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Investor Relations > Financial Information > Management Discussion and Analysis (MD & A)
   

Overview of the Historical Financial Position and Operating Performanc

As of 31 December 2015, the Company and its subsidiary recorded the total assets of THB 30,249.48 million increased from THB 29,465.40 million at the end of year 2014 or increased by 2.66% due to the portfolio and disbursement growth. The disbursement in 2015 was THB 20,395.36 million increases by 10.50% from that of THB 18,457.54 million in 2014

The total liabilities as of 31 December 2015 were THB 25,902.49 million increased by 2.21% from THB 25,342.78 million at the end of 2014. 

The shareholders'equity as of 31 December 2015 was THB 4,346.99 million, increased by 5.44% from THB 4,122.63 million at the end of 2014. This was resulted from a good operating performance that reflected on a rise in the Company’s retain earnings. The Company had registered capital of THB 1,759.48 million and retain earnings of THB 1,867.91 million.  

Total revenues in 2015 amounted to THB 2,722.11 million increased by 1.38% from THB 2,684.93 million in 2014 as a result of a growth in portfolio. The major sources of revenues were from hire purchase interest income, which was accounted for 81.50% and 82.89% of total revenues in 2015 and 2014 respectively. Income from factoring was 4.03% and 3.46% of total revenues in 2015 and 2014 respectively. The interest income from financial lease (leasing business) generated 2.89% and 2.53% of total revenues in 2015 and 2014 respectively. The other incomes including as penalty income from late payment, income from recommending insurance services, revenues from personal loan and revenues from floor plan financing and etc. were 11.57% and 11.11%  of total revenues in 2015 and 2014 respectively.

The total expenses (including bad debt and doubtful accounts, financial cost, and corporate income tax expense) amounted to THB 2,041.49 million in 2015 increased by 1.37% from THB 2,013.93 million in 2014. The selling and administrative expenses were 34.01% and 32.27% of total expenses in 2015 and 2014 respectively. The bad debt and doubtful accounts were 13.23% and 13.28% of total expenses in 2015 and 2014 respectively. The financial costs were 44.28% and 45.99% of total expenses in 2015 and 2014 respectively. The corporate income tax expense was 8.48% and 8.45% of total expenses in 2015 and 2014 respectively.

The selling and administrative expenses amounted to THB 694.40 million in 2015 increased by 6.86% from THB 649.84 million in 2014. The financial costs in 2015 amounted to THB 903.98 million decreased by 2.41% from THB 926.30 million in 2014. This was resulted from a decrease in the interest rate whereas the borrowings amount increased to support the portfolio expansion.

The total profit for the year 2015 amounted to THB 680.61 million increased by 1.43% from THB 671.00 million in 2014. The net profit margin ratio in 2015 was 25.00% which was about that of 24.99% in 2014. The return on equity ratio in 2015 was 16.41% decreased from 17.31% at the end of 2014.      

The total portfolio in 2015 amounted to THB 30,078.99 million, increased from THB 29,177.08 million in 2014 or increased by 3.09%. The NPLs ratio at the end of 2015 was at 1.70% of the total portfolio, increased from 0.73% at the end of 2014. However, this still reflected the well-controlled asset quality of the Company and its subsidiary. The allowance for doubtful accounts to NPLs ratio was 96.84% at the end of 2015, decreased from 172.55% at the end of 2014.

Operating Performance by Business

Revenues

The total revenues of the Company and its subsidiary during 2013 - 2015 equaled to  THB 2,460.40 million, THB 2,684.93 million and THB 2,722.11 million respectively. The major source of revenues was income from hire-purchase business. Other sources were income from factoring, income from financial lease, and other incomes such as penalty income from late payment, and income from recommending insurance services, etc., described as follows; 

Hire-Purchase Interest Income

Hire-purchase interest income during 2013 -2015 amounted to THB 2,007.76 million, THB 2,225.63 million and THB 2,218.63 million respectively. Income in 2014 increased by 10.85% from 2013 due to expansion in hire-purchase portfolio. Income in 2015 decreased by 0.31% from 2014 due to a decrease in the interest income rate in relation to the market rate. The hire-purchase account receivables before allowance for doubtful accounts (excluding court case receivables) at the end of the year 2013 - 2015 equaled to THB 26,205.01 million, THB 27,134.88 million and THB 27,932.84 million respectively accounted for 81.60%, 82.89% and 81.50% of the total revenues of the Company and its subsidiary during the year 2013 - 2015 respectively.

