DEAR SHAREHOLDERS

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On behalf of the Board of Directors, we are pleased to present the Annual Report of KTMG Limited (“KTMG” or the “Company”, and together with its subsidiaries, the “Group”) for the financial year ended 31 December 2023 (“FY2023”).

FY2023 proved to be another demanding year, with global growth remaining sluggish amidst heightened geopolitical tensions, economic uncertainties, elevated interest rates, and inflationary pressures. These multifaceted factors dampened consumer demand and impeded global trade.

Over the past few years, we have strategically invested in laying a solid foundation for future growth. Our early adoption of automation and new technologies has positioned us well to adapt to the changing trends and meet the demands of our industry and customers. The lean manufacturing methodologies, alongside the adoption of General Sewing Data (GSD) software in the previous year, have facilitated the seamless integration of all stages of our manufacturing processes. This integration has enabled us to track and monitor our entire manufacturing workflow accurately and promptly. As a result, we reduced product turnaround times, enhancing overall operational efficiency.

With these advancements, we have successfully broadened our customer base beyond the traditional customer segment, comprising casual wear, loungewear, and pyjamas, venturing into the thriving athleisure market. This strategic move marks a significant milestone for the Group, with our first international athleisure customer secured in the United States (“US”), cementing our foothold in this growing segment. Although we faced initial challenges, we have effectively demonstrated our worth and capabilities, leading to a steady increase in recurring orders from the new athleisure customer. This achievement highlights our unwavering commitment to excellence and relentless pursuit of success in the global market.

 

FINANCIAL HIGHLIGHTS

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For FY2023, the Group recorded revenue of S$88.7 million, a 16.5% decrease year-on-year. This decline was primarily due to lower apparel orders placed by existing customers in the United Kingdom, Canada, and Europe, resulting in geographical revenues for these regions dropping by S$13.4 million, S$7.4 million, and S$2.7 million, respectively, impacted by weakened consumer demand as the purchasing power of consumers declined as a result of rising inflation and interest rates, particularly in the first half of 2023 (“1H2023”). Nevertheless, the decrease was partially offset by an increase in revenue contribution from the US attributable to sales from the recently secured athleisure customer in the US.

Gross profit margin narrowed by 6.1 percentage points from 15.2% in FY2022 to 9.1% in FY2023 as the Group’s performance was affected by a lower revenue generated in 1H2023, which resulted in diseconomies of scale and significant initial one-off costs incurred to fulfil a substantial maiden order from the new athleisure customer with a tight delivery schedule during the financial year. Due to the tight delivery schedule, the Group experienced higher salaries, production-related costs, and freight and delivery charges on the order concerned. Consequently, the Group recorded a net loss attributable to shareholders of S$2.0 million in FY2023.

 

THE WAY FORWARD

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As we look ahead, the Group is cautiously optimistic of an improved outlook, with a potential rebound in consumer demand. With a firm order book secured for the first half of 2024, we will persist in enhancing operational efficiencies and implementing cost rationalisation measures while exercising financial prudence, all in our concerted effort to improve our top line and profitability.

We remain steadfast in our commitment to ongoing skill development and adopting cutting-edge technologies, building upon the foundations established in lean manufacturing, General Sewing Data software, and automation in recent years, to continuously improve our manufacturing and work processes to achieve maximum operational efficiencies. At the same time, we aim to increase cost efficiency by consolidating and rationalising our supplier network, simplifying supplier management processes for greater efficiency and better control over material costs and quality standards.

 

As we forge ahead, we intend to stay at the forefront of change, delivering products and services that consistently exceed expectations in an ever-evolving market landscape. We are committed to maintaining our status as the preferred manufacturer, particularly for the renowned international apparel brands we have recently secured. We will prioritise timely and efficient fulfilment of our order book to ensure we meet customer requirements, guaranteeing their satisfaction. In line with our strategic shift to grow the athleisure segment, we will intensify our marketing efforts to secure partnerships with more renowned international athleisure brands to strengthen our customer base. Additionally, we will actively pursue new customers in our existing and new geographical markets to boost our order book.

Looking ahead, we anticipate the ongoing volatility and a less predictable environment to persist. We will maintain a prudent approach as we pursue and evaluate opportunities while continuing to evolve to expand our business and operations. To strengthen our production capabilities and strategically position the Group to capitalise on growth opportunities once business sentiment improves, we plan to look for additional manufacturing partnerships with carefully selected apparel manufacturers in Vietnam. During the year, we expanded downstream with the establishment of a subsidiary in Malaysia to manage women’s apparel retail operations under our own brands. As we embark on this new venture, we will closely monitor its progress, especially during the initial stages of our expansion.

APPRECIATION

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On behalf of the Board, we would like to express our sincere gratitude to the management and staff for their efforts and hard work over the past year. Our appreciation also goes to our fellow Board members for contributing their invaluable time and expertise.

Mr Yap Boh Pin and Mr Goh Yeow Tin, having served on the Board of Directors since 1 April 2004 and 1 October 2007, respectively, have indicated that they will retire at the forthcoming Annual General Meeting. On behalf of the Board, we thank them for their invaluable guidance and contributions to the Group and wish them every success in their future endeavours. The Board is proposing the appointment of Mr Ooi Jit Huat and Mr Lau Ping as Independent Directors at the forthcoming Annual General Meeting. With their diverse expertise and experience, we are confident that they will contribute invaluable insights to our Group.

Lastly, we would also like to thank our shareholders, business partners, and customers for your confidence in us. With your support, we look forward to sharing more successes in the year ahead.

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Lim Siau Hing
Executive Chairman

Damien Lim Vhe Kai
Executive Director 
Chief Executive Officer