cont'd - KNM Steel Sdn Bhd

12KNM GROUP BERHAD I Annual Report 2012Chairman’s MessageDear Valued Shareholders,On behalf of the Board of Directors’ of KNM Group Berhad (“KNM” or “the Group” ), it gives megreat pleasure as the new appointed Chairman of the Group to present to you the Annual Reportand Audited Financial Statements of the Group for the financial year ended 31 December 2012.I am pleased to announce the turnaround of the Group’s results during FYE2012 with a revenueof RM2.38 billion, a 21.43% increase compared to the RM1.96 billion recorded last year. Thistranslates to a Profit Before Tax (“PBT”) of RM21.04 million, compared to RM155.88 millionloss registered during FYE2011. There is still much for us to do as we look to improve furtheron these results in the years to come despite the positive turn around for FYE2012.CORPORATE DEVELOPMENTSDuring the second half of FYE2012, the Group had completed a two-call rights issue exercise that raised approximatelyRM195.57 million to commensurate our funding requirements as well as the Group’s working capital. I am pleasedto note that the issuance was oversubscribed by 31.45% and sincerely thank our shareholders who have subscribedfor these shares. The trust shown by our shareholders had provided further encouragement and motivation for usto strive harder as we work towards greater success for the Group.During the year under review, we further announced our intention to list the Group’s wholly-owned German subsidiary,the BORSIG Group on the Singapore Stock Exchange. Besides unlocking the intrinsic value in BORSIG, the proposedexercise will also augur well for the BORSIG Group as part of the proceeds will be utilised for BORSIG’s expansion.The ever changing economic landscape currently experienced in Europe is something that we need to consider verycarefully to ensure that we can reap the full benefits of this exercise.FINANCIAL HIGHLIGHTSFYE2012 also saw overall improvements in the Group’s financial performance. The Group’s Earnings Before Interest,Tax, Depreciation and Amortisation (“EBITDA”) rose to RM202.72 million compared to the negative EBITDA ofRM12.61 million registered in the previous financial year. The Group further posted a Profit After Tax and Minorityinterest (“PATAMI”) of RM82.03 million compared to the RM91.77 million loss recorded in FYE2011.Compared to the previous year, the higher Revenue, EBITDA, PBT and PATAMI during the year were mainly dueto higher job progress recognition on stronger order book and stable contribution margin from projects secured.OPERATIONAL HIGHLIGHTSProcess EquipmentThe process equipment business units have shown improving margins with more reasonable competition than in2010/2011. I am pleased to inform that due to the hard work and dedication of our staff, we have been fairly successfulin securing more profitable contracts for the Group which has contributed to the better results during FYE2012.In contrast, the Europe segment has remained consistent in delivering good results for this division, with demandfor our higher-end products remained strong. With the anticipated listing of the BORSIG Group and the plannedexpansion of its operations on the cards, we see the potential for our Europe segment to grow significantly in the future.