are by no means over but I do believe we have turned a corner.
It is therefore with a sense of hope and optimism that I present to you, on behalf of the Board of Directors, the Annual Report and
Audited Financial Statements for the MIECO Chipboard Group (“MIECO” or “The Group”) for the financial year ending 31 December
2010.
2010 : Managing costs and efficiencies
In 2010, MIECO recorded RM174.2 million in revenue, 6% down against RM185.7 million in 2009. This was attributable to lower
export sales volume as a result of a lower allocation for plain board, but mitigated by increased domestic demand with more sales
of value-added products.
MIECO’s profit before tax was RM1.65 million after accounting for finance cost, depreciation and maintenance of its plant in Kechau
Tui, Kuala Lipis which was not operational in 2010, compared to its previous year’s loss of RM16.5 million.
To manage costs, we continued in 2010 to operate only two plants, having temporarily stopped production in our Kuala Lipis plant
at the end of 2008 in the wake of the global financial crisis. We focused our efforts on improving efficiencies in our Gebeng and
Semambu plants and negotiating best rates for materials. However, the prices of raw materials, especially glue and wax, started to
increase in the 4th quarter of 2010 due to an increase in the price of crude oil, and we expect this upward trend to continue.
16 | LETTER TO OUR SHAREHOLDERS MIECO AnnUAL REPORT 2010
GLOBAL CHALLEnGESHIT HOME
At the same time, we continued our
efforts in R&D, with a focus on developing
environmentally-sensitive products which
are rapidly becoming the global market
preference. This is a key differentiator
for the MIECO brand, and one that we
will continue to focus on. We stepped up
efforts to meet international standards,
and achieved the E1 California Air
Resource Board (CARB) Phase 2 in 2010.
The improvement in our financial
performance has resulted in earnings per
share rising from a loss of 6.99 sen in
2009 to a gain of 0.77 sen in 2010.
Dividend
Although the company made a small
profit in the current financial year, due
to the financial covenants of our existing
borrowings and our intention to preserve
cash to finance the recommencement
of Plant 3, the Directors are not in a
position to recommend the payment of
dividends for the financial year ended
31 December 2010. no dividend was
declared for the financial year ending
31 December 2009. It is the Board’s
intention to resume payment of dividends
as soon as circumstances permit.
2011 : Emerging stronger, better
Following a steady recovery in demand
for particleboard and related products,
the Group recommenced operations at its
Plant 3 in Kechau Tui, Pahang in January
this year, after temporarily suspending
operations during the global economic
turmoil in late 2008.
We expect to sort out all technical and
other issues at our Plant 3 in Kechau Tui
during the 1st quarter of 2011. We are
aggressively moving to reconsolidate our
WE STAYED FOCUSED On OUR STRATEGY OF InTRODUCInG VALUE-ADDED PRODUCTS THAT CEMEnT OUR DIFFEREnTIATIOn In THE MARKETPLACE, AnD ROLLED OUT 6 nEW WOOD GRAIn DESIGnS FOR OUR MILLEnnIUM COLLECTIOn, WITH EnCOURAGInG RESPOnSE.
| 17LETTER TO OUR SHAREHOLDERSMIECO AnnUAL REPORT 2010
raw material supply chain around the
Kuala Lipis area and we are hopeful to
achieve this during the 1st half of 2011.
The recommencement of Plant 3 will
enable Mieco to start getting back the
market share that we had lost during
the closure of the plant. 2011 will be a
challenging year for Plant 3 operations
but we are confident that we will be
showing more positive results from
2012 onwards.
In addition to the reopening of our
Plant 3 in Kecau Tui, for 2011 to meet
the more demanding expectations of
our global customers, we are focusing
on improving our overall product
standards and technical specifications.
We are currently working on at least 6
new colours and 2 surface designs, to
expand our capacity and meet increasing
demand.
We plan to increase our offering of new
colours, especially in the solid colour and
wood grain colour range, to meet current
demand. And we plan to capitalize on the
growing demand for innovative, stylish
furniture designs especially apparent
amongst younger customers and first-
time homeowners.
We will also continue to pioneer new
products, as we have in the past –
innovations like the DIY concept which
we introduced to the Malaysian market in
1979, the Electron Beam Foil Chipboard
(EBFC), the Direct Post-Formed board
(DPF) and the R3 Worktop.
