UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
6-K
Report
of Foreign Issuer
Pursuant
to Rule 13a-16 or 15d-16 of
the
Securities Exchange Act of 1934
For
August 31, 2022
Commission
File Number: 333-263457
JE
CLEANTECH HOLDINGS LIMITED
(Exact
name of Registrant as specified in its charter)
Cayman
Islands
(Jurisdiction
of incorporation or organization)
3
Woodlands Sector 1
Singapore
738361
(Address
of principal executive offices)
Bee
Yin Hong, CEO
Tel:
+65 6368 4198
Email:
Elise.hong@jcs-echigo.com.sg
3
Woodlands Sector 1
Singapore
738361
(Name,
Telephone, email and/or fax number and address of Company Contact Person)
Indicate
by check mark whether the Registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form
20-F ☒ Form 40-F ☐
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Note
: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual
report to security holders.
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
Note:
Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that
the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated,
domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on
which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to
be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the
subject of a Form 6-K submission or other Commission filing on EDGAR.
TABLE
OF CONTENTS
Overview
Our
Group is based in Singapore and is principally engaged in (i) the sale of cleaning systems and other equipment; and (ii) the provision
of centralized dishwashing and ancillary services. Our Group commenced business in the selling of cleaning systems in 2005, before starting
our business in the design, development, manufacture and sale of cleaning systems in Singapore in 2006. We design, develop, manufacture
and sell cleaning systems for various industrial end-use applications to our customers mainly in Singapore and Malaysia. We also have
provided centralized dishwashing services since 2013 and general cleaning services since 2015 mainly for food and beverage establishments
in Singapore.
For
the six months periods ended June 30, 2021 and 2022, our revenue amounted to approximately S$8.9 million, and S$7.2 million, respectively.
Our net income amounted to approximately S$0.6 million and S$0.1 million for the six months periods ended June 30, 2021 and 2022, respectively.
The
following table shows our Statement of Operations data for the six months periods ended June 30, 2021, and 2022 in SGD and, for 2022,
in USD. For further information regarding the results of our operations, see our consolidated financial statements appearing elsewhere
in this Form.
| |
For the six months ended June 30, | |
| |
2021 | | |
2022 | | |
2022 | |
| |
SGD’000 | | |
SGD’000 | | |
USD’000 | |
| |
| | |
| | |
(Note) | |
Revenues | |
| 8,908 | | |
| 7,197 | | |
| 5,150 | |
Cost of revenues | |
| (6,919 | ) | |
| (5,556 | ) | |
| (3,976 | ) |
Gross profit | |
| 1,989 | | |
| 1,641 | | |
| 1,174 | |
| |
| | | |
| | | |
| | |
Operating expenses: | |
| | | |
| | | |
| | |
Selling and marketing expenses | |
| (5 | ) | |
| (15 | ) | |
| (11 | ) |
General and administrative expenses | |
| (1,128 | ) | |
| (1,565 | ) | |
| (1,120 | ) |
Total operating expenses | |
| (1,133 | ) | |
| (1,580 | ) | |
| (1,131 | ) |
| |
| | | |
| | | |
| | |
Income from operations | |
| 856 | | |
| 61 | | |
| 43 | |
| |
| | | |
| | | |
| | |
Other income (loss): | |
| | | |
| | | |
| | |
Other income | |
| 326 | | |
| 379 | | |
| 272 | |
Interest expense | |
| (95 | ) | |
| (123 | ) | |
| (88 | ) |
Other expense | |
| (314 | ) | |
| (179 | ) | |
| (128 | ) |
Change in fair value in financial instrument | |
| - | | |
| 9 | | |
| 6 | |
Total other income (loss) | |
| (83 | ) | |
| 86 | | |
| 62 | |
| |
| | | |
| | | |
| | |
Income before tax expense | |
| 773 | | |
| 147 | | |
| 105 | |
Income tax expense | |
| (157 | ) | |
| - | | |
| - | |
Net income | |
| 616 | | |
| 147 | | |
| 105 | |
(1)
Calculated at the rate of US$0.7156 = SGD$1.
Key
Factors Affecting the Results of Our Group’s Operations
Our
financial condition and results of operation have been and will continue to be affected by a number of factors, many of which may be
beyond our control, including those factors set out below:
Demand
from our major customer groups
Our
aggregate sales generated from our top five customers were approximately 86.0% and 68.3% of our revenue for the six months periods ended
June 30, 2021 and 2022, respectively. Accordingly, our sales would be significantly affected by the demands of our top five customer
groups, and particularly our largest customer group, as well as certain inherent risks, among others, changes and development in the
local political, regulatory and business conditions, that may affect their purchases from us, many of which are beyond our control. These
uncertainties could have a material adverse effect on our business, results of operations and financial conditions, and affect our ability
to remain profitable and achieve business growth.
Non-recurring
nature of our sale of cleaning systems and other equipment business
We
design, manufacture and sell cleaning systems and other equipment on an order-by-order basis. Our customers are under no obligation to
continue to award contracts to or place orders with us and there is no assurance that we will be able to secure new orders in the future.
Moreover, our Group generally must go through a tendering or quotation process to secure new orders, and the number of orders and the
amount of revenue that we are able to derive therefrom are affected by a series of factors including but not limited to changes in our
clients’ businesses and changes in market and economic conditions. The result of such process is beyond our control and there is
no assurance that our Group will secure new projects from future tender submissions or new orders. Accordingly, our results of operations,
revenue and financial performance may be adversely affected if our Group is unable to obtain new orders from our customers of contract
values, size and/or margins comparable to previous orders.
Fluctuations
in the cost of our raw materials
Raw
materials, such as steel and electronic components, are the largest component of our cost of revenues, representing approximately 50.2%
and 38.3% of our total cost of revenues for the six months periods ended June 30, 2021 and 2022, respectively. As our contract price
is fixed once our customer confirms an order for a cleaning system or other equipment, it is difficult for us to manage the pricing of
our cleaning systems and other equipment to pass on any increase in costs to our customers. Any fluctuations in the cost of raw materials
would affect our profitability.
The
prices at which we purchase such raw materials are determined principally by market forces such as the relevant supply and demand of
such raw materials, as well as our bargaining power with our suppliers. We monitor supply and cost trends of these raw materials and
take appropriate action to obtain the materials we need for production. We expect fluctuations in the cost of key materials to continue
to affect our margins.
All
of the raw materials we procure, including stainless steel, aluminum and electronic components, are purchased from a number of suppliers
to ensure adequate supply and efficient delivery to our production and processing facilities.
Management’s
Discussion and Analysis of Financial Condition and Results of Operations
The
following discussion is based on our Group’s historical results of operations and may not be indicative of our Group’s future
operating performance.
Revenue
During
the six months periods ended 2021 and 2022, our customers were from various industries, including HDD manufacturing, semiconductor manufacturing,
food and beverage and public transportation. As of the date of this Form, our customers continue to be from such various industries.
Our cleaning systems and other equipment are mainly sold in Singapore and Malaysia, and we provided centralized dishwashing and ancillary
services to customers in Singapore.
Our
revenue was derived from (i) sale of cleaning systems and other equipment business; and (ii) provision of centralized dishwashing and
ancillary services business. The following table sets out the revenue generated from each of our business sectors during the six months
periods ended June 30, 2021 and 2022:
| |
Six months ended June 30, | |
| |
2021 | | |
2022 | |
| |
SGD’000 | | |
% | | |
SGD’000 | | |
% | |
| |
| | |
| | |
| | |
| |
Sale of cleaning systems and other equipment business | |
| | | |
| | | |
| | | |
| | |
Sale of precision cleaning systems | |
| 4,293 | | |
| 48.2 | | |
| 230 | | |
| 3.2 | |
Sale of other cleaning systems and other equipment | |
| 1,370 | | |
| 15.4 | | |
| 2,879 | | |
| 40.0 | |
Repair and servicing of cleaning systems and sale of related parts | |
| 608 | | |
| 6.8 | | |
| 503 | | |
| 7.0 | |
Sub-total | |
| 6,271 | | |
| 70.4 | | |
| 3,612 | | |
| 50.2 | |
| |
| | | |
| | | |
| | | |
| | |
Provision of centralized dishwashing and ancillary services business | |
| | | |
| | | |
| | | |
| | |
Provision of centralized dishwashing and general cleaning services | |
| 2,559 | | |
| 28.7 | | |
| 3,491 | | |
| 48.5 | |
Leasing of dishwashing equipment | |
| 78 | | |
| 0.9 | | |
| 94 | | |
| 1.3 | |
Sub-total | |
| 2,637 | | |
| 29.6 | | |
| 3,585 | | |
| 49.8 | |
| |
| | | |
| | | |
| | | |
| | |
Total | |
| 8,908 | | |
| 100.0 | | |
| 7,197 | | |
| 100.0 | |
Our
total revenue decreased by approximately S$1.7 million or 19.2% to approximately S$7.2 million for the six months period ended June 30,
2022 from approximately S$8.9 million in June 30, 2021. The decrease was mainly attributable to the decrease in revenue generated from
our sale of cleaning systems and other equipment business of approximately S$4.1 million, while partially offset by the increase in revenue
generated from sale of other cleaning systems and other equipment and provision of centralized dishwashing and ancillary services business
of approximately S$1.5 million and S$0.9 million, respectively. The decrease in revenue generated from our sale of precision cleaning
systems for the six months period ended June 30, 2022 was primarily attributable to an approximately S$4.1 million decrease in revenue
from a customer group in Malaysia caused by the disruption by COVID-19 of their expansion in production facilities that resulted in the
postponement of delivery of their orders to 2023 and 2024. Nonetheless, our Group did not experience any material order cancellations
by our customers during the six months period ended June 30, 2021 and 2022, or during the period from July 1, 2022 to the present date.
The outstanding contract value as of August 15, 2022 is approximately S$ 36.8 million.
The
following table sets forth the movement in orders backlog for our sale of cleaning systems and other equipment in terms of the number
of orders during the year or period.
|
|
Year
ended December 31, 2021 |
|
|
Six
months period ended June 30, 2022 |
|
|
Period
from July 1, 2022 to August 15, 2022 |
|
|
|
|
|
|
|
|
|
|
|
Number
of orders as of beginning of year/period(1) |
|
|
20 |
|
|
|
44 |
|
|
|
58 |
|
Number
of new orders |
|
|
114 |
|
|
|
55 |
|
|
|
9 |
|
Number
of completed orders |
|
|
90 |
|
|
|
41 |
|
|
|
3 |
|
Number
of orders as of year/period-end(2) |
|
|
44 |
|
|
|
58 |
|
|
|
64 |
|
(1) Number of orders as of beginning of year/period represents the number of orders which were not completed as of the beginning of the relevant year or period.
(2) Number of orders as of year/period-end represents the number of ongoing orders as of the end of the relevant year/period that will be carried forward to the next year or period.
The
following table sets forth the movement in orders backlog for our sale of cleaning systems and other equipment in terms of approximate
contract value of orders during the six months ended June 30, 2021 and 2022 and the period from July 1, 2022 to August 15, 2022.
| |
Year ended December 31, 2021 | | |
Period ended
June 30, 2022 | | |
Period from July 1, 2022 to August 15, 2022 | |
| |
(SGD’000) | | |
(SGD’000) | | |
(SGD’000) | |
| |
| | |
| | |
| |
Outstanding contract value as of beginning of year/period(1) | |
| 5,820 | | |
| 19,997 | | |
| 35,439 | |
New contract value for the year | |
| 22,208 | | |
| 18,457 | | |
| 1,570 | |
Revenue recognized for the year/period | |
| 8,031 | | |
| 3,015 | | |
| 287 | |
Outstanding contract value as of year/period end(2) | |
| 19,997 | | |
| 35,439 | | |
| 36,722 | |
(1) Outstanding contract value as of beginning of year/period represents the contract value of orders which were not completed as of the beginning of the relevant year or period.
(2) Outstanding contract value as of year/period-end represents the contract value of ongoing orders as of the end of the relevant year or period that will be carried forward to the next year or period.
