Investor Relations

Chairman's Statement

(Extracted from Annual Report 2015)

"On behalf of the Board of Directors ("the Board") of KKB Engineering Berhad ("KKB"), I am pleased to present the Annual Report and the Audited Financial Statements of KKB and the Group for the financial year ended ("FYE") 31 December 2015."

The FYE 2015 presented yet another challenging year for the Group. Amidst the economic uncertainties and world market situation particularly the depressing oil price, I am pleased to report that KKB Group has delivered satisfactory results through perseverance and resilience in times of adversity.

Overview Of Financial Performance

The overall result of KKB Group has been dampened by the continued slow-down in the global economy demonstrated by limited number of contracts and works available in the Steel Fabrication and Civil Construction Divisions coupled with the late timing of projects awarded and commencements of our projects.

The Group recorded revenue RM127.9 million (FYE 2014: RM202.0 million), lower by 36.7% over the preceding year.

However, Group's Profit before taxation improved markedly to RM37.6 million from RM31.9 million registered in the preceding year, representing an increase of 17.9%.

Similarly, Group's Profit after taxation rose to RM29.1 million, an increase of 21.8% over the preceding year of RM23.9 million, translating into earnings per share of 10.10 sen compared to 8.13 sen registered in the preceding year.

Group's Net Asset per share stood at RM1.17 compared to RM1.11 in the preceding year.

The Group's financial position remains healthy with relatively low gearings. During the year, the acquisition of new heavy machineries and additional capital expenditure for expansion of our steel fabrication yard at Lot 777, Block 5 Muara Tebas Land District, Kuching, Sarawak are largely met by internally generated funds.

We continue to strengthen and grow our core business in Structural Steel Fabrication engineering for the Oil & Gas Sectors to complement our traditional structural steel fabrication business. The Group is well positioned to undertake Major Onshore Fabrication for the Oil & Gas Sectors with readiness of our facilities at Lot 777, Block 5, Muara Tebas Land District, Kuching, Sarawak.

Despite the uncertainties in the global economy, escalation of costs due to inflationary pressure, volatility of global raw material steel prices and the sharp fluctuation of foreign exchange rates affecting the Group's performance, the Board will stay focused on its long term strategies to identify viable new business opportunities to grow the Company.

Milestone Achievement

I am pleased to report that our associate Company, OceanMight Sdn Bhd has successfully completed two (2) Onshore Fabrication jobs ahead of schedule for the Oil & Gas sectors, with Zero Lost Time Injuries i.e The Provision of Fabrication, Hook-Up and Commissioning Services for Tanjong Baram Wellhead Platform (Contract No.: EQ/TB/2014/004) from 2H Offshore Engineering Sdn Bhd and Provision of Yard Space, Manpower, Tools, Equipment and Services for New Helideck Steel Support Fabrication and New Helideck Assembly for Baram-B Revisit 4 Project for Petronas Carigali Sdn Bhd.

KKB Group has commenced work on its third project for the Engineering, Procurement and Construction of Wellhead Platform for Kinabalu Redevelopment Project (Contract No. 152085) secured from Talisman Malaysia Limited in third quarter of 2015 and is scheduled for completion in middle 2017.

The award of these projects mark the beginning of our entry into the Major Onshore Fabrication for the Oil & Gas sectors to enhance our core capabilities for sustainability and long term growth of the Group in years to come.

Dividends

KKB is committed to ensure shareholders have fair and equitable return of investment and while taking into consideration all other factors in striking a balance, the Board is pleased to recommend for shareholder's approval at the forthcoming Annual General Meeting a first and final single tier dividend of four (4) sen per ordinary share of RM0.50 each in respect of FYE 2015.

Based on the enlarged share capital of 257,792,000 ordinary shares of RM0.50 each, the Company's total payout will amount to RM10.3 million (FYE 2014: RM10.3 million).

Appreciation

On behalf of the Board, I applaud the staff and management for their loyalty and contribution to the Group. I have confidence they will continue to add value to the Group for achieving better results in the coming years.

I would also like to take this opportunity to thank all our valued shareholders, stakeholders, business partners and various government bodies for their continued support and confidence in the Group.

In closing, I would like to express my deepest gratitude to my fellow Board members for their invaluable advice and dedication in ensuring our continuous growth and success.

DATO KHO KAK BENG
Chairman/Group Managing Director