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Financials

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Condensed Financial Statement And Dividend Announcement For The Year Ended 31 December 2024

Condensed Interim Consolidated Statement of Profit or Loss and Other Comprehensive Income

Condensed Interim Statements of Financial Position

Review of Performance

Statement of Comprehensive Income

Revenue

In Singapore, the Group has 106 dental outlets, 5 medical outlets, 1 dental college and 1 dental equipment & supplies distribution company as at 31 December 2024 compared to 105 dental outlets, 5 medical outlets, 1 dental college, 1 dental equipment & supplies distribution company and a medical laboratory company as at 31 December 2023.

In Malaysia, the Group has 38 dental outlets and 1 dental equipment & supplies distribution company as at 31 December 2024 compared to 44 dental outlets and 1 dental equipment & supplies distribution company as at 31 December 2023.

The revenue contribution from core dental business decreased by 2% from $91.3 million for the six months ended 31 December 2023 (“2H23”) to $89.1 million for the six months ended 31 December 2024 (“2H24”). The decrease of $2.2 million was mainly due to lower revenue contribution from Singapore dental clinics offset by higher revenue contribution from Malaysia dental clinics.

The revenue contribution from other businesses decreased by 46% from $4.3 million in 2H23 to $2.3 million in 2H24. The decrease was mainly due to the cessation of the Group’s medical laboratory in September 2024 due to the expiry of the clinical laboratory service licence.

The revenue contribution from core dental business increased by $0.8 million from $173.0 million for the 12 months ended 31 December 2023 (“FY23”) to $173.8 million for the 12 months ended 31 December 2024 (“FY24”). The increase was mainly due to higher revenue contribution from the Group’s Malaysia dental clinics.

Comparing FY24 with FY23, the revenue contribution from other businesses decreased by 29% or $2.9 million.

Other (Losses) Gains – Net

Other losses increased from $2.8 million in 2H23 to $6.0 million in 2H24 mainly due to impairment of goodwill, impairment on plant and equipment and impairment on inventories arising from the cessation of the Group’s medical laboratory in September 2024 due to the expiry of the clinical laboratory service licence.

Comparing FY24 with FY23, other losses increased by 60% or $1.7 million due to the same reasons as given above.

Other Items of Expense

Cost of Sales from Core Dental Business

Cost of sales from core dental business increased by 8% from $9.3 million in 2H23 to $10.0 million in 2H24. The increase was mainly due to increase in cost of sales from the Group’s dental equipment & supplies distribution companies in Singapore and Malaysia.

As a percentage of revenue from the core dental business, cost of sales used in the core dental business in 2H24 was 11.2% compared to 10.2% in 2H23.

Comparing FY24 with FY23, cost of sales from core dental business remains the same at $18.4 million.

As a percentage of revenue from the core dental business, cost of sales used in the core dental business in FY24 was 10.6% compared to 10.7% in FY23.

Cost of Sales from Other Businesses

The cost of sales from other businesses decreased by 45% from $1.4 million in 2H23 to $0.8 million in 2H24. The decrease of $0.6 million was mainly due to the cessation of the Group’s medical laboratory in September 2024.

As a percentage of revenue from other businesses, cost of sales used in other businesses in 2H24 was 33.1% compared to 32.9% in 2H23.

Comparing FY24 with FY23, cost of sales from other businesses decreased by 28% or $0.8 million mainly due to the same reason given above.

As a percentage of revenue from other businesses, cost of sales used in other businesses in FY24 was 29.9% compared to 29.4% in FY23.

Employee Benefits Expense

Employee benefits expense, which include professional fees paid to dentists, decreased by 6% from $56.9 million in 2H23 to $53.7 million in 2H24. The decrease of $3.2 million was mainly due to decrease in revenue from the dental clinics in Singapore in 2H24.

As a percentage of revenue, employee benefits expense in 2H24 was 58.7% compared to 59.5% in 2H23.

Comparing FY24 with FY23, employee benefits expense decreased 3% or $3.0 million due to the same reason given above.

As a percentage of revenue, employee benefits expense in FY24 was 58.6% compared to 59.6% in FY23.

Depreciation and Amortisation Expense

Depreciation and amortisation expense decreased by 6% from $2.7 million in 2H23 to $2.5 million in 2H24. The decrease of $0.2 million was mainly due to lower amortisation expense as a result of the deconsolidation of EM2AI from a subsidiary to an associate of the Group in March 2024.

As a percentage of revenue, depreciation and amortisation expense in 2H24 was 2.7% compared to 2.8% in 2H23.

Comparing FY24 with FY23, depreciation and amortisation expense decreased by 1% or $0.1 million due to the reason given above.

As a percentage of revenue, depreciation and amortisation expense remains the same at 2.8% in FY24 and FY23.

Finance Costs

Finance costs decreased by 6% from $2.9 million in 2H23 to $2.7 million in 2H24. The decrease of $0.2 million was due to lower interest expense in 2H24 as a result of lower interest rate.

