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V2Y Corporation 2024 Financial Results · Investor Exchange

• 0:02
  Time for another Investor Exchange podcast. Here are your hosts, Matt and Sally.
• 0:07
  So you're trying to get a quick handle on V2Y Corporation LTD's financial performance
• 0:12
  for 2024, the full year ending December 31st.
• 0:16
  Well, you've come to the right place. We've gone through their results announcement,
• 0:21
  the FY 2024 result, and we're going to pull out the key takeaways for you right here. Exactly.
• 0:25
  And our goal in this deep dive is pretty straightforward. Right.
• 0:28
  We want to understand V2Y's financial health in 2024, figure out the reasons
• 0:33
  behind the numbers, you know, the good and the bad.
• 0:35
  Right. And sort of get a feel for where they might be headed based on what's in this report.
• 0:39
  OK, so the aim is clarity, conciseness without drowning in like every single
• 0:44
  number. Precisely. Just the critical stuff. Okay, let's dive in then.
• 0:47
  Starting with the big picture, overall financial performance, revenue first. Okay.
• 0:52
  Huge jump in FY 2024.
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  S$911,000.
• 0:56
  Compare that to FY 2023, which was only S$215,000. Wow, what's the percentage on that?
• 1:03
  It's a massive 323.72% increase. Right, huge.
• 1:08
  So yeah, on the surface, that looks, you know, fantastic.
• 1:10
  But we need to see if that actually translates lower down. True.
• 1:14
  Top line isn't everything. And it's worth noting, too, the second half of 2024
• 1:17
  saw a big revenue climb compared to the second half of 23 as well. OK, interesting.
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  But let's look at the cost side, cost of sales, because that also saw a really significant increase.
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  It hits $812,000 in FY 2024.
• 1:32
  That's way up from Ecuador to $19,000 in FY 2023.
• 1:36
  And the percentage there. Even bigger percentage wise, 582.35 percent.
• 1:42
  Whoa. And again, like you said, with revenue, the second half of 2024 was a
• 1:45
  big driver of that increase.
• 1:46
  So revenue is way up. Cost of sales is way, way up. What did that mean for the actual gross profit?
• 1:52
  Well, this is where it gets a bit counterintuitive, maybe. The gross profit
• 1:55
  only increased slightly.
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  Really? Yeah. It's $99,000 in FY 2024 compared to $96,000 in FY 2023.
• 2:03
  Barely a change. OK, that's unexpected given the revenue jump.
• 2:06
  And it gets even more interesting if you look just at the second half.
• 2:08
  Gross profit actually decreased in 2H2A24 compared to 2H2023.
• 2:13
  Decreased. Okay, so that immediately tells you something's up at the margins,
• 2:16
  doesn't it? Exactly. It points right to profitability per sale.
• 2:19
  Let's talk about that gross profit margin. Yeah.
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  That's the percentage of revenue left after your direct costs, right? Right.
• 2:25
  In FY2023, it was, well, pretty healthy, 44.65%. Okay.
• 2:30
  But in FY2024, it plummeted down to just 10.86%. 10%. Wow.
• 2:37
  That is a huge drop. It's critical. It signals a fundamental shift in how profitable
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  each dollar of sales is, even with way more sales happening. Absolutely.
• 2:46
  And it wasn't just the direct costs hitting the bottom line, was it? Other...
• 2:50
  Income. No, that took a major hit, too. It dropped from $118,000 in FY23 down
• 2:55
  to only S-14,000 in FY24.
• 2:58
  That's an 88% decrease. 80.14%. Yeah.
• 3:02
  And again, the second half of the year showed that same downward trend.
• 3:05
  Okay. So costs are up, margins are down, other income is down.
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  What about administrative expenses? Those also rose considerably.
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  S-1,726,000 in FY2024. compared to S1,109,000 in FY2023.
• 3:20
  So that's a 55.64% increase.
• 3:23
  And again, the second half of 2024 saw a larger chunk of that increase.
• 3:28
  Seems to be a pattern here. It does. Although, interestingly.
• 3:32
  Other operating expenses actually went down a bit in FY2024 compared to 23.
• 3:36
  Yeah, slight decrease there. And also in the second half comparison,
• 3:39
  the report notes these are mainly foreign exchange losses. Right, okay.
• 3:43
  And finance costs. last piece before the bottom line.
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  Finance costs also increased, went from $7,000 in FY23 up to $26,000 in FY24.
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  That's more than double.
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  Yeah, 136.36% increase.
• 3:57
  And again, a noticeable jump in the second half of 2024.
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  So you add all that up, the higher costs, lower margins, lower other income.
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  What's the result? A bigger loss before income tax. It widened to S1,639,000 in FY 2024. Compared to?
• 4:13
  $921,000 in FY 2023. And that loss really blew out in the second half of 2024
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  compared to the same period the year before.
• 4:20
  Okay. And since there was no income tax expense, the loss after tax is the same figure. Correct.
• 4:25
  Mirrors the loss before tax. Right. So a lot going on there.
• 4:28
  Let's really dig into the why now.
