Kimlun Corporation Berhad Annual Report 2019

Annual Report 2019 Kimlun Corporation Berhad MANAGEMENT DISCUSSION AND ANALYSIS (cont’d) M&T Division The M&T division achieved a higher revenue of RM373.04 million in FY2019 compared to RM252.66 million recorded in FY2018. The improvement in M&T revenue by RM120.38 million or 47.6% was due to the following: Operation Revenue (RM’ mil) Main reasons for variance FY2019 FY2018 Precast concrete products 274.47 203.89 Higher revenue from KVMRT line 2 project Quarry products 98.57 48.77 Higher volume of quarry products supplied to the PBH The M&T division’s GP margin declined from 15.2% in FY2018 to 13.8% in FY2019. The decline in GP margin was mainly due to larger proportion of the precast concrete products revenue was contributed by lower margin sales orders. On the back of higher revenue, GP increased by RM12.90 million in FY2019 against FY2018. Property Development Division The property development division recorded higher revenue of RM8.52 million in FY2019 against RM4.54 million in FY2018 as more completed houses were sold during the period. Consequently, higher GP of RM1.70 million was recorded in FY2019. Financial Position Shareholders’ funds increased from RM664.72 million as at 31 December 2018 to RM720.47 million as at 31 December 2019, attributable to comprehensive income generated and issuance of shares pursuant to the dividend reinvestment plan during FY2018. Non-current assets increased from RM325.45 million as at 31 December 2018 to RM389.58 million as at 31 December 2019. This was mainly attributable to the increase in land held for development by RM88.58 million following the completion of the acquisition of a parcel of agriculture land in Johor during the year. Current assets increased from RM1.07 billion as at 31 December 2018 to RM1.16 billion as at 31 December 2019 mainly due to the combined effects of the following: (i) increase in development properties by RM26.15 million, mainly attributable to the purchase of 60 freehold semi-detached building lots located in Mukim Plentong, Johor Bahru, Johor, and the refurbishment of bungalows lots in Bukit Bayu@U10 Shah Alam, Seksyen U10, Shah Alam, Selangor; (ii) increase in trade and other receivables by RM31.10 million mainly attributable to higher billing raised in the last quarter of FY2019 against the corresponding period of FY2018; (iii) increase in contract assets by RM40.42 million, in line with higher scale of operations; and (iv) decrease in inventories by RM42.24 million, mainly due to active delivery of pre-cast concrete finished goods to KVMRT line 2 project. Current liabilities increased from RM648.55 million as at 31 December 2018 to RM667.44 million as at 31 December 2019 mainly due to the combined effects of the followings: (i) increase in loans and borrowings by RM59.24 million. The increase in short term loans was mainly due to higher utilization of working capital financing facilities to meet the requirement of higher scale of operations; and (ii) net decrease in trade and other payables and contract liabilities by RM50.45 million, mainly attributable to the followings: • the fulfilment in FY2019 of sales contracts obligations, for which part payments were received from customers prior to FY2019. • payment of balance purchase consideration in relation to certain land bank bought in FY2018. Non-current liabilities increased from RM83.79 million as at 31 December 2018 to RM158.20 million as at 31 December 2019 mainly due to the drawdown of term loans to finance the purchase consideration of the Group’s new land bank. Net gearing ratio as at 31 December 2019 was 0.32 times. 20