AGM Key Matters

 

 

SUMMARY OF KEY MATTERS DISCUSSED AT THE 29TH ANNUAL GENERAL MEETING HELD ON MONDAY, 23 AUGUST 2021

The following questions raised by shareholders and proxies that were submitted in advance of the meeting and during the meeting, were addressed by the Group Managing Director succinctly. Details were as follows:-
Questions raised by Mr. Puan Hoe Bee:


1. Are we expecting any insurance claim as a result of the fire incident?


   The Company’s response:


   We have received an interim payment of RM6 million in May 2021. Final fire claim has yet to be finalized by the insurer.


2. How much is the reinstatement costs of our warehouse?


   The Company’s response:


   The expected reinstatement cost is approximately RM3 million. This is based on the contract signed and submitted for our insurance claim.


3. Will the Company’s cash flows be significantly affected by the fire incident?


   The Company’s response:


   The Company's cash flows have not been significantly affected as a result of the fire incident. We expect our cash flows to remain robust..
   Questions raised by Mr. Sia Seng Heng:


4. Market expected to slow down in 2021 and 2022 and you are diversifying product to mitigate the impact of Covid-19. The Managing Director has mentioned new products in packaging so please provide more details.


   The Company’s response:


   We have increased the sales of sawn timber and specific panel products to cater to the packaging industry.


5. Can the Company Research and Development to develop wood-based material comparable to corrugated board, stronger yet cheaper? Online purchase will be the trend, packing material is essential – compete with pulp material.


   The Company’s response:


   The Company is always researching and developing new products to be introduced to the market.


6. Please provide next 3 years business revenue forecast


   The Company’s response:


   We expect our business to grow by 5% each year.
 


7. The Group defined significant increase in credit risk. Are we expecting more bad debt in 2022? What are the actions taken to avoid this? [Page 81 of the Annual Report 2021]


   The Company’s response:


   The pandemic has hit many companies badly globally. We are taking a cautious approach in managing our debtors. We continue to keep in close contact with       our customers to maintain our close relationships even during lockdowns and to push for payments. In addition, we go through each and every debtor to               assess the customer’s credit worthiness. The Group has implemented strict credit control policy and every branch is to adhere to the policy strictly.


8. Why don’t we use short term investments to cover Overdrafts and interests on Banker’s Acceptances since interest rate is low?


   The Company’s response:


   The short-term investments that we hold act as buffer for the Group, and cushions the Group from unexpected events which may result in the Group being           cash strapped. The Covid-19 pandemic further strengthened our belief that it is important for us to be prudent and prepared.
   At the same time, these funds can be utilized should any good opportunities arise for the Group.
   

Questions raised by Mr. Sia Seng Heng:
9. Enhanced Movement Control Orders (“EMCO”) & National Recovery Plan Phase I (“NRP1”), is factory granted approval to operate? What is the impact of this round of lock down to company?


   The Company’s response:


   Our manufacturing subsidiaries were not allowed to operate during EMCO and NRP1. However, we were able to get approval for our distribution subsidiaries       to continue to operate during these periods.


10. If not permitted to operate during EMCO and NRP1, estimate loss for May to Jul 2021?


   The Company’s response:


   We were able to avoid a loss making situation in the first quarter of the new financial year, and we are cautiously optimistic that we will be able to maintain this.


11. What is management plan to recover or mitigate the impact of the pandemic?


   The Company’s response:


   We have been keeping in constant contact with our customers and at the same time, arranged for our production colleagues to get vaccinated during this             period so that once the production side is allowed to operate, we can start strongly.

 


12. Sales route will greatly limited by the pandemic outbreak, what will be the new ways of sales route created for new business way?


   The Company’s response:


   In such times of limited physical visits to our customers, we now rely on technology such as video calls, Facebook, WhatsApp to keep engaging our customers.     We regularly share market news and trends with our customers and suppliers to maintain our close relationships with them.

 


13. How many % of company’s staff get vaccination until end of Aug 2021?


   The Company’s response:


   This is dependent on the rollout of vaccination in each state, but more than 90% of our staff have gotten at least one shot of vaccination by end Aug 2021.

 


Questions raised by Mr. Lai Kuan Yu:
14. Please elaborate on the equity fair value loss. Is Fair Value Through Profit or Loss (“FVTPL”) still in operation? [Page 78 of Annual Return 2021]


   The Company’s response:

   Quoted share was delisted on 28 May 2021.
   There is no new development. We are still waiting for further notice from them. The business is still running.

 


Questions raised by Mr. Lee Eng Shan:
15. Any delays in commencing Dengkil plant operation?


