Quarterly Results

Quarterly Report For The Financial Period Ended 31 December 2017

Financials Archive
Financial Statement (123 KB)

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Condensed Consolidated Statement Of Profit Or Loss And Other Comprehensive Income For The Financial period Ended 31 December 2017



Condensed Consolidated Statement Of Financial Position As At 31 December 2017



Condensed Consolidated Statement Of Cash Flow For the financial period ended 31 December 2017

Review of Performance
CURRENT QUARTER (FY2018-Q3 vs FY2017-Q3)

The Group's revenue increased by 3% to RM25.90 million due to higher contribution from hire purchase segment. The Group's profit before tax increased by 26% to RM9.54 million mainly due to higher profit contribution from the hire purchase segment.

Hire purchase receivables registered a 14% growth year on year from RM323.97 million to RM370.41 million as at 31 December 2017. This was the key factor that led to the hire puchase division's increased revenue for the current financial period.

Total borrowings increased 328% mainly due to higher drawdown of block discounting payables during the current financial period to support the increased hire purchase receivables.

Hire Purchase Segment

Revenue increased by 10% to RM18.45 million, mainly due to increase in hire purchase portfolio.

Other income increased by 78% to RM0.71 million mainly due to additional income received from short term funds.

Impairment allowance decreased by 13% to RM4.54 million. Credit loss charge (i.e. impairment allowance over average net hire purchase receivables) decreased from 1.55% to 1.18%. Excluding the collective impairment allowance, the credit loss charge for the quarter decreased from 1.44% to 1.08%.

Other expenses increased by 4% to RM4.37 million, which is in line with the larger hire purchase portfolio. As a result of higher borrowings, the finance cost increased by 242% to RM0.58 million.

The profit before tax increased by 29% to RM9.56 million mainly due to increase in hire purchase portfolio and lower impairment allowance for the quarter ended 31 December 2017.

Furniture Segment

Revenue decreased by 11% to RM7.45 million mainly due to the lower export sales, which is in line with the Group's effort to focus its operations in the domestic market. Gross profit margin increased from 35% to 38%.

Other expenses increased by 5% to RM2.75 million mainly due to higher advertisement and promotional expenses.

The Division recorded a loss before tax of approximately RM15,000 for the quarter ended 31 December 2017.

YEAR-TO-DATE (FY2018YTD vs FY2017YTD)

The Group's revenue increased 10% to RM76.43 million, mainly due to higher contribution from hire purchase business.

The Group's profit before tax increased 10% to RM24.53 million, contributed by hire purchase division.

Hire Purchase Segment

Revenue increased by 12% from RM48.02 million to RM53.75 million, mainly due to increase in hire purchase portfolio.

Impairment allowance increased by 10% to RM16.09 million mainly due to higher cost of debt recoveries. Despite the higher impairment allowance, the credit loss charge decreased from 4.71% to 4.41%. Excluding the collective impairment allowance, the credit loss charge for the financial period would be 4.18%, a decrease from 4.31%. 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 7% to RM12.57 million, which is in line with the larger hire purchase portfolio.

As a result of higher borrowings, the finance cost increased by 140% to RM1.67 million.

As a result of the above factors, the profit before tax for the 9-month period increased by 10% from RM22.20 million to RM24.52 million, riding on the increase in hire purchase portfolio and the Group's concerted efforts in credit recovery.

Furniture Segment

Despite a 52% decrease in export sales amounting to RM2.6 million, the total furniture revenue increased by 5% to RM22.68 million which is in line with the Group's effort to focus its operations in the domestic market. Gross profit margin increased from 35% to 37%.

Impairment allowance increased by 218% to approximately RM163,000 mainly due to slow payment from the furniture dealers. Other expenses increased by 10% to RM7.93 million mainly due to higher advertisement expenses, staff cost and transportation expenses.

The Division recorded a profit before tax of approximately RM15,500 for the 9-month period ended 31 December 2017

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.

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 third 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.