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TT International: FY2025 Financial Results · Investor Exchange

• 0:02
  Time for another Investor Exchange podcast. Here are your hosts, Matt and Sally.
• 0:08
  Okay, welcome back. Today, we're doing a deep dive into TT International Limited.
• 0:13
  We've got their latest full-year financials for the fiscal year ending March 2025.
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  That's right. Unaudited results, plus an interesting correction notice they
• 0:21
  put out shortly after the initial announcement.
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  So we have the main report and that little adjustment to consider.
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  Right. And our mission, as always, is to really unpack what these documents tell us.
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  We want to understand the numbers, sure, but also the story behind the numbers. Exactly.
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  And with TT International, there's definitely a story. You look at the headline
• 0:38
  figures and it seems a bit, well, contradictory at first glance.
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  Yeah, that's what caught my eye.
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  So let's start at the top. What are the headline numbers telling us about,
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  say, revenue compared to last year, FY 2024? Okay, so revenue first,
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  it's down quite significantly, actually.
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  It decreased by 22.1%. 22%, wow.
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  Yeah, it went from $25.7 million in FY 2024 down to $20.1 million in FY 2025.
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  So a noticeable drop in sales.
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  Okay. And does gross profit follow that trend? I assume it would.
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  It does, and even more steeply.
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  Gross profit fell by 29.5%. It went from $7.9 million down to $7.7 million.
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  Ouch. So less money coming in and keeping less of it as gross profit,
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  too. What did that do to the margin?
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  Yeah, the gross profit margin dipped. It was 42.5% in the previous year,
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  and it fell to 38.4% in FY 2025.
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  So pressure on profitability right from the start. Okay, so far it sounds pretty
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  challenging. Weak sales, lower margins.
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  That usually points towards bigger losses or smaller profits if they were making
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  any. That's not quite the story here, is it? No, it's not. And this is where it gets interesting.
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  Despite that weaker top line performance, the loss from operations actually
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  improved significantly.
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  Improved. How much are we talking? Well, in FY 2024, they reported a loss from
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  operations of $10.6 million.
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  But in FY 2025, that shrank quite dramatically to a loss of $3.3 million.
• 2:07
  Whoa. OK. So they cut the operating loss by, what, about two thirds,
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  even with revenue falling sharply. Exactly.
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  It's a big swing. And that improvement flows further down, too.
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  The overall net loss for the year also got much smaller.
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  Right. And this is where that correction notice comes in. Yes, precisely.
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  Initially, they reported one figure, then corrected it slightly.
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  The final corrected net loss for FY 2025 stands at S3.607 million dollars.
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  That's compared to a net loss of S11.1 million dollars in FY 2024.
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  So again, a huge improvement on the bottom line.
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  And what about the loss specifically attributable to the owners of the company?
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  Sometimes that differs.
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  It does. And that figure saw an even more dramatic improvement.
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  The loss attributable to owners went from $7.9 million in FY 2025 down to just
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  $6 to $7 million in FY 2025.
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  That's the corrected figure again, almost breaking even from the owner's perspective.
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  Sales down over 20 percent, gross margin down, but operating losses slashed,
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  net loss slashed, and the loss to owners almost vanishes.
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  How does the company explain this? What reasons do they give in the report?
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  Well, for the drop in revenue and gross profit, they point to what they call
• 3:13
  a challenging operating environment.
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  Okay, standard phrase. Do they get specific?
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  They do. They mention a significantly weaker retail industry,
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  which they explicitly link to the ongoing impacts of COVID-19.
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  Plus, they talk about increasing margin pressures, rising costs in general,
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  and difficulties due to manpower tightening policies.
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  Right. Those are definitely headwinds we've seen affecting many businesses,
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  particularly in retail over the past couple of years.
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  Labor shortages, supply chain costs, lingering pandemic effects.
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  Exactly. So that covers the why sales are down part. But as you said,
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  that doesn't explain why the losses got so much smaller.
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  So what's the explanation for the improved bottom line? It wasn't core sales, obviously.
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  No, it seems to come from other areas of the financial statements.
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  The source material highlights a couple of key things.
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  First, other operating income went up a lot by 48.0%. Other operating income?
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  Like what? The report mainly credits that increase to income from events held
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  by subsidiaries. And importantly, there was also a one-off non-cash gain.
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  This came from the deconsolidation of a subsidiary that's currently under liquidation.
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  Ah, okay. Okay, so some extra income streams, maybe not directly related to
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  their main retail business, and a significant accounting gain from sorting out
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  a troubled subsidiary. That sounds like it could make a difference.
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  It definitely seems to have played a big part, but that's not all.
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  They also managed to decrease other operating expenses quite substantially down
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  by 29.7%. Okay, and what drove that decrease?
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  Cost-cutting measures. The report mainly attributes this decrease to lower unrealized
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  foreign exchange losses.
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  Forex losses. So basically changes in currency exchange rates hurt them less
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  on paper this year compared to last year.
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  That seems to be the main factor mentioned, yes. It's an unrealized loss,
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  meaning it's more of an accounting adjustment based on currency values rather
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  than cash actually spent.
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  So less of a negative paper adjustment this year helped the expense line. Right.
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  So if we put it all together, the core business struggled with sales and margins
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  due to tough market conditions.
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  But the bottom line improved drastically because of extra income from things
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  like events, a significant one-off gain from shedding its subsidiary,
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  and lower paper losses on foreign exchange.
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  Is that a fair summary? I think that captures the essence of what the financial
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  statements are showing, yes.
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  It's a mix of operational struggle offset by other financial factors. Okay.
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  Now, improved losses are one thing, but what about actual cash?
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  Did the company generate cash from its operations during the year,
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  especially with that smaller loss? That's a really important question. And interestingly, no.