• 4:29
  What drove that huge revenue growth, but also the worsening profitability?
• 4:33
  Well, the report's pretty clear on the main driver for revenue.
• 4:36
  It was the new food and beverage, the F&B business segment.
• 4:40
  That segment only started operating in September 2024.
• 4:43
  Right at the end of Q3. Exactly. And if you break down the FY 2024 revenue.
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  Incertech brought in S$296,000.
• 4:52
  Okay. The new F&B segment brought in S$594,000. So more than double the Incertech
• 4:58
  revenue in just a few months. Yes. Significant impact straight away.
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  And then there was trading, which was much smaller, S$21,000.
• 5:05
  So that F&B launch explains the revenue surge, but it sounds like it's also
• 5:09
  the culprit for the increased cost of sales.
• 5:12
  Directly linked, according to the report. Makes sense, right?
• 5:15
  New line of business, physical goods, locations, staff, costs go up.
• 5:19
  Yeah. And that huge drop in gross profit margin we talked about.
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  Also largely pinned on the F&B segment.
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  The report explicitly states that F&B just operates on a lower gross margin
• 5:28
  compared to their Intertech business.
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  So when you mix them together. It drags the overall group margin down.
• 5:34
  Significantly, as we saw. Okay. What about the other pieces,
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  that sharp drop in other income? That's put down to two things, mainly.
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  Lower gains from selling off some plant and equipment compared to the previous
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  year, and also less interest income earned.
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  Got it. And the higher administrative expenses. We touched on it, but specifically.
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  Again, mainly linked to acquiring and running the F&B business.
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  Things like increased management service fees, higher payroll,
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  presumably for new F&B staff and more professional fees, likely related to setting
• 6:04
  up that whole new segment.
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  So you really see how that one strategic decision moving into F&B rippled across
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  the entire P&L. Absolutely.
• 6:12
  Revenue, cost of sales, admin expenses affected almost everything.
• 6:16
  And finance costs. You said leases.
• 6:18
  Yeah, primarily higher interest being accrued on their lease liabilities.
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  Again, likely tied to getting the properties and maybe equipment needed for the F&B outlets.
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  Taking on those leases means bigger commitments. Right. Okay,
• 6:29
  let's shift to cash flow. Always crucial.
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  How did that look? Not great on the operating side. Net cash used in operating
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  activities increased in FY 2024.
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  It was S1,186,000 used.
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  S813,000 used in FY 2023. And the report says this was mainly driven by that
• 6:49
  bigger net loss we discussed. Makes sense.
• 6:51
  Burning more cash in day-to-day operations. Exactly.
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  And there was also a net cash outflow in investing activities.
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  Which fits with buying assets for the new business. Precisely.
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  Acquiring assets, setting up leases for the F&B segment, that's an investing
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  outflow. Any positive cash flow?
• 7:09
  Yes. On the financing side, they generated net cash from financing activities. Whoa.
• 7:14
  Mainly from issuing new shares, they did placements, and also from taking out some loans.
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  So plugging the operational hole with financing, essentially.
• 7:22
  Kind of like trying to fill a leaky bucket, yeah. Okay.
• 7:24
  The increased operating loss
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  was draining cash, so they brought cash in through shares and debt. Okay.
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  Let's pivot to the balance sheet, the statement of financial position.
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  End of 2024 versus end of 2023.
• 7:35
  Assets first. All right. Current assets actually decreased overall. Oh, why?
• 7:41
  Mainly because cash and cash equivalents went down significantly.
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  And the report explicitly says this cash was used for the F&B acquisition. Okay, so that tracks.
• 7:49
  Though interestingly, trade and other receivables actually went up. Hmm, okay.
• 7:54
  What about non-current assets? Things like property, equipment.
• 7:59
  Those increased significantly. Big jump. Driven by? Primarily by adding right-of-use assets.
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  That's the accounting treatment for the leases, likely those F&B properties. Right.
• 8:09
  Plus, new plant and equipment, and also some intangible assets.
• 8:13
  Again, likely all tied back to setting up the S&B side.
• 8:16
  Okay, so assets shifted from cash to longer-term assets, mostly related to F&B.
• 8:22
  What about the other side of the sheet? Liabilities? Current liabilities also
• 8:27
  increased substantially.
• 8:28
  Because of a? Lease liabilities showing up as current, again tied to F&B.
• 8:32
  Also higher trade payables, other payables, and something called deferred service
• 8:36
  revenue, also linked to the new segment.
• 8:38
  Okay. And non-current liabilities, longer term debts. Smaller increase there.
• 8:42
  Higher non-current lease liabilities were partly offset because bank borrowings
• 8:46
  actually decreased a bit.
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  And so did some non-current deferred service revenue.
• 8:51
  Right. So assets up overall, liabilities up overall.
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  What does that mean for equity? The net position. This is a pretty concerning point.
• 8:59
  As of December 31st, 2024, V2Y had net negative equity. Negative. Yes.
• 9:06
  $409,000. Basically means total liabilities exceeded total assets.
• 9:10
  That's usually a red flag, isn't it? Even though they raise capital.