Cost
of revenues
During
the six months periods ended June 30, 2021 and 2022, our Group’s cost of revenues was mainly comprised of raw materials costs,
labor costs, sub-contracting costs and production overhead. For the six months ended June 30, 2021 and 2022, our cost of revenues amounted
to approximately S$6.9 million and S$5.6 million, respectively.
| |
Six months ended June 30, | |
| |
2021 | | |
2022 | |
| |
SGD’000 | | |
% | | |
SGD’000 | | |
% | |
| |
| | |
| | |
| | |
| |
Cost of sale of cleaning systems and other equipment | |
| 4,544 | | |
| 65.7 | | |
| 2,521 | | |
| 45.4 | |
Cost of provision of centralized dishwashing and ancillary services | |
| 2,375 | | |
| 34.3 | | |
| 3,035 | | |
| 54.6 | |
| |
| | | |
| | | |
| | | |
| | |
Total | |
| 6,919 | | |
| 100.0 | | |
| 5,556 | | |
| 100.0 | |
Gross
profit and gross profit margin
The
table below sets forth our Group’s gross profit and gross profit margin by business sector during the six months ended June 30,
2021 and 2022:
| |
Six months ended June 30, | |
| |
2021 | | |
2022 | |
| |
Gross
profit | | |
Gross
Profit Margin | | |
Gross
profit | | |
Gross
Profit Margin | |
| |
SGD’000 | | |
% | | |
SGD’000 | | |
% | |
Sale of precision cleaning systems and other equipment business | |
| | | |
| | | |
| | | |
| | |
Sale of precision cleaning systems | |
| 1,199 | | |
| 27.3 | | |
| 90 | | |
| 39.1 | |
Sale of other cleaning systems and other equipment | |
| 436 | | |
| 33.8 | | |
| 910 | | |
| 31.6 | |
Repair and servicing of cleaning systems and sale of related parts | |
| 92 | | |
| 15.9 | | |
| 91 | | |
| 18.1 | |
| |
| | | |
| | | |
| | | |
| | |
Sub-total/overall | |
| 1,727 | | |
| 27.5 | | |
| 1,091 | | |
| 30.2 | |
| |
Six months ended June 30, | |
| |
2021 | | |
2022 | |
| |
Gross
profit | | |
Gross
Profit Margin | | |
Gross
profit | | |
Gross
Profit Margin | |
| |
SGD’000 | | |
% | | |
SGD’000 | | |
% | |
Provision of centralized dishwashing and ancillary services business | |
| 262 | | |
| 9.9 | | |
| 550 | | |
| 15.3 | |
| |
| | | |
| | | |
| | | |
| | |
Total/overall | |
| 1,989 | | |
| 22.3 | | |
| 1,641 | | |
| 22.8 | |
Our
total gross profit amounted to approximately S$2.0 million and S$1.6 million for the six months periods ended June 30, 2021 and 2022,
respectively. Our overall gross profit margins were approximately 22.3% and 22.8% for the periods ended June 30, 2021 and 2022, respectively.
Our
total gross profit decreased by approximately S$0.4 million, which was mainly due to the decrease in our revenue from the sales of precision
cleaning systems.
Selling
and marketing expenses
Our
selling and marketing expenses mainly included promotion and marketing expenses and transportation expenses. The following table sets
forth the breakdown of our selling and distribution expenses for the six months periods ended June 30, 2021 and 2022:
| |
Six months ended June 30, | |
| |
2021 | | |
2022 | |
| |
SGD’000 | | |
SGD’000 | |
| |
| | |
| |
Promotion and marketing expenses | |
| 1.3 | | |
| 8 | |
Transportation expenses | |
| 3.7 | | |
| 7 | |
| |
| | | |
| | |
Total | |
| 5 | | |
| 15 | |
Our
selling and marketing expenses amounted to approximately S$5,000 and S$15,000 for the six months period ended June 30, 2021 and 2022,
respectively.
The
increase in promotion and marketing expenses for the six months periods ended June 30, 2022 was primarily attributable to revamp and
improvement of corporate website and online marketing activities and transportation for overseas business trips to customers site.
Administrative
expenses
Our
administrative expenses primarily consist of (i) staff cost; (ii) depreciation; (iii) office supplies and upkeep expenses; (iv) travelling
and entertainment; (v) legal and professional fees; (vi) property and related expenses; (vii) Directors and officers liability insurance;
and (viii) miscellaneous expenses. The following table sets forth the breakdown of our administrative expenses for the periods ended
June 30, 2021 and 2022:
| |
Six months ended June 30, | |
| |
2021 | | |
2022 | |
| |
SGD’000 | | |
% | | |
SGD’000 | | |
% | |
| |
| | |
| | |
| |
Staff costs | |
| 703 | | |
| 62.3 | | |
| 970 | | |
| 62.0 | |
Depreciation | |
| 102 | | |
| 9.0 | | |
| 135 | | |
| 8.6 | |
Office supplies and upkeep expenses | |
| 57 | | |
| 5.0 | | |
| 93 | | |
| 5.9 | |
Travelling and entertainment | |
| 67 | | |
| 6.0 | | |
| 64 | | |
| 4.1 | |
Legal and professional fees | |
| 42 | | |
| 3.7 | | |
| 98 | | |
| 6.2 | |
Property and related expenses | |
| 84 | | |
| 7.5 | | |
| 84 | | |
| 5.4 | |
Directors and officers liability insurance | |
| - | | |
| - | | |
| 34 | | |
| 2.2 | |
Miscellaneous expenses | |
| 73 | | |
| 6.5 | | |
| 87 | | |
| 5.6 | |
| |
| | | |
| | | |
| | | |
| | |
Total | |
| 1,128 | | |
| 100.0 | | |
| 1,565 | | |
| 100.0 | |
Our
administrative expenses amounted to approximately S$1.1 million and S$1.6 million for the six months periods ended June 30, 2021 and
2022, respectively, representing approximately 12.7%, and 21.8% of our total revenue for the corresponding periods.
Staff
costs mainly represented the salaries, employee benefits and retirement benefit costs to our employees and Directors’ remuneration.
The staff costs of our Group increased by approximately S$0.3 million mainly due to the directors’ fees paid following the appointment
of directors from January 1, 2022 and recruitment of operation manager and engineers.
Depreciation
expense is charged on our property, plant and equipment which included (i) leasehold buildings; (ii) right-of-use assets; (iii) computer
equipment; and (iv) furniture and fittings. The increase in depreciation is mainly due to amortization of newly acquired computer equipment,
hardware and system.
Office
supplies and upkeep expenses mainly represented office supplies, cleaning cost and the relevant utilities expenses such as electricity
and water.
Travelling
and entertainment mainly represented expenditure for business travel and cost incurred for social gathering and refreshment for our staff.
Legal
and professional fees mainly represented auditor’s remuneration and other professional fees for training and development and staff
recruitment services. The increase is mainly due to the increase in audit fee.
Property
and related expenses mainly represented property tax and related expenses in Singapore.
Directors
and officers liability insurance relates to liability insurance payable to the directors and officers of a company, or to the organization
itself, as indemnification (reimbursement) for losses or advancement of defense costs in the event an insured suffers such a loss as
a result of a legal action brought for alleged wrongful acts in their capacity as directors and officers.
Miscellaneous
expenses were mainly comprised of insurance expenses, donation and other miscellaneous expenses.
Other
income
Other
income of our Group amounted to approximately S$0.3 million and S$0.4 million for the six months periods ended June 30, 2021 and 2022,
respectively. The other income was mainly derived from wholesale sales of STICO anti-slip shoes and Government grants. The following
table sets forth the breakdown of our other income for these periods:
| |
Six months ended June 30, | |
| |
2021 | | |
2022 | |
| |
SGD’000 | | |
SGD’000 | |
| |
| | |
| |
Wholesale sales of STICO anti-slip shoes | |
| 69 | | |
| 93 | |
Provision of credit losses reversed | |
| - | | |
| 21 | |
Government grants | |
| 191 | | |
| 231 | |
Other(1) | |
| 66 | | |
| 34 | |
Total | |
| 326 | | |
| 379 | |
(1)
Other mainly consists of sale of scrap materials and other miscellaneous income. |
Wholesale
of STICO anti-slip shoes represented the income generated from wholesale of STICO anti-slip shoes mainly to food and beverage (F&B)
establishments in Singapore. The wholesale sales of STICO anti-slip shoes increased by approximately 34.8% due to resumption of demand
from F&B establishments.
During
the six months periods ended June 30, 2022, we reversed the provision of credit losses of approximately S$21,000 which we had previously
impaired as of December 31, 2021 pursuant to the recovery of accounts receivable.
Government
grants mainly represented Jobs Support Scheme, Jobs Growth Incentive and capability development grants received from the Singapore Government.
Interest
expense
Our
interest expense arose from lease liabilities and secured bank loans. For the six months periods ended June 30, 2021 and 2022, our interest
expense increased by approximately S$0.03 million mainly due to increase in interest rate. For more details of our bank borrowings, please
see the paragraph headed ‘‘Bank Indebtedness’’ in this section.
Other
expenses
Other
expenses of our Group mainly consist ofcost of STICO anti-slip shoes, bank charges and extraordinary expenses. The following table sets
forth the breakdown of our other expenses for the periods ended June 30, 2021 and 2022:
| |
Six months ended June 30, | |
| |
2021 | | |
2022 | |
| |
SGD’000 | | |
SGD’000 | |
| |
| | |
| |
Cost of STICO anti-slip shoes | |
| 37 | | |
| 60 | |
Bank charges | |
| 12 | | |
| 15 | |
Extraordinary expenses | |
| 259 | | |
| 88 | |
Others(1) | |
| 6 | | |
| 16 | |
| |
| | | |
| | |
Total | |
| 314 | | |
| 179 | |
(1) |
Others
mainly consist of professional training expenses, withholding tax expenses and other miscellaneous expenses. |
Other
expenses of our Group decreased to approximately S$0.1 million for the six months period ended June 30, 2022 mainly due to a decrease
in extraordinary expenses incurred related to business advisories and consultation in relation to our initial public offering.
Income
tax
During
the six months period ended June 30, 2021 and 2022, our income tax expense was comprised of our current tax expense and deferred tax
for the year. The following table sets forth the breakdown of our income tax for the six months periods ended June 30, 2021 and 2022:
| |
Six months ended June 30, | |
| |
2021 | | |
2022 | |
| |
SGD’000 | | |
SGD’000 | |
| |
| | |
| |
Current tax expense | |
| 96 | | |
| - | |
Deferred tax | |
| 61 | | |
| - | |
| |
| | | |
| | |
Total | |
| 157 | | |
| - | |
Pursuant
to the rules and regulations of the Cayman Islands and the BVI, our Company and its subsidiary, JE Cleantech International Limited, both
are not subject to any income tax in the Cayman Islands and the BVI. Our Group’s operations are based in Singapore and we are subject
to income tax on an entity basis on the estimated chargeable income arising in Singapore at the statutory rate of 17%.
Our
income tax decreased to nil for the six months periods ended June 30, 2022. Such decrease was generally in line with the decrease in
our profit and utilization of capital allowances and tax incentives.
Our
Group had no tax obligation arising from other jurisdictions during the year ended December 31, 2021 and six months periods ended June
30, 2022. During the year ended December 31, 2021 and six months periods ended June 30, 2022, our Group had no material dispute or unresolved
tax issues with the relevant tax authorities.
Net
Income for the Year
As
a result of the foregoing, our net income amounted to approximately S$0.6 million and S$0.1 million for the periods ended June 30, 2021
and 2022, respectively.
Liquidity
and Capital Resources
Our
liquidity and working capital requirements primarily related to our operating expenses. Historically, we have met our working capital
and other liquidity requirements primarily through a combination of cash generated from our operations and loans from banking facilities.
Going forward, we expect to fund our working capital and other liquidity requirements from various sources, including but not limited
to cash generated from our operations, loans from banking facilities, the net proceeds from our initial public offering and other equity
and debt financings as and when appropriate.
Cash
flows
The
following table summarizes our cash flows for the six months periods ended June 30, 2021 and 2022:
| |
Six months ended June 30, | |
| |
2021 | | |
2022 | |
| |
SGD’000
| | |
SGD’000 | |
| |
| | |
| |
Cash and cash equivalents as at beginning of the period | |
| 550 | | |
| 1,108 | |
| |
| | | |
| | |
Net cash generated from/(used in) operating activities | |
| 3,534 | | |
| (5,197 | ) |
Net cash used in investing activities | |
| (74 | ) | |
| (104 | ) |
Net cash (used in)/from financing activities | |
| (1,277 | ) | |
| 12,719 | |
Net foreign currency effect | |
| (16 | ) | |
| (23 | ) |
| |
| | | |
| | |
Net increase in cash and cash equivalents | |
| 2,167 | | |
| 7,395 | |
| |
| | | |
| | |
Cash and cash equivalents as at end of the period | |
| 2,717 | | |
| 8,503 | |
Cash
flows from operating activities
During
the six months periods ended June 30, 2021 and 2022, the cash inflows from our operating activities were primarily derived from the revenue
generated from our sale of cleaning systems and other equipment and provision of centralized dishwashing and ancillary services, whereas
the cash outflows for our operating activities mainly comprised the purchase of raw materials, sub-contracting fees, staff costs and
administrative expenses.