Factoring Income

Factoring income from subsidiary’s business during 2013 - 2015 amounted to THB 91.84 million, THB 92.85 million and THB 109.66 million respectively. Income in 2014 increased by 1.10% from 2013. Income in 2015 increased by 18.10% from 2014. Such increase in 2014 - 2015 was due to the expansion in factoring portfolio. The factoring receivables before allowance for doubtful accounts (excluding court case receivables) at end of the year 2013 - 2015 equaled to THB 928.88 million, THB 1,066.91 million and THB 1,072.43 million respectively which accounted for 3.73%, 3.46% and 4.03% of the total revenues of the Company and its subsidiary respectively.

Interest Income from Financial Leases

Interest income from financial leases from subsidiary’s business during 2013 - 2015 amounted to THB 61.02 million, THB 68.03 million and THB 78.77 million respectively. In 2014, income increased by 11.49% from that of 2013, as a result of the subsidiary’s expansion in financial lease portfolio. Income in 2015 increased by 15.79% from 2014 mainly the prepayment of a customer. The financial lease receivables before allowance for doubtful accounts (excluding court case receivables) at the end of the year 2013 - 2015 equaled to THB 784.83  million, THB 879.58 million and THB 842.03 million respectively which accounted for 2.48%, 2.53% and 2.89% of the total revenues of the Company and its subsidiary respectively.

Other Incomes

Other incomes included penalty income from late payment, income from recommending insurance services, fee income from registration services, income from personal loan and income from floor plan, etc.  Other income from the Company and its from subsidiary during 2013 - 2015 amounted to THB 299.78 million, THB 298.42 million and THB 315.04 million respectively. Income in 2014 decreased by 0.45% from 2013, whereas the income in 2015 increased by 5.57% from 2014. Such increase was mainly attributable to an increase in income from recommending insurance services as a result of the disbursement. The income from recommending insurance services at the end of the year 2013 - 2015 equaled to THB 169.10 million, THB 164.97 million and THB 167.45 million respectively, or decreased by 2.44% in 2014 but increased by 1.50% in 2015 respectively.

Expenses

The Company and its subsidiary’s expenses (including bad debts and doubtful accounts, finance cost and income tax expenses) during 2013 - 2015 amounted to THB 1,819.48 million, THB 2,013.93 million and THB 2,041.49 million respectively. The expenses in 2014 increased by 10.69% from 2013, and the expenses in 2015 increased by 1.37% from 2014. The major source of expenses was finance cost whereas the other sources of expenses included selling and administrative expenses, bad debt and doubtful accounts expenses, and income tax expenses, described as below:

Selling and administrative expenses

Selling and administrative expenses of the Company and its subsidiary during 2013 - 2015 amounted to THB 655.07 million, THB 649.84 million and THB 694.40 million respectively. The expenses in 2014 decreased by 0.80% from 2013, and the expenses in 2015 increased by 6.86% from 2014. Selling and administrative expenses accounted for 36.00%, 32.27% and 34.01% of the total expenses of the Company and its subsidiary during 2013 - 2015 respectively. The selling and administrative expenses mainly comprised of employee salary, bonus and related expenses.

Bad debts and doubtful accounts expenses

Bad debts and doubtful accounts expenses of the Company and its subsidiary during 2013 - 2015 amounted to THB 152.41 million, THB 267.54 million and THB 270.01 million respectively. The expenses in 2014 increased by 75.54% from 2013, and the expenses in 2015 increased by 0.92% from 2014. Such increases in bad debts and doubtful accounts expenses in 2014 and 2015 were mainly to Thailand's economic slowdown. The Company and its subsidiary’s NPL to total lending ratio during 2013 - 2015 were 0.49%, 0.73% and 1.70% respectively indicating asset quality is still well controlled. The bad debts and doubtful accounts expenses accounted for 8.38%, 13.28% and 13.23% of the total expenses during 2013 - 2015 respectively.

