Captii Limited

Investor Relations.
 
 

Financial Statements And Related Announcement - Full Yearly Results

Financials Archive

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Consolidated Statement of Comprehensive Income

 
Group
12 months ended 31 December
2017
2016
Inc/(dec)
 
S$'000
S$'000
%
Revenue
24,807
23,452
5.8
Cost of Sales
(13,466)
(10,967)
22.8
Gross profit
11,341
12,485
(9.2)
Other Items of Income:      
Interest Income
154
259
(40.6)
Other Gains
52
2,988
(98.3)
Other Items of Expense:      
Technical Support Expenses
(3,069)
(3,126)
(1.8)
Distribution Costs
(1,290)
(1,390)
(7.2)
Administrative Expenses
(3,404)
(3,317)
2.6
Other Losses
(970)
(487)
99.2
Shared of Result from Jointly-Controlled Entity
-
(3)
(100.0)
Profit Before Income Tax
2,814
7,409
(62.0)
Income Tax Expenses
(514)
(950)
(45.9)
 
 
 
 
Profit, Net of Tax
2,300
6,459
(64.4)
 
 
 
 
Profit, Net of Tax, Attributable to:
 
 
 
Owners of the Company
1,166
5,334
(78.1)
Non-Controlling Interest
1,134
1,125
0.9
Profit, Net of Tax
2,300
6,459
(64.4)

Consolidated Statement of Comprehensive Income

 
Group
12 months ended 31 December
2017
2016
Inc/(dec)
 
S$'000
S$'000
%
Profit, Net of Tax
2,300
6,459
(64.4)
Other Comprehensive Income:      
Item that may be reclassified subsequently to profit or loss:      
Exchange Differences on Translating Foreign Operations, Net of Tax
887
(1,012)
(187.7)
Total Comprehensive Income for the period
3,187
5,447
(41.5)
       
Total Comprehensive Income for the period
Attributable to:
     
Owners of the Company
1,970
4,410
(55.3)
Non-Controlling interest
1,217
1,037
17.3
Total Comprehensive Income for the year
3,187
5,447
(41.5)

Balance Sheet

 
Group
Group
As at
As at
31/12/2017
31/12/2016
S$'000
S$'000
   
ASSETS
 
 
Non-Current Assets
 
 
Plant and Equipment
1,694
1,288
Investment Property
2,660
2,588
Intangible Assets
11,646
11,582
Investments in Subsidiaries
-
-
Investment in an Associate
1,860
1,819
Other Financial Assets
7,439
5,370
Deferred Tax assets
933
436
Total Non-Current Assets
26,232
23,083
 
Current assets
 
 
Inventories
45
26
Trade and Other Receivables
20,061
17,346
Other Assets
320
339
Cash and Cash Equivalents
7,391
9,055
Total Current Assets
27,817
26,766
 
 
 
Total Assets
54,049
49,849
 
 
 
EQUITY AND LIABILITIES
 
 
Equity
 
 
Share Capital
31,948
31,948
Retained Earnings
13,429
13,062
Foreign Currency Translation Reserve
(8,322)
(9,126)
Equity, Attributable to Owners of the Parent
37,055
35,884
Non-Controlling Interest
3,151
2,405
Total Equity
40,206
38,289
 
 
 
Non-Current Liabilities
 
 
Deferred Tax Liabilities
305
500
Total Non-Current Liabilities
305
500
 
Current Liabilities
 
 
Income Tax Payables
359
241
Trade and Other Payables
11,604
8,818
Other Liabilities
1,575
2,001
Total Current Liabilities
13,538
11,060
 
Total Liabilities
13,843
11,560
 
 
 
Total Equity and Liabilities
54,049
49,849
 
 
 

Review of results for the financial year ended 31 December 2017 as compared to corresponding financial year ended 31 December 2016

Revenue

The Group achieved consolidated revenue of S$24.807 million for the financial year ended 31 December 2017 ("2017"), an increase of 5.8% against the revenue recorded in the financial year ended 31 December 2016 ("2016"). The increase in Group revenue for 2017 is attributable to the improved revenue performance by GlobeOSS.

GlobeOSS posted revenue of S$13.088 million in 2017, an increase of 19.2% from the S$10.982 million recorded in 2016. This improvement in revenue was mainly driven by higher system sale contracts delivered in 2017.

