Chairman's Statement

On behalf of the Board of Knusford Berhad ("KB" or "the Company"), I am pleased to present the Annual Report and Audited Financial Statements for the Group for the financial year ended 31 March 2026 ("FYE 2026").

The core activities of the Group are trading of building materials, construction, property development and investment. The Group is also involved in landscape construction and maintenance services as well.

Performance Overview

The Group recorded revenue of RM37.57 million and a loss before tax of RM11.72 million in FYE 2026, compared to revenue of RM80.48 million and a profit before tax of RM11.92 million in financial year ended 2025 ("FYE 2025"). The decrease in revenue was mainly due to lower contributions from the construction and trading sectors. The decrease in profit before tax was primarily due to the lower sales volume and the recalibration of profit margins for a construction project, which resulted in the retrospective recognition of project losses in year to-date ("YTD") 2026. The loss position was also contributed by a lower gain on disposal of an investment property of RM4.67 million, compared to RM12.03 million in YTD 2025.

An in-depth review of the financial performance is presented under the Management Discussion and Analysis ("MD&A") section on KB's Annual Report 2026.

Corporate Development

  1. On 27 September 2023, the Company received a letter from Tan Sri Dato' Lim Kang Hoo ("TSDLKH"), a major shareholder of the Company and the Group Executive Chairman and a major shareholder of Ekovest Berhad ("Ekovest"), requesting the Company to consider participating in a reorganisation, rationalisation and merger proposal comprising, amongst others, the proposed merger of the construction and construction-related businesses of Ekovest and the Group through the acquisition by the Company of the entire issued share capital of Ekovest Construction Sdn Bhd ("ECSB"), a wholly-owned subsidiary of Ekovest and its existing construction arm ("Proposed Knusford-ECSB Merger").

    Following thereto, the Company entered into a binding heads of merger agreement ("HOA") with Ekovest on 27 October 2023 to exclusively explore and negotiate further on the Proposed Knusford-ECSB Merger via the proposed acquisition by the Company of the entire equity interest in ECSB from Ekovest for an indicative purchase consideration of RM450 million, arrived at on a willing-buyer, willing-seller basis, after taking into account the audited net assets of ECSB as at 30 June 2023.

    The Parties agreed to use their best endeavours to negotiate in good faith and execute the definitive agreement within four (4) months from the date of the HOA, with an automatic extension of three (3) months upon the expiry of the initial four (4) months period, or such further extended date as mutually agreed by both Parties.

    On 27 May 2024, the Parties mutually agreed to extend the HOA to 27 July 2024. Subsequently, on 26 July 2024, the HOA was further extended to 27 January 2025.

    On 27 January 2025, the Parties agreed to a final extension of 6 months, from 28 January 2025 to 27 July 2025.

    On 28 July 2025, the Board announced that the HOA had lapsed on 27 July 2025.

  2. The wholly owned subsidiary of the Company, Knusford Holdings Sdn Bhd, had on 11 March 2026, entered into a conditional sale and purchase agreement with Tahap Juara Sdn Bhd to dispose of all that piece of freehold land held under Geran Mukim 348, Lot 3658, in the Mukim of Setapak, District of Kuala Lumpur, Wilayah Persekutuan Kuala Lumpur for a cash consideration of Ringgit Malaysia Seven Million (RM7,000,000) only ("Proposed Disposal").

    The Proposed Disposal was completed on 11 June 2026.

Industry Landscape

Malaysia's Gross Domestic Product (GDP) growth is projected to remain resilient, supported by continued inflows of foreign direct investments (FDIs), steady domestic investments, and ongoing initiatives by government-linked investment companies (GLICs) aligned with national development priorities. While growth momentum is expected to be sustained into 2026/2027, the outlook remains subject to downside risks arising from geopolitical tensions and global policy uncertainties, including evolving trade dynamics following recent developments in the United States.

Notwithstanding the above, the global economic outlook remains highly susceptible to evolving geopolitical developments and regional tensions. Any prolonged instability in the region is expected to drive sustained volatility and exert upward pressure on global energy prices. The recent increase in energy costs has already translated into higher prices for fuel, transportation, and energy-intensive building materials, significantly raising overall construction and associated costs.

This cost escalation is expected to further compress contractors' margins, particularly for fixed-price contracts where cost increases cannot be readily passed on. In addition, higher energy-driven inflation may lead to tighter monetary conditions and weaker consumer sentiment, thereby affecting property demand and overall market activity. As such, the operating environment for both the construction and property sectors is expected to become increasingly challenging in the near term.

