F. COVER
Kimlun Group is an engineering and construction services provider specialising in infrastructure and building construction, project management, industrial building systems (IBS) and manufacture of concrete products. Ancillary to our core business, we also involve in property development and trading in construction and building materials. We have the ability to act as a one-stop engineering services provider, capable of providing a comprehensive and integrated range of concrete products and engineering and construction services to our customers. NOWLEDGE NTEGRITY ORAL EADERSHIP NITY OVELTY “We aim to continuously improve, promote and provide construction activities and services to the society in which we operate. By providing one stop construction design and build services, we aim to add value to our clients that in turn will be beneficial to the society at large. We will treat all partners including suppliers, subcontractors and consultants with trust, honesty and fairness in all business dealings. Towards our employees, we balance our focus on their personal skills development while taking care of their welfare. While seeking for the maximisation of shareholders’ wealth, we strive to maintain harmony with the interest of the society to enhance our corporation’s sustainability”. “We aspire to be a reliable, innovative and profitable provider of full range construction services and products in the South East Asia region”. OUR MISSION OUR VISION CORPORATE VALUES
WHAT’S INSIDE 02 Corporate Information 03 Corporate Structure 04 Corporate Milestones 06 Profile of Directors 11 Group Financial Highlights 12 Chairman’s Statement 16 Management Discussion and Analysis 28 Sustainability Statement 37 Corporate Governance Overview Statement 51 Additional Compliance Information Disclosures 54 Audit and Risk Management Committee Report 58 Statement on Risk Management and Internal Control 64 Statement on Directors’ Responsibility 65 FINANCIAL STATEMENTS 174 Analysis of Shareholdings 176 Analysis of Warrant Holdings 178 List of Properties 180 Notice of Fourteenth (14th) Annual General Meeting 188 Statement Accompanying Notice of Annual General Meeting 189 Administrative Guide for the 14th Annual General Meeting Proxy Form
CORPORATE INFORMATION BOARD OF DIRECTORS Pang Tin @ Pang Yon Tin Executive Chairman Sim Tian Liang Chief Executive Officer and Executive Director Chin Lian Hing Executive Director Yam Tai Fong Executive Director Pang Khang Hau Executive Director Datuk Woon See Chin Independent Non-Executive Director Johar Salim Bin Yahaya Independent Non-Executive Director Anita Chew Cheng Im Independent Non-Executive Director Bhupendar Singh A/L Sewa Singh Independent Non-Executive Director Dato’ Ir. Fong Tian Yong Independent Non-Executive Director AUDIT AND RISK MANAGEMENT COMMITTEE Chairperson • Anita Chew Cheng Im Independent Non-Executive Director Members • Datuk Woon See Chin Independent Non-Executive Director • Bhupendar Singh A/L Sewa Singh Independent Non-Executive Director • Dato’ Ir. Fong Tian Yong Independent Non-Executive Director REMUNERATION COMMITTEE Chairman • Datuk Woon See Chin Independent Non-Executive Director Members • Johar Salim Bin Yahaya Independent Non-Executive Director • Dato’ Ir. Fong Tian Yong Independent Non-Executive Director NOMINATION COMMITTEE Chairman • Johar Salim Bin Yahaya Independent Non-Executive Director Members • Anita Chew Cheng Im Independent Non-Executive Director • Bhupendar Singh A/L Sewa Singh Independent Non-Executive Director COMPANY SECRETARIES Wong Peir Chyun (MAICSA 7018710)(SSM PC No. 202008001742) Tay Lee Shya (MIA 16982)(SSM PC No. 202008002274) Yeng Shi Mei (MAICSA 7059759)(SSM PC No. 202008001282) HEAD OFFICE Suite 19.06, Level 19, Johor Bahru City Square, 106-108, Jalan Wong Ah Fook, 80000 Johor Bahru, Johor Darul Takzim Telephone No. : (+607) 222 8080 Facsimile No. : (+607) 223 8282 E-mail : info@kimlun.com Web-site : www.kimlun.com REGISTRAR Tricor Investor & Issuing House Services Sdn. Bhd. Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur Telephone No. : (+603) 2783 9299 Facsimile No. : (+603) 2783 9222 REGISTERED OFFICE Unit 30-01, Level 30, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur Telephone No. : (+603) 2783 9191 Facsimile No. : (+603) 2783 9111 AUDITOR Crowe Malaysia PLT 201906000005 (LLP0018817-LCA) & AF 1018 E-2-3 Pusat Komersial Bayu Tasek, Persiaran Southkey 1, Kota Southkey, 80150 Johor Bahru, Johor Darul Takzim Telephone No. : (+607) 288 6627 Facsimile No. : (+607) 338 4627 Annual Report 2022 02
CORPORATE STRUCTURE 100% 100% 100% 100% 100% 100% 60% 40% 30% 69.50% 49% 51% 100% 60% 100% 100% 100% 100% 100% 51% Kii Melodia Sdn Bhd JBB Kimlun Sdn Bhd Kimlun Superior Crest Sdn Bhd Zecon Kimlun Consortium Sdn Bhd Bayu Damai Sdn Bhd Rex Series Sdn Bhd Posh Atlantic Sdn Bhd Kitaran Lintas Sdn Bhd Pinegate Development Sdn Bhd Kimlun Land Sdn Bhd I-Buildtech Solutions Pte Ltd SPC Industries Sdn Bhd Kimlun Sdn Bhd KL Building Materials Sdn Bhd Kii Amber Sdn Bhd Kiiville Sdn Bhd Kii Ashburry Sdn Bhd Kii Morris Sdn Bhd Rock Projects Sdn Bhd Kimlun Medini Sdn Bhd 67% 33% Kimlun Corporation Berhad | Registration No. 200901023978 (867077-X) 03
1977 • Our humble beginnings started when Kimlun Earthworks Sdn Bhd was incorporated. 1994 • Kimlun Earthworks Sdn Bhd changed its name to Kimlun Sdn Bhd (“KLSB”). 1997 - 2002 • KLSB involved in building construction and infrastructure projects with contract value less than RM20.0 million each in Johor, Malaysia. 2002 • SPC Industries Sdn Bhd (“SPC”) commenced its pre-cast concrete business. 2003 • KLSB secured its first contract with a value exceeding RM20.0 million for the construction of apartments and townhouses. • SPC was accredited with ISO 9001:2000 Quality Management. 2004 • SPC supplied concrete sewerage tunnel segments to Pantai Trunk Sewerage Bored Tunnel project in Kuala Lumpur. 2005 • KLSB ventured into specialised infrastructure construction by constructing the Tanjung Puteri flyover in Johor Bahru. • KLSB ventured into Klang Valley with the construction of 70 units of semi detached houses. • SPC secured its first sales contract for the supply of concrete tunnel lining segments to Singapore MRT project. 