Unpacking the Numbers: A Deep Dive into Performance

Overall Financial Performance: Quarter-on-Quarter and Year-to-Date

REDTONE’s Q3 FY2025 results show a fascinating interplay of revenue pressures and profit resilience. While the quarter saw a decrease in top-line figures compared to the same period last year, the year-to-date performance paints a more robust picture of profitability.

Current Quarter (Q3 FY2025) vs. Same Period Last Year (Q3 FY2024)

For the quarter, revenue decreased by 33.46% to RM66.58 million, primarily due to lower contributions from the Managed Telecommunication Network Services (MTNS) segment. Despite this, profit from operations remained relatively stable, declining by only 0.26%. Profit before tax saw a modest decrease of 3.76%, influenced by higher finance costs and lower investment-related income. However, profit after tax actually increased by 6.79%, leading to a higher basic earnings per share.

Year-to-Date (9 months ended 31 March 2025) vs. Same Period Last Year

Year-to-date, REDTONE’s revenue saw a minimal decrease of 1.32% to RM241.72 million, primarily due to lower revenue from the telecommunication segment. However, the nine-month profit before tax significantly improved by 9.36% to RM45.54 million. This notable increase was largely driven by a fair value gain of RM2.85 million from investments, which contrasts with a fair value loss incurred in the same period last year. Consequently, profit after tax for the nine months surged by 16.20% to RM33.98 million, pushing basic earnings per share up by almost 18%.

Current Quarter (Q3 FY2025) vs. Preceding Quarter (Q2 FY2025)

Compared to the preceding quarter, Q3 FY2025 revenue declined by 11.01%, again mainly due to lower contributions from the MTNS segment. However, the profitability metrics saw a remarkable surge. Profit from operations increased by 135.77%, and profit before tax nearly doubled, jumping by 97.86%. This impressive quarterly profit rebound was primarily driven by higher gross profit contributions from both the MTNS and Cloud & IOT segments.

Segmental Performance: A Closer Look

REDTONE operates through three key segments:

• Telecommunication Services: For Q3 FY2025, this segment reported a revenue of RM25.35 million and a profit of RM5.07 million. For the nine-month period, it contributed RM78.70 million in revenue and RM23.35 million in profit.
• Managed Telecommunication Network Services (MTNS): This segment’s Q3 FY2025 revenue was RM30.53 million. Interestingly, it recorded a loss of RM5.15 million for the quarter. However, for the nine-month period, MTNS remained a significant revenue driver with RM142.34 million and a profit of RM22.05 million. The quarterly loss despite contributing to gross profit improvement suggests a shift in cost structures or project phases within the quarter.
• Cloud and Internet of Things (Cloud & IOT): This segment showed strong profitability in Q3 FY2025 with revenue of RM10.70 million and a healthy profit of RM8.07 million. Over the nine months, its revenue reached RM20.68 million with a profit of RM1.33 million.

Financial Health and Cash Flow

Beyond the income statement, REDTONE’s balance sheet and cash flow statement offer crucial insights into its financial robustness:

• Net Assets per Share: As at 31 March 2025, net assets per share stood at 37.79 sen, a slight decrease from 38.13 sen as at 30 June 2024.
• Cash and Bank Balances: The group’s cash and bank balances decreased to RM50.90 million from RM63.48 million at the end of the previous financial year.
• Operating Cash Flow: A significant highlight is the net cash generated from operating activities for the nine-month period, which soared to RM75.54 million. This marks a remarkable turnaround from a net cash outflow of RM10.86 million in the same period last year, indicating strong operational efficiency and cash conversion.
• Trade and Other Receivables: This category saw a substantial increase to RM140.62 million from RM80.46 million, largely attributed to progress billings for government projects under the MTNS segment, which typically involve large-scale telecom engineering projects.
• Loans and Borrowings: Total loans and borrowings increased to RM9.48 million from RM4.93 million, mainly due to an increase in current portion of margin facility.
• Non-current Other Payables: A positive development is the reduction of non-current other payables from RM20.17 million to zero, suggesting a settlement or reclassification of these liabilities.