Financial Cost

Financial cost was the main cost of the Company’s business which consisted of interest expenses and guarantee fees. The financial cost of the Company and its subsidiary during 2013 - 2015 amounted to THB 848.96 million, THB 926.30 million and THB 903.98 million respectively. The expenses in 2014 increased by 9.11% from 2013 due to an increase in the borrowings amount which was resulted from portfolio expansion. Expenses in 2015 decreased by 2.41% from 2014 due to a decrease in the interest rate expense in the relation to a decline in the market interest rate whereas the borrowing amount has been increased. During the year 2013 - 2015, the financial cost accounted for 46.66%, 45.99% and 44.28% of the total expenses respectively.

Corporate Income Tax

Corporate income tax of the Company and its subsidiary during 2013 - 2015 amounted THB 163.04 million, THB 170.25 million and THB 173.10 million respectively, the expenses in 2014 - 2015   increase by 4.42% and 1.67% respectively due to the higher amount of profit before income tax expense.

Total Comprehensive Income

Profits during the year 2013 - 2015 for the Company and its subsidiary amounted to THB 640.92 million, THB 671.00 million and THB 680.61 million respectively. The profit in 2014 increased by 4.69% from 2013, and the profit in 2015 increased by 1.43% from 2014. Net profit margin ratio during the year 2013 - 2015 equaled to 26.05%, 24.99% and 25.00% respectively. The earning per weighted average shares during the year 2013 - 2015 equaled to 1.82 Baht/share, 1.91 Baht/share and 1.93 Baht/share respectively.

The Company and its subsidiary was able to maintain the proper interest rate spread while there was a fierce competition in the market interest rate. In addition, the Company and its subsidiary continuously pay attention on the risk management by maintaining the good credit quality and balancing of the portfolio between new and used vehicles. For hire-purchase business, the Company had focused on vehicles that generate high revenues with acceptable risk such as used cars and commercial vehicles, rather than private vehicles. For leasing and factoring businesses, the subsidiary had determined the minimum interest rate charged to customers keeping the proper range of interest rate while still competitive to others in the market. 

Financial Status Analysis

Assets

The total assets of the Company and its subsidiary at the end of the year 2013 - 2015 amounted to THB 28,397.31 million, THB 29,465.40 million, and THB 30,249.48 million respectively. The total assets in 2014 increased by 3.76% from 2013, and the total assets in 2015 increased by 2.66% from 2014. Such increase in the total assets was mainly due to a growth of the number of the hire-purchase account receivables (net of allowance for doubtful accounts) which were the main assets of the Company and its subsidiary accounted for 91.49%, 91.09%, and 90.95% of the total assets at the end of the year 2013 - 2015 respectively. The core assets of the Company and its subsidiary were summarized as follows:

Hire-Purchase Receivables

The hire-purchase receivables (net of allowance for doubtful accounts) of the Company and its subsidiary at the end of the year 2013 - 2015 amounted to THB 25,980.61 million, THB 26,841.49 million and THB 27,510.87 million respectively. The receivables in 2014 increased by 3.31% from 2013, and the receivables in 2015 increased by 2.49% from 2014. Such increase in the hire-purchase receivables was mainly due to a growth of the hire-purchase portfolio of the Company and its subsidiary.

Financial Lease Receivables

The financial lease receivable (net of allowance for doubtful accounts) of the subsidiary at the end of the year 2013 - 2015 amounted to THB 776.63 million, THB 853.93 million and THB 815.83 million respectively. The receivables in 2014 increased by 9.95% from 2013, whereas the receivables in 2015 decreased by 4.46% from 2014. Such decrease in the financial lease receivable in 2015 was mainly due to the prepayment of a customer that led to a decrease in receivables but an increase in the interest income from financial leases. Nevertheless, the subsidiary still has a cautious lending policy in the portfolio expansion.

