Concorde International Group Ltd-A(CIGL) - 2024 Q4 - Annual Report

PART I Key Information This section outlines critical investor information, focusing on significant business, regulatory, and ownership risks Risk Factors The company faces material risks from high customer concentration, a prior going concern warning, intense competition, and a controlling dual-class share structure - A significant portion of revenue comes from a few long-term customers; the top five customers accounted for 23% of total revenue in FY2024, a decrease from 33% in FY2023[33][39] - The company's independent registered public accounting firm expressed substantial doubt about its ability to continue as a going concern for the fiscal year ended December 31, 2022, due to operating losses[32][35] - The dual-class share structure concentrates approximately 97.56% of voting power with the CEO, Swee Kheng Chua, limiting the influence of Class A shareholders on corporate matters[97][99] - Material weaknesses in internal control over financial reporting were identified as of December 31, 2024, including lack of proper segregation of duties and insufficient staff training on IFRS[104][105][107] - The company is a "controlled company" under Nasdaq rules, exempting it from certain corporate governance requirements like having a majority of independent directors on the board[109] Information on the Company The company operates as a BVI-incorporated holding company for its Singapore-based security service subsidiaries, focusing on technology-integrated solutions History and Development of the Company The company consolidated its structure in 2023, completed a $4.4 million net IPO in 2025, and secured a $1 million convertible note from Softbank in 2024 - The company completed an Initial Public Offering (IPO) on April 21, 2025, raising gross proceeds of $5,000,000 and net proceeds of approximately $4.4 million[145][147] - On June 10, 2024, the company received $1,000,000 from Softbank Robotics Singapore Pte Ltd through a convertible note with a 24-month maturity[152] - The company has a dual-class share structure where Class B shares have 100 votes per share, and the CEO holds approximately 97.56% of the total voting rights[135][136] Business Overview The company specializes in technology-driven i-Guarding services, which generate over 97% of revenue, and pursues a growth strategy focused on recurring revenue Revenue Breakdown by Service (FY2022-2024) | Service Type | FY2024 Revenue (%) | FY2023 Revenue (%) | FY2022 Revenue (%) | | :--- | :--- | :--- | :--- | | i-Guarding Services | 97.57% | 98.09% | 99.09% | | Man-Guarding Services | 1.15% | 1.41% | 0.24% | | Consultancy and Training | 0.54% | 0.50% | 0.67% | | Others | 1.28% | 0.50% | 0.67% | - The company's growth strategy includes growing its recurring revenue business (89% of total revenue in FY2024) and expanding its patented solutions internationally[189] - The company faces competition from major government-owned and international players but differentiates itself with a technology-driven, mobile command center model[182][183] - As of the report date, the company employed 134 full-time staff, with the majority (95 employees) being security officers[191][192] Property, Plants and Equipment The company's key assets include a portfolio of international patents for its security technologies and its owned corporate headquarters in Singapore - The company holds a portfolio of patents for its core technologies, including a mobile control unit and a security control system, with grants in multiple jurisdictions such as the US (Patent US 11,854,354B2), Australia, and Europe[209][210] - The company owns its corporate headquarters, an approximately 735 sqm office space in Singapore, and leases an additional 292 sqm of office space[213][214] Operating and Financial Review and Prospects FY2024 performance was marked by stable revenue of $10.5 million and a significant net loss of $83.6 million due to a one-time share-based compensation expense Operating Results FY2024 revenue was $10.49 million with a net loss of $83.6 million, driven by a non-cash $83.16 million share-based compensation expense Consolidated Results of Operations (2022-2024) | Financial Metric | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Total Revenue | $10,490,668 | $10,655,993 | $5,006,345 | | Cost of Revenue | ($6,875,141) | ($7,662,024) | ($3,648,637) | | Share-based Compensation | ($83,155,336) | - | - | | Net (Loss)/Profit | ($83,623,097) | $994,194 | ($803,980) | - The significant net loss in 2024 was primarily due to a one-time, non-cash share-based compensation expense of $83,155,336 related to the issuance of Class B Ordinary Shares[234] Non-GAAP Financial Measure Reconciliation | Reconciliation Item | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Net (Loss)/Profit before tax | ($83,508,195) | $1,125,434 | ($803,980) | | Share-based compensation expense | $83,155,336 | - | - | | Adjusted Net (Loss)/profit before tax | ($352,859) | $1,125,434 | ($803,980) | - Revenue increased by 113% from $5.0 million in 