Excel Force MSC Berhad Annual Report 2016

EXCEL FORCE MSC BERHAD ANNUAL REPORT 2016 9 FINANCIAL PERFORMANCE REVIEW (CONT’D) Assets, Liabilities and Liquidity (cont’d) Cash and bank balances increased by 18% from RM19.7 million in FY 2015 compared to RM23.3 million in FY 2016 which is in line with the higher collection from trade receivables. Trade and other payables decreased by 36% from RM3.6 million in FY 2015 compared to RM2.3 million in FY 2016, mainly due to reduction in advance billing and accruals. Borrowings The Group recorded borrowings of RM5.2 million at the end of FY 2016, compared with borrowings of RM6.2 million at the end of FY 2015. The borrowings of the Group mainly consist of secured term loan with fixed interest rates. The decrease in borrowings by 19% was mainly due to repayments in FY 2016. Gearing ratio lowered to 0.11 from 0.14 compared to previous correspondence year. Capital Expenditures The Group’s capital expenditure is invested in product development. It is an on-going investment policy and the Group does not expect significant changes to this policy in the coming years. OPERATIONAL PERFORMANCE REVIEW This has been a challenging year for our customer’s business and it was reflected in our lower revenue performance. Customer’s budget allocation for system upgrade and enhancement was constrained in FY 2016. Our customers face increasing cost pressure, to meet the multi-faceted demands of their internal and external customers, as well as keeping abreast with the changing regulatory and market landscape. Strategies and Initiatives for the Year To support our customers, we are continuously investing in our products to improve our offering. We aim to increase the efficiency of our application solutions to help customers achieve cost efficiency. One example is the development of a solution to unite the front end trading platform, middle risk management module and back office processing system into one seamless integrated process flow. Mobile trading application is gaining popularity among younger investors and our customers are looking for applications that will deliver unique user experience to this group of users. We have enhanced on our existing version of mobile apps by incorporating advance features to suit their needs. This is a growth area and will invest further for product enhancement. Amidst this tough business environment, the Group has initiated actions to review cost base for margin improvement. We started to identify areas of inefficiencies in our process flow for elimination of redundancies and wastages. The objective is to increase the speed of work flowing through our software development life cycle process steps and improve throughput. We expect to see positive results from our effort in the next financial year. Collaboration with Ullink The Group announced a collaboration with Ullink, a global provider of electronic trading and connectivity solutions to the financial community. This strategic partnership will allow our customers to leverage on Ullink’s NYFIX global connectivity platform to widen their trading connections with international exchanges and global community. RISK MANAGEMENT The Group is vigilant in identifying, assessing and responding to various risk factors that may impact our business and operation performance. With the assistance of external service providers, we maintain a risk register and risk management handbook, and conduct yearly assessment to identify principal business risk and update on-going changes in the risk profile. The risk management activities are carried out annually as discussed in the Statement of Risk Management and Internal Control on pages 32 to 34. The framework enables the Boards to continuous identify, assess and manage the risk that affects the respective business segments within the Group. management discussion and analysis (cont’d)