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OIO Holdings Q1 2025 Financials · 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 taking a closer look at OIO Holdings Limited.
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That's right. What really caught our attention, and probably yours too,
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is their latest financial update, the unaudited results for the first quarter of 2025.
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And it's significant because, well, you remember their auditors raised that
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material uncertainty flag about going concern in the last annual report. Exactly.
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So this release gives us a fresh look under the hood, especially given those
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concerns. It definitely warrants a closer look. Definitely.
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So for this deep dive, our main source is that PDF they released,
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the OIO results, 1Q 2025.
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Right. It's got all the key stuff, profit and loss, financial position,
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cash flows, equity changes, plus, you know, the notes and what management is saying.
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Okay, so our goal here is to really sift through this, pull out the key insights
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into how OIO Holdings actually performed financially in Q1.
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Yeah, figure out what's driving things. What they're projecting for the future.
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And basically, what does it all mean for someone just trying to get a clear,
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concise handle on the situation?
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Let's do it. Okay, so diving right in then.
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Financial performance overview, what's the big picture? What jumped out first?
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Well, the headline really is the revenue. It's down pretty sharply.
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Oh, sharply. Compared to Q1 last year, it dropped by almost 36%.
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So from around S-186,000 down to just $119,000.
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That's quite a slide. Wow. Okay. That's a big chunk. What's behind that drop?
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Any specific reasons mentioned?
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Yeah, they point to a couple of things. First, lower income from their digital
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wallets and staking services. That was down by about S-25,000. Okay.
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And second, maybe even more impactful, was the complete absence of agency service income this quarter.
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Last year, that brought in around S-41,000 dollars. Ah, I see. So a double hit there.
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Less from existing services and a whole income stream just gone for the quarter.
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Pretty much sums it up, yeah.
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So with less money coming in, how did that affect their actual profit,
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the gross profit? Well, as you'd expect, it took a big hit too.
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Gross profit fell by over 54 percent. 54 percent. Yeah.
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Dropped from almost as $130,000 in Q1 2024 down to just under at $60,000 this quarter.
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And the margin itself? That fell significantly too.
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The gross profit margin went from a pretty healthy 70% last year down to just about 50% this year.
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That's a major squeeze on their core profitability.
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Yeah. That signals some real pressure. Either trouble getting the same price
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or costs are maybe out of sync. It could be either or both. Yeah.
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And interestingly, on the cost side... Did costs go down with revenue?
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Not really. The cost of sales, what it actually cost them to deliver their services,
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it actually nudged up by almost 7%. Up, even with the lower revenue.
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Yeah, they mentioned higher costs for outsourcing services as the main reason.
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So less money coming in and slightly more expensive to earn it. Ouch.
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Okay, so lower revenue, tighter margins.
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Now, what about operating income? I heard there was a pretty dramatic shift
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there. Oh, absolutely. It's a complete reversal.
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Q1 2024, they had an operating profit of around $193,000.
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Okay. Q1 2025, an operating loss of over $731,000.
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That's quite the swing. What drove such a massive change?
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A huge factor was the drop in other operating income. It just plummeted down by over 94%.
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It's mainly because two big one-off games they had last year didn't happen again
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this year. Ah, okay. What were they?
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Well, first, they had reversed an impairment loss on some crypto assets that
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was worth about $313,000 in Q1 2024.
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Right. And second, they made a gain of around $56,000 from selling some crypto assets back then, too.
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So those were significant boosts last year that just weren't there this time.
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Exactly. It kind of suggests last year's Q1 profit was maybe inflated by these
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non-recurring items, making this year's loss look even starker,
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perhaps revealing a weaker underlying operational performance.
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Got it. So without those one-offs, the picture changes drastically. Yeah.
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Any positives in the operating income, however small? There was one minor thing,
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a gain of about S$44,000 from foreign exchange translation this quarter.
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Okay. But, you know, compared to the hundreds of thousands missing from last
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year's gains, it's, well, it doesn't move the needle much. Right.
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Let's shift gears to operating expenses. How did those look?
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It's actually a bit of a mixed bag here. Oh, how so?
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Well, on one side, their administrative expenses actually went down quite a
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bit, but about 34%. Okay, that's good.
