Delivering resilience and emerging stronger
The financial year ended 30 April 2021 ("FY2021") saw the full impact of the Coronavirus disease ("COVID-19") pandemic on the businesses and operations of Hai-O and its group of subsidiaries ("Hai-O Group" or "Group"). The global health crisis has affected all business segments and reshaped the way we work and the way we live. I believe we will not go back to the old ways of living and doing business. Critical changes that the Group has and will continue to put in place to counter the evolving challenges brought about by COVID-19 will drive the future for us and all stakeholders (including employees, customers, suppliers, the environment and the communities in which our businesses operate).
I am proud to report that Hai-O Group has delivered resilient results amidst the challenges which have driven us to work harder to emerge stronger. Notwithstanding the adverse impact from various control measures imposed by the Government which dealt a hard blow on our consumercentric businesses, Hai-O Group has maintained our unbroken profit track record since we were listed on Bursa Malaysia Securities Berhad. The Group's diversified products portfolios have demonstrated remarkable resilience as evident in the modest growth in revenue, while our relentless focus on products, product mix, marketing channels and cost optimisation efforts, just to name a few, has helped to lift profits commendably higher. The health and safety of our stakeholders, including employees and customers, are areas of focus for us during the crisis as strict standard operating procedures ("SOPs") are enforced across all businesses.
On behalf of the Board of Directors ("Board"), I am pleased to present to you the Group's Annual Report and Financial Statements for FY2021.
The Group's revenue rose 6.3% to RM271.4 million (FY2020: RM255.2 million) and profit before taxation ("PBT") grew 26.0% to RM52.3 million (FY2020: RM41.5 million) in FY2021.
We started the financial year right at the height of the pandemic in May 2020. During this turbulent time, the Board and Management worked together to help the Group adapt to short-term challenges and achieve long-term sustainability. Products and product launches were adjusted in anticipation of a decline in purchasing power, e-commerce platforms were actively explored and established, while costs and expenses were further optimised in the face of the new way of conducting businesses. I am very glad that the crisis has brought out the best in many employees who stepped up to address setbacks and enhance the inter-company synergies seamlessly, and I am indeed pleased that the team spirit and cooperation across different segments have reached the highest level ever.
Further information on the business strategies and other measures adopted by the Group during the financial year will be discussed more extensively in the Management Discussion & Analysis by the Group Managing Director in this Annual Report.
Our capital and liquidity positions remained strong. The Group has maintained solid cash flows from operating activities with RM113.5 million (FY2020: RM95.9 million) held as cash and cash equivalents and other investments in the form of financial assets as at the end of FY2021, which was higher than the previous financial year. The Group remained in a net cash position with no borrowings as at the end of the financial year, which provides us with the flexibility and capability to support our employees and business associates in this extended trying period. To this end, I am proud to report that Hai-O Group has not implemented any retrenchments nor salary reduction for our employees despite the severe and direct challenges faced by our consumer-centric businesses.
The key financial metrics of the Group for the FY2021 are set out below:
The equity attributable to shareholders as at the end of FY2021 was RM312.8 million (FY2020: RM299.6 million) or RM1.08 per share (FY2020: RM1.03), which was again higher than the previous financial year due to improved financial performance and conservation of capital in the uncertain environment.
The Board is conscious of the impact of COVID-19 on our shareholders, many of whom may to some extent rely on our consistent dividend payments as extra income. The annual dividend of the Company is directly driven by the Group's overall financial performance and the prospects of the general business environment.
In respect of FY2021, the Board had declared 1st and 2nd single tier interim dividends of 4 sen and 5 sen per share respectively. The said cash dividends were paid on 4 March 2021 and 29 July 2021 respectively. These have brought total dividends declared and paid to 9 sen per share for FY2021 (FY2020: 10 sen per share), which was consistent with the economic environment, financial performance and conservation of capital position. Every decision by the Board reflects a tactical balance of our short and long-term responsibilities to shareholders and our ability to serve customers and communities.
The Company's policy is to pay at least 50% of the Group's annual profit after taxation as dividends. In FY2021, the dividend payout ratio was 68% as we continued to declare and pay dividends exceeding the minimum commitment on the basis that dividends received are of real value to our shareholders.
