KUALA LUMPUR (Feb 24): CTOS Digital Bhd’s (KL:CTOS) net profit fell 42.2% to RM32.39 million for the fourth quarter ended Dec 31, 2024 (4QFY2024), from RM56.01 million a year ago, largely due to higher tax expenses arising from the absence of a tax credit.

During the quarter under review, the group recorded a tax expense of RM846,000 compared to a tax credit of RM26.03 million in 4QFY2023. The tax credit in 2023 was due to the overprovision of prior year taxes after the group’s wholly-owned unit CTOS Data Systems Sdn Bhd (CDS) secured another five-year extension of tax exemption from the Ministry of Finance, effective Nov 9, 2021 to Nov 8, 2026.

The group’s effective tax rate for the financial year ended Dec 31, 2024 (FY2024) stood at 8% — lower than the statutory tax rate of 24%.

Revenue for the quarter increased 5% to RM76.82 million from RM73.15 million in 4QFY2023, its bourse filing on Monday showed.

CTOS Digital declared a fourth interim dividend of 0.99 sen per share — payable on April 30 — bringing its total dividend for FY2024 to 3.25 sen per share, versus 3.33 for FY2023.

In FY2024, CTOS Digital’s net profit fell by 10% to RM106.27 million, down from RM118.11 million a year ago, despite a 16.6% increase in cumulative revenue to RM304.85 million from RM261.44 million.

Looking towards 2025, the group said it remains positive about its growth, which will be driven by strategic expansion as well as efficient and improved operational performance across all its business segments.

In the key accounts segment, the group said it is experiencing higher adoption of advanced digital solutions and analytical tools.

Meanwhile, its commercial segment continues to undertake several initiatives with the focus to drive small and medium enterprises to further leverage on credit-related tools for business decision-making.

Lastly, the direct-to-consumer segment is continuously engaging approximately 16 million credit-active consumers in Malaysia through targeted financial literacy initiatives and a series of digital marketing campaigns.

Regionally, the group said it continues to integrate its established expertise with local market insights, with the goal towards becoming a market leader in alternative credit-centric solutions, thereby providing a competitive edge to further expand its footprint in the Asean market.

“Our strategic investments continue to focus on identifying and nurturing synergistic opportunities across Malaysia and Asean. The group is actively engaging with its associate companies to further enhance their performance for the coming year,” it said.

CTOS Digital also said it maintains a positive outlook for the medium to long term, despite the presence of uncertainties in both domestic and global markets.

“The group's growth potential extends beyond our existing operations into new verticals and broader geographical footprints and is optimistic about continuing to deliver sustainable growth in the forthcoming periods,” it added.

Shares of CTOS Digital closed down three sen or 2.5% to RM1.17 on Monday, giving it a market capitalisation of RM2.7 billion. In the past one year, the stock was down 20.4%.