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Why the decrease? A few reasons. They're not amortizing software development
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costs anymore because those were fully impaired last year that saved about $136K compared to Q1-24.
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Professional fees were lower by around $53K. They also stopped depreciating
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some right-of-use assets, again, fully impaired.
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And some office upkeep costs from last year seemed to have been one-offs.
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So some decent cost control on the admin side, but you said it was mixed.
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Yes, because while admin costs fell, their other operating expenses just exploded.
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They shot up by almost 340%. Whoa, 340%. What caused that surge?
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Primarily losses related to their crypto assets. They recorded an impairment
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loss, basically a write-down of about $254,000 on crypto they hold. Okay.
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And they also booked a loss of around $170,000 when they sold some crypto.
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So crypto volatility really hit them hard on the expense side too. Absolutely.
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It was partially offset because they didn't have a foreign exchange loss like
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last year and didn't write off any equipment. But those crypto losses were the main story.
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So the admin savings were basically wiped out and then some by these crypto
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issues. What about finance costs, interest payments and the like?
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Now, here's some genuinely good news for them.
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Finance costs fell off a cliff down almost 97 percent.
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97 percent. How? The main reason
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is they converted their convertible notes into shares back in FY 2024.
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So that debt is gone and the interest payments stop. Oh, OK.
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Just in Q1 2024, they paid over $17,000 in interest on those notes.
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So that's a real saving moving forward.
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That's a significant relief on the financing side. OK, so putting all these
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pieces together, revenue down, mixed expenses, lower finance costs.
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What was the final result? The bottom line? Well, the net result after tax for
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Q1 2025 was a loss of approximately $732,000 compared to a profit of about $175,000 in Q1 2024.
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So yeah, a really stark turnaround. The lower revenue, those missing one-off
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gains from last year, and the new crypto losses all piled up.
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Right. Definitely a challenging quarter for profitability.
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Let's pivot then to the balance sheet, their assets and liabilities,
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and also touch on cash flow. What are the highlights there?
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Okay, looking at assets first. Their non-current assets, the longer-term stuff, decreased quite a bit.
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Went from about $1.4 million down to $718 million.
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What drove that decrease? Mostly it was their crypto assets again.
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They sold some, as we mentioned.
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But also the market value of the crypto they still held dropped,
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leading to those impairment write-downs. Okay.
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And what about current assets, short-term stuff? Those actually went up from
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around $76,000 to S-170,000. Oh boy, the increase there.
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Mainly more cash and bank balances, plus an increase in what they call other
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receivables, things like prepayments and GST they expect to get back.
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Got it. Now, flipping to the other side, liabilities.
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What they owe? Any big moves in long-term debt, non-current liabilities?
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A slight decrease there. From about $6.4 million down to $6.3 million.
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Seems like it was mostly influenced by foreign exchange differences on some
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crypto advances in shareholder loans, plus some repayments on leases and a small
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reduction in a contingent liability.
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So relatively stable on the long term side. What about current liabilities, short term debts?
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Those went up from about $6.9 million to S1.2 million dollars.
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Why the increase there...
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The report points mainly to hire other payables, which could suggest they might
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be taking a bit longer to pay some bills or short-term obligations.
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Okay. So looking at current assets versus current liabilities,
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their working capital and their overall equity position, how does that stack up?
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Well, the working capital situation is still negative, meaning short-term debts
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are higher than short-term assets.
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And that negative position actually worsens slightly. It's around $1.0 million now.
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Which isn't ideal for liquidity. No, it's not. And their overall shareholder's
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equity, or rather their equity deficit, also deepened.
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It's now down to about $6.6 million, mainly because of that net loss they took during the quarter.
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Right. So the balance sheet reflects those operational struggles.
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Okay, let's talk cash flow. How did cash move in and out?
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From their main operating activities, they actually had a net cash outflow of about $0.2 million.
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So the day-to-day business used up cash. Yes. And it's worth remembering,
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like we touched on, about $0.1 million of their revenue came in as crypto,
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which isn't counted as cash flow until it's converted. That's a key detail.
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OK, what about investing activities, buying or selling long term assets?
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That actually brought cash in, a net inflow of roughly $0.3 million.
