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
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