GHL System Berhad Annual Report 2020

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 MANAGEMENT DISCUSSION AND ANALYSIS CONT’D 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 dropped to RM13.5 million, a -52.8% decline yoy. Fully diluted earnings per ordinary share for the year amounted to 1.69 sen, a decline of -33.7% yoy. The performance in 2020 reflects the COVID-19 challenges which led governments introducing lockdowns and movement controls to contain the spread of the pandemic. 2.5 Annuity versus Non-Annuity Revenue 87.3% 12.7% Annuity vs Non-Annuity Revenue 87.1% 12.9% 2019 (RM’mil) 44.0 303.7 Annuity Non-Annuity 43.3 291.2 2020 (RM’mil) Total RM347.7m Total RM334.5m The annuity-based revenue component within the group’s total revenue remains high at 87.1% and this compared to 87.3% achieved in 2019 as the result of lower TPA revenue recognised in 2020 due to the COVID-19 pandemic which had resulted in lockdowns and business closures. Annuity based income also declined in absolute terms, as the result of lesser recurring TPA transaction captured during the lockdown months as well as lower recurring revenue/maintenance revenue from the Shared Services segment. 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 our main bank customers with their hardware and software requirements. As TPA recovery gathers momentum in all three geographical markets, we expect annuity revenues to remain strong and recover in 2021. 2.6 Liquidity and Capital Resources As at 31 December 2020, the Group’s Net Cash Position (Note 1) amounted to RM117.6 million (31 December 2019 – RM97.1 million). There are further funds placed in fixed income fund with financial institution included in Other Investments amounting to RM64.8 million (31 December 2019 – RM53.3 million). (Note 1 – Defined as Total Cash and Bank Balances less all Bank Borrowings and Lease Liabilities) The key items that impacted the Group’s cashflow in 2020 were as follow: - (i) Net cash generated from operating activities declined to RM44.3 million (2019 – RM91.5 million), mainly due to a decrease in working capital requirements of RM39.6 million from a decrease in receivables (RM35.5 million), and a decrease in inventories (RM17.0 million). This was offset by an increase in trade, other payables and advanced payments (RM12.9 million), and decrease in operating profit before working capital changes of RM8.9 million, and also a slight decrease in movement of tax and interest of RM1.4 million.