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On behalf of the Board of Directors, l am pleased to present to you the Annual Report of Mithril
Berhad (“Mithril”) for the financial year ended 30 June 2007.
REVIEW OF FINANCIAL PERFORMANCE
This year continued to be a challenging year for the Group.
For the financial year ended 30 June 2007, Mithril generated revenue of approximately RM48 million as compared to approximately RM65 million for the previous financial year. This represents a decrease of 26% as compared to the previous financial year.
The decrease in revenue is mainly due to the following:
| i) |
Lower sales value as a result of the strengthening of Ringgit Malaysia currency against the US Dollar, as the sales of polyurethane
products (“PU”) are denominated in USD; |
| ii) |
Increase in competition particularly from China; and |
| iii) |
Temporary cessation of production and sales of bricks as compared to the previous year. |
The Group incurred a higher loss before taxation of approximately RM15 million as compared to approximately RM10 million as
reported in previous financial year. The
increase in loss before taxation is mainly due to the following:
| i) |
Decrease in revenue as compared to previous financial year; |
| ii) |
Rising raw material costs, in particular, the chemicals for the production of the PU; |
| iii) |
Impairment in value and loss on disposal of idle factory amounting to approximately RM2 million; and |
| iv) |
Write off of damaged and obsolete stocks amounting to approximately RM3.8 million. |
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| REVIEW OF OPERATIONS
Mithril continues to focus on its core business activities i.e. manufacturing and investment properties. For the financial year ended
30 June 2007, the manufacturing division contributed approximately RM41 million or 85% of revenue and the investment properties
division contributed approximately RM7 million or 15% of revenue.
The main contributor of the manufacturing division is the manufacturing and trading of PU which operates under its wholly-owned
subsidiary, Mithril Saferay Sdn Bhd. The PU business continues to face the challenges of increasing chemical prices as a result
of higher crude oil prices and the shortage of supply during the financial year under review.To mitigate the increase in prices of
raw material, the Group has initiated the price adjustment to transfer a portion of the cost to the customers. Apart from the price
adjustment, Mithril is currently in the process of relocating and centralising its production facilities under one roof to further improve
its production capacity and efficiency.
As a result of a fire which damaged a section of the bricks plant in the previous financial year, the bricks business has temporarily
ceased and therefore, did not contribute materially to the Group during the financial year under review.
The investment properties i.e. the two (2) office buildings (Menara MAA) in Kota Kinabalu and in Kuching continues to generate a
stable source of rental income and cash flows to the Group.
FUTURE OUTLOOK
The Group expects the coming financial year to continue to be challenging. The Group is currently undertaking the following key
initiatives to arrest the declining performance of the Group:
| i) |
to dispose of non-core assets to fund the working capital of the Group; |
| ii) |
to relocate and centralise the production facilities of the polyurethane manufacturing division to further improve the production
capacity and efficiency; and |
| iii) |
to restructure the existing loans to reduce the gearing and interest expense. |
ACKNOWLEDGEMENT AND APPRECIATION
On behalf of the Board of Directors, I would like to welcome Dato’ Abdul Majid bin Mohamed and Mr Onn Kien Hoe, the independent
non-executive directors who were appointed on 13 December 2006 and 12 January 2007 respectively.
l would also like to take this opportunity to express my gratitude to my fellow directors, management and all members of the Mithril
team for their dedicated efforts and valuable contributions to ensure the continued growth of the Group.
Finally, I would like to thank our valued shareholders, customers and business associates for the support, trust and confidence placed
upon us.
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TUNKU YAHAYA @ YAHYA BIN TUNKU TAN SRI ABDULLAH
EXECUTIVE CHAIRMAN |
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