CHAIRMAN’S
STATEMENT
On behalf of the Board of Directors of Kim
Loong Resources Berhad (“KLR”), I take
pleasure to present to you the Annual
Report and Audited Financial Statements
for the financial year ended
31 January 2023.
On behalf of the Board of Directors of Kim
Loong Resources Berhad (“KLR”), I take
pleasure to present to you the Annual
Report and Audited Financial Statements
for the financial year ended
31 January 2023.
FINANCIAL HIGHLIGHTS
RESULTS
Amidst challenging global and domestic uncertainties, the Group has reported recordhigh revenue and profit for the financial year 2023 (“FY2023”). The Group achieved
an annual revenue of RM1.91 billion, its highest recorded revenue to-date, and with
this we delivered a profit before tax of RM252.44 million, surpassing the quarter of
a billion mark for the first time. Revenue and profit have increased by 12% and 20%
respectively as compared to the previous financial year. The Group’s strong financial
performance is reflective of our management team’s successes in capitalizing on the
favourable movement in selling prices, optimising production levels and delivering
operational efficiencies, whilst navigating inflationary pressures on cost.
Over FY2023, the Group achieved an average selling
price of RM920 per MT for our FFB and RM4,898
per MT for our CPO, representing an increase of
11% and 9% respectively from the previous year. The
Group’s revenue was further bolstered with improved
production levels. Total production of FFB from our
plantations stood at 287,000 MT, an 8% incremental
rate from last year whilst our mills recorded a total
CPO production of 331,000 MT, or 6% improvement.
We are proud to add that the Group has in December
2022 commissioned our second biogas plant at
our mill in Keningau, Sabah. Besides supplying
renewable energy to our Keningau mill, the plant has
the authority’s approval for a net energy export of
2.0 megawatt (“MW”) to Sabah Electricity Sdn Bhd
(“SESB”) grid. The Group’s combined net export
capacity is 5.3 MW, after taking into account our
biogas plant in Kota Tinggi, Johor (1.8 MW) and
Telupid, Sabah (1.5 MW). Our Kota Tinggi plant is our
first plant at our biogas plant, it has been in operation
since 2019. The plant at our Telupid mill in Sabah has
yet to be commissioned.
The biogas plant in Kota Tinggi generated a revenue
of RM4.64 million by supplying power to the TNB
grid in FY2023. The Keningau plant’s revenue is
negligible as it has only been commissioned in the
last quarter of FY2023.
With the Group’s strong financial performance, we
have achieved a Return on Equity (after tax) of 20.9%
as compared to 18.2% in FY2022.
DIVIDEND
DEVELOPMENT AND PROSPECTS
ENVIRONMENT, SOCIAL AND
GOVERNANCE ASPECTS
BOARD MATTERS
APPRECIATION
Gooi Seong Lim
Executive Chairman
Johor Bahru, Johor
Date: 17 May 2023
DIVIDEND
Having achieved record revenue and profitability, the
Company has progressively over the financial year
rewarded its shareholders with an interim and a special
dividend of 5 sen each. The Board has also recommended
a final dividend of 5 sen making a total single tier
dividend of 15 sen per share for FY2023 (FY2022: 14 sen
per share).
The dividend payout ratio for FY2023 is approximately
90% of the annual profit attributable to owners of the
Company. With this we achieved an impressive dividend
yield of 8.38% based on the closing share price of
RM1.79 at the end of the financial year.
The Group’s strong financial fundamental which we built
over the years is yielding returns to our shareholders today.
We will strive to sustain our profitability and dividend
payouts in the coming years as an acknowledgement of
our shareholders’ continuous support.
ENVIRONMENT, SOCIAL AND GOVERNANCE ASPECTS
The Group is cognisant of the importance of running
its operations sustainably with due consideration given
to the way we manage environmental, social, and
governance (“ESG”) aspects of the business.
On this front, the Group has an established practice
of zero burning in both new planting and replanting
activities in its plantations. All our plantations and mills
have achieved Malaysian Sustainable Palm Oil (MSPO)
certification. Our employees are provided with modern,
comfortable, and functionally designed quarters with
good quality water and electricity supply.
