On behalf of the Board of Directors, it is my pleasure to present to you the Annual Report of Kim Hin Industry Berhad for the financial year ended 31 December 2009.
Business Environment
The global financial crisis affected many countries globally in 2009 and Malaysia was not being spared from the onslaught of the economic woes, with its economy recording a negative growth for the first three quarters of the year, with the economy contracting by 6.2% in the first quarter. However, the swift implementation of the fiscal stimulus measures and the monetary policy by the Malaysian government contributed to the stabilization of the domestic economy in the second quarter, and subsequent recovery in the second half of the year. As a result, the Malaysian economy regained its growth momentum in the fourth quarter, to grow by 4.5%.
Against this backdrop, the Group was faced with the challenge of a slowdown in business as evidenced from the weaker overseas demand during the financial year under review.
In response to the unfavourable economic conditions, the Group cautiously implemented austerity measures and undertook systematic review to achieve better operational efficiency.
Financial Performance
For the financial year ended 31 December 2009, the Group's revenue decreased marginally to RM242.7 million from RM251.5 million as compared to the financial year ended 31 December 2008. However, the profit for the year increased markedly from RM4.7 million to RM23.3 million. The higher profit attributed mainly to unrealised foreign exchange gain, lower fuel cost and reduction in other operating costs resulting from the aforesaid measures undertaken by the Group.
Dividend
The Board has recommended a first and final dividend of 5% (tax exempt) for the financial year ended 31 December 2009. This declaration of dividend showed that the Company endeavours to commit itself in rewarding a fair and equitable return of investment to shareholders.
The declared dividend, if approved by the shareholders at the forthcoming Annual General Meeting, will be paid to shareholders in July 2010.
Business Outlook and Prospects
The Malaysian economy is projected to grow by 4.5% to 5.5% in 2010, underpinned by the strengthening of domestic demand and an improving external environment.
Meanwhile, the construction sector is expected to sustain its growth as a result of the continued implementation of the remaining projects under the second stimulus package and the Ninth Malaysia Plan.
In view of this, the Group is undergoing a capacity expansion programme at our Seremban factory with the installation of an additional production line in order to give a more comprehensive product range.
However, for the first quarter of 2010, the Group is faced with the challenge of continual price increase in fuel cost which has affected the profit margin of the Group.
Going forward, the Group expects the ceramic tile market to remain challenging and competitive. The Group remains sensitive to present market changes and is fully alert to take on the opportunities that arise from the global and domestic economic recovery.
Corporate Social Responsibility
The Group recognises the importance of being a socially responsible corporate citizen. The Group endeavours to treat its stakeholders to whom our business has an impact on, be it directly or indirectly, in a responsible manner.
Annually, the Group has been making contributions financially to various charitable organizations with the hope of making a positive difference to the lives of the less fortunate. Besides, the Group also donated ceramic tiles to schools and religious places in order to fulfill their needs for expansion or improvement of their premises.
The Group also acknowledges that employees are its best asset and are able to steer the Group to greater heights. Various learning and development programmes have been conducted throughout the year so as to equip and develop both technical and soft skills of our work force. In addition, the Group provides financial assistance in the form of "Back-to-school Grant" to our low-income employees for their children education. Achievement awards were also presented to our employees' children who excel in the government examinations. Sports and other activities were carried out with the full support and commitment of our employees, through Kimgres Club, the Group's sports club, with a view of providing a healthy lifestyle for our employees.
Appreciation
First of all, I would like to thank my fellow directors for their invaluable contribution, advice, support and continued commitment in driving the Group forward.
I would like to thank Mr Yeo Yong Siang who resigned in November 2009 for his contributions to the Group during his tenure as an Independent Non-Executive Director. Meanwhile, I would also like to take this opportunity to welcome Mr Ong Ah Ba who was appointed as Independent Non-Executive Director in December 2010.
On behalf of the Board, I would like to express my sincere appreciation to our shareholders, the management and staff, our valued customers, vendors and all our stakeholders as well as business partners for their loyalty, perseverance, dedication and trust towards the Group. Together with the management and staff, we will continue to give our full commitment and strive for better performance in this challenging economic environment.
CHUA SENG HUAT
Executive Chairman
30 April 2010
