Captii Limited

Investor Relations.
 
 

Financial Statements And Related Announcement - Second Quarter Results

Financials Archive

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Consolidated Statement of Comprehensive Income

 
Group
Quarter ended 30 June
Q2 2017
Q2 2016
Inc/(dec)
 
S$'000
S$'000
%
Revenue
4,352
5,444
(20.1)
Cost of Sales
(2,016)
(2,166)
(6.9)
Gross profit
2,336
3,278
(28.7)
Other Items of Income:      
Interest Income
40
74
(45.8)
Other Gains
3
5
(48.0)
Other Items of Expense:      
Technical Support Expenses
(733)
(836)
(12.4)
Distribution Costs
(442)
(463)
(4.5)
Administrative Expenses
(657)
(632)
4.0
Other Losses
(129)
18
(817.8)
Shared of Result from Jointly-Controlled Entity
-
(2)
0.0
Profit Before Income Tax
418
1,442
(71.0)
Income Tax Expenses
(106)
(271)
(60.8)
 
 
 
 
Profit, Net of Tax
312
1,171
(73.4)
 
 
 
 
Profit, Net of Tax, Attributable to:
 
 
 
Owners of the Company
216
984
(78.1)
Non-Controlling Interest
96
187
(48.7)
Profit, Net of Tax
312
1,171
(73.4)

 
Group
6 months ended 30 June
2017
2016
Inc/(dec)
 
S$'000
S$'000
%
Revenue
9,351
9,375
(0.3)
Cost of Sales
(4,393)
(3,678)
19.4
Gross profit
4,958
5,697
(13.0)
Other Items of Income:      
Interest Income
73
148
(50.7)
Other Gains
3
7
(59.9)
Other Items of Expense:      
Technical Support Expenses
(1,513)
(1,622)
(6.7)
Distribution Costs
(888)
(903)
(1.7)
Administrative Expenses
(1,223)
(1,176)
4.0
Other Losses
(180)
(251)
(28.7)
Shared of Result from Jointly-Controlled Entity
-
(3)
(100.0)
Profit Before Income Tax
1,230
1,897
(35.1)
Income Tax Expenses
(304)
(366)
(17.1)
 
 
 
 
Profit, Net of Tax
926
1,531
(39.5)
 
 
 
 
Profit, Net of Tax, Attributable to:
 
 
 
Owners of the Company
626
1,216
(48.5)
Non-Controlling Interest
300
315
(4.6)
Profit, Net of Tax
926
1,531
(39.5)

Consolidated Statement of Comprehensive Income

 
Group
Quarter ended 30 June
Q2 2017
Q2 2016
Inc/(dec)
 
S$'000
S$'000
%
Profit, Net of Tax
312
1,171
(73.4)
Other Comprehensive Income:      
Item that may be reclassified subsequently to profit or loss:      
Exchange Differences on Translating Foreign Operations, Net of Tax
639
(888)
(172.0)
Total Comprehensive Income for the period
951
283
236.0
       
Total Comprehensive Income for the period
Attributable to:
     
Owners of the Company
808
140
477.0
Non-Controlling interest
143
143
(0.0)
Total Comprehensive (Loss)/Income for the period
951
283
236.0

 
Group
6 months ended 30 June
2017
2016
Inc/(dec)
 
S$'000
S$'000
%
Profit, Net of Tax
926
1,531
(39.5)
Other Comprehensive Income:      
Item that may be reclassified subsequently to profit or loss:      
Exchange Differences on Translating Foreign Operations, Net of Tax
(79)
575
(113.7)
Total Comprehensive Income for the period
847
2,106
(59.8)
       
Total Comprehensive Income for the period
Attributable to:
     
Owners of the Company
556
1,767
68.6
Non-Controlling interest
291
339
(14.1)
Total Comprehensive (Loss)/Income for the period
847
2,106
(59.8)

Balance Sheet

 
Group
Group
As at
As at
30/6/2017
31/12/2016
S$'000
S$'000
   
ASSETS
 
 
Non-Current Assets
 
 
Plant and Equipment
1,613
1,288
Investment Property
2,580
2,588
Intangible Assets
11,389
11,582
Investments in Subsidiaries
-
-
Investment in an Associate
1,819
1,819
Other Financial Assets
6,138
5,370
Deferred Tax assets
435
436
Total Non-Current Assets
23,974
23,083
 
Current assets
 
 
Inventories
30
26
Trade and Other Receivables
12,325
17,346
Other Assets
260
339
Cash and Cash Equivalents
9,002
9,055
Total Current Assets
21,617
26,766
 
 
 
Total Assets
45,591
49,849
 
 
 
