Captii Limited - Financials

Investor Relations.

Financial Statements And Related Announcement - First Quarter Results

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Condensed consolidated statement of profit or loss and other comprehensive income

	Group
	Quarter ended 31 March
	2022	2021
	S$'000	S$'000
		Restated
Revenue	5,344	5,361
Cost of Sales	(2,845)	(2,638)
Gross profit	2,499	2,723
Other Items of Income:
Interest Income	33	35
Other Gains	136	293
Other Items of Expense:
Technical Support Expenses	(1,012)	(1,163)
Distribution Costs	(385)	(369)
Administrative Expenses	(583)	(530)
Other Losses	(32)	(3)
Finance Costs	(15)	(29)
Profit Before Income Tax	641	957
Income Tax Expenses	(109)	(174)

Profit/(Loss), Net of Tax	532	783

Profit/(Loss), Net of Tax Attributable to:
Owners of the Company	455	740
Non-Controlling Interests	77	43
Profit/(Loss), Net of Tax	532	783

Other comprehensive income

	Group
	Quarter ended 31 March
	2022	2021
	S$'000	S$'000
Profit/(Loss), Net of Tax	532	783
Other Comprehensive Income:
Items that may be reclassified to profit or loss in subsequent periods (net of tax)
Currency translation differences on consolidation of foreign entities (net)	(193)	(610)
Total other comprehensive income (loss) for the period	339	173

Total comprehensive income/(loss) attributable to:
Owners of the Company	287	199
Non-Controlling interest	52	(26)
Total other comprehensive income (loss) for the period	339	173

Earnings per share for profit/(loss) for the period attributable to the owners of the Company during the period:	cents	cents
Basic and diluted earnings per share	1.42	2.32

Condensed statements of financial position

	Group	Group
	As at	As at
	31/3/2022	31/12/2021
	S$'000	S$'000
		Restated
ASSETS
Non-Current Assets
Plant and Equipment	1,603	1,811
Investment Property	2,124	2,137
Intangible Assets	10,595	10,645
Investments in Subsidiaries	-	-
Investment in Jointly-Controlled Entity	-	-
Investment in an Associate	-	-
Other Financial Assets	27,164	28,523
Deferred Tax assets	1,022	1,025
Total Non-Current Assets	42,508	44,141

Current assets
Inventories	4	4
Trade and Other Receivables	11,363	11,384
Other Non-Financial Assets	1,875	2,017
Cash and Cash Equivalents	13,829	13,823
Total Current Assets	27,071	27,228

Total Assets	69,579	71,369

EQUITY AND LIABILITIES
Equity
Share Capital	31,948	31,948
Retained Earnings	29,127	28,672
Foreign Currency Translation Reserve	(8,816)	(8,648)
Equity, Attributable to Owners of the Parent	52,259	51,972
Non-Controlling Interest	10,561	10,747
Total Equity	62,820	62,719

Non-Current Liabilities
Lease Liabilities	337	417
Deferred Tax Liabilities	(0)	-
Total Non-Current Liabilities	337	417

Current Liabilities
Income Tax Payables	425	548
Trade and Other Payables	4,796	6,362
Other Non-Financial Liabilities	717	707
Lease Liabilities	336	342
Borrowings	148	274
Total Current Liabilities	6,422	8,233

Total Liabilities	6,759	8,650

Total Equity and Liabilities	69,579	71,369

Review of performance of the Group

Review of performance of the group for the financial period ended 31 March 2022 as compared to corresponding financial period ended 31 March 2021

Group Revenue

The group recorded consolidated revenue of S$5.344 million for the quarter ended 31 March 2022 ("Q1 2022"), a 0.3% marginal decrease against the revenue recorded in the corresponding quarter ended 31 March 2021 ("Q1 2021"). The decline in group revenue for Q1 2022 is attributable to lower revenue recorded by GlobeOSS.