With all the efforts that are being spent
on our business, we have to be cognizant
of the fact that in 2011, business
conditions remain challenging for the
Group, especially in the face of rising
raw material and energy costs. There has
been a sharp rise in the price of glue and
wax in recent months, and we expect this
to continue.
Wood prices, which were well below
budget in 2010, have started to rise,
due to the extended monsoon which is
making it difficult for wood to be sourced.
However, we expect prices to stabilize
when the weather improves in Q2.
Despite this, we are cautiously optimistic;
the slight improvement we saw in the
second half of 2010 is heartening.
We are working hard at ensuring that
we keep a tight rein on the cost of raw
materials, which we are getting much
better at doing, and upping the ante
on product development, especially
value-added and environmentally-
sensitive products, which has always
been our forte.
With the high prices of latex, making
it more difficult to source traditional
rubber wood supply, we continue to
explore the use of alternative raw
material sources and sustainable timber
waste as key raw material components,
which will reduce our dependency on
current sources. We will also continue
to implement process optimizations in
order to improve productivity as well
as implement new ways to control and
manage our reject rates.
As always, we will continue to nurture
and grow our relationships with our
Malaysian customers, who have been
loyal customers to MIECO and who
contribute more than half of our global
business.
Market outlook : Positive & promising
The outlook for the Malaysian economy
is positive. The national Property
Centre’s 2010 property report records
a new high for the Malaysian property
market in 2010, with volume and value
of transactions recording double-digit
growth of 11.4% and 32.6% respectively.
18 | LETTER TO OUR SHAREHOLDERS MIECO AnnUAL REPORT 2010
The residential property sector dominated
the local property market last year,
capturing 60.2% of total transactions
and 47.1% of value, and we expect this
trend to continue in 2011. This bodes
well for our domestic market, which
is increasingly important to us given
the dismal performance of the global
marketplace. An expected rise in domestic
consumption will give our business a
much-needed boost.
We believe that the fundamentals of
the country remain solid, supported
by various measures under the Tenth
Malaysia Plan and Prime Minister Dato
Seri najib’s Economic Transformation
Programme. Projects such as the Kuala
Lumpur International Financial District,
the Mass Rapid Transit for Greater KL and
the redevelopment of areas like Kampung
Baru and the Rubber Research Institute
in Sg Buloh are all expected to have
positive spillover effects.
We foresee the next 3 years to be a
period of strong growth, on the back of
increased public spending and a more
dynamic public sector. The five strategic
thrusts identified by the government;
Government Transformation, Conducive
Business Environment, Inclusive Socio-
Economic Development, First World
Talent Base and Enhanced Quality of
Life Environment will augur well for the
economy and is set to transform the
country into a high income nation.
We expect the emphasis on
environmentally-sensitive products to keep
growing, and in this, we are well-positioned
to take advantage of opportunities.
Globally, we expect Asia to drive growth,
as has been the case these past few years.
Additionally, we expect to see higher
demand from Japan, as the country moves
into a phase of rebuilding following the
devastation of the March 2011 earthquake
and tsunami. This will mitigate the
challenges being faced by the United
States and across Europe, especially
Greece, Iceland, Portugal and Spain.
We have been through some trying years
for Mieco, but through it all we have
kept faith in the belief that we have a
viable and sustainable business. now
we are seeing signs that the industry is
finding its feet again and we are confident
that MIECO is ready to take full advantage
of this.
| 19LETTER TO OUR SHAREHOLDERSMIECO AnnUAL REPORT 2010
The MIECO Team
Through all these challenges, the MIECO
team has been steadfast in their loyalty
and commitment to the business.
They have worked hard to contain
costs and look for more efficiencies.
As with our shareholders, our team
have had to endure difficult times but
have performed above and beyond
expectations throughout.
To our loyal customers, all around the
world and especially here in Malaysia –
Thank You. You have seen us through
tough times, and we thank you for that.
We will continue to work hard to produce
high quality, value-added products that
bring strong returns to your business
and brand.
To the MIECO Board of Directors, thank
you for your belief in the MIECO brand,
and your vision in steering it through
some turbulent times. I could not have
asked for a better, more committed team
to help us stay the course. And on behalf
of all of us, our deepest appreciation to
Datin Sri Bettina Khan, who retired from
the Board last year.