   The Company’s response:


   There has been delays in the completion of construction due to disruptions resulting from Movement Control Orders. Dengkil warehouse has been completed       but still pending issuance of Certificate of Completion and Compliance (“CCC”) due to the lockdown. However, we expect to get approval very soon.


16. Please comment on the raw material supply environment.


   The Company’s response:


   Prices of raw materials and freight costs have increased significantly in the past few months. We are still expecting prices to increase and have taken the               opportunity to bring in more stocks at current prices.


17. Please elaborate on the cost-to-pricing-power dynamic of the industry.


   The Company’s response:


   We always strive to be the price leader in the market. Now that we are expecting prices to be on the uptrend, we have prepared our customers accordingly by       engaging them and sharing market info with them regularly. We are optimistic that we will be able to pass on most of the increase in raw material prices and         freight costs to our customers.
 


18. What are the potential growth drivers for the next coming 2 years?


   The Company’s response:


   We expect the furniture export market to continue to boom due to exchange rate, as well as the new norm of working from home. At the same time, we are           looking to aggressively grow our sales in the packaging/racking industry which benefitted from strong export sales and online sales.


19. Other than Dominant, which company in the industry is most admired by the management?


   The Company’s response:


   Each of our competitors have their own strengths and competitive advantages, which we strive to learn from.

 


Questions raised by Mr. Lew Tuck Wai:
20. Under the Operating Segments information [Page 99 of the Annual Report 2021], please provide the breakdown of the 3 biggest market/countries under the category of "Asia excluding Malaysia" and the revenue achieved for these market/countries.


   The Company’s response:


   Thailand, Singapore and Vietnam


21. There has been an increase in the impairment losses on Property, plant, and equipment and inventories written off. [Page 96 of the Annual Report 2021]
   a) Please provide details/reasons for the higher impairment and write-off.


   The Company’s response:


   Given the current pandemic situation, the Management has taken a more conservative approach, hence the increase in impairment.

 


   b) What is the status of inventories of finished goods in current financial year due to the Covid-19 lockdown?


   The Company’s response:


   As our production plants had to cease operation during the movement control periods, the level of finished goods produced was reduced.
   In addition, the fire incident has also resulted in some stocks being written off.

 

 


Questions raised by Minority Shareholder Watch Group (“MSWG”):
Operational and Financial matters
22. One of the immediate risks of the Group faces is the continuing COVID-19 pandemic. The COVID-19 pandemic has caused disruptions to both Dominant’s local and overseas operations. [Page 12 of the Annual Report 2021]


What is the expected impact of the pandemic on Dominant’s operations and financial position in FY2022? How is the Board planning to mitigate the impact of the pandemic on the Group’s business segments?


   The Company’s response:


   Despite the current pandemic situation, we remain cautiously optimistic about the Group’s prospects for FY2022. We have identified specific industries that we     believe will continue to grow even under current circumstances and we will work to increase our sales to these industries. These include furniture export               industry and packaging industry. The Group is working to strengthen our footprint in these industries by bringing in specific products to cater to the needs of           these customers.

 


23. In FY2021, the Distributing of wood products segment recorded another impairment loss on trade and other receivables amounting to RM1,532,327 (FY2020:Impairment loss of RM429,665). [Page 96-97 of the Annual Report 2021]
   a) Which trade and other receivables are involved in the impairment exercise?


   The Company’s response:


   These are mainly our debtors from our Malaysian distribution operations.


   b) Are there any prospects of reversing the impairment loss for both receivables in FY2022? If so, what is the expected amount of the reversal of the                     impairment loss?


   The Company’s response:


   Yes, we continue to engage our customers to push for payments even if impairment has been allowed for.


   c) How much of these impairment losses have been recovered to-date?


   The Company’s response:


   As of 30 June 2021, approximately RM600,000 of impairment losses have been recovered.

 


24. Other operating income increased significantly from RM2,613,406 in FY2020 to RM5,001,699 in FY 2021. [Page 39 of the Annual Report 2021]
What are the reasons for the significant increase in other operating income? What is the outlook for other operating income in FY2022?


   The Company’s response:


   The increase in other operating income is mainly driven by government grants and subsidies the Group has received in the past financial year.
 


25. Manufacturing
   a) What is the latest capacity utilization for the Group’s plants? What are the planned optimal utilisation rates that the Group expects for its plants in FY2022?