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  The cash flow picture wasn't quite as positive.
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  Cash flow from operating activities actually worsened year over year.
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  Oh, how so? In FY 2024, they generated a positive S1.3 million dollars from operations.
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  But in FY 2025, that flipped to using S65,000 dollars in cash for operations.
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  So despite the lower accounting loss, the actual cash generated from day-to-day
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  business went negative. Hmm.
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  That's a crucial detail. It suggests the underlying operational profitability
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  might still be under pressure from a cash perspective, even if the accounting
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  loss looks better due to non-cash items like that gain or reduce forex losses.
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  It certainly highlights the difference between accounting profit and cash generation,
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  which is always important to watch.
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  What about the balance sheet? Did anything significant change there? Debt levels.
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  Equity? Well, the company's overall equity position remains negative.
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  That's not ideal. Obviously, liabilities exceed assets.
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  However, total liabilities did see a small decrease compared to the previous year.
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  Borrowings like bank loans and such were mentioned as being largely stable.
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  Okay, so still in a tough spot financially overall with negative equity,
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  but maybe some slight stabilization or reduction in liabilities.
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  Now, this brings us to the broader context, which seems really critical here. Absolutely essential.
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  You can't look at these FY 2025 results in isolation.
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  The source material, both the financial statement commentary and potentially
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  other announcements referenced, makes it very clear that TT International has
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  been operating under a court-sanctioned scheme of arrangement for a very long time.
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  And when you say a long time? Since 2010. 2010.
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  So we're talking about 15 years under a formal restructuring process supervised
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  by the courts. That's correct. 15 years.
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  This isn't a company just having a bad year or two. It's a company that has
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  been in a deep, protracted financial restructuring for over a decade and a half. Wow.
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  That context completely reframes these annual results, doesn't it? It absolutely does.
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  The source documents actually detail numerous court applications,
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  creditor meetings, requests for extensions, and amendments to this scheme of
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  arrangement and related funding agreements over the years.
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  It's clearly been a long and complex process.
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  Are there recent developments mentioned? Like, is this scheme concluding?
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  Not concluding, apparently.
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  The latest information mentioned in the source points to further adjournments.
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  There is a court hearing that was adjourned to August 11, 2025,
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  and a crucial scheme meeting with creditors adjourned to July 14, 2025.
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  So the process is still very much ongoing, with key dates pushed out again.
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  This isn't just historical context, it's the current reality influencing everything. Exactly.
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  It underscores the immense financial pressure and uncertainty the company continues to operate under.
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  Their ability to continue as a going concern likely hinges on the successful
• 8:36
  continuation and eventual completion of this very long-running scheme.
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  Okay, so looking ahead, what does the company itself say about its outlook in
• 8:45
  the commentary, given this context and the recent performance?
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  The commentary, according to the source, states that the operating environment
• 8:51
  remains more challenging.
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  They essentially reiterate the same issues, the weak retail sector,
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  COVID impacts, margin pressures, costs, manpower issues.
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  There isn't a particularly optimistic tone about the immediate operating future described.
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  Right. So they're signaling that the tough conditions that impacted FY2025 sales
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  are expected to persist while they continue to navigate this very complex,
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  long-term restructuring. That seems to be the picture painted by the source material.
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  Ongoing operational challenges coupled with the overarching legal and financial
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  restructuring framework. OK, so let's bring this back to the listener.
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  When you encounter a company report like this, maybe not always with a 15 year
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  restructuring, but with complexities, what does it all mean for you?
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  What can you take away from this kind of deep dive? Well, I think it's a fantastic
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  real-world example of several key things.
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  First, you see how broad economic factors like the post-COVID retail environment
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  directly impact a company's top line.
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  It's not abstract. It shows up in the numbers. Right. Connects the macro to the micro. Exactly.
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  Second, it highlights the critical difference between revenue performance and bottom-line results.
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  You absolutely cannot assume that falling sales automatically mean worsening losses or vice versa.
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  You have to dig into why the profit or loss changed. Yeah, the importance of looking at.
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  Other income, other expenses, one-off items, non-cash items,
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  all those lines below gross profit. Precisely.
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  Those items, like the deconsolidation gain or the forex changes here,
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  can dramatically swing the reported profitability, sometimes masking or,
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  conversely, exaggerating the underlying operational health.
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  And third, it shows the immense importance of context. The scheme of arrangement in this case.
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  Yes. Knowing about that longstanding restructuring completely changes how you
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  interpret the results and the company's overall situation and prospects.
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  Financial statements never exist in a vacuum. You need that narrative, that background.
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  So it's about looking holistically, the P&L, the cash flow, the balance sheet,
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  and the commentary, and any relevant external context like legal proceedings.
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  Couldn't have fed it better myself.
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  You need all the pieces to understand the full picture, especially with a company
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  facing significant challenges. Okay, we definitely unpack quite a bit there
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  from TT International's latest reports and the crucial background context.
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  Lower sales, but much smaller losses due to other factors, all happening under
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  the very long shadow of a court-supervised restructuring. We have,
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  and maybe a final thought to leave you with, drawing from that context.
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  Consider this company operating under a scheme of arrangements since 2010.
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  Think about the sheer persistence required, the repeated negotiations with creditors,
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  the constant court dates, the uncertainty documented in these sources with adjournments
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  stretching into late 2025.
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  Fifteen years is an incredibly long time in the business world. It really is.
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  So the thought is, reflect on the immense difficulty, the complexity,
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  and the deep uncertainty that must be involved in such a prolonged corporate restructuring?
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  What does that sheer duration tell you about the challenges involved?
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  What aspect of that long ongoing process stands out most to you?
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  Something to ponder. A powerful point to end on. That's all the time we have
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  for this deep dive. Thanks for joining us.