2022 to $10.7 million in 2023, driven by growth in i-Guarding services and the acquisition of new customers[219][250] Liquidity and Capital Resources As of Dec 31, 2024, the company held $1.0 million in cash, with operations financed by income, bank loans, and recent IPO proceeds Cash and Cash Equivalents | Date | Amount | | :--- | :--- | | Dec 31, 2024 | $1,000,284 | | Dec 31, 2023 | $956,975 | | Dec 31, 2022 | $441,278 | Summary of Cash Flows (2022-2024) | Cash Flow Activity | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Net cash from/(used in) operating activities | $(564,187) | $790,944 | $(931,028) | | Net cash used in investing activities | $(952,990) | $(309,631) | $(912,089) | | Net cash provided by financing activities | $1,589,835 | $947 | $602,923 | - The company's contractual obligations as of Dec 31, 2024, include total debt of $6.03 million and undiscounted lease liabilities of $0.29 million[324] Critical Accounting Estimates Key estimates include the fair value of financial instruments and share-based compensation, and the assessment of expected credit losses on receivables - Fair value of financial instruments, especially Level 3 inputs for convertible options and share-based compensation, are critical estimates[328][329][332] - Assessment of Expected Credit Losses (ECL) on trade receivables is a key source of estimation uncertainty, based on a provision matrix using historical and forward-looking data[334][742] Directors, Senior Management, and Employees The company's leadership includes a five-member board, key executives, and 134 employees, with voting power highly concentrated with the CEO Directors and Senior Management The company is led by CEO Swee Kheng Chua and a board comprising two executive and three independent directors chairing key committees - The leadership team includes Swee Kheng Chua (CEO & Chairman), Terence Wing Khai Yap (Director), and Sze Yin Ong (CFO)[337] - The board includes three independent directors: Sim Peng Thia, Goh Kok Kee Alfred, and Mark Allen Brisson, who chair the Audit, Compensation, and Nominating committees, respectively[337] Compensation Aggregate cash compensation for directors and executive officers totaled $978,672 for the fiscal year ended December 31, 2024 - Aggregate cash compensation for directors and executive officers for the fiscal year ended December 31, 2024, was $978,672[352] Board Practices The board consists of five directors, including three independent members, and has established Audit, Compensation, and Nominating committees - The Board has three standing committees: Audit, Compensation, and Nominating and Corporate Governance[356] - The Audit Committee is composed of three independent directors, with Sim Peng Thia designated as the 'Audit Committee Financial Expert'[358][360] Employees As of December 31, 2024, the company employed 134 full-time staff, with security officers forming the largest group Employee Headcount by Department (as of Dec 31, 2024) | Department | Number of Employees | | :--- | :--- | | Management | 3 | | Finance and Accounting | 4 | | Operations Management | 11 | | Business Development | 5 | | Technology & Engineering | 5 | | Administrative | 11 | | Security officers | 95 | | Total | 134 | Share Ownership Share ownership is highly concentrated, with CEO Swee Kheng Chua controlling approximately 97.56% of the total voting power Beneficial Ownership of Key Individuals | Name of Beneficial Owner | Class B Shares Owned | Total Voting Power (%) | | :--- | :--- | :--- | | Swee Kheng Chua, CEO and Director | 20,392,590 | 97.56% | | All directors and executive officers as a group | 20,688,886 | 98.97% | Major Shareholders and Related Party Transactions Ownership is dominated by the CEO, and significant related party transactions include $2.67 million in subcontracting costs paid to an affiliated company - Major shareholders are detailed in Item 6.E, highlighting the control held by CEO Swee Kheng Chua[383] Key Related Party Transactions (FY2022-2024) | Transaction | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Subcontracting costs - Total Protection Solution Pte Ltd | $2,667,045 | $2,504,458 | $1,668,048 | | Subcontracting costs - iMatrix Global Pte Ltd | - | $16,403 | $150,305 | Key Management Personnel Compensation (FY2022-2024) | Year | Total Compensation | | :--- | :--- | | 2024 | $978,672 | | 2023 | $319,190 | | 2022 | $403,798 | - On March 18, 2024, 20,788,886 Class B Ordinary Shares were issued to board members, executive officers, and their affiliates as part of a share-based compensation plan[322][389] Additional Information This section covers the BVI legal structure, dual-class shares, controlled company status, and key tax considerations including PFIC risk for U.S. holders Memorandum and Articles of Association The company is governed by BVI law with a dual-class share structure that establishes it as a "controlled company" under Nasdaq rules - The company's authorized share capital is 250,000,000 Class A Ordinary Shares (1 vote/share) and 100,000,000 Class B Ordinary Shares (100 