Latest / Investor Exchange / Abundante Limited FY2025 Results

Transcript

Abundante Limited FY2025 Results · Investor Exchange

• 0:02
  Time for another Investor Exchange podcast. Here are your hosts, Matt and Sally.
• 0:08
  Ever feel like trying to figure out a company's real financial health is,
• 0:11
  well, just way too complicated? Reading a different language sometimes, right? Exactly.
• 0:16
  Well, today we're grabbing the translation guide. We're going deep into Abundante
• 0:20
  Limited's finances for the year that ended February 28th, 2025.
• 0:24
  Uh-huh. Specifically, their unaudited interim statements. Yeah.
• 0:28
  And our mission really is simple. Pull out the key stuff about how they performed
• 0:33
  financially. And figure out why. What's behind those numbers.
• 0:36
  Right. And get a sense of what they think is coming next, their outlook.
• 0:38
  We've got the condensed income statement, that's profitability.
• 0:41
  Then the balance sheet, you know, assets and liabilities, snapshot.
• 0:45
  The cash flow, seeing where the money actually went. And importantly,
• 0:48
  the notes. You always need the notes for the context behind the figures.
• 0:51
  Definitely. It's about getting that quick but solid understanding of their financial
• 0:56
  story. Let's do it. Okay, big picture first. Revenue.
• 1:00
  Group revenue landed at $7.33 million for the year. Which is down,
• 1:05
  what, about 8% from the year before?
• 1:07
  $7.97 million, I think. That's it. And the company line is basically tough competition
• 1:13
  in construction impacting sales.
• 1:15
  Does anything jump out at you there? Well, yeah, actually. There's a little
• 1:19
  nugget in the report. Even though the whole year was down, sales in the second
• 1:23
  half, they were actually 12% stronger than the first half.
• 1:27
  Oh, interesting. So maybe things started to turn around a bit later on. Could be.
• 1:31
  Or just different market dynamics, perhaps. It definitely makes you wonder,
• 1:35
  despite those competitive pressures they mentioned.
• 1:37
  Yeah, good point. Okay, so how did that lower revenue flow through to profit?
• 1:43
  Gross profit took a much steeper dive. Much steeper. Down from S1.88 million
• 1:48
  dollars to just a $755,000.
• 1:51
  And a big reason they flag is higher depreciation costs, an extra S321,000 dollars,
• 1:57
  specifically from buying new concrete pumping equipment.
• 2:00
  Right. So it wasn't just the sales dip hitting the bottom line. No.
• 2:03
  And depreciation, for anyone listening, that's just spreading the cost of a
• 2:06
  big asset like this equipment over its useful life.
• 2:09
  So that investment, while maybe necessary, hit their profits straight away. Exactly.
• 2:13
  And if you link it back to the competition they mentioned, well,
• 2:16
  it makes you ask, was this investment essential just to keep up,
• 2:19
  even if it squeezed margins right now?
• 2:21
  That squeeze definitely shows up in the final profit number.
• 2:24
  Profit attributable to the owners. Yeah.
• 2:26
  It really fell off a cliff. Yeah, S-237,000 compared to S-1.14 million dollars
• 2:32
  the year before. That's a huge drop.
• 2:34
  Wow. It really reflects both things, lower sales and those higher operating
• 2:38
  costs, especially the depreciation.
• 2:40
  It's worth just quickly noting, they mentioned discontinued operations too,
• 2:44
  right? Something about a ready-mixed concrete business.
• 2:47
  Yeah, they shut that down a while back, liquidated it fully in late 2023.
• 2:51
  But the numbers we're really digging into now, the S237K profit,
• 2:56
  that's from their ongoing stuff.
• 2:58
  Which is the concrete pumping and waste management services.
• 3:00
  Correct. Continuing operations.
• 3:02
  Okay, so let's break those down then. How did each segment do?
• 3:05
  Revenue-wise, concrete pumping brought in $6.7 million, roughly. Down from $7.1 million.
• 3:10
  And waste management, also down as $620,000 from S834,000.
• 3:16
  So yeah, both core areas saw sales dip. And the profit picture for those segments,
• 3:21
  well, it sharpens the focus.
