1QFY2009 Financial Results

2QFY2009 Financial Results

3QFY2009 Financial Results

4QFY2009 Financial Results

Archives

Dear Shareholders:

On behalf of the Board of Directors of Cocoaland Holdings Berhad (“Cocoaland”), I am pleased to present the Annual Report and the audited financial statements of the Company and Group for the financial year ended 31 December 2009 (“FY2009”).

BUSINESS ENVIRONMENT

The Malaysian economy showed improvement towards the second half of the financial year under review, with the Gross Domestic Product (“GDP”) rising by 4.6% in the fourth quarter compared to the same quarter of the previous year. The turnaround set off a positive tone to the consumers in the country.

For the food and beverage (“F&B”) manufacturing industry, demand remained resilient despite the challenging times and operating costs were under less pressure. Reflecting this, Cocoaland enjoyed a good year with sustained revenues and better profitability.

FINANCIAL PERFORMANCE AND OPERATING REVIEW

The Group’s total revenues for the year were RM133.1 million, an increase of 3.4% from last year’s revenue of RM128.7 million. Profit before tax improved 132% to RM25.3 million, from RM10.9 million previously; while net profit attributable to shareholders more than doubled to RM19.7 million, versus FY2008’s RM8.7 million.

In terms of geographical segmentation, the stronger overseas sales for the year – from our direct export as well as via our Original Equipment Manufacturing (“OEM”) clientele, more than offset the slower domestic sales, resulting in the higher group revenues. For FY2009, export sales effectively made up of 46.6% of the Group’s revenues, versus 40.8% in the previous year.

We are pleased to see that Cocoaland is on course to achieve our vision of becoming a leading regional F&B manufacturer with proprietary brand names and quality products.

From the perspective of product categories, our fruit gummy continued to record higher sales and increased tonnage, making the Group a leading fruit gummy producer in the region.

The other promising product is CocoPie – a snack product, which was the Group’s fastest growing product for the year under review. Our advertising and promotional (“A&P”) activities for this chocolate-coated marshmallow-filled snack are now paying off. Going forward, we will continue to invest in targeted A&P to position our products for increased market penetration in Malaysia as well as in the export markets.

The better profitability for the year was largely due to the improved cost structure, as a result of better production efficiency from increased automation and energy savings. Lower costs of production inputs, such as packaging and raw materials, also played a role to a less extent in the improved profits.

FY2009’s earnings per share (EPS) stood at 16.4 sen, 126.7% higher than the previous year’s 7.2 sen.

DIVIDEND

With the outperformance, the Board is pleased to have declared and paid total dividends of 10 sen per share, less 25% tax, in respect of FY2009. The total dividends paid to shareholders amounted to RM9 million, representing a total payout ratio of 45.7% for net profits of RM19.7 million. This compares well with FY2008’s payout ratio of 40.9%.

CORPORATE DEVELOPMENTS

The Company did not undertake any major corporate exercise during the year under review. However, the new financial year started with a proposed private placement of up to 12 million new ordinary shares of RM0.50 each, representing up to 10% of the current issued and paid-up capital of the Company. The funds raising aims to provide the Group with additional working capital as well as to strengthen the Group’s balance sheet.

The Board views 2010 favourably. Our portfolio of products currently offers a wide selection to our customers, consisting of local and overseas wholesalers, modern trade of hypermarkets and retailers, as well as OEM clientele. Our established distribution network is indeed one of Cocoaland’s success factors, besides our competency in building brand names, some of which have even become household names in recent years.

With the boost in consumer confidence due to the improving economic conditions, we look forward to further develop new and existing products to better serve our target end consumers.

Going forward into 2010, our beverage facility was ready for production by end of the second quarter after the initial successful trial runs. Presently, we are in advanced stages of negotiation with many renowned OEM clientele in the beverage market. The new venture aims to diversify our product range by offering health beverages of fruit and vegetable juices, green tea and other nutritious drinks.

The new beverage line cost the Group about RM26.5 million, consisting of RM11.5 million land and building costs and RM15 million of machinery investment. We are proud that this state-of-the-art facility is one of the first in Malaysia to be able to carry out hot filling in environmental-friendly polyethylene terephthalate (“PET”) bottles.

The Board is optimistic that the beverage segment will not only be the Group’s earnings booster in the future but also catapult Cocoaland to be a complete food and beverage player.

As for our existing products, we will continue our investment in advertising and promotions as well as product enhancement. To strengthen our position as the market leader for gummy products, we will be launching new flavours for our “Lot 100” brand by the end of the year and working closely with our OEM customers for further exports. As for our fast-growing product – “Cocopie”, we hope to replicate its success in overseas markets, as we had in Malaysia.

Given the better economic climate in our export destinations, we are expecting an increase in the demand for our products, be it direct exports or via OEMs. To this end, we are doubling up our efforts in markets such as Middle East, Hong Kong and China, Vietnam, Indonesia, and Thailand.

We are optimistic that Cocoaland can scale greater heights in 2010.

CORPORATE SOCIAL RESPONSIBILITY

Cocoaland is committed to being a socially responsible partner to our employees, shareholders and other parties within the communities we operate in. Our initiatives include donations and sponsorship of local events. On the environmental front, we have encouraged best practices in our operations that reduce waste and pollution. As for our employees, we practice stringent measures pertaining to occupational health and safety to ensure their wellbeing.

CORPORATE GOVERNANCE

The Board is committed to maintaining high levels of corporate governance in the management and business direction of Cocoaland, and its subsidiaries. Our efforts on this end will be highlighted further in the Corporate Governance Statement in the Annual Report.

ACKNOWLEDGEMENT

On behalf of the Board of Directors of Cocoaland, I would like to welcome Dato’ Sri Koh Kin Lip (“Dato’ Sri Koh”) on board as an Independent Non-executive Director. Dato’ Sri Koh comes with a wealth of entrepreneurial experience, and the Board has no doubt that his insight and business acumen will contribute positively to the Group.

I would like to take this opportunity as well to thank Mr. Law Tiam Hock (“Mr. Law”), who resigned his board positions on 14 January 2010. Mr. Law had played a significant role in guiding the Board all the past years. We wish him well for his future endeavours.

Lastly, I express my sincerest gratitude to all our shareholders, customers, suppliers, business associates, Government and regulatory authorities for their support to the Group. Our special thanks to the management and employees of the Group for their dedication and efforts throughout the year to bring Cocoaland to where we are today.

2010 promises to be a fruitful year ahead and we look forward to taking this journey with your support.

Thank you.

Dato’ Azman bin Mahmood
Chairman