GHL System Berhad Annual Report 2023

MANAGEMENT DISCUSSION AND ANALYSIS CONT’D 2.0 DISCUSSION AND ANALYSIS OF THE FINANCIAL RESULTS AND CONDITIONS (Cont’d) 2.5 Annuity versus Non-Annuity Revenue Annuity vs Non-Annuity Revenue (RM million) 410.4 2022 2023 339.6 Annuity Non-Annuity 379.1 70.8 81.3 460.4 82.7% 82.3% In 2023, the Group maintained a strong annuity-based revenue component of 82.3% of the total revenue (compared to 82.7% in 2022). The absolute revenue of both annuity and non-annuity grew in 2023, reflecting the growth of all its business pillars. The Group maintains a strategic focus on the growth of TPA businesses, while remaining dedicated to supporting its bank customers with their hardware and software requirements. With the ongoing economic recovery across all three geographical markets, the Group anticipates that its annuity revenue, resulting from its TPA segment, will continue to remain strong and grow in the upcoming years. 2.6 Liquidity and Capital Resources As at 31 December 2023, the Group’s net cash position amounted to RM127.4 million (31 December 2022: RM122.2 million). The Group also had RM6.3 million of Other Investments (31 December 2022: RM14.9 million) comprised of fixed income fund held by a financial institution. Key items that impacted the Group’s cash flow in 2023 were as follows: (a) Net cash generated from operating activities was RM59.5 million (2022: Net cash used in operating activities was RM10.5 million), mainly due to improvements in working capital. (b) An amount of RM53.5 million (2022: RM42.3 million) was spent on capital expenditure mostly related to the Group’s purchases of EDC terminals. (c) The Group repaid RM94.4 million of its bank borrowings and lease payables in 2023 (2022: RM57.7 million). The Group also drew-down fresh bank loans of RM114.6 million (2022: RM19.0 million) for working capital purposes. 2.7 Trends and Events Consumer cashless spending continued to rise in 2023, resulting in a 12.2% revenue growth. This healthy and sustainable growth was driven by Transaction Payment Value uptrend across all three (3) geographical markets and growth across all three (3) business pillars. Furthermore, this growth was equally present across both the recurring and non-recurring lines of business. The Group’s Transaction Payment Value grew across both its offline as well as online merchant base, in-line with regional growth in cashless spending. The expected boost from the return of tourism in our markets did not fully materialise in 2023, however efforts by the governments (e.g. visa-free travel) resulted in a pickup of tourism in the latter part of 2023, which will likely continue into 2024 and beyond. 10 GHL SYSTEMS BERHAD 199401007361 (293040-D)

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