2006 • KLSB secured specialised infrastructure construction project for the upgrading works of the Perling Interchange in Johor Bahru. 2007 • KLSB was accredited the “ISO 9001:2000, Quality Management System” certification. 2008 • KLSB secured the project for the construction of the elevated interchange along Johor Bahru Inner Ring Road – Package 3B Jalan Abu Bakar Interchange with a contract value exceeding RM100 million. • KLSB formed IBS Department to promote IBS construction methods. • I-Buildtech Solutions Pte Ltd (“IBT”) was incorporated in Singapore. 2009 • KLSB secured its first Industrial Building System (“IBS”) building project from Iskandar Regional Development Authority at a contract value of RM142.81 million. • Kimlun Corporation Berhad was incorporated as an investment holding company. 2010 • Kimlun Corporation Berhad acquired KLSB, SPC and IBT in conjuction with its proposed initial public offering exercise. • Kimlun Corporation Berhad was successfully listed on the Main Market of Bursa Malaysia Securities Berhad on 29 June 2010. • Kimlun Corporation Berhad incorporated a new whollyowned subsidiary namely, Kimlun Land Sdn Bhd (“KLLSB”). 2011 • Kimlun Group ventured into property development with its first development land in Cyberjaya, Selangor. 2012 • SPC was appointed by Mass Rapid Transit Corporation Sdn Bhd as the designated supplier for the supply of segmental box girders (“SBG”) to certain packages of the Projek Mass Rapid Transit Lembah Kelang: Jajaran Sungai Buloh-Kajang for RM223.18 million. • KLSB secured more than RM400 million worth of IBS projects during 2012. CORPORATE MILESTONES 1977 - 2003 2004 - 2008 2009 - 2012 Annual Report 2022 04
2013 • Kimlun Group launched its first property development project, the Hyve SOHO and Offices in Cyberjaya, Selangor. • KLSB secured its first contract with a value exceeding RM290 million for the construction of service apartments and ancillary buildings. • SPC set up a new precast concrete products manufacturing plant on a piece of land measuring approximately 130 acres in Negeri Sembilan, and commenced production during the year. 2015 • Kimlun Corporation Berhad incorporated a whollyowned subsidiary, KL Building Materials Sdn Bhd (“KBMSB”). The principal activities of KBMSB are manufacturing and trading of building and construction materials, and provision of quarry services and machinery rental services. 2016 • Kimlun Group’s 30% owned joint venture company, Zecon Kimlun Consortium Sdn Bhd, was awarded a work package contract for the Proposed Development and Upgrading of the Pan Borneo Highway in Sarawak for a contract sum of RM1.46 billion. This signifies the Group’s geographical diversification to East Malaysia, and expansion of its construction services to highway project. The Project is the single largest contract which the Group won in its history. • SPC won SBG and tunnel lining segments supply contracts in relation to Projek Mass Rapid Transit Lembah Kelang: Jajaran Sungai Buloh-Putrajaya Line, with aggregate contract value of RM252 million. 2017 • KLSB subscribed for 40% equity interest in JBB Kimlun Sdn Bhd (“JKSB”). The principal activity of JKSB is building and infrastructure contractor. • KLLSB incorporated three wholly-owned subsidiaries, Kiiville Sdn Bhd (“KVSB”), Kii Ashbury Sdn Bhd (“KASB”) and Kii Morris Sdn Bhd (“KMSB”). The principal activities of KVSB, KASB and KMSB are property investment and property development. • Kimlun Group commenced premix production in Sarawak and Johor. 2020 • KLSB successfully registered with CIDB for additional specialization to construct hospital building. • Kimlun Corporation Berhad incorporated a whollyowned subsidiary, Kii Amber Sdn Bhd (“KABSB”). The principal activities of KABSB are investment holding, property investment and development. • KABSB subscribed for 49% equity interest in Bayu Damai Sdn Bhd (“BDSB”). The principal activity of BDSB is property development. • KABSB incorporated a 69.50% owned subsidiary, Kii Melodia Sdn Bhd (“KMLDSB”). The principal activities of KMLDSB are property investment and property development. 2013 - 2016 2017 - 2020 CORPORATE MILESTONES Kimlun Corporation Berhad | Registration No. 200901023978 (867077-X) 05
PANG TIN @ PANG YON TIN Executive Chairman SIM TIAN LIANG Chief Executive Officer & Executive Director Pang Tin @ Pang Yon Tin, a Malaysian aged 75, male, was appointed to the Board as Executive Chairman of Kimlun Corporation Berhad on 24 October 2009 and is responsible for overseeing the management of our Group. He completed Senior Middle Three at Foon Yew High School in Johor Bahru, Johor, in 1966. He commenced his career in the construction industry in 1966 by assisting his late father in his construction business. He, together with Phang Piow @ Pang Choo Ing, incorporated Kimlun Sdn Bhd in 1977 to continue their venture in the construction industry. With the experience gained in the construction industry, he ventured into quarry business in 1970s and into property development in 1980s. He has more than 43 years of experience in various sectors, encompassing property development, property investment, construction, quarrying, manufacturing and hotel management. He also sits on the Board of several private limited companies. Sim Tian Liang, a Malaysian aged 68, male, was appointed to the Board as Chief Executive Officer of Kimlun Corporation Berhad on 24 October 2009 and is responsible for strategic planning and for the overall management of the Group. He graduated from Universiti Teknologi Malaysia in 1978, obtaining a Bachelor’s Degree (Honours) in Engineering. Currently, he is the Past Chairman of the Institution of Engineers Malaysia Southern Branch and Past President of Johor Master Builders Association. He is also a member of the Chartered Institution of Highway and Transportations of the UK, a Honorary Member of Asean Federation of Engineering Organisation and a Fellow of Construction Industry Development Board Malaysia. He is a professional engineer registered with the Board of Engineers Malaysia, and has been in the construction industry since 1978 where he commenced work as a civil engineer with the Malaysian Government. He joined Pang Hock Constructions Sdn Bhd (now known as Tebrau Bay Constructions Sdn Bhd) towards the end of 1996 and was appointed as its Project Director in 1997 where his responsibilities included overseeing, monitoring and management of building and infrastructure construction projects. In 2003, he left Pang Hock Constructions Sdn Bhd and joined Kimlun Sdn Bhd as Chief Executive Officer. His primary role is to oversee to the execution of corporate objectives, as well as to provide the strategic direction of the company. Date of Appointment 24 October 2009 75 Date of Appointment 24 October 2009 68 PROFILE OF DIRECTORS Annual Report 2022 06
