Chairman Statement
FINANCIAL PERFORMANCE
The management and staff of the Group have delivered yet another year of commendable performance in 2007 despite high materials prices. It is against the backdrop of increasingly high production costs that the Group continues to show strong results. Revenue increased by 10.5% from RM84.9 million to RM93.8 million, profit attributable to shareholders increased by 12.3% from RM7.8 million to RM8.8 million. All these are record financial achievements that have never before been attained by the Group. The outcome is directly due to the overall sales increase in our markets that are located in more than 40 countries worldwide.
In line with the increase in revenue, earnings per share for the current financial year was 9.7 sen compared to 8.7 sen recorded for the previous year, reflecting an increase of 11.6%.
Total equity attributable to shareholders as at 31 December 2007 was RM70.1 million, contributing to net assets per share of 77.4 sen, an increase of 7.8% from last year's 71.8 sen. Gearing ratio of the Group at the end of the financial year also improved from the 0.33 recorded last year to 0.26.
CORPORATE ACHIEVEMENTS AND DEVELOPMENTS
The Company is honoured to have been selected for inclusion in "Top Malaysian Small Cap Companies - 100 Jewels, 2008 Edition" published by OSK Research Sdn. Bhd. Selection criteria for inclusion include management execution, corporate track record, competitive advantage and ability of the companies to respond to structural changes within the sector and/or the economy.
It was reported in the last Annual Report that the Company was exploring the possibility of listing its wholly owned subsidiary, Furniweb Manufacturing (Vietnam) Co. Ltd. ("FMV") on the Ho Chi Minh City Stock Exchange ("HOSE"). The proposed listing was intended to allow the Company to capitalize on the fast growing Vietnamese economy and enhance the values of its subsidiaries in Vietnam.
As announced through Bursa Malaysia Securities Berhad on 28 January 2008, FMV was converted into a joint stock company with effect from 2 January 2008 and is now known as Furniweb (Vietnam) Shareholding Company ("FVSC"). The Company further informed that due to the delay in the issuance of the investment certificate by the relevant authority in Vietnam in relation to the conversion, the proposed listing is expected to be completed by the second quarter of 2008 instead of the fourth quarter of 2007 as disclosed in the Company's Circular dated 21 September 2007.
The Board will keep shareholders informed on the progress of the proposed exercise through announcements via Bursa Malaysia Securities Berhad.
FUTURE PROSPECTS
The coming year is expected to be extremely demanding for the Group. The high material prices, including natural rubber and fuel prices, will continue to have a significant impact on the cost of our products and hence the performance of the Group.
The Board realizes that sustaining the current financial performance will be challenging. It is becoming increasingly clear that the Group needs to be more vigilant as more and more challenges emerge. The Group will continue to embark on more research to add value to its products to keep abreast with market requirements and also to explore methods to improve operating efficiency and human productivity in order to reduce cost.
In operations, the Group maintains good relationship with its customers and receives strong support from these customers. The Group will continue to focus on the growth and expansion of its core business activities and will carefully consider any investment opportunities that will broaden its earnings base, with the objective of fostering long term sustainable growth. The Group will also continue to implement prudent policies in terms of capital expenditure, cash flow management, managing credit terms, stock holding, as well as cost management.
Based on the above and barring any unforeseen circumstances, the Board is cautiously optimistic of a satisfactory Group performance for the financial year ending 31 December 2008.
DIVIDEND
The Board is pleased to recommend for the approval of the shareholders at the forthcoming seventh Annual General Meeting, a first and final tax exempt dividend of 3.0 sen per share that is equivalent to a return of 6.0% per annum based on the par value of the Company's shares of RM0.50 per share.
Your Board's dividend policy aims at allowing shareholders to participate annually in the results of the Group, whilst ensuring that adequate funds remain to meet its financial obligations and finance future expansion that will ultimately enhance value for all shareholders. Since the listing of the Company on Bursa Malaysia Securities Berhad on 16 October 2003, the Board has always maintained a dividend payout rate of not less than 6.0% per annum based on the par value of the Company's shares of RM0.50 per share.
APPRECIATION
On behalf of the Board of Directors, I would like to express my sincere appreciation and gratitude to the management and staff of the Group for their continuous contribution, undivided dedication and loyalty to the Group.
The Board would also like to take this opportunity to extend our heartfelt appreciation to our shareholders, valued customers, suppliers, bankers, business associates and the regulatory authorities for their continued confidence in and support for the Group.
Finally, my sincere thanks to my fellow directors in the Group for their active participation, valuable advice and support.