• 3:24
  Concrete pumping profit before tax, it plunged from nearly S1.4 million dollars
• 3:30
  down to just S323,000 dollars.
• 3:34
  And waste management, which actually made a tiny profit last year, S33,000 dollars. Yeah.
• 3:40
  It swung to a loss this year, minus 57,000 dollars.
• 3:44
  So challenges across the board in their main operations then.
• 3:47
  Pretty much sums it up. Yeah.
• 3:49
  The report also mentioned some intersegment revenue. Is that important stuff
• 3:53
  like renting pumps or office space between divisions?
• 3:56
  It's part of the internal plumbing, really, how they allocate costs and income inside the company.
• 4:01
  It looks fairly stable year on year, suggesting the internal setup hasn't changed much. OK.
• 4:05
  And you see the depreciation split out by segment, too.
• 4:08
  As you'd expect, concrete pumping carries most of that burden because of the new gear. Right.
• 4:12
  And then there are those other little bits on the income statement,
• 4:14
  like gains or losses from selling old equipment or maybe getting back some money
• 4:18
  they thought was a bad debt.
• 4:20
  Yeah. Non-cash items, usually. They're not core operations, but they do affect the final number.
• 4:25
  A gain might mean they sold an old truck for more than expected.
• 4:29
  Recovering bad debts is always a small win for credit control.
• 4:32
  Gives a bit more flavor, I guess. Exactly.
• 4:34
  OK, let's switch gears. The statement of financial position.
• 4:38
  The balance sheet. What jumps out? Well, the big one is non-current assets,
• 4:43
  property, plant, and equipment specifically.
• 4:46
  Up quite a bit, right? From S3.2 million dollars to S4.75 million dollars.
• 4:52
  Driven almost entirely by that S2.49 million dollars to spend on the new concrete
• 4:57
  pumping equipment we keep mentioning.
• 4:58
  That's a major investment, especially with the market being tough.
• 5:01
  Seems like a strategic bet. It certainly does. Suggests they're looking longer
• 5:04
  term, maybe aiming for efficiency gains or just more capacity to compete better
• 5:09
  later on. It's a key signal.
• 5:11
  Okay, what about current assets? Things they expect to turn into cash soonish.
• 5:15
  Trade receivables, the money owed by customers, are down. S2.98 million dollars
• 5:19
  versus S3.39 million dollars. Which makes sense if sales were lower.
• 5:24
  Absolutely. Doesn't necessarily mean they're having more trouble collecting,
• 5:27
  just less is being billed out. And cash itself?
• 5:29
  Cash and equivalents are down too. Fell from S2.35 million dollars to S1.57 million dollars.
• 5:37
  Which is probably where the money for the equipment came from,
• 5:39
  mostly. Very likely, yeah. A direct result of that big purchase.
• 5:42
  Inventories look pretty stable, though. And on the other side,
• 5:45
  what they owe? Current liabilities. Trade and other payables are also down.
• 5:50
  S$813,000 compared to just over S$1 million before.
• 5:55
  Again, probably linked to just doing less business overall, buying less stuff.
• 6:00
  Seems like the most logical explanation, yes.
• 6:02
  Lower activity often means lower payables. So despite the profit drop,
• 6:06
  how's the overall financial foundation looking?
• 6:08
  Equity. Total equity, the owner's stake, actually nudged up slightly.
• 6:12
  $17.68 million from $17.35 million. Huh. So the net asset value per share went up a little too.
• 6:20
  $17.92 from $17.660. Yeah, it did.
• 6:23
  It suggests that even with lower profit this year, maybe retained earnings from
• 6:27
  past years or other equity adjustments kept the overall net worth relatively
• 6:30
  stable or even slightly improved it. Interesting. Okay, last statement.
• 6:34
  Cash flows. Where did the actual cash go? Well, good news first,
• 6:38
  they did generate cash from their day-to-day operations.
• 6:41
  S-651,000 net cash in.
• 6:45
  So the core business is still bringing cash through the door.
• 6:48
  It is, but then you look at investing activities.
• 6:51
  Ah, the equipment purchase again. Bingo! A big net cash outflow there.
