GRC Limited FY2025 Financial Results: Acquisition-Fueled Growth Delivers Strong Turnaround

GRC Limited has released its condensed financial statements for the year ended 30 June 2025, marking a transformative period driven by the acquisition of CES Construction Group. This move has substantially reshaped the Group’s revenue base, profit profile, and balance sheet strength, positioning the company for a new phase of growth and resilience. Below, we analyze the key financial and strategic highlights, supported by structured data and insights for investors.

Key Financial Metrics and Year-on-Year Comparisons

Historical Performance Trends & Revenue Spike Explanation

GRC Limited’s FY2025 financials show an extraordinary surge in revenue and profit, primarily due to the strategic acquisition of CES Construction Group completed on 30 April 2025. The two-month contribution from the acquired entity accounted for over 92% of FY2025 revenue, propelling top-line growth of over 1,100% year-on-year. Gross profit more than doubled, and net profit after tax also grew significantly, despite increased administrative expenses due to consolidation of the new business unit.

Balance Sheet & Cash Flow Strengthening

• Non-current assets increased from \$77.9 million to \$169.9 million, with CES Construction Group representing a material portion of the increase.
• Net current assets position reversed from a deficit of \$9.9 million to a surplus of \$46.6 million, underpinned by cash acquired and refinancing of borrowings.
• Total equity rose by over 147%, primarily due to share issuance for the acquisition and earnings accretion.
• Net-debt-to-equity ratio improved dramatically, shifting the Group to a net cash position post-acquisition.
• Operating cash flow rose sharply to \$21.5 million (vs \$0.5 million in FY2024), and free cash flow benefited from net cash inflow from the acquisition (\$81.4 million in cash acquired).

Dividends

A first and final cash dividend of 0.13 Singapore cents per ordinary share was proposed for FY2025 (subject to shareholder approval). No dividend was declared in the previous year.

Business Segments & Revenue Concentration

• The acquisition diversified the Group into seven business segments, with construction-related revenue now dominating.
• Three major customers contributed significantly to revenue, with the largest providing \$52.5 million (building construction).
• Order book for construction business as at 30 June 2025 stands at \$2.3 billion, with an additional \$273.2 million awarded post-year end.

Exceptional Items, Asset Revaluation & Related-Party Transactions

• Provision for onerous contracts of \$12.2 million was recognized, mainly due to issues with a subcontractor under the LTA Contract.
• Write-back of impairment provisions on receivables from subsidiaries (\$12.3 million) reflects improved financial positions.
• Investment properties were revalued, with a net fair value gain of \$0.3 million. Some assets were reclassified between investment and owner-occupied properties.
• Significant related-party transactions included rental income and interest on loans, but all disclosed as conducted at arm’s length.

Corporate Actions: Share Issuance & Dilution

• Issued 2,257,197,258 new shares as consideration for the CES Construction acquisition, increasing the total share count from 1,128,657,445 to 3,385,854,703.
• No outstanding convertibles, treasury shares, or subsidiary holdings at period end. No share buybacks or mandates disclosed.

Macroeconomic and Industry Outlook

The Group highlighted robust construction sector growth (6.0% YoY in Q2 2025), a strong forward order book, and full occupancy in industrial properties with minimal near-term renewal risk. Management maintains a positive outlook, citing resilience against potential headwinds from increased industry supply and global geopolitical developments.

Chairman’s Statement

“The Group’s Financial Position strengthened significantly, primarily due to the acquisition of CES Construction Group… Supported by the strengthened financial position from CES Construction Group and the reclassification of borrowings from current to non-current following a refinancing exercise, the Group reversed its net current liabilities of \$9.9 million as at 30 June 2024 to a net current assets position of \$46.6 million as at 30 June 2025… Total equity rose from \$59.3 million to \$146.6 million, factoring in the net profit of \$7.3 million recorded in FY2025 and the \$80.0 million equity effect from the acquisition of CES Construction Group.”

Tone: Positive and forward-looking, emphasizing improved financial health and growth prospects post-acquisition.

Conclusion & Investment Recommendations

Overall, GRC Limited delivers a strong financial recovery and growth narrative for FY2025, primarily due to the transformative CES Construction Group acquisition. The Group demonstrates improved profitability, robust cash generation, a healthy balance sheet, and a positive sector outlook. However, the results are substantially driven by acquisition effects, so organic growth and margin sustainability warrant close future monitoring.

Investor Recommendations

• If you currently hold the stock: Consider maintaining your position. The Group’s improved fundamentals, large order book, and dividend resumption signal positive momentum. However, monitor integration execution and future organic margins closely.
• If you do not hold the stock: The stock may present an attractive entry point for those seeking exposure to construction sector recovery and turnaround stories. However, consider waiting for the next quarterly update to confirm that post-acquisition gains translate to sustained organic growth.

Disclaimer: This analysis is based solely on information disclosed in the FY2025 financial report. It does not constitute investment advice. Please consider your own financial circumstances and consult a professional before making investment decisions.

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