Our
net cash generated from operating activities primarily reflected our net income, as adjusted for non-operating items, such as depreciation,
loss on disposal of property, plant and equipment, reversal of loss allowance, change in fair value of financial instruments and effects
of changes in working capital such as increase or decrease in inventories, accounts receivable, accounts payables, accruals and other
current liability.
For
the six months ended June 30, 2021, our net cash generated from operating activities was approximately S$3.5 million, which primarily
reflected our profit before tax of approximately S$0.6 million, as positively adjusted by (i) the non-cash depreciation of property,
plant and equipment of approximately S$0.3 million; (ii) the decrease in accounts receivable of approximately S$4.7 million; and (iii)
the decrease in inventory of approximately S$0.1 million. The effect of these factors was partially mitigated by the decrease in accounts
payables, accruals and other current liabilities of approximately S$2.1 million.
For
the six months ended June 30, 2022, our net cash used in operating activities was approximately S$5.2 million, which primarily
reflected our profit before tax of approximately S$0.1 million, as adjusted by (i) the non-cash depreciation of property, plant and equipment
of approximately S$0.3 million; (ii) the decrease in accounts receivable of approximately S$0.3 million; (iii) the increase in inventory
of approximately S$5.2 million; and (iv) the effect of these factors was partially mitigated by the decrease in accounts payable, accrual
and other current liabilities of approximately S$0.7 million.
Cash
flows from investing activities
Our
cash flows used in investing activities primarily consisted of (i) the proceeds from disposal of property, plant and equipment; and (ii)
the purchase of property, plant and equipment.
For
the six months ended June 30, 2021, our net cash used in investing activities was approximately S$0.1 million, primarily due to the purchase
of property, plant and equipment of approximately S$0.1 million for replacement of obsolete equipment.
For
the six months ended June 30, 2022, our net cash used in investing activities was approximately S$0.1 million, primarily attributable
to the purchase of property, plant and equipment of approximately S$0.1 million for replacement of obsolete equipment.
Cash
flows from financing activities
Our
cash flows used in financing activities primarily consists of interest paid, proceeds from loans, repayment of loans, payment for interest
portion of lease liabilities, payment for capital portion of lease liabilities, net proceeds from issuance of shares,
placement of deposit with escrow agent as a result of our initial public offering and payment of deferred financing costs.
For
the six months ended June 30, 2021, our Group recorded net cash used in financing activities of approximately S$1.3 million, which was
entirely attributable to the repayment of loans.
For
the six months ended June 30, 2022, our Group recorded net cash generated from financing activities of approximately S$12.7 million,
which was mainly attributable to (i) drawdown of bank loans of approximately S$0.5 million; (ii) repayment of bank loans and lease
liabilities of approximately S$ 0.3 million; (iii) net proceeds from the issuance of Ordinary Shares of approximately S$14.9
million and placement of deposit with escrow agent of approximately S$0.8 million and as a result of our initial public offering;
and (iv) payment of deferred financing costs of approximately S$1.5 million.
Working
Capital
We
believe that our Group has sufficient working capital for our requirements for at least the next 12 months from the date of this Form,
in the absence of unforeseen circumstances, taking into account the financial resources presently available to us, including cash and
cash equivalents on hand, cash flows from our operations and the net proceeds from our initial public offering.
Accounts
receivable
Our
accounts receivable, net, decreased from approximately S$3.2 million as of December 31, 2021 to approximately S$2.4 million as of June
30, 2022. The decrease was mainly resulted from the receipt of payments from our largest customer group as of December 31, 2021.
We
did not charge any interest on, or hold any collateral as security over these accounts receivable balances. We generally offer credit
periods of 30 to 60 days to our customers in respect of the manufacture and sale of cleaning systems and other equipment, whereas our
customers will be offered credit terms of seven days to 30 days in respect of the provision of centralized dishwashing services and general
cleaning services.
The
following table sets forth the ageing analysis of our accounts receivable, net, based on the invoiced date as of the dates mentioned
below:
| |
As of
December 31,
2021 | | |
As
of
June 30,
2022 | |
| |
SGD’000 | | |
SGD’000 | |
| |
| | |
| |
Within 30 days | |
| 1,511 | | |
| 1,797 | |
Between 31 and 60 days | |
| 587 | | |
| 386 | |
Between 61 and 90 days | |
| 282 | | |
| 58 | |
More than 90 days | |
| 840 | | |
| 139 | |
| |
| | | |
| | |
Total accounts receivable, net | |
| 3,220 | | |
| 2,380 | |
Movements
in the provision for impairment of accounts receivable are as follows:
| |
As of
December 31,
2019 | | |
As of
June 30,
2022 | |
| |
SGD’000 | | |
SGD’000 | |
| |
| | |
| |
Opening balance | |
| 82 | | |
| 34 | |
Reversal of loss allowance | |
| (48 | ) | |
| (21 | ) |
| |
| | | |
| | |
Closing balance | |
| 34 | | |
| 13 | |
We
have a policy for determining the allowance for impairment based on the evaluation of collectability and ageing analysis of accounts
receivable and on management’s judgement, including the change in credit quality, the past collection history of each customer
and the current market condition.
The
loss allowance for accounts receivable related to a general provision for accounts receivable applying the simplified approach to providing
for expected credit loss(es) (the ‘‘ECL(s)’’). Credit risk grades are defined using qualitative and quantitative
factors that are indicative of the risk of default. An ECL rate is calculated based on historical loss rates of the industry in which
our customers operate and ageing of the accounts receivable.
During
the year ended December 31, 2021 and six months periods ended June 30, 2022, other than the loss allowance provision discussed above,
no impairment loss was provided for amounts that were past due.
The
following table sets forth our average accounts receivable turnover days as of December 31, 2021 and June 30, 2022:
| |
As of
December 31,
2021 | | |
As of
June 30,
2022 | |
| |
| | | |
| | |
Average accounts receivable turnover days(1) | |
| 138.5 | | |
| 70.0 | |
(1) Average accounts receivable turnover days is calculated as the average of the beginning and ending of accounts receivable balance for the respective year/period divided by revenue for the respective year/period and multiplied the number of days in the respective year/period.
Our
average receivables turnover days improved significantly and amounted to approximately 70.0 days for the period ended June 30, 2022.
The
accounts receivable were closely monitored and reviewed on a regular basis to identify any potential non-payment or delay in payment.
Our Group conducted an individual review on each of the customers to determine the impairment, which is aligned with external credit
rating agencies’ definition when it is available or based on other data such as available press information about the customer
and past due status. Our Group has further implemented certain procedures to strengthen our credit control. For instance, we are actively
monitoring the credit terms of our customers and follow up on collection regularly to ensure greater control over our accounts receivable.
Prepaid
expenses and other current assets, net
Prepaid
expenses and other current assets, net of our Group mainly represents amounts due from investors and prepayment of expenses of listing
our Ordinary Shares. The following table sets forth the breakdown of the prepaid expenses and other current assets, net as of the dates
indicated:
| |
As of
December 31,
2021 | | |
As of
June 30,
2022 | |
| |
SGD’000 | | |
SGD’000 | |
| |
| | |
| |
Other receivables | |
| 132 | | |
| 101 | |
Deposits | |
| 68 | | |
| 879 | |
Prepayments | |
| 647 | | |
| 1,789 | |
| |
| | | |
| | |
Total | |
| 847 | | |
| 2,769 | |
Our
total other receivables, deposits and prepayments increased from approximately S$0.8 million as of December 31, 2021 to approximately
S$2.8 million as of June 30, 2022, primarily attributable to the increase in prepayments of approximately S$1.8 million as a result
of an increase in upfront payments to raw materials suppliers, directors and officers liability insurance and increase in deposits due
to placement of part of the proceeds of our initial public offering as escrowed funds.
Accounts
and other payables
Accounts
payable
The
general credit terms from our major suppliers are 15 to 90 days. Our accounts payable decreased marginally from approximately S$1.9 million
as of December 31, 2021 to approximately S$1.8 million as of June 30, 2022.
The
following table sets forth the ageing analysis of our accounts payable based on the invoice date as of the dates mentioned below:
| |
As of
December 31,
2021 | | |
As of
June 30,
2022 | |
| |
SGD’000 | | |
SGD’000 | |
| |
| | |
| |
Within 30 days | |
| 1,712 | | |
| 1,224 | |
Between 31 and 60 days | |
| 196 | | |
| 595 | |
Between 61 and 90 days | |
| 5 | | |
| 57 | |
More than 90 days | |
| 3 | | |
| 11 | |
| |
| | | |
| | |
Total | |
| 1,916 | | |
| 1,887 | |
The
following table sets forth our average accounts payable turnover days for the year ended December 31, 2021 and six months period ended
June 30, 2022:
| |
As of
December 31,
2021 | | |
As of
June 30,
2022 | |
Average accounts payable turnover days(1) | |
| 64.0 | | |
| 61.1 | |
(1)
Average accounts payable turnover days is calculated as the average of the beginning and ending of accounts payable balance for
the respective year/period divided by cost of revenues for the respective year/period and multiplied the number of days in the respective
year/period.
Our
average payables turnover days remained relatively stable and amounted to approximately 61.1 days for the period ended June 30, 2022.
Our
Group did not have any material default in payment of accounts payable during the year ended December 31, 2021and six months period ended
June 30, 2022.
Accrued
expenses
Accrued
expenses mainly represented expenses related to our listing of our Ordinary Shares, salaries and bonus. As of December 31, 2021, our
Group’s accrued expenses amounted to approximately S$0.4 million, which was mainly due to the accrued listing expenses of approximately
S$0.2 million. Our Group’s accrued expenses decreased to approximately S$0.05 million as of June 30, 2022, primarily attributable
to the repayment of accrued listing expenses.
Our
Group did not have any material default in payment of other payables during the year ended December 31, 2021 and June 30, 2022.
Contract
liabilities
Our
contract liabilities represent the sales deposits and instalments received during the year in respect of machineries still under production
but not yet recognized as revenue under our revenue recognition policies. Our contract liabilities amounted to nil as of December 31,
2021 and June 30, 2022, respectively.
Bank
indebtedness
As
of June 30, 2022, our bank indebtedness equaled an aggregate of S$10.1 million, of which S$9.9 million is denominated in Singapore dollars
and bears interest at a variable rate ranging from 1.25% to 1.5% above the Singapore Interbank Offered Rate (“SIBOR”) and
S$0.2 million is denominated in US dollars and bears interest at 1.25% above the London Interbank Offer Rate (“LIBOR”). S$5.9
million of our bank indebtedness constitutes current liability and S$4.2 million constitutes non-current liability.
Provisions
Our
provisions during the year ended December 31, 2021 and six months period ended June 30, 2022 mainly represented the provision for warranty
for machines sold, which usually covers a 12-month period from the date on which the machines are delivered. The provision is based on
estimates made from historical warranty data associated with similar products and services. As of December 31, 2021 and June 30, 2022,
our Group recorded provision of approximately S$22,000 and S$22,000, respectively.
Tax
payables
Our
tax payables remained nil as of December 31, 2021 and June 30, 2022, respectively. It was generally due to our settlement of tax payable
for the year ended December 31, 2021.
Deferred
tax (assets)/liabilities
Our
deferred tax (assets)/liabilities during the year ended December 31, 2021 and June 30, 2022 mainly represented the Singapore tax implication
on the temporary difference between the tax written down value and the net book value of the property, plant and equipment, which are
owned by our Group. As of December 31, 2021 and June 30, 2022, our deferred tax liabilities remained relatively stable.
Commitments
Operating
lease commitments as a lessor
Our
Group leases out the dishwashing machines pursuant to leases that are classified as non-cancellable operating leases.
