FINANCIAL REVIEW Group Revenue and Profitability The Group recorded revenue of RM852.57 million in FY2023, which was RM96.44 million (12.8%) higher compared to RM756.13 million recorded in FY2022. The growth in revenue was mainly attributable to higher revenue generated by the construction division. Despite of higher revenue, gross profit (“GP”) of FY2023 was lower at RM61.58 million compared to RM86.54 million of FY2022, due to a lower GP margin of 7.22% against 11.45% of FY2022. The decline in the GP margin was due to lower profitability achieved by the manufacturing and trading (“M&T”) division which offset the marked improvement in the GP of construction division. Other income of RM8.37 million in FY2023 approximate the level in FY2022. Other income mainly comprised of reversal of allowance for impairment on land held for property development and trade receivable, and interest income. Administration expenses of RM38.18 million in FY2023 were RM44.56 million (53.9%) lower against FY2022. Administration expenses were higher in FY2022 due to the impairment of trade receivable and contract asset totaling RM43.52 million in relation to a hospital project. Finance costs of RM15.57 million in FY2023 were RM2.75 million (21.5%) higher against FY2022 mainly due to higher utilisation of bank facilities and hike in interest rate. Share of loss of joint ventures of RM3.14 million in FY2023 was RM0.24 million (8.2%) higher against FY2022 mainly due to higher finance costs incurred by joint ventures. The effective tax rate for FY2023 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 profit before tax of RM13.06 million and profit after tax of RM6.88 million in FY2023 against loss before tax of RM3.70 million and loss after tax of RM7.29 million in FY2022. 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. FY2023 RM'000 FY2022 RM'000 Changes RM'000 % Revenue Construction 679,704 550,208 129,496 23.5% M&T 249,999 366,153 (116,154)-31.7% Property Development 23,809 31,623 (7,814) -24.7% Investment 8,907 9,674 (767) -7.9% Elimination (109,851) (201,524) 91,673 -45.5% Consolidated revenue 852,568 756,134 96,434 12.8% GP Construction 25,056 6,703 18,353 273.8% M&T 37,013 76,520 (39,507) -51.6% Property Development 3,982 3,589 393 11.0% Investment 8,907 9,674 (767) -7.9% Elimination (13,376) (9,945) (3,431) 34.5% Consolidated GP 61,582 86,541 (24,959) -28.8% GP margin Construction 3.69% 1.22% M&T 14.81% 20.90% Property Development 16.72% 11.35% Investment 100.00% 100.00% Consolidated GP margin 7.22% 11.45% The increase in construction revenue in FY2023 was attributable to revenue contribution from new construction projects secured in FY2023, and higher revenue arose from the acceleration of construction progress of the Sarawak-Sabah Link Road Construction Project (Lawas-Long Lopeng Junction) (“SSRL Project”). The decrease in M&T revenue in FY2023 was due to the significant decrease in the inter-segment sales as a large order which contributed significantly to the inter-segment sales in the preceding year was near completion. MANAGEMENT DISCUSSION AND ANALYSIS 021 Annual Report 2023
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