SAG Holdings Ltd(INEO) - 2024 Q4 - Annual Report

PART I Key Information The company faces significant business risks from supplier dependency and debt, alongside securities risks from controlling shareholders and potential delisting - The company is highly dependent on key executives, including CEO Jimmy Neo, Deputy CEO Edward Neo, and COO CK Neo[29] - Sales decreased by approximately $1.2 million (2.0%) in FY2024 compared to FY2023, primarily due to a drop in local demand in Singapore[33][42] - The company has significant customer concentration, with the top five customers accounting for 24.1% of revenue in FY2024[36][185] - As of December 31, 2024, the company had a substantial amount of debt, with approximately $19.9 million in aggregate principal outstanding[47] - The company plans to develop an e-commerce platform, but faces risks related to cost, profitability, and competition[44] - The company's controlling shareholders collectively own 80.1% of the outstanding Ordinary Shares, giving them substantial influence over corporate governance[73] - The company does not expect to pay dividends in the foreseeable future, meaning investors must rely on share price appreciation for returns[64] - As a Cayman Islands company, it is permitted to follow home country corporate governance practices that may differ from Nasdaq standards[75][77] - The company is an "Emerging Growth Company" and has elected to use the extended transition period for complying with new accounting standards[84][85] Information on the Company The company distributes automotive and industrial parts in Singapore and Malaysia, with strategies for APAC expansion and digital growth - The company operates through two main business segments: On-Highway (automotive) and Off-Highway (industrial)[103] - In FY2024, domestic (Singapore) revenue was approximately $21.8 million (37.4% of total), while export revenue was approximately $36.5 million (62.6% of total)[123] - Key business strategies include market penetration in Asia Pacific, expanding product lines, and enhancing digital capabilities with an e-commerce platform[135][139][140][141] - Completed its initial public offering (IPO) on October 22, 2024, raising net proceeds of approximately $4.9 million[20] - Changed its name from SAG Holdings Limited to INNEOVA Holdings Limited, effective April 28, 2025, and began trading under the ticker "INEO"[20] - Acquired a 100% stake in INNEOVA Engineering Pte Ltd on May 1, 2025, from its controlling shareholder[19] - The Group's operating subsidiaries include INNEOVA Industrial, INNEOVA Automotive, Autozone (S), and INNEOVA Malaysia[21][97] - The company develops and supplies products under its own in-house brands, including VETTO, REV-1, NUTEQ, GENTEQ, and FILTEQ[101][112] Revenue Breakdown by Business Segment (FY2024 vs. FY2023) | Business Segment | FY2024 Revenue (%) | FY2023 Revenue (%) | | :--- | :--- | :--- | | On-Highway | 44.1% | 45.1% | | Off-Highway | 55.7% | 54.8% | | Services | 0.2% | 0.1% | On-Highway Business Products | Category | Examples | Key Brands | | :--- | :--- | :--- | | Genuine OEM parts | All components | Isuzu, Hino, Toyota, Honda, etc. | | Engine parts | Pistons, rings, bearings | Teikin, NPR, NDC, Daido | | Chassis parts | Brake pads, rotors, clutch | BPW, Bosch, FERODO, WABCO | | Wear and tear parts | Wipers, water pumps, radiators | Flosser, DENSO, GATES, CHAMPION | | Body parts | Lamps, mirrors, bumpers | DOSSUN, DEPO, LY | Off-Highway Business Products | Category | Examples | Key Brands | | :--- | :--- | :--- | | Filters | Air, oil, fuel, hydraulic filters | Fleetguard, Baldwin, Donaldson, MANN-FILTER | | Lubricants | Engine oil, hydraulic oil | Valvoline, Mobil, Caltex, Castrol, Shell | | Batteries | Dry charged, deep cycle | Fujiya, ENERGEO | | Spare parts | Engine, transmission, hydraulic parts | Cummins, Caterpillar, Komatsu, Perkins | Operating and Financial Review and Prospects (MD&A) FY2024 revenue fell 2.0% to $58.3 million, and higher expenses caused net income to drop to $8,000 from $1.6 million in FY2023 - The decrease in FY2024 revenue was mainly due to a $4.1 million drop in Singapore, driven by lower local demand[188][195] - As of Dec 31, 2024, the company had total bank borrowings of $19.9 million, up from $16.8 million in 2023[266] - Gross profit margin slightly increased from 18.3% in FY2023 to 18.7% in FY2024[206] - Administrative expenses increased by $1.6 million (22.2%), driven by higher miscellaneous expenses (+$0.8M) and staff costs (+$0.2M)[209][210][213] - Net income for FY2024 was approximately $8,000, a sharp decline from $1.6 million in FY2023[218][184] - The revenue increase in FY2023 was mainly attributable to a $9.0 million increase in demand from customers in Singapore and other countries[219] - Net accounts receivable decreased slightly to $14.3 million as of Dec 31, 2024, from $14.6 million in 2023[257][258] Key Financial Performance (FY2024 vs. FY2023) | Metric | FY 2024 ($'000) | FY 2023 ($'000) | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | 58,333 | 59,521 | -2.0% | | Gross Profit | 10,925 | 10,910 | +0.1% | | Administrative Expenses | 8,509 | 6,959 | +22.2% | | Net Income | 8 | 1,629 | -99.5% | Key Financial Performance (FY2023 vs. FY2022) | Metric | FY 2023 ($'000) | FY 2022 ($'000) | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | 59,521 | 51,445 | +15.7% | | Gross Profit | 10,910 | 9,280 | +17.6% | | Net Income | 1,629 | 1,527 | +6.7% | Summary of Cash Flows (FY2024 vs. FY2023) | Cash Flow Activity | 2024 ($'000) | 2023 ($'000) | | :--- | :--- | :--- | | Net cash