As a percentage of revenue, finance costs remain the same at 3.0% in FY24 and FY23.

Comparing FY24 with FY23, finance costs decreased by 5% or $0.3 million for the same reason above.

As a percentage of revenue, finance costs in FY24 was 3.0% compared to 3.1% in FY23.

Share of Profit from Equity-Accounted Associate

Share of profit from equity-accounted associates increased by 143% from $0.1 million in 2H23 to $0.3 million in 2H24. The increase was mainly due to an increase in share of profit from equity accounted associate, Aoxin Q & M.

The Group recorded a share of profit from equity-accounted associates of $0.5 million in FY24 compare to a share of loss from equity-accounted associates of $0.1 million.

Profit Before Tax and Net Profit After Tax

The Group’s profit before tax decreased from $6.8 million in 2H23 to $3.0 million in 2H24. The Group’s net after tax profit decreased from $5.4 million in 2H23 to $2.9 million in 2H24.

After removing the impact of the other losses, the Group’s profit without the other losses increased 8% from $8.2 million in 2H23 to $8.9 million in 2H24.

Profit after tax attributable to owners of the parent decreased from $6.2 million in 2H23 to $4.8 million in 2H24. After removing the impact of other losses, profit after tax attributable to owners of the parent increased by 9% or $0.7 million.

The Group’s net profit after tax increased from $11.1 million in FY23 to $13.1 million in FY24.

After removing the impact of the other losses, the Group’s profit without the other losses increased 27% from $14.0 million in FY23 to $17.7 million in FY24.

Profit after tax attributable to owners of the parent increased from $11.5 million in FY23 to $14.6 million in FY23. After removing the impact of other losses, profit after tax attributable to owners of the parent increased by 28% or $3.7 million.

Statement of Financial Position

As at 31 December 2024, the Group has cash and cash equivalents of $34.3 million while bank borrowings plus finance leases amounted to $73.7 million. As at 31 December 2023, the Group has cash and cash equivalents of $34.0 million while bank borrowings plus finance leases amounted to $80.3 million.

Current Assets

Trade and other receivables as at 31 December 2024 increased to $36.0 million from $31.2 million as at 31 December 2023. The increase of $4.8 million was mainly due to the loan amount due from EM2AI Pte. Ltd. now recognised as a third-party receivables following the deconsolidation exercise in March 2024, increase in profit guarantee receivables and compensation receivables from ex-vendors offset by decrease in trade receivables from the medical laboratory and the Group’s medical clinics as well as credit card and NETS receivables from the Singapore dental clinics.

Other assets as at 31 December 2024 decreased to $3.2 million from $3.6 million as at 31 December 2023. The decrease of $0.4 million was mainly due to decrease in sign on bonus for dentists.

Inventory as at 31 December 2024 decreased to $10.6 million from $11.8 million as at 31 December 2023. The decrease of $1.2 million was mainly due to decrease in inventory from the dental equipment & supplies companies and cessation of medical laboratory business in September 2024.

Non-Current Assets

The net book value of property, plant and equipment as at 31 December 2024 decreased to $37.1 million from $37.6 million as at 31 December 2023. The decrease of $0.5 million was mainly due to the impairment of plant and equipment for medical laboratory business and depreciation for plant and equipment offset by purchase of clinic’s property located in Towner Road.

The net book value of ROU assets as at 31 December 2024 decreased to $38.2 million from $46.6 million as at 31 December 2023. The decrease of $8.4 million was mainly due to depreciation of the ROU assets offset by renewal of ROU assets.

Investment in associates as at 31 December 2024 increased to $26.2 million from $24.6 million as at 31 December 2023. The increase of $1.6 million was mainly due to the deconsolidation of EM2AI from a subsidiary to an associate of the Group as well as share of profit from equity-accounted associate, Aoxin Q & M in 2024.

Other intangible assets as at 31 December 2024 decreased to $0.4 million from $4.7 million as at 31 December 2024. The decrease of 4.3 million was mainly due to the deconsolidation of EM2AI from a subsidiary to an associate of the Group.

Other receivables as at 31 December 2024 increased to $2.9 million from $2.4 million as at 31 December 2023. The increase of $0.5 million was due to increase in loan to dentists of the Company offset by the repayment of loan by the dentists of the Company.

Other assets as at 31 December 2024 decreased to $6.5 million from $8.0 million as at 31 December 2023. The decrease of $1.5 million was mainly due to amortisation of sign on bonuses for dentists.

Current Liabilities

Trade and other payables as at 31 December 2024 decreased to $18.6 million from $19.2 million as at 31 December 2023. The decrease of $0.6 million was mainly due decrease in accrued expenses as at 31 December 2024.

Other financial liabilities as at 31 December 2024 decreased to $0.5 million from $1.1 million as at 31 December 2023. The decrease of $0.6 million was due to decrease in bills payable from the dental equipment & supplies distribution company in Malaysia.

