Company: MAGH
Filing Date: 2025-06-10
Form Type: F-1/A
Source: 0001641172-25-014489
Chunk: 23

Company: Magnitude International Ltd
Filing Date: 2025-06-10
Form: F-1/A
Chunk 23
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 revenue, operational cash flows and financial performance. We are also required to pay our suppliers and subcontractors regardless of such delay if the purchase orders have been fulfilled, therefore affecting our operational cash flows. A delay in the project can be due to various factors, including but not limited to, a shortage of manpower, a shortage of materials and equipment, delays by subcontractors or adverse weather. If the delay is caused by us, we are liable to pay our contracting parties for the liquidated damages stipulated in our contracts and our reputation (including the chance of being invited for future tenders and our tender success rate) could also be materially affected. If the delay is caused by our customers, we will also be unable to terminate our contracts with them or seek compensation from them as such clauses are typically not included in our contracts.

Moreover, other than liquidated damages, we may also have to bear additional costs as our customers have the discretion, after giving us notice and regardless of our objections, hire or employ additional subcontractor, labor, machinery and equipment as they deem fit, to avoid or minimize further delay. We will have to bear the aforementioned costs, with administrative charges calculated as a percentage of the incurred costs. In addition, to minimize further delay, we are also obliged to incur overtime man hours and the related labor costs at our own expense. In such circumstances, our financial performance and operations will be adversely affected.

Our operating margin may decline as a result of increasing subcontracting, material, labor and other indirect costs.

Our cost of sales is mainly comprised of subcontracting costs, material costs and project-related employee benefit expenses. Other indirect costs include management costs, staff costs, administrative costs, finance costs and sales and distribution expenses. Indirect costs are affected by, among other things, requirements imposed on contractors or subcontractors to implement more safety, environmental and health enhancements to keep accident rates low, to improve welfare requirements to ensure the well-being of workers, to obtain more certifications to fit customers’ tender requirements and to increase overhead costs for administrative purposes. If material costs, labor costs and/or the other indirect costs increase, our subcontractors may pass the increase in their costs on to us by increasing their subcontracting fees.

Subcontracting, material, labor and other indirect costs mentioned above are subject to increase by other factors that are generally unpredictable and beyond the control of contractors or subcontractors. If these costs continue to rise, and we fail to pass the increases on to our customers, our business may be materially and adversely affected.

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