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EuroSports Global: FY2025 Financial Performance and Outlook · Investor Exchange

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  Time for another Investor Exchange podcast. Here are your hosts, Matt and Sally.
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  Welcome to the Deep Dive. Today, we're cracking open the latest financials from
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  Eurosports Global Limited.
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  We're looking specifically at their unaudited interim statements for the full
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  year that just wrapped up on March 31st, 2025.
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  That's right. And our mission here is pretty straightforward.
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  We want to dive into these documents, pull out the really crucial insights on
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  how they performed financially, understand the reasons behind those numbers,
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  and, you know, get a clear view of the outlook they've shared. Exactly.
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  Think of it as getting you up to speed quickly, but thoroughly,
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  on where Eurosport stands right now.
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  Get the numbers, the segment details, management's take, all straight from the source.
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  It's always interesting seeing how the different parts connect,
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  isn't it? Like the flashy luxury
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  car sales versus the underlying financial health and what's coming next.
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  Definitely. The performance versus the position. Okay, let's get into it then.
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  First off, the headline numbers, FY 2025 compared to FY 2024.
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  The big story seems to be revenue. Oh, absolutely. A massive jump.
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  Right. It went from S25.12 million dollars to 53.62 million dollars.
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  That's more than double.
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  A 113.4% increase year over year. Huge increase on the top line.
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  But despite that really dramatic growth
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  in sales, the group still ended up reporting a net loss for the year.
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  Okay, so still in the red. But was it better or worse than last year?
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  It was better. The loss did shrink quite a bit, actually, almost 24 percent.
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  Down from S8.61 million dollars in FY 2024 to 6.55 million dollars this year.
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  So progress on the bottom line, just not profitability yet.
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  Right. And what about gross profit? With revenue up so much,
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  that must have increased, too.
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  It did, yes. Gross profit rose by 64.5 percent, hitting 6.32 million dollars.
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  So the margin decreased.
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  I see here the gross profit margin dropped from 15.3 percent down to 11.8 percent. Exactly.
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  So they sold a lot more stuff, made more actual dollars in gross profit,
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  but the profitability rate on each dollar of sales went down.
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  OK, so that begs the question, what exactly fueled this massive revenue surge
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  and why did the margin slip? Well, the documents are very clear on this.
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  The revenue jump was overwhelmingly driven by their automobiles distribution segment.
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  That segment alone grew by 113.6 percent.
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  Wow. Almost identical to the group's overall growth rate. So it's basically
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  all cars. Pretty much. And digging even deeper within that segment.
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  It was Lamborghini sales. Lamborghini, okay. Yeah, those sales leaped from S21.37
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  million dollars to, get this, S49.37 million dollars.
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  49 million out of a total revenue of 53. Precisely. S49.37 million dollars out
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  of S53.62 million dollars total.
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  Lamborghini sales made up a staggering 92.1% of the group's entire revenue for FY 2025.
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  That's huge concentration. The source mentions new models arriving as the reason. Correct.
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  The arrival of new Lamborghini models seems to be the key catalyst cited for
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  that surge. It shows the power of desirable new products in that luxury space.
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  But yeah, it certainly highlights a big reliance on one brand, even one model cycle.
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  Definitely something to keep an eye on. So if revenue is up so much,
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  cost of sales obviously followed suit. Naturally, yeah.
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  Higher volume means higher cost to acquire those vehicles. But the margin drop,
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  the source says that's because the mix of cars sold had lower profit margins.
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  That's what they attribute it to, yes.
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  Selling automobiles with lower profit margins compared to the mix in the previous
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  year, maybe more volume on slightly less profitable variants,
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  or perhaps introductory pricing, or just a different mix overall pulling the average down.
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  Interesting. Okay, moving down the income statement. Other income went up. It did.
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  The report says this was mainly due to getting higher sales incentives from the manufacturers.
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  Ah, makes sense. Sell more cars, hit targets, get bigger bonuses back from the brand.
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  Exactly. Though, interestingly, they note this was partially offset because
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  they had fewer forfeited customer deposits compared to the year before. Okay.
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  Now, on the flip side, other losses. Those jumped quite a bit.
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  From $0.32 million to $1.21 million loss, what happened there?
