Captii Limited

Investor Relations.
 
 

Financial Statements And Related Announcement - Third Quarter Results

Financials Archive

Get Adobe Reader Note: Files are in Adobe (PDF) format.
Please download the free Adobe Acrobat Reader to view these documents.

Consolidated Statement of Comprehensive Income

 
Group
Quarter ended 30 September
Q3 2019
Q3 2018
Inc/(dec)
 
S$'000
S$'000
%
Revenue
5,479
9,041
(39.4)
Cost of Sales
(2,699)
(5,494)
(50.9)
Gross profit
2,780
3,547
(21.6)
Other Items of Income:      
Interest Income
23
12
91.7
Other Gains
36
198
(81.8)
Other Items of Expense:      
Technical Support Expenses
(1,178)
(941)
25.2
Distribution Costs
(436)
(475)
(8.2)
Administrative Expenses
(562)
(682)
(17.6)
Other Losses
187
23
713.0
Finance Costs
(33)
-
100.0
Profit Before Income Tax
817
1,682
(51.4)
Income Tax Expenses
112
(417)
(126.9)
       
Profit, Net of Tax
929
1,265
(26.6)
       
Profit, Net of Tax Attributable to:      
Owners of the Company
936
782
19.7
Non-Controlling Interest
(7)
483
(101.4)
Profit, Net of Tax
929
1,265
(26.6)

 
Group
9 months ended 30 September
2019
2018
Inc/(dec)
 
S$'000
S$'000
%
Revenue
17,286
22,710
(23.9)
Cost of Sales
(8,234)
(14,179)
(41.9)
Gross profit
9,052
8,531
6.1
Other Items of Income:      
Interest Income
71
37
91.9
Other Gains
502
200
151.0
Other Items of Expense:      
Technical Support Expenses
(3,356)
(2,485)
35.1
Distribution Costs
(1,284)
(1,337)
(4.0)
Administrative Expenses
(1,733)
(1,919)
(9.7)
Other Losses
(86)
(17)
405.9
Finance Costs
(100)
(1)
9,990.0
Profit Before Income Tax
3,066
3,009
1.9
Income Tax Expenses
(208)
(676)
(69.2)
       
Profit, Net of Tax
2,858
2,333
22.5
       
Profit, Net of Tax Attributable to:      
Owners of the Company
2,587
1,504
72.0
Non-Controlling Interest
271
829
(67.3)
Profit, Net of Tax
2,858
2,333
22.5

Consolidated Statement of Comprehensive Income

 
Group
Quarter ended 30 September
Q3 2019
Q3 2018
Inc/(dec)
 
S$'000
S$'000
%
Profit, Net of Tax
929
1,265
(26.6)
Other Comprehensive Income:      
Item that may be reclassified subsequently to profit or loss:      
Exchange Differences on Translating Foreign Operations, Net of Tax
198
(711)
127.9
Total Comprehensive Income for the period
1,127
554
103.4
       
Total Comprehensive Income for the period
Attributable to:
     
Owners of the Company
1,110
148
650.0
Non-Controlling interest
17
406
(95.8)
Total Comprehensive Income for the year
1,127
554
103.4

 
Group
9 months ended 30 September
2019
2018
Inc/(dec)
 
S$'000
S$'000
%
Profit, Net of Tax
2,858
2,333
22.5
Other Comprehensive Income:      
Item that may be reclassified subsequently to profit or loss:      
Exchange Differences on Translating Foreign Operations, Net of Tax
120
62
93.5
Total Comprehensive Income for the period
2,978
2,395
24.3
       
Total Comprehensive Income for the period
Attributable to:
     
Owners of the Company
2,702
1,573
71.8
Non-Controlling interest
276
822
(66.4)
Total Comprehensive Income for the year
2,978
2,395
24.3

Balance Sheet

 
Group
Group
As at
As at
30/9/2019
31/12/2018
S$'000
S$'000
   
ASSETS    
Non-Current Assets    
Plant and Equipment
1,763
1,825
Investment Property
2,309
2,305
Intangible Assets
10,939
11,050
Investments in Subsidiaries
-
-
Investment in an Associate
781
2,255
Other Financial Assets
11,468
8,948
Deferred Tax assets
1,546
1,313
Total Non-Current Assets
28,806
27,696
     
