GHL System Berhad Annual Report 2019

G H L S Y S T E M S B E R H A D 1 9 9 4 0 1 0 0 7 3 6 1 ( 2 9 3 0 4 0 - D ) 12 2. DISCUSSION AND ANALYSIS OF THE FINANCIAL RESULTS AND CONDITIONS (Cont’d) 2.4 Profit attributable to Equity Holders of the group The profit attributable to equity holders of the Group increased to RM28.7 million, a +17.0% improvement YOY. Fully diluted earnings per ordinary share for the year amounted to 3.86 sen, an improvement of +11.2% YOY. These financial measurements reflect the improvement in the Group’s results in 2019. 2.5 Annuity versus Non-Annuity Revenue 88.5% 11.5% Annuity vs Non-Annuity Revenue 87.3% 12.7% 2018 (RM’mil) 34.4 264.7 Annuity Non-Annuity 44.0 303.7 2019 (RM’mil) Total RM299.1m Total RM347.7m 90% 100% 80% 70% 60% 50% 40% 30% 20% 10% 0% The annuity based revenue component within the Group’s total revenue remains high at 87.3% and this is compared to 88.5% achieved in the previous year. There was a slight decrease in annuity based revenue while non annuity based revenue grew in absolute terms. The Group’s strategy is to grow the TPA and other businesses that have a strong recurring annuity-based revenue and at the same time to continue to support main bank customers with their hardware and software requirements. As TPA gathers momentum in all three geographical markets, the Group expects annuity revenues to remain strong. 2.6 Liquidity and Capital Resources As at 31 December 2019, the Group’s Net Cash Position (Note 1) amounted to RM97.1 million (31 December 2018 – RM67.6 million). There are further funds placed in fixed income fund with financial institution included in Other Investments amounting to RM53.3 million (31 December 2018 – RM42.8 million). The key items that impacted the Group’s cashflow in 2019 were as follow:- (Note 1 – Defined as Total Cash and Bank Balances less all Bank Borrowings and Lease Liabilities) (i) Net cash generated from operating activities increased to RM 91.5 million (2018 – RM2.5 million), mainly due to a decrease in working capital requirements of RM65.5 million from a decrease in receivables (RM82.4 million), and a decrease in inventories (RM30.5 million). This was offset by a decrease in trade, other payables and advanced payments (RM47.8 million), and increase in operating profit before working capital changes of RM24.1 million, and also a slight increase in tax and interest paid of RM0.6 million. (ii) An amount of RM26.8 million (2018 – RM22.5 million) was expended on capital expenditure which was mostly in respect of the Group’s purchases of EDC terminals. (iii) The Group repaid RM84.7 million of its bank borrowings and hire purchase payables in 2019 (2018 – RM89.5 million). The Group also drew-down fresh bank loans in 2019 of RM77.8 million (2018 – RM86.5 million). MANAGEMENT DISCUSSION AND ANALYSIS CONT’D