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Dear Shareholders,

Since inception in 1971, Masteel has demonstrated its ability not only in the scaling up its manufacturing operations, but also in fine-tuning its business model and technological advantages. This year marks Masteel’s 42 years of steel bar manufacturing par excellence.

On behalf of the Board of Directors for Malaysia Steel Works (KL) Bhd (Masteel or the Group), I am honoured to present you the Group’s 2013 Annual Report and audited financial statements for the financial year ended 31 December 2013 (FY2013).

The steel sector witnessed a challenging FY2013, largely due to the over-supply of steel from China, which opened the doors to steel dumping issues all over the world including Malaysia.

However, the China-imported steel bars failed to make significant headway into the domestic market, with import quantities remaining at low levels throughout the year. This was attributable to the preference of Malaysia’s construction industry to source steel bars from reliable local manufacturers, owing to quality requirements, timely on-demand delivery and storage constraints.

I am proud to state that Masteel, with strategic presence within the Klang Valley, has secured a significant share of increasing steel demand from the numerous public and private sectors’ infrastructure and property development projects. These included high-impact mega projects, such as the light rail transit (LRT) extension, Klang Valley Mass Rapid Transit (MRT) train network, and other iconic developments.

Moreover, we continued to benefit from the relatively-stable prices of our raw material of scrap metal, thereby shielding us from the price volatility of iron ore.

I am pleased to acknowledge our visionary management team, who endeavoured to improve our operations’ efficiency and meet the industry demands, thus steering Masteel towards another remarkable year.

FY2013 Financial Highlights

Against this backdrop, we charted a good year with four consecutive quarters of profitable performance in FY2013. This resulted in Masteel achieving record revenue of RM1.38 billion, a 4.8% increase from RM1.31 billion in FY2012. The topline increase is commendable in view of the challenging industry environment, and demonstrates the mitigating effect of higher sales volumes over lower average selling prices.

The higher demand for our steel bars resulted in overall higher capacity utilisation allowing Masteel to benefit from the economies of scale and positive operating income. This enabled us to reap 16.3% higher profit before tax of RM28.96 million in FY2013 compared to RM24.90 million previously. The Group ended the year with strong net profit of RM27.01 million, noting an 11% increase from RM24.35 million in FY2012.

Basic earnings per share was 12.38 sen in FY2013 versus 11.51 sen previously, based on a share capital of 222.00 million shares of RM0.50 par each.

Masteel’s balance sheet remained healthy throughout FY2013, as shareholders’ equity increased to RM553.28 million from RM525.88 million previously. The Group’s FY2013 cash and cash equivalents stood at RM60.40 million, a 10.5% rise from FY2012’s RM54.68 million. Total borrowings increased marginally to RM289.21 million from RM283.73 million a year ago.

With this, the Group improved its net gearing to 0.41 times in FY2013, from 0.44 times previously. This allows us the flexibility to implement any additional business expansion, as and when such opportunities arise.


Masteel has consistently paid dividends since listing in 2005.

The Group declared its first interim single tier dividend of 0.5 sen per share in respect of FY2013, which was paid out to shareholders on 11 October 2013.

Subsequently, the Board declared a second interim single tier dividend of 0.5 sen per share, which was distributed on 12 May 2014.

Furthermore, the Board has proposed a final single tier dividend of 0.5 sen share for shareholders’ approval at the forthcoming Annual General Meeting.

If approved, this will bring the Group’s total dividend to 1.5 sen per share in respect of FY2013, amounting to RM3.28 million in dividend payout.

Corporate Social Responsibility (“CSR”)

Over the years, Masteel has committed to various welfare activities, for the purpose of enhancing the well-being of our community.

In FY2013, the Group reiterated our support for the “Meals-on-Wheels” programme organised by Ti-Ratana Penchala Community Centre, a non-profit charity organisation. Masteel sponsored the operational expenses of the van used to carry out humanitarian activities, including delivering groceries to the poor, conducting free health checks for refugees, and bringing cheer to festive celebrations held in welfare centres.

Additionally, we were also involved in the upgrading of a local school in Serdang, Selangor. Masteel assisted the school by providing advisory services in the aspects of design, construction and cost planning. The Group also contributed financial support towards the school building fund.

We view these efforts as small yet significant steps towards enhancing the well being of the society at large.

Corporate Governance

The Board of Directors of Masteel is constantly mindful of and wholly committed to implementing best practices in corporate governance. As a Group, we look to achieve business sustainability and profitability, towards continuously improving and protecting shareholder value.

To this end, the Board endeavours to ensure that employees uphold the highest possible standard within every aspect of Masteel’s operations. The measures undertaken by the Group in this respect are detailed in the Corporate Governance Statement of this Annual Report.


I would like to take this opportunity to express my deepest gratitude to my fellow Board members, the management team and all employees working in Masteel. The Group’s achievements today are the fruits of our collective hard work, dedication and diligence.

I would also like to extend my highest appreciation to our valued shareholders, business associates, customers, regulatory bodies and many others who have partnered the Group throughout FY2013. We look forward to have your continuous support for the years to come.

Thank you.

Dato’ Ikhwan Salim Bin Dato’ Haji Sujak

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