Koda Ltd – FY2024 Financial Statements Adjustments and Implications

Report Date: October 2, 2024

Financial Year: Reporting for the financial year ended June 30, 2024 (FY2024)

Key Facts and Summary:

1. Material Variances: The report outlines variances between the unaudited and audited financial statements for FY2024. These adjustments were identified by the company’s external auditors, particularly concerning income tax, trade receivables, other payables, and provisions.

2. Income Tax Adjustment: The income tax expense was reduced by $0.261 million due to an overprovision of income tax. This adjustment was guided by the IRAS consultation paper on revenue recognition under SFRS(I) 15. This change reduced the net loss for FY2024 by the same amount, resulting in an improvement in net loss per share.

3. Reclassification of Provisions:

   • Trade Receivables: A provision of $0.685 million for co-advertising services was offset against trade receivables in the audited results, reducing trade receivables to $8.1 million.
   • Other Payables: A provision for retail markdowns amounting to $0.852 million was reclassified as “deferred revenue” in the audited results, increasing other payables to $7.35 million.

4. Impact on Cash Flows: Changes in trade receivables, other payables, and provisions did not affect net cash used in operating activities.

5. Total Comprehensive Loss: The audited financial statements report a comprehensive loss of $4.719 million, an improvement of $0.261 million from the unaudited results.

6. Equity and Accumulated Profit: The company’s accumulated profits and total equity increased by $0.261 million due to the overprovision adjustment, resulting in accumulated profits of $40.38 million and total equity of $44.22 million.

Notable Points for Investor Actions:

1. Dividends: There is no mention of dividend distribution for FY2024 in this report, indicating that investors should not expect a dividend payout for this financial year.

2. Special Activities for Profitability: The report does not specifically mention any ongoing or future activities aimed at improving profitability.

Recommendations for Investors:

• If You Currently Hold the Stock: Given the company reported a loss for FY2024, there seems to be a need for cautious assessment. Investors should monitor future announcements and financial reports closely to understand how the company plans to improve its profitability. Unless the company outlines concrete strategies for turning around its financial performance, it may be prudent to consider holding the stock with caution, keeping an eye on market developments and potential recovery signals.

• If You Do Not Hold the Stock: Based on the current financial status, as reflected in this report, it may be wise to adopt a wait-and-see approach. Potential investors should seek more clarity on the company’s strategic plans for revenue growth and cost management before considering investing.

Disclaimer:

This analysis and recommendation are based solely on the content provided in the report and do not account for other market conditions or individual investment strategies. Investors should perform their own research and consult financial advisors before making any investment decisions.