Non-Current Liabilities

Lease liabilities from ROU assets as at 31 December 2024 decreased to $30.7 million from $39.2 million as at 31 December 2023. The decrease of $8.5 million was due to repayment of operating lease offset by renewal of operating leases,

Other financial liabilities as at 31 December 2024 decreased to $73.2 million from $79.2 million as at 31 December 2023. The decrease of $6.0 million was due to repayment of bank loan.

Statement of Cash Flows

The Group generated net cash flow from operating activities of $22.8 million in 2H24. This was mainly derived from operating cash flows before changes in working capital, decrease of inventory and increase in trade and other payables offset by income tax paid in 2H24. Net cash used in investing activities in 2H24 amounted to $5.2 million, mainly due to the purchase of clinic’s property located in Towner Road, equipment for the existing dental clinics and acquisition of Veritas Dental Pte. Ltd. in November 2024 offset by decrease in sign on bonus for dentists.

Net cash used in financing activities in 2H24 was $15.6 million, mainly due to repayment of lease liabilities arising from right-of use assets, repayment of bank loans, dividend payment to shareholders offset by drawdown of bank loan for the purchase of clinic’s property located in Towner Road.

Consequent to the above factors, the Group’s cash and cash equivalents was $34.3 million as at 31 December 2024.

Commentary

Industry Prospects

Barring any unforeseen circumstances, there are no known significant changes in the trends and competitive conditions of the industry in which the Group operates and no other major known factors or events that may adversely affect the Group in the next reporting period and the next 12 months.

Recent Business Developments

Update from Acumen Diagnostics Pte. Ltd. (“Acumen”)

On 16 September 2024, the Company announced that the clinical laboratory service licence issued by MOH to Dr. Ong Siew Hwa (“Dr. Ong”) as the licensee, provided under the business name of Acumen, had expired on 15 September 2024.

On 28 October 2024, the Company updated that Acumen had temporarily ceased its business and operation as well as the MOH’s press release in relation to the closure of the Joint Testing and Vaccination Centre located in Sengkang.

Acquisition of the Business of Veritas Dental Pte. Ltd.

On 15 November 2024, the Company announced the completion of the acquisition of the business of Veritas Dental Pte. Ltd..

Receipt of Medical Device Licenses in Thailand, Philippines, Vietnam and Indonesia by EM2AI Pte. Ltd. (“EM2AI”)

On 13 January 2025, the Company announced that EM2AI, a 49% associated company of the Group, has received through its representative(s), in respect of its dental artificial intelligence (“AI”) solutions, the following licenses in the following jurisdictions:

Category 2 Medical Device License from the Food and Drug Administration (FDA) of Thailand;
Class B Medical Device License from the Food and Drug Administration (FDA) of the Philippines;
Class B Medical Device License from the Department of Medical Equipment and Construction (DMEC) of Vietnam; and
Class C Medical Device License from the Ministry of health of Indonesia,
(collectively, the “Licenses”).

Upon receipt of the Licenses, the Company understands that EM2AI is actively seeking distributors and potential customers in these jurisdictions as part of its efforts to expand the business.

Entry into a Memorandum of Understanding by EM2AI in relation to Dental AI Solutions

On 20 January 2025, the Company announced that EM2AI has entered into a memorandum of understanding with an established provider of dental solutions in the region, serving a network of approximately 1,000 dental clinics. This collaboration is part of the Board’s plan for EM2AI to expand its business network in the region and represents a strategic step toward expanding EM2AI’s footprint in key regional markets.

Update in Relation to Arbitral Award

On 21 February 2025, the Company announced that on 27 August 2024, the High Court of Malaysia at Kuala Lumpur allowed Q & M Dental Group (Malaysia) Sdn Bhd (“QDGM”), a wholly-owned subsidiary of the Group, application for the arbitral award to be recognied as binding and a Court judgement be entered in such terms of the award (“Enforcement Order”). QDGM was awarded a total sum of RM 26.0 million.

Update on the Use of Proceeds from Placement of Treasury Shares

The Board of Directors of the Company wishes to provide an update on the use of the proceeds of approximately $130,000 raised from the placement of treasury shares in the capital of the Company on 24 June 2024.

As at 31 December 2024, the Company has fully utilised the proceeds raised from the placement for the following purposes:

Future Plans

The Group intends to continue executing the business plans outlined below.

Expansion of network of dental clinics in Singapore and the Asia Pacific region

The Group is initiating a strategy of organic and inorganic growth of dental clinics and will expand its team of dentists to support the future growth of its operations in Singapore. We will continue to develop, invest and optimise our digital clinical decision support system to provide the most effective and suitable treatment plans for our patients.

With rising standards of living and higher expectations of dental healthcare, especially in Singapore, the Group believes it is well-positioned to meet the rising demand for primary and high-valued specialist dental healthcare services for its patients.

The Group is continuously looking for opportunities to expand its dental business in the Asia Pacific region.