To you our shareholders, thank you for
your patience and continued belief in
MIECO. All of us in Mieco will continue
to strive to serve as best as we can
and hopefully are able to fulfill your
expectations.
Thank You
Dato’ Mohamed Moiz bin J M Ali Moiz
Chairman
MIECO Chipboard Berhad
27 April 2011
On BEHALF OF THE BOARD OF DIRECTORS OF MIECO, I WOULD LIKE TO EXTEnD OUR HEARTFELT THAnKS TO EACH AnD EVERY MEMBER OF THE MIECO FAMILY. YOU HAVE WORKED HARD, STAYED LOYAL AnD COMMITTED In THE FACE OF TOUGH TIMES AnD HAVE EMERGED A STROnGER, MORE CLOSELY-KnIT, MORE UnITED TEAM THAT I AM SURE WILL TAKE US FURTHER AnD HIGHER. WE LOOK FORWARD TO MUCH BETTER TIMES AHEAD, TOGETHER.
20 | SURAT KEPADA PEMEGAnG SAHAM MIECO AnnUAL REPORT 2010
SURAT KEPADA PEMEGAnG SAHAM
Para pemegang saham dan pemegang taruh masyarakat global MIECO yang dihormati,
Pada tahun 2010, syarikat kami yang berasaskan kayu, buat kali pertamanya sepanjang beberapa tahun ini, telah memperlihatkan
beberapa pemulihan permintaan yang nyata. Ini merupakan peristiwa yang menggembirakan kami setelah mengharungi beberapa
tahun yang mencabar. Keadaan pasaran di Asia mulai pulih, meskipun Amerika Syarikat dan Eropah, yang merupakan pasaran perabot
terbesar masih lagi menghadapi kesulitan.
Kami telah merebut sebahagian besar daripada peluang yang wujud dalam tahun 2010, di mana peningkatan prestasi syarikat telah
berlangsung sepanjang 2 tahun berturut-turut. Masa yang mencabar itu belum berlalu, akan tetapi kami percaya bahawa kami telah
melepasi laluan yang sukar.
Oleh itu, saya, dengan penuh harapan dan optimis, selaku wakil Lembaga Pengarah ingin membentangkan Laporan Tahunan dan
Penyata Kewangan Berodit bagi Kumpulan MIECO Chipboard (“MIECO” atau “Kumpulan”) untuk tahun kewangan yang berakhir pada
31 Disember 2010.
2010: Pengurusan kos dan kecekapan
Pada tahun 2010, MIECO telah mencatat RM174.2 juta hasil pendapatan, iaitu 6% menurun berbanding dengan RM185.7 juta pada
tahun 2009. Hal ini disebabkan oleh penurunan jualan eksport tetapi diatasi dengan peningkatan permintaan domestik serta
peningkatan penjualan produk-produk nilai tambah.
MIECO telah mencatat keuntungan sebelum cukai sebanyak RM1.65 juta setelah mengambil kira kos kewangan, susut nilai dan
penyelenggaraan bagi kilang di Kechau Tui, Kuala Lipis yang tidak beroperasi pada tahun 2010, berbanding dengan kerugian
sebanyak RM16.5 juta pada tahun sebelumnya.
| 21SURAT KEPADA PEMEGAnG SAHAMMIECO AnnUAL REPORT 2010
Untuk mengawal kos, pada tahun 2010
kami meneruskan operasi dua buah
kilang, selepas penutupan sementara
kilang kami di Kechau Tui pada tahun
2008. Kami menumpukan usaha kami
untuk meningkatkan kecekapan kilang
kami di Gebeng dan Semambu dan
membuat rundingan harga terbaik untuk
kesemua bahan mentah. namun, harga
bahan mentah khususnya pelekat, cecair
lilin mula meningkat pada suku ke-4
tahun 2010 akibat kenaikan harga minyak
mentah, di mana kami menjangkakan
trend ini akan berterusan.
Kami memberi tumpuan kepada
strategi kami iaitu memperkenalkan
produk-produk tambah nilai yang dapat
mengukuhkan keistimewaan kami
di dalam pasaran, dan melancarkan
sebanyak enam rekabentuk corak
kayu terbaru kami untuk siri Millenium
Collection yang mana terus mendapat
sambutan yang memberangsangkan.
