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
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