For a number of years, the multilevel marketing company used its operating cash flow to diversify into unrelated businesses, from property development and a travel agency to the timber trade and biodiesel production.
In 2008, they made the decision to focus on the MLM business. The transformation has reinvigorated the group’s bottom line. It made a record net profit of RM28.4 million for FY2010 ended Jan 2010, which improved further into a record quarterly net profit of RM10 million in its 1Q2011 ended May 31, 2010.
That was helped by the use of operating cash flow to reduce borrowings. It reduces its net borrowings to RM17.3 million in 1Q from RM31.3 million in the preceding quarter. The group could turn net cash by year end.
All its unrelated businesses have been wound down and losses provided for – except for ongoing property development project in Alor Star. It does not plan to scale up this division. Operating cash flow from the MLM will be ploughed back into the MLM or distributed as dividends.
In 1Q2011, besides savings in interest costs, earnings also grew through the group’s two pronged strategy of opening new markets and broadening its product range.
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