SIBU, May 25 (Bernama) -- The Ta Ann Group, a timber and oil palm conglomerate, is investing RM28 million in a biomass power plant at its plywood processing factory in Sungai Sadit here.

Its executive chairman Datuk Abdul Hamed Sepawi said this was in line with its policy to maximise its resource utilisation and to reduce environmental waste.

"This plant fed by wood wastes from our processing operations is capable of generating about seven megawatts of energy per hour, almost all the power required by our processing plant," Hamed said in a statement prior to the group's annual general meeting tomorrow.

He said the procurement of machines had been finalised and the plant should be ready for commissioning next year.

On the group's performance for its financial year ended Dec 31, 2005, Hamed said it had managed to post commendable results to sustain profitability despite the tough operating environment.

He said tropical log export prices had continued to rise on the back of a sustained strong demand from major exporters like India and China.

Plywood product prices, on the other hand, were however marginally lower compared to the previous year due to strong competition from softwood plywood.

"The increase in global crude oil prices too has a direct and material impact on our overall plywood costs due to major input components such as log and glue prices going up," he pointed out.

For the financial year ended Dec 31, 2005, the group's revenue increased from RM505.29 million in the previous financial year to RM527.75 million, up by RM22.46 million or 4.4 percent.

Pre-tax profit was RM96.76 million while net profit was RM81.60 million which translated to an earning per share of 46.9 sen.

Hamed said the sustained profitability resulted in a further rise in shareholders' fund from RM494.12 million previously to RM535.11 million, up by 8.3 percent.

"The group's return on equity for the year under review was 15 percent, mainly due to the increase in investment in capital expenditure, especially in the plantation development sector," he said.

For the year under review, the board had declared and paid interim dividends of 20 sen per share and also proposed a final dividend of 15 sen per share, making the total dividends for 2005 at 35 sen per share.

"This translates to a gross dividend yield of 6.5 percent (based on the year-end closing share price of RM5.40) and represents a distribution of 75 percent of the group's net profit," Hamed said.

On corporate developments, Hamed said the group through its subsidiary, Ta Ann Tasmania Propriety Ltd, had entered into a wood supply agreement with Forestry Tasmania, an Australian government agency, in January this year for the supply of eucalyptus billets.

The billets would be sourced from PEFC (Programme for the Endorsement of Forest Certification) certified sustainable managed forest area for a period of 20 years, he said.

Hamed said the billets would be processed into veneer for transfer to Ta Ann's plywood mill here for further processing into eco-wood products with the group's intention to become one of the pioneers in this area.

He said this was a significant development as it would assist the plywood divison in achieving its target of attaining the globally respected Chain of Custody (COC) certification.

This would enable it to meet the growing demand of the global market for certified planted forest products and also its concern for sustainability of supply, he added.

On oil palm, Hamed said the group's recent acquisitions of Mega Bumimas Sdn Bhd and Ta Ann Pelita Igan Plantation Sdn Bhd had increased its oil palm's divsion landbank by 14,343 hectares.

He said in 2005, its oil palm planted areas had steadily risen to 10,706 hectares, of which 3,678 hectares were matured palms, and as more of these areas reached maturity, revenue contribution was expected to grow.

On its reforestration projects, Hamed said the group had acquired Zumida Sdn Bhd's planted forest area in Bintulu and the Raplex/Melekum planted forest area in Kapit to increase its planted forest area by 197,250 hectares.

On the group's future outlook, he said commodity prices which had been on the upward trend throughout the past year propelled by strong growth in the emerging economies of Asia would benefit timber prices.

The group, he added, would also maintain its strategy of continually improving production and capacity to meet the upcoming trend.

Hamed said as the global trends indicated a world economy that would put the spotlight on renewable resources, the group's emphasis would be on the growth of its oil palm and reforestration division sectors.

"Plans are ahead to increase our planted areas. The oil palm division will continue to expand on its landbank, laying the foundations for a solid growth in the industry," he said.

"In view of the positive macro economic developments in the year ahead, coupled with the group's organic growth, we are optimistic of achieving solid growth in our bottom line in financial year 2006," he added.

-- BERNAMA