Excel Force MSC Berhad Annual Report 2016

EXCEL FORCE MSC BERHAD ANNUAL REPORT 2016 10 RISK MANAGEMENT (CONT’D) Key Financial Risk Factors (i) Credit Risk The Group’s primary exposure to credit risk arises through its trade receivables and through the amount owning by a subsidiary. Credit risk is managed through strict control over the outstanding receivables. Overdue balances are reviewed regularly by senior management. (ii) Liquidity and Cash Flow Risk Liquidity risk is the risk that the funds of the Group will not be able to meet its financial obligations. The Group actively manages its debts maturity profile, operating cash flows and the availability of funding so to ensure that all operating, investing and financing needs are met. As at FY 2016, the Group’s available cash and bank balances were RM23.3 million. (iii) Interest Rate Risk Interest rate risk is the risk that future cash flows are affected by changes in market interest rates. Adverse interest rate movement may affect financial performance. The Group’s exposure to changes in interest rates relates primarily to the Group’s deposit with bank and interest bearing debt obligations. The Group does not use derivative financial instrument to hedge its risk but regularly reviews it debt portfolio to enable it to source low interest funding. The Group’s deposit is placed at fixed rates and management endeavours to obtain the best rate available in the market . PROSPECT AND OUTLOOK FOR 2017 The challenging economic environment is not expected to improve much in 2017. Despite this situation, we strive to improve our performance by focusing on our strength in core business segment. We will renew our effort to keep close to our customers, listen to their needs and concerns, and be proactive in responding to them. We are also looking out for collaboration opportunities with partners in Malaysia and overseas to create new revenue stream. We will still be providing technology solution to the financial services industry but into expanded and new market segments. With the completion of disposal of non-performing subsidiaries which were Winvest and CMRA in 2016 and the acquisition of remaining 40% stake in subsidiary, Insage MSC Sdn Bhd (“Insage”) on 31 March 2017, coupled with several contracts secured end of 2016, the Group is optimistic that we will achieve a reasonable growth in 2017. People Human resource is the backbone of our company and we intend to increase our investment in them in the coming years. Our purpose is to ensure they keep up with the rapidly changing technology and able to deliver the latest and highest quality solution to our customers. CONCLUSION As an appreciation to our valued shareholders for their continuous support, the Group has declared and paid 2 sen dividend per share for financial year ended 31 December 2016, that means Group has allocated 74% of its consolidated net profit as dividend to shareholders. There is no dividend distribution policy as management is of the view that adequate resources must be maintained within the Group for potential future expansion plan. Dividend payout is mainly determined by the Group’s profitability and availability of cash balances and reserves. We would like to express our heartfelt appreciation to the Board of Director for their steady guidance and counsel, and to our employees for their effort and performance. Lastly, we would like to thank our business partners and cherished customers for their unwavering trust, confidence and support. management discussion and analysis (cont’d)