OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following discussion of our financial condition and results of operations is based upon and should be read in conjunction with our consolidated financial statements and their related notes included in this annual report. This annual report contains forward-looking statements. In evaluating our business, you should carefully consider the information provided under the caption "Item 3. Key Information-D. Risk Factors" in this annual report. We caution you that our business and financial performance are subject to substantial risks and uncertainties.
History and Overview
Our Company was incorporated on December 29, 2020 as a private company limited by shares under the name "Primech Holdings Pte. Ltd." On May 11, 2023, our Company changed its corporate name to "Primech Holdings Ltd.", so as to remove the designation "Pte." which is used only for privately held companies under Singapore law, and adopted a constitution for a public company under Singapore law.
As of March 31, 2026, our Company is a holding company that owns 100% of Primech A&P, Maint-Kleen, HomeHelpy, Princeston International, Primech AI Holding Limited, Primech Hong Kong and Primech USA Inc. Primech A&P owns 100% of our Malaysian subsidiary My All Services. Our Company also owns 80% of CSG and 51% of Primech AI Investments and Primech AI Pte. Ltd.. Our Malaysian subsidiary, My All Services, has voluntarily applied to the Companies Commission of Malaysia ("CCM") to be struck off the register of companies under the Companies Act 2016 of Malaysia. CCM has responded by issuing a notice on April 15, 2026 of its intention to strike off My All Services. Interested parties may lodge objections within the prescribed 30-day statutory period. If no objection is received and CCM proceeds with the striking-off, a notice of dissolution will be published in the Malaysian Government Gazette, upon which My All Services will be deemed dissolved. As of the date hereof, My All Services has not yet been struck off the register.
We are an established facilities and stewarding services provider in the public and private sectors. We operate primarily in Singapore which operations contributed approximately $74.0 million or 99.6% and $77.7 million or 99.7% of our total revenue for FY 2025 and FY 2026, respectively, with the remainder from our operations in sales of products and sales or lease of robots.
Concentration of Risk
Substantially all of our revenue was derived from our operations in Singapore and a substantial portion of our revenue was derived from our facilities services operations (approximately $58.6 million or 78.8% during FY 2025 and $63.9 million or 82.0% during FY 2026). Any adverse circumstances affecting the Singapore market, such as an economic recession, epidemic outbreak or natural disaster or other adverse incidents may adversely affect our business, financial condition, results of operations and prospects. Any downturn in our industry that results in any postponement, delay or cancellation of our contracts or in any delay in recovery of our receivables is likely to have an adverse effect on our business and profitability.
For the year ended March 31, 2025, one customer accounted for 15.5% of our total revenue and one customer accounted for 21.1% of our accounts receivable.
For the year ended March 31, 2026, one customer accounted for 16.3% of our total revenue and two customers accounted for an aggregate of 36.9% our accounts receivable.
Critical Accounting Policies
Management's discussion and analysis of our results of operations, liquidity and capital resources is based upon our financial statements. We prepare our financial statements in conformity with GAAP. Certain of our accounting policies require that we apply significant judgment in determining estimates and assumptions for calculating estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. We use, in part, our historical experience, terms of existing contracts, observance of trends in the industry and information obtained from independent valuation experts or other outside sources to make our judgments. We cannot assure you that our actual results will conform to our estimates. We regularly evaluate these estimates and assumptions, particularly in areas we consider to be critical accounting estimates, where changes in estimates and assumptions could have a material impact on our results of operations, financial position and, generally to a lesser extent, cash flows.
The following critical accounting policies affect the more significant judgments and estimates used in the preparation of the Company's financial statements.
Use of estimates
The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates. On an ongoing basis, management reviews its estimates and, if deemed appropriate, those estimates are adjusted. Significant estimates include those related to assumptions used in valuing reserves of uncollectible accounts receivable, assumptions used in valuing assets acquired in business acquisitions, impairment testing of goodwill and other long-term assets, the valuation allowance for deferred tax assets, accruals for potential liabilities, and assumptions used in the determination of the Company's liquidity.