GlobeOSS recorded revenue of S$1.674 million in Q1 2022, a decrease of 7.6% from the S$1.811 million recorded in Q1 2021. This decline in revenue was due to lower revenue from system sale contracts.

In contrast, Unifiedcomms posted revenue of S$3.67 million in Q1 2022, an increase of 3.4% from the S$3.55 million recorded in Q1 2021. This improvement in revenue was mainly driven by higher revenue from managed service contracts.

The group's sales mix in Q1 2022 showed an increase in the proportionate contribution of revenue of a recurring nature, with revenue from managed service contracts representing 83.9% of the group's total revenue in Q1 2022 as compared to 74.5% in Q1 2021. The higher contribution of managed service contracts to the group's sales mix in Q1 2022 was mainly attributable to a 36.9% drop in system sale contract revenues of both GlobeOSS and Unifiedcomms from S$1.367 million in Q1 2021 to S$0.862 million in Q1 2022.

Group Gross Profit and Gross Profit Margins

With lower revenue, the group recorded gross profit of S$2.499 million in Q1 2022, a decrease of 8.2% from the S$2.723 million achieved in Q1 2021. In addition, gross profit margin declined from 50.8% in Q1 2021 to 46.8% in Q1 2022.

The decrease in group gross profit margin is mainly attributable to the lower gross profit margin recorded on the group's managed service contract revenues, which decreased to 42.8% in Q1 2022 from 45.3% in Q1 2021. This decrease in gross profit margin was mainly due to higher third-party costs on certain managed service contracts.

The group recorded gross profit margin on its system sales contract revenues of 67.2% in Q1 2022, slightly higher against the 66.7% recorded in Q1 2021.

Interest Income

The group recorded slightly lower interest income of S$0.033 million in Q1 2022 as compared to S$0.035 million earned in Q1 2021.

Other gains and Other item of Expense

The group recorded net total expenses of S$1.891 million in Q1 2022, 5% higher than the S$1.801 million incurred in Q1 2021. This is mainly attributable to the absence in Q1 2022 of a net foreign exchange gain such as that recorded in Q1 2021 arising from the favourable exchange rate movement of USD against SGD, the group's reporting currency.

Net Profit/(Loss) and EBITDA

The group recorded net profit of S$0.532 million and EBITDA of S$0.924 million in Q1 2022, as compared to S$0.783 million in net profit and S$1.286 million in EBITDA in Q1 2021. The lower net profit and EBITDA recorded in Q1 2022 was due to the flow-down effects of the lower gross profit margin and higher net total expenses recorded in Q1 2022.

Detailed Segmental Breakdown of Group Revenue and Gross Profit

The detailed segmental breakdown of the group's revenue and gross profit for Q1 2022, together with comparative results for Q1 2021 is provided below:

Table 2.1: Group revenue as analysed by business unit for the quarter ended 31 March

	2022 S$'000	Sales mix %	2021 S$'000	Sales mix %
Unifiedcomms	3,670	68.7	3,550	66.2
GlobeOSS	1,674	31.3	1,811	33.8
Captii Ventures	-	-	-	-
Others	-	-	-	-
Total	5,344	100.0	5,361	100.0

Table 2.2: Group revenue as analysed by contract type for the quarter ended 31 March

External Sales	2022			2021
External Sales	System Sale⁽¹⁾	Managed Service⁽²⁾	Group	System Sale⁽¹⁾	Managed Service⁽²⁾	Group
Revenue	862	4,482	5,344	1,367	3,994	5,361
Gross Profit	579	1,920	2,499	912	1,811	2,723
Gross Profit (%)	67.2%	42.8%	46.8%	66.7%	45.3%	50.8%

Table 2.3: Group net total gains/(expenses) for the financial year ended 31 December

	Group
	2022 S$'000	2021 S$'000

Other Gains	136	293
Technical Support Expenses	(1,012)	(1,163)
Distribution Costs	(385)	(369)
Administrative Expenses	(583)	(530)
Other Losses	(32)	(3)
Finance Cost	(15)	(29)
Net total expenses	(1,891)	(1,801)

Review of the group's financial position as at 31 March 2022 as compared to the group's financial position as at 31 December 2021

Non-cash current assets of the group decreased from S$13.405 million as at 31 December 2021 to S$13.242 million as at 31 March 2022, a 1.2% marginal decrease.

