For publication on MESB Berhad’s website
MESB BERHAD
199501008356 (337554-D)
(Incorporated in Malaysia)
SUMMARY OF KEY MATTERS DISCUSSED AT THE TWENTY-SIXTH ANNUAL GENERAL MEETING OF MESB BERHAD (“MESB” OR “THE COMPANY”) HELD ON TUESDAY, 7 DECEMBER 2021 AT 3:00 P.M. (“26TH AGM”)
REPLY TO QUESTIONS FROM THE MINORITY SHAREHOLDERS WATCH GROUP (“MSWG”)
Mr. Loke Lee Ping, the Chief Executive Officer (“CEO”) cum Executive Director of the Company, presented to the Shareholders, the questions received from MSWG along with the responses from the Board, as summarised below:
Operational & Financial Matters
Q1. The Company managed to post a net profit of RM9.2 million in FYE 2021 after suffering an after-tax loss of RM26.8 million in FYE 2020, The better performance was achieved despite the operating challenges brought by the pandemic. (Page 3 of AR 2021)
What are the Company’s plans to enhance its profitability in FYE 2022?
The Company’s expansion plan on retailing division remained cautious in FYE 2022. Instead, the focus will be on re-building sales volume with more product promotions and campaigns to strengthen its product mix.
Furthermore, pressures on margins may become more prevalent in FYE 2022 given potential supply chain disruptions and increases in raw material and freight costs.
The Company will continue developing in the waste recycling business.
Q2. The Company has embarked on E-Commerce through its online platform miroza.com.my. The pandemic has seen many customers pivot to online purchases due to constant lockdowns which restrict movements.
a) What were the sales derived from the online platform compared to overall sales in FYE 2021?
The Company’s e-commerce is still at the infant stage. Therefore, the sales only accounted for 1.5% to 2% of overall revenue in FYE 2021.
b) What was the cost of developing this platform?
The cost incurred for developing an online platform is not significant as the Company used the existing resources to do the shooting, handle customer service, order fulfilment.
Other costs incurred such as paying trade margin to platformers, buying digital advertisements, giving in sponsors and additional promotion during special events i.e. Merdeka Sales, 11.11.
c) What are the Company’s plans to further develop its online sales?
Changes in consumer behaviour towards higher digital platform expenditure is undeniable. Therefore, we will continue pushing marketing efforts for greater visibility amongst consumers.
Meantime, the Company does not solely depend on its own online portal (miroza.com.my) but extended the online platform to others i.e. Shopee, Lazada and Zalora.
Q3. During FYE 2021, the Company embarked into the Waste Recycling business. The segment profit for this business was RM0.11 million on the back of revenue of RM1.10 million. (Page 5 of AR 2021)
a) What was the rationale for the Company to enter this new line of business?
In view of the favourable outlook of the recycling industry as set out in our Circular dated 23 March 2021 as a mean to provide the Group with a more diversified business and stable revenue stream for future growth, which in turn enhance its prospects and financial performance.
b) What was the investment made by the Company for this business?
The Company has invested RM 100,000 (paid up capital) as of FYE 2021.
c) What are the Company’s plans to develop the Waste Recycling business?
The Company will inject share capital to facilitate and enhance the business operation. The Company may also in the future embark on additional viable ventures for the Waste Recycling Business, which include, but are not limited to, strategic businesses/ investments, joint ventures, collaborative arrangements, and/or mergers and acquisitions of suitable businesses/ investments in the recycling industry.
Q4. Other Income rose significantly from RM653k in FYE 2020 to RM3.84 million in FYE 2021.(Page 62 of AR 2021)
What was the nature of the Other Income and is it expected to recur in FYE 2022?
Under Note 18 (Page 100 of AR 2021), the government grants of RM 3,449,000 recognised during the financial year were related to the Wage Subsidy Programmes introduced by the Government of Malaysia in response to the Covid-19 pandemic. The grants were recognised in profit or loss as Other Income.
We expect Other Income will reduce in FYE 2022.
Q5. Inventories Written Down increased significantly from NIL in FYE 2020 to RM410k in FYE2021. (Page 65 of AR 2021)
a) What were the reasons for the write down (i.e stock obsolescence or slow moving inventory)?
The Company writes down its obsolete or slow-moving inventories based on an assessment of their estimated net selling prices and shelf life of the product. Inventories are written down when events or changes in circumstances indicate that the carrying amounts could not be recovered. Management specifically analyses future demand when making this judgement to evaluate the adequacy of the write down for obsolete or slow-moving inventories. Where expectations differ from the original estimates, the differences would impact the carrying amounts of inventories.
b) Does the Company foresee inventory write downs to increase in the coming year as the economy is still weak?
Yes. The Management will closely monitor the market situation from time to time.
QUESTIONS RAISED BY THE SHAREHOLDERS DURING THE MEETING
The questions raised by the Shareholders which were duly responded by Mr. Loke Lee Ping, the CEO cum Executive Director of the Company are as summarised below:-
Q1. Can the Company to consider giving door gifts in the form of E-Wallet to those shareholders who have taken the initiative to attend the Company’s Annual General Meeting 26th AGM?
Yes, the Company will email the e-vouchers to all Shareholders who attended the 26th AGM after the Meeting.
Q2. What is the cost for this AGM?
The cost is less than RM12,000.