Revenue Recognition
The Company recognizes revenue in accordance with FASB Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers ("ASC 606"). The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contract(s), which include (1) identifying the contract or agreement with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. If an entity has a right to invoice a customer for an amount that corresponds directly with performance, it may recognize revenue in the amount invoiced.
The Company provides certain services under contracts that bill customers based on agreed-upon rates. For these contracts, the Company has a right to invoice the customer in an amount that corresponds directly with the value to the customer of the Company's performance completed to date. Accordingly, the Company applies the practical expedient in ASC 606-10-55-18 and recognizes revenue in the amount to which it has a right to invoice, as this amount corresponds directly with the value delivered to the customer. As such, the Company does not disclose the aggregate amount of the transaction price allocated to unsatisfied performance obligations for these contracts.
For any service contracts where the performance obligation is not completed, deferred revenue is recorded for any payments received in advance of the performance obligation.
Government subsidies
Government subsidies are not recognized until there is reasonable assurance that the Company will comply with the conditions of the subsidy and the Company will receive the subsidy.
Generally, government subsidies fall into two categories: subsidies related to income and subsidies related to assets. Subsidies related to income are recognized in the period that the recognition criteria are met, and are presented as a reduction of the related expense that they are intended to subsidize within operating expenses in the consolidated statements of operations and comprehensive income. Subsidies related to assets are for the purchase, construction or other acquisition of long-lived assets and are recognized as reductions to the capitalized costs of the related assets.
Recent accounting pronouncements
See Note 1 to the financial statements for the discussion of 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 consolidated financial position, statements of operations and cash flows.
Plan of Operation
Currently our Company is primarily a facility services provider, with a focus on general cleaning services. Moving forward, we intend to provide a full suite of services in the facility services sector through constant innovation focusing on automation and digitization.
| A. | Operating Results |
Fiscal Year Ended March 31, 2026 and 2025
The following discussion summarizes our operating results for FY 2026 compared to FY 2025.
| Year Ended March 31, | Change | |||||||||||||||
| (thousand dollars) | 2026 | 2025 | Dollars | Percentage | ||||||||||||
| Revenue | $ | 78,009 | $ | 74,349 | $ | 3,660 | 4.9 | % | ||||||||
| Direct Costs and Expenses | ||||||||||||||||
| Depreciation and amortization | (874 | ) | (910 | ) | 36 | (4.0 | )% | |||||||||
| Employee benefit expense - Salaries | (46,290 | ) | (39,378 | ) | (6,912 | ) | 17.6 | % | ||||||||
| Employee benefit expenses - Other | (8,735 | ) | (9,127 | ) | 392 | (4.3 | )% | |||||||||
| Subcontractor charges | (3,870 | ) | (2,789 | ) | (1,081 | ) | 38.8 | % | ||||||||
| Other expense | (4,926 | ) | (4,619 | ) | (307 | ) | 6.6 | % | ||||||||
| (64,695 | ) | (56,823 | ) | (7,872 | ) | 13.9 | % | |||||||||
| General and administrative Expenses | ||||||||||||||||
| Depreciation and amortization | (2,644 | ) | (3,071 | ) | 427 | (13.9 | )% | |||||||||
| Employee benefit expense | (7,519 | ) | (7,133 | ) | (386 | ) | 5.4 | % | ||||||||
| Consultancy and other professional fees | (1,958 | ) | (3,015 | ) | 1,057 | (35.1 | )% | |||||||||
| Other expense | (2,315 | ) | (2,957 | ) | 642 | (21.7 | )% | |||||||||
| (14,436 | ) | (16,176 | ) | 1,740 | (10.8 | )% | ||||||||||
| Goodwill impairment | - | (291 | ) | 291 | (100.0 | )% | ||||||||||
| Sales and marketing expenses | (864 | ) | (2,007 | ) | 1,143 | (57.0 | )% | |||||||||
| Interest expense | (672 | ) | (789 | ) | 117 | (14.8 | )% | |||||||||
| Income tax expense | (366 | ) | (456 | ) | 90 | (19.7 | )% | |||||||||
| Other operating income (expense), net | 57 | (27 | ) | 84 | 311.0 | % | ||||||||||
| Net loss | $ | (2,967 | ) | $ | (2,220 | ) | $ | (747 | ) | 34.0 | % | |||||
Discussion For the Fiscal Years Ended March 31, 2026 and 2025
Revenue
The Company's revenues for FY 2026 and FY 2025 were approximately $78.0 million and $74.3 million, respectively, representing an increase of approximately 4.9%.