Pada masa yang sama, kami masih
meneruskan usaha penyelidikan dan
pembangunan (R&D), dengan memberi
fokus kepada produk-produk mesra
alam yang makin menjadi pilihan
utama pasaran global. Ini adalah kunci
keistimewaan jenama MIECO yang tetap
kami fokuskan. Kami telah meningkatkan
usaha untuk memenuhi piawaian
antarabangsa dan mencapai California
Air Resources Board (CARB) Fasa 2 pada
tahun 2010.
PEnInGKATAn DALAM PRESTASI KEWAnGAn KAMI TELAH MEnGUBAH KEDUDUKAn PEROLEHAn SESAHAM DARI KERUGIAn 6.99 SEn SESAHAM BAGI TAHUn 2009 KE KEUnTUnGAn 0.77 SEn SESAHAM BAGI TAHUn 2010.
GELORA EKOnOMIYAnG MELAnDA
22 | SURAT KEPADA PEMEGAnG SAHAM MIECO AnnUAL REPORT 2010
Dividen
Walaupun syarikat memperolehi
keuntungan yang kecil dalam tahun
kewangan, disebabkan oleh perjanjian
dan kontrak kewangan dan hasrat untuk
mengekalkan tunai bagi membiayai
pembukaan semula kilang ke-3, pihak
Pengarah tidak dapat menyarankan
bayaran dividen bagi tahun kewangan
yang berakhir pada 31 Disember 2010.
Bagi tahun 2009, tiada dividen juga
diisytiharkan. Ini ialah disebabkan
harapan pengarah untuk menyambungkan
semula pembayaran dividen
secepat mungkin sekiranya keadaan
membenarkan.
2011 : Kemunculan lebih bertenaga,
lebih baik
Kami memulakan operasi kilang ke-3 kami
di Kechau Tui, Pahang pada bulan Januari
tahun ini berikutan dengan peningkatan
permintaan pasaran untuk papan serpai
serta produk-produk berkaitan, setelah
penutupan sementara operasi akibat
kemelesetan ekonomi global pada akhir
tahun 2008.
Pada suku tahun pertama tahun 2011,
kami berharap dapat menyelesaikan
kesemua masalah teknikal dan isu-isu lain
di kilang ke-3 kami di Kechau Tui. Kami
dengan agresifnya akan mengukuhkan
rangkaian pembekalan bahan mentah
di sekitar kawasan Kuala Lipis dan
berharap akan mencapai kejayaan dalam
pertengahan tahun 2011. Pembukaan
semula kilang ke-3 kami di Kechau Tui
akan membolehkan MIECO mendapat
semula pasaran yang pernah terlepas
semasa penutupan kilang tersebut. 2011
akan menjadi tahun yang mencabar bagi
operasi kilang ke-3 kami tetapi kami yakin
bahawa kami mampu untuk menunjukkan
keputusan positif pada tahun 2012 dan
seterusnya.
Selain pembukaan semula kilang ke-3
kami di Kechau Tui, untuk memenuhi
kehendak lebih ramai pelanggan
global kami bagi tahun 2011, kami
memberi tumpuan kepada peningkatan
keseluruhan piawaian produk dan
spesifikasi teknikal. Kami sedang dalam
proses menghasilkan 6 warna baru
dan 2 rekabentuk permukaan untuk
memperluaskan kapasiti kami bagi
memenuhi peningkatan permintaan.
Kami merancang untuk menawarkan
pelbagai warna baru, terutamanya
warna solid dan juga pelbagai pilihan
corak kayu demi memenuhi permintaan
pelanggan. Kami juga merancang untuk
memanfaatkan peningkatan permintaan
rekabentuk perabot yang berinovasi dan
bergaya di kalangan pelanggan berusia
muda dan pemilik rumah baru pertama.