• 9:13
  It is a significant point.
• 9:14
  And yes, this is after accounting for the share capital increase from those
• 9:17
  placements they did in July and September 2024, which brought in as $1.5 million.
• 9:23
  Wow. So that raises the obvious question.
• 9:26
  Going concern. Can they continue operating? Does the report address this?
• 9:31
  It does, quite directly. Management states they have assessed the company can
• 9:34
  continue as a going concern.
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  Despite the negative equity and the losses, on what basis? They list several factors.
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  They mentioned disposing of some other loss-making subsidiaries,
• 9:44
  the fact the core insertech business can generate cash flow,
• 9:47
  they secured a new loan agreement, they're implementing cost reduction measures,
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  and they're actively pursuing new business opportunities and potentially more fundraising.
• 9:55
  Okay, so they have a plan, or at least reasons for optimism.
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  But is there a but? There is a very important but.
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  The directors explicitly acknowledge in the report that a material uncertainty
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  exists regarding the group's ability to continue as a going concern.
• 10:10
  Material uncertainty. That's strong language in an audit report context.
• 10:14
  It is. It signals significant doubt. It basically means their ability to continue
• 10:18
  depends heavily on those positive factors. is they, listen, actually working
• 10:22
  out the cost cuts, the Intertech performance, maybe raising more money.
• 10:26
  Okay, so a precarious position at year end. Now let's look forward.
• 10:29
  Outlook and anything major that happened after December 31st, 2024.
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  The biggest thing, really, links back to everything we've discussed.
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  On April 4th, 2025, so just recently, they disposed of the F&B business.
• 10:42
  Ah, so they got out. Yes, they sold off the indirect subsidiaries running that F&B retail operation.
• 10:48
  Why the quick reversal? They only started it in September 24.
• 10:52
  The report cites underperformance, which, given the financial impact we just
• 10:56
  went through, the high costs, the low margins, the increased losses, isn't surprising.
• 11:00
  Makes sense. Did they say if they made or lost money on the sale itself?
• 11:04
  They estimate a gain on despotal of just over S1 million dollars.
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  About S1 million, $28,000. Okay, so getting out, generated some cash,
• 11:14
  and stopped the bleeding from that segment? That's a major strategic U-turn. Absolutely.
• 11:19
  It signals a clear decision to refocus entirely on their original core business.
• 11:24
  Insert tech. And they did raise more money recently, too, right? Yes.
• 11:27
  There was another share placement in 2025 after the year-end,
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  which raised around S451,000. So the disposal plus the new funds,
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  the idea is that should strengthen things financially.
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  That's the expectation stated, to strengthen the financial position and,
• 11:43
  importantly, alleviate those cash flow pressures we talked about.
• 11:47
  Did they give any kind of forecast or outlook statement for the future?
• 11:51
  No. The report explicitly says the group has not issued any prospect statement or forecast.
• 11:55
  Okay. And dividends. Any payout for shareholders in FY 2024?
• 11:58
  No dividends were declared or recommended.
• 12:01
  They cited the need to conserve cash for future business development.
• 12:04
  Understandable, given the losses and cash burn. Did they say how the money raised
• 12:08
  from the share placements, the 2024 and 2025 ones, was used? Yeah, briefly.
• 12:12
  It went towards business expansion initially.
• 12:15
  F&B pushed general working capital, paying back some borrowings,
• 12:18
  covering professional fees and
• 12:20
  other operating expenses, sort of funding operations in the F&B venture.
• 12:23
  Okay. So let's try and wrap this up. Key takeaways from this deep dive into V2Y's FY 2024.
• 12:29
  Well, first, massive revenue growth, driven almost entirely by that short-lived
• 12:33
  diversification into F&B.
• 12:35
  Right. But that growth came at a steep price. Exactly. Much higher cost to sales,
• 12:40
  significantly slashed gross profit margins, increased admin and finance costs,
• 12:44
  all largely linked back to that F&B segment.
• 12:47
  Leading to a much larger net loss for the year compared to FY 2023.
• 12:51
  Correct. And a concerning financial position at year end, with negative of equity
• 12:55
  and that material uncertainty about going concern.
• 12:57
  But then the crucial post-year-end events.
• 13:01
  The strategic pivot, selling off the underperforming F&B business,
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  raising more funds and refocusing squarely on the core insert tech business.
• 13:09
  So for you listening, understanding this whole roller coaster,
• 13:12
  the big F&B bet, the financial strain it caused and the quick reversal is really
• 13:15
  key context for evaluating V2Y now. It absolutely is.
• 13:19
  It explains the 2024 results and sets the stage for what they're trying to do now.
• 13:23
  Which leads us to maybe a final thought for you to ponder.
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  Given this rapid diversification, the financial hit, and the equally rapid divestment.
• 13:32
  What are the really critical risks, but also maybe the opportunities for V2Y
• 13:37
  as it now tries to make a go of it, focusing only on insert tech?
• 13:41
  That's the key question, isn't it? Yeah. Definitely keep in mind if you're following
• 13:44
  the company's story from here.
• 13:51
  Bye.