provided by operating activities | 2,667 | 3,965 | | Net cash used in investing activities | (774) | (455) | | Net cash used in financing activities | (568) | (3,898) | | Net change in cash | 1,057 | (300) | Bank Indebtedness as of Dec 31, 2024 | Type | Amount ($'000) | Interest Rate | | :--- | :--- | :--- | | Term loans | 3,019 | 2.00-3.75% | | Trust receipts | 16,172 | 1.65-7.25% | | Revolving loan | 664 | 2.50% | | Total | 19,855 | | Directors, Officers and Senior Management The company is led by the Neo family, with a board including three independent directors chairing key committees - The executive team is led by Jimmy Neo (CEO), Edward Neo (Deputy CEO), CK Neo (COO), and Li Hoon Lee (CFO)[313] - The Board has three independent directors who chair the Audit Committee (Yee Yen Han), Compensation Committee (Gang Wong), and Nomination Committee (Chin Chye Koh)[333][334][335] - As a foreign private issuer, the company follows certain Cayman Islands home country governance practices instead of Nasdaq rules, such as not having a majority-independent board[338][342] Executive Compensation for FY2024 (in S$) | Name | Position | Salary/Fees | Bonus | | :--- | :--- | :--- | :--- | | Jimmy Neo | CEO | 180,000 | 15,000 | | Edward Neo | Deputy CEO | 165,000 | 13,750 | | CK Neo | COO | 144,000 | 12,000 | | Ivy Lee | CFO | 132,000 | 24,200 | Major Shareholders and Related Party Transactions Ownership is concentrated with the Neo family (80.1%), and the company engages in extensive related party transactions - As of the report date, CE Neo, Jimmy Neo, Edward Neo, and CK Neo collectively beneficially own 80.1% of the company's shares through their ownership of Soon Aik Global Pte Ltd[353] - The company has numerous transactions with related parties, including sales of $1.18M to INNEOVA Engineering and purchases of $1.33M from PT Heavy Machindo Diesel in FY2024[360] - The company has logistics service agreements with EU Group Pte Ltd, an entity in which CEO Jimmy Neo has a 50% equity stake, for office space and warehouse services[356] - On May 1, 2025, the company acquired 100% of INNEOVA Engineering Pte Ltd from its controlling shareholder, Soon Aik Global Pte Ltd, in exchange for over 6.2 million ordinary shares[34][594] Financial Information This section presents the company's audited U.S. GAAP consolidated financial statements for FY2022-2024 - The financial statements were audited by Audit Alliance LLP, which issued an unqualified opinion[459][463] - The financial statements for FY2022 and FY2023 were restated to reclassify non-controlling interests to equity holders of the company following a group reorganization[592][593] Consolidated Balance Sheet Summary (as of Dec 31) | Metric | 2024 ($'000) | 2023 ($'000) | | :--- | :--- | :--- | | Total Assets | 39,592 | 39,056 | | Total Current Assets | 36,781 | 37,598 | | Total Non-Current Assets | 2,811 | 1,458 | | Total Liabilities | 30,717 | 36,005 | | Total Current Liabilities | 28,612 | 34,450 | | Total Long-Term Liabilities | 2,105 | 1,555 | | Total Shareholders' Equity | 8,875 | 3,051 | Consolidated Statement of Operations Summary | Metric | 2024 ($'000) | 2023 ($'000) | 2022 ($'000) | | :--- | :--- | :--- | :--- | | Revenues, net | 58,333 | 59,521 | 51,445 | | Gross Profit | 10,925 | 10,910 | 9,280 | | Profit from Operations | 784 | 2,528 | 1,610 | | Net Income | 8 | 1,629 | 1,527 | | Basic and Diluted EPS ($) | 0.0008 | 0.18 | 0.16 | Consolidated Statement of Cash Flows Summary | Metric | 2024 ($'000) | 2023 ($'000) | 2022 ($'000) | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | 2,667 | 1,614 | (2,056) | | Net cash used in investing activity | (774) | (455) | (283) | | Net cash (used in) provided by financing activities | (568) | (1,547) | 2,139 | | Net change in cash | 1,057 | (300) | (170) | PART II Controls and Procedures Management concluded disclosure controls were effective, and no material weaknesses in internal control were found - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the annual report[439] - In its assessment as of December 31, 2024, management determined there were no control deficiencies that constituted material weaknesses in internal control over financial reporting[442] - As an emerging growth company, INNEOVA is exempt from the auditor attestation requirement regarding internal control over financial reporting[440] Corporate Governance and Other Matters The company has an audit committee financial expert, a code of ethics, and policies for cybersecurity and compensation recovery - The Board of Directors has designated Mr Han Yee Yan as the "audit committee financial expert"[444] - The company has adopted a cybersecurity policy, with the Audit Committee responsible for oversight; no material cybersecurity breaches occurred during the year ended December 31, 2024[452][453][454] - The company has adopted a compensation recovery (Clawback) policy as required by Nasdaq rules[348] Principal Accountant Fees | Fee Category | FY 2024 ($'000) | FY 2023 ($'000) | | :--- | :--- | :--- | | Audit Fees | 103 | 98 | | Audit Related Fees | - | - | | Tax Fees | - | - | | All Other Fees | - | - | | Total | 103 | 98 | PART III Financial Statements This section contains the full audited U.S. GAAP consolidated financial statements for FY2022-2024 - The financial statements are prepared in accordance with U.S. GAAP and audited by Audit Alliance LLP[459][483] - A significant subsequent event was the acquisition of 100% of INNEOVA Engineering Pte Ltd on May 1, 2025, from the company's controlling shareholder in exchange for 6,295,624 ordinary shares[594]