| (thousand dollars) |
For the Years Ended March 31, | |||||||
| Revenue by category | 2026 | 2025 | ||||||
| Facilities services | $ | 63,940 | $ | 58,594 | ||||
| Stewarding services | 6,242 | 8,354 | ||||||
| Cleaning services to offices (tenancy) | 7,563 | 7,089 | ||||||
| Total service revenues from Singapore | 77,745 | 74,037 | ||||||
| Sales of products | 252 | 312 | ||||||
| Leasing of cleaning robots | 12 | - | ||||||
| $ | 78,009 | $ | 74,349 | |||||
Revenue from facilities services increased from approximately $58.6 million for FY 2025 to approximately $63.9 million for FY 2026. The increase was mainly driven by (i) new institutional customers during the reporting period and (ii) increase in revenue from a major Asian aviation hub.
Revenue from stewarding services decreased from approximately $8.4 million for FY 2025 to approximately $6.2 million for FY 2026. The decrease was result from the increase in marketing competition in such segment.
Revenue from cleaning services to offices increased slightly from approximately $7.1 million for FY 2025 to approximately $7.6 million for FY 2026. The increase was mainly due to businesses encouraging their employees to return to office instead of working remotely, resulted increasing in demand of cleaning services.
Direct costs and expenses
Direct costs and expenses for FY 2026 and FY 2025 were approximately $64.7 million and $56.8 million, respectively, representing an approximate increase of 13.9%. Labor costs contributed approximately 85.1% and 85.4% of our direct costs for FY 2026 and FY 2025, respectively, amounting to approximately $55.0 million and $48.5 million, respectively, where employee benefit expense - salaries was the largest component of labor costs for both years. Approximately $2.8 million and $4.1 million in Singapore government grants were netted against our direct costs and expenses in FY 2026 and FY 2025, respectively. The increase of direct costs and expenses was driven by the following items.
Depreciation and amortization
Depreciation and amortization charges relating to direct costs remained stable for FY 2026 and FY 2025, were approximately $874,000 and $910,000, respectively, representing an approximate decrease of 4.0% year over year.
Employee benefit expense
Employee benefit expenses were approximately 85.1% and 85.4% of our direct costs for FY 2026 and FY 2025, respectively. Employee benefit expense mainly represents salaries, contributions to provident fund and allowances paid to employees, of which salaries accounted for the largest portion of employee benefit expenses. Salaries relating to direct costs and expenses for FY 2026 and FY 2025 were approximately $46.3 million and $39.4 million, respectively, representing an approximate increase of 17.6%. The increase in employee benefit expenses mainly result from increase minimum wages under the Progressive Wage Model ("PWM") which resulted in increase in labor costs, as well as decrease in government grants by approximately $1.3 million from $4.1 million in FY 2025 to $2.8 million in FY 2026. Such government grants were netted against our Employee benefit expense - Salaries under direct costs and expenses in FY 2026 and FY 2025 respectively.
Subcontractor charges
Subcontractor charges for FY 2026 and FY 2025 were approximately $3.9 million and $2.8 million, respectively, representing an approximate increase of 38.8%. The increase resulted from increase in service from sub-contractor specialized in waste disposal and pest management.
General and Administrative expenses
General and administrative expenses for FY 2026 and FY 2025 were approximately $14.4 million and $16.2 million, respectively, representing an approximate decrease of 10.8%. Approximately $0.2 million and $0.3 million of government grants were set-off against our general and administrative expenses in FY 2026 and FY 2025, respectively. The decrease in our general and administrative expenses was explained by the following items.
