GHL System Berhad Annual Report 2017

ANNUAL REPORT 2017 15 MANAGEMENT DISCUSSION AND ANALYSIS CONT’D 2. DISCUSSION AND ANALYSIS OF THE FINANCIAL RESULTS AND CONDITIONS (cont’d) Analysis of Financial Results (cont’d) 2.4 Profit Attributable to Equity Holders of the Group The profit attributable to equity holders of the Group increased to RM20.5 million, a +12.8% improvement yoy. Diluted earnings per ordinary share for the year amounted to 3.12 sen an improvement of +12.2% yoy. These financial measurements reflect the improvement in the Group’s results in 2017. 2.5 Annuity versus Non-Annuity Revenues 0% 20% 40% 60% 80% 100% 10% 30% 50% 70% 90% Annuity vs Non-Annuity Revenue Total RM245.9m Total RM253.7m 2016 (RM’mil) 221.7 24.2 2017 (RM’mil) 230.1 23.6 90.2% 90.7% 9.8% 9.3% Annuity Non-annuity The annuity based revenue component within the Group’s total revenue remains high at 90.7% in 2017 as compared to 90.2% in 2016. The Group’s strategy is to continue to grow the TPA and other businesses that have strong annuity based revenue in favour of non-annuity hardware and software sales. As TPA gathers momentum in all 3 geographical markets, we expect that annuity revenue streams will become even larger. 2.6 Liquidity and Capital Resources As at 31st December 2017, the Group’s Net Cash Position (Note 1) amounted to RM73.3 million (31st December 2016 – RM45.7 million). The key items that impacted the Group’s cashflow in 2017 were as follows:- (Note 1 – Defined as Total Cash and Bank Balances less all Bank Borrowings and Hire Purchase obligations) (i) Net cash generated from operating activities increased significantly to RM56.4 million (2016 – RM32 million) mainly from a) an reduction in working capital requirements of +RM21.3 million due to i) an increase in receivables (-RM38.8 million), offset by ii) a significant reduction in inventories (+RM60.0 million) and iii) an increase in trade, other payables and advanced payments (+RM0.1 million) b) marginal improvement in operating profit before working capital changes +RM3.3 million and, c) offset by additional tax and interest paid –RM0.6 million. (ii) An amount of RM28.8 million (2016 – RM3.2 million) was expended on capital expenditure which was mostly in respect of the Group’s purchases of EDC terminals. These outflows were partly cushioned by the disposal of assets of RM2.6 million (2016 – RM0.76 million). (iii) The Group repaid RM19.7 million of its bank borrowings and hire purchase payables in 2017 (2016 – RM17.5 million. The Group also drew-down fresh bank loans in 2017 of RM16.0 million (2016 – RM9 million). The net effect of these financing activities reduced the Group’s overall borrowings by RM4.0 million in 2017.