Ellipsiz Ltd 1HFY2026 Financial Results: Growth in Revenue, Start-up Losses in New Business, and Prudent Cash Management

Ellipsiz Ltd, a Singapore-listed diversified group, released its unaudited condensed interim consolidated financial statements for the six months ended 31 December 2025 (1HFY2026). The Group operates in Distribution and Services Solutions (DSS), Property Investment and Development, Egg Production and Distribution (pre-development phase), and Sports, Recreational & Lifestyle segments, with a recent divestment of its Automated Precision System Solutions (APSS) business.

Key Financial Metrics and Performance Table

*2HFY2025 numbers are inferred by subtracting 1HFY2025 from full-year FY2025 based on available data.

Historical Performance Trends

• Revenue: The Group achieved a robust 24% YoY increase in revenue in 1HFY2026, reaching \$34.6 million, driven mainly by higher equipment, chemicals, and consumables sales in the DSS segment.
• Gross Profit Margin: Margins declined to 18% from 21% YoY primarily due to losses in the start-up indoor golf simulator business.
• Net Profit: Net profit fell sharply by 84% YoY (from \$3.0m to \$0.46m), due mainly to the absence of discontinued operation gains previously recognized (APSS disposal), higher operating costs, and losses from the new golf business.
• EPS: Correspondingly, EPS dropped from 2.13 cents to 0.40 cents.

Exceptional Items and One-Offs

• The prior period (1HFY2025) included a \$2.34m gain from the disposal of the APSS business (Axis-Tec Pte. Ltd.), which was not repeated in 1HFY2026.
• Current period earnings reflect a startup phase loss in the new indoor golf simulator business, impacting group profitability.
• Other income improved by 30% YoY to \$771k, mainly due to higher fair value gains from financial assets and net foreign exchange gains.

Dividend Policy and Recent Dividends

• 1HFY2026: No interim dividend declared. The Board cited the need to preserve cash for working capital and investments.
• Prior Year: A special interim dividend of 5.00 cents was paid in 1HFY2025, and a final dividend of 1.00 cent was paid for FY2025.

Asset Revaluation and Balance Sheet Events

• The Group’s investment property in Bintan is carried at fair value, with no material change this period. Last valuation was at \$20.6m as at 31 Dec 2025, based on an independent report from June 2025.
• Inventories increased sharply due to ongoing equipment sales orders still in installation phase. These will be recognized as revenue upon completion.
• No borrowings; net cash position at \$50.6m at period-end.
• Treasury shares increased to 1,420,300 (0.85% of issued shares), with no sales, transfers, or cancellations during the period.

Divestments and Corporate Actions

• The APSS segment (Axis-Tec Pte. Ltd.) was divested in December 2024, with a gain recognized in 1HFY2025. This strongly boosted last year’s profit and was a non-recurring item.
• No new fundraisings or share placements in the current period.

Segment Performance Highlights

• DSS Segment: Main revenue and profit driver; benefited from improved market demand.
• Sports & Lifestyle (Golf Simulators): In startup phase, contributing to higher expenses and loss in the period.
• Egg Production: Still in pre-development; no material revenue or profit contributions.

Related Party Transactions and Fund Flows

• Routine payments to related parties for services, consultancy, and leases; no unusual or material items highlighted.
• Strong cash preservation, with a reduction in cash from \$52.2m to \$50.6m, mainly due to dividend and lease repayments.

Outlook and Strategic Developments

• The global semiconductor market is projected to grow by >25% in 2026, supporting the Group’s core DSS business. Singapore and China remain the focus, with efforts to expand in SE Asia, Taiwan, and India.
• The new Singapore egg farm (“SG4EF”) project is progressing, pending land allocation and regulatory approvals; construction is targeted to begin in 1H 2026.
• Golf simulator business is being refined in partnership with Uplay Ventures (NTUC Club affiliate), but remains loss-making in its startup phase.

Chairman’s Statement

“The Group is well-positioned to benefit from the growth in the semiconductor market. It is also focused on advancing the egg farm project and developing the indoor golf simulator business.”

The tone is cautiously optimistic, highlighting sector tailwinds but acknowledging the need for focus and vigilance amid market uncertainties and startup losses in new ventures.

Conclusion and Investment Recommendation

Overall Assessment: Ellipsiz Ltd delivered solid revenue growth but saw a significant drop in net profit due to the absence of divestment gains and losses from new business ventures. The balance sheet remains strong with no debt and significant cash reserves. The Group is prudently withholding dividends to support expansion and working capital. The outlook is positive for its core DSS business, given semiconductor industry growth, but near-term profitability will depend on management’s ability to turnaround new investments and control costs.

Investor Recommendations

• If you are currently holding Ellipsiz Ltd shares:
  Maintain a hold position. The company’s core business is well-placed to benefit from macro tailwinds, and its strong balance sheet offers downside protection. However, near-term earnings may remain under pressure due to startup losses and lack of dividend support. Monitor progress on new ventures and recovery in profitability closely.
• If you are not currently holding Ellipsiz Ltd shares:
  Adopt a wait-and-see approach. Entry may be attractive once there is evidence of sustained profitability from new ventures or a return to dividend payments. The current share price may not fully reflect the risks tied to the startup phase of its new businesses.

Disclaimer: This analysis is for informational purposes only and does not constitute financial advice or a recommendation to buy or sell any securities. Please consult your own financial advisor and consider your own risk profile before making investment decisions.

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