Creative Technology Ltd: First Half FY2026 Financial Analysis

Creative Technology Ltd has released its unaudited financial statements for the first half-year ended 31 December 2025. The report highlights a continued challenging business environment, but also shows significant operational improvements and strategic restructuring. Below, we analyze key financial metrics, review performance trends, and summarize corporate actions and outlook.

Key Financial Metrics & Comparative Table

Historical Performance Trends

• Net loss has narrowed sharply from \$6.1m in H1 FY2025 to \$1.2m in H1 FY2026, largely due to lower payroll and related expenses following restructuring.
• Gross profit margin improved to 30% (from 27%), reflecting a more favorable product mix and focus on higher-margin products.
• SG&A and R&D expenses dropped by 19% and 52% YoY, respectively, as the company optimized its workforce and R&D activities.

Exceptional Earnings and Expenses

• Other gains for H1 FY2026 include a gain on sale of intellectual property assets (\$0.2m) and fair value gains/disposal on financial assets at FVPL (\$0.2m), partially offset by foreign exchange losses.
• FY2025 numbers included employee severance charges of \$0.9m, which did not recur in FY2026.

Divestments and Asset Sales

• In January 2026, the Group completed divestment of certain assets and equity participation in Zeica Labs Pte Ltd. The company expects to recognize a gain of ~\$0.9m in H2 FY2026.

Macroeconomic and Business Environment

• The company notes ongoing challenges due to adverse macroeconomic conditions, uncertain U.S. trade policies, and geopolitical tensions, leading to cautious consumer demand.
• The Group expects lower revenue in the next half-year due to historical seasonal sales trends and forecasts an operating loss for the coming period.

Share Capital and Treasury Shares

• No share buybacks or new treasury shares issued in H1 FY2026.
• Company maintains 4.6m treasury shares against 70.4m issued ordinary shares.
• Employee share option pool reduced to 2.42m from 4.07m YoY.

Cash Flow and Balance Sheet Highlights

• Cash and equivalents increased to \$32.6m (from \$29.8m at end-FY2025), driven by positive net cash from operations (\$3.9m), mainly due to inventory reduction.
• Net asset value per share stands at \$0.57, down 2% from \$0.58 at end-FY2025.

Chairman’s Statement

“On behalf of the Board of Directors of the Company, we, the undersigned, hereby confirm to the best of our knowledge that nothing has come to the attention of the Board of Directors of the Company which may render the financial statements for the six-month period ended 31 December 2025 to be false or misleading in any material aspect.”
Sim Li Ern (Chairman), Lai Su Fang Cynthia (Director)

The tone is neutral, with a factual assurance and no forward-looking optimism or pessimism expressed.

Forecast and Outlook

• The Group expects revenue to be lower in H2 FY2026, consistent with seasonal trends.
• Operating loss is expected in the next period, with continued macroeconomic headwinds noted.

Conclusion & Investor Recommendations

Overall Financial Performance:
Creative Technology Ltd’s performance in H1 FY2026 shows marked improvement in cost structure and gross margin, with net loss significantly reduced. However, revenue continues to decline amid challenging macroeconomic conditions and strategic restructuring. No dividend was proposed or paid, and the outlook for H2 FY2026 is cautious, with management forecasting further operating losses.

Recommendation for Current Holders

Investors currently holding the stock should closely monitor the company’s continued restructuring and cost optimization. The narrowing net loss and positive operating cash flow are encouraging, but persistent revenue declines and expected losses suggest maintaining a cautious stance. Hold or reduce exposure may be prudent unless signs of sustained revenue recovery emerge.

Recommendation for Non-Holders

For investors not currently holding the stock, the company’s operational improvements and divestment gains may warrant watching for signs of turnaround. However, given the forecasted operating losses and challenging market environment, it may be best to remain on the sidelines until revenue growth resumes or profitability is restored.

Disclaimer: This analysis is based strictly on the company’s published financial report for H1 FY2026 and does not constitute financial advice. Investors should consider their own risk tolerance and conduct further due diligence before making investment decisions.

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