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Financial Report

Full Year Financial Statement And Dividend Announcement for the Year Ended 31 December 2017

Financials Archive

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UNAUDITED FULL YEAR 2017 FINANCIAL STATEMENTS

Statements of Comprehensive Income (for the group)

Operating loss is arrived at after crediting and (charging) :



Review of Performance

Statements of Comprehensive Income

The following paragraphs should be read in conjunction with our Statements of Comprehensive Income for year ended 31 December 2017.

Revenue

Overview

The Group recorded a 57.8% year-on-year ("yoy") decrease in revenue from US$104.8 million in FY2016 to US$44.3 million in FY2017. The main reason for the decrease was the disposal of the subsidiary in Indonesia and the restructuring of group operations.

ICT

The Group's "ICT" division revenue decreased 59.3% yoy from US$103.7 million in FY2016 to US$42.2 million in FY2017 which accounts for most part (95.3%) of the Group's total revenue. The "Services / Software" segment has also decreased from US$26.5 million in FY2016 to US$12.3 million in FY2017 of which contribution to ICT division has been increased from 25.6% in FY2016 to 29.1% in FY2017.

Digital Media & Mobile Solution Services

The Group's "Digital Media" division increased the revenue from US$1.1 million in FY2016 to US$2.1 million in FY2017 with 90.9% yoy due to the completion of existing ordered projects in China. The Group Digital Media & Mobile Solution Services business did not register new sales orders during FY2017.

Revenue from "China" region decreased -61.6% yoy to US$5.8 million in FY2017 due to the restructuring of China operation. As a result, China's contribution reduced to 13.1% of the Group's total revenue for FY2017.

Revenue from "Indonesia" decreased -64.3% yoy to US$27.1 million in FY2017 due to the disposal of the subsidiary in Indonesia in September 2017. Indonesia's contribution also decreased to 61.2% in FY2017 of the Group's total revenue.

Revenue from "Others" outside of "China" and "Indonesia" also recorded the decrease of 17.4% yoy to US$11.4 million in FY2017 since the revenue decrease of restructured business outweighed the increase of viable business such as Malaysia. As a result, revenue contribution from "Others" increased to 25.7% of the Group's total revenue in FY2017.

Gross Margin

Gross margin ratio has increased from 21.29% in FY2016 to 27.56% in FY2017 due to the increase of higher margin business composition ratio among the Group after the group restructuring.

Total Operating Expenses

The Group's total operating expenses decreased from US$29.8 million in FY2016 to US$21.4 million in FY2017 which includes Non-ordinary administrative expenses of US$8.1 million.

Loss Before Tax

The Group's loss before tax was US$8.9 million in FY2017 following the loss before tax of US$7.3 million in FY2016 mainly as a result of the Non-ordinary administrative expenses as mentioned above.

Statement of financial position

The following paragraphs should be read in conjunction with our Statements of Financial Position as at 31 December 2017.

Total current assets decreased by US$42.7 million to US$21 million as at 31 December 2017 compared to the last year end unaudited figures. This was largely due to the net impact from:-

  • US$2.5 million increase in cash and cash equivalents to US$8.7 million;

  • US$0.5 million decrease in pledged bank deposits;

  • US$24.2 million decrease in trade receivables to US$5.6 million;

  • US$4.1 million decrease in other receivables, deposits and prepayments to suppliers; and

  • US$16.4 million decrease in indent inventories

Aging of total trade receivables are as follows:-

Non-current assets decreased by US$3.5 million to US$3.2 million as of 31 December 2017 as capital expenditure on property, plant and equipment amounting to US$3.0 million and intangible assets were much less than the depreciation and amortization expenses during the year.

Total current liabilities also decreased by US$33.5 million to US$12.0 million as at 31 December 2017. This was due mainly to 1) repayment of bank loans of US$9.6 million, 2) a US$22.0 million decrease in "trade & other payables", and 3) a US$1.8 million decrease in "tax payable".

As at 31 December 2017, the Group's equity attributable to shareholders decreased by US$7.0 million to US$12.2 million is mainly due to the operational loss incurred during FY2017.

Statement of cash flows

The following paragraphs should be read in conjunction with our Statements of Cash Flows as of 31 December 2017.

The Group generated US$5.3 million of cash in operating activities in FY2017 compared to US$0.8 million in FY2016. The Group experienced a decrease of trade and other receivable at US$13.7 million in FY2017 compared to the decrease at US$7.4 million in FY2016; and also the decrease in inventories by US$5.4 million compared to the increase of US$1.2 million in FY2016; and also the decrease of trade and other payable at US$9.7 million compared to the decrease of US$6.7 million in FY2016.

The Group generated US$6.5 million of cash in investing activities for FY2017 as compared to US$1 million cash generated in FY2016 mainly due to the disposal of subsidiary in FY2017.

The Group had utilized the cash in financing activities amounting US$7.7 million in FY2017 compared to US$6.7 million in FY2016 due to that the "Repayment of bank loans" in FY2017 compared to FY2016.

As a result of the above activities, the Group recorded an increase in cash and cash equivalents at US$2.5 million in FY2017 compared to the decrease of US$4.6 million in FY2016.

Commentary

As announced on 15 January 2018, the board of directors has assessed the current situation of the company and has proposed placing the Company under creditors' voluntary liquidation for the best interest of shareholders and other stakeholders, for the reasons set out in the announcement. The Company will be convening a special general meeting for the purposes of initiating the creditors' voluntary liquidation and will be releasing further details in due course.

Balance Sheet