EQUITY AND LIABILITIES
 
 
Equity
 
 
Share Capital
31,948
31,948
Retained Earnings
13,688
13,062
Foreign Currency Translation Reserve
(9,196)
(9,126)
Equity, Attributable to Owners of the Parent
36,440
35,884
Non-Controlling Interest
2,229
2,405
Total Equity
38,669
38,289
 
 
 
Non-Current Liabilities
 
 
Deferred Tax Liabilities
500
500
Total Non-Current Liabilities
500
500
 
Current Liabilities
 
 
Income Tax Payables
323
241
Trade and Other Payables
3,171
8,818
Other Liabilities
2,928
2,001
Total Current Liabilities
6,422
11,060
 
Total Liabilities
6,922
11,560
 
 
 
Total Equity and Liabilities
45,591
49,849
 
 
 

Review of Performance

Review of results for the second quarter ended 30 June 2017 as compared to corresponding quarter ended 30 June 2016

Group Revenue

The Group recorded consolidated revenue of S$4.352 million for the quarter ended 30 June 2017 (“Q2 2017”), a decrease of 20.1% against the revenue recorded in the corresponding quarter ended 30 June 2016 (“Q2 2016”). The decline in Group revenue for Q2 2017 is attributable to lower revenue recorded by both Unifiedcomms and GlobeOSS.

Unifiedcomms recorded revenue of S$2.945 million in Q2 2017, a decrease of 17.8% from the S$3.583 million recorded in Q2 2016. This decrease in revenue was due to lower system sale contract revenues following delays in award of new system sale contracts and slower than expected delivery of system sale contracts in-hand.

GlobeOSS recorded revenue of S$1.407 million in Q2 2017, a decline of 22.2% from the S$1.808 million recorded in Q2 2016. This decline in revenue is attributable to the slower-than-expected delivery of system sale contracts in Q2 2017.

The Group’s Others segment received nil rental revenue in Q2 2017, following the expiry of tenancy agreement on the Group's investment property.

The Group’s sales mix in Q2 2017 showed an increase in the proportionate contribution of revenue of a recurring nature, with revenue from managed service contracts representing 73.7% of the Group’s total revenue in Q2 2017 as compared to 57.3% in Q2 2016. The higher contribution of managed service contracts to the Group’s sales mix in Q2 2017 is mainly attributable to the decrease in system sale contract revenues of the Group, which had declined 50.8% from S$2.326 million in Q2 2016 to S$1.143 million in Q2 2017.

Group Gross Profit and Gross Profit Margins

With the lower revenue in Q2 2017, the Group recorded gross profit of S$2.336 million in Q2 2017, a decrease of 28.7% from the S$3.278 million recorded in Q2 2016.

Group gross profit margin was also lower at 53.7% as compared to 60.2% in Q2 2016. This was primarily due to lower gross profit margin realised on the Group’s system sale contract revenues, which declined from 60.1% in Q2 2016 to 53.6% in Q2 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 53.7% in Q2 2017 from 60.3% in Q2 2016. This decrease in gross profit margin was primarily due to higher third-party costs on certain managed service contracts.

Interest Income

The Group recorded interest income of S$0.04 million in Q2 2017, 45.8% lower against the S$0.074 million recorded in Q2 2016. This is mainly attributable to lower cash and cash equivalents as a result of on-going investment in other financial assets.

Other Items of Expense

The Group recorded total expenses of S$1.961 million in Q2 2017, 2.4% higher than the S$1.915 million incurred in Q2 2016. This was primarily due to higher foreign exchange loss 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 partly offset by lower technical support expenses recorded in Q2 2017.

Group Net Profit and EBITDA

The Group recorded lower net profit of S$0.312 million and EBITDA of S$0.665 million in Q2 2017 as compared to the S$1.171 million in net profit and S$1.674 million in EBITDA recorded by the Group in Q2 2016. The lower net profit and EBITDA results recorded in Q2 2017 are mainly attributable to the flow-down effects of lower revenue and lower gross profit margin, coupled with higher operating expenses recorded in Q2 2017.

Detailed Segmental Breakdown of Group Revenue and Gross Profit

The detailed segmental breakdown of the Group’s revenue and gross profit for Q2 2017, together with comparative results for Q2 2016 is provided below:

Group consolidated revenue as analysed by business unit for the quarter ended 30 June

 
Q2 2017
S$'000
Sales mix
%
Q2 2016
S$'000
Sales mix
%
Unifiedcomms
2,945
67.7
3,583
65.8
GlobeOSS
1,407
32.3
1,808
33.2
Others
-
-
53
1.0
Total
4,352
100.0
5,444
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.