CHIN LIAN HING Executive Director YAM TAI FONG Executive Director Chin Lian Hing, a Malaysian aged 58, male, was appointed to the Board as Executive Director of Kimlun Corporation Berhad on 24 October 2009 and is responsible for the operations and business development activities of our construction business. He graduated from Tunku Abdul Rahman College, Malaysia, in 1988, obtaining a Diploma in Technology (Building). He holds a Bachelor’s Degree of Applied Science (Constructions Management and Economics) from Curtin University of Technology, Australia. He has been in the construction industry since 1988 where he commenced work as an Assistant Quantity Surveyor in Rukumas Sdn Bhd, leaving in 1989 to join AJ Construction Sdn Bhd as a Quantity Surveyor. In 1990, he joined Hoon Lay Kien Construction also as a Quantity Surveyor. Thereafter, he joined Chin Kek Ling Transport in mid-1990 before leaving to join Pang Hock Constructions Sdn Bhd (now known as Tebrau Bay Constructions Sdn Bhd) in January 1992. During his time at Pang Hock Constructions Sdn Bhd, his last held position was General Manager (Operations and Contracts) and he was responsible for overseeing the tendering of building and infrastructure construction projects, and project implementation. He left Pang Hock Constructions Sdn Bhd in 2002 to join Kimlun Sdn Bhd, where he is responsible for the operations and business development activities of the company. Yam Tai Fong, a Malaysian aged 55, female, was appointed to the Board as Executive Director of Kimlun Corporation Berhad on 24 October 2009 and is responsible for all financial matters concerning our Group. She graduated from Monash University, Australia, in 1990, obtaining a Bachelor’s Degree in Economics. Since 1994, she has been a member of the Malaysian Institute of Accountants. She commenced her career at Ernst & Young, Malaysia, in 1991, with responsibilities for audit, taxation and corporate advisory matters, leaving in 1994 to join Pang Hock Constructions Sdn Bhd (now known as Tebrau Bay Constructions Sdn Bhd). Whilst at Pang Hock Constructions Sdn Bhd, she was responsible for the financial management and management reporting of its affairs. She left Pang Hock Constructions Sdn Bhd in 2003 to join Kimlun Sdn Bhd to assume similar responsibilities. Date of Appointment 24 October 2009 58 Date of Appointment 24 October 2009 55 PROFILE OF DIRECTORS Kimlun Corporation Berhad | Registration No. 200901023978 (867077-X) 07
PANG KHANG HAU Executive Director DATUK WOON SEE CHIN Independent Non-Executive Director Pang Khang Hau, a Malaysian aged 41, male, was appointed to the Board as Executive Director of Kimlun Corporation Berhad on 24 October 2009 and is responsible for the corporate affairs of our Group, including business development activities, human resource, administration and management. He graduated from the University of Western Australia in 2005, obtaining a Bachelor’s Degree in Civil Engineering. He completed a Master of Business Administration degree at the University of Liverpool, UK, in 2010. He commenced his career in the construction industry in 2006 with his appointment as a Director of Kimlun Sdn Bhd where he is responsible for business development activities, human resource, administration and management. Datuk Woon See Chin, a Malaysian aged 79, male, was appointed to the Board as Independent Non-Executive Director of Kimlun Corporation Berhad on 1 October 2020. He is the Chairman of the Remuneration Committee and a member of the Audit and Risk Management Committee. He graduated from the law school of University of Singapore and is an advocate and solicitor by profession and has been in legal practice in Johor Bahru for more than forty-eight years. He was an Independent Non-Executive Director of Focal Aims Holdings Bhd (now knows as Eco World Development Group Bhd) for more than 9 years until his resignation on 28 November 2013. He was a Johor State Assembly member in 1982 and was elected as a Member of Parliament of Malaysia from 1986 to 1995. He served as a Deputy Minister of Education of Malaysia for four (4) years from 1986 to 1990. Date of Appointment 24 October 2009 41 Date of Appointment 1 October 2020 79 PROFILE OF DIRECTORS Annual Report 2022 08
JOHAR SALIM BIN YAHAYA Independent Non-Executive Director ANITA CHEW CHENG IM Independent Non-Executive Director Johar Salim Bin Yahaya, a Malaysian aged 69, male, was appointed to the Board as Independent Non-Executive Director of Kimlun Corporation Berhad on 1 December 2021. He is the Chairman of the Nomination Committee and a member of the Remuneration Committee. He graduated with a Bachelor of Economics (Hons.) Degree from University of Malaya. He started his career with Bank of America in 1974 and later moved to Malaysian French Bank in 1983. He joined Kumpulan Prasarana Rakyat Johor as Chief Operating Officer from 1997 to 2003 and rose to become the Chief Executive Officer until 2013. He was also the Chief Executive Officer of Tebrau Teguh Berhad from 2004 to 2012 and Executive Chairman of PLS Plantation Bhd from 2000 to 2013. He is currently the Chairman of Selia Ekuiti Sdn Bhd. Anita Chew Cheng Im, a Malaysian aged 56, female, was appointed to the Board as an Independent Non-Executive Director of Kimlun Corporation Berhad on 1 December 2021. She is the Chairperson of the