Current assets    
Inventories
5
488
Trade and Other Receivables
16,109
16,549
Other Assets
1,246
2,330
Cash and Cash Equivalents
7,536
8,686
Total Current Assets
24,896
28,053
     
Total Assets
53,702
55,749
     
EQUITY AND LIABILITIES    
Equity    
Share Capital
31,948
31,948
Retained Earnings
17,559
15,371
Foreign Currency Translation Reserve
(8,178)
(8,293)
Equity, Attributable to Owners of the Parent
41,329
39,026
Non-Controlling Interest
4,146
4,080
Total Equity
45,475
43,106
     
Non-Current Liabilities    
Deferred Tax Liabilities
53
53
Total Non-Current Liabilities
53
53
     
Current Liabilities    
Income Tax Payables
134
102
Trade and Other Payables
4,301
7,047
Other Liabilities
2,264
3,423
Borrowings
1,475
2,018
Total Current Liabilities
8,174
12,590
     
Total Liabilities
8,227
12,643
     
Total Equity and Liabilities
53,702
55,749
     

Review of results for the third quarter ended 30 September 2019 as compared to corresponding quarter ended 30 September 2018

Group Revenue

The Group recorded consolidated revenue of S$5.479 million for the quarter ended 30 September 2019 ("Q3 2019"), a decrease of 39.4% against the revenue achieved in the corresponding quarter ended 30 September 2018 ("Q3 2018"). The decline in Group revenue for Q3 2019 is attributable to lower revenue recorded by both Unifiedcomms and GlobeOSS.

GlobeOSS recorded revenue of S$2.874 million in Q3 2019, a decrease of 52.1% from the S$5.996 million recorded in Q3 2018. This decrease in revenue was due to lower system sale contract revenues as a result of delay in award of new system sale contracts and slower than expected delivery of system sale contract in-hand.

Unifiedcomms recorded revenue of S$2.605 million in Q3 2019, a decrease of 14.4% from the S$3.045 million recorded in Q3 2018. This decline in revenue was due to lower revenues from both system sale and managed service contracts.

The Group's sales mix in Q3 2019 showed an increase in the proportionate contribution of revenue of a recurring nature, with revenue from managed service contracts representing 66.8% of the Group's total revenue in Q3 2019 as compared to 42.7% in Q3 2018. The higher contribution of managed service contracts to the Group's sales mix in Q3 2019 was mainly due to lower system sale contract revenues contribution from GlobeOSS, which had decreased 64.9% from S$5.183 million in Q3 2018 to S$1.820 million in Q3 2019.

Group Gross Profit and Gross Profit Margins

With the lower revenue in Q3 2019, the Group recorded gross profit of S$2.780, a decrease of 21.6% from the S$3.547 million achieved in Q3 2018. This impact was partly mitigated by the higher gross profit margin of 50.7% in Q3 2019 against 39.2% in Q3 2018. This improvement in gross profit margin is mainly attributable to the lower proportionate contribution of system sale contract revenues by GlobeOSS, which generally delivers lower gross profit margin as a result of its typical higher third party cost.

Gross profit margin recorded by the Group on its managed service contract revenues decreased to 49.4% in Q3 2019 from 54.2% in Q3 2018. This decrease in gross profit margin was mainly due to higher third-party costs on certain managed service contracts.

Interest Income

The Group recorded interest income of S$0.023 million in Q3 2019, 91.7% higher against the S$0.012 million recorded in Q3 2018, as a result of higher bank balances in this reporting period.

Other gains

The Group recorded other gains of S$0.036 million in Q3 2019, 81.8% lower than the S$0.198 million recorded in Q3 2018. This is mainly attributable to absence of fair value gain assessed on the Group's venture investment portfolio.