Group consolidated revenue as analysed by geographical segment for the quarter ended 30 June

External Sales
Q2 2017
Unifiedcomms
S$'000
GlobeOSS
S$'000
Others
S$'000
Group
S$'000
South East Asia (SEA)
2,669
1,404
-
4,073
South Asia (SA)
198
-
-
193
Middle East & Africa (MEA)
83
-
-
83
Others
-
3
-
3
Total
2,958
1,407
-
4,352

External Sales
Q2 2016
Unifiedcomms
S$'000
GlobeOSS
S$'000
Others
S$'000
Group
S$'000
South East Asia (SEA)
3,098
1,808
53
4,959
South Asia (SA)
205
-
-
205
Middle East & Africa (MEA)
280
-
-
280
Others
-
-
-
-
Total
3,583
1,808
53
5,444

Group consolidated revenue as analysed by contract type for the quarter ended 30 June

External Sales
Q2 2017
Q2 2016
System Sale(1)
Managed Service(2)
Group
System Sale(1)
Managed Service(2)
Group
Revenue
1,143
3,209
4,352
2,326
3,118
5,444
Gross Profit
613
1,723
2,336
1,398
1,880
3,278
Gross Profit (%)
53.60%
53.70%
53.70%
60.10%
60.30%
60.20%

(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 six months ended 30 June 2017 as compared to corresponding financial period ended 30 June 2016

Revenue

The Group recorded consolidated revenue of S$9.351 million for the six months ended 30 June 2017 (“6M 2017”), flat against the revenue of S$9.375 million recorded in the corresponding period ended 30 June 2016 (“6M 2016”).

Unifiedcomms recorded revenue of S$5.903 million in 6M 2017, a decrease of 8.0% from the S$6.416 million recorded in 6M 2016. This decrease in revenue was due to delays in the award of new system sale contracts.

GlobeOSS posted revenue of S$3.448 million in 6M 2017, an increase of 20.9% from the S$2.852 million recorded in 6M 2016. This improvement in revenue was driven by new system sale contracts delivered in Q1 2017.

The Group’s Others segment received nil rental revenue in 6M 2017, following the expiry of tenancy agreement on the Group's investment property.

The Group’s sales mix in 6M 2017 showed an increase in the proportionate contribution of revenue of a recurring nature, with revenue from managed service contracts representing 67.0% of the Group’s total revenue in 6M 2017 as compared to 64.5% in 6M 2016. The higher contribution of managed service contracts to the Group’s sales mix in 6M 2017 is mainly attributable to the decrease in system sale contract revenues of the Group, which had declined 7.3% from S$3.329 million in 6M 2016 to S$3.085 million in 6M 2017.

Gross Profit and Gross Profit Margins

The Group recorded gross profit of S$4.958 million in 6M 2017, a decrease of 13.0% from the S$5.697 million recorded in 6M 2016, as a result of lower gross profit margin of 53.0% as compared to 60.8% in 6M 2016. This was primarily due to lower gross profit margin realised on Group’s system sale contract revenues, which declined from 61.8% in 6M 2016 to 48.9% in 6M 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 55.1% in 6M 2017 from 60.2% in 6M 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$0.073 million in 6M 2017, 50.7% lower against the S$0.148 million recorded in 6M 2016. This is mainly attributable to lower cash and cash equivalents as a result of on-going investment in other financial assets.

Other Items of Expense

The Group recorded total expenses of S$3.804 million in 6M 2017, 3.8% lower than the S$3.955 million incurred in 6M 2016. This was primarily due to :-

* Lower foreign exchange loss as a result of favourable exchange rate movements of MYR against the Group's reporting currency in SGD; and
* Lower technical support expenses recorded in 6M 2017, as compared to 6M 2016. This is mainly attributable to higher rate of capitalisation of technical support resource costs into intellectual property that related to new managed service contracts.

Net Profit and EBITDA

The Group recorded lower net profit of S$0.926 million and EBITDA of S$1.713 million in 6M 2017 as compared to the S$1.531 million in net profit and S$2.372 million in EBITDA recorded by the Group in 6M 2016. The lower net profit and EBITDA results recorded in 6M 2017 are mainly attributable to the flow-down effects of lower revenue and lower gross profit margin recorded in 6M 2017.

Detailed Segmental Breakdown of Group Revenue and Gross Profit

The detailed segmental breakdown of the Group’s revenue and gross profit for 6M 2017, together with comparative results for 6M 2016 is provided below:

Group revenue as analysed by business unit for the six months ended 30 June

 
2017
S$'000
Sales mix
%
2016
S$'000
Sales mix
%
Unifiedcomms
5,903
63.1
6,416
68.4
GlobeOSS
3,448
36.9
2,852
30.4
Others
-
-
107
1.2
Total
9,351
100.0
9,375
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.