Audit and Risk Management Committee and a member of the Nomination Committee. She graduated from Monash University, Australia with a Bachelor of Economics Degree, majoring in Accounting in April 1990. Anita started her career as an audit assistant at KPMG, Melbourne in 1990. She left KPMG in September 1991 to return to Malaysia. While in KPMG, she was engaged in the audit of the media, retail and mining industries. In 1992, she joined the Corporate Finance department of Bumiputra Merchant Bankers Berhad (now known as Alliance Investment Bank Berhad after merging with Amanah Investment Bank Berhad) and was with the investment bank for approximately 5 years. From 2003 to 2007, she worked at HwangDBS Investment Bank Berhad as Senior Vice President, Equity Capital Market. Prior to that, she was Director, Corporate Finance at Alliance Investment Bank Berhad from 1997 to 2003. She was involved in most related areas of corporate finance work during her tenure in the various investment banks, having advised clients on numerous IPO, fund raising, both equity and debt, mergers and acquisitions; and corporate and debt restructuring exercises. Since she left the investment banking industry in 2007, she has been sitting on various corporate boards. She is currently an Independent Non-Executive Director of Plytec Holding Berhad, K-One Technology Berhad and SKP Resources Berhad, companies listed/to be listed on Bursa Securities Malaysia Berhad. She also sits on Fortress Minerals Ltd, a company listed on the Singapore Exchange (SGX) as an Independent Non-Executive Director. Date of Appointment 1 December 2021 69 Date of Appointment 1 December 2021 56 PROFILE OF DIRECTORS Kimlun Corporation Berhad | Registration No. 200901023978 (867077-X) 09
BHUPENDAR SINGH A/L SEWA SINGH Independent Non-Executive Director DATO’ IR FONG TIAN YONG Independent Non-Executive Director Bhupendar Singh A/L Sewa Singh, a Malaysian aged 65, male, was appointed to the Board as Independent NonExecutive Director of Kimlun Corporation Berhad on 1 December 2021. He is a member of the Audit and Risk Management Committee and Nomination Committee. He holds a Bachelor’s Degree (Honours) in Accounting from Universiti Malaya. He is a member of the Malaysian Institute of Accountants and an Associate Member of the Chartered Member of the Tax Institute of Malaysia. He commenced his career with Hanafiah, Raslan & Mohammad in 1983 with the taxation unit and the firm merged with Arthur Andersen & Co in April 1990. He became a Tax Partner in 1996 and moved to the firm of Ernst & Young in 2002. He was a senior tax partner with the firm until October 2010 when he left to join Petronas as the Head of Group Tax Department. He became a Vice President in 2016 and retired from Petronas in March 2020. He was responsible for setting up and growing the Tax Department of Petronas to be able to manage all the tax affairs of the Group in an effective manner. He is currently running his own tax consultancy and advisory firm and provides such services to clients in various industries. Dato’ Ir Fong Tian Yong, a Malaysian aged 74, male, was appointed to the Board as Independent Non-Executive Director of Kimlun Corporation Berhad on 1 December 2021. He is a member of the Audit and Risk Management Committee and the Remuneration Committee. He holds a Bachelor’s Degree in Civil Engineering from Singapore University. Upon graduation in 1974, he joined the Public Works Department as Executive Engineer and rose to become the Deputy Director General of Local Government Department of the Ministry of Housing & Local Government (KPKT) until his retirement from government service in 2007. He was thereafter appointed to serve as Technical Advisor to four Ministers of KPKT until 2012 when he joined Malaysia-China Business Council as its Executive Director. In KPKT, he oversaw the development of Chinese New Village Master Plan, the amendments of Street, Drainage and Building Act, Uniform Building Bylaws and several policy matters. He co-authored the Book, Malaysian Chinese New Villages. On the corporate side, he is a director of Malaysia-China Business Council, a not-for-profit company limited by guarantee as well as the Editor of the Board of Engineers Malaysia. He was the past President of the Technological Association Malaysia. Date of Appointment 1 December 2021 65 Date of Appointment 1 December 2021 74 Notes to Directors’ Profile : 1. Pang Tin @ Pang Yon Tin is the father of Pang Khang Hau. Save as disclosed, none of the directors have any family relationship with any other director and/or major shareholder of the Company. 2. Save for Pang Tin @ Pang Yon Tin and Pang Khang Hau, who have interest in recurrent related party transactions as disclosed under Note 31 to the financial statements contained in this Annual Report, none of the directors have any conflict of interest with the Company. 3. None of the directors have been convicted of any offences within the past five (5) years and imposed any public sanction or penalty by the relevant regulatory bodies during the financial year 2022 other than traffic offences, if any. PROFILE OF DIRECTORS Annual Report 2022 10
2021 2022 50,105 2020 74,536 2019 134,117 2018 128,027 86,541 33 1,022,167 272,095 8,523 2019 8 623,797 168,598 2,306 2020 8 503,982 142,103 44,994 2021 538,156 186,337 31,622 19 2022 49 801,122 206,272 4,536 2018 GROSS PROFIT (RM’000) REVENUE BY SEGMENT (RM’000) Construction Manufacturing Investment Property Development 2021 2020 2022 2019 2018 (0.17) 2.34 (2.05) 17.42 18.81 BASIC EARNINGS/(LOSS) PER SHARE (SEN) 2018 2019 2020 2021 2022 (728) (7,291) 58,369 61,065 PROFIT/(LOSS) AFTER TAX (PAT) (RM’000) 7,944 2018 2019 2020 2021 2022 971 (3,698) 79,687 81,666 PROFIT/(LOSS) BEFORE TAX (PBT) (RM’000) 15,524 2021 2020 2022 2019 2018 691,087 794,709 756,134 1,302,818 1,011,979 REVENUE (RM’000) GROUP FINANCIAL HIGHLIGHTS Kimlun Corporation Berhad | Registration No. 200901023978 (867077-X) 11
