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 2010.
Business Environment
The Malaysian economy experienced a strong resumption of growth, recording an expansion of 7.2% following the downturn in 2009. Growth was driven mainly by robust domestic demand and primarily by private sector activity. However, the growth momentum softened in the second half-year, in tandem with the moderation in global trade and a diminishing base effect.
The construction sector expanded by 5.2% in 2010, with some moderation in the second half, due partly to the completion of projects financed by the second stimulus package. Growth was supported mainly by the non-residential sub-sector, reflecting the construction of commercial properties, particularly purpose-built office and retail space, and the upgrading and repair of public buildings.
Despite the positive growth of economy in 2010, the revenue of the Group however registered only a negligible growth of about 1%. This was caused mainly by the intense competition in the Malaysian domestic market as well as the influx of imported porcelain tiles from China.
Financial Performance
For the financial year ended 31 December 2010, the Group's revenue improved marginally to RM245.1 million from RM242.7 million as recorded in the financial year ended 31 December 2009. However, the profit for the year reduced from RM23.3 million to RM19.1 million. The performance of the Group was affected mainly by high liquefied petroleum gas cost and a lesser extent of the foreign exchange gains as compared to the previous financial year.
Dividend
The Board has recommended a first and final dividend of 5% (tax exempt) for the financial year ended 31 December 2010. 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 2011.
Business Outlook and Prospects
The Malaysian economy is projected to expand between 5% to 6% in 2011, mainly driven by domestic demand and supported by a favourable external sector. The strong economic fundamentals will continue to propel the growth momentum of domestic demand.
The capacity expansion programme for our Seremban factory is near completion and shall be operational by second half of this year. Through this expansion of capacity, the Group shall be ready to take on opportunities arising from the anticipated growing demands from the implementation of various projects under the Tenth Malaysia Plan.
Going forward, the Group expects the ceramic tile market to remain challenging and competitive. The Group shall remain sensitive to the market changes and is fully alert to take on any opportunities that may arise from the global and domestic economic growth.
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, orphanage homes like The Salvation Army 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
I would like to thank my fellow directors for their invaluable contribution, advice, support and continued commitment in driving the Group forward.
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
29 April 2011