Factoring Receivables

The factoring receivables (net of allowance for doubtful accounts) of the subsidiary at the end of the year 2013 - 2015 amounted to THB 874.45 million, THB 1,023.67 million and THB 1,029.30 million respectively. The receivables in 2014 increased by 17.06% from 2013, and the receivables in 2015 increased by 0.55% from 2014. Such increase in the factoring receivables was mainly due to the subsidiary's portfolio expansion according to the economic situation that raised demand of customers' working capital. However, the subsidiary still has a cautious lending policy.

Quality of Receivables of the Company and its Subsidiary

The Company and its subsidiary had the internal customers' status classification method to assess the quality of the receivables. This status classification method was used for internal assessment. In order to compare with the other companies in the same industry, the Company prepared the details of hire-purchase receivables and financial lease receivables classified by aging as below:

Table of the balance of hire purchase receivables of the Company and its subsidiary classified by aging as at 31 December 2015

Age of receivables Amount (Million Baht)
%
Not yet due 24,609.62 88.10
1 - 3 installments 2,483.29 8.89
4 - 6 installments 359.71 1.29
7 - 12 installments 274.45 0.98
Over 12 installments 205.79 0.74
Total* 27,932.84 100.00
Less: Allowance for doubtful accounts 421.97  
Hire purchase receivables - net 27,510.87  

Note: * The hire-purchase receivables are calculated from the hire-purchase receivables net of unearned hire-purchase interest revenue before subtracting allowance for doubtful account  

Considering the above table at the end of 2015, the majority of hire-purchase receivables of the Company and its subsidiary were normal status. The receivables with no overdue balance and the receivables due within 3 installments equaled to THB 27,092.90 million, or 96.99% of the total hire-purchase receivables. The Company and its subsidiary have the efficient debt control and debt collection management system by assigning the officers to take care and monitor each customer's payment closely. If there is any past due receivables, the responsible officers will closely follow up immediately.

Table of the balance of financial lease receivables of the subsidiary classified by aging as at 31 December 2015

Age of receivables Amount (Million Baht)
%
Not yet due 818.56 97.22
1 - 3 installments - -
4 - 6 installments - -
7 - 12 installments 3.06 0.36
Over 12 installments 20.41 2.42
Total* 842.03 100.00
Less: Allowance for doubtful accounts 26.2  
Financial lease receivables - net 815.83  

Note: * The financial lease receivables are calculated from the financial lease receivables net of unearned interest revenue before subtracting allowance for doubtful account

Considering the above table at the end of 2015, the majority of financial lease receivables of the subsidiary were normal status. The receivables with no overdue balance and the receivables due within 3 installments equaled to THB 818.56 million, or 97.22% of the total financial lease receivables.

Table of the balance of factoring receivables of the subsidiary classified by aging as at 31 December 2015

Age of receivables Amount (Million Baht)
%
Not yet due 972.66 90.70
1 - 3 installments 56.83 5.30
4 - 6 installments - -
7 - 12 installments 1.11 0.10
Over 12 installments 41.83 3.90
Total* 1,072.43 100.00
Less: Allowance for doubtful accounts 43.14  
Factoring receivables - net 1,029.30  

Considering the above table at the end of 2015, the majority of factoring receivables of subsidiary  were normal status. The receivables with no overdue balance and the receivables due within 3 installments equaled to THB 1,029.49 million, or 96.00% of the total factoring receivables.

The adequacy of the Company and its subsidiary's provision for doubtful account expenses

Due to the strengthened collection efficiency, the augmented base of portfolio size, and bad-debt write-off, the Company and its subsidiary's NPLs at the end of year 2015 was THB 511.16 million, or 1.70% of the total receivables (before allowance for doubtful accounts). Moreover, the ratio of Allowance for doubtful accounts to NPLs was still high at 96.84% reflecting the adequacy of the Company and its subsidiary's allowance for doubtful accounts

Land, Building, and Equipment and Intangible assets

Land, building, and equipment and Intangible assets (Intangible assets such as computer programs) of the Company and its subsidiary at the end of the year 2013 - 2015 amounted to THB 77.75 million, THB 112.45 million and THB 153.09 million respectively. The land, building, and equipment and Intangible assets in 2014 - 2015 increased by 44.63% and 36.14% respectively due to the expansion in the branches.

