FIMA CORPORATION ANNUAL REPORT 2016

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FIMA CORPORATION BERHAD

(21185-P) |

Annual Report

2016

MANAGEMENT DISCUSSION

AND ANALYSIS

(contd.)

268.3

(RM Million)

266.8

54.0 50.5

Revenue

PBT

2016

2015

Confidential

Licences

32%

REVENUE CONTRIBUTION BY PRODUCTS

Certificates & Passes

3% Others

Travel

Documents

57%

MANUFACTURING

BUSINESS OPERATION REVIEW

FY2016 the Division posted a revenue and PBT of RM268.3 million and RM54.0 million respectively, representing

an increase of 0.6% in revenue and 6.9% in PBT from previous year. The improvement in PBT is mainly due to

lower depreciation cost.

Cash flows from operations amounted to RM68.6 million in FYE2016, an increase of RM65.4 million from the

previous year. On the operational front, this segment was able to maintain satisfactory profit margin despite

Ringgit depreciation via prudent cost management and efficient administration of operational cost.

During the year under review, the Division spent RM7.2 million on capital expenditure.

FUTURE OUTLOOK

New digital technologies are changing the industry’s landscape through inter alia the introduction of mobile

applications and digital IDs as replacement for the use of paper-based security documents. The security and

identity documents markets are increasingly seeking complete integrated solutions to facilitate faster time-to-

market personalization and issuance processes This posed another set of challenges relating to the highly

competitive landscape of these markets. Emerging competitors, as well as traditional ones, are exerting

pressure in particular product segments whilst compressing margins.

These developments create both threats and opportunities for the Division. We will continue to address these

business model shifts and challenges by developing new revenue streams and product innovation to ensure

that we are proactive in addressing the needs of our clients’ evolving requirements as well as expanding into

new markets with our strategic partners. Our differentiation lies in our strong track record of collaboration with

customers and partners, our expertise in project management as well as superior support service.

2016/2017 will be a challenging year for the Manufacturing Division in view of the expiration of the contract to

supply certain travel documents in Quarter 3 FY2017. The Division will endeavour to establish new strategic

alliances to develop new products and solutions to complement its products.