07-05-2015, 11:23 PM
Tien Wah Annual Report (2014)
2014 was a difficult year for the Group. The main industry in which we operate in, continued to undergo dynamic changes. This in return
had a direct impact on our business.
The introduction of Graphical Health Warning on packs for Vietnam’s market was one significant impact on our business as we saw a
drastic drop in demand. Increase in excise duties continued to dampened demand on the major industry players as this resulted in an
increasing prevalence of illicit products.
The Group as a whole, continued to face severe challenges as our major customer raised their level of expectations on quality and
deliveries. This demanded further process changes as well as implementation of new resources for the Group. The Board then approved a restructuring of the production footprint within the Group to improve strategic positioning to service the customers and reduce operating cost over the longer term. As a consequence of the restructuring, a redundancy expense of RM2.0 million was recognised. There was also a one-off sales rebate of RM5.9 million incurred during the year.
These events contributed to an overall decline in both revenue and profit for the year. While the Group is still profitable at RM13.5 million,
revenue declined by 7.0% or RM26.7 million and net profit reduced by 44.8% or RM11.0 million as compared to 2013. Our balance
sheet remains favourable with the Group’s net assets (excluding non-controlling interests) increasing by 3.3% to RM236.7 million from
RM229.1 million. Debt levels increased slightly from RM72.9 million to RM74.0 million, due to the implementation of new resources
mentioned above. The business also continued to generate cash positively in the year under review which amounted to RM60.0 million
(2013: RM58.3 million).
OUTLOOK FOR 2015
The market, in which we operate in, continues to show uncertainty. The challenges of 2014 are expected to continue in 2015. We have
also seen increasing activities among our competitors as they continue to expand their presence in Asia. As the competition intensifies,
the demand on quality and delivery expectations would be even greater.
To overcome these severe challenges, it is paramount for the Group to look beyond our current footprint and customers’ base. The Group would continue to explore new opportunities while driving total cost downwards.
The Group remains positive that we have the knowledge, capabilities and resources to continue to grow the company in both revenue and
profits. Our strategy of focusing on being a business partner to our customers to help drive efficiencies, cost reductions and innovation
would remain as our top priority.
2014 was a difficult year for the Group. The main industry in which we operate in, continued to undergo dynamic changes. This in return
had a direct impact on our business.
The introduction of Graphical Health Warning on packs for Vietnam’s market was one significant impact on our business as we saw a
drastic drop in demand. Increase in excise duties continued to dampened demand on the major industry players as this resulted in an
increasing prevalence of illicit products.
The Group as a whole, continued to face severe challenges as our major customer raised their level of expectations on quality and
deliveries. This demanded further process changes as well as implementation of new resources for the Group. The Board then approved a restructuring of the production footprint within the Group to improve strategic positioning to service the customers and reduce operating cost over the longer term. As a consequence of the restructuring, a redundancy expense of RM2.0 million was recognised. There was also a one-off sales rebate of RM5.9 million incurred during the year.
These events contributed to an overall decline in both revenue and profit for the year. While the Group is still profitable at RM13.5 million,
revenue declined by 7.0% or RM26.7 million and net profit reduced by 44.8% or RM11.0 million as compared to 2013. Our balance
sheet remains favourable with the Group’s net assets (excluding non-controlling interests) increasing by 3.3% to RM236.7 million from
RM229.1 million. Debt levels increased slightly from RM72.9 million to RM74.0 million, due to the implementation of new resources
mentioned above. The business also continued to generate cash positively in the year under review which amounted to RM60.0 million
(2013: RM58.3 million).
OUTLOOK FOR 2015
The market, in which we operate in, continues to show uncertainty. The challenges of 2014 are expected to continue in 2015. We have
also seen increasing activities among our competitors as they continue to expand their presence in Asia. As the competition intensifies,
the demand on quality and delivery expectations would be even greater.
To overcome these severe challenges, it is paramount for the Group to look beyond our current footprint and customers’ base. The Group would continue to explore new opportunities while driving total cost downwards.
The Group remains positive that we have the knowledge, capabilities and resources to continue to grow the company in both revenue and
profits. Our strategy of focusing on being a business partner to our customers to help drive efficiencies, cost reductions and innovation
would remain as our top priority.