Unifiedcomms however recorded revenue of S$11.719 million in 2017, a decrease of 4.5% from the S$12.277 million recorded in 2016. This decrease in revenue was due to lower system sale contracts which was however partly mitigated by higher revenue from managed service contracts.

The Group's Others segment received no rental revenue in 2017, following the expiry of tenancy agreement on the Group's investment property.

The Group's sales mix in 2017 showed an increase in the proportionate contribution of revenue of a recurring nature, with revenue from managed service contracts representing 53.5% of the Group's total revenue in 2017 as compared to 52.2% in 2016. The higher contribution of managed service contracts to the Group's sales mix in 2017 was mainly contributed by the improvement in managed service contract revenues of the Group, which had improved 8.3% from S$12.244 million in 2016 to S$13.266 million in 2017.

Gross Profit and Gross Profit Margins

Although Group revenue was higher in 2017, gross profit was lower at S$11.341 million as compared to S$12.485 million in 2016. This was primarily due to lower gross profit margin realised on Group's system sale contract revenues, which declined from 45.5% in 2016 to 35.6% in 2017. The decline in gross profit margin is mainly attributable to the higher proportionate contribution of system sale contract revenues by GlobeOSS, which generally deliver lower gross profit margin as a result of its typically higher third party costs.

Gross profit margin recorded by the Group on its managed service contract revenues also decreased to 54.5% in 2017 from 60.3% in 2016. This decrease in gross profit margin was mainly due to higher third-party costs on certain managed service contracts, coupled with the lower revenue contribution of certain mature, higher-margin managed service contracts.

Interest Income

The Group recorded interest income of S$0.154 million in 2017, 40.6% lower against the S$0.259 million recorded in 2016. This is mainly attributable to lower cash and cash equivalents as a result of on-going investment in other financial assets.

Other gains

The Group recorded other gains of S$0.052 million in 2017, 98.3% lower than the S$2.988 million recorded in 2016. This was mainly due to absence of fair value gain on the Group's venture investment portfolio.

Other Items of Expense

The Group recorded total expenses of S$8.733 million in 2017, 4.9% higher than the S$8.323 million incurred in 2016. This is mainly attributable to:-

* A fair value loss of S$0.351 million assessed on the Group's venture investment portfolio. This fair value loss, which is unrealised, is a result of lower estimated fair valuation of the Group's venture investment portfolio following the adoption of the most appropriate valuation techniques for each investment and may not be reflective of the actual return upon disposal of these investments in the medium to long term; and
* Higher foreign exchange loss recorded in 2017, as a result of unfavourable exchange rate movements of USD, PKR and MYR against the Group's reporting currency in SGD.

The increase in the above-mentioned expense was offset by:-

* Absence of impairment loss on investment property of S$0.271 million;
* Absence of impairment loss on intangible assets of S$0.1 million; and
* Lower distribution expenses recorded in 2017, as result of reduction of sales and business development expenses of the Group.

Net Profit and EBITDA

The Group recorded lower net profit of S$2.300 million and EBITDA of S$3.712 million in 2017 as compared to the S$6.459 million in net profit and S$8.287 million in EBITDA recorded by the Group in 2016. The lower net profit and EBITDA results recorded in 2017 are mainly attributable to the flow-down effects of lower gross profit margin, lower other income and higher operating expenses recorded in 2017.

Detailed Segmental Breakdown of Group Revenue and Gross Profit

The detailed segmental breakdown of the Group's revenue and gross profit for 2017, together with comparative results for 2016 is provided below:

Group revenue as analysed by business unit for the financial year ended 31 December

 
2017
S$'000
Sales mix
%
2016
S$'000
Sales mix
%
Unifiedcomms
11,719
47.2
12,277
52.3
GlobeOSS
13,088
52.8
10,982
46.8
Captii Ventures
-
-
-
-
Others
-
-
193
0.9
Total
24,807
100.0
23,452
100.0

Unifiedcomms - Segment for content-driven mobile VAS, messaging and signaling systems, solutions and managed services.

GlobeOSS - Segment for mobile network operation support systems, solutions and managed services.

Captii Ventures - Segment for strategic investment in early and late-stage technology ventures.

Others - Segment for operational headquarters of the Group and investment holding.