   The Company’s response:


   The current capacity utilisation rate for the Group’s plants is approximately 70% and we expect this to increase by 5% to 10% in FY2022, barring any                     disruptions from the pandemic. This would be the Group’s planned optimal utilisation rate.


   b) The construction of the Group’s Dengkil factory is expected to be completed in the third quarter of 2021, and the Group has purchased an additional                 production line for the new factory which is expected to start production towards the end of 2021. This new Dengkil plant, together with the additional line of           production will increase the Group’s production capability. [Page 11 of the Annual Report 2021]


i) What is the current progress on the construction of the Group’s Dengkil factory? Is the construction work still within the expected timeframe for completion?


   The Company’s response:


   There has been delays in the completion of construction due to disruptions resulted from the various movement controls that were put in place to control the         Covid-19 pandemic. The construction of Dengkil factory has been completed in August 2021 and is currently pending the issuance of CCC.


ii) What is the remaining capital expenditure needed to complete the construction of the factory?


   The Company’s response:


   The remaining capital expenditure needed is approximately RM1 million. This would include the remaining payment for the renovation of the office and the road     alignment leading to the warehouse, which have been delayed as a result of the pandemic.


iii) With the inclusion of the new Dengkil plant and the additional line of production, what is the expected total capacity of the Group’s plants in the next two financial years?


   The Company’s response:


   The expected total capacity of the Group’s lamination production once the Dengkil factory is up and running is 15,000 cubic meter per month. We are                     expecting production to increase by approximately 1,500 cubic meter per month in the next two financial years.

26. Diversifying income stream
The Group has started on the construction of 2 warehouses in Johor Bahru, Construction is expected to be completed in the third quarter of 2021. Once completed, these warehouse might be rented out. In addition, part of the new Ipoh warehouse might also be rented out upon the completion of construction. The renting out these warehouses will generate stable, recurring rental income for the Group. [Page 12 of the Annual Report 2021]


   a) What is the current progress on the construction of the two warehouses? Is the construction work still within the expected timeframe for completion?


   The Company’s response:


   The construction of the two warehouses in JB have been completed, pending the issuance of CCC, which has been delayed as a result of the disruptions             caused by the pandemic.


   b) On the recurring rental income prospect. What is the expected yearly rental income contribution to the Group’s earnings?


   The Company’s response:


   The expected rental income from the Group’s properties that have been rented out to external parties form approximately 0.5% of the Group’s revenue.


27. Looking out for investment opportunities
The Group is always on the lookout for new investment opportunities related to furniture and construction industries to increase its revenue. However, other non-related opportunities are also not ruled out if they can enhance the Group’s value. [Page 12 of the Annual Report 2021]


   a) What is the Group’s current progress in looking for new investment opportunities related to the furniture and construction industries to increase its revenue?     Is the Group in any serious discussion on any deal?


   The Company’s response:


   The Group has so far not identified any potential opportunities related to the furniture and construction industries to date, but we continue to be on the lookout       constantly for such opportunities.


   b) What are the non-related opportunities or business that the Board might consider for investment in the future?


   The Company’s response:


   Some of the non-related opportunities that the Group might consider would include the purchase of land for development purpose – either to sell or to receive       passive rental income, or other businesses that provide essential goods and services.

   c) Is the Group planning venture into new markets or countries? If so, which markets and countries?


   The Company’s response:


   The Group has recently set up a second branch in Thailand. We see a lot of potential in Thailand and hence, decided to set up a new branch despite the               current pandemic situation, to capture a bigger market share.


Sustainability Matters
28. On 23 January 2021, a fire incident occurred at a warehouse owned by Bripanel Industries Sdn. Bhd, a wholly owned subsidiary of the Company located at PTD 2805, Jalan Raja, Kawasan Perindustrian Bukit Pasir, 84300, Bukit Pasir, Muar, Johor. [Page 107 of the Annual Report 2021]
   a) What caused the fire incident?


   The Company’s response:


   The fire was caused by sparks from our sanding machine in the production floor.


   b) What steps have been taken to ensure that such incident will not recur in the future?


   The Company’s response:


   The Management has carried out safety inspection on all our machines after the incident. We have also carried out a thorough inspection of all our warehouses     to ensure that fire-fighting systems are in place. Security guards have been stationed in all our warehouses. All staff have been re-trained on the Group’s               Occupational Safety & Health Act (“OSHA”) policy and on fire-fighting measures. We continue to carry out regular maintenance of all our machines.                       Assessment of fire risk has also been included in our regular internal audit exercise carried out in our branches.


   c) What is the expected insurance proceeds?


   The Company’s response:


   Total insurance claim amount has yet to be finalised. We have, however, received an interim payment of RM6 million from the insurer in May 2021.