Kami juga akan terus menjadi perintis
bagi produk baru - inovasi seperti konsep
DIY yang kami perkenalkan ke pasaran
Malaysia pada tahun 1979, Electron Beam
Foil Chipboard (EBFC), Direct Post-Formed
Board (DPF) dan R3 Worktop.
| 23SURAT KEPADA PEMEGAnG SAHAMMIECO AnnUAL REPORT 2010
Dengan segala usaha yang sedang
kami gunakan pada perniagaan kami,
kami harus mengambil ikhtibar bahawa
dalam tahun 2011, keadaan perniagaan
masih lagi mencabar untuk Kumpulan,
terutamanya apabila menghadapi
kenaikan kos bahan mentah dan tenaga.
Terdapat peningkatan runcing dalam
harga pelekat dan cecair lilin beberapa
bulan terakhir ini yang mana kami
jangkakan akan berterusan.
Harga kayu, yang di bawah anggaran
bajet dalam tahun 2010, sudah mula
meningkat kerana musim tengkujuh
yang berpanjangan telah menyulitkan
pencarian sumber kayu. namun, kami
berharap harga beransur stabil apabila
cuaca bertambah baik pada suku ke-2.
Walaupun demikian, kami optimis
secara berjaga-jaga; pemulihan di suku
ke-2 2010 adalah menggalakkan. Kami
bekerja keras untuk memperketatkan
pergerakan kos bahan mentah di mana
kami telah mempunyai pengalaman
yang luas. Kami juga mempergiatkan
pembangunan produk terutamanya
produk tambah-nilai dan mesra alam
iaitu merupakan kekuatan kami.
Oleh kerana harga susu getah yang
tinggi telah menyukarkan pemperolehan
sumber kayu getah, kami terpaksa
mencari sumber bahan mentah alternatif
dan sisa kayu secara berterusan
sebagai komponen utama supaya
dapat mengurangkan pergantungan
kami kepada sumber sediada. Kami
juga akan terus melaksanakan proses
pengoptimuman untuk meningkatkan
produktiviti serta menerapkan cara-cara
baru untuk mengawal dan menguruskan
kadar penolakan.
Seperti biasa kami akan terus memupuk
dan memperluaskan hubungan kami
dengan pelanggan kami di Malaysia,
yang kuat dan setia kepada MIECO,
yang telah menyumbangkan separuh
daripada perniagaan global kami.
24 | SURAT KEPADA PEMEGAnG SAHAM MIECO AnnUAL REPORT 2010
Prospek Pasaran : Yang Menjanjikan &
Positif
Sektor hartanah telah mendominasi
pasaran tempatan tahun lalu, merangkul
sebanyak 60.2% dari jumlah keseluruhan
transaksi dan 47.1% secara nilai, dan
kami berharap tren ini akan berterusan
pada tahun 2011. Hal ini menjadi petanda
baik untuk pasaran domestik, lebih-lebih
lagi di masa prestasi pasaran global
yang suram. Seperti yang dijangkakan,
kenaikan penggunaan domestik akan
memberikan dorongan yang amat
diperlukan kepada perniagaan kami.
Kami percaya bahawa dasar negara
tetap kukuh dengan sokongan daripada
pelbagai tindakan di bawah Rancangan
Malaysia Ke-10 dan program Transformasi
Ekonomi Perdana Menteri Datuk Seri
najib. Projek seperti Daerah Kewangan
Antarabangsa Kuala Lumpur, Mass
Rapid Transit untuk Greater KL dan
pembangunan semula kawasan-kawasan
seperti Kampung Baru, Penjara Pudu dan
Institut Penyelidikan Getah di Sungai
Buloh diharap akan mempunyai kesan
kelebihan yang positif.
Kami menganggarkan pertumbuhan yang
kukuh pada 3 tahun yang akan datang
ditambah oleh perbelanjaan orang ramai
dan sektor awam yang lebih dinamik.
Kami berharap penekanan kepada produk
mesra alam akan terus berkembang di
mana kami berada dalam kedudukan
yang baik untuk mengambil kesempatan
terhadap peluang yang ada.
Secara global, kami berharap Asia dapat
memberi dorongan kepada pertumbuhan,
seperti yang telah terjadi kebelakangan
ini. Selain itu, kami menjangkakan
permintaan yang lebih tinggi dari negara
Jepun, di mana negara Jepun sedang
bergerak ke fasa pembangunan semula
selepas kemusnahan akibat gempa
bumi pada bulan Mac 2011. Ini selaku
langkah berjaga-jaga terhadap cabaran
yang dihadapi oleh Amerika Syarikat
dan seluruh Eropah, terutamanya
Greek, Iceland, Portugal, Sepanyol dan
sebagainya.
