MKH Annual Report 2020

23 MKH BERHAD Management Discussion and Analysis Report This Report provides a discussion and analysis of the Group’s financial performance for the year ended 30 September 2020 (“FY2020”), including explanations for significant fluctuations over the previous financial year. TheGroup’s principal business segments, which remained unchanged from the preceding year, comprise Property Development and Construction; Plantation; Hotel and Property Investment; and Others. The segment “Others” comprises Trading, Manufacturing, Investment Holding and other non-reportable operations. FY2020 FINANCIAL HIGHLIGHTS The Group’s revenue and profit before tax for the financial year under review and the preceding year are summarised as follows: 2020 RM’000 2019 RM’000 Changes (%) GROUP REVENUE 911,926 1,121,657 (18.7) Segments • Property Development and Construction 561,833 775,923 (27.6) • Plantation 250,487 229,762 9.0 • Hotel and Property Investment 25,036 3 1 ,1 92 (19.7) • Others 74,570 84,780 (12.0) GROUP PROFIT BEFORE TAX 116,476 158,373 (26.5) Segments • Property Development and Construction 73,839 122,239 (39.6) • Plantation 26,192 5,936 341.2 • Hotel and Property Investment (7,994) 1,784 (548.1) • Others 24,439 28,414 (14.0) For the financial year ended 30 September 2020, the Group’s revenue and profit before tax (“PBT”) decreased by 18.7% and 26.5% to RM911.9 million (FY2019: RM1.12 billion) and RM116.5 million (FY2019: RM158.4 million) respectively mainly due to lower revenue and profit recognition in the 3rd quarter ended 30 June 2020 as a result of the suspension and disruption of the physical construction work on ongoing property development projects during the implementation of Movement Control Order (“MCO”) and Conditional MCO (“CMCO”) from 18 March 2020 to 9 June 2020 to contain the spread of Coronavirus disease (“COVID-19”) and higher share of losses of associated companies of RM5.1 million (FY2019: RM0.9 million) from the Property and Construction Division but mitigated by higher revenue and profit contribution from Plantation Division. In addition, the Group recorded unrealised foreign exchange losses of RM13.9 million as compared to the preceding year unrealised foreign exchange gains of RM14.0 million mainly from the Plantation Division following the weakening of Indonesian Rupiah against its borrowings in United States (“US”) Dollar. The Rupiah has since strengthen against the US Dollar (30-09-2020: USD1: Rp14,918; 31-12-2020: USD1: Rp14,105). Excluding the unrealised foreign exchange losses of RM13.9 million (FY2019: unrealised foreign exchange gains of RM14.0 million), the Group’s PBT was lower by 9.7% at RM130.4 million (FY2019: RM144.4 million) which was mainly due to higher loss on changes in fair value of investment properties totalling RM12.2 million (FY2019: RM6.2 million) and fair value losses from transfer of inventories to investment properties totalling RM5.2 million (FY2019: RMNil) from the Hotel and Property Investment Division and the Property and Construction Division respectively.