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  Yeah, that's a significant increase.
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  The main driver was a $0.93 million impairment charge on trade and other receivables.
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  Impairment. So basically, they decided they likely wouldn't collect nearly a
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  million dollars that was owed to them.
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  That's the essence of it, yes. A write-down of expected receivables,
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  which directly hits the profit. Ouch.
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  And what about costs, like finance, marketing, admin?
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  Finance costs saw a really sharp increase. They shot up from $0.43 million to S1.10 million dollars.
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  Whoa, more than doubled, almost tripled.
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  Yeah, over 150% increase. It clearly reflects that they took on or used significantly
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  more loans and financing during the year.
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  Probably needed to fund that higher inventory and operating activity.
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  That makes sense with the big revenue jump. More cars need more financing.
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  What about marketing? Did they spend more launching these new models?
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  Actually, no. Marketing costs decreased.
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  The reason given was fewer new model launches in FY 2025 itself compared to FY 2024.
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  They mentioned the URUS SE launch was in FY 2025, but perhaps FY 2024 had multiple
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  launches clustered together. Ah, okay. Timing of events.
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  And administrative expenses. Those slightly decreased overall,
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  which is interesting because employee benefits costs actually went up,
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  including a share-based payment expense.
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  But this was offset by lower spending on things like transport and travel,
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  maybe some cost control measures there.
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  Okay, so a bit of a mixed picture on expenses. Increased finance costs are the
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  big standout there. Definitely.
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  Now, before we get to the outlook, what about the other segment?
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  The sustainable mobility business.
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  Electric motorcycles, right? Right, the EV side. Well, that segment continues to report losses.
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  It lost S3.01 million dollars in FY 2025.
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  Is that better or worse than before? It's an improvement from the S4.26 million dollar loss in FY 2024.
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  So the loss narrowed, but it's still a significant drain while they're in the development phase.
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  And are they investing heavily there? Yes. The report shows they're investing
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  in intangible assets development costs, essentially, and also in property,
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  plant and equipment for this segment.
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  Building the foundation, but it's not contributing positively to the bottom
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  line yet. Got it. Okay, so that covers the performance drivers.
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  Now let's talk financial position and cash flow. You mentioned the increased borrowing.
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  How does the balance sheet look overall? Yeah, the balance sheet shows some
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  pressure, particularly on the liquidity front.
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  As of the end of March 2025, their current liabilities were $5.06 million higher
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  than their current assets.
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  So negative working capital. They owe more in the short term than they have
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  readily available. Exactly.
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  That indicates potential strain in meeting short-term obligations from readily convertible assets.
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  And the cash flow statement. Does that tell a similar story? It does.
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  For the full year FY 2025, the group actually used cash in its core operating
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  activities, an outflow of S3.1 million dollars.
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  So the day-to-day business didn't generate cash, it consumed it.
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  Correct. And they also use cash in investing activities as $2.22 million outflow,
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  likely related to those EV investments and maybe other capital expenditures.
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  So cash going out for operations, cash going out for investments,
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  where did the money come from to keep things running and cover the gap? Financing activities.
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  That was the only area with a net cash inflow, bringing in $6.12 million.
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  And that was mostly new debt?
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  Overwhelmingly, yes. Yeah. Driven by a significant net increase in loans and
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  trade financing facilities. It really underscores the reliance on borrowing
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  to fund the growth and cover the operating cash shortfall. Okay.
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  And how did all this impact the overall equity, the book value of the company?
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  Total equity decreased by $6.49 million during the year.
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  That's mainly a direct result of the S $6.55 million net loss they incurred.
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  Right. Losses eat into equity.
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  And liabilities. Total liabilities increased significantly. They went up from
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  S31.39 million dollars to S46.10 million dollars.
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  A big jump, especially in current liabilities, again, primarily due to those
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  increased loans needed to support the higher level of operating activities.
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  So higher debt, negative working capital, cash consumed by operations.
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  The source must comment on this, right? Does it raise concerns?
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  It does, quite directly.
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  The report explicitly states that the recurring losses in the negative working
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  capital position represent a material uncertainty that may cast significant
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  doubt on the group's ability to continue as a going concern.
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  Wow, that's strong language. Going concern uncertainty?
