On behalf of the Board of Directors, I am pleased to present to you the Annual Report and Audited Financial Statements of the Group and the Company for the financial year ended 31 May 2016.
The slowing economy has weighed on the overall performance of the Group. The Group posted a lower revenue of RM1.51 billion for the current financial year ended 31 May 2016 (“FY2016”) compared to a revenue of RM1.55 billion in the previous financial year ended 31 May 2015 (“FY2015”). Profit before taxation (“PBT”) decreased to RM17.2 million in FY2016 compared to RM29.7 million in FY2015.
Review of Operations
The agricultural and industrial chemicals division faced a weak and volatile crude oil and commodity prices in FY2016. As a result, revenue from this division decreased to RM1.24 billion in FY2016 compared to RM1.27 billion in FY2015. Nevertheless, the division managed to report higher segmental profit of RM36.5 million in FY2016 compared to RM27.6 million in FY2015 mainly due to improved margins of its products.
For the current financial year, the Polymer Division posted lower revenue of RM119.5 million compared with RM128.4 million in FY2015. The decline in revenue was mainly attributed to lower contributions from the Indonesian operations and slower demand for our sub-soil drainage products. Despite lower revenue, the division posted a higher segmental profit of RM15.8 million in FY2016 compared to RM14.1 million in FY2015 on improved operational efficiencies and cost savings initiatives.
Our logistics division reported lower revenue of RM21.1 million in FY2016 compared to RM22.8 million in FY2015. This was mainly due lower contributions from the trucking business as competitions remain stiff in an already weak economy. In addition, higher repair and maintenance costs has also affect our profit margins and as a result, the logistics division posted lower segmental profit of RM2.0 million in FY2016 compared to RM3.8 million in FY2015.
The unfavourable market sentiment and a low consumers’ confidence have severely affected the advertising industry. In a slow economy, advertising and promotional activities were scaled down by all corporations. The media division posted a segmental loss of RM16.0 million in FY2016 compared to a segmental profit of RM7.5 million in FY2015. While revenue from our Media Division grew marginally to RM116.5 million in FY2016 compared to RM114.8 million, the growth came from the acquisition of Redberry Solutions Sdn Bhd during the year. Excluding this, our revenue in FY2016 was RM109.9 million.
The investment holding division and others incurred an aggregated segmental loss of RM23.4 million in FY2016 compared to RM25.0 million in FY2015. The lower segmental loss is primarily due to lower corporate expenses in the investment holding companies.
The key business segments, Agricultural and Industrial Chemical Division and Polymer Division are expecting challenging business environments with continued pressure on profit margins amid oil price and currency volatility. The continued weakness in the domestic economy has affected the advertising industry generally. The Media Division will face pressure on its sales under the prevailing economic conditions.
As there remain uncertainties in the global economic situations, which may have an impact to the Group’s businesses, the Board will continue to exercise caution in managing the Group’s businesses for the next financial year. The Board will continue to explore ways to improve revenue growth while strengthening its operational and productivity efficiencies.
The Board is of the view that, barring unforeseen circumstances, the financial performance and prospects of the Group will be satisfactory in the next financial year.
On behalf of the Board, I would like to express our appreciation to all our shareholders for their support all this while. I would also like to thank all our valued customers, suppliers, bankers, business associates and the regulatory authorities for their continued assistance and co-operation. And lastly, the Board wishes to express its heartfelt gratitude to the management and staff of the Group for their continuous dedication and commitment.
Dato' Johari Razak