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How? Primarily because they converted some of those crypto assets into regular currency, into fiat.
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So selling crypto generated cash. OK, liquidating some crypto holdings.
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And lastly, financing activities, loans, shares, et cetera.
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A very small net cash outflow there, only about CO.01 million dollars,
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mainly just repayments on lease liabilities.
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OK, so operations used cash, investing brought some in via crypto sales and financing was minimal.
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Right. Let's get to the elephant in the room. The going concern issue.
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Exactly. That auditor's warning from last year hangs over this.
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What does this Q1 report say about the company's view on its ability to keep
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operating and how are they addressing that uncertainty?
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So the report directly addresses this. The board outlined several factors why
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they believe the company can continue as a going concern despite that previous audit flag.
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Okay, what are they pinning their hopes on? What's their argument?
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Well, first, they point to the value of their crypto assets,
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the ones classified as intangible assets valued at over S825,000.
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They argue these convertible to cash.
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Second, they mention a non-cash item, $50,000 in share-based compensation that's
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sitting in payables but doesn't actually require a cash outlay right now.
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Okay, so asset value and a non-cash expense.
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What about actual financial support, cash injections? This seems to be the core of it.
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They highlight first that a S1.1 million dollar interest-free loan from a controlling
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shareholder has had his repayment date pushed way back beyond July 2026.
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That gives them significant breathing room. Absolutely.
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And second, critically, that same controlling shareholder has committed to providing
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up to $2.80 million in additional financial support over the next 12 months,
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starting from April 2025.
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Wow. Okay. That sounds like a lifeline. It really does.
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It appears to be a key reason why the board feels confident of continuing operations
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for the foreseeable future. Are they looking at other ways to raise money too?
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Beyond shareholder support? Yes. They explicitly state they're planning to explore
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corporate fundraising exercises.
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So, trying to bring in fresh capital from the market or other investors. Right.
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So the plan seems to be leverage crypto assets, manage payables,
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rely heavily on the main shareholder support and try to raise external funds.
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What's their broader take on the market and their own future direction?
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Well, management sort of frames Q1 2025 as a period of recalibration for the...
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Whole blockchain and crypto industry. Acknowledging the turbulence.
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Yeah. But they also say they still believe in the long-term fundamentals.
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And interestingly, they highlight real-world asset tokenization,
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using blockchain for things like property or other physical assets as a key
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growth area they're watching.
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They note increasing interest there from traditional finance, too.
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So positioning themselves towards potentially more stable institutional applications
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of blockchain. That seems to be the angle.
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They say their focus moving forward is on strategic partnerships,
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finding new revenue streams, and of course, keeping a tight rein on costs.
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It's about navigating the current choppy waters while aiming for those emerging opportunities.
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Okay, let's try to wrap this up. Summarizing the key takeaways from this deep
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dive into OIO's Q1 2025 results, what are the main points listeners should remember?
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I think the big picture is pretty clear.
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OIO saw a really significant drop in revenue and swung from a profit last year
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to a substantial loss this quarter, driven by, well, a mix of things,
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lower crypto-related income, the disappearance of that agency service revenue,
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and crucially, those big impairment and disposal losses on their crypto holdings this time around.
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Despite some savings on the admin side? Exactly.
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Those savings just weren't enough to offset the other hits. And the balance
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sheet reflects this stress. It does.
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Negative working capital continues. The shareholder equity deficit has grown.
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It's not a strong financial position on paper. But there's a but.
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But yeah, the management is expressing confidence in staying afloat.
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They're leaning heavily on that extended loan and the promised S2 million dollar
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injection from the controlling shareholder, plus hopes of raising more external capital.
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So it's a company facing real financial challenges, maybe even precariousness,
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but with a stated plan and critically significant backing from at least one major stakeholder.
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Okay, final thought for our listeners trying to digest this.
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I think OIO's situation really highlights just how intertwined a company like
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this can be with the wild swings of the crypto market, even if they try to build
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other blockchain services.
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Right. Their performance is clearly impacted by crypto prices and activity,
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both positively and negatively.
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Understanding that dynamic alongside their efforts in areas like asset tokenization
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and their reliance on shareholder support is really key to assessing where they
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might be headed. And as always, for the full picture.
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Music.