• 6:56
  S-1.492 million dollars used in investing, mostly for that property, plant, and equipment.
• 7:01
  So you net the operating cash inflow against the investing outflow.
• 7:05
  And you end up with a net decrease in cash overall for the year of S-I-100 and
• 7:10
  $141,000, which matches the drop we saw on the balance sheet.
• 7:15
  It all ties together. Right.
• 7:16
  So boiling it down, the why behind the performance seems pretty clear now,
• 7:20
  doesn't it? I think so. You've got rising competition hitting the top line, the revenue.
• 7:24
  Then the strategic decision to invest heavily in new equipment boosts depreciation,
• 7:28
  which really hits the gross profit. Uh-huh.
• 7:30
  And the lower sales volume naturally leads to lower receivables owed by customers
• 7:34
  and lower payables owed to suppliers.
• 7:36
  It paints a picture of a company navigating a tougher market.
• 7:41
  While simultaneously making a big bet on its future capabilities. Exactly.
• 7:45
  That investment is the really interesting piece here.
• 7:48
  Making a significant capital expenditure while facing headwinds.
• 7:52
  It tells you something about their strategy or perhaps their view of the long game.
• 7:57
  So what is their view? What's the outlook they provide?
• 7:59
  They're pretty upfront, actually. They expect the concrete pumping business
• 8:03
  will stay challenging for, say, the next 6 to 12 months.
• 8:07
  Still competition plus rising costs. Yeah, that's what they flag.
• 8:10
  So their focus, they say, is on being cautious.
• 8:14
  Meaning? Like really watching credit, controlling costs wherever they can,
• 8:18
  and trying to, you know, squeeze more efficiency and productivity out of their
• 8:22
  operations to handle what they call deteriorating business conditions.
• 8:26
  Okay. And they didn't give a forecast before this, did they?
• 8:29
  So we can't see if things are better or worse than they expected.
• 8:32
  No. The report notes there was no previously disclosed forecast,
• 8:35
  so no variance analysis possible.
• 8:38
  We just have their current assessment. Which sounds quite guarded, quite cautious.
• 8:43
  It directly reflects the pressures we saw in the numbers, doesn't it?
• 8:46
  Acknowledging the reality and focusing on the internal levers, costs, and efficiency.
• 8:51
  Okay, so let's wrap this deep dive up. Key takeaways for a Bernante Limited.
• 8:56
  Definitely a year of lower revenue and much lower profit. Driven mainly by that
• 9:01
  increased competition.
• 9:02
  But also impacted significantly by their own big investment in new gear,
• 9:07
  which increased costs immediately.
• 9:09
  And despite that investment, their outlook for the near future is cautious,
• 9:13
  focusing on control and efficiency to navigate expected challenges.
• 9:18
  Was anything particularly surprising to you in all this?
• 9:21
  I think just the scale of that investment during the downturn,
• 9:25
  it's counterintuitive in some ways, but suggests perhaps a belief in the long-term
• 9:30
  market or their ability to gain an edge with better equipment.
• 9:33
  Strategic resilience, maybe? Yeah, it definitely stands out.
• 9:36
  It really shows how digging into these documents gives you that richer picture, doesn't it?
• 9:40
  Beyond just the headline profit number. Absolutely. It's about understanding
• 9:43
  the context, the decisions behind the figures.
• 9:46
  Which leads us to a final thought for you, listening in. Yeah, consider this.
• 9:50
  Avendante made this big investment in equipment while facing a tough market
• 9:54
  and forecasting continued challenges.
• 9:56
  So the question is, how might they strategically use that new equipment?
• 10:02
  Right. Will it be purely about becoming more efficient or could it open up new
• 10:05
  types of jobs, maybe let them target different, less competitive niches?
• 10:09
  How can they leverage that S2.5 million dollar spend to not just survive the
• 10:14
  next year, but maybe come out stronger in the longer run?
• 10:17
  How does that investment actually fight back against the competition?
• 10:20
  Definitely something to think about. We hope this deep dive gives you a clearer
• 10:23
  idea of how you can pull apart financial information for any company you're interested in.
• 10:28
  It's about finding the story within the numbers. Thank you.