Group revenue as analysed by geographical segment for the financial year ended 31 December

External Sales
2017
Unifiedcomms
S$'000
GlobeOSS
S$'000
Others
S$'000
Group
S$'000
South East Asia (SEA)
10,474
13,072
-
23,546
South Asia (SA)
800
-
-
800
Middle East & Africa (MEA)
445
-
-
445
Others
-
16
-
16
Total
11,719
13,088
-
24,807

External Sales
2016
Unifiedcomms
S$'000
GlobeOSS
S$'000
Others
S$'000
Group
S$'000
South East Asia (SEA)
10,593
10,965
193
21,751
South Asia (SA)
833
-
-
833
Middle East & Africa (MEA)
851
-
-
851
Others
-
17
-
17
Total
12,277
10,982
193
23,452

Group revenue as analysed by contract type for the financial year ended 31 December

External Sales
2017
2016
System Sale(1)
Managed Service(2)
Group
System Sale(1)
Managed Service(2)
Group
Revenue
11,541
13,266
24,807
11,208
12,244
23,452
Gross Profit
4,105
7,236
11,341
5,102
7,383
12,485
Gross Profit (%)
35.6%
54.5%
45.7%
45.5%
60.3%
53.2%

(1) System Sale - this refers to contracts that involve the outright purchase by customers of systems comprising the Group's products and technologies, and where these systems are in turn delivered as turnkey solutions. The scope of work for a system sale contract includes system design, implementation, testing and commissioning services.

(2) Managed Service - this refers to contracts that involve the provision of both systems comprising the Group's products and technologies as well as the Group's professional services, on a recurring, revenue sharing, software-as-a-service, pay-per-use or monthly or quarterly fixed and variable fee basis. Also treated as a managed service contract are system maintenance and technical support contracts with existing customers of the Group.

Review of the Group's financial position as at 31 December 2017 as compared to the Group's financial position as at 31 December 2016

Non-cash current assets of the Group increased from $17.711 million as at 31 December 2016 to S$20.426 million as at 31 December 2017. This 15.3% increase in non-cash current assets was mainly due to the increase in trade and other receivables as a result of higher revenue achieved by the Group in respect of GlobeOSS major system sale contracts that were awarded and billed in late 2017.

Total non-current assets of the Group increased from S$23.083 million as at 31 December 2016 to S$26.232 million as at 31 December 2017. This 13.6% increase in noncurrent assets is mainly attributable to:-

* An increase in investment in other financial assets, made by the Group's subsidiary, Captii Ventures Pte Ltd; and
* An increase in investment in plant and equipment relating to new managed service contracts.

Total liabilities of the Group increased from S$11.560 million as at 31 December 2016 to S$13.843 million as at 31 December 2017. This 19.7% increase in total liabilities is attributable to the increase in trade and other payables corresponding to the higher cost of sales incurred related to the system sales contracts awarded in late 2017.

Review of the Group's cash flow for the financial year ended 31 December 2017 as compared to the corresponding financial year ended 31 December 2016

The Group's net cash flow from operations for 2017 was S$3.798 million, as compared to S$1.089 million for 2016, an increase of 248.8%. This significant increase was primarily due to a lower working capital incurred of S$0.238 million for 2017, as compared to S$4.683 million for 2016, which was mainly contributed by higher collection related to trade receivables from late 2016.

The Group's net cash flow used in investing activities for 2017 was S$3.816 million, as compared to S$3.434 million for 2016. The higher net cash used in investing activities was mainly due to the additional investment made in the plant and equipment invested for new managed service contracts.

The Group's net cash flow used in financing activities for 2017 was S$2.409 million, as compared to S$1.427 million for 2016. The higher net cash used in financing activities was mainly due to:-

* Additional restricted deposits placed as performance bond in connection with new system sale contracts awarded; and
* Dividend payout by a subsidiary to Non-Controlling Interest in 2017.

Commentary

The directors and management of the Group expect the financial year 2018 to be challenging but remain optimistic about growth prospects.

Although 2017 proved to be another unexpectedly good year for business generated from system sale contracts, management does not expect this to be a trend that can be readily extended into 2018. Significant uncertainty and hence lumpiness is still to be expected in the contribution of system sale contracts to the performance of both Unifiedcomms and GlobeOSS businesses.

Management will continue to work on improving execution in respect of strategies and tactics to grow Group managed service contract revenues and profit and further build on the improvement achieved so for this year.

The growing interest and opportunity in internet-driven application services, new media and applications delivered on an advertisement-supported or advertisement-funded model continues to be recognised by management of the Group. The Group's strategic and venture investment plans in the year ahead will continue to focus primarily on these growth businesses in the SEA and SA regions and will complement the growth initiatives of existing businesses.