Kami telah mengharungi beberapa tahun
percubaan untuk MIECO, tetapi melalui
jangka masa tersebut, kami percaya
bahawa kami memiliki perniagaan yang
berbaloi serta kekal usia. Sekarang, kami
melihat tanda-tanda bahawa industri kami
sudah kembali bertapak dan kami yakin
bahawa MIECO bersedia untuk merebut
peluang dengan sepenuhnya.
Warga MIECO
Setelah mengharungi segala cabaran
ini, warga MIECO masih menunjukkan
kesetiaan dan komitmen terhadap
PROSPEK EKOnOMI MALAYSIA ADALAH POSITIF. LAPORAn HARTAnAH DARI nATIOnAL PROPERTY CEnTRE’S 2010 TELAH MEnCATAT TAHAP BARU PASARAn HARTAnAH DI MALAYSIA PADA TAHUn 2010, DEnGAn JUMLAH DAn nILAI TRAnSAKSI MASInG-MASInG MEnCATAT PERTUMBUHAn DUA DIGIT SEBAnYAK 11.4% DAn 32.6%.
| 25SURAT KEPADA PEMEGAnG SAHAMMIECO AnnUAL REPORT 2010
perniagaan ini. Mereka telah bekerja
keras untuk mengekalkan kos dan
mencari kecekapan. Seperti yang
dilakukan oleh para pemegang saham
kami, pasukan kami harus juga bertahan
menghadapi masa sukar, serta bertindak
di luar jangkaan.
Atas nama Lembaga Pengarah MIECO,
saya ingin menghulurkan ucapan terima
kasih dengan tulus ikhlas kepada setiap
ahli keluarga MIECO. Anda telah bekerja
keras, tetap setia dan komited dalam
menghadapi masa sukar dan telah
muncul lebih kuat, lebih erat dan lebih
bersatu. Saya yakin ianya akan membawa
kita lebih jauh. Saya berharap kita dapat
bersama-sama menuju ke hadapan.
Untuk pelanggan setia kami di seluruh
dunia dan khususnya di Malaysia -
Terima Kasih. Anda telah melihat kami
melalui masa yang sukar, dan kami
berterima kasih untuk itu. Kami akan
terus bekerja keras untuk menghasilkan
produk berkualiti tinggi, produk nilai
tambah yang akan memberi pulangan
hebat kepada perniagaan dan jenama
anda.
Untuk Lembaga Pengarah MIECO, terima
kasih atas kepercayaan anda pada
jenama MIECO, dan visi anda dalam
memandu syarikat ini melalui pahit
getir. Anda adalah pasukan yang terbaik,
lebih komited untuk membantu kami
tetap berada di landasan. Kami juga
ingin mengambil kesempatan ini untuk
mengucapkan terima kasih kepada
Datin Sri Maria Bettina Khan yang bersara
daripada Lembaga Pengarah.
Untuk anda pemegang saham kami,
terima kasih di atas kesabaran anda dan
keyakinan yang berterusan terhadap
MIECO. Kami semua dari MIECO akan
terus berusaha keras untuk memberikan
perkhidmatan sebaik mungkin dan
semoga kami mampu memenuhi harapan
anda semua.
Terima Kasih
Dato’ Mohamed Moiz bin Ali M J Moiz
MIECO Chipboard Berhad
27 April 2011
26 | REVIEW OF OPERATIOnSMIECO AnnUAL REPORT 2010
2010 was a year of recovery for MIECO,
after a challenging year in 2009.
2010 generated positive results, giving us
the confidence that we can finally expect
to see the business enjoy a turn for the
better.
Our financial results: The start of a
turnaround
For the year ending December 2010,
MIECO recorded revenue of RM174.2
million, down 6% against the RM185.7
million we achieved in 2009. This was
attributable to lower export sales volume
but mitigated by increased domestic
demand with more sales of value-added
products.
MIECO’s profit before tax increased
to RM1.65 million after accounting
for finance cost, depreciation and
maintenance of its plant in Kuala Lipis
which was not operational in 2010,
compared to its previous year’s loss of
RM16.5 million.
