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Operating and Financial Reviewextracted from the Annual Report 2025 Operational Review In FY2025, the Group delivered a resilient performance despite a challenging global environment, achieving a net attributable profit of S$3.4 million on revenue of S$53.8 million. While revenue declined by 5.4% compared to FY2024, profit increased by 7.2%, supported by the improved performance of the Precision Machining business and continued prudent cost management. The Group's disciplined operational approach enabled it to maintain profitability and operational stability amid mixed industry conditions. Through disciplined execution, enhanced process controls, and strategic realignment of business activities, the Group continued to strengthen its operational competitiveness and responsiveness to customer requirements. The Group's profit before tax increased by 13.9% to S$4.2 million from S$3.6 million in FY2024, reflecting improved operational efficiency and effective expense control across the business. All of the Group's core business segments remained profitable during the year, except for Equipment Manufacturing, which recorded a loss due to additional transition costs as it repositioned toward front-end semiconductor manufacturing. Despite this short-term impact, the Group continued to strengthen its operational capabilities to support long-term growth. The Group's performance was further supported by its continued focus on operational discipline and cost management. Cost of sales declined in line with revenue, enabling the Group to maintain a stable gross margin of 15.8%, consistent with FY2024. This reflects the Group's ability to manage production costs and optimise resources while navigating fluctuations in demand across different industries and markets. Geographically, the Group's key markets recorded mixed performance during the year. Revenue from Malaysia increased significantly to S$17.9 million, driven by stronger contributions from the Precision Machining and Equipment Manufacturing segments. Revenue from Canada rose slightly to S$2.9 million, supported by higher Precision Machining sales. In contrast, revenue from Singapore declined to S$16.8 million, mainly due to lower contributions from the Equipment Manufacturing and Trading & Others segments. Revenue from China decreased to S$1.9 million, reflecting reduced sales in the Precision Machining and Trading & Others businesses. Revenue from the USA eased slightly to S$12.2 million, while other markets contributed S$2.1 million during the year. Despite softer demand in certain markets, the Group remained focused on strengthening operational capabilities, enhancing production efficiency, and optimising its cost structure. These efforts enabled the Group to sustain profitability and reinforce its foundation for long-term growth. Precision Machining The Precision Machining segment was the strongest contributor to the Group's performance in FY2025. Sales in this segment increased by 14.2% to S$39.0 million, driven primarily by an 85.2% surge in semiconductor sales, while aerospace sales softened slightly compared with FY2024. Profit for this segment soared by 71.0% to S$6.2 million in FY2025, compared with S$3.6 million in FY2024, mainly due to higher revenue and improvedmargins. This segment's sterling performance was lifted by stronger contributions from its semiconductor business, reflecting improved operational throughput and execution capability in meeting the stringent quality and precision standards required by the sector. Margin improvement was additionally supported by higher utilisation of machining capacity and tighter cost controls. Despite a more moderate pace of growth in aerospace demand, the segment continued to benefit from the Group's established capabilities in Precision Machining and long-standing customer relationships. The Group maintained its focus on delivering high-quality machining solutions while further improving production efficiency and operational reliability. Overall, the Precision Machining segment remained the Group's primary revenue contributor in FY2025 and continued to play a key role in supporting the Group's profitability and operational stability. Equipment Manufacturing The Equipment Manufacturing segment underwent a strategic repositioning in FY2025 as part of the Group's efforts to focus on higher-value front-end semiconductor manufacturing processes, including specialised plastic machining fabrication. During the year, revenue from this segment declined 30.5% to S$10.2 million, compared with S$14.7 million in FY2024, reflecting softer demand. The segment recorded a loss of S$1.5 million in FY2025, compared with a profit of S$0.1 million in FY2024. The weaker performance was mainly attributable to additional transition costs, including a one-off inventory adjustment, as the segment moved away from lower-margin activities to support front-end semiconductor manufacturing. Despite these near-term challenges, the Group remains committed to strengthening its capabilities in front-end semiconductor equipment manufacturing. This strategic shift is intended to better align the segment with evolving industry requirements, enhance product performance and quality, and improve operational efficiency over the longer term. The Group believes these ongoing initiatives will support the segment's long-term competitiveness and position it to benefit from future opportunities in the semiconductor manufacturing ecosystem. Trading and Others The Trading & Others segment recorded a softer performance in FY2025 amid weaker global demand for industrial manufacturing equipment. Segment revenue declined 43.0% to S$4.6 million, compared with S$8.0 million in FY2024, mainly due to weaker global demand for industrial manufacturing equipment and intensified competition. Despite the decline in revenue, the segment remained profitable, contributing S$0.3 million in profit in FY2025, compared with S$1.2 million in FY2024. The Group continued to focus on managing operating costs and maintaining operational efficiency within its trading activities to mitigate the impact of the softer market environment. The Group's focus on expanding its product offerings and increasing market reach is expected to continue driving growth in this segment, particularly as it navigates challenges in the broader industrial equipment market. The Group remains committed to further strengthening its trading operations and exploring new business opportunities in emerging markets, which will enhance the segment's resilience and support future growth. Investments in Production Capabilities Investments in production capabilities continued in FY2025, with more than S$20 million deployed to upgrade and modernise facilities in Singapore. These investments included enhancements to machining infrastructure, automation, improvements to production workflows, and the development of advanced processes to support specialised product requirements, including specialised plastic fabrication. These initiatives are expected to deliver greater production flexibility, shorter cycle times, and strengthened quality assurance.
