Kimlun Corporation Berhad Annual Report 2019

Annual Report 2019 Kimlun Corporation Berhad FINANCIAL REVIEW Group Revenue and Profitability Revenue recorded in FY2019 was RM1.30 billion which was RM290.84 million or 28.7% higher compared to the revenue achieved in FY2018. The higher revenue achieved in FY2019 was mainly attributable to higher revenue achieved by the construction and manufacturing and trading (“M&T”) divisions. Our Group’s gross profit (“GP”) margin achieved in FY2019 of 10.3% was lower compared to 12.7% in FY2018 mainly due to lower GP margins achieved by both the construction and M&T divisions. On the back of a higher revenue achieved in FY2019, our Group recorded GP of RM134.12 million, which was an increase of RM6.09 million or 4.8% against FY2018. The selling and administrative expenses in FY2019 was RM45.09 million, increased by RM1.45 million compared to FY2018, mainly due to the increase in employee expenses by RM0.87 million, in line with higher scale of operation, and higher provision for assets impairment. Finance costs of RM16.73 million in FY2019 was higher against FY2018 mainly due to higher utilization of working capital financing facilities to meet the requirement of higher scale of operation. The Group recorded a small loss in the share of results of joint ventures in the period under review mainly due to a provision of doubtful debt made by one of the joint ventures. There was no significant variance in other income in the period under review against FY2018. Due to the variances in gross profit, share of results of joint ventures, other income and expenses as explained above, profit before taxation (“PBT”) and profit after taxation (“PAT”) of FY2019 of RM79.69 million and RM58.37 million respectively were lower than FY2018. This was 2.4% and 4.4% lower compared to the PBT and PAT of RM81.67 million and RM61.07 million achieved in FY2018, respectively. Our net profit attributable to owners of the Company for FY2019 was RM58.39 million. Segmental Revenue and Gross Profit* *: The segmental revenue and gross profit stated in the commentary in relation to the respective segment was inclusive of inter-segment transactions. Construction Division The construction division’s revenue of RM1.03 billion was RM229.98 million or 28.7% higher compared to RM801.12 million recorded in FY2018. The increase was mainly due to higher revenue contribution from the Pan Borneo Highway Sarawak project (“PBH”) and an office tower project, on higher percentage of completion. These two projects collectively contributed about 45% of the revenue of FY2019. The construction division’s GP margin declined from 11.0% in FY2018 to 7.8% in FY2019. The decline in GP margin was mainly due to the Group’s projects mix with higher composition of lower margin projects. Consequential upon the lower GP margin, GP declined by 8.0% from RM87.92 million in FY2018 to RM80.92 million in FY2019. 19 MANAGEMENT DISCUSSION AND ANALYSIS (cont’d)