SUMMARY OF KEY MATTERS DISCUSSED AT THE FORTY-THIRD ANNUAL GENERAL MEETING ("43RD AGM") OF BOX-PAK (MALAYSIA) BHD ("BOX-PAK" OR "THE COMPANY") HELD ON MONDAY, 24 APRIL 2017 AT 10.00 A.M.
Pursuant to Paragraph 9.21(2)(b) of the Main Market Listing Requirements, a listed issuer must publish a summary of key matter matters discussed at the annual general meeting, as soon as practicable after the conclusion of the annual general meeting.
All ordinary resolutions that were tabled at the 43rd Annual General Meeting were duly approved by the Shareholders through poll voting. The Shareholders also received the Audited Financial Statements of the Company and of the Group, along with the Directors Reports of Directors and Auditors for the financial year ended 31 December 2016.
The results of the poll, which were announced by the Scrutineer, Boardroom Business Solutions Sdn Bhd, are as follows:
| Voted in favour | Voted against | Total votes casted | ||||
|---|---|---|---|---|---|---|
| No. of shares | % | No. of shares | % | No. of shares | % | |
| ORDINARY BUSINESS | ||||||
|
Ordinary Resolution 1 Approval of Directors' Fees amounting to RM523,000 payable to Directors of the Company in respect of the financial year ended 31 December 2016 |
79,850,629 | 99.99 | 11,000 | 0.01 | 79,861,629 | 100.00 |
|
Ordinary Resolution 2 Approval of benefits of up to RM300,000 payable to the Non-Executive Directors of the Company for the financial year ending 31 December 2017 |
79,850,629 | 99.99 | 11,500 | 0.01 | 79,862,129 | 100.00 |
|
Ordinary Resolution 3 Re-election of Director, Chee Khay Leong who retires pursuant to Article 95 of the Articles of Association of the Company |
79,851,129 | 99.99 | 11,000 | 0.01 | 79,862,129 | 100.00 |
|
Ordinary Resolution 4 Re-election of Director, Gong Wooi Teik who retires pursuant to Article 95 of the Articles of Association of the Company |
79,851,129 | 99.99 | 11,000 | 0.01 | 79,862,129 | 100.00 |
|
Ordinary Resolution 5 Re-election of Director, Tee Keng Hoon who retires pursuant to Article 95 of the Articles of Association of the Company |
79,851,129 | 99.99 | 11,000 | 0.01 | 79,862,129 | 100.00 |
|
Ordinary Resolution 6 Re-election of Director, Keith Christopher Yeoh Min Kit who retires pursuant to Article 101 of the Articles of Association of the Company |
79,851,129 | 99.99 | 11,000 | 0.01 | 79,862,129 | 100.00 |
|
Ordinary Resolution 7 Re-appointment of Messrs BDO, Chartered Accountants, as Auditors of the Company and to authorise the Directors to determine their remuneration |
79,851,129 | 99.99 | 11,000 | 0.01 | 79,862,129 | 100.00 |
| SPECIAL BUSINESS | ||||||
|
Ordinary Resolution 8 Proposed authority to Directors to allot and issue shares pursuant to Sections 75 and 76 of the Companies Act, 2016 |
79,851,129 | 99.99 | 11,000 | 0.01 | 79,862,129 | 100.00 |
|
Ordinary Resolution 9 Proposed renewal of authority for the Company to purchase its own shares |
79,851,129 | 99.99 | 11,000 | 0.01 | 79,862,129 | 100.00 |
|
Ordinary Resolution 10 Proposed renewal of mandate for the Company and its subsidiaries to enter into recurrent related party transactions of a revenue or trading nature |
13,834,508 | 99.92 | 11,000 | 0.08 | 13,845,508 | 100.00 |
The Shareholders raised questions during the 43rd AGM, which were duly answered and clarified by the Group Chief Financial Officer. The salient questions raised by the Shareholders are as follows:
| Q1 | The Group earnings decreased from RM9.8 million in FY2015 to a loss of RM0.9 million in FY2016 due to the increase in raw material, labour costs, production overhead and higher borrowings as stated in the Annual Report 2016. | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| (a) | How would the Board address the above issues to improve the Group earnings? What would be the outlook in FY2017 and would the Board expect the Group to return to profitability in FY2017? | ||||||||
| (b) | What were the reasons for significant decrease in other income by 62.3% form RM10.6 million in FY2015 to RM4.0 million in FY2016? | ||||||||
| A1 |
The Group embarks on the following strategies to address the cost pressure faced by the Group:
The drop in Other Income was mainly due to the drop in unrealised foreign currency gains. In FY2015, the Group registered an unrealised foreign currency gain of RM7.36 million arising from temporary USD funds brought back from Vietnam as dividend (about USD5 million) and kept in USD accounts and advances from Malaysia to Vietnam which is denominated in USD. An unrealised exchange loss of RM3.1 million for year 2016 was recorded. |
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| Q2 |
As stated in the Management Discussion and Analysis (MD&A) under the strategic analysis, competition in Vietnam and Malaysia was expected to be still with slim profit margin due to the presence of the high numbers of manufacturers.