In the construction sector, cost conditions are expected to remain challenging. Although prices of certain building materials have eased from previous peak levels, volatility persists, particularly for key inputs such as steel and timber, driven by global supply chain disruptions and trade uncertainties. At the same time, domestic policy developments are expected to exert further upward pressure on costs. These include subsidy rationalisation measures, potential implementation of carbon-related policies, expansion of the Sales and Service Tax, and rising labour costs, including regulatory changes affecting foreign workers such as Employees Provident Fund (EPF) contribution requirements. Collectively, these factors are likely to sustain elevated construction costs and continue to pose margin compression risks for contractors.

The operating environment within the construction industry remains highly competitive. Contractors continue to face pricing pressure as market participants adopt aggressive bidding strategies to secure projects. In addition, delays in progress payments remain a key concern, affecting cash flow and liquidity across the sector. In this regard, effective working capital management and timely receivables collection remain critical to sustaining operations and supporting the replenishment of order books.

Turning to the property sector, the outlook for 2026/2027 remains cautiously optimistic, supported by selective demand and ongoing policy support. However, structural challenges persist, including oversupply in certain segments, particularly high-end residential properties, elevated household debt levels, and affordability constraints. Cost pressures arising from tax changes and construction input inflation may further impact project viability and pricing strategies, with developers facing limitations in passing on higher costs to buyers.

Despite these headwinds, opportunities remain in targeted segments such as affordable housing and transit-oriented developments (TODs), which continue to benefit from government initiatives and underlying demand. Overall, both the construction and property sectors are expected to operate in a more challenging environment, where heightened cost pressures, tighter margins, and external uncertainties will require disciplined project selection, prudent cost management, and strong execution capabilities to sustain performance.

Moving Forward

The Board expects the operating environment for the construction and property sectors to remain challenging in the near term, driven by escalating construction costs, energy price volatility, supply chain disruptions, and intense competition. Recent increases in energy costs, amid ongoing geopolitical uncertainties, have further heightened cost pressures across materials, logistics, and overall project delivery.

In light of a declining order book and continued margin compression, the Group will adopt a cautious and disciplined approach in navigating current market conditions. Focus will remain on core business segments, namely building materials trading, civil and building works, and landscaping services.

To protect margins, the Group will continue its selective tendering strategy, prioritising projects with viable profit margins, manageable risk exposure, and reliable payment terms. Greater emphasis will also be placed on contract and cost management to mitigate the impact of rising input costs, particularly for fixed-price contracts.

The Group will strengthen its focus on liquidity management, with priority given to timely billings and prudent cash flow management to support ongoing operations.

Operationally, the Group remains committed to disciplined execution, with continued emphasis on cost control, resource optimisation, and timely project delivery.

Moving forward, the Group will take a measured approach in rebuilding its order book, focusing on opportunities that align with its capabilities and risk appetite. The Board remains mindful of prevailing uncertainties and will continue to prioritise financial discipline and operational resilience in sustaining the Group's performance.

Corporate Governance

The Board recognises the importance of maintaining good corporate governance and is committed to meet all applicable rules, regulations, norms and standards that will meet the expectations of the stakeholders.

The principles of integrity, transparency and accountability are embedded in its Code of Conduct and Ethics. Measures are put in place and constantly tested and reviewed to ensure that they stay relevant and effective in the environment of the Company's operations.

For further insights into our measures in upholding corporate governance, please refer to the Corporate Governance Overview Statement within this Annual Report and our Corporate Governance Report.

Dividend

In view of the Group's financial performance during the FYE 2026, the Board has not recommended the payment of a dividend. This decision reflects the Board's prudent approach to capital management, with a focus on preserving cash resources to support the Group's operational requirements, ongoing investments and future growth initiatives. The Board remains committed to enhancing long-term shareholder value and will continue to review its dividend policy in light of the Group's financial performance, cash flow position and capital requirements.

Sustainability

Sustainability remains a continuous journey and the Group is committed to progressively enhancing our sustainability practices. This includes strengthening our governance standards, fostering inclusive community development, exploring and implementing initiatives that support a low-carbon transition, in response to evolving stakeholder expectations, in alignment with the Group's business strategy, and emerging sustainability standards.

An update on our approach towards sustainability is included in our Sustainability Statement section within KB's Annual Report 2026.

Acknowledgment

On behalf of the Board, I would like to express my gratitude to all our valued customers, employees, bankers, business associates and partners and the shareholders for their continuous support and confidence in the Group.

DYAM Tunku Ismail Ibni Sultan Ibrahim
Chairman

Date: 24 July 2026