Captii Limited

Investor Relations.
(Extracted from Annual Report 2021)

Dear Captii Shareholder:

On behalf of the board of directors, I am pleased to present the annual report of Captii Limited for the financial year ended 31 December 2021.

Another year of contrasts

Our group entered the 2021 financial year on the back of thirteen consecutive years of profit.

Our Unifiedcomms business generated higher revenue this year while our GlobeOSS business unfortunately did not. GlobeOSS posted revenue of S$8.7 million, a decrease of 6.6% from the S$9.3 million achieved in 2020. Unifiedcomms revenue in contrast increased by 25.9% to S$15.2 million in 2021 compared to the S$12.1 million recorded the year before.

As a result of this, group revenue increased from S$21.4 million in 2020 to S$23.9 million in 2021, an improvement of S$2.5 million.

Gross profit achieved by our group was higher this year, as a result of improved revenue. However the magnitude of the increase was lesser than that of revenue - gross profit rose by 3.2%, as compared to the 11.8% increase in revenue. This reflected the considerably lower average gross profit margin for the year of 48.7%, which resulted from the less favourable sales mix of 2021. This year the lower margin managed service contract revenues of Unifiedcomms was mainly due to higher third-party costs on certain managed service contracts.

Group profit before tax for 2021 came in at S$10.4 million, 109.4% higher compared to the S$4.9 million recorded for 2020. The substantial increase in profit before tax arose from the progress achieved at Captii Ventures which resulted in a substantial increase in the fair value of its venture investment portfolio during the year.

In terms of the bottom-line, group profit after tax for the year was S$9.5 million, representing a 127.5% improvement on the S$4.2 million recorded last year.

Our 14th consecutive year of profit with ROE uplift

2021 represented our fourteenth consecutive year of profitability. Profitability in 2021 had improved compared to 2020 - our group's return on equity (ROE) increased to 19% this year from 7.9% the year before. This improvement in our ROE performance is largely attributable to the non-cash negative goodwill and fair value gain on the Captii Ventures investment portfolio. Without this gain, our group recorded an adjusted ROE of 2.4% in 2021, lower compared to the adjusted ROE of 3.5% generated in 2020.

Growth in system sale and managed service revenues

Efforts to grow the managed service business persisted in 2021. Revenues from this contract type improved by S$1.1 million against last year with the increase being attributable to the higher managed service contract revenues from Unifiedcomms.

Group system sale contract revenue was higher for 2021, with system sale contract performance at both Unifiedcomms and GlobeOSS showing improvement. System sale revenue at GlobeOSS increased by 29% to S$5.5 million in 2021 compared to S$4.3 million recorded in 2020. Unifiedcomms system sale revenue meanwhile improved by 15.3% to S$1.5 million in 2021, as compared to S$1.3 million recorded for 2020.

Driving returns with venture investment

At the start of 2021, we continued to have adequate cash balances to continue with the strategy of augmenting organic growth with growth by strategic investment. The Captii Ventures team identified and screened several candidates for investment throughout 2021. During the year, Captii Ventures completed one further investment to bring the number of investees in the portfolio to fifteen in total. The work to identify, screen and engage on selective investment opportunities will persist in the new year but with greater focus to be placed on managing existing investments to a positive outcome.

Balance sheet strength and dividends

Apart from the one further investment made by Captii Ventures in 2021, during the year we continued to reinvest in GlobeOSS and Unifiedcomms - especially for the PostPay business – for further product development as well as for the acquisition of assets to support the fulfilment of managed service contracts. We continue to have a strong balance sheet at year-end 2021 with ample cash and cash equivalents of S$13.8 million. This was also after declaring and paying to shareholders a dividend for the eleventh year running.

We had on 20 September 2021, paid a tax- exempt interim dividend of 1.25 Singapore Cents per share. In light of the anticipated capital requirements of our group's growth and investment-driven development strategy, no further and final dividend payment has been recommended by our directors for the financial year ended 31 December 2021.

In gratitude

2021 proved to be another challenging year for our group but one that ended on a firmly positive note. We concluded the year with encouraging financial results, mainly from the progress achieved in our venture investing activities at Captii Ventures.

We look forward to doing better in the year ahead and will strive to deliver continued strength in group financial performance for 2022.

For the year that was, I extend my deepest gratitude to the talented and dedicated individuals across all the businesses that make up our group, for your commitment and perseverance. I ask the same from you again in the new financial year ahead, to move our business onward and upward. To you, our shareholder, I thank you for your continued belief and patience in our people and our business. Last but certainly not least, my thanks go to the government agencies and regulatory bodies for their guidance and support.


Wong Tze Leng
Executive Chairman

15 March 2022