Financial Review Financial Performance In FY2025, the Group achieved a net attributable profit of S$3.4 million on revenue of S$53.8 million, representing a 7.2% increase in profit compared to FY2024. Group profit before tax for the year increased by 13.9% to S$4.2 million, compared to S$3.6 million in FY2024. The improvement in net profit was driven mainly by the strong performance of the Precision Machining segment and effective cost management. Group revenue declined by 5.4%, totalling S$53.8 million compared to S$56.9 million in FY2024. This decrease was largely due to weaker contributions from the Equipment Manufacturing as well as the Trading & Others segments. Meanwhile, the Precision Machining segment remained resilient, with sales increasing by 14.2% to S$39.0 million in FY2025, supported by an 85.2% surge in semiconductor sales, which offset softer performance in aerospace compared to FY2024. Geographically, the Group's key markets showed a mixed performance. Revenue from Malaysia rose sharply from S$7.0 million in FY2024 to S$17.9 million in FY2025, driven by growth in both the Precision Machining and Equipment Manufacturing segments. Sales in Canada edged up from S$2.8 million to S$2.9 million, largely due to higher Precision Machining revenue. In contrast, sales in Singapore decreased from S$24.8 million in FY2024 to S$16.8 million in FY2025, primarily due to lower contributions from the Equipment Manufacturing and Trading & Others segments. Revenue from China slumped from S$5.9 million to S$1.9 million, mainly attributable to weaker sales in the Precision Machining and Trading & Others segments. Revenue in the USA also declined from S$13.6 million to S$12.2 million, while revenue in other markets fell from S$2.8 million to S$2.1 million. The cost of sales decreased by 5.5% from S$47.9 million in FY2024 to S$45.3 million in FY2025, in line with the decline in revenue. As a result, the gross margin remained stable at 15.8%, similar to FY2024. Other operating income decreased to S$1.4 million from S$2.1 million in FY2024, mainly due to lower interest income and foreign exchange losses incurred during the year. Selling and distribution expenses, which mainly comprise staff costs of the Group's sales and marketing staff, outward freight, travelling and marketing expenses, decreased by 14.6% compared to FY2024, as a result of tighter cost controls. Administrative expenses, comprising staff costs, Directors' fees and compensation, depreciation charge in relation to non-production assets, professional fees and other office expenses, decreased by 25.7%, mainly due to reduced staff costs. Finance costs decreased by 16.6%, from approximately S$0.7 million in FY2024 to about S$0.5 million in FY2025, primarily attributable to the full repayment of bank borrowings during the year and lower loan interest expense. The Group recorded a total income tax expense of S$0.8 million in FY2025 compared to S$0.5 million in FY2024, mainly due to higher profits during the year and under-provision of tax in previous year. Reflecting the Group's performance, earnings per share ("EPS") for FY2025 increased 7.3% to 0.812 cents from 0.757 cents in FY2024. The Group's net asset value ("NAV") per share increased to 20.3 cents as at 31 December 2025 compared to 19.4 cents as at 31 December 2024. Balance Sheet Total non-current assets increased from S$62.9 million in FY2024 to S$75.3 million in FY2025, driven by an increase in property, plant, and equipment (PPE) of S$5.0 million, mainly reflecting additions to PPE, net of depreciation of S$6.6 million, and the reclassification of S$7.4 million to investment property. In FY2025, the Group did not operate the premises and leased the property to generate rental income. In view of the change in use of the property, the Group reclassified the property from property, plant and equipment to investment property as at 31 December 2025. Inventories, net of allowance for obsolescence of S$3.3 million, amounted to S$20.7 million as at 31 December 2025, compared to S$21.0 million in FY2024. The carrying amount remained relatively consistent with the prior year, reflecting stable inventory management. Trade and other receivables decreased by S$6.0 million from S$20.8 million as at 31 December 2024 to S$14.8 million as at 31 December 2025, mainly due to fluctuations arising from business volumes made by customers. Trade and other payables decreased by S$1.3 million from S$13.5 million as at 31 December 2024 to S$12.2 million as at 31 December 2025, again attributable to fluctuations arising from business volume made to creditors. Lease liabilities decreased by S$0.1 million from S$5.7 million as at 31 December 2024 to S$5.6 million as at 31 December 2025, following scheduled repayments of leased property, plant and equipment. Bank loans were fully settled during FY2025. As at 31 December 2025, the Group had no bank borrowings, with remaining borrowings comprising loans from the ultimate holding company. The reduction in the loan from the ultimate holding company was due to scheduled repayments during FY2025. Deferred tax liabilities increased by S$0.7 million to S$5.6 million in FY2025 from S$4.9 million in FY2024, primarily due to deferred tax expenses arising from the origination and reversal of temporary differences. Cash Flow Net cash generated from operating activities increased by S$9.5 million from S$6.0 million in FY2024 to S$15.5 million in FY2025, driven by improved cash collection and working capital inflows. During the financial year, the Group invested S$20.3 million in property, plant and equipment for production upgrades, facility automation and the development of advanced machining capabilities. Net cash used in financing activities was mainly for repayment of lease liabilities and the full settlement of bank borrowings. The Group's financial position remained healthy with net cash and cash equivalents of S$7.3 million as at 31 December 2025, despite significant capital expenditure during the year. |