KUALA LUMPUR: Ahead of a boardroom tussle, Bright Packaging Industry Bhd has said it intends to pay out 100% of all distributable profits as dividends over the next five financial years as it embarks on an active capital management programme.
Speaking to The Edge Financial Daily yesterday, its managing director Wong See Yaw said the company is financially fit to distribute more dividends as it is growing on a consistent basis.
“Bright Packaging has been performing well. Our balance sheet speaks for itself; we have quite a good amount of cash (reserve), our profit has been increasing and we have zero borrowings. The only thing we have overlooked so far is a dividend payout policy,” he reiterated on the 100% payout policy the company stated in a press release last Friday.
As at Nov 30, 2012, the company had RM21.29 million cash and bank balances, which translates into 49.2 sen cash per share, and zero borrowings. With decent cash reserves and zero borrowings hitherto, the company can afford to gear up for expansion if need be, Wong explained.
The stock closed at RM1.83 yesterday, with a market capitalisation of RM79.2 million.
At its upcoming AGM on Feb 21, Bright Packaging will seek minority shareholders’ approval for a final single tier tax-exempt dividend of 8 sen per share for its financial year ended Aug 31, 2012.
“We overlooked the need to distribute dividends in the last financial year. However, we are making amends by planning ahead for the next five financial years,” Wong told The Edge Financial Daily.
In the first quarter ended Nov 30, 2012 Bright Packaging registered a net profit of RM1.69 million or 3.91 sen a share on the back of RM11.41 million in revenue. In the previous corresponding period, the company achieved a lower net profit of RM663,000 with a higher revenue of RM13.74 million.
According to the company, which manufactures aluminium foil packaging materials, the lower turnover in the latest quarter was due to reduced orders from a local tobacco manufacturer currently undergoing major restructuring and a relocation of operation exercise, while the higher margin was attributed to lower costs of material and improved operational efficiency.
Following the 100% dividend policy, Bright Packaging also announced to Bursa Malaysia yesterday that it had received a revaluation surplus of RM12.85 million for its two parcels of freehold land and building in Subang Hi-Tech Industrial Park. The property was valued at RM23 million as at Jan 3, 2013.
The revaluation exercise resulted in a 30 sen increase to the group’s net asset per share, which was previously valued at 66 sen per share as at Nov 30 last year.
Bright Packaging was thrown into the spotlight recently when four shareholders with a collective stake of 31.19%, slightly higher than the incumbent management’s holdings, called for an EGM to remove certain members of the board.
The four shareholders are politician and businessman Datuk Wira Syed Ali Abbas Alhabshee, Ang Lay Chieng, Tee Wee Keat and Lye Jun Fei.
They are seeking the removal of four out of six existing Bright Packaging board members, namely Wong, executive director Yap Kok Eng, non-independent non-executive director Wong Siew Yoong and independent non-executive director Yeap Cheng Chuan.
When asked if Bright Packaging’s 100% dividend policy was a way to appease the minority shareholders ahead of the EGM — which falls on the same date as the AGM on Feb 21 — Wong answered with an emphatic yes.
“Of course we need to please the shareholders. It’s my job (to do so). At any point that I don’t do that, I do deserve to be removed from the board,” he said.
“One thing that our shareholders have been grumbling about is the lack of dividend payout.”
According to Wong, the incumbent board collectively holds a 30.58% stake in the company, slightly less than the four shareholders led by Syed Ali, who is also Tanjung Offshore Bhd’s independent non-executive chairman and Cheras Umno division chief.
“What is the intention and rationale (of these individuals) to remove the board? We have been running the company well, and do these people even have experience in the industry?” Wong asked.
He said that all contact made by Bright Packaging to Syed Ali’s party has not been reciprocated.
This article first appeared in The Edge Financial Daily, on Jan 22, 2013.