Assets Foreclosed

Assets foreclosed of the Company and its subsidiary such as vehicles and equipments repossessed from contractual customers' default, at the end of the year 2013 - 2015 amounted to THB 22.64 million, THB 68.05 million and THB 39.27 million respectively, comprised of 95 contracts, 178 contracts and 83 contracts respectively which considered to be very low comparing to the total numbers of contracts at the end of the year 2013 - 2015 amounted to 43,349 contracts, 43,887 contracts and 44,779 contracts respectively. This was resulted from the Company and its subsidiary's efficient control system and collection process along with high liquidity of financed assets.

Total Liabilities

Total liabilities of the Company and its subsidiary at the end of the year 2013 - 2015 amounted to THB 24,600.90 million, THB 25,342.78 million and THB 25,902.49 million respectively. The total liabilities in 2014 increased by 3.02% from 2013, and the total liabilities in 2015 increased by 2.21% from 2014. Such an increase in liabilities was mainly due to an increase in the borrowings to support the growth of portfolio.

Table presents details of total liabilities of the Company and its subsidiary

Liabilities As at 31 December (Million baht)
2013 % 2014 % 2015 %
Bank overdrafts and short-term loans from banks 3,912.49 15.90 2,989.18 11.80 4,518.97 17.45
  -  Bank overdrafts and loans from  related party 682.77 2.78 278.18 1.10 304.97 1.18
  -  Bank overdrafts and loans from  others 3,229.72 13.13 2,711.00 10.70 4,214.00 16.27
Current portion of long-term loans from related party  -    -    300.00 1.18 2,000.00 7.72
Current portion of long-term loans from banks -    -    2,700.00 10.65 3,100.00 11.97
Unsecured debentures, due in 1 year  999.14 4.06 349.87 1.38 2,224.24 8.59
Other short-term unsecured debentures 100.00 0.41 4,397.80 17.35 3,593.82 13.87
Other current loans 9,024.94 36.69 2,658.06 10.49 1,666.02 6.43
Total current liabilities 14,036.57 57.06 13,394.91 52.85 17,103.04 66.03
Long-term loans from related party - net of current portion due in 1 year 2,300.00 9.35 2,000.00 7.89 800.00 3.09
Long-term loans from banks - net of current portion due in 1 year 6,000.00 24.39 4,650.00 18.35 3,700.00 14.28
Unsecured debentures - net of current portion due in 1 year 1,647.50 6.70 4,601.09 18.16 3,598.10 13.89
Total non-current liabilities 9,947.50 40.44 11,251.09 44.40 8,098.10 31.26
Total loans 23,984.07 97.49 24,646.00 97.25 25,201.14 97.29
Other liabilities /1 616.83 2.51 696.77 2.75 701.35 2.71
Total liabilities 24,600.90 100.00 25,342.78 100.00 25,902.49 100.00

Source: Audited 2013 - 2015 consolidated financial statements of Asia Sermkij Leasing Public Company Limited.

Note: 1/ Other liabilities consist of amounts due to related parties, income tax payable, other current liabilities, rental deposit, and provision for long-term employee benefit, etc.

The Company and its subsidiary had short-term borrowings (Including the current portion of long-term borrowings that due within 1 year) at the end of 2013 - 2015 amounted to THB 14,036.57 million, THB 13,394.91 million, and THB 17,103.04 million respectively, or equaled to 57.06%, 52.85%, and 66.03% of total liabilities at the end of 2013 - 2015 respectively.

The Company has diversified the sources of fund to both money market and capital market via issuing debt instruments to institutional and high net worth investors. The Company has balanced the proper portion between short-term and long-term borrowings according to the interest rate trend. This could help the Company and its subsidiary to manage the cost of fund and balance risk efficiently

The borrowings (both short-term and long-term loans) of the Company and its subsidiary from related parties at the end of the year 2013 - 2015 amounted to THB 2,982.77 million, THB 2,578.18 million, and THB 3,104.07 million respectively, or equal to 12.12%, 10.17%, and 11.99% of the total liabilities at the end of the year 2013 - 2015 respectively.

Debt to equity ratio of the Company and its subsidiary at the end of the year 2013 - 2015 equaled to 6.48 times, 6.15 times and 5.96 times respectively.

