(Extracted from Annual Report 2024)
Dear Shareholders,
It is my privilege to write to you as we are 30 years to our listing since September 1994. Over the last three decades, Revenue and Net Profits of the KKB Group have grown. The Group's ability to deliver strong revenue growth and continued profit expansion is testament to the fundamental resilience and underlying strengths of the KKB business model.
I am happy to highlight the remarkable financial performance of our businesses, navigating through a challenging economic environment with focus and resilience. The global economic scenario remained volatile causing considerable headwinds. The strategic depth of our businesses, talented business teams, and resilient domestic markets helped KKB Group navigate the obstacles. Our strong balance sheet is a testament to our prudent business and financial management strategies which help us maximise cash profits.
We recognise that producing sustainable growth in the future will require continued and further excellence in people leadership, strategy, commercial agility, governance and investment in technology.
2024 was a busy but rewarding year for us as we executed our strategy of building a foundation for growth and sustainable profitability. We strengthened our core segments and continued to drive changes to reap the benefits.
Our financial results for FY2024 reflect the positive impact of our strategic initiatives and operational enhancements. These commendable results demonstrate the strength and resiliency of our business, as well as the firm foundations we have built in our core businesses.
The Group's annual revenue crossed the half a billion mark, more than 32-fold increase since its listing in 1994, reaching RM634.3 million in FY2024, recording a growth of 34.7% as compared to RM471.0 million posted in the preceding financial year ("FY2023"). We saw strong revenue growth in our Engineering sector which grew 38.5% compared to FY2023.
Gross profit increased by 19.6% from RM86.6 million in FY2023 to RM103.6 million in FY2024. This increase is consistent with the overall increase in revenue, underscoring our successful efforts in enhancing profitability.
In FY2024, the group recorded a pre-tax profit of RM55.6 million, increased by 6.7% compared to RM52.2 million in the preceding year, mainly attributable to the strong performance of the Steel Fabrication division within the Engineering sector.
The overall group's results were however impacted by the impairment of goodwill, write down of inventories and obsolete inventories written off coupled with lower contribution from the Manufacturing sector.
The consolidated Earnings Before Interest, Tax, Depreciation and Amortisation ("EBITDA") grew 10.8% to RM71.3 million (FY2023: RM64.4 million) whilst consolidated profit after tax stood at RM40.5 million with 17.8% growth compared to RM34.3 million in FY2023. Profit Attributable to equity holders of the parent decreased 1.6% to RM26.2 million (FY2023: RM26.6 million), thereby reducing Earnings per share to 9.07 sen compared to 9.22 sen in FY2023.
The Group maintains a strong Balance Sheet and a healthy cash position (short term funds, cash and shortterm deposits) of RM218.1 million. We remain committed to optimising cash flow, maintaining capital discipline and improving value and returns.
The Group's net assets were RM413.6 million, up from RM407.6 million in FY2023. This was equivalent to net assets per share of RM1.43 as compared to RM1.41 in FY2023.
This improvement reflects our agility and resilience to continue delivering positive and consistent performance despite the challenging and competitive operating landscape the Group operates in.
We continued to be well diversified in our revenue stream. The Steel Fabrication and Civil Construction division within the Engineering sector registered a combined revenue of RM613.6 million (FY2023: RM443.7 million), whilst the Steel Pipes manufacturing division registered revenue of RM13.3 million (FY2023: RM17.0 million) and LP Gas Cylinders manufacturing division posted revenue of RM4.6 million (FY2023: RM9.0 million).
More positively, our Engineering sector provided a welcome contribution to the group's overall result, in particular the Steel Fabrication and Civil Construction divisions. This strategy of diversification, helps us to navigate market turbulence and we are grateful that this structure gives us predictability and flexibility through good times and bad.
In December 2024, we managed to secure order from Gamuda Berhad for the Supply of MSCL Pipes and Specials in Sabah of which is expected to contribute positively to the Group's performance in FY2025, in particular the Manufacturing sector.
