Quarterly Results

Quarterly Report For The Financial Period Ended 30 September 2017

Financials Archive
Financial Statement (404 KB)

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Condensed Consolidated Statement Of Profit Or Loss And Other Comprehensive Income For The Financial period Ended 30 September 2017



Condensed Consolidated Statement Of Financial Position As At 30 September 2017



Condensed Consolidated Statement Of Cash Flow For the financial period ended 30 September 2017

Review of Performance
CURRENT QUARTER (FY2018-Q2 vs FY2017-Q2)

The Group's revenue increased by 11% to RM24.96 million due to higher contribution from both hire purchase and furniture segment. The Group's profit before tax increased by 11% to RM8.09 million mainly due to higher profit contribution from the hire purchase segment.

Hire purchase receivables registered a 15% growth year on year from RM308.50 million to RM355.55 million as at 30 September 2017. This was the key factor that led to the hire puchase division's increased revenue for the current financial period.

Total borrowings increased 403% mainly due to higher drawdown of block discounting payables during the current financial period to support the increased hire purchase receivables.

Upon the completion of the rights issue exercise as disclosed in Note B6, the Group received a rights issue proceed amounting to RM53.93 million. The funds have been placed in fixed deposits and short term funds, prior to its utilisation for the purpose of hire purchase disbursement.

Hire Purchase Segment

Revenue increased by 11% to RM17.67 million, mainly due to increase in hire purchase portfolio.

Other income decreased by 18% mainly due to lower fixed deposit interest income, as the cash were utilised for higher yielding hire purchase disbursements.

Impairment allowance increased marginally to RM5.95 million. Credit loss charge (i.e. impairment allowance over average net hire purchase receivables) decreased from 1.58% to 1.37%. Excluding the collective impairment allowance, the credit loss charge for the quarter decreased from 1.47% to 1.33%.

Other expenses increased by 13% to RM4.28 million, which is in line with the larger hire purchase portfolio. As a result of higher borrowings, the finance cost increased by 192% to RM0.56 million.

The profit before tax increased by 10% to RM8.09 million mainly due to increase in hire purchase portfolio.

Furniture Segment

Revenue increased by 10% to RM7.30 million mainly due to the Division's sales and promotional efforts. Gross profit margin increased from 34% to 37%.

Other expenses increased by 12% to RM2.60 million mainly due to higher advertisement expenses, staff cost and transportation expenses.

The Division recorded a profit before tax of approximately RM4,400.

YEAR-TO-DATE (FY2018YTD vs FY2017YTD)

The Group's revenue increased 14% to RM50.54 million, due to higher contribution from both hire purchase and furniture business.

The Group's profit before tax increased marginally to RM14.99 million, contributed by both divisions.

Hire Purchase Segment

Revenue increased by 13% from RM31.29 million to RM35.31 million, mainly due to increase in hire purchase portfolio.

Impairment allowance increased by 22% to RM11.55 million mainly due to higher deliquent accounts and cost of debt recoveries. Credit loss charge increased from 3.13% to 3.31%. Excluding the collective impairment allowance, the credit loss charge for the financial period would be 3.18%, an increase from 2.85%. Generally, the higher cost of living and the current soft economic environment would have an impact on the repayablility of our hirers.

Other expenses increased by 8% to RM8.20 million, which is in line with the larger hire purchase portfolio.

As a result of higher borrowings, the finance cost increased by 107% to RM1.09 million.

As a result of the above factors, the profit before tax only increased marginally from RM14.79 million to RM14.96 million.

Furniture Segment

Revenue increased by 15% to RM15.24 million mainly due to the Division's sales and promotional efforts. Gross profit margin increased marginally from 35% to 37%.

Impairment allowance increased by 895% to approximately RM147,300 mainly due to slow payment from the furniture dealers. Other expenses increased by 13% to RM5.21 million mainly due to higher advertisement expenses, staff cost and transportation expenses. The Division recorded a profit before tax of approximately RM30,400.

Prospects and Outlook

Despite the cautious outlook ahead, the Group is not likely to experience any slowdown in the demand for second hand cars financing for the financial year ending 31 March 2018 as the business segment that the Group is currently operating in, is still relatively small as compared to the overall auto financing industry. The Group believes that there is still much more room to grow, even within its existing area of operations.

The Group will continue to strategically operate in the underserved niche market and focus on growing the small value second hand car financing segment. The business strategy will also be constantly reviewed to ensure the Group continues to stay relevant in the industry and at the same time keeping the credit risk exposure within the tolerance level.

Like any other local retail business, the furniture business will continue to be affected by the sluggish consumers' sentiments and current soft economic environment. However, the Group will focus on ensuring the operational efficiencies in the furniture division.

Impairment allowances as a result of downside credit risk is a key factor affecting the future performance of the Group, in particular the hire purchase business. Therefore, the Group will continue to place strong emphasis on close monitoring and efficient debt recoveries as well as follow-up mechanism, to minimise the impact from the current soft economic environment.

Riding on the positive performance in the second quarter, the Board is optimistic that the Group's profit for the financial year ending 31 March 2018 will be better than financial year ended 31 March 2017.