Depreciation and amortization
Depreciation and amortization charges relating to general and administrative expenses for FY 2026 and FY 2025 were approximately $2.6 million and $3.1 million, respectively, representing an approximate decrease of 13.9%. Such increase was driven by reduce in amortization on right-of use assets.
Employee benefit expense
Employee benefit expense mainly represents salaries, contribution to provident fund and allowances paid to employee, which salaries accounted for the majority portion of employee benefit expenses. Salaries relating to general and administrative expenses for FY 2026 and FY 2025 were approximately $7.5 million and $7.1 million, respectively, representing an approximate increase of 5.4%. The increase was result from salary adjustment to back-office staff to align salaries with the current market rates and reduce in government grants that were netted against our Employee benefit expense - Salaries in general and administrative expenses.
Consultancy and other professional fees
Other professional fees for FY 2026 and FY 2025 were approximately $2.0 million and $3.1 million, respectively, representing an approximate decrease of 35.1%. The decrease mainly resulted from less consultants and professionals engaged during the year as certain business plans or projects that requires assistants from consultants and professionals has completed during the year.
Sales and Marketing Expenses
Sales and marketing expenses mainly represent advertising expenses; such charges for FY 2026 and FY 2025 were approximately $0.9 million and $2.0 million, respectively, representing an approximate decrease of 57.0%. The decrease in sales and marketing expenses was primarily attributable to the Company's more targeted and disciplined approach to advertising spend during FY 2026.
Other operating income (expense), net
Other operating income, net, for FY 2026 were approximately $57,000 and other operating expense, net, for FY 2025 were approximately $27,000. Such change was mainly represent gain on disposal of fixed assets and bad-debt recovery, they are partly off-set by other operating expenses such unrealized exchange loss and loss on de-recognition of subsidiary.
Interest expense
Interest expense mainly represent interest on bank borrowings and lease liabilities; such charges for FY 2026 and FY 2025 were approximately $672,000 and $789,000, respectively, representing an approximate decrease of 14.8%. Such decrease was driven by decrease in interest rate.
Income tax expense
Income tax expense for FY 2026 and FY2025 was approximately $366,000 and approximately $456,000, the decrease mainly resulted from reduce in taxable income of the year.
Discussion For the Fiscal Years Ended 31 March, 2026 and 2025
Liquidity and Capital Resources
The Group and a registered financial institution under the Monetary Authority of Singapore (the "Lender") are parties to a temporary bridge loan dated October 21, 2020 (supplemented May 5, 2021, August 3, 2021, July 26, 2022 and October 25, 2024). The aggregate amount of this loan outstanding at March 31, 2025 is approximately $0.9 million (S$1.3 million). This loan is fully repaid during the year ended March 31, 2026.
The Group and the Lender are parties to four overdraft facilities dated August 6, 2019; July 14, 2022 (supplemented October 30, 2024), July 20, 2022 and October 17, 2024, respectively. The aggregate amount of the overdraft facilities is approximately $7.7 million (S$10.3 million), of which $5.9 million (S$7.6 million) was outstanding at March 31, 2026.
These loans bear interest at a rate that ranges from 2.0% to 5.5% per annum. These loans and are secured by debentures over assets and several guarantees from Sapphire Universe, certain Executive Officers and one or more Major Shareholders for an unlimited amount. See section titled "Related Party Transactions".
We are a party to a "with recourse" receivable purchase facility dated July 20, 2018 (supplemented September 28, 2021 and August 15, 2022; and replaced September 27, 2024) and July 23, 2020 (supplemented August 18, 2022 and September 5, 2024) with the Lender pursuant to which Primech A & P and Maint-Kleen agreed to sell to the Lender, and the Lender agreed to purchase from the subsidiary, certain receivables owing from customers. All amounts due under the terms of the Facility, totaling up to approximately $5.2 million (S$7.0 million), are guaranteed by security over receivables; debentures over assets and several personal guarantees for an unlimited amount. The bank granted a temporary increase in the credit limit of an additional $2.6 million (S$ 3.3 million) from January 2026 through March 2026 and $1.2 million (S$1.5 million) from April 2026 through June 2026. The outstanding balance under this loan at March 31, 2026 was approximately $3.8 million (S$4.9 million). See section titled "Related Party Transactions". We pay a discount charge calculated based on 1.5% p.a. over three months bank's Costs of Fund on the outstanding gross amount of accounts receivable factored.