We implemented the following measures to mitigate the impact of the aforesaid challenges to the Group’s business: (i) communicate with suppliers as to their stocks readiness and procure alternative suppliers/supplies to improve supply chain lead times; (ii) placement of advance bulk purchase orders to lock in raw materials supply at a better bulk purchase price; and (iii) adoption of IBS construction, whenever possible, to reduce reliance on labour. In view of the supply chain constrictions, massive shortage of labour and volatility in raw materials prices, the Group had been very cautious in pursuing order book replenishment and had resulted in lower order book replenishment in FY2022. OUR BUSINESS PERFORMANCE Our revenue increased from RM691.09 million in FY2021 to RM756.13 million in FY2022, mainly attributable to low base effects, as the Group’s operation was substantially curtailed in FY2021, during the nationwide Full Movement Control Order 3.0. Our gross profit (“GP”) increased from RM50.10 million in FY2021 to RM86.54 million in FY2022, on the back of higher revenue and improved GP margin of 11.4%. Our GP margin in FY2022 had benefited from the followings: (i) revenue combination with higher proportion of the Group revenue contributed by the more profitable manufacturing and trading division; (ii) stronger Singapore Dollar against Ringgit Malaysia enhanced the profitability of our Singapore sales orders; and OUR OPERATING ENVIRONMENT Malaysia entered into the transition of the COVID-19 endemic phase on 1 April 2022 after battling the virus outbreak for two years. The transition saw gradual relaxations in various COVID-19 related restrictions, including the removal of restrictions on business operating hours and reopening of the country’s borders, enabled normalising of economic activities. The operating landscape of the construction industry was very challenging during FY2022 despite the improvement in productivity. The industry continued to suffer from the pandemic-inflicted supply chain disruptions and supply constrictions, rising cost of raw materials and massive shortage of workers. The outbreak of the Russia-Ukraine war in February 2022, further exacerbate the escalation in raw materials prices via steep increases in a range of commodity prices. ON BEHALF OF THE BOARD OF DIRECTORS (“THE BOARD”), I AM PLEASED TO PRESENT THE ANNUAL REPORT OF KIMLUN CORPORATION BERHAD (“OUR COMPANY”) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 (“FY2022”). DEAR SHAREHOLDERS, CHAIRMAN’S STATEMENT Annual Report 2022 12
(iii) better absorption of sunk costs enabled by higher level of operations. Despite the higher GP achieved, we suffered loss before tax of RM3.70 million and loss after tax of RM7.29 million in FY2022 against profit before tax of RM0.97 million and loss after tax of RM0.73 million in FY2021. This was mainly due to the impairment of trade receivable (“Debt”) and contract asset (“Contract Asset”) totaling RM43.52 million in relation to a hospital project which the Group completed in the last quarter of year 2020. The said project was awarded to our subsidiary, by a company (“Debtor”) which is jointly owned by a body corporate (owned by a state government) and a public listed company. Please refer to the Financial Review section under the Management Discussion And Analysis for further details on the Debtor and the project. The aforesaid impairment is a non-cash provision, i.e. it does not have any impact on the Group’s cash flow. Notwithstanding, any recovery of the Debt and Contract Asset will increase the Group’s other operating income and operating cash inflow in the future. We will continue to pursue the recovery of the Debt and Contract Asset. OUTLOOK The Group has an estimated construction and manufacturing balance order book of approximately RM1.38 billion and RM0.35 billion respectively as at 31 December 2022, from a list of diversified clientele. The balance order book is expected to support the Group’s performance in 2023. Notwithstanding, rising cost of raw materials, higher energy costs and commodity prices and shortage of workers will continue to weigh on our operation and profitability. As the shortage of labour is expected to ease gradually, we will intensify our bidding for projects and sales orders in order to increase our job flows and contribute positively to our result in 2023 and beyond. Our track record in the industries we operate in, and extensive experience in our businesses, coupled with the support from bankers, are good supporting factors for the Group to bid for and execute future projects. REWARD TO SHAREHOLDERS – DIVIDEND While we do not adopt a formal dividend policy, our Company has been declaring dividends every year since its listing on the Main Market of Bursa Malaysia Securities Berhad in 2010. In respect of FY2022, the Board recommends a single tier final dividend of 1.0 sen per share. The recommended final dividend is subject to the approval of the shareholders at the forthcoming Annual General Meeting. Our Company is always mindful to reward our loyal shareholders who have supported our growth over the years while trying to strike a balance with the funding needs at our different development phases. ACKNOWLEDGEMENT On behalf of the Board, I would like to extend my heartfelt gratitude to our shareholders, bankers, customers, business partners and regulatory authorities for their continued support, guidance and assistance. The Board would like to express our appreciation to our management team and employees for their hard work and dedication. Pang Tin @ Pang Yon Tin Chairman CHAIRMAN’S STATEMENT Kimlun Corporation Berhad | Registration No. 200901023978 (867077-X) 13
我们的运营环境 马来西亚在与新冠肺炎(“COVID-19”)疫情抗争两年 后，于 2022 年 4 月 1 日开始将新冠疫情过渡成为地方 性流行病。在过渡期间，各种与COVID-19相关的限 制逐渐放宽，包括取消对营业时间的限制和重新开放 国界，使经济活动得以正常化。 尽管生产力有所提高，但建筑业的运营环境在2022财 年充满挑战。该行业继续受到疫情造成的供应链中断 和供应紧缩、原材料成本上升和劳工严重短缺的影 响。此外，该年爆发的俄乌战争更加剧了原材料价格 的上涨。 我们采取了以下措施，以减轻上述挑战对业务的影 响： (i) 与供应商就库存情况进行沟通，并在必要时寻找 替代供应，以改善原料供应期; 敬爱的股东， 本人谨代表董事局提呈金轮企业有 限公司（“本公司”）截至2022年12 月31日财政年（“2022财年”）的年 度报告。 (ii) 提前下批量采购订单，以批量优惠采购价格锁定 原材料供应; 及 (iii) 尽可能采用工业化建筑系统施工方法，以减少对 劳工的依赖。 有鉴于供应链紧缩、劳工严重短缺和原材料价格的波 动，我們在考量投标项目得要非常的谨慎，导致2022 财年投得的项目偏低。 我们的业务表现 我们在2022财年的营业额报7亿5613万令吉，较2021财 年的6亿9109万令吉的营业额有所增长。我们在2021 财年的营业额较低，主要因为我們的业务在马来西亚 政府于2021年实施的行动管制令3.0期间大幅缩减。 毛利则从2021财年的5010万令吉增加到2022财年的 8654万令吉，主要归功于营业额上升以及较好的毛利 润率达11.4%。我们2022财年的毛利润率受益于以下几 方面： (i) 利润较高的制造及贸易分部对集团营业额的贡献 比例较2021财年高; (ii) 新加坡元兑马来西亚令吉的汇率走强,提高了我 们新加坡销售订单的利润;及 (iii) 固定开销吸收率在集团业务有所提升下得以改 善。 主席文告 Annual Report 2022 14