The
future minimum lease receivables under non-cancellable operating leases contracted for as of December 31, 2021 and June 30, 2022, but
not recognized as receivables, are as follows:
| |
As of
December 31,
2021 | | |
As of
June 30,
2022 | |
| |
SGD’000 | | |
SGD’000 | |
| |
| | |
| |
Within one year | |
| 40 | | |
| 40 | |
After one but within two years | |
| — | | |
| — | |
Total | |
| 40 | | |
| 40 | |
Capital
commitments
As
of December 31, 2021 and June 30, 2022, our Group did not have any capital commitments.
Capital
Expenditures
Historical
capital expenditures
Our
capital expenditures during the six months periods ended June 30, 2021 and 2022 mainly related to replacement of obsolete equipment.
For the six months periods ended June 30, 2021 and 2022, our capital expenditures in relation to property, plant and equipment were approximately
S$0.1 million and S$0.3 million, respectively. We principally funded our capital expenditures through cash flows from operations and
borrowings during the period ended June 30, 2021 and 2022. Our primary uses of net proceeds from our initial public offering have been
and will be used to fund operations, expansions and upgrades of our manufacturing facilities.
Critical
Accounting Policies and Estimates
Our
financial statements and accompanying notes have been prepared in accordance with U.S. GAAP. The preparation of these financial statements
and accompanying notes requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues
and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various
other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments
about the carrying values of assets and liabilities that are not readily apparent from other sources. We have identified certain accounting
policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding
of our financial condition and results of operation. Critical accounting policies are those that are most important to the portrayal
of our financial conditions and results of operations and require management’s difficult, subjective, or complex judgment, often
as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods.
Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility
that future events affecting the estimate may differ significantly from management’s current judgments. While our significant accounting
policies are more fully described in Note 2 to the consolidated financial statements included elsewhere in this Form, we believe the
following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial
statements.
We
are an “emerging growth company” as defined under the federal securities laws and, as such, will be subject to reduced public
company reporting requirements. Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage
of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act, for complying with new or revised accounting
standards. We have elected to take advantage of the extended transition period for complying with new or revised accounting standards
and acknowledge such election is irrevocable pursuant to Section 107 of the JOBS Act. As a result of our election, our financial statements
may not be comparable to those of companies that comply with public company effective dates.
Use
of Estimates and Assumptions
The
preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated
financial statements and the reported amounts of revenues and expenses during the periods presented. Significant accounting estimates
reflected in our consolidated financial statements include allowance for uncollectible accounts receivable, inventory valuation, useful
lives and impairment for property, plant and equipment, valuation allowance for deferred tax assets, fair value of financial instruments,
warranty liabilities, and contingencies. Actual results could differ from these estimates.
Revenue
Recognition
We
recognized our revenue under Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (ASC606). We recognize
revenue to depict the transfer of promised goods or services (that is, an asset) to customers in an amount that reflects the consideration
to which we expect to receive in exchange for those goods or services. An asset is transferred when the customer obtains control of that
asset. It also requires us to identify contractual performance obligations and determine whether revenue should be recognized at a point
in time or over time, based on when control of goods and services transfers to a customer. We elected the modified retrospective method
which required a cumulative adjustment to retained earnings instead of retrospectively adjusting prior periods. The adoption of ASC 606
did not have a material impact on the consolidated financial statements.
To
achieve that core principle, we apply the five steps defined under Topic 606: (i) identify the contract(s) with a customer, (ii) identify
the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance
obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation.
We
account for a contract with a customer when the contract is committed in writing, the rights of the parties, including payment terms,
are identified, the contract has commercial substance and consideration to collect is substantially probable.
In
accordance with ASC 340-40, which requires the capitalization of all incremental costs from obtaining and fulfilling a contract with
a customer if such costs are expected to be recovered with the period of more than one year, we capitalize certain contract acquisition
costs consisting primarily of consulting fees, and expect such consulting fees as a result of obtaining customer contracts to be recoverable.
For contracts with the realization period of less than one year, the guidance provides a practical expedient that permits an entity to
immediately expense contract acquisition costs when the asset that would have resulted from capitalizing these costs would have been
amortized in one year or less.
Revenue
recognition policies for each type of revenue stream are as follows:
(a)
Goods and services sold
We
recognize revenue for our goods and services sold when we have satisfied a performance obligation by transferring control of a promised
good or service to the customer. The amount of revenue recognized is the amount of the transaction price allocated to the satisfied performance
obligation, which is the amount of the consideration in the contract to which our Group expects to be entitled in exchange for transferring
the promised goods or services.
Revenue
may be recognized at a point in time or over time following the timing of satisfaction of the performance obligation. If a performance
obligation is satisfied over time, revenue is recognized based on the percentage of completion reflecting the progress towards complete
satisfaction of that performance obligation.
(b)
Rental of dishware washing machines
We
recognize revenue for our rental of our dishware washing machines on a straight-line basis over the term of the lease.
Recent
Accounting Pronouncements
See
Note 2 of the notes to the consolidated financial statements included elsewhere in this Form for a discussion of recently issued accounting
standards.
Impact
of Inflation
In
accordance with the Monetary Authority of Singapore, the year-over-year percentage changes in the all items consumer price index for
2020 and 2021 were -0.2% and 2.3%, respectively. Inflation in Singapore has not materially affected our profitability and operating results.
However, we can provide no assurance that we will be unaffected by higher inflation rates in Singapore in the future.
Quantitative
and Qualitative Disclosures about Market Risk
Interest
Rate Risk
We
are exposed to interest rate risk while we have short-term bank loans outstanding. Although interest rates for our short-term loans are
typically fixed for the terms of the loans, the terms are typically twelve months and interest rates are subject to change upon renewal.
Credit
Risk
Credit
risk is controlled by the application of credit approvals, limits and monitoring procedures. We manage credit risk through in-house research
and analysis of the relevant economy and the underlying obligors and transaction structures. We identify credit risk collectively based
on industry, geography and customer type. In measuring the credit risk of our sales to our customers, we mainly reflect the “probability
of default” by the customer on its contractual obligations and consider the current financial position of the customer and the
current and likely future exposures to the customer.
Liquidity
Risk
We
are also exposed to liquidity risk, which is risk that we will be unable to provide sufficient capital resources and liquidity to meet
our commitments and business needs. Liquidity risk is controlled by the application of financial position analysis and monitoring procedures.
When necessary, we will turn to financial institutions and related parties to obtain short-term funding to cover any liquidity shortage.
Foreign
Exchange Risk
While
our reporting currency is the U.S. dollar, almost all of our consolidated revenues and consolidated costs and expenses are denominated
in S$. All of our assets are denominated in S$. As a result, we are exposed to foreign exchange risk as our revenues and results of operations
may be affected by fluctuations in the exchange rate between the U.S. dollar and S$. If the S$ depreciates against the U.S. dollar, the
value of our S$ revenues, earnings and assets as expressed in our U.S. dollar financial statements will decline. We have not entered
into any hedging transactions in an effort to reduce our exposure to foreign exchange risk.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
|
JE
CLEANTECH HOLDINGS LIMITED |
|
|
Dated
August 31, 2022 |
/s/
HONG Bee Yin |
|
HONG
Bee Yin, Chief Executive Officer and Director |
|
|
Dated
August 31, 2022 |
/s/
LONG Jia Kwang |
|
LONG
Jia Kwang, Chief Financial Officer |
JE
CLEANTECH HOLDINGS LIMITED AND ITS SUBSIDIARIES
UNAUDITED
CONSOLIDATED BALANCE SHEETS
(Amount
in thousands, except for share and per share data, or otherwise noted)
| |
As of December 31, | | |
As of June 30, | |
| |
2021 | | |
2022 | | |
2022 | |
| |
SGD’000 | | |
SGD’000 | | |
US$’000 | |
| |
| | | |
| | | |
| | |
Assets | |
| | | |
| | | |
| | |
Current assets: | |
| | | |
| | | |
| | |
Cash and cash equivalents | |
| 1,108 | | |
| 8,503 | | |
| 6,085 | |
Accounts receivable, net | |
| 3,220 | | |
| 2,380 | | |
| 1,703 | |
Prepaid expenses and other current assets, net | |
| 847 | | |
| 2,769 | | |
| 1,982 | |
Inventory | |
| 2,557 | | |
| 7,724 | | |
| 5,527 | |
Total current assets | |
| 7,732 | | |
| 21,376 | | |
| 15,297 | |
| |
| | | |
| | | |
| | |
Financial instrument | |
| 243 | | |
| 252 | | |
| 180 | |
Property, plant and equipment, net | |
| 8,981 | | |
| 8,852 | | |
| 6,335 | |
Deferred financing costs | |
| 1,321 | | |
| - | | |
| - | |
Deferred tax assets | |
| 163 | | |
| 163 | | |
| 117 | |
Total non-current assets | |
| 10,708 | | |
| 9,267 | | |
| 6,632 | |
TOTAL ASSETS | |
| 18,440 | | |
| 30,643 | | |
| 21,929 | |
| |
| | | |
| | | |
| | |
Liabilities | |
| | | |
| | | |
| | |
Current liabilities: | |
| | | |
| | | |
| | |
Bank loans - current | |
| 5,457 | | |
| 5,956 | | |
| 4,262 | |
Lease payable - current | |
| 158 | | |
| 195 | | |
| 140 | |
Accounts payable, accruals, and other current liabilities | |
| 2,290 | | |
| 1,936 | | |
| 1,385 | |
Warranty liabilities | |
| 22 | | |
| 22 | | |
| 16 | |
Loan from controlling shareholder | |
| 1,523 | | |
| 1,521 | | |
| 1,089 | |
Total current liabilities | |
| 9,450 | | |
| 9,630 | | |
| 6,892 | |
| |
| | | |
| | | |
| | |
Bank loans – non-current | |
| 4,421 | | |
| 4,187 | | |
| 2,996 | |
Lease payable – non-current | |
| 1,395 | | |
| 1,464 | | |
| 1,048 | |
Deferred tax liabilities | |
| 151 | | |
| 151 | | |
| 108 | |
Total non-current liabilities | |
| 5,967 | | |
| 5,802 | | |
| 4,152 | |
| |
| | | |
| | | |
| | |
TOTAL LIABILITIES | |
| 15,417 | | |
| 15,432 | | |
| 11,044 | |
| |
| | | |
| | | |
| | |
Commitments and contingencies | |
| - | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | |
Shareholders’ equity | |
| | | |
| | | |
| | |
Ordinary shares US$0.001 par value per share; 100,000,000 authorized as of December 31, 2021 and June
30, 2022; 12,000,000 and 15,020,000 shares issued and outstanding, respectively | |
| 16 | | |
| 20 | | |
| 14 | |
Additional paid-in capital | |
| 3,626 | | |
| 15,686 | | |
| 11,226 | |
Accumulated deficit | |
| (585 | ) | |
| (438 | ) | |
| (314 | ) |
Accumulated other comprehensive income | |
| (34 | ) | |
| (57 | ) | |
| (41 | ) |
Total shareholders’ equity | |
| 3,023 | | |
| 15,211 | | |
| 10,885 | |
| |
| | | |
| | | |
| | |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | |
| 18,440 | | |
| 30,643 | | |
| 21,929 | |
The
accompanying notes are an integral part of these consolidated financial statements.