Other Items of Expense

The Group recorded total expenses of S$2.022 million in Q3 2019, 2.5% lower than the S$2.075 million incurred in Q3 2018. This is mainly attributable to:

The decrease in the above-mentioned expenses was partly offset by a 25.2% increase in technical support expenses from S$0.941 million in Q3 2018 to S$1.178 million in Q3 2019. This increase in technical support expenses is a result of an increase in the technical support headcount of GlobeOSS.

Group Net Profit and EBITDA

The Group recorded lower net profit of S$0.929 million and EBITDA of S$1.115 million in Q3 2019 as compared to S$1.265 million in net profit and S$1.953 million in EBITDA recorded by the Group in Q3 2018. The lower net profit and EBITDA results recorded in Q3 2019 are mainly attributable to the flow-down effects of the lower revenue and other income recorded in Q3 2019, though partly mitigated by higher GP margin and lower operating expenses.

Detailed Segmental Breakdown of Group Revenue and Gross Profit

The detailed segmental breakdown of the Group's revenue and gross profit for Q3 2019, together with comparative results for Q3 2018 is provided below:

Table 8.1: Group consolidated revenue as analysed by business unit for the quarter ended 30 September

 
Q3 2019
S$'000
Sales mix
%
Q3 2018
S$'000
Sales mix
%
Unifiedcomms
2,605
47.5
3,045
33.7
GlobeOSS
2,874
52.5
5,996
66.3
Captii Ventures
-
-
-
-
Others
-
-
-
-
Total
5,479
100.0
9,041
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.

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

Table 8.2: Group consolidated revenue as analysed by geographical segment for the quarter ended 30 September

External Sales
Q3 2019
Unifiedcomms
S$'000
GlobeOSS
S$'000
Others
S$'000
Group
S$'000
South East Asia (SEA)
2,339
2,873
-
5,212
South Asia (SA)
138
-
-
138
Middle East & Africa (MEA)
128
-
-
128
Others
-
1
-
1
Total
2,605
2,874
-
5,479

External Sales
Q3 2018
Unifiedcomms
S$'000
GlobeOSS
S$'000
Others
S$'000
Group
S$'000
South East Asia (SEA)
2,717
5,992
-
8,709
South Asia (SA)
187
-
-
187
Middle East & Africa (MEA)
141
-
-
141
Others
-
4
-
4
Total
3,045
5,996
-
9,041

Table 8.3: Group consolidated revenue as analysed by contract type for the quarter ended 30 September

External Sales
Q3 2019
Q3 2018
System Sale(1)
Managed Service(2)
Group
System Sale(1)
Managed Service(2)
Group
Revenue
1,820
3,659
5,479
5,183
3,858
9,041
Gross Profit
973
1,807
2,780
1,455
2,092
3,547
Gross Profit (%)
53.5%
49.4%
50.7%
28.1%
54.2%
39.2%

(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 results for the nine months ended 30 September 2019 as compared to corresponding financial period ended 30 September 2018

Group Revenue

The Group recorded consolidated revenue of S$17.286 million for the nine months ended 30 September 2019 ("9M 2019"), a decrease of 23.9% against the revenue achieved in the corresponding period ended 30 September 2018 ("9M 2018"). The decline in Group revenue for 9M 2019 is attributable to lower revenue recorded by GlobeOSS.

GlobeOSS recorded revenue of S$7.151 million in 9M 2019, a decrease of 49.2% from the S$14.066 million recorded in 9M 2018. This decrease in revenue was due to lower system sale contract revenues as a result of delay in the award of new system sale contracts and slower than expected delivery of system sale contracts in-hand.

In contrast, Unifiedcomms posted revenue of S$10.135 million in 9M 2019, an increase of 17.2% from the S$8.644 million recorded in 9M 2018. This improvement in revenue was driven by higher system sale revenues.

The Group's sales mix in 9M 2019 showed an increase in the proportionate contribution of revenue of a recurring nature, with revenue from managed service contracts representing 59.7% of the Group's total revenue in 9M 2019 as compared to 47.8% in 9M 2018. The higher contribution of managed service contracts to the Group's sales mix in 9M 2019 was mainly due to lower system sale contract revenues from GlobeOSS, which had decreased 41.2% from S$11.857 million in 9M 2018 to S$6.967 million in 9M 2019.

