Forum : Stock: [MAXLAND]: MAXLAND BERHAD

EXTRACTS from annual report 2017 (Management Discussion & Analysis)

As mentioned earlier, the FMU 5 operations will have a significant positive impact to PWI, but there are challenges in operations
under the SFM regime especially in terms of Regulatory Control on harvesting. However, PWI is confident of being able to meet
these challenges as we have had sufficient experience in operating under Reduced Impact Logging condition whereby Comprehensive
Harvesting Planning (CHP) is required prior to harvesting. We also have had experience in achieving high efficiency in deploying our
7 units of Log Fishers under this regime.
While the terms and conditions governing FMU 5 contains in the Sustainable Forest Management Licence Agreement (SFMLA) may
be subject to adjustment, depending on Government Policies as well as other relevant bodies, PWI is of the view that the Sabah State
Forestry Department has by now put in place good governance having implemented all the SFMLAs for 20 years, and that our constant
dialogues and meetings with them would mitigate any adverse risks arising thereof.

azta12

5,594 posts

Posted by azta12 > 2017-10-12 21:57 | Report Abuse

With the proposed Transformative Acquisition of FMU 5, PWI is bullish on its future outlook. We envisage that FMU 5, with 80 years
remaining on its tenure, will be able to provide a sustainable supply of logs for the foreseeable future. Thus, the principal business
segment of logs trading, sawmill operations and plywood manufacturing will be further enhanced with our margins improving beyond
the breakeven level which we have been experiencing for the past few years.
In order to create value for our shareholders, the Board of Directors is always looking at related activities to shift the business up
the value chain. With the sustainable logs supply from FMU 5, PWI will be looking at possibility of venturing into “Quality Engineered
Wood Products” in the near future.

azta12

5,594 posts

Posted by azta12 > 2017-10-12 21:59 | Report Abuse

To date, we manage 28,000 hectares of FMU under the SFM regime. These are mostly newly planted and the lack of mature areas has
limited our harvesting under the new regulations. Hence, most of our assets remain underutilised. This reduced timber supply has also
impacted our plywood mill operations, and kept us just above our break-even point.
This is why during the financial year, we implemented a game-changing, transformative acquisition of FMU 5, a 101,000 hectares forest
allocated for sustainable, renewable wood production. We received approval on 12 May 2017 to commence work in Compartments
57 and 58 starting with the repairing of bridges and main roads, setting up of offices and staff/workers quarters, construction of the
base camp, workshop, stores, and stumping. It also included preparing the ground for a sawmill factory and a veneer plant.
Harvesting started in early September 2017 and we have now almost 700 pieces of harvested timber at the stumping.
Once our FMU5 operations are in full swing, PWI will have a stable source of timber, which is expected to return the Group to full
utilisation of its machinery and equipment for harvesting as well as manufacturing.

azta12

5,594 posts

Posted by azta12 > 2017-10-12 22:01 | Report Abuse

Products and Markets
We sell more than 80% of our plywood products to the Japanese market, as we manufacture premium products which meet stringent
Japanese JAS standards. We have two other main products, namely round logs and sawn timber, which are sold in the Asean region as
well as East Asia, particularly Japan and China.
In terms of contribution to revenue, the three largest contributing products are plywood, round logs and sawn timber. Plywood
contributes 45 %, round log contributes 20%, while sawn timber contributes 17% for the current financial year. Our other products
such as moulding contributes 3% and the remaining 15% contributed by timber service contracts for third parties.
Our plywood products are of the highest quality which meet JAS certification, a requirement for the Japanese market. Our plywood
plant obtained certification for the ISO 9001-2008 standard for manufacturing processes, ensuring that products are of quality
standard, and that process quality control measure and final quality inspection are complied with.

azta12

5,594 posts

Posted by azta12 > 2017-10-12 22:02 | Report Abuse

Customer Base
Our major buyers are established Japanese trading houses with whom we have maintained established relationships for more than
20 years. Meanwhile, we continue to receive inquires from new and existing customers for more timber products due to the regional
shortage of tropical hardwood. However, we have not been able to produce sufficient quantity to meet this demand. We expect this
to change once the supply of timber improves with the additional harvest from Compartments 57 and 58 of FMU 5.
The breakdown of our main customer markets for our different products is:
● Plywood: Japan 80%, Malaysia 10% and others 10%;
● Sawn Timber: China 30%, Thailand 30%, Malaysia 30%, others 10%;
● Round Logs: China 70%, India 20%, Malaysia 10%;
● Moulding: Taiwan 35%, Malaysia 35%, Korea 25%, others 5%.

azta12

5,594 posts

Posted by azta12 > 2017-10-12 22:34 | Report Abuse

DISTRIBUTION OF SHAREHOLDINGS AS AT 25 SEPTEMBER 2017

SUBSTANTIAL SHAREHOLDERS

No. of shares held
Name of Shareholder Direct Interest % Indirect Interest %
Lim Nyuk Foh 79,880,911 8.70 - -
Tan Sri Abdul Rashid Hussain 45,199,153 4.92 25,424,524 2.77(a)
Puan Sri Emilahani Mohd Yatim 25,424,524 2.77 45,199,153 4.92(a)
Maha Gayabina Sdn Bhd 141,247,353 15.38 - -

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