On behalf of my fellow Directors, I am pleased to present our Annual Report for the financial year ended 30 April 2024 (“FY2024”) for Beshom Holdings Berhad (“BESHOM” or “Company”) and its subsidiaries (“BESHOM Group” or “Group”). It would not be an overstatement to say that the past three years have been characterised by more uncertainty and volatility than any similar period in recent decades. Consumer demand has been unpredictable, influenced by both macroeconomic factors and changes in consumer behaviour, due to the evolving phases of the coronavirus disease (“COVID-19”), and aggressive government policies implemented in response to economy slowdown, which at the same time brought about the impact of inflationary pressures.
Dear Shareholders,
FY2024 was a challenging year for BESHOM Group in several ways, as the global economy confronted a series of macroeconomic and geopolitical challenges. Our business segments continued to be impacted by disruptions to supply chains and high logistic costs. While interest rates remained largely stable over the course of FY2024 to combat inflation, inflationary pressures remain persistent, challenging the financial abilities of many individuals and inevitably affecting their buying decisions. BESHOM was not immune to these headwinds, but all our business segments continued to record profits albeit at a more moderated level.
The Group’s financial performance was mostly affected by the Multi-Level-Marketing (“MLM”) segment, followed by the Retail and Wholesale segments. We saw a decline in revenue of approximately 13.3% for FY2024 to RM151.1 million (FY2023: RM174.2 million), primarily due to a material drop in revenue in the MLM segment. Consequently, the Group recorded a profit before taxation (“PBT”) of RM14.5 million as compared to RM24.3 million in the previous financial year, representing a decline of approximately 40.3%.
The revenue recorded by MLM was primarily affected by the shrinkage in discretionary spending of the MLM members. Similarly, the high cost of living did not favour our Retail and Wholesale segments, though these segments experienced a more gradual decline in revenue. Notwithstanding the aforementioned challenges, profits recorded by these segments were affected to a greater extent as compared to their revenue, particularly for the Retail segment, mainly affected by fixed costs given the current scale of operations.
The financial performance for FY2024, including the operating and financial review of each business segment, will be more fully described in the section under Management Discussion and Analysis by our Group Managing Director in the ensuing pages.
Even though the financial performance of the Group was challenged by the current operating environment, the financial position of the Group remained robust, with equity attributable to equity holders of the parent as at 30 April 2024 at RM310.1 million (FY2023: RM309.7 million), which translates to a net asset per share of RM1.03 (FY2023: RM1.03). The shareholders’ equity of the Group is largely unchanged despite the profits recorded for FY2024. This is because the Group distributed most of the profits earned during the FY2024 in the form of cash dividend after defraying all necessary operating expenses allocated for working capital purposes.
Our prudent financial management provided us financial flexibilities given the Group is in a zero-debt position, hence we are able to access additional liquidity as and when required. The cash and cash equivalents and other investments of financial assets in unit trusts amounted to RM103.7 million as at 30 April 2024 (FY2023: RM95.6 million). Combined with maintaining strong disciplines in our investment activities, the current level of cash position of the Group held should ensure that the Group continues and operates sustainably. Furthermore, the Group will not be perturbed by any interest rate movements directly, given the net cash position in which the Group is operating in.
As a public-listed company, one of our objectives is to provide return to our shareholders. While maintaining a dividend policy of distributing dividends with a payout ratio of not less than 50% of the Group’s profit after taxation, the dividend payout ratio for the past 10 years has ranged between 67% to 96% for the financial years 2014 to 2023. For FY2024, our total dividend is 3 sen per share (FY2023: 5 sen per share), comprising a proposed final single tier dividend of 1.5 sen, which is subject the shareholders’ approval at the forthcoming Annual General Meeting. The interim single tier dividend of 1.5 sen per share amounting to RM4,501,574 was paid on 14 March 2024. The total dividends of 3 sen for FY2024 represent a dividend payout ratio of 82%.
In addition to returns to our shareholders, the Group is committed to looking after our employees, providing high quality and value focused products to our customers, dealing fairly with our suppliers, protecting the environment and supporting the communities where we operate. A well-balanced stakeholder-orientated strategy is essential for sustainable shareholder value creation. Our ongoing sustainability efforts are detailed in the Group’s inaugural Sustainability Statement 2024.