These efforts are attributable to the meticulous execution of our corporate strategy, driven commitment from its management team and all employees, and via the careful stewardship from the Board of Directors.
We remain prudent in our financial management to build up and conserve liquidity as the economic landscape remain uncertain and challenging.
KKB continues to recognise the importance of conducting our business in a sustainable and responsible manner focusing on sustainability values based on Environmental, Social and Governance framework. We continue to build on our strong commitment to environmental sustainability in how we operate our business. Sustainability aligns with our founding philosophy of value for all.
We continue to work towards carbon emissions reduction, and we invest in our communities to help them thrive and provide our employees with vibrant places to work. We continue to advance our talent strategy to attract, retain and inspire outstanding employees.
An update on our approach towards sustainability is included in our Sustainability Statement section on pages 26 to 58 of this Annual Report.
The Company endeavours to maintain stable dividends and return profits to shareholders in line with Company's performance through a dividend payout ratio of 20% or more of Consolidated Profit attributable to owners of the parent, depending on our financial performance, the availability of adequate distributable reserves and on condition that such distribution will not be detrimental to our Group's cash flows requirements.
During the year, the Company paid a first and final single tier dividend of seven (7.0) sen per ordinary share, in respect of the financial year ended 31 December 2023. As such, the total dividend payment of RM20.2 million represented about 75.9% of the Consolidated Profit attributable to owners of the parent and it is well above our 20% dividend policy.
The Board remains committed to delivering value to our shareholders. For financial year ended 31 December 2024, the Board of Directors recommended a first and final single tier dividend of seven and a half (7.5) sen per share, representing about 82.6% of the Consolidated Profit attributable to owners of the parent but subject to approval by shareholders at the forthcoming Forty-Ninth (49th) Annual General Meeting. The proposed dividend, if approved, would amount to approximately RM21.7 million.
As the company evolves, the board's composition will evolve too – reflecting the need for new experiences and skills aligned with the Board's firm commitment to maintaining the highest standards of corporate governance in line with best practices and aims to embed our core values of honesty, integrity and compliance in everything we do.
The Board, through the Audit Committee and Risk & Sustainability Committee, carefully monitors and manages risk across the business within the Group.
There were some changes to Non-Executive Board responsibilities during the year. Datin Mary Sa'diah binti Zainuddin retired from the Board in September 2024.
I would like to thank Datin Mary Sa'diah Binti Zainuddin for her past contributions to KKB Group over many years.
As part of the continuing process of strengthening the Audit Committee composition, Ir. Haji Othman bin Abdul Kadir whom was appointed as Independent Non-Executive Director in June 2023 was appointed as member of the Audit Committee with effect from September 2024. The Board looks forward to the benefit of his experience and inputs in the coming years.
It is with great pleasure that we welcomed Puan Norliza Binti Mohamad Nawi to the Board in September 2024 as an Independent Non-Executive Director. Norliza's extensive past working experience in the Oil and Gas industry will be extremely valuable to KKB Group as the business continues to execute its strategy.
The strong performance of this year is a direct result of the talent, dedication, and commitment of our employees.
I would like to thank each and every one of the KKB team for their dedicated services and outstanding contributions during the year to deliver another respectable group's performance in FY2024 for our shareholders and not forgetting members of the KKB Board for their wise counseling and ongoing support.
My heartfelt appreciation goes to all other stakeholders such as shareholders, customers, suppliers, bankers, business partners, advisers and relevant authorities for their trust and support. Indeed, grateful to have you all on our journey throughout these years, and we look forward to your support as we continue to achieve new milestones together.
Moving forward, although economic conditions are improving, the outlook remains uncertain. Nevertheless, I am confident that KKB's strategy and sound financial footing position the business well for the future. I look forward to the continuing support of our stakeholders as we work towards delivering a resilient performance in the coming years.
Thank you.
DATO SRI KHO KAK BENG