虽然我们实现了更高的毛利，但我们卻在2022财年蒙 受370万令吉的税前亏损，及729万令吉的税后亏损。 这主要是由于集团对一笔与一项医院工程相关的应收 账款（“债务”）和合同资产（“合同资产”）共计4352 万令吉作出全盘的减值。上述医院项目的授予者（“ 债务人”）是一家由州政府机构和一家上市公司共同 拥有的公司。欲知更多关于债务人和项目的讯息，请 参阅2022财年年度报告的第 21 至 22 页。相对的,我们 在2021财年的税前利润为97万令吉, 税后亏损为73万令 吉。 上述减值为非现金拨备，即对本集团的现金流并无任 何影响。尽管如此，债务及合约资产的任何回收将增 加本集团未来的收入及现金。 我们将继续追讨该债务和合同资产。 展望 截至2022年12月31日，我們手握来自多元化客户群的 13.8亿令吉的建筑订单和3.5亿令吉的制造订单。这些 订单将为我们2023年的收入做出贡献。 尽管如此，原材料、能源和商品价格的上涨以及劳工 短缺将继续拖累我们的运营和盈利能力。 由于预计劳工短缺将逐渐缓解，我们将积极地竞标工 程和销售订单，以增加我们的工作量，并为我们在 2023及以后的业绩做出贡献。我们丰富的业务经验， 加上银行家的支持，是集团竞投及执行未来项目的良 好支持因素。 股东回馈—股息 虽然本公司没有实行正规的股息政策，但是本公司自 2010年在马来西亚证券交易所主板上市以来,每年都派 发股息回馈股东。 即使我们经历了艰辛的一年,董事局仍然建议派发每股 1仙的终期单层股息，惟需在来临的股东常年大会上 获得股东批准。 致谢 我谨代表董事会，衷心感谢我们的股东、来往银行、 客户、业务伙伴以及有关监管当局对我们的持续支 持，指导以及协助。董事会谨借此机会感谢我们的管 理层以及员工的辛勤工作以及奉献精神。 彭廷 主席 主席文告 Kimlun Corporation Berhad | Registration No. 200901023978 (867077-X) 15
MANAGEMENT DISCUSSION AND ANALYSIS We aim to continuously improve, promote and provide construction activities and services to the society in which we operate. By providing one stop construction design and build services, we aim to add value to our clients that in turn will be beneficial to the society at large. We will treat all partners including suppliers, subcontractors and consultants with trust, honesty and fairness in all business dealings. Towards our employees, we balance our focus on their personal skills development while taking care of their welfare. While seeking to maximise shareholders’ wealth, we strive to maintain harmony with the interest of the society to enhance our corporation’s sustainability. We aspire to be a reliable, innovative and profitable provider of full range construction services and products in the South East Asia region. MISSION VISION NOWLEDGE NTEGRITY ORAL EADERSHIP NITY OVELTY CORPORATE VALUES Annual Report 2022 16
Construction and Engineering KIMLUN GROUP’S CORE BUSINESSES Manufacturing and Trading Property Development Building Division Infrastructure Division Highways, interchanges, flyovers, roads and earthworks Residential projects: high rise and landed properties Non residential projects: retail malls, factories, hospitals, schools and colleges SOHO and office in HYVE at Cyberjaya, Selangor Residential properties in Pekan Nenas, Johor, and Shah Alam, Selangor Precast Concrete Products Quarry Products Aggregates and premix Tailor made products for infrastructure related projects Customised products for IBS building related projects Completed Development Ongoing Semi-detached houses in 100 trees @ Seri Alam, Johor In the Pipe Line Bungalow in Bukit Bayu Phase 2, Shah Alam, Selangor MANAGEMENT DISCUSSION AND ANALYSIS OVERVIEW OF OUR BUSINESSES AND OPERATIONS Kimlun Corporation Berhad | Registration No. 200901023978 (867077-X) 17
Public sector 51% Private sector 49% Building projects 44% Infrastructure projects 56% 1% 99% PRODUCTION PLANT AND PRODUCTS MANAGEMENT DISCUSSION AND ANALYSIS CONSTRUCTION PROJECTS Balance order book as at 31 Dec 2022 RM1.38 billion Notable completed projects include: • Main building works for Marlborough College East, Johor • Mall of Medini, Johor • Granada Hotel, Johor • The Sky Loft Suites, Johor • Gleneagle Medini Hospital, Johor Ongoing projects include: • Pan Borneo Highway Sarawak • Sarawak-Sabah Link Road • Various apartment and landed properties projects in Selangor and Johor MANUFACTURING ORDERS Balance order book as at 31 Dec 2022 RM0.35 billion Completed sales orders include: • Segmental box girders (“SBG”) and tunnel lining segment (“TLS”) to Klang Valley MRT (“KVMRT”) Line 1 and Line 2 • TLS to Singapore MRT Circle Line, Downtown Line and Thomson Line • Precast Bathroom to Michael and Festive Hotel, Singapore Ongoing sales orders include: • SBG for train testing center • TLS, rail sleepers and IBS for Singapore MRT projects • Jacking pipes for Singapore Deep Tunnel Sewerage project • IBS for a resort development JOHOR • Tunnel lining segment • Rail sleeper • Jacking pipe • Vertical cast pipe • Box culverts • Prefabricated prefinished volumetric module • Hollow core slab • Column and beam • Aggregates • Premix NEGERI SEMBILAN • Tunnel lining segment • Segmental box girder • Parapet walls • Column and beam SARAWAK • Aggregates • Premix • Concrete drains All projects in Malaysia Malaysia orders Singapore orders Annual Report 2022 18
PROPERTY DEVELOPMENT Location Gross Development Value (RM) Launched Development / Planned Development Completed Projects Hyve at Cyberjaya, Selangor 232 million A combination of 804 units of freehold SOHO and offices Taman Puteri at Pekan Nenas, Johor 48 million 131 units of various types of freehold landed properties Seksyen U10 Shah Alam, Selangor 67 million 30 units of leasehold bungalows Total 347 million New Projects Seksyen U10 Shah Alam, Selangor 48 million Expected launching in second quarter of 2023: 16 units of leasehold bungalows Bandar Seri Alam, Johor 66 million Ongoing: 60 units of freehold semi-detached houses Total 114 million Location / Land Area Gross Development Value (RM) Type of Land Usage / Planned Development Existing Land Bank in Hand Bandar Seri Alam, Johor Bahru, Johor / 11.27 acres # Freehold commercial land / commercial development Seksyen U10 Shah Alam, Selangor / 22.40 acres # 88 units of 99-years leasehold vacant detached lots approved for bungalow development Medini Iskandar Malaysia, Johor / 5.31 acres # 99-years lease on freehold commercial land / A combination of SOHO and retails properties Kota Tinggi, Johor / 140.84 acres # 29 parcels of freehold agriculture land / township development Mukim Pulai, Johor Bahru, Johor / 29.00 acres # Freehold agriculture land / commercial development Mukim Pulai, Johor Bahru, Johor / 5.15 acres # Freehold commercial land / commercial development # The gross development value cannot be ascertained as the development details have yet to be finalised DIVERSIFIED CLIENTELE We are not materially dependent on any single customer for business. We have been securing projects from different clients. Our diversified clientele include: MANAGEMENT DISCUSSION AND ANALYSIS Private Sector • IOI Properties Bhd • Mah Sing Group Bhd • IJM Land Bhd • WCT Construction Sdn Bhd • MMC Gamuda KVMRT (UGW) Joint Venture • Sunway Construction Sdn Bhd Government and Government Link Companies • Mass Rapid Transit Corporation Sdn. Bhd. • UEM Sunrise Land Bhd • SP Setia Bhd • Sime Darby Bhd International Contractors • Shimizu Corporation • Shanghai Tunnel Engineering Ltd • SK Engineering & Construction • Nishimatsu Construction Co. Ltd. • M+W Singapore Ptd Ltd Kimlun Corporation Berhad | Registration No. 200901023978 (867077-X) 19
