Financial Statements And Related Announcement - Full Yearly Results
Financials Archive
Note: Files are in Adobe (PDF) format.
Please download the free Adobe Acrobat Reader to view these documents.
Consolidated Statement of Comprehensive Income
2019 |
2018 |
Inc/(dec) |
|
S$'000 |
S$'000 |
% |
|
| Revenue | 23,813 |
31,476 |
(24.3) |
| Cost of Sales | (11,393) |
(19,483) |
(41.5) |
| Gross profit | 12,420 |
11,993 |
3.6 |
| Other Items of Income: | |||
| Interest Income | 149 |
98 |
52.0 |
| Other Gains | 498 |
1,000 |
(50.2) |
| Other Items of Expense: | |||
| Technical Support Expenses | (4,477) |
(3,643) |
22.9 |
| Distribution Costs | (1,113) |
(1,298) |
(14.3) |
| Administrative Expenses | (3,283) |
(3,440) |
(4.6) |
| Other Losses | (496) |
(1,007) |
(50.7) |
| Finance Costs | (140) |
(27) |
418.5 |
| Profit Before Income Tax | 3,558 |
3,676 |
(3.2) |
| Income Tax Expenses | (691) |
(292) |
136.4 |
| Profit, Net of Tax | 2,867 |
3,384 |
(15.3) |
| Profit, Net of Tax Attributable to: | |||
| Owners of the Company | 2,076 |
2,341 |
(11.4) |
| Non-Controlling Interest | 791 |
1,043 |
(24.2) |
| Profit, Net of Tax | 2,867 |
3,384 |
(15.3) |
Consolidated Statement of Comprehensive Income
2019 |
2018 |
Inc/(dec) |
|
S$'000 |
S$'000 |
% |
|
| Profit, Net of Tax | 2,867 |
3,384 |
(15.3) |
| Other Comprehensive Income: | |||
| Item that may be reclassified subsequently to profit or loss: | |||
| Exchange Differences on Translating Foreign Operations, Net of Tax |
45 |
13 |
239.7 |
| Total Comprehensive Income for the year | 2,912 |
3,397 |
(14.3) |
| Total Comprehensive Income for the year Attributable to: |
|||
| Owners of the Company | 2,127 |
2,370 |
(10.3) |
| Non-Controlling interest | 785 |
1,027 |
(23.7) |
| Total Comprehensive Income for the year | 2,912 |
3,397 |
(14.3) |
Balance Sheet
Group |
Group |
|
As at |
As at |
|
31/12/2019 |
31/12/2018 |
|
S$'000 |
S$'000 |
|
| ASSETS | ||
| Non-Current Assets | ||
| Plant and Equipment | 1,690 |
1,825 |
| Investment Property | 2,301 |
2,305 |
| Intangible Assets | 10,888 |
11,050 |
| Investments in Subsidiaries | - |
- |
| Investment in an Associate | - |
2,255 |
| Other Financial Assets | 12,073 |
8,948 |
| Deferred Tax assets | 1,362 |
1,313 |
| Trade and Other Receivables | 599 |
- |
| Total Non-Current Assets | 28,913 |
27,696 |
| Current assets | ||
| Inventories | 4 |
488 |
| Trade and Other Receivables | 11,861 |
13,045 |
| Other Assets | 3,073 |
5,834 |
| Cash and Cash Equivalents | 10,173 |
8,686 |
| Total Current Assets | 25,111 |
28,053 |
| Total Assets | 54,024 |
55,749 |
| EQUITY AND LIABILITIES | ||
| Equity | ||
| Share Capital | 31,948 |
31,948 |
| Retained Earnings | 17,048 |
15,371 |
| Foreign Currency Translation Reserve | (8,242) |
(8,293) |
| Equity, Attributable to Owners of the Parent | 40,754 |
39,026 |
| Non-Controlling Interest | 4,655 |
4,080 |
| Total Equity | 45,409 |
43,106 |
| Non-Current Liabilities | ||
| Deferred Tax Liabilities | - |
53 |
| Total Non-Current Liabilities | - |
53 |
| Current Liabilities | ||
| Income Tax Payables | 344 |
102 |
| Trade and Other Payables | 4,688 |
7,047 |
| Other Liabilities | 1,931 |
3,423 |
| Borrowings | 1,652 |
2,018 |
| Total Current Liabilities | 8,615 |
12,590 |
| Total Liabilities | 8,615 |
12,643 |
| Total Equity and Liabilities | 54,024 |
55,749 |
Review of results for the financial year ended 31 December 2019 as compared to corresponding financial year ended 31 December 2018
Group Revenue
The Group recorded consolidated revenue of S$23.813 million for the financial year ended 31 December 2019 ("2019"), a decrease of 24.3% against the revenue achieved in the corresponding financial year ended 31 December 2018 ("2018"). The decline in Group revenue for 2019 is attributable to lower revenue recorded by GlobeOSS.