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  It is. Standard auditor language when these conditions exist.
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  However, the document also includes management's perspective.
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  And what do they say? Management states that despite these factors,
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  they believe preparing the financial statements on a going concern basis is still appropriate.
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  On what grounds? They base this belief on the expected future cash flows from
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  the automobile business, banking
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  on those new models and their plans for refinancing existing borrowings.
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  They seem confident they can manage the situation. OK, so a clear risk flagged,
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  but management believes they have a handle on it through future sales and financing arrangements.
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  That leads us perfectly into the outlook. What did management say about the future?
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  Well, they start with a note of caution. They acknowledge that the luxury auto
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  market, you know, continues to face uncertainties. That does.
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  They mention ongoing global economic factors, geopolitical trade tensions,
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  and also high taxes in their markets, potentially tempering demand,
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  at least in the short term.
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  So headwinds are acknowledged. But are they optimistic overall?
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  Yes, there's definitely a tone of optimism, too. This is primarily driven,
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  they say, by a robust order backlog they currently hold.
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  Ah, so even with market worries, they have existing orders waiting to be fulfilled. Exactly.
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  And specifically, they highlight that deliveries of the new Lamborghini Urus
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  SE plug-in hybrid, a key new model, have already started in Q1 of this new financial year, FY2026.
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  Okay, so cash from those deliveries should be starting to flow now.
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  That would be the expectation.
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  Plus, they're looking ahead to the launch of another new Lamborghini,
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  the Temerario, which is anticipated in Q2 of FY2026.
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  So more new product excitement, hopefully translating into sales.
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  So the strategy seems heavily reliant on these new Lamborghini models performing
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  well. It certainly appears that way from the commentary.
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  They're central to the near-term outlook. What about the outlook for the sustainable
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  mobility, the EV segment? They mentioned progress there.
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  Securing the license in Singapore back in July 2024 for public road testing
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  was a key step. But is it close to generating revenue? Not yet.
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  Yeah. They explicitly mentioned the fundraising environment for this kind of
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  venture is challenging right now. Mass production and actual deliveries are
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  not expected to start until sometime in 2026.
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  So still a ways off contributing meaningfully to the top line.
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  Yes. The plan for now is to grow the distributor network in Asia Pacific and Europe.
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  Top line growth in that segment is really only expected once mass production begins.
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  So it's still very much an investment phase dependent on securing more funding. Understood.
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  And finally, any mention of dividends for shareholders?
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  No dividends were declared or proposed for FY 2025. They state they are conserving
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  cash for business operations.
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  Which makes complete sense given the net loss, the negative working capital,
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  and the reliance on financing we've discussed.
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  Absolutely. Prudent capital management in their current situation.
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  Okay, so let's just sum this up. We saw a year with really impressive revenue
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  growth, almost entirely down to Lamborghini, specifically new models coming online.
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  Right. That growth helped narrow the net loss compared to the previous year.
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  But the company is still loss-making.
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  And that growth seems to have come at the cost of a lower gross profit margin
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  and required a significant increase in borrowing.
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  Leading to much higher finance costs, a negative working capital position,
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  and cash being consumed by operations, offset only by financing inflows.
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  The auditors flagged a material uncertainty about going concern.
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  Though management feels confident based on the auto order book and refinancing plans.
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  And that auto order book, particularly for the new Urus SE already getting delivered
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  in the upcoming Temerario, seems absolutely critical for their near-term prospects.
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  Meanwhile, the EV motorcycle segment is making progress, but it's still pre-revenue,
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  facing funding challenges, and not expected to deliver until 2026.
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  A pretty clear picture, really.
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  Growth and future hopes pinned on luxury autos, while managing current financial
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  pressures and investing in the longer-term EV play. All right.
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  That brings us to our final thought for you, the listener.
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  Considering everything we've just discussed, the strong reliance on Lamborghini,
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  the current negative working capital, the significant increase in debt and the
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  flagged going concern uncertainty.
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  How crucial do you think the immediate success, the sales and profitability
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  of these new models like the URSSE and the upcoming Temerario will be?
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  Can strong performance there truly turn the financial tide for Eurosports Global
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  in the next year or two, especially given those wider market uncertainties they
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  mentioned? something to pump.
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  Music.