Malaysian gaming product distributor RGB International Bhd said Friday it had decided to “kitchen sink” its costs related to ageing trade receivables after reporting a net loss of MYR25.5 million (US$5.4 million) for the three months to 31 December 2023.
In a filing, the company revealed it had opted to recognize full impairment of these receivables to the tune of MYR35.1 million (US$7.4 million), effectively reversing what would have been an MYR9.60 million (US$2.0 million) profit for the period on performance alone.
This was despite 4Q23 revenue falling by 9% year-on-year to MYR109.6 million (US$23.1 million) due to more subdued performance across all of its business divisions.
“The Group has adopted a more cautious and prudent decision in determining the impairment loss for trade receivables, albeit the ongoing monitoring and close following up with respective debtors,” RGB explained.
“Given the aging receivables, the group has thus decided to kitchen sink these costs even though some of the debtors have agreed to a repayment schedule.
“Consequently, the Group has made an exceptional provision for impairment loss on trade receivables amounting to MYR13.9 million (US$2.9 million) for the Sales and Marketing (SSM) and MYR21.2 million (US$4.5 million) for the Technical Support and Management (TSM) divisions respectively for the quarter ended 31 December 2023.”
As a result, both divisions reported heavy losses for the quarter, however RGB noted that SSM would have booked an MYR9.1 million (US$1.9 million) profit and TSM an MYR3.02 million (US$632,000) profit without impairment.
The company also remained healthy for the year as a whole, booking a FY23 profit of MYR44.0 million (US$9.3 million) – up more than 400% on 2022 even with impairment recognition.
Revenue for the year grew by 160% to MYR707.8 million (US$149 million), led by the SSM division where revenues were 242% higher year-on-year at MYR589.8 million (US$124 million).
RGB said there was a “significant increase in number of products sold” albeit with a lower margin due to a special discount given for bulk orders.
Looking ahead, the company added that its prospects remain “robust, bolstered by the promising market conditions, especially in key areas like the Philippines.
“The Philippine Amusement and Gaming Corporation (PAGCOR) announced that the country’s GGR in 2023 reached a record Php285 billion and is projected to achieve Php336 billion in 2024,” RGB added.
“As a pivotal slot machine distributor and major player in the machine concession business in the country, the Group is well positioned to capitalize on this industry growth.
“The Group remains vigilant for emerging opportunities within the regional gaming industry and aligning its strategy with the evolving industry landscape. Barring unforeseen circumstances, the Group expects to achieve a better performance in 2024.”