GlobeOSS recorded revenue of S$10.876 million in 2019, a decrease of 44.7% from the S$19.673 million recorded in 2018. This decrease in revenue was due to lower system sale contract revenues as a result of uncertainty and lumpiness in the contribution of system sale contracts, coupled by delay in the award of new system sale contracts.
In contrast, Unifiedcomms posted revenue of S$12.937 million in 2019, an increase of 9.6% from the S$11.803 million recorded in 2018. This improvement in revenue was driven by higher system sale revenues.
The Group's sales mix in 2019 showed a higher proportionate contribution of revenue of a recurring nature, with revenue from managed service contracts representing 60.8% of the Group's total revenue in 2019 as compared to 45.7% in 2018. The higher contribution of managed service contracts to the Group's sales mix in 2019 was mainly due to lower system sale contract revenues from GlobeOSS, which had decreased 45.3% from S$17.091 million in 2018 to S$9.345 million in 2019.
Gross Profit and Gross Profit Margins
Although Group revenue was lower in 2019, gross profit was higher at S$12.42 million as compared to S$11.993 million recorded in 2018. This is attributtable to the higher gross profit margin of 52.2% in 2019 against 38.1% in 2018, which was driven by higher gross profit margin on system sale contract revenues. This is attributable to the higher proportionate contribution of system sale contract revenues by Unifiedcomms to Group revenue, which generally delivers higher gross profit margins.
Gross profit margin recorded by the Group on its managed service contract revenues decreased to 51% in 2019 from 53.5% in 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$0.149 million in 2019, 52% higher against the S$0.098 million recorded in 2018, as a result of higher bank balances in this reporting year.
Other gains
The Group recorded other gains of S$0.498 million in 2019, 50.2% lower than the S$1 million recorded in 2018. This is mainly attributable to lower fair value gain assessed on the Group's venture investment portfolio.
Other Items of Expense
The Group recorded total expenses of S$9.509 million in 2019, 1% higher than the S$9.415 million incurred in 2018. This marginal increase in total expenses was a result of the following items' movement:-
- Net increase in technical support and distribution expenses due to changes in headcount;
- Higher depreciation of right-of-use asset over the remaining term of the lease, due to the effect on the adoption of SFRS(I) 16 Leases. This increase was offset by the reduction in rental expenses;
- Lower other losses as a result of absence of impairment loss on goodwill and investment property. This decrease was partly offset by i) Impairment loss on plant and equipment for certain managed service contracts which produced lower than expected returns; and ii) Higher net foreign exchange loss as a result of unfavourable exchange movement of USD against SGD; and
- Higher finance costs on borrowings.
Net Profit and EBITDA
The Group recorded net profit of S$2.867 million in 2019, 15.3% lower than the S$3.384 million recorded in 2018. This is mainly attributable to the lower other gains and deferred tax asset recorded in 2019, though partly mitigated by higher gross profit.
In contrast with the above, the Group recorded EBITDA of S$4.663 million in 2019, 1% slightly higher than the S$4.615 million recorded in 2018.
Detailed Segmental Breakdown of Group Revenue and Gross Profit
The detailed segmental breakdown of the Group's revenue and gross profit for 2019, together with comparative results for 2018 is provided below:
Table 8.1: Group revenue as analysed by business unit for the financial year ended 31 December
2019
S$'000 |
Sales mix
% |
2018
S$'000 |
Sales mix
% |
|
| Unifiedcomms | 12,937 |
54.3 |
11,803 |
37.5 |
| GlobeOSS | 10,876 |
45.7 |
19,673 |
62.5 |
| Captii Ventures | - |
- |
- |
- |
| Others | - |
- |
- |
- |
| Total | 23,813 |
100.0 |
31,476 |
100.0 |
Unifiedcomms - Segment for content-driven mobile VAS, messaging and signaling systems, solutions and managed services.