Despite the challenging global conditions, Malaysia’s economy continued to expand, growing by 3.7% in 2023 (2022: 8.7%). The more moderate growth also reflected normalising conditions following the economic rebound in 2022, which was supported by the reopening of the economy and sizeable policy measures. (Source: Bank Negara Malaysia (“BNM”) Annual Report 2023)
The Malaysian economy is projected to grow between 4% and 5% in 2024. This will be supported by resilient domestic demand and improvement in external demand. Headline inflation is expected to average between 2% and 3.5% in 2024 amid contained cost pressures from easing global supply conditions. Inflation outlook remains highly subject to upside risks due to potential price adjustments on food and energy items, as well as external pressures from exchange rate and global commodity price developments (Source: Press Statement by BNM dated 20 March 2024 titled “Bank Negara Malaysia Publishes Annual Report 2023, Economic and Monetary Review 2023 and Financial Stability Review for Second Half 2023”)
In 2024, the Malaysian economy is poised for continued expansion. In addition to resilient domestic expenditure, the sustained global growth and rebound in trade activity will benefit our exports. These would lend support to Malaysia’s economic growth. At the same time, inflation is also expected to remain moderate. These favourable economic conditions in 2024 provide a window for the implementation of structural reforms as announced by the Government. Pursuing these reforms, such as subsidy rationalisation, is necessary for strengthening the economy post-crisis, ultimately benefitting Malaysia in the long run. (Source: BNM Annual Report 2023)
We expect the Group’s business will continue to navigate in a complex economic and geopolitical environment for FY2025. Although BNM stated that it is expected to anticipate easing in global supply conditions, the possibility of severe disruptions to supply chains remained in sight and could affect regional economies negatively. Notwithstanding the possibility of rate cuts over the course 2024/2025, consumer spending is likely to remain weak as the full impact of interest rate increase is felt. These events continue to affect our consumer-centric business. To this end, the Group will take proactive measures to enhance visitation to our physical outlets, social media channels, and online digital platforms. As part of the long-term strategic goals to drive the Group business, we are looking into investment and collaboration alignment with business partners which add value to the redevelopment and repositioning of our business. The Group will be on constant look out for opportunities that encourage win-win collaborations that align with our strategic objectives, offering significant benefits and a strong fit for the Group's industrial chain with the support of the Board’s guidance. Alongside with the effort to repositioning the Group’s business, we will continue to streamline operational efficiency for greater cost control, and last but not least, re-strategise our product mix and marketing plan to boost sales.
We are committed to delivering stable returns and sustainable growth for our stakeholders. Our strong balance sheet positions the Group to benefit from any upturn in trading conditions and growth that may arise from Government initiatives supporting household spending, such as Employees Provident Fund (EPF) related measures and public sector salary adjustments. However, there are still signs of downside risks, including potential inflationary pressures brought about by subsidy rationalisation. Therefore, the Board will remain highly vigilant and nimble in taking decisive action where needed.
There were some changes at the Board level during FY2024. Ms. Tan Beng Ling, who served as an Independent Non- Executive Director, retired upon the conclusion of the Company’s last AGM. Mr. Chia Kuo Wui and Madam Tay Bee Koo resigned as the Company’s Independent Non-Executive Director with effect from 31 December 2023 and 5 April 2024 respectively, due to personal / business commitments. As valuable members to the Board, I will personally miss their insight, experience, professionalism and wise counsel. With much appreciation, we would like to thank them for their years of guidance and stewardship and acknowledge their contributions to the Group.
We consciously refresh the Board composition to ensure a diverse and well-balanced representation of gender, experience, skills and age. We welcome onboard Ms. Foong Yein Fun and Dato’ Lee Teck Hua as our Independent Non-Executive Directors.
Ms. Foong has extensive experience in finance management and investment banking across diversified industries. Throughout her career as an investment banking adviser, she has been involved in a wide range of corporate finance advisory services and the execution of corporate exercises. Ms. Foong is a member of the Malaysian Institute of Certified Public Accountants (“MICPA”) and a Chartered Accountant of the Malaysian Institute of Accountants (“MIA”).
Dato' Lee has extensive years of experience in audit and finance, including statutory and special audit for acquisition and restructuring exercise in various industries. He was attached to PricewaterhouseCoopers from 1997 to 2000 in both the taxation and business assurance (audit) divisions. Currently, Dato' Lee is the Senior Partner with LTTH PLT, a Chartered Accountants firm. He is also an Audit Oversight Board registered auditor under the purview of the Securities Commission Malaysia. Dato' Lee is a Fellow of the Association of Chartered Certified Accountants (ACCA) and a member of both MICPA and MIA. He is also a Certified Member of the Financial Planning Association of Malaysia.
The Board looks forward to collaborating and championing business strategies and future plans with Ms. Foong and Dato’ Lee, who bring extensive experience in capital markets and audit and finance, respectively.
I am pleased to report that our Group has continued to expand and integrate our sustainability and climate-related disclosures in our Annual Report. Detailed information, including performance data, can be found in the Sustainability Statement 2024.
On behalf of the Board, I would like to express my gratitude to our dedicated team members across the Group for their exceptional contributions in another challenging year. Their dedication enables us to create a sustainable business and make positive community contributions. We value and appreciate the ongoing support and confidence of our shareholders in the leadership and future direction of our business.
Thank you.
Ng Chek Yong
Chairman