JE
CLEANTECH HOLDINGS LIMITED AND ITS SUBSIDIARIES
UNAUDITED
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Amount
in thousands, except for share and per share data, or otherwise noted)
| |
For the six months ended June 30, | |
| |
2021 | | |
2022 | | |
2022 | |
| |
SGD’000 | | |
SGD’000 | | |
USD’000 | |
| |
| | |
| | |
| |
Revenues | |
| 8,908 | | |
| 7,197 | | |
| 5,150 | |
Cost of revenues | |
| (6,919 | ) | |
| (5,556 | ) | |
| (3,976 | ) |
Gross profit | |
| 1,989 | | |
| 1,641 | | |
| 1,174 | |
| |
| | | |
| | | |
| | |
Operating expenses: | |
| | | |
| | | |
| | |
Selling and marketing expenses | |
| (5 | ) | |
| (15 | ) | |
| (11 | ) |
General and administrative expenses | |
| (1,128 | ) | |
| (1,565 | ) | |
| (1,120 | ) |
Total operating expenses | |
| (1,133 | ) | |
| (1,580 | ) | |
| (1,131 | ) |
| |
| | | |
| | | |
| | |
Income from operations | |
| 856 | | |
| 61 | | |
| 43 | |
| |
| | | |
| | | |
| | |
Other income (loss): | |
| | | |
| | | |
| | |
Other income | |
| 326 | | |
| 379 | | |
| 272 | |
Interest expense | |
| (95 | ) | |
| (123 | ) | |
| (88 | ) |
Other expense | |
| (314 | ) | |
| (179 | ) | |
| (128 | ) |
Change in fair value in financial instrument | |
| - | | |
| 9 | | |
| 6 | |
Total other income (loss) | |
| (83 | ) | |
| 86 | | |
| 62 | |
| |
| | | |
| | | |
| | |
Income before tax expense | |
| 773 | | |
| 147 | | |
| 105 | |
Income tax expense | |
| (157 | ) | |
| - | | |
| - | |
Net income | |
| 616 | | |
| 147 | | |
| 105 | |
Other comprehensive income | |
| | | |
| | | |
| | |
Foreign currency translation loss, net of taxes | |
| (16 | ) | |
| (23 | ) | |
| (16 | ) |
Total comprehensive income | |
| 600 | | |
| 124 | | |
| 89 | |
| |
| | | |
| | | |
| | |
Net income per share attributable to ordinary shareholders | |
| | | |
| | | |
| | |
basic and diluted | |
| 0.05 | | |
| 0.01 | | |
| 0.01 | |
Weighted average number of ordinary shares used in computing net income per share | |
| | | |
| | | |
| | |
basic and diluted | |
| 12,000,000 | | |
| 13,167,956 | | |
| 13,167,956 | |
The
accompanying notes are an integral part of these consolidated financial statements.
JE
CLEANTECH HOLDINGS LIMITED AND ITS SUBSIDIARIES
UNAUDITED
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Amount
in thousands, except for share and per share data, or otherwise noted)
| |
Ordinary Shares | | |
Additional paid-in | | |
Accumulated Other Comprehensive | | |
Retained earnings/ | | |
Total stockholders’ | |
| |
No. of shares | | |
Amount | | |
capital | | |
loss | | |
(deficit) | | |
equity | |
| |
| | | |
SGD’000 | | |
SGD’000 | | |
SGD’000 | | |
SGD’000 | | |
SGD’000 | |
Balance as of January 1, 2021 | |
| 12,000,000 | | |
| 16 | | |
| 3,626 | | |
| (10 | ) | |
| 2,314 | | |
| 5,946 | |
Net income | |
| | | |
| | | |
| | | |
| | | |
| 616 | | |
| 616 | |
Foreign currency translation adjustment | |
| - | | |
| - | | |
| - | | |
| (16 | ) | |
| - | | |
| (16 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance as of June 30, 2021 | |
| 12,000,000 | | |
| 16 | | |
| 3,626 | | |
| (26 | ) | |
| 2,930 | | |
| 6,546 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance as of January 1, 2022 | |
| 12,000,000 | | |
| 16 | | |
| 3,626 | | |
| (34 | ) | |
| (585 | ) | |
| 3,023 | |
Net income | |
| | | |
| | | |
| | | |
| | | |
| 147 | | |
| 147 | |
Foreign currency translation adjustment | |
| - | | |
| - | | |
| - | | |
| (23 | ) | |
| - | | |
| (23 | ) |
Issue of new shares | |
| 3,020,000 | | |
| 4 | | |
| 12,060 | | |
| - | | |
| - | | |
| 12,064 | |
Balance as of June 30, 2022 | |
| 15,020,000 | | |
| 20 | | |
| 15,686 | | |
| (57 | ) | |
| (438 | ) | |
| 15,211 | |
The
accompanying notes are an integral part of these consolidated financial statements.
JE
CLEANTECH HOLDINGS LIMITED AND ITS SUBSIDIARIES
UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amount
in thousands, except for share and per share data, or otherwise noted)
| |
For the six months ended June 30, | |
| |
2021 | | |
2022 | | |
2022 | |
| |
| SGD’000 | | |
| SGD’000 | | |
| US$’000 | |
| |
| | | |
| | | |
| | |
Net income | |
| 616 | | |
| 147 | | |
| 105 | |
Adjustment: | |
| | | |
| | | |
| | |
Depreciation and amortization | |
| 258 | | |
| 293 | | |
| 210 | |
Loss on disposal of property, plant and equipment | |
| - | | |
| 36 | | |
| 25 | |
Reversal of loss allowance | |
| - | | |
| (21 | ) | |
| (15 | ) |
Change in fair value of financial instruments | |
| - | | |
| (9 | ) | |
| (6 | ) |
Changes in operating assets: | |
| | | |
| | | |
| | |
Decrease/ (increase) in inventories | |
| 117 | | |
| (5,167 | ) | |
| (3,698 | ) |
Decrease of accounts receivable | |
| 4,635 | | |
| 264 | | |
| 189 | |
Decrease of accounts payable, accruals and other current liabilities | |
| (2,092 | ) | |
| (740 | ) | |
| (526 | ) |
Cash provided by/(used in) operating activities | |
| 3,534 | | |
| (5,197 | ) | |
| (3,716 | ) |
| |
| | | |
| | | |
| | |
Proceeds from disposal of property, plant and equipment | |
| - | | |
| 20 | | |
| 14 | |
Purchase of property, plant and equipment | |
| (74 | ) | |
| (124 | ) | |
| (89 | ) |
Cash used in investing activities | |
| (74 | ) | |
| (104 | ) | |
| (75 | ) |
| |
| | | |
| | | |
| | |
Proceeds from bank loans | |
| - | | |
| 500 | | |
| 357 | |
Repayment of bank loans | |
| (1,277 | ) | |
| (235 | ) | |
| (168 | ) |
Principal payment of lease liabilities | |
| - | | |
| (93 | ) | |
| (66 | ) |
Placement of deposit with escrow agent | |
| - | | |
| (838 | ) | |
| (600 | ) |
Net proceeds from issuance of shares | |
| - | | |
| 14,931 | | |
| 10,686 | |
Payment of deferred financing costs | |
| - | | |
| (1,546 | ) | |
| (1,110 | ) |
Cash (used in)/provided by financing activities | |
| (1,277 | ) | |
| 12,719 | | |
| 9,099 | |
| |
| | | |
| | | |
| | |
Foreign currency effect | |
| (16 | ) | |
| (23 | ) | |
| (16 | ) |
Net change in cash and cash equivalents | |
| 2,167 | | |
| 7,395 | | |
| 5,292 | |
| |
| | | |
| | | |
| | |
Cash and cash equivalents as of beginning of the period | |
| 550 | | |
| 1,108 | | |
| 793 | |
Cash and cash equivalents as of the end of the period | |
| 2,717 | | |
| 8,503 | | |
| 6,085 | |
Net increase in cash and cash equivalents | |
| 2,167 | | |
| 7,395 | | |
| 5,292 | |
| |
| | | |
| | | |
| | |
Supplementary Cash Flows Information | |
| | | |
| | | |
| | |
Cash paid for interest | |
| 95 | | |
| 123 | | |
| 88 | |
Cash paid for taxes | |
| 106 | | |
| - | | |
| - | |
The
accompanying notes are an integral part of these consolidated financial statements.
JE
CLEANTECH HOLDINGS LIMITED AND ITS SUBSIDIARIES
NOTES
TO FINANCIAL STATEMENTS
1.
ORGANIZATION AND PRINCIPAL ACTIVITIES
On
January 29, 2019, JE Cleantech Holdings Limited (the “Company”) was incorporated in the Cayman Islands, as an investment
holding company. The Company conducts its primary operations through its indirectly held wholly owned subsidiaries that are incorporated
and domiciled in Singapore, namely: 1.) by JCS-Echigo Pte. Ltd. (‘‘JCS-Echigo’’) which is principally engaged
in the manufacture and sale of cleaning systems, related cleaning equipment, equipment parts and components, and 2.) Hygieia Warewashing
Pte. Ltd. (‘‘Hygieia’’) which is principally engaged in the provision of centralized dishwashing and ancillary
services. The Company holds JCS-Echigo via its wholly owned subsidiary JE Cleantech International Ltd (“JEC International”),
a company that is incorporated and domiciled in the British Virgin Islands; Hygenia is a wholly owned subsidiary of the JCS-Echigo. JCS-Echigo
wholly owns Evoluxe Pte. Ltd (“Evoluxe”) which is also incorporated and domiciled in Singapore, which, as of the date of
the report, is dormant. The Company is headquartered in Singapore and conducts its operations domestically.
The
Company and its subsidiaries (“the Group”) are in the table as follows:
Percentage
of effective ownership |
Name |
|
Date
of
Incorporation |
|
December 31,
2021 |
|
|
June 30,
2022 |
|
|
Place
of
incorporation |
|
Principal
Activities |
JE
Cleantech Holdings Limited |
|
January
29, 2019 |
|
|
- |
|
|
|
- |
|
|
Cayman
Islands |
|
Investment
holding |
JE
Cleantech International Ltd |
|
April
9, 2018 |
|
|
100 |
% |
|
|
100 |
% |
|
The
British
Virgin Islands |
|
Investment
holding |
JCS-
Echigo Pte. Ltd. |
|
November
25, 1999 |
|
|
100 |
% |
|
|
100 |
% |
|
Singapore |
|
Manufacturing,
selling and servicing of cleaning systems, component and parts |
Hygieia
Warewashing Ptd. Ltd. |
|
December
29, 2010 |
|
|
100 |
% |
|
|
100 |
% |
|
Singapore |
|
Provision
of centralized dishware washing services and leasing of dishware washing equipment |
Evoluxe
Pte. Ltd |
|
May
6, 2016 |
|
|
100 |
% |
|
|
100 |
% |
|
Singapore |
|
Dormant |
The
accompanying financial statements are presented assuming that the Company was an existence at the beginning of the first period presented.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a)
Basis of presentation
The
accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the
United States of America (“US GAAP”) and pursuant to the regulations of the Securities and Exchange Commission (“SEC”).
(b)
Consolidation
The
consolidated financial statements include the financial statements of the Company and its subsidiaries. All inter-company transactions,
if any, and balances due to, due from, long-term investment subsidiary, and registered paid in capital have been eliminated upon consolidation.
(c)
Use of estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the U.S. GAAP requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The
most significant estimates relate to allowance for uncollectible accounts receivable, inventory valuation, useful lives and impairment
for property, plant and equipment, valuation allowance for deferred tax assets, fair value of financial instruments, warranty liabilities,
and contingencies. Actual results could vary from the estimates and assumptions that were used.
(d)
Risks and uncertainties
The
main operations of the Company are located in Singapore. Accordingly, the Company’s business, financial condition, and results
of operations may be influenced by political, economic, and legal environments in Singapore, as well as by the general state of the economy
in Singapore. The Company’s results may be adversely affected by changes in the political, regulatory and social conditions in
Singapore. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing
laws and regulations including its organization and structure disclosed in Note 1, such experience may not be indicative of future results.
The
Company’s business, financial condition and results of operations may also be negatively impacted by risks related to natural disasters,
extreme weather conditions, health epidemics and other catastrophic incidents, which could significantly disrupt the Company’s
operations.
(e)
Foreign currency translation and transaction and Convenience translation
The
accompanying consolidated financial statements are presented in the Singaporean dollar (“$”), which is the reporting currency
of the Company. The functional currency of the Company and its subsidiary JEC International are the USD and HKD, respectively. JCS-Echigo,
Hygenia, and Evoluxe use the Singaporean dollar as their functional currencies.
Assets
and liabilities denominated in currencies other than the reporting currency are translated into the reporting currency at the rates of
exchange prevailing at the balance sheet date. Translation gains and losses are recognized in the unaudited consolidated statements
of income and comprehensive income as other comprehensive income or loss. Transactions in currencies other than the reporting currency
are measured and recorded in the reporting currency at the exchange rate prevailing on the transaction date. The cumulative gain or loss
from foreign currency transactions is reflected in the unaudited consolidated statements of income and comprehensive income as
other income (other expenses).