GlobeOSS - Segment for mobile network operation support systems, solutions and managed services.
Captii Ventures - Segment for strategic investment in early and late-stage technology ventures.
Others - Segment for operational headquarters of the Group and investment holding.
Table 8.2: Group revenue as analysed by geographical segment for the financial year ended 31 December
| External Sales | 2019
|
|||
Unifiedcomms
S$'000 |
GlobeOSS
S$'000 |
Others
S$'000 |
Group
S$'000 |
|
| South East Asia (SEA) | 11,909 |
10,872 |
- |
22,781 |
| South Asia (SA) | 578 |
- |
- |
578 |
| Middle East & Africa (MEA) | 450 |
- |
- |
450 |
| Others | - |
4 |
- |
4 |
| Total | 12,937 |
10,876 |
- |
23,813 |
| External Sales | 2018
|
|||
Unifiedcomms
S$'000 |
GlobeOSS
S$'000 |
Others
S$'000 |
Group
S$'000 |
|
| SEA | 10,700 |
19,659 |
- |
30,359 |
| SA | 724 |
- |
- |
724 |
| MEA | 379 |
- |
- |
379 |
| Others | - |
14 |
- |
14 |
| Total | 11,803 |
19,673 |
- |
31,476 |
Table 8.3: Group revenue as analysed by contract type for the financial year ended 31 December
| External Sales | 2019
|
2018 |
||||
System Sale(1) |
Managed Service(2) |
Group |
System Sale(1) |
Managed Service(2) |
Group |
|
| Revenue | 9,345 |
14,468 |
23,813 |
17,091 |
14,385 |
31,476 |
| Gross Profit | 5,037 |
7,383 |
12,420 |
4,303 |
7,690 |
11,993 |
| Gross Profit (%) | 53.9% |
51.0% |
52.2% |
25.2% |
53.5% |
38.1% |
(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 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$14.938 million as at 31 December 2019. This 22.9% decrease in non-cash current assets was mainly due to a 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$28.913 million as at 31 December 2019 representing an increase of 4.4%. This increase consists of:-
- Trade and other receivables of S$0.599 million related to a system sale contract; and
- An increase in fair value of S$2.667 million in the Group's other financial assets. This increase is partly offset by a reduction in fair value of S$2.231 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$0.436 million for the current year. 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.
Total liabilities of the Group decreased from S$12.643 million as at 31 December 2018 to S$8.615 million as at 31 December 2019. This 31.9% decrease in total liabilities is attributable to a decrease in trade and other payables and borrowings following repayments in the reporting year.
Review of the Group's cash flow for the financial year ended 31 December 2019 as compared to the corresponding financial year ended 31 December 2018
The Group's net cash flow from operations for 2019 was S$4.418 million, as compared to S$2.778 million for 2018, an increase of 59.1%. This increase was primarily due to lower working capital incurred of S$0.03 million for 2019, as compared to S$1.743 million for 2018, which was mainly contributed by higher collection related to trade receivables.
The Group's net cash flow used in investing activities for 2019 was S$1.435 million, as compared to S$1.785 million for 2018. The lower net cash used in investing activities was mainly due to the lower volume of venture investments made in the current year as compared to 2018. The decrease was partly offset by absence of proceed from disposal of investment.
The Group's net cash flow used in financing activities for 2019 was S$1.212 million, in contrast with the net cash flow from financing activities of S$0.94 million for 2018. This decrease was mainly due to i) Lower proceeds from borrowings; and ii) Higher repayment made to borrowings. The impact was partly mitigated by withdrawal of restricted deposits placed as performance bond in connection with new system sale contracts requirement, in contrast with additional restricted deposits placed in 2018.
Commentary
The directors and management of the Group expect the financial year 2020 to be challenging but remain optimistic about growth prospects.
Although the growth in system sale business of GlobeOSS from 2017 to 2018 had significantly augmented the slower than desired growth of the Group's managed service contract portfolio, the significant decline in GlobeOSS revenues in 2019 evidenced the lumpiness that is 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.