Quarterly Report For The Financial Period Ended 30 June 2017
Condensed Consolidated Statement Of Profit Or Loss And Other Comprehensive Income For The Financial period Ended 30 June 2017
Condensed Consolidated Statement Of Financial Position As At 30 June 2017
Condensed Consolidated Statement Of Cash Flow For the financial period ended 30 June 2017
Review of Performance
The Group's revenue increased by 16% to RM25.57 million due to higher contribution from both hire purchase and furniture segment. The Group's profit before tax decreased by 8% to RM6.90 million mainly due to lower profit contribution from the hire purchase segment.
Hire Purchase Segment
Revenue increased by 15% to RM17.64 million, mainly due to increase in hire purchase portfolio.
Other income decreased by 66% mainly due to lower fixed deposit interest income, as the cash were utilised for higher yielding hire purchase disbursements.
Impairment allowance increased by 46% to RM6.45 million mainly due to higher deliquent accounts and cost of debt recoveries. Credit loss charge (i.e. impairment allowance over average net hire purchase receivables) increased from 1.48% to 1.79%. Excluding the collective impairment allowance, the credit loss charge for the quarter increased from 1.32% to 1.70%. 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 3% to RM3.92 million, which is in line with the larger hire purchase portfolio. As a result of higher borrowings, the finance cost increased by 58% to RM0.53 million.
The profit before tax decreased by 7% to RM6.87 million mainly due to higher impairment allowance.
Revenue increased by 20% to RM7.94 million mainly due to the Division's sales and promotional efforts. Gross profit margin was relatively stable at 36%.
Impairment allowance increased by 100% to approximately RM160,000 due to long outstanding trade receivables. The Division will closely monitor its trade receivables to ensure efficient debt recoveries, in order to minimise the credit risk exposure. Other expenses increased by 15% to RM2.61 million mainly due to higher advertisement expenses and staff cost.
The Division recorded a profit before tax of approximately RM26,000.
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 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 continue to grow the furniture business and focus on ensuring the operational efficiencies in the various divisions (i.e. retail, wholesale, export and manufacturing).
Downside credit risk remains for the Group in the current economic environment. 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.
The Board is optimistic on the Group's future performance and will grow its hire purchase portfolio without compromising on the quality of the assets. Even though the furniture division is at its early development stage, the Group will continue to work towards ensuring that the division remains profitable for the financial year.
In conclusion, the Board is confident that the Group's profit for the financial year ending 31 March 2018 is expected to be better than financial year ended 31 March 2017.