The
value of foreign currencies including, the US Dollar and Hong Kong Dollar, may fluctuate against the Singaporean Dollar. Any significant
variations of the aforementioned currencies relative to the Singaporean Dollar may materially affect the Company’s financial condition
in terms of reporting in SGD. The following table outlines the currency exchange rates that were used in preparing the accompanying consolidated
financial statements:
| |
December 31, 2021 | | |
June 30, 2022 | |
SGD to HKD Year End | |
| 5.8300 | | |
| 5.6965 | |
SGD to HKD Average Rate | |
| 5.8348 | | |
| 5.7212 | |
SGD to USD Year End | |
| 0.7396 | | |
| 0.7193 | |
SGD to USD Average Rate | |
| 0.7450 | | |
| 0.7316 | |
Translations
of the consolidated balance sheets, unaudited consolidated statements of income and comprehensive income and unaudited
consolidated statements of cash flows from SGD into USD as of and for the six months period ended June 30, 2022 are solely for the convenience
of the reader and were calculated at the rate of USD0.7156 = SGD1.
(f)
Fair Value Measurement
Accounting
guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required
or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact,
and it considers assumptions that market participants would use when pricing the asset or liability.
Accounting
guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of
unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based
upon the lowest level of input that is significant to the fair value measurement. Accounting guidance establishes three levels of inputs
that may be used to measure fair value:
|
● |
Level
1 applies to assets or liabilities for which there are quoted prices, in active markets for identical assets or liabilities. |
|
|
|
|
● |
Level
2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable
for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical
asset or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations
in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. |
|
|
|
|
● |
Level
3 applies to asset or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the
measurement of the fair value of the assets or liabilities. |
Cash
and cash equivalents, accounts receivable, other current assets, financial instruments, bank loans, leases payable, accounts payables,
accruals and other current liabilities, warranty liabilities and loan from controlling shareholder are financial assets and liabilities.
Cash and cash equivalents, accounts receivables, other current assets, accounts payable, accruals and other current liabilities, warranty
liabilities, and loan from controlling shareholder are subject to fair value measurement; however, because of their being short term
in nature management believes their carrying values approximate their fair value. Financial instruments are fair value financial assets
that are marked to fair value and are accounted for under as Level 3 under the above hierarchy. The Company accounts for bank loans and
lease payables at amortized cost and has elected NOT to account for them under the fair value hierarchy.
(g)
Related parties
We
adopted ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions
(h)
Cash and cash equivalents
Cash
and cash equivalents consist of cash on hand, the Company’s demand deposit placed with financial institutions, which have original
maturities of less than three months and unrestricted as to withdrawal and use.
(i)
Restricted cash
Restricted
cash are bank deposits that are pledge to the bank as security for outstanding loans and bank borrowings. The carrying amount for restricted
cash was $0, and $0 as of December 31, 2021 and June 30, 2022, respectively.
(j)
Accounts Receivable, net
Accounts
receivable, net are stated at the original amount less an allowance for expected credit loss on such receivables. The allowance for expected
credit loss is estimated based upon the Company’s assessment of various factors including historical experience, the age of the
accounts receivable balances, current general economic conditions, future expectations and customer specific quantitative and qualitative
factors that may affect the Company’s customers’ ability to pay. An allowance is also made when there is objective evidence
for the Company to reasonably estimate the amount of probable loss.
(k)
Inventories
Inventories
are measured at the lower of cost and net realizable value. The cost of inventories is based on the first-in, first-out principle, and
includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them
to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate
share of production overheads based on normal operating capacity.
(l)
Property, plant and equipment, net
Property,
plant and equipment are stated at cost less accumulated depreciation and impairment, if any, and depreciated on a straight-line basis
over the estimated useful lives of the assets. Cost represents the purchase price of the asset and other costs incurred to bring the
asset into its intended use. Estimated useful lives are as follows:
Category |
|
Estimated
useful lives |
|
|
|
Land
use right |
|
Over
the lease term |
Leasehold
buildings |
|
30
years |
Plant
and machinery |
|
5
to 10 years |
Equipment,
furniture and fittings |
|
1-5
years |
Expenditure
for repair and maintenance costs, which do not materially extend the useful lives of the assets, are charged to expenses as incurred,
whereas the expenditure for major renewals and betterment that substantially extends the useful lives of property and equipment are capitalized
as additions to the related assets. Retirements, sales and disposals of assets are recorded by removing the costs, accumulated depreciation
and impairment with any resulting gain or loss recognized in the unaudited consolidated statements of income.
(m)
Impairment of long-lived assets
The
Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of
an asset may no longer be recoverable. When these events occur, the Company measures impairment by comparing the carrying value of the
long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition.
If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets, the Company would recognize an impairment
loss, which is the excess of carrying amount over the fair value of the assets, using the expected future discounted cash flows. No impairment
of long-lived assets was recognized as of December 31, 2021 and June 30, 2022.
(n)
Contract liabilities
A
contract liability is recognized when the customer pays non-refundable consideration before the Company recognizes the related revenue.
A contract liability would also be recognized if the Company has an unconditional right to receive nonrefundable considerations before
the Company recognizes the related revenue. In such cases, a corresponding receivable would also be recognized.
(o)
Commitments and contingencies
In
the normal course of business, the Company is subject to commitments and contingencies, including operating lease commitments, legal
proceedings and claims arising out of its business that relate to a wide range of matters, such as government investigations and tax
matters. The Company recognizes a liability for such contingency if it determines it is probable that a loss will occur, and a reasonable
estimate of the loss can be made. The Company may consider many factors in making these assessments on liability for contingencies, including
historical and the specific facts and circumstances of each matter.
(p)
Revenue recognition
In
May 2014, the FASB issued Topic 606, “Revenue from Contracts with Customers”. This topic clarifies the principles for recognizing
revenue and develops a common revenue standard for U.S. GAAP. Simultaneously, this topic supersedes the revenue recognition requirements
in Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the Codification. The core principle
of the guidance requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount
that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
The
Group currently generates its revenue from the following main sources:
Revenue
from good sold and services provided
Revenue
from sales of goods and services in the ordinary course of business is recognized when the Group satisfies a performance obligation (‘‘PO’’)
by transferring control of a promised good or service to the customer. The amount of revenue recognized is the amount of the transaction
price allocated to the satisfied PO.
The
transaction price is allocated to each PO in the contract on the basis of the relative stand-alone selling prices of the promised goods
or services. The individual standalone selling price of a good or service that has not previously been sold on a stand-alone basis, or
has a highly variable selling price, is determined based on the residual portion of the transaction price after allocating the transaction
price to goods and/or services with observable stand-alone selling price. A discount or variable consideration is allocated to one or
more, but not all, of the performance obligations if it relates specifically to those performance obligations.
Transaction
price is the amount of consideration in the contract to which the Group expects to be entitled in exchange for transferring the promised
goods or services. The transaction price may be fixed or variable and is adjusted for time value of money if the contract includes a
significant financing component. Consideration payable to a customer is deducted from the transaction price if the Group does not receive
a separate identifiable benefit from the customer. When consideration is variable, if applicable, the estimated amount is included in
the transaction price to the extent that it is highly probable that a significant reversal of the cumulative revenue will not occur when
the uncertainty associated with the variable consideration is resolved.
Revenue
may be recognized at a point in time or over time following the timing of satisfaction of the PO. If a PO is satisfied over time, revenue
is recognized based on the percentage of completion reflecting the progress towards complete satisfaction of that PO. Typically, POs
for products where the process is described as below, the PO is satisfied at point in time. POs for services are more typically satisfied
over time such as in the contracts for sterilization and sanitation service where the Company delivers service daily over the course
of a month, and the Group will recognize revenue and charge the client on a monthly basis.
For
the sales of sterilization and cleaning systems, related cleaning equipment, equipment parts and components, the Group typically receives
purchase orders from its customers which will set forth the terms and conditions including the transaction price, products to be delivered,
terms of delivery, and terms of payment. The terms serve as the basis of the performance obligations that the Group must fulfill in order
to recognize revenue. The key performance obligation is the delivery of the finished product to the customer at their location at which
point title to that asset passes to the customer. The completion of this earning process is evidenced by a written customer acceptance
indicating receipt of the product. The Group includes a warranty on its product for one year from the point of delivery and acceptance.
The warranty is antecedent to the performance obligation set forth above; however, management develops an estimate of future warranty
costs and accrues that amount to cost of sales in the period that revenue is recognized to the Group’s unaudited consolidated
statements of income and the corresponding amount to the warrant liabilities on the Group’s consolidated balance sheets. Details
on the changes in the warranty liabilities can be found in Note 11 below. Typical payment terms set forth in the purchase order ranges
from 30 to 90 days from the date of delivery.
Revenue
from rental of dishware washing machines
In
accordance with ASC 842 Lease Topics. The Group accounts for the rental of dishware washing machines as direct finance leases where,
lease income from the prospective of lessor is recognized to the Group’s statement of income straight-line basis over the term
of the lease once management has determined that the lease payments are reasonably expected to be collected. The performance obligation
under these leasing arrangements is to deliver the unit to the customer at their location and ensure that the equipment is ready for
use, and to ensure that the equipment is available for use over the life of the lease contract.
(q)
Cost of revenue
Cost
of revenue mainly consists of raw material costs, labor costs, sub-contracting costs and production overhead.
(r)
Selling and marketing expenses
Selling
expenses mainly consists of promotion and marketing expenses and transportation expenses. The Company does not carry any capitalized
contract acquisition costs that would be amortized to its results of operations over time, and potential expenses related to customer
and contract acquisitions costs if any are accounted for as periodic costs.
(s)
General and administrative expenses
General
and administrative expenses mainly consist of staff cost, depreciation, office supplies and upkeep expenses, travelling and entertainment,
legal and professional fees, property and related expenses, other miscellaneous administrative expenses.
(t)
Operating leases
Prior
to the adoption of ASC 842 on January 1, 2019:
Leases,
mainly leases of factory buildings, offices and employee dormitories, where substantially all the rewards and risks of ownership of assets
remain with the lessor are accounted for as operating leases. Payments made under operating leases are recognized as an expense on a
straight-line basis over the lease term. The Company had no finance leases for any of the periods stated herein.
Upon
and hereafter the adoption of ASC 842 on January 1, 2019:
The
Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”)
assets, operating lease liability, and operating lease liability, non-current in the Company’s consolidated balance sheets. ROU
assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s
obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date
based on the present value of lease payments over the lease term. When determining the lease term, the Company includes options to extend
or terminate the lease when it is reasonably certain that it will exercise that option, if any. As the Company’s leases do not
provide an implicit rate, the Company used an incremental borrowing rate based on the information available at commencement date in determining
the present value of lease payments. The Company has elected to adopt the following lease policies in conjunction with the adoption of
ASU 2016-02: (i) for leases that have lease terms of 12 months or less and does not include a purchase option that is reasonably certain
to exercise, the Company elected not to apply ASC 842 recognition requirements; and (ii) the Company elected to apply the package of
practical expedients for existing arrangements entered into prior to January 1, 2019 to not reassess (a) whether an arrangement is or
contains a lease, (b) the lease classification applied to existing leases, and (c) initial direct costs.
(u)
Income taxes
The
Group accounts for income taxes under ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable
to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective
tax bases.
Deferred
tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized
in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets
to the amount expected to be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.
The
provisions of ASC 740-10-25, “Accounting for Uncertainty in Income Taxes,” prescribe a more-likely-than-not threshold for
consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This
interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred
income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures.
The
Company did not accrue any liability, interest or penalties related to uncertain tax positions in its provision for income taxes line
of its unaudited consolidated statements of income for the year ended December 31, 2021 and six months period ended June 30, 2022,
respectively. The Company does not expect that its assessment regarding unrecognized tax positions will materially change over the next
12 months.
(v)
Earnings per share
Basic
earnings per share is computed by dividing net earnings attributable to ordinary shareholders by the weighted average number of ordinary
shares outstanding during the year. Diluted earnings per share reflect the potential dilution that could occur if securities or other
contracts to issue ordinary shares were exercised or converted into ordinary shares.
(w)
Recent accounting pronouncements
The
Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material
effect on the Company’s unaudited consolidated balance sheets, statements of income and comprehensive income and statements of
cash flows.
3.
