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A breakdown of revenue in terms of geographic regions for the six-month periods ended June 30, 2023 and 2024 is summarized below:

• Revenue from the Africa market declined 18.5% for the six months ended June 30, 2024. The sales of rice and oil and fat products that were significantly decreased contributed to it.

• Revenue from the China market experienced a decrease of 51.3%. The global price increased, hence Chinese importers turned to purchases within their domestic market to meet their supply requirements.

• The Company was not awarded sugar tenders in the Indonesian market for the six months ended June 30, 2024, hence there was not any revenue from Indonesia.

• Revenue from the Vietnamese market demonstrated growth, representing a 15.3% growth, which is attributable to an increase of demand for premixed sugar from Vietnam to China. The sugar sales generally increased due to the higher sales to Vietnam’s premixed importers.

• The overall global prices of sugar and other commodities can significantly impact revenue for exporting countries and consequently lead to a dip in sales.
  

Cost of Revenue

Cost of revenue was $64.0 million for the six months ended June 30, 2024, which decreased by 31.6% from $93.5 million for the same period of the last fiscal year. The decrease was primarily due to the decreased revenue as described above, which was due to a lower demand for the Company’s sugar and oil products from customers. Accordingly, the cost of revenue increased correspondingly, due to the increased sales of rice.

Gross Profit and Gross Margin

Gross profit was $2.9 million for the six months ended June 30, 2024, which decreased by 31.0% from $4.2 million for the same period of the last fiscal year. The drop in rice profit margin is mainly due to intense competition from origin producers and sharp increases in supply chain costs, resulting in a significantly thinner profit margin, making previous profitability levels hard to achieve in the current reporting period.

Overall gross margin was 4.4% for the six months ended June 30, 2024, compared to 4.3% for the same period of the last fiscal year.

Operating Expenses

Operating expenses were $1.8 million for the six months ended June 30, 2024, which decreased by 10.0% from $2.0 million for the same period of the last fiscal year.

• Selling and marketing expenses were $0.4 million for the six months ended June 30, 2024, which decreased by 42.9% from $0.7 million for the same period of the last fiscal year. The decrease was primarily due to a decrease in sales commissions payable as a result of the decrease in revenue.

• General and administrative expenses were $1.3 million for the six months ended June 30, 2024, which remain unchanged from $1.3 million for the same period of the last fiscal year. There was a slight increase in expenses associated with the Company’s listing in 2023, primarily driven by higher audit fees, legal fees, listing fees, director fees, and professional fees.
  

Other Income and Interest Expense

Other income was $0.6 million for the six months ended June 30, 2024, which increased by 200.0% from $0.2 million for the same period of the last fiscal year. Contributing to such increase was the reversal of impairment loss from last financial year, interest income earned and the government grant received.

Interest expense was $0.09 million for the six months ended June 30, 2024, which increased by 350.0% from $0.02 million for the same period of last fiscal year. The increase was due to interests incurred on additional borrowings such as a loan from a related party which was drawn down on July 6, 2023, as well as additional finance lease facility which was drawn down on June 15, 2023.

Profit before Tax and Income Tax Expense

Profit before tax was $1.6 million for the six months ended June 30, 2024, which decreased by 30.4% from $2.3 million for the same period of the last fiscal year. Correspondingly, income tax was $0.3 million for the six months ended June 30, 2024, which decreased by $0.1 million from $0.4 million for the same period of last fiscal year.

Net Income

Net income was $1.3 million for the six months ended June 30, 2024, which decreased by 35.0% from $2.0 million for the same period of last fiscal year.

Basic and diluted earnings per share were $0.05 for the six months ended June 30, 2024, compared to $0.08 for same period of the last fiscal year.

Financial Condition

As of June 30, 2024, the Company had cash and cash equivalents of $1.4 million, compared to $1.3 million as of December 31, 2023.

Net cash provided by operating activities was $0.2 million for the six months ended June 30, 2024, as adjusted primarily by (i) the non-cash operating items of $0.42 million, such as depreciation of property, plant and equipment, fair value adjustment, reversal of impairment loss and interest, and (ii) a decrease in operating assets of $0.7 million. Net cash provided by operating activities was $0.05 million for the six months ended June 30, 2023, as adjusted primarily by (i) the non-cash operating items of $0.005 million, such as depreciation of property, plant and equipment, interest expense, adjustment of fair value and interest, and (ii) the decrease in operating assets of $1.9 million.

Net cash used in investing activities was $0.005 million for the six months ended June 30, 2024, attributable to the purchase of property, plant and equipment of $0.005 million. Net cash used in investing activities was $0.3 million for the six months ended June 30, 2023, attributable to the purchase of property, plant and equipment of $0.3 million and interest received from a convertible loan to a related party.

Net cash used in financing activities was $0.2 million for the six months ended June 30, 2024, which was attributable to the repayment of bank loans of $0.1 million, payment of finance lease of $0.02 million and payment of lease liabilities of $0.02 million. Net cash provided by financing activities was $0.2 million for the six months ended June 30, 2023, which was mainly attributable to a loan from a related party and proceeds from a finance lease; offset by repayments of bank borrowings and payment of finance lease and lease liabilities.

About Davis Commodities Limited

Based in Singapore, Davis Commodities Limited is an agricultural commodity trading company that specializes in trading sugar, rice, and oil and fat products in various markets, including Asia, Africa and the Middle East. The Company sources, markets, and distributes commodities under two main brands: Maxwill and Taffy in Singapore. The Company also provides customers of its commodity offerings with complementary and ancillary services, such as warehouse handling and storage and logistics services. The Company utilizes an established global network of third-party commodity suppliers and logistics service providers to distribute sugar, rice, and oil and fat products to customers in over 20 countries, as of the six months ended June 30, 2024. For more information, please visit the Company’s website: ir.daviscl.com.

Forward-Looking Statements

Certain statements in this announcement are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on the Company’s current expectations and projections about future events that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. Investors can find many (but not all) of these statements by the use of words such as “approximates,” “believes,” “hopes,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “plans,” “will,” “would,” “should,” “could,” “may,” or other similar expressions. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company’s registration statement and other filings with the U.S. Securities and Exchange Commission.

For more information, please contact:

Davis Commodities Limited
Investor Relations Department
Email: investors@daviscl.com

Celestia Investor Relations
Dave Leung
Phone: +852 9494-3413
Email: investors@celestiair.com

* Denotes amount less than US$1,000.
** Retrospectively restated for the effect of a 2,325-for-1 share subdivision.

* Denotes amount less than US$1,000.
** Retrospectively restated for the effect of a 2,325-for-1 share subdivision.

* Denotes amount less than US$1,000