Shareholders'equity

Shareholders' equity of the Company and its subsidiary at the end of the year 2013 - 2015 amounted to THB 3,796.41 million, THB 4,122.63 million and THB 4,346.99 million respectively. At the end of year 2014, the shareholders' equity increased by 8.59% from 2013 due to an increase in the retain earnings. Moreover in 2014 the Company's capital increased from THB 1,725.00 million to THB 1,759.50 million as a result of the stock dividend issuance. The Company and its subsidiary have a paid-up capital of THB 1,759.48 million and retained earnings of THB 1,643.54 million. In 2015, the shareholders' equity increased by 5.44% from 2014 as a result of an increase in the from retained earnings of the Company and its subsidiary. The paid-up capital was THB 1,759.48 million and the retained earnings equaled to THB 1,867.91 million

Return on Equity during 2013 - 2015 equaled 17.92%, 17.31%, and 16.41% respectively.

Liquidity

As at December 31, 2015 the loan repayment and the installment to be obtained in different period were summarized as follows:

Period Loan Repayment Due (Million Baht) Installment to be Obtained from Debtor (Million Baht)
Within 1 year 17,109.97 13,880.69
More than 1 year but not more than 2 years 6,750.00 9,401.93
More than 2 years but not more than 3 years 1,350.00 6,138.69
More than 3 years - 3,844.52
Stop accrued account receivables - 559.31
Total 25,209.97 33,825.15

Note: Bill of exchanges shown and Debentures were shown at face value from share certificate.

The gap difference between the installment expected to be obtained within 1 year and loan repayment due in 1 year of THB 3,229.28 million was mainly resulted from the current portion of long-term loan and unsecured debentures amounted to THB 7,324.24 million. Such amount was a current portion of long-term loans from related party amounted to THB 2,000.00 million. This would not affect the Company and its subsidiary liquidity since the Company and its subsidiary have been considered the very good credit customers who have never been called for default from the banks even during the economic crisis.

In addition, the Company and its subsidiary still have the unused credit line from financial institutions amounting to approximately THB 7,644.00 million. These factors reflected the credibility and sufficiency in the financial status of the Company and its subsidiary. Nevertheless, the Company and its subsidiary have continually improved the funding structure by gradually switching the short-term borrowings into long-term borrowings at the appropriate level according to the trend of interest rates and by diversifying the sources of fund from the bank's loan to the debt and capital market in order to manage the funding cost efficiently and balance the risks accordingly.

Cash Flow

The Company and its subsidiary had the profit before tax during the year 2013 - 2015 amounted to THB 803.96 million, THB 841.24 million and THB 853.72 million respectively. After adjusting the non-cash expenditures and the change in assets and liabilities, the Company and its subsidiary had the net cash flow used in operating activities during the year 2013 - 2015 amounted to THB 4,485.66 million, THB 303.52 million and THB 41.62 million respectively. This was mainly resulted from an increase in the hire purchase receivables during the year 2013 - 2015 by THB 5,144.66 million, THB 908.86 million and THB 803.80 million respectively. The cash flow that used for increasing factoring receivables during the year 2013 - 2015 decreased by THB 61.59 million, increased by THB 138.02 million and increased by THB 5.53 million respectively. The cash flow used for increasing financial lease receivables during the year 2013 - 2015 increased by THB 99.45 million, increased by THB 93.88 million and decreased by THB 36.82 million respectively.

The net cash flow used in investing activities of the Company and its subsidiary during the year 2013 - 2015 amounted to THB 18.34 million, THB 60.76 million and THB 72.98 million respectively. Such amount was mainly from an increase in the Company and its subsidiary's investment in land, building, the office equipments and vehicles during 2013 - 2015 which amounted to THB 18.77 million, THB 56.36 million and THB 64.76 million respectively, and from an increase in investment in intangible assets (information systems) in order to increase the operational efficiency amounted to THB 2.48 million, THB 1.37 million and THB 4.18 million respectively.

Moreover, the net cash flow from financing activities of the Company and its subsidiary during the year 2013 - 2015 amounted to THB 4,508.39 million, THB 304.50 million and THB 90.75 million respectively.