Quarterly Results

Quarterly Report For The Financial Period Ended 30 September 2021

Financials Archive
Financial Statement (332 KB)

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Condensed Consolidated Statement Of Profit Or Loss And Other Comprehensive Income For The Financial period Ended 30 September 2021

Condensed Consolidated Statement Of Financial Position As at 30 September 2021

Condensed Consolidated Statement Of Cash Flow For the financial period ended 30 September 2021

Review of Performance

The ongoing Coronavirus (“Covid-19”) outbreak and the reintroduction of the Movement Control Order (“MCO”) declared by the Malaysian Government from June 2021 onwards, has resulted in disruptions to our Group’s business and operations.

The Group's revenue for the quarter decreased to RM23.36 million and profit before tax for the quarter decreased by 53% to RM6.33 million due to lower contribution from both hire purchase and furniture segments.

Hire purchase receivables as at 30 September 2021 stood at RM469.87 million, which is 13% lower than the previous year.

The Group's bank borrowings decreased by 14% mainly due to repayment of block discounting facilities and term loans. There was no outstanding balance for MTN as they were fully redeemed during the quarter. As at 30 September 2021, the Group's gearing remains at a low level of 0.34 times.

Revenue decreased by 20% to RM18.62 million, as a result of a smaller hire purchase portfolio and no hire purchase disbursement during the quarter due to the Full MCO.

Impairment allowance increased by 95% to RM5.36 million. Credit loss charge (i.e. impairment allowance over average net hire purchase receivables) increased from 0.47% to 1.01%. The higher impairment alllowance and credit loss charge were mainly due to increase in the nonperforming accounts during the quarter.

Other expenses decreased by 41% to RM3.57 million mainly due to lower operating costs such as staff and operating costs when the office premises were closed . Cost to income ratio remains at a manageable level of 25%. Despite a significantly lower borrowings and MTN in this quarter, the finance cost reduced minimally to RM3.12 million due to a one off charge as a result of the early redemption of MTN one year ahead of the maturity date.

The profit before tax decreased by 44% to RM6.59 million mainly due to lower revenue and the higher impairment allowance during the quarter.

Revenue decreased by 67% to RM4.74 million mainly due to lower furniture sales caused by the MCO as no delivery of goods could be made during the MCO period.

Other expenses decreased by 52% to RM1.60 million mainly due to lower selling and distribution costs and staff costs.

The segment recorded a net loss before tax of RM0.27 million for the quarter ended 30 September 2021 mainly due to its inability to operate for most part of the quarter.

Prospects and Outlook

Due to the disruptions from the full lockdown, that affected both our hire-purchase and furniture businesses, ELK-Desa expects its performance for financial year ending 31 March 2022 to be lower than the previous financial year.

The operating landscape in the remaining part of the financial year (FY2022) is expected to have less uncertainties compared to a year ago. This stems from the on-going roll-out of the national vaccination programme, positive outcome of the Government’s economic stimulus packages and the gradual recovery of global trade and economy.

ELK-Desa expects demand for used-car financing to remain strong on the back of stable macro-economic factors including manageable unemployment rate, improving consumer and business confidence as well as controllable inflation. Barring any unforeseen shocks to the economy, we anticipate demand to continue to out-pace supply as this niche market remains underserved.

Demand for hire purchase solutions may be strong but disruptions to the economy caused by the pandemic and MCO may hamper our customers’ ability to fulfill their loan obligations. Moving forward, ELK-Desa is maintaining its cautious stance to protect the quality of its assets while ensuring that its hire purchase receivables does not decline any further. In addition, the Group will also remain vigilant in credit risk management while continuing to improve operational efficiencies and optimise operating cost.

For the Group’s furniture trading business, demand for furniture products is also expected to remain resilient. The lifestyle in the new normal will see more and more people working and studying from home. Hence, we foresee an uptrend in consumers spending to make their homes better equipped for work and study.

In spite of the increased demand for affordable quality furniture products, raw material supply locally and globally have been hampered by logistic problems due to the pandemic while travel restrictions as well as foreign labour policies have caused labour shortages. ELK-Desa aims to focus on overcoming these supply chain issues by working closely with our suppliers.

Concurrently, being a furniture wholesaler for the domestic market, ELK-Desa is also committed to building strong relationships with furniture retailers across Malaysia in order to solidify our brand presence and grow.

Due to the substantially lower hire purchase portfolio, the performance for financial year ending 31 March 2022 is expected to be lower than the previous financial year. However, the Board remains committed to delivering its dividend policy of distributing not less than 60% of the Group's annual net profits after tax to shareholders.