Kimlun Corporation Berhad Annual Report 2018

Property Development Division The property development division recorded lower revenue of RM4.54 million in FY2018 against RM15.71 million in FY2017 as lesser completed houses were sold during the period. Consequently, lower GP of RM0.90 million was recorded in FY2018. Financial Position Shareholders’ funds increased from RM607.64 million as at 31 December 2017 to RM664.72 million as at 31 December 2018, attributable to comprehensive income generated and issuance of shares pursuant to the dividend reinvestment plan and warrants conversion during FY2018. Non-current assets increased from RM302.07 million as at 31 December 2017 to RM325.45 million as at 31 December 2018. This was largely due to the purchase of PPE amounting to RM63.93 million during FY2018, partly offset by depreciation charges of RM40.44 million. Current assets increased from RM846.15 million as at 31 December 2017 to RM1.07 billion as at 31 December 2018 mainly due to the combined effect of the following: (i) increase in development properties by RM73.41 million, mainly attributable to the purchase of several vacant detached lots and building lots located in Bukit Bayu@U10 Shah Alam, Seksyen U10, Shah Alam, Selangor (collectively “BB Property”) for RM68.41 million; (ii) increase in inventories by RM48.35 million, mainly attributable to the increase in SBG closing stocks by RM37.53 million on active production pursuant to the KVMRT Line 2 SBG sales order during FY2018; Annual Report 2018 20 MANAGEMENT DISCUSSION AND ANALYSIS (iii) increase in trade and other receivables by RM52.57 million mainly attributable to part payment of approximately RM50 million toward the purchase of few parcels of land as detailed in the ensuing section; and (iv) increase in contract assets by RM102.57 million mainly due to delay in certification of work done for few projects by the certifying parties. Current liabilities increased from RM456.42 million as at 31 December 2017 to RM648.55 million as at 31 December 2018 mainly due to the followings: - (i) net increase in trade and other payables and contract liabilities by RM49.43 million, which in turn was attributable to higher deposits collected from customers and amount due to a joint venture company; and (ii) increase in loans and borrowings by RM143.55 million. The increase in short term loans and borrowings under current liabilities as well as under non-current liabilities were mainly due to the drawdown of finance lease facilities during the period to finance capital expenditures, and higher utilization of working capital financing facilities to meet the requirement of higher scale of operations, as well as part payment of the purchase consideration of few parcels of land. Net gearing ratio as at 31 December 2018 was 0.26 times. Cash Flow For FY2018, the Group registered net cash outflow from operating activities of RM137.52 million, mainly due to working capital committed in current assets. Net cash used in investing activities of RM21.44 million was mainly for the purchase of PPE. Net cash generated from financing activities of RM93.01 million was mainly attributable to the proceeds from loans and borrowings and issuance of shares, partly offset by the repayment of obligations under finance lease and dividend payment. Due to the net cash outflow of RM65.65 million during FY2018, the Group’s cash and cash equivalents was a deficit of RM4.86 million as at 31 December 2018. (cont’d)