Business activities
As part of our cost containment strategy,
we continued to operate only two plants
in 2010, keeping Plant 3, in Kechau Tui,
Pahang, closed.
We focused on improving efficiencies
and production quality at the two plants.
Among the initiatives we implemented
there were; improving plain board
production volume, improving product
standards to meet international
requirements such as the E1 CARB
Phase 2, reducing machine downtime and
FOR 2010, WE FOCUSED On 3 CORE STRATEGIES FOR SUSTAInInG OUR BUSInESS – MAnAGInG COSTS AnD IMPROVInG EFFICIEnCIES, STEPPInG UP PRODUCT DEVELOPMEnT AnD PROTECTInG OUR DOMESTIC CUSTOMER BASE, WHICH COnTInUES TO BE OUR LIFELInE.
REVIEW OF OPERATIOnS
| 27REVIEW OF OPERATIOnSMIECO AnnUAL REPORT 2010
reducing production reject rate.
Based on the market turnaround in the
second half of 2010, we anticipated
having to reopen our plant at Kechau
Tui in Pahang, and spent time and effort
ensuring the plant was up and ready. We
reopened the plant in January 2011 and
are pleased to report that it is running
smoothly. With the resumption of Plant
3, MIECO will see an increase in its plain
board capacity and this will enable us to
produce more value-added products.
6 new wood grain designs under the
2010 MIECO Decorative MFC comprising
Montana Cherry, Olive Ash, Vermont Ash,
Linea, Tiziano Pine and Zena Pine. These
have been well-received in the market,
and we anticipate they will be significant
contributors to our bottom line in 2011.
We are currently working on at least 6
new additional designs which we will roll
out in 2011. Our target is to increase our
range of designs as we expect there to be
increasing demand for this value-added
product.
We stepped up efforts to meet
international standards, and achieved the
E1 California Air Resource Board (CARB)
Phase 2 in 2010. In January 2011, we
started to produce products with this
certification, demonstrating compliance
of MIECO’s composite wood products
with California Code of Regulations for
the US market.
We also attained, for MIECO’s melamine
laminated products, the Singapore Green
Label Certification endorsed by the
Singapore Environment Council certifying
our products’ minimal impact to overall
environment, right from our raw
materials to the manufacturing process,
composition, health impact and finally
the disposal of the product.
We focused our marketing efforts on
the domestic market, which has steadily
grown and now contributes more than
50% of our business. Our Malaysian
We also worked hard to negotiate the
best rates for raw materials, taking
advantage of a depressed market in the
first half of 2010, and managed to secure
good contracts for the supply of critical
raw materials that will see us through
2011.
Product development has always been
a core strategy for MIECO, and it was
no different in 2010. We rolled out
28 | REVIEW OF OPERATIOnSMIECO AnnUAL REPORT 2010
customers have proven to be loyal and
respond well to our new products; we
spent time nurturing and growing these
relationships.
And we continued to explore the use of
rubber wood as a sustainable raw material
alternative. Results are positive and we
are optimistic that we will have a suitable,
cost-efficient raw material alternative in
the not-too-distant future.
All these measures not only helped us
minimize losses, but gave us a strong
differentiation factor in the international
marketplace, helping position us
strongly amongst players in the global
particleboard industry.
People : A year of great teamwork
In 2010, we invested time and effort in
developing the skills and knowledge of
our team, taking advantage of a slower
operating environment to improve our
talent pool. Our employees spent a total
of 602 hours in training in 2010, against
the original plan of 427 hours.
In ADDITIOn TO THAT, WE HAD 137 EMPLOYEES ATTEnD MOTIVATIOnAL AnD TEAM DEVELOPMEnT PROGRAMMES, WHICH TOGETHER HELPED InCREASE EFFICIEnCY, TEAMWORK AnD PRODUCTIVITY.
| 29REVIEW OF OPERATIOnSMIECO AnnUAL REPORT 2010
We believe that working together is
an important part of MIECO’s success;
as was clearly demonstrated in our
performance in 2010. We are working
hard to ensure this is carried through
across the company, and especially at
Plant 3, as we recommence operations
there this year.
Community : Supporting the
communities we operate in
MIECO continued to have close ties
with the communities it operated
in, organizing events to build and
strengthen relationships, whilst being
supportive of their needs.
