SCC Holdings Berhad Annual Report 2018

SCC Holdings Berhad | Annual Report 2018 8. MANAGEMENT DISCUSSION AND ANALYSIS OVERVIEW OF BUSINESS AND OPERATIONS SCC Holdings Berhad is principally an investment holding company listed on the ACE Market of Bursa Malaysia Securities Berhad since 3rd August 2010 under the Trading/ Services and had been reclassified to Consumer Products and Services category in 2018. Our group is involved in the business of distributing well-known brands of industrial- grade foodservice equipment and food supplies to the F&B markets which are widely used in restaurants, cafes, fast food restaurants and kiosks, cinemas and hypermarkets among others. We also supply animal health products to feed mills and livestock industries while our food manufacturing division produces food premixes for related industries. The Group continues to explore new markets for its products and expand its customer base to reduce dependency on a few key customers to deliver maximum value to its stakeholders. Our financial results and highlights for the past 5 years are shown on a separate page. FINANCIAL PERFORMANCE REVIEW Review on Statement of Comprehensive Income During the year under review, theGroup recorded the highest revenue of RM66.16m and highest profit after taxation of RM7.15m since its inception. The increase was spearheaded by our Foodservice Equipment Division (“FSED”), followed by Animal Health Products Division (“AHPD”), mainly attributed to higher demand from customers. However, Food Manufacturing Division (‘’SCCFM”) recorded lower revenue amid a competitive operating environment. In tandem with the increase in revenue by approximately 7%, our gross profit increase by approximately 8% due to a lower cost of sales. Despite the increase in revenue, selling and distribution costs incurred to support the revenue growth have decreased by 3% due to cost savings exercises and stringent cost controls in selling and distribution costs. Administrative and other operating expenses increased by 8% mainly due to higher staff expenses. Profit before tax of the Group increased by approximately 11%, which is in line with the higher operating profit in FYE 2018. Review on Statement of Financial Position Non-current assets increased by almost 13% mainly due to purchase of fixed assets during the year under review in preparation for the upcoming projects. The decrease in Trade Receivables by RM0.39m despite the increase in revenue of the Group is primarily due to improved collection during the financial year. Inventories have increased mainly due to higher purchases towards end of the financial year in preparation of early festival season in 2019. WORKING CAPITAL, LIQUIDITY The Group continues to maintain a healthy cash flows position in FYE2018 with near zero gearing which places it in a favourable financial position to capture any future opportunity and stayed one step ahead of the competition. DIVIDEND POLICY The Company does not have a formal dividend policy but the Management envisages a dividend payout ratio of approximately 35% of the company's profit after tax to shareholders in each financial year. Since its inception, the company has consistently payout dividend of more than 35% of the company’s profit after tax to shareholders (please refer to page 4). RM7.15M PROFIT AFTER TAX RM66.16M REVENUE