MANAGEMENT DISCUSSION AND ANALYSIS GROUP FINANCIAL HIGHLIGHTS Year ended/As at 31 December 2018 2019 2020 2021 2022 FINANCIAL RESULTS (RM’ mil) Revenue 1,011.98 1,302.82 794.71 691.09 756.13 Gross Profit 128.03 134.12 74.54 50.10 86.54 Profit/(Loss) Before Taxation 81.67 79.69 15.52 0.97 (3.70) Profit/(Loss) After Taxation 61.07 58.37 7.94 (0.73) (7.29) Profit/(Loss) Attributable to Owners of the Company 61.14 58.39 7.99 (0.59) (7.23) FINANCIAL POSITION (RM’ mil) Cash and Bank Balances 35.57 64.94 57.47 69.54 72.23 Total Assets 1,397.14 1,546.16 1,476.98 1,326.44 1,300.77 Total Borrowings 273.15 406.61 407.11 307.06 307.64 Shareholders’ Equity 664.72 720.47 725.91 721.28 710.40 FINANCIAL RATIOS Gross Profit Margin % 12.65 10.29 9.38 7.25 11.45 Basic Earnings per Share (“EPS”)/ Loss per Share Sen 18.81 17.42 2.34 (0.17) (2.05) Dividend per Share Sen 3.70 3.30 1.00 1.00 1.00 Dividend Yield (note 1) % 3.4 2.6 1.1 1.2 1.3 Net Assets per Share RM 2.00 2.12 2.08 2.07 2.05 Net Gearing Ratio (note 2) times 0.26 0.32 0.32 0.25 0.25 CASH FLOW (RM’ mil) Net cash flows generated from/ (used in) operating activities (137.52) 10.55 13.14 117.57 52.02 Net cash flows used in investing activities (21.14) (91.86) (1.98) (2.60) (20.83) Net cash flows generated from/ (used in) financing activities 93.01 104.04 4.24 (103.44) (17.16) SHARES PERFORMANCE Share Price – Year Close RM 1.08 1.25 0.895 0.81 0.77 Share Price – Year High RM 2.35 1.49 1.26 1.01 0.835 Share Price – Year Low RM 1.00 1.08 0.51 0.74 0.63 Trading volume (no of shares) Mil 34 35 163 76 12 Market Capitalisation (note 3) RM' mil 358 425 316 286 272 Price Earnings Ratio (note 4) times 5.7 7.2 38.2 - - Note 1: Being dividend per share/share price – year close Note 2: Being net debt/total equity plus net debt Note 3: Market capitalisation as at the financial year end Note 4: Being year close share price/EPS for the financial year Annual Report 2022 20
MANAGEMENT DISCUSSION AND ANALYSIS FINANCIAL REVIEW Group Revenue and Profitability The Group recorded revenue of RM756.13 million in FY2022, which was RM65.04 million (9.4%) higher compared to RM691.09 million recorded in FY2021. The growth in revenue was mainly due to low base effects, as the Group’s operation was substantially curtailed in FY2021, during the nationwide Full Movement Control Order 3.0. The Group recorded gross profit (“GP”) of RM86.54 million in FY2022, which was RM36.44 million (72.7%) higher against RM50.10 million of FY2021, on the back of higher revenue and improved GP margin of 11.4%. The Group’s GP margin in FY2022 had benefited from the followings: (i) Higher proportion of the Group revenue was contributed by the more profitable manufacturing and trading (“M&T”) division; (ii) Stronger Singapore Dollar against Ringgit Malaysia enhanced the profitability of M&T division’s Singapore sales orders; and (iii) Better absorption of sunk costs enabled by higher level of operations. Conversely, the construction division recorded a lower GP margin in FY2022, mainly due to higher costs of raw materials, energy and commodities attributable to the pandemic-inflicted supply chain disruptions and supply constrictions, further exacerbated by the Russia-Ukraine war. Other income at RM8.22 million in FY2022, approximate the level in FY2021. Other income mainly comprised of reversal of allowance for impairment on trade receivable, interest income and gains on disposal of scrap materials. Administration expenses of RM82.74 million in FY2022 were RM40.96 million (98.1%) higher against FY2021, due to the impairment of trade receivable (“Debt”) and contract asset (“Contract Asset”) totaling RM43.52 million in relation to a hospital project which the Group completed in the last quarter of year 2020. The said project was awarded to Kimlun Sdn Bhd (“KLSB”), a subsidiary of the Company, by a company (“Debtor”) which is jointly owned by a body corporate (owned by a state government) and a public listed company. The Debtor is the concession holder in respect of a hospital (“Hospital”) granted by the Government of Malaysia (“Government”). The development of the Hospital is being undertaken through ‘public-private partnership’ on a build, lease, maintain and transfer concept, and a concession agreement in relation to the proposed development of the Hospital was signed between the Government, the Debtor and a public entity. The concession period is for a period of approximately 33 years, including 7 years of construction works and 25.5 years of asset management services (“Asset Management Services Period”). During the Asset Management Services Period, the Debtor will be paid the Availability Charges (for the availability of the Hospital and the supporting facilities and infrastructure) and the Asset Management Services Charges (for the provision of the maintenance services and asset replacement programme), aggregating approximately RM141 million per annum. Kimlun Corporation Berhad | Registration No. 200901023978 (867077-X) 21