Part of our efforts in 2010 included
several familiarization sessions for the
communities, where we invited students
and lecturers from nearby institutions
of learning to visit our plants and
understand our production process.
Led by our well- trained staff, they were
exposed to the step by step production
of particleboards.
We also stayed in close touch with the
local community, inviting representatives
from the Department of Environment,
the Police department and Taman Balok
Makmur Residents Committee members
to attend our ‘Majlis Berbuka Puasa’
(breaking of fast) event.
We continue to engage with and aid our
communities despite market challenges;
they have been loyal supporters of
our business, and we enjoy a strong,
mutually-rewarding relationship with
them. We are committed to giving them
our best, acting responsibly and keeping
their interests at heart.
All in, 2010 was a lean year for the
business, but we used the time to
improve MIECO’s overall operational,
product development and purchasing
model, which will help us lay a strong
foundation for the turnaround we
anticipate to happen in 2011, and
help MIECO regain its position as one
of the world’s leading wood-based
manufacturing brands.
30 | EnGAGInG WITH OUR COMMUnITIES In 2010MIECO AnnUAL REPORT 2010
to develop the communities confidence in
approaching MIECO, testament to strong
relationships.
In its efforts to foster stronger ties with
the government-related bodies in its area
of operation, members of the Department
of Environment, Police and Taman Balok
Makmur Residents Committee were invited
to attend ‘Majlis Berbuka Puasa’. The well-
received event was attended by Dato’ Yong
Seng Yeow as well as the staff from the
Gebeng and Semambu plants.
Within the company, employee engagement
programmes to create interaction between
the plants were carried out successfully.
There was strong participation, an
indication of the effect of previous
programmes we have had, and this year
brought further encouragement.
In Pantai Balok, a fishing competition and
telematch was held for the members and
children of Kelab Sukan dan Sosial Mieco
(KSSM). A friendly football match was held
between MIECO KSSM and Beserah Selatan
Football Club which KSSM won. Sepak
takraw and badminton matches were held
between members and there was a KSSM
organised trip to Tioman Island.
MIECO has always placed strong emphasis
on education and 2010 saw several
initiatives in this vein. Groups of students
and lecturers from the International Islamic
University of Malaysia, Universiti Teknologi
Mara, Jengka and Universiti Putra Malaysia
were taken on tours of the plants and
educated on the machinery and processes
used in MIECO’s production.
The visits from universities were also
structured to give participants a greater
understanding of the possible hazards and
dangers involved in chipboard production,
and the respective safety systems MIECO
has in place.
Taking steps for greater involvement on the
educational front, 22 students from UTM,
USM, ADTEC, UPM, UUM, Polisas, UMP and
Politeknik Hulu Terengganu were received
to undertake their 6 months practical
training.
Donations were made to the community for
a variety of causes that included new ceiling
fans for Sekolah Agama Rendah and the
blister board needed for Rejimen Ke 1, Kor
Armor Di Raja, Kem Batu 10 to construct
the platform for their family day. These
donations represent MIECO’s aim to support
different groups within the community and
Corporate Social Activities for 2010.
Jan – Dec 2010
Received 22 students for Industrial Practical
training for a period of 2 – 6 months.
• Students were from UTM, USM, ADTEC,
UPM, UUM, Polisas, UMP and Politeknik
Hulu Terengganu.
21 Jan 2010
Plant Visit by 3 Lecturers and 20 students
from Int’l Islamic University of Malaysia.
• to expose them on machine used in
MIECO production, hazard while working
with machines and how to control and
avoid an accident from happening.
31 Jan 2010
Launching of general meeting
‘Jawatankuasa Majlis Muafakat – SAR / KAFA
Masjid Darul Husna, Taman Balok Makmur.
• Donation of 4 units ceiling fans for
Sekolah Agama Rendah / Kelas Agama
Fardhu Ain Darul Husna.
THROUGHOUT 2010, MIECO COnTInUED EnGAGInG WITH AnD SUPPORTInG ITS COMMUnITIES In PAHAnG. EFFORTS WERE FOCUSED HERE TO STREnGTHEn RELATIOnSHIPS WITH THE IMMEDIATE COMMUnITIES.
EnGAGInG WITH OUR COMMUnITIES In 2010