Gross Profit and Gross Profit Margins

Although Group revenue was lower in 9M 2019, gross profit was higher at S$9.052 million as compared to S$8.531 million recorded in 9M 2018. This is attributtable to the higher gross profit margin of 52.4% in 9M 2019 against 37.6% in 9M 2018, which was driven by the improvement in gross profit margin on system sale contract revenues. This is attributable to the higher proportionate contribution of system sale contract revenues by Unifiedcomms, which generally delivers higher gross profit margins.

Gross profit margin recorded by the Group on its managed service contract revenues decreased to 50.1% in 9M 2019 from 54.5% in 9M 2018. This decrease in gross profit margin was mainly due to higher third-party costs on certain managed service contracts.

Interest Income

The Group recorded interest income of S$0.071 million in 9M 2019, 91.9% higher against the S$0.037 million recorded in 9M 2018, as a result of higher bank balances in this reporting period.

Other gains

The Group recorded other gains of S$0.502 million in 9M 2019, 151% higher against the S$0.2 million recorded in 9M 2018. This is mainly attributable to higher fair value gain assessed on the Group's venture investment portfolio.

Other Items of Expense

The Group recorded total expenses of S$6.559 million in 9M 2019, 13.9% higher than the S$5.759 million incurred in 9M 2018. This is mainly attributable to:

The increase in the above-mentioned expenses was partly mitigated by a 9.7% decrease in administrative expenses from S$1.919 million in 9M 2018 to S$1.733 million in 9M 2019. This decrease in administrative expenses is a result of reduction in the administrative headcount of the Group.

Net Profit and EBITDA

The Group recorded higher net profit of S$2.858 million and EBITDA of S$3.963 million in 9M 2019 as compared to S$2.333 million in net profit and S$3.805 million in EBITDA recorded by the Group in 9M 2018. The higher net profit and EBITDA results recorded in 9M 2019 are mainly attributable to the flow-down effects of the higher GP margin and higher other income achieved in 9M 2019, though partly offset by higher operating expenses.

Detailed Segmental Breakdown of Group Revenue and Gross Profit

The detailed segmental breakdown of the Group's revenue and gross profit for 9M 2019, together with comparative results for 9M 2018 is provided below:

Table 8.4: Group revenue as analysed by business unit for the nine months ended 30 September

 
2019
S$'000
Sales mix
%
2018
S$'000
Sales mix
%
Unifiedcomms
10,135
58.6
8,644
38.1
GlobeOSS
7,151
41.4
14,066
61.9
Captii Ventures
-
-
-
-
Others
-
-
-
-
Total
17,286
100.0
22,710
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.

Table 8.5: Group revenue as analysed by geographical segment for the nine months ended 30 September

External Sales
2019
Unifiedcomms
S$'000
GlobeOSS
S$'000
Others
S$'000
Group
S$'000
South East Asia (SEA)
9,357
7,147
-
16,504
South Asia (SA)
426
-
-
426
Middle East & Africa (MEA)
352
-
-
352
Others
-
4
-
4
Total
10,135
7,151
-
17,286

External Sales
2018
Unifiedcomms
S$'000
GlobeOSS
S$'000
Others
S$'000
Group
S$'000
South East Asia (SEA)
7,802
14,054
-
21,856
South Asia (SA)
558
-
-
558
Middle East & Africa (MEA)
284
-
-
284
Others
-
12
-
12
Total
8,644
14,066
-
22,710

Table 8.6: Group revenue as analysed by contract type for the nine months ended 30 September

External Sales
2019
2018
System Sale(1)
Managed Service(2)
Group
System Sale(1)
Managed Service(2)
Group
Revenue
6,967
10,319
17,286
11,857
10,853
22,710
Gross Profit
3,881
5,171
9,052
2,615
5,916
8,531
Gross Profit (%)
55.7%
50.1%
52.4%
22.1%
54.5%
37.6%

(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 30 September 2019 as compared to the Group's financial position as at 31 December 2018

Non-cash current assets of the Group decreased from $19.367 million as at 31 December 2018 to S$17.360 million as at 30 September 2019. This 10.4% decrease in non-cash current assets was mainly due to decrease in inventories, trade and other receivables and other assets, as a result of project deployment and lower revenue recorded.