MANAGEMENT DISCUSSION AND ANALYSIS Segmental Revenue and Gross Profit* *: The segmental revenue and gross profit stated in the commentary in relation to the respective segment were inclusive of inter-segment transactions. FY2022 RM’000 FY2021 RM’000 Changes RM’000 % Revenue Construction 550,208 510,129 40,079 7.9% M&T 366,153 227,054 139,099 61.3% Property Development 31,623 44,282 (12,659) (28.6%) Investment 9,674 14,986 (5,312) (35.4%) Elimination (201,524) (105,364) (96,160) 91.3% Consolidated revenue 756,134 691,087 65,047 9.4% GP Construction 6,703 16,690 (9,987) (59.8%) M&T 76,520 25,434 51,086 200.9% Property Development 3,589 5,408 (1,819) (33.6%) Investment 9,674 14,986 (5,312) (35.4%) Elimination (9,945) (12,413) 2,468 (19.9%) Consolidated GP 86,541 50,105 36,436 72.7% GP margin Construction 1.22% 3.27% M&T 20.90% 11.20% Property Development 11.35% 12.21% Investment 100.0% 100.0% Consolidated GP margin 11.45% 7.25% KLSB will continue to monitor the progress of the proposed SUKUK issuance, or any other repayment proposal from the Debtor, and will take appropriate action to recover the Debt and the Contract Asset. Finance costs of RM12.82 million in FY2022 were RM2.01 million (13.5%) lower against FY2021, on lower utilisation of banking facilities during the period. Share of loss of joint ventures was higher at RM2.90 million in FY2022 due to low business activities of joint venture companies, and incidental expenses incurred by a joint venture company in securing banking facilities. The effective tax rate for FY2022 was higher than the statutory rate applicable to the Group as certain expenses were disallowed for tax deduction under tax regulations and potential deferred tax benefit on unutilised tax losses, unabsorbed capital allowances and other temporary differences were not recognised on prudent basis. As a result, the Group recorded loss before tax of RM3.70 million and loss after tax of RM7.29 million in FY2022 against profit before tax of RM0.97 million and loss after tax of RM0.73 million in FY2021. The scope of the Debtor’s work under the Concession Agreement includes construction and completion of the Hospital and the supporting infrastructure and amenities, and to carry out the asset management services for the facilities and infrastructure of the Hospital. The construction of the Hospital and the supporting infrastructure and amenities had been completed and issued with the Certificate of Practical Completion on 19 August 2020 and the Certificate of Acceptance (“COA”) on 30 December 2020. Upon the issuance of the COA, the Assets Management Services Period has commenced. KLSB was informed by the Debtor that it is pursuing the issuance of SUKUK, the proceeds of which will be used, amongst other, to repay the outstanding construction loans and dues to KLSB. However, as the Debtor had missed its target of issuing the SUKUK in 2022, and the SUKUK is still not issued as at the date of finalisation of our financial results for FY2022, and on a prudent basis, KLSB has impaired the Debt and the Contract Asset. The aforesaid impairment is a non-cash provision, i.e. it does not have any impact on the Group’s cash flow. Notwithstanding, any recovery of the Debt and Contract Asset will increase the Group’s other operating income and operating cash inflow in the future. Annual Report 2022 22
MANAGEMENT DISCUSSION AND ANALYSIS The increase in construction and M&T revenue in FY2022 was mainly due to low base effects as explained in the preceding section of this report. The improvement in M&T revenue was mainly attributable to the increase in inter-segment sales and external sales by RM94.87 million and RM44.23 million respectively against FY2021. The growth in M&T division’s inter-segment sales was derived from higher sales to the construction division, while the growth in external sales was derived from higher sales to Singapore on fulfillment of sales orders in hand. Property development (“PD”) division recorded lower revenue in FY2022, due to lower sales of Phase 1 of Bukit Bayu, Seksyen U10, Shah Alam project in FY2022, as most of the units under Phase 1 had been sold in FY2021. The decline in investment revenue which mainly comprised of dividend and interest income, was due to lower dividend income from other divisions. The construction division recorded a lower GP margin, while M&T division achieved a higher GP margin in FY2022, due to the reason elaborated in the preceding section of this report. PD division recorded a lower GP margin in FY2022, due to lower profit margin products were sold during FY2022. Financial Position Shareholders’ equity decreased from RM721.28 million as at 31 December 2021 to RM710.40 million as at 31 December 2022, attributable to the comprehensive loss attributable to owners of the Company of RM7.35 million and dividend paid of RM3.53 million during FY2022. Non-current assets decreased from RM377.21 million as at 31 December 2021 to RM316.77 million as at 31 December 2022, mainly due to the decrease in land held for development by RM68.39 million upon the reclassification of certain plots of land to development properties under current assets (‘Reclassification of Land”). Current assets increased from RM949.23 million as at 31 December 2021 to RM984.00 million as at 31 December 2022. This was mainly due to the Reclassification of Land, higher properties held for sale, partly offset by the impact of the aforesaid impairment of Debt and Contract Asset. Current liabilities decreased from RM444.38 million as at 31 December 2021 to RM416.17 million as at 31 December 2022 mainly due to lower trade payables and contract liabilities. Non-current liabilities increased from RM151.01 million as at 31 December 2021 to RM159.31 million as at 31 December 2022 mainly due to new loan drawn down during the year for refinancing of land bank. Net gearing ratio as at 31 December 2022 was at a manageable level of 0.25 times. Cash Flow For FY2022, the Group registered net cash from operating activities of RM52.02 million. Net cash of RM20.83 million was used in investing activities, mainly for the purchase of machineries for our construction projects and quarry operation. Net cash of RM17.16 million was used in financing activities, mainly for repayment to hire purchase creditors. With the net increase in cash of RM14.03 million during FY2022, the Group’s cash and cash equivalents was RM60.35 million as at 31 December 2022. Kimlun Corporation Berhad | Registration No. 200901023978 (867077-X) 23
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