In light of the above, what are the key strategic plans to compete with other players and to what extent the expected margin compression if the market competition intensified? |
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| A2 |
As further discussed in the MDNA under strategic analysis - page 7, there are broadly 3 types of players in this industry, i.e.
Box-Pak concentrates on the effort to produce high quality carton boxes which is one of the Company's strength. Box-Pak also maintains very good relationship with its customers. The Company also work with the holding company, Kian Joo Can Factory Berhad ("Kian Joo") and related parties to supply carton boxes to Kian Joo's customers or manufacturing facilities. The Company will also continue to work on its production efficiency to bring down costs in order to stay competitive. |
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| Q3 | Please update shareholders on the current capacity of the Group�s factory and other indicators such as lead time, inventory holding period, etc. | ||||||||
| A3 |
The current production capacity is approximately 4,300 MT/month in Malaysia and 12,000 MT/month in Vietnam. The Company will increase the Malaysian plants capacity to 7,500 MT/month.
Purchase lead time depends on paper required but usually is longer than a month. Paper roll inventory is around 1.5 months to 2 months. |
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| Q4 | What is the age of the Group's main machineries in Vietnam? What is the total cost of maintenance for the Group's operation in Vietnam and Malaysia? | ||||||||
| A4 |
The main machine in Malaysia like the corrugators are more than 30 years old. Some of the printing machines are also quite old. In FY2016, RM3 million was spent on repair and maintenance cost in Malaysia.
For Vietnam, the oldest corrugator is about 17 years old. In FY2016, RM7 million repair and maintenance cost was incurred in Vietnam. |
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| Q5 | What is the budgeted CAPEX for 2017 to phase out the aging machinery and equipment? | ||||||||
| A5 |
The budgeted CAPEX for FY2017 was mentioned in the abridged prospectus dated 20 February 2017:
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| Q6 | How would the Board address the issue of availability of replacement parts and cost of repair and maintenance in future? | ||||||||
| A6 | Cost of replacement parts and maintenance will be very much reduced once the parts are replaced with newer and better machines. | ||||||||
| Q7 | Please share on the Group's plans to source new customers and diversify its business into other industries? | ||||||||
| A7 |
Sourcing new customers and diversifying business into other industry is an ongoing process. Box-Pak rides on the sales network of the holding company, Kian Joo. However, this is still not a priority as the Company has been achieving good revenue growth of at least 10% in the past 4 years.
However, the Company needs to solve the capacity issues. |
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| Q8 | The Group is seeking shareholders' approval under the Resolution 2 for the benefits of up to RM300,000 payable to the Non-Executive Directors of the Company for the financial year ending 31 December 2017. Please provide the breakdown of the benefits payable to the Non-Executive Directors. | ||||||||
| A8 |
A Non-Executive Director is entitled to attendance allowance of RM1,500 per meeting and travelling package of RM30,000 per annum.
Apart from the above, the said Director is entitled to attend training and seminar on subject relevant to the director's roles and is also covered under the insurance cover for directors and officers of the Company. |
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| Q9 | What are the capacity utilisation and the potential growth in Vietnam? | ||||||||
| A9 | The plant in Vietnam is making profit and its existing capacity has increased from 9MT to approximately 12MT/month. | ||||||||
| Q10 | The demand in Myanmar was supplied by local manufacturer or via import? | ||||||||
| A10 | The economy in Myanmar is expanding; Box-Pak is working closely with the existing customers who have plans in setting up factories in Myanmar as well as the customers from the holding company, Kian Joo. | ||||||||
| Q11 | Whether it is worthwhile to import in order to meet the local market demand? | ||||||||
| A11 | Yes, there were shipments from Atlantic Ocean to other countries. | ||||||||