votes/share)[405] - Each Class B Ordinary Share is convertible into one Class A Ordinary Share at any time by the holder; Class A shares are not convertible[411] - As a "controlled company," Concorde is exempt from certain Nasdaq corporate governance rules, including the requirement for a majority of independent directors[407] Taxation The company is exempt from BVI taxes but faces a significant risk of being classified as a Passive Foreign Investment Company (PFIC) for U.S. investors - The company is incorporated in the British Virgin Islands and is exempt from all BVI income, capital gains, and dividend withholding taxes[470] - There is a risk that the company could be classified as a Passive Foreign Investment Company (PFIC) for U.S. federal income tax purposes, which could have adverse tax consequences for U.S. Holders[129][477][478] - The company's Singapore subsidiaries are subject to a 17% corporate income tax rate, and dividends paid are tax-exempt to shareholders under a one-tier system[271][502] Controls and Procedures Management concluded that disclosure controls were ineffective as of December 31, 2024, due to identified material weaknesses in internal control - Management concluded that as of December 31, 2024, the company's disclosure controls and procedures were ineffective[528] - Material weaknesses in internal control over financial reporting were identified, including lack of proper segregation of duties and insufficient IFRS training for accounting staff[531] - Remediation plans include hiring more qualified staff, establishing a formal financial control framework, and strengthening corporate governance[530][532] Corporate Governance As a "controlled company," Concorde utilizes exemptions from certain Nasdaq corporate governance requirements for its committees - The company is a "controlled company" under Nasdaq rules, as over 50% of voting power is held by an individual[546] - Due to its controlled company status, Concorde is exempt from and utilizes exemptions for certain Nasdaq governance requirements, such as having fully independent compensation and nominating committees[546] Cybersecurity The company maintains a cybersecurity risk program with board oversight and has experienced no material incidents to date - The company has integrated cybersecurity risk management into its overall enterprise risk management system, with oversight from the board of directors[550][554] - A comprehensive cybersecurity threat defense system is in place, and the company has experienced no material cybersecurity incidents to date[551][552] Financial Statements This section presents the audited consolidated financial statements for FY2022-2024, prepared under IFRS, with an unqualified audit opinion Consolidated Statements of Financial Position Total assets grew to $10.27 million and total liabilities increased to $8.01 million as of December 31, 2024, while total equity declined to $2.26 million Consolidated Statement of Financial Position Highlights (As of Dec 31) | Account | 2024 | 2023 | | :--- | :--- | :--- | | Total Assets | $10,273,207 | $8,550,581 | | Total Current Assets | $5,378,614 | $5,287,321 | | Total Non-current Assets | $4,894,593 | $3,263,260 | | Total Liabilities | $8,013,010 | $5,848,005 | | Total Current Liabilities | $4,580,526 | $3,514,897 | | Total Non-current Liabilities | $3,432,484 | $2,333,108 | | Total Equity | $2,260,197 | $2,702,576 | Consolidated Statements of Profit or Loss and Other Comprehensive (Loss)/Income For FY2024, the company reported a net loss of $83.62 million, or $(5.08) per share, driven by a large non-cash expense Consolidated Profit and Loss Summary (For the Year Ended Dec 31) | Account | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Revenue | $10,490,668 | $10,655,993 | $5,006,345 | | Share-based compensation | ($83,155,336) | - | - | | (Loss) /Profit for the year | ($83,623,097) | $994,194 | ($803,980) | | Basic (Loss)/Earnings per share | ($5.08) | $9.61 | ($7.83) | Consolidated Statements of Changes in Equity Total equity decreased to $2.26 million in FY2024, as the $83.62 million net loss was largely offset by an $83.16 million increase in other reserves - Total equity decreased to $2,260,197 as of Dec 31, 2024, from $2,702,576 as of Dec 31, 2023[578] - The major changes in equity during 2024 were the net loss of ($83.6M) and the share-based compensation of $83.2M, which was recorded as an increase in 'Other reserves'[578] Consolidated Statements of Cash Flows Net cash used in operations was $0.56 million in FY2024, with financing activities providing $1.59 million, resulting in a slight increase in total cash Consolidated Cash Flow Summary (For the Year Ended Dec 31) | Cash Flow Activity | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Net cash (used in)/from operating activities | ($564,187) | $790,944 | ($931,028) | | Net cash used in investing activities | ($952,990) | ($309,631) | ($912,089) | | Net cash provided by financing activities | $1,589,835 | $947 | $602,923 | | Net change in cash and cash equivalents | $72,658 | $482,260 | ($1,240,194) |