Sevens Atelier Limited 2Q & 1H 2025 Financial Results Analysis

Sevens Atelier Limited (“the Group”), a Singapore-listed specialist in investment holding, building construction, and interior design, has released its unaudited condensed interim financial statements for the second quarter and half year ended 30 June 2025. The following analysis breaks down the key financial metrics, performance trends, and management commentary for investors.

Key Financial Metrics

Performance Review and Trends

Revenue and Profitability

The Group experienced a sharp decline in both revenue and profitability for 2Q and 1H 2025 compared to the same periods in 2024. 2Q 2025 revenue dropped by 23% year-on-year (YoY) to S\$1.8 million, while 1H 2025 revenue halved to S\$2.0 million. The Group swung from a profit of S\$0.18 million in 2Q 2024 to a loss of S\$0.06 million in 2Q 2025, and from a loss of S\$0.19 million in 1H 2024 to a deeper loss of S\$0.57 million in 1H 2025.

The YoY revenue decline was largely attributed to the completion of performance obligations for major contracts in the prior periods, with new contracts still in early execution stages. Delays were further exacerbated by inclement weather and longer lead times for obtaining regulatory approvals.

Gross Profit and Margins

Gross profit also contracted substantially, reflecting the lower revenue base. The gross margin for 1H 2025 was about 17.6%, compared to 18.4% in 1H 2024. The margin contraction was mainly due to under-utilisation of resources and the early phases of new projects where revenue recognition is limited.

Operating Expenses and Cash Flow

The Group demonstrated some cost discipline, with administrative expenses falling 22% YoY for 1H 2025. The decrease was mainly from employee cost savings due to internal restructuring and reduced depreciation of right-of-use assets. Net cash generated from operations was positive at S\$71,000 in 1H 2025, a marked improvement over an outflow of S\$945,000 in 1H 2024. However, overall cash balance remains low at S\$353,000.

Balance Sheet and Working Capital

The Group’s negative working capital position deteriorated further, widening from S\$2.76 million at 31 Dec 2024 to S\$3.26 million at 30 Jun 2025. This was primarily due to a sharp rise in contract liabilities (i.e., advances from customers for projects yet to be delivered). Trade payables also remain high, though there was a reduction due to payments made to subcontractors.

Exceptional Items and Other Notable Events

• No Dividends: No interim, final, or special dividends were declared for 1H 2025 or the prior corresponding periods, citing accumulated losses.
• Fundraising: The Group completed a small private placement in May 2024, raising S\$90,000 net, primarily for marketing and working capital.
• Going Concern: The auditors highlighted a material uncertainty related to going concern for FY2024. The Board maintains that with a S\$13.1 million secured order book, the Group can meet its short-term liabilities, but is also actively exploring further equity and debt fundraising options.
• No Asset Revaluations or Major Exceptional Items: No asset revaluations, major write-offs, or one-off gains/losses were reported.
• No Share Buybacks or Dilution Events: There were no share buybacks, bonus issues, or new dilutive events in the period. Total shares on issue remain at 214,916,321.
• No Related Party Transactions: No interested person or related party transactions above S\$100,000 were disclosed.
• No Legal or Regulatory Disputes or Macroeconomic Shocks: None reported.

Chairman’s Statement

“Sevens Atelier enters the forthcoming reporting period with confidence, supported by a robust order book and clearly articulated growth strategy. By maintaining targeted investments in talent development, technological innovation, and operational excellence, the Group remains poised to seize opportunities, effectively manage potential risks, and continues to aim towards leadership position in Singapore’s premium Design & Build industry.”

The Chairman’s tone is positive, highlighting operational agility, a strong order book, and confidence in the Group’s positioning despite near-term financial losses and working capital challenges.

Industry Outlook and Risks

• Positive: Singapore’s construction demand is expected to remain robust in 2025 (S\$47–53 billion), with mega-projects and premium landed residential redevelopment aligning with the Group’s focus.
• Risks: Management cautions about supply chain volatility, rising material/labour costs, intense sector competition, and ongoing global macroeconomic uncertainties. The Group is responding with cost management, vendor diversification, and digital transformation.

Conclusion and Recommendations

Overall Assessment

While Sevens Atelier Limited shows operational resilience, a strong order book, and improved cost control, the financial performance for 1H 2025 is weak with substantial YoY declines in revenue and profitability. Working capital remains negative and the company is reliant on successful execution of new contracts and potential fundraising to support liquidity. The outlook is cautiously optimistic based on management’s confidence, industry tailwinds, and the secured pipeline, but downside risks remain elevated.

Investor Recommendations

• If you currently hold the stock:
  
  Consider holding your position if you have a high risk tolerance and a long-term outlook. There is upside potential if the Group executes on its order book and successfully raises new capital. However, monitor working capital, contract execution, and fundraising developments closely—any adverse news could further pressure the share price.
• If you do not currently hold the stock:
  
  Exercise caution before initiating a new position. Wait for signs of revenue recovery, consistent profitability, and improvements in the Group’s liquidity. Entry may be reconsidered if the company demonstrates successful delivery of its secured order book and/or completes a substantial capital injection.

Disclaimer: This analysis is based solely on data disclosed in the company’s published financial statements. It does not constitute investment advice. Please consult your financial advisor and consider your own risk tolerance before making any investment decisions.

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