The Group and the Lender are parties to a business property financing facility dated March 30, 2021 (supplemented February 10, 2023 and November 6, 2024) in relation to our acquisition of the properties located at 23 Ubi Crescent and 25 Ubi Crescent, Singapore. The purchase price is approximately $6.7 million consisted of cash consideration of approximately $1.7 million and a loan obtained from the Lender of approximately $5.0 million (S$6.8 million) and the outstanding balance of this loan at March 31, 2026 was approximately $4.3 million (S$5.5 million). This facility is secured by several personal guarantees. See section titled "Related Party Transactions".
Primech A&P is required to maintain, during the term of the financing agreements relating to each of these facilities, a minimum adjusted tangible net worth of $7.0 million (SGD 10.0 million), and a gearing ratio, defined as to the ratio of total bank debt to tangible net worth of not more than 2.2. As of March 31, 2026, we are complying of the financial covenants.
The consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. For FY 2026, the Company recorded net loss of approximately $3.0 million and cash provided by operating activities of approximately $3.9 million. We received approximately $3.1 million and $4.5 million in Singapore government grants which were netted against our direct costs and expenses, general and administrative expenses and other operating income in FY 2026 and FY 2025, respectively. These government subsidies were received from government authorities in Singapore, and were primarily used to offset wage costs, and are recorded as a reduction to associated wage costs in cost of revenue and general and administrative expenses in the accompanying consolidated statements of operations and comprehensive income.
Notwithstanding the receipt of the government subsidies received during FY 2026, management believes that with working capital of approximately $8.1 million (including cash of $8.9 million) and approximately $6.0 million of available loans or overdraft facilities at March 31, 2026, our liquidity is sufficient to fund operations for at least one year from the date the Group's March 31, 2026 financial statements are issued.
We intend to fund our future operations and meet our financial obligations through revenue growth. We cannot, however, provide assurance that revenue, income and cash flows generated from our businesses will be sufficient to sustain our operations in the twelve months following the date of this report. As a result, we are actively evaluating strategic alternatives including debt and equity financings and potential sales of investment assets.
Cash Flows - Operating Activities
We used approximately $11.3 million more cash in operating activities during the year ended March 31, 2026 than we did during the year ended March 31, 2025. The increase in cash used in continuing operating activities mainly resulted from the decrease in government subsidies receivables and increase in accounts receivable.
We generated approximately $16.5 million more cash in operating activities during the year ended March 31, 2025 than we did during the year ended March 31, 2024. The increase in cash provided by continuing operating activities mainly resulted from the decrease in accounts receivable and prepaid expenses and other current assets as we are utilising service from vendor that was prepaid in FY 2024.
Cash Flows - Investing Activities
We used approximately $0.3 million less cash from investing activities during the year ended March 31, 2026 than we did during the year ended March 31, 2025. The decrease in cash used in investing activities resulting from increase in proceed from sales of property and equipment while partly offset by increase in acquisition of property and equipment.
We used approximately $0.2 million more cash in investing activities during the year ended March 31, 2025 than we did during the year ended March 31, 2024. The increase in cash used in investing activities resulting from more acquisition of property and equipment.
Cash Flows - Financing Activities
We generated approximately $7.1 million more cash from financing activities during the year ended March 31, 2026 than we did during the year ended March 31, 2025. The increase in cash from financing activities resulted from proceed from convertible bonds and less repayment of bank loans in the period.
We used approximately $4.4 million cash in financing activities during the year ended March 31, 2025 as compared to $8.2 million of cash provided by financing activities during the year ended March 31, 2024. The increase in cash used in financing activities resulted from net repayment of bank loans in current period.
Off-Balance Sheet Arrangements
We have not entered into any derivative contracts that are indexed to our shares and classified as Shareholders' equity or that are not reflected in our consolidated financial statements. Moreover, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us.