The Group has also installed proper treatment systems as
well as biogas plants to treat the highly polluting effluent
(POME) generated by the milling process and capture the
methane produced at our three palm oil mills. In FY2023,
we recorded nearly 35 million M³ (FY2022: 30 million M³)
of greenhouse gases (GHG) captured which were then
destroyed or repurposed to generate renewable energy
for sales as well as to reduce our dependence on diesel
power generator.
BOARD MATTERS
On behalf of the Board, I wish to register our appreciation to Mr. Gan Kim Guan, Mr. Chan Weng Hoong and Mr. Cheang
Kwan Chow, who have resigned from the Board as Independent Non-Executive Directors during FY2023. The Board has
benefited in many ways from the guidance and leadership of these gentlemen. Their dedication and professionalism
in fulfilling their roles as independent members of the Board are exemplary. We wish these gentlemen good health,
prosperity and success in all their future endeavors.
On behalf of the Board, I welcome Mr. Yong Chung Sin, Ms. Soh Ban Ting and Dr. Chee Yau Kuan @ Chia Yan Kuan, all
of whom were appointed to the Board as Independent Non-Executive Directors in FY2023. Mr. Yong is redesignated as
the Senior Independent Non-Executive Director subsequent to his appointment. We look forward to working with the
new directors and trust that together we will continue the Board’s journey in delivering value to all our shareholders.
DEVELOPMENT AND PROSPECTS
Whilst our domestic economy is on a gradual post
pandemic recovery phase, external headwinds and
global uncertainties continue to loom on a backdrop
of an oncoming global economic slowdown. Price
volatilities, inflationary pressures on cost, persisting
weather extremities, labour shortages, and biofuel policy
changes in Indonesia are amongst the key concerns in
the minds of major plantation players in the industry.
Under these circumstances, the plantation industry
outlook remains challenging.
Being mindful of the current economic landscape, the
Group will continue to exercise agility and prudence
in our corporate strategies. Sound risk identification,
assessment and management will be our main emphasis
during these uncertain times.
Moving forward in the financial year 2024 (“FY2024”),
barring any climate extremities, the Group forecasts
its FFB production to be 15% higher than the quantity
achieved in FY2023 on account of more replanted areas
coming into maturity and better age profile of young
palms productive area. As part of our plan to achieve
long-term sustainability in FFB production, the Group will
resume major replanting activities from the second half
of 2023 onwards with a projected replanting program of
1,000 hectares per year.
As for the palm oil milling operations, the Group targets
to achieve a total processing throughput of 1.5 million
MT of FFB in FY2024. Our biogas plant at Keningau
has commenced supply of renewable energy to SESB’s
grid in December 2022 and we expect this plant will
contribute positively to revenue in FY2024. The Group is
also targeting to commission our biogas plant at Telupid
in the second half of FY2024 and for the plant to start
generating revenue in FY2024.
In terms of CPO price prospects, although the movement
of CPO price has been volatile and unpredictable, the
management is hopeful for the average CPO price for
FY2024 to stay above RM4,000 per MT.
However, CPO price is generally susceptible to currency
exchange rate fluctuations, demand and supply of
commodities and policies of major importing and
exporting countries. Being mindful of these uncertainties,
the Group will continue to practice vigilance in monitoring
the impact of volatile pricing on our performance and
take the necessary actions to mitigate exposure to such
risk.
In addition, the Group is still facing labour shortage
challenges and inflationary pressures on cost as it
progresses into FY2024. Whilst we improve operational
efficiencies to reduce reliance on labour and explore
more cost-effective ways, the current situation if persist
may affect our ability to optimise production level in our
plantation operations.
APPRECIATION
I would like to take this opportunity to express my appreciation to the management and staff for their loyal and dedicated
services to the Group, and to various government authorities and agencies, bankers, valued customers, suppliers and
business associates for their co-operation and continued support.
Finally, I wish to thank my fellow Board members for their support and the shareholders for their confidence in the Board
and Management of the Group.