In addition to the cash dividends and also to facilitate greater equity participation for our shareholders, the Board had also on 4 June 2021, declared a distribution of share dividend of 1 treasury share for every 26 existing ordinary shares held on 22 June 2021. The share dividend was credited into the entitled Depositors' Securities Accounts on 6 July 2021.
At the time of production of this Annual Report, we continue to see resurgence of COVID-19 cases in Malaysia and other emerging markets, despite the aggressive roll-out of vaccination efforts by various countries. The COVID-19 pandemic has fundamentally changed the business environment in which we operate, and we have to constantly anticipate, adjust, adapt and strategize in response.
Widespread containment measures, international border closures and the consequently weak external demand has persistently dragged domestic economic activity. Containment measures in the form of movement control orders and SOPs, while necessary to curb the spread of the virus, have considerably dampened domestic production and consumption and weakened labour market conditions. Overall, Malaysia's Gross Domestic Products contracted by 5.6% in 2020 (2019: +4.3%). Inflationary pressures were muted with headline inflation turning negative for the year at -1.2% (2019: +0.7%) due mainly to substantially lower global oil prices (Source: Bank Negara Malaysia Annual Report 2020).
While it is almost impossible to accurately predict the future, we remain optimistic on the prospects of Hai-O Group given the strong fundamentals, the track record, the demonstrated capability, dedication and team spirit of our employees, Management and the Board as we face the unprecedented crisis together. There are more challenges ahead but the constructive feedback and results in the past 18 months have bolstered our confidence on the actions taken so far. This will provide a very helpful and valuable guidance on the way forward as the pandemic enters a new phase.
Broadly, the Group has plans in place to strengthen growth, fortify sustainability and manage business risks as we strive to add values to all stakeholders in a responsible and sustainable manner. These include continuation of optimizing costs, upgrading and enhancing the digital infrastructures of our major business segments to support the sharp rise in e-commerce, exploring and adopting various sustainable business practices as we progress on our Environmental, Social and Governance ("ESG") journey. The Group remains committed to deliver consistent positive financial results for our shareholders, balancing between growth and return as well as short-and long-term goals.
During FY2021, the Company announced a Proposed Internal Reorganisation which involved separating the investment holding and business operating functions of the listing vehicle of Hai-O Group. Beshom Holdings Berhad, which will be assuming the listing status of Hai-O Enterprise Berhad, will be purely an investment holding company while Hai-O Enterprise Berhad and its subsidiaries will continue to operate the existing businesses with no change in business activities. One of the objectives of the internal reorganisation is to provide a clear demarcation of business for the Group's business segments which will allow Management to have a more focused and targeted business and risk management initiatives for each segment. The High Court of Malaya has on 23 July 2021 sanctioned the Company's Scheme of Arrangement under the Proposed Internal Reorganisation. Barring unforeseen circumstances, the implementation of the Proposed Internal Reorganisation is expected to complete by 3QFY2022.
Hai-O Group firmly believes that business has an important role to play for a sustainable future. Our approaches to ensuring sustainability through responsible long-term management are set out in the Sustainability Statement 2021.
While focusing on addressing immediate needs, Hai-O Group is committed to creating a lasting positive impact for all stakeholders. We seek to strike a balance between positive returns to shareholders and the interests of other stakeholders. We aim to do this by leveraging our resources and working closely with strategic partners to build a sustainable future. To ensure meaningful resources are deployed for a sustainable future, regular reviews and reassessment exercises are conducted to measure the impact of our businesses on the economy, environment, society and overall governance of the Group. The Group's inaugural Sustainability Statement was first published in August 2018 and has since been updated on an annual basis.
I would like to take this opportunity to thank our fellow Board members for their guidance and wise counsel as we successfully navigated Hai-O Group through this most challenging period in FY2021.
On behalf of the Board, to all our shareholders, thank you for your support and trust in Hai-O. Last but not least, I would like to thank the Group's Management, employees and agents, who have remained focused on doing right for our customers and who have steadfastly helped to steer the Group through this unprecedented health crisis. We are proud and grateful for your contributions in these challenging circumstances as we support one another in the big Hai-O family.
Please take good care and stay healthy.
Tan Kai Hee