Total non-current assets of the Group increased from S$27.696 million as at 31 December 2018 to S$28.806 million as at 30 September 2019 representing an increase of 4%. This increase comprises mainly i) an increase in fair value of S$1.935 million in the Group's other financial assets; and ii) a reduction in fair value of S$1.469 million in the Group's investment in an associate. The said associate and other financial assets are investees in the Group's venture investment portfolio. The net effect of their fair value movements is reflected under the fair value gain on investments amounting to S$0.466 million for the current period. These fair value movements assessed on the Group's venture investment portfolio, which are unrealised, is a result of changes in estimated fair valuation of the Group's venture investments 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. In addition, increase in investment in other financial assets, made by the Group's venture investment subsidiary, Captii Ventures Pte Ltd.

Total liabilities of the Group decreased from S$12.643 million as at 31 December 2018 to S$8.227 million as at 30 September 2019. This 34.9% decrease in total liabilities is attributable to decrease in trade and other payables and borrowings following repayments in the reporting period.

Review of the Group's cash flow for the quarter and nine months ended 30 September 2019 as compared to the corresponding period ended 30 September 2018

The Group's net cash flow from operations for Q3 2019 was S$1.381 million, as compared to S$1.874 million for Q3 2018, a decrease of 26.3%. This decrease was mainly due to lower profit before tax of S$0.817 million in the current reporting period, as compared to S$1.682 million for Q3 2018.

The Group's net cash flow from operations for 9M 2019 was S$1.614 million, as compared to S$2.292 million for 9M 2018, a decrease of 29.6%. This decrease was mainly due to higher working capital incurred of S$1.883 million in the current reporting period, as compared to S$1.315 million for 9M 2018.

The Group's net cash flow used in investing activities for Q3 2019 was S$0.835 million, as compared to S$0.43 million for Q3 2018. The higher net cash used in investing activities was mainly due to the higher volume of venture investments and higher investment in plant and equipment for new managed service contracts made in the current quarter as compared to Q3 2018.

The Group's net cash flow used in investing activities for 9M 2019 was S$1.116 million, as compared to S$1.974 million for 9M 2018. The lower net cash used in investing activities was mainly due to the lower volume of venture investments made in the current period as compared to 9M 2018.

The Group's net cash flow used in financing activities for Q3 2019 was S$0.76 million, as compared to S$0.489 million for Q3 2018. This increase was mainly due to repayment made to borrowings.

The Group's net cash flow used in financing activities for 9M 2019 was S$0.962 million, as compared to S$1.006 million for 9M 2018. This decrease was mainly due to withdrawal of restricted deposits placed as performance bond in connection with new system sale contracts requirement, in contrast with additional restricted deposits placed in 9M 2018. This impact was partly offset by i) Higher dividend payout to Non-Controlling Interest; and ii) Higher repayment made to borrowings.

Commentary

The directors and management of the Group expect the remainder of 2019 to be challenging but remain optimistic about growth prospects.

Although the growth in system sale business of GlobeOSS in 2017 and 2018 had significantly augmented the slower than desired growth of the Group's managed service contract portfolio, uncertainty and hence lumpiness is still to be expected in the contribution of system sale contracts to the Group's results.

The need for management to continue to strengthen the Group's managed service contract portfolio and to continue to grow its venture investment portfolio as the basis for delivering steady and sustainable growth, remains.

The growing interest and opportunity in internet-driven application services for enterprises, fintech as well as internet and handset-app delivered digital media will guide the Group's venture investment activities. The Group's venture investment plans in the year ahead will continue to focus primarily on these growth businesses in the SEA region and will complement the organic growth strategy in place for the Unifiedcomms and GlobeOSS businesses.