Total non-current assets of the group decreased from S$44.141 million as at 31 December 2021 to S$42.508 million as at 31 March 2022. This 3.7% decrease in non-current assets is attributable to the decrease in venture investments of the group, following the disposal of one venture investment in the reporting period.

Total liabilities of the group decreased from S$8.65 million as at 31 December 2021 to S$6.759 million as at 31 March 2022. This 21.8% decrease in total liabilities is attributable to the decrease in trade and other payables following repayments made in the reporting period.

Review of the group's cash flow for the quarter ended 31 March 2022 as compared to the corresponding quarter ended 31 March 2021

The group's net cash flow used in operations for Q1 2022 was S$0.609 million, in contrast with the net cash flow from operations of S$0.626 million for Q1 2021. This was mainly due to the unfavourable working capital movement of S$1.398 million for Q1 2022, as compared to S$0.557 million for Q1 2021. This higher cash outflow from operations is mainly attributable to the higher repayment of trade and other payables in the current quarter.

The group's net cash flow from investing activities for Q1 2022 was S$1.426 million, in contrast with the net cash flow used in investing activities of S$0.121 million in Q1 2021. This was primarily due to proceeds received from the disposal of a venture investment in the current quarter.

The group's net cash flow used in financing activities for Q1 2022 was S$0.466 million, flat against what was recorded in Q1 2021.

Commentary

The COVID-19 pandemic continues to affect many countries in our group's regions of focus, although many territories have relaxed movement and travel restrictions. The uncertainty of economic recovery from the shock caused by COVID-19 and the prospect of another economic slowdown or a slow recovery, especially in the group's regions of focus, have weighed on the minds of management and the directors of the group when considering the outlook for the remainder of the financial year.

The impact of COVID-19 on Unifiedcomms and GlobeOSS operations in the current financial year has fortunately remained minimal. This is because these businesses operate primarily in the field of telecommunications, an essential service in any economy today. In addition, Unifiedcomms and GlobeOSS businesses have been made capable of fullyfunctioning under a work-from-home mode of operation, well ahead of movement control restrictions or lockdown orders being enforced. The group's primary customers in the Unifiedcomms and GlobeOSS businesses are telecommunications network operators and service providers that have continued to operate normally throughout COVID-19 restrictions, albeit remotely and through digital engagement, rather than face-to-face interaction. Contracts in-hand continue to be progressed and management of the group are hopeful that new projects and initiatives requiring our products and services, will continue to be pursued by customers. The possibility remains however, that larger system sale contracts that have yet to be committed in the current financial year, may be further deferred, or even abandoned entirely if macroeconomic and industry conditions worsen or do 15 not improve significantly enough. Some managed service contracts of the group which have been impacted by government restrictions or directives arising from COVID-19 policy measures, may meanwhile continue to show weaker performance.

At Captii Ventures, the group's venture investment business, the climate for business development and funding has improved but continues to be challenging for certain start-ups in industries or business areas that remain significantly affected by COVID-19. On a more positive note, the group had in the current quarter successfully materialised certain unrealised fair value gains recorded in prior years by disposing one venture investment. As a result of this exit, disposal proceeds of S$1.5m were received and are reflected in the consolidated statement of cash flows for the current quarter. Moreover, a number of other investees in the portfolio contined to grow strongly through the period under review, and contributed to the improvement in value of the overall venture investment portfolio.

Against this negative but improving macroeconomic backdrop for the future, the group remains optimistic and will continue to work closely with customers and investees, to minimise the negative impact of COVID-19 on the group financial performance. Management of the group continues to take an active and measured approach to managing risks to protect the group's people and assets, and will sustain these efforts until the effects of the lingering pandemic abate.