Group revenue as analysed by geographical segment for the six months ended 30 June

External Sales
2017
Unifiedcomms
S$'000
GlobeOSS
S$'000
Others
S$'000
Group
S$'000
South East Asia (SEA)
5,344
3,441
-
8,785
South Asia (SA)
394
-
-
394
Middle East & Africa (MEA)
165
-
-
165
Others
-
7
-
7
Total
5,903
3,448
-
9,351

External Sales
2016
Unifiedcomms
S$'000
GlobeOSS
S$'000
Others
S$'000
Group
S$'000
South East Asia (SEA)
5,553
2,835
107
8,495
South Asia (SA)
421
-
-
421
Middle East & Africa (MEA)
442
-
-
442
Others
-
17
-
17
Total
6,416
2,852
107
9,375

Group revenue as analysed by contract type for the six months ended 30 June

External Sales
2017
2016
System Sale(1)
Managed Service(2)
Group
System Sale(1)
Managed Service(2)
Group
Revenue
3,085
6,266
9,351
3,329
6,046
9,375
Gross Profit
1,508
3,450
4,958
2,058
3,639
5,697
Gross Profit (%)
48.90%
55.10%
53.00%
61.80%
60.20%
60.80%

(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 June 2017 as compared to the Group's financial position as at 31 December 2016

Non-cash current assets of the Group decreased from $17.711 million as at 31 December 2016 to S$12.615 million as at 30 June 2017. This 28.8% decrease in non-cash current assets was mainly due to the decrease in trade and other receivables of the Group, as a result of higher collections relating to trade receivables from late 2016.

Total non-current assets of the Group increased from S$23.083 million as at 31 December 2016 to S$23.974 million as at 30 June 2017. This 3.9% increase in non-current 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.

Total liabilities of the Group decreased from S$11.560 million as at 31 December 2016 to S$6.922 million as at 30 June 2017. This 40.1% decrease in total liabilities is attributable to the decrease in trade and other payables, associated with the higher collection relating to receivables from late 2016.

Review of the Group's cash flow for the quarter and six months ended 30 June 2017 as compared to the corresponding period ended 30 June 2016

The Group's net cash flow used in operations for Q2 2017 was S$1.082 million, in contrast with the net cash flows from operations of S$0.175 million for Q2 2016. This significant decrease was primarily due lower profit before tax of S$0.418 million for Q2 2017 versus S$1.442 million for Q2 2016.

The Group's net cash flow from operations for 6M 2017 was S$2.079 million, as compared to S$0.699 million for 6M 2016, an increase of 197.4%. This significant increase was primarily due to a favourable working capital change of S$0.365 million for 6M 2017, in contrast with the unfavourable working capital change of S$1.676 million for 6M 2016, which was mainly contributed by higher collection related to trade receivables from late 2016. The higher net cash from operations was partly offset by the lower profit before tax of S$1.230 million for 6M 2017 from S$1.897 million for 6M 2016.

The Group's net cash flow used in investing activities for Q2 2017 was S$0.474 million, as compared to S$0.583 million for Q2 2016. The lower net cash used in investing activities was mainly due to the lower venture investments completed in the quarter, also lower investment in intangible assets. The lower net cash used in investing activities was partly offset by higher investment cost on plant and equipment, related to new managed service contracts.

The Group's net cash flow used in investing activities for 6M 2017 was S$1.434 million, as compared to S$1.086 million for 6M 2016. The higher net cash used in investing activities was mainly due to the higher investment cost on plant and equipment, related to new managed service contracts.

The Group's net cash flow used in financing activities for Q2 2017 amounted to S$0.316 million as compared to S$0.002 million for Q2 2016. The significant higher net cash used in financing activities was mainly due to dividend payout by a subsidiary to Non-Controlling Interest in Q2 2017.

The Group's net cash flow used in financing activities for 6M 2017 amounted to S$1.067 million as compared to S$0.030 million for 6M 2016. The higher net cash used in financing activities was mainly due to:-

* Restricted deposits placed as performance bond in connection with system sale contracts; and
* Dividend payout by a subsidiary to a Non-Controlling Interest in 6M 2017.

Commentary

The directors and management of the Group expect the remainder of financial year 2017 to be challenging but remain optimistic about growth prospects.

Although 2016 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 2017. 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. This has been made apparent in the current quarter's result where system sale contracts revenue for both businesses have shown a sizeable decline against the prior quarter this year and the corresponding quarter last year. The Group will need to continue to strengthen its managed service contract portfolio to deliver steady and sustainable growth.

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.