ACCOUNTS RECEIVABLE, NET
Accounts
receivable, net, consists of the following:
| |
December 31, 2021 | | |
June 30, 2022 | |
| |
SGD’000 | | |
SGD’000 | |
Accounts receivable | |
| 3,254 | | |
| 2,393 | |
Less: allowance for doubtful accounts | |
| (34 | ) | |
| (13 | ) |
Accounts receivable, net | |
| 3,220 | | |
| 2,380 | |
The
movements in the allowance for doubtful accounts for the year ended December 31, 2021 and six months period ended June 30, 2022 were
as follows:
|
|
December
31, 2021 |
|
|
June
30, 2022 |
|
|
|
SGD’000 |
|
|
SGD’000 |
|
Balance
at beginning of the year/period |
|
|
82 |
|
|
|
34 |
|
Reversal |
|
|
(48 |
)
|
|
|
(21 |
) |
Balance
at end of the year/period |
|
|
34 |
|
|
|
13 |
|
As
of December 31, 2021 and June 30, 2022, the ageing analysis of accounts receivable, net of allowance for doubtful accounts, based on
the invoice date is as follows:
|
|
December
31, 2021 |
|
|
June
30, 2022 |
|
|
|
SGD’000 |
|
|
SGD’000 |
|
Within
30 days |
|
|
1,511 |
|
|
|
1,797 |
|
Between
31 and 60 days |
|
|
587 |
|
|
|
386 |
|
Between
61 and 90 days |
|
|
282 |
|
|
|
58 |
|
More
than 90 days |
|
|
840 |
|
|
|
139 |
|
|
|
|
3,220 |
|
|
|
2,380 |
|
4.
INVENTORY
|
|
December
31, 2021 |
|
|
June
30, 2022 |
|
|
|
SGD’000 |
|
|
SGD’000 |
|
Raw
materials |
|
|
1,980 |
|
|
|
4,534 |
|
Work-in-progress |
|
|
516 |
|
|
|
3,066 |
|
Finished
goods |
|
|
61 |
|
|
|
124 |
|
|
|
|
2,557 |
|
|
|
7,724 |
|
5.
FINANCIAL INSTRUMENT
The
Financial instrument is key management insurance policy. The fair value of the key management insurance policy is determined by reference
to the surrender cash value of the insurance policy at the end of each of the reporting period, which is primarily based on the performance
of the underlying investment portfolio together with the guaranteed minimum returns of 1.5% per annum. The fair value measurement of
the key management insurance contract has been categorized as a Level 3 fair value based on the inputs to the valuation technique used
and is positively correlated to the surrender cash value that is valued by the policy underwriter at the end of each reporting period.
The
following table shows a reconciliation from the opening balances to the ending balances for Level 3 fair value:
|
|
December
31, 2021 |
|
|
June
30, 2022 |
|
|
|
SGD’000 |
|
|
SGD’000 |
|
As
of January 1, |
|
|
240 |
|
|
|
243 |
|
Change
in fair value recognized in profit or loss |
|
|
3 |
|
|
|
9 |
|
As
of December 31/June 30 |
|
|
243 |
|
|
|
252 |
|
6.
PROPERTY, PLANT AND EQUIPMENT, NET
Property,
plant and equipment, net, consists of the following:
|
|
December
31, 2021 |
|
|
June
30, 2022 |
|
|
|
SGD’000 |
|
|
SGD’000 |
|
Leasehold
buildings and improvements |
|
|
7,523 |
|
|
|
7,523 |
|
Right-of-use
assets |
|
|
1,592 |
|
|
|
1,665 |
|
Plant
and machinery |
|
|
6,157 |
|
|
|
6,216 |
|
Furniture
and fittings |
|
|
3,101 |
|
|
|
3,237 |
|
Subtotal |
|
|
18,373 |
|
|
|
18,641 |
|
Less:
accumulated depreciation |
|
|
(9,392 |
) |
|
|
(9,789 |
) |
Property,
plant and equipment, net |
|
|
8,981 |
|
|
|
8,852 |
|
Depreciation
expense was approximately SGD$258,000 and SGD$293,000 for the six months period ended June 30, 2021 and 2022, respectively.
7.
RIGHT-OF-USE (“ROU”) ASSETS AND LEASE PAYABLE
The
right-of-use assets relate to leases of industrial lands in Singapore and certain plant and machinery and motor vehicles under a number
of leases.
The
Group recognized operating lease ROU assets and lease liabilities as follows:
|
|
December
31, 2021 |
|
|
June
30, 2022 |
|
|
|
SGD’000 |
|
|
SGD’000 |
|
Operating
lease ROU asset |
|
|
1,180 |
|
|
|
1,289 |
|
|
|
December
31, 2021 |
|
|
June
30, 2022 |
|
|
|
SGD’000 |
|
|
SGD’000 |
|
Operating
lease liabilities |
|
|
|
|
|
|
|
|
Current
portion |
|
|
158 |
|
|
|
195 |
|
Non-current
portion |
|
|
1,395 |
|
|
|
1,464 |
|
Total |
|
|
1,553 |
|
|
|
1,659 |
|
As
of June 30, 2022, future minimum lease payments under the non-cancelable operating leases are as follows:
Future
payment |
|
SGD’000 |
|
2023 |
|
|
266 |
|
2024 |
|
|
252 |
|
2025 |
|
|
248 |
|
2026 |
|
|
155 |
|
2027 |
|
|
108 |
|
Thereafter |
|
|
937 |
|
|
|
|
1,966 |
|
The
following summarizes other supplemental information about the Company’s operating lease as of June 30, 2022:
Weighted average discount rate | |
| 4.67 | % |
Weighted average remaining lease term (years) | |
| 14.5 | |
8.
DEFERRED FINANCING COSTS
The
Company complies with the requirement of the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A —
“Expenses of Offering”. Deferred offering costs consist of underwriting, legal and other expenses incurred through the balance
sheet date that are directly related to the intended IPO. Deferred offering costs will be charged to shareholders’ equity upon
the completion of the IPO. Should the IPO prove to be unsuccessful, these deferred costs, as well as additional expenses to be incurred,
will be charged to operations. As of December 31, 2021, the Company capitalized approximately SGD1,321,000. Such costs will be
deferred until the closing of the IPO, at which time the deferred costs will be offset against the offering proceeds.
As
of June 30, 2022, the deferred financing costs are offset against the offering proceeds in the additional paid-in capital.
9.
BANK LOANS
The
bank loans as of December 31, 2021 and June 30, 2022 are set out below:
Bank loans | |
Currency | | |
Period | | |
Interest rate | |
Third Party guarantee | |
Director’s Personal guarantee | | |
Carrying amount | |
| |
| | | |
| | | |
| |
| |
| | | |
| SGD’000 | |
Secured floating rate bank loans | |
| SGD | | |
| 2021 - 2026 | | |
SIBOR+1.25% to +1.5% | |
NIL | |
| | | |
| 9,692 | |
| |
| USD | | |
| 2029 | | |
London Inter Bank Offer Rate +1.25% | |
NIL | |
| | | |
| 186 | |
December 31, 2021 | |
| | | |
| | | |
| |
| |
| 3,430 | | |
| 9,878 | |
| |
| | | |
| | | |
| |
| |
| | | |
| | |
Secured floating rate bank
loans | |
| SGD | | |
| 2022 - 2026 | | |
SIBOR+1.25% to +1.5% | |
NIL | |
| | | |
| 9,980 | |
| |
| USD | | |
| 2029 | | |
London Inter Bank Offer Rate +1.25% | |
NIL | |
| | | |
| 163 | |
June 30, 2022 | |
| | | |
| | | |
| |
| |
| 3,430 | | |
| 10,143 | |
Bank loans | |
Carrying amount | | |
Within 1 year | | |
2022 | | |
2023 | | |
2024 | | |
2025 | | |
Thereafter | |
| |
SGD’000 | | |
| | |
| | |
| | |
| | |
| | |
| |
Secured floating rate bank loans | |
| 9,692 | | |
| 5,433 | | |
| 436 | | |
| 198 | | |
| 180 | | |
| 180 | | |
| 3,265 | |
| |
| 186 | | |
| 24 | | |
| 24 | | |
| 24 | | |
| 24 | | |
| 24 | | |
| 66 | |
December 31, 2021 | |
| 9,878 | | |
| 5,457 | | |
| 460 | | |
| 222 | | |
| 204 | | |
| 204 | | |
| 3,331 | |
| |
Carrying amount | | |
Within 1 year | | |
2023 | | |
2024 | | |
2025 | | |
2026 | | |
Thereafter | |
Secured floating rate bank loans | |
| 9,980 | | |
| 5,932 | | |
| 334 | | |
| 180 | | |
| 180 | | |
| 90 | | |
| 3,264 | |
| |
| 163 | | |
| 24 | | |
| 24 | | |
| 24 | | |
| 24 | | |
| 24 | | |
| 43 | |
June 30, 2022 | |
| 10,143 | | |
| 5,956 | | |
| 358 | | |
| 204 | | |
| 204 | | |
| 114 | | |
| 3,307 | |
10.
ACCOUNTS PAYABLE, ACCRUALS AND OTHER CURRENT LIABILITIES
Account
Payable, accrued expenses and other liabilities consists of the following:
| |
December 31, 2021 | | |
June 30, 2022 | |
| |
SGD’000 | | |
SGD’000 | |
Accounts Payable | |
| 1,916 | | |
| 1,887 | |
Payroll payable | |
| 196 | | |
| 26 | |
Payable to other services | |
| 146 | | |
| - | |
Deposits | |
| 7 | | |
| 7 | |
Others | |
| 25 | | |
| 16 | |
| |
| 2,290 | | |
| 1,936 | |
11.
WARRANTY LIABILITIES
| |
December 31, 2021 | | |
June 30, 2022 | |
| |
SGD’000 | | |
SGD’000 | |
As of January 1, | |
| 28 | | |
| 22 | |
Additional accrual | |
| 22 | | |
| - | |
Utilized | |
| (28 | ) | |
| - | |
As of December 31/June 30 | |
| 22 | | |
| 22 | |
The
warranty for machines sold typically covers a 12-month period from the date on which the machines are delivered and accepted by the customers.
The warrant liability is based on estimates made from historical warranty data associated with similar products and services. The Company
expects to make use of the accrued liability over the next operating period.
12.
LOAN FROM CONTROLLING SHAREHOLDER
The
amount of loan from controlling shareholder is non-trade, unsecured, interest-free and repayable on demand.
13.
DEFERRED TAX ASSETS/ LIABILITIES
| |
December 31, 2021 | | |
June 30, 2022 | |
| |
SGD’000 | | |
SGD’000 | |
Deferred tax assets | |
| 163 | | |
| 163 | |
Deferred tax liabilities | |
| (151 | ) | |
| (151 | ) |
| |
| 12 | | |
| 12 | |
Following
are the major deferred tax assets and liabilities recognized by the Company:
| |
Property,
plant and
equipment | | |
Provisions | | |
Tax losses | | |
Total | |
| |
SGD’000 | | |
SGD’000 | | |
SGD’000 | | |
SGD’000 | |
As of January 1, 2021 | |
| (193 | ) | |
| 5 | | |
| 163 | | |
| (25 | ) |
Recognized in statements of income | |
| 37 | | |
| - | | |
| - | | |
| 37 | |
As of December 31, 2021 | |
| (156 | ) | |
| 5 | | |
| 163 | | |
| 12 | |
| |
| | | |
| | | |
| | | |
| | |
As of January 1, 2022 | |
| (156 | ) | |
| 5 | | |
| 163 | | |
| 12 | |
Recognized in statements of income | |
| - | | |
| - | | |
| - | | |
| - | |
As of June 30, 2022 | |
| (156 | ) | |
| 5 | | |
| 163 | | |
| 12 | |
14.
EQUITY
For
the sake of undertaking a public offering of the Company’s ordinary shares, the Company has performed a series of re-organizing
transactions resulting in 12,000,000 shares of ordinary shares outstanding that have been retroactively restated to the beginning of
the first period presented. The Company only has one single class of ordinary shares that are accounted for as permanent equity.
On
April 22, 2022, the Company issued 3,020,000 ordinary shares pursuant to the initial public offering.
15.
REVENUES BY PRODUCT AND GEOGRAPHY
| |
For the six months period
ended June 30, | |
| |
2021 | | |
2022 | |
| |
| SGD’000 | | |
| SGD’000 | |
Sales of cleaning systems and other equipment | |
| 6,271 | | |
| 3,612 | |
Provision of centralized dishware washing and general cleaning services | |
| 2,559 | | |
| 3,491 | |
Leasing of dishware washing equipment | |
| 78 | | |
| 94 | |
| |
| 8,908 | | |
| 7,197 | |
An
operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses,
and is identified on the basis of the internal financial reports that are provided to and regularly reviewed by the Company’s chief
operating decision maker in order to allocate resources and assess performance of the segment.
In
accordance with ASC 280, Segment Reporting, operating segments are defined as components of an enterprise about which separate financial
information is available that is evaluated regularly by the chief operating decision maker (“CODM”), or decision making group,
in deciding how to allocate resources and in assessing performance. The Company uses the “management approach” in determining
reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s
chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s
reportable segments. Management, including the chief operating decision maker, reviews operation results by the revenue of different
services. Based on management’s assessment, the Company has determined that it has two operating segments as defined by ASC 280
as follow:
1.
Sale of cleaning systems and other equipment business (‘‘Cleaning systems’’): Manufacturing, selling and
servicing of cleaning systems, component and parts.
2.
Provision of centralized dishware washing and ancillary services (‘‘Dishware washing services’’): Provision
of centralized dishware washing services and leasing of dishware washing equipment.
The
following tables present summary information by product type for the six months period ended 2021 and 2022, respectively:
| |
For the six months period
ended June 30, 2022 | |
| |
Cleaning
Systems | | |
Dishware
Washing
Services | | |
Total | |
| |
| SGD’000 | | |
| SGD’000 | | |
| SGD’000 | |
Revenue | |
| 3,612 | | |
| 3,585 | | |
| 7,197 | |
Gross Profit | |
| 1,091 | | |
| 550 | | |
| 1,641 | |
| |
For the six months period
ended June 30, 2021 | |
| |
Cleaning
Systems | | |
Dishware
Washing
Services | | |
Total | |
| |
| SGD’000 | | |
| SGD’000 | | |
| SGD’000 | |
Revenue | |
| 6,271 | | |
| 2,637 | | |
| 8,908 | |
Gross Profit | |
| 1,727 | | |
| 262 | | |
| 1,989 | |
In
the following table, revenue is disaggregated by the geographical locations of customers.
| |
For the six months period
ended June 30, 2022 | |
| |
Cleaning
Systems | | |
Dishware
Washing
Services | | |
Total | |
| |
| SGD’000 | | |
| SGD’000 | | |
| SGD’000 | |
Geographical location: | |
| | | |
| | | |
| | |
Singapore | |
| 898 | | |
| 3,585 | | |
| 4,483 | |
Malaysia | |
| 476 | | |
| - | | |
| 476 | |
Other countries | |
| 2,238 | | |
| - | | |
| 2,238 | |
| |
| 3,612 | | |
| 3,585 | | |
| 7,197 | |
| |
For the six months period
ended June 30, 2021 | |
| |
Cleaning
Systems | | |
Dishware
Washing
Services | | |
Total | |
| |
| SGD’000 | | |
| SGD’000 | | |
| SGD’000 | |
Geographical location: | |
| | | |
| | | |
| | |
Singapore | |
| 351 | | |
| 2,637 | | |
| 2,988 | |
Malaysia | |
| 4,603 | | |
| - | | |
| 4,603 | |
Other countries | |
| 1,317 | | |
| - | | |
| 1,317 | |
| |
| 6,271 | | |
| 2,637 | | |
| 8,908 | |
In
the following table, revenue is disaggregated by the timing of revenue recognition.
| |
For the six months period
ended June 30, 2022 | |
| |
Cleaning
Systems | | |
Dishware
Washing
Services | | |
Total | |
| |
| SGD’000 | | |
| SGD’000 | | |
| SGD’000 | |
Timing of revenue recognition: | |
| | | |
| | | |
| | |
Point in time | |
| 3,612 | | |
| - | | |
| 3,612 | |
Over time | |
| - | | |
| 3,585 | | |
| 3,585 | |
| |
| 3,612 | | |
| 3,585 | | |
| 7,197 | |
| |
For the six months period
ended June 30, 2021 | |
| |
Cleaning
Systems | | |
Dishware
Washing
Services | | |
Total | |
| |
SGD’000 | | |
SGD’000 | | |
SGD’000 | |
Timing of revenue recognition: | |
| | | |
| | | |
| | |
Point in time | |
| 6,242 | | |
| - | | |
| 6,242 | |
Over time | |
| 29 | | |
| 2,637 | | |
| 2,666 | |
| |
| 6,271 | | |
| 2,637 | | |
| 8,908 | |
16.
INCOME TAX EXPENSES
Caymans
and BVIs
The
Company and its subsidiary, JE Cleantech International Ltd. are domiciled in the Cayman Islands and the British Virgin Islands, respectively.
Both localities currently enjoy permanent income tax holidays; accordingly, the Company and JE Cleantech International Ltd. do not accrue
for income taxes.
Singapore
The
Company’s subsidiary, JCS-Echigo Pte. Ltd. and Hygieia Warewashing Pte. Ltd are considered Singapore tax resident enterprises under
Singapore tax laws; accordingly, they are subject to enterprise income tax on their taxable income as determined under Singapore tax
laws and accounting standards at a statutory tax rate of 17% (2021: 17%).
The
income tax provision consists of the following components:
| |
For
the six months period
ended
June 30, | |
| |
2021 | | |
2022 | |
| |
| SGD’000 | | |
| SGD’000 | |
Income tax: | |
| | | |
| | |
Current year | |
| 96 | | |
| - | |
Current Income Tax Expense | |
| 96 | | |
| - | |
| |
| | | |
| | |
Deferred tax: | |
| | | |
| | |
Current year | |
| 61 | | |
| - | |
Deferred Income Tax Expense | |
| 61 | | |
| - | |
Income Tax Expense | |
| 157 | | |
| - | |
The
income tax expense varied from the amount of income tax expense determined by applying the Singapore income tax rate of 17% (2021: 17%)
to profit before income tax as a result of the following differences:
| |
For the six months period
ended June 30, | |
| |
2021 | | |
2022 | |
| |
SGD’000 | | |
SGD’000 | |
Income before tax expenses: | |
| 773 | | |
| 147 | |
| |
| | | |
| | |
Tax at the domestic income tax rate | |
| 131 | | |
| 25 | |
Tax effect of expenses that are not deductible in determining taxable profit | |
| 26 | | |
| - | |
Tax effect of non-taxable incomes | |
| - | | |
| (25 | ) |
Income Tax Expense | |
| 157 | | |
| - | |
As
of December 31, 2021 and June 30, 2022, the one of the Company’s subsidiaries in Singapore, namely Hygieia Warewashing Pte Ltd
had net operating loss carryforwards of approximately SGD959,000. As of December 31, 2021 and June 30, 2022, deferred tax assets from
the net operating loss carryforwards amounted to SGD163,000, and the Group has provided a valuation allowance as it has concluded that
it is more likely than not that these net operating losses would not be utilized in the future.
17.
RELATED PARTY TRANSACTIONS
On
September 24, 2021, prior to the reorganization and the Company’s initial public offering, the Company declared a dividend of SGD
2.9 million (approximately US$2.1 million) payable in cash to its shareholders—JE Cleantech Global Limited, which is wholly-owned
by Ms. Bee Yin Hong, the Company’s controlling shareholder, and Triple Business Limited. The dividend was subsequently paid in
full. Of this amount, SGD 2.5 million (approximately US$1.9 million) was paid to JE Cleantech Global Limited and SGD 406,000 (approximately
US$0.3 million) was paid to Triple Business Limited. On October 5, 2021, the Company entered into a loan facility agreement with Ms.
Bee Yin Hong, the Company’s controlling shareholder, for a revolving loan facility of up to US$1.1 million for general working
capital and general corporate purposes, including the payment of expenses related to the Company’s initiative to raise capital
through an initial public offering and simultaneous listing of the Company’s ordinary shares on a globally recognized stock exchange.
Ms. Hong and the Company entered into a subsequent revolving loan facility on October 6, 2021 in
the amount of US$0.7 million to be used for the same purposes. The total amount of the loan of approximately US$1.8 million from
Ms. Bee Yin Hong, the Company’s controlling shareholder, is non-trade, unsecured, interest-free and payable on demand.
Other
than the above-mentioned disclosure, there were no other significant outstanding balances due from nor due to related parties as of December
31, 2021 and June 30, 2022 and no other significant related party transactions conducted during the year ended December 31, 2021, and
during the six months ended June 30, 2022.
18.
CONCENTRATIONS AND RISKS
Concentrations
Financial
instruments that potentially expose the Company to concentrations of credit risk consist primarily of accounts receivable. The Company
conducts credit evaluations of its customers, and generally does not require collateral or other security from them. The Company evaluates
its collection experience and long outstanding balances to determine the need for an allowance for doubtful accounts. The Company conducts
periodic reviews of the financial condition and payment practices of its customers to minimize collection risk on accounts receivable.
The
following table sets forth a summary of single customers who represent 10% or more of the Company’s total revenue:
| |
For the six months period
ended 30 June, | |
| |
2021 | | |
2022 | |
| |
| SGD’000 | | |
| SGD’000 | |
Amount of the Company’s revenue | |
| | | |
| | |
Customer A | |
| 4,554 | | |
| * | |
Customer B | |
| 1,292 | | |
| 2,289 | |
Customer C | |
| * | | |
| 938 | |
Customer D | |
| * | | |
| * | |
*Revenue
from relevant customer was less than 10% of the Group’s total revenue for the respective period.
The
following table sets forth a summary of single customers who represent 10% or more of the Company’s total accounts receivable:
| |
As of December 31,
2021 | | |
As of June 30,
2022 | |
| |
SGD’000 | | |
SGD’000 | |
Amount of the Company’s accounts receivable | |
| | | |
| | |
Customer A | |
| 802 | | |
| ** | |
Customer B | |
| 898 | | |
| 850 | |
Customer C | |
| ** | | |
| 304 | |
Customer D | |
| 393 | | |
| ** | |
**Account
receivable from relevant customer was less than 10% of the Group’s total accounts receivable for the respective period.
The
following table sets forth a summary of suppliers who represent 10% or more of the Company’s total purchases:
| |
For the six months period ended June 30, | |
| |
2021 | | |
2022 | |
| |
| SGD’000 | | |
| SGD’000 | |
Amount of the Company’s purchase | |
| | | |
| | |
Supplier A | |
| 634 | | |
| 1,126 | |
Supplier B | |
| 741 | | |
| # | |
Supplier C | |
| # | | |
| 1,133 | |
#
Purchase from relevant supplier was less than 10% of the Group’s total purchase for the respective period.
The
following table sets forth a summary of single supplier who represent 10% or more of the Company’s total accounts payable:
| |
As of December 31, 2021 | | |
As
of June 30, 2022 | |
| |
SGD’000 | | |
SGD’000 | |
Amount of the Company’s accounts payable | |
| | | |
| | |
Supplier A | |
| ## | | |
| 272 | |
Supplier B | |
| ## | | |
| ## | |
Supplier C | |
| 320 | | |
| 368 | |
##
Accounts payable from relevant supplier was less than 10% of the Group’s total accounts payable for the respective period.
Credit
Risk
Credit
risk is the potential financial loss to the Company resulting from the failure of a customer or a counterparty to settle its financial
and contractual obligations to the Company, as and when they fall due. As the Company does not hold any collateral, the maximum exposure
to credit risk is the carrying amounts of trade and other receivables (exclude prepayments), financial instrument and cash and bank deposits
presented on the unaudited consolidated balance sheets. The Company has no other financial assets which carry significant exposure to
credit risk.
Liquidity
Risk
Liquidity
risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that
are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as
possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the Company’s reputation.
Typically,
the Company ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 60 days, including the
servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted,
such as natural disasters.
19.
COMMITMENTS AND CONTINGENCIES
Contingencies
In
the ordinary course of business, the Company may be subject to legal proceedings regarding contractual and employment relationships and
a variety of other matters. The Company records contingent liabilities resulting from such claims, when a loss is assessed to be probable,
and the amount of the loss is reasonably estimable. In the opinion of management, there were no pending or threatened claims and litigation
as of June 30,2022 and through the issuance date of these consolidated financial statements.
20.
SUBSEQUENT EVENTS
The
Company has assessed all events from June 30, 2022 through August 31, 2022, which is the date that these consolidated financial
statements are available to be issued, unless as disclosed below, there are not any material subsequent events that require disclosure
in these consolidated financial statements other than events detailed below.
The director’s personal guarantee to the bank loans are discharged
and replaced by two corporate guarantees issued by the Company and JE Cleantech International Limited by end August 2022.
JE Cleantech (NASDAQ:JCSE)
Historical Stock Chart
From May 2024 to Jun 2024
JE Cleantech (NASDAQ:JCSE)
Historical Stock Chart
From Jun 2023 to Jun 2024