The contact person for the Sponsor is Ms Goh Mei Xian (Tel: (65) ) at 1 Robinson Road, #21-02 AIA Tower, Singapore

Transcription

1 DECLOUT LIMITED (Registration No: W) UNAUDITED FINANCIAL STATEMENTS AND DIVIDEND ANNOUNCEMENT FOR THE SECOND QUARTER ENDED 30 JUNE 2016 ( 2Q2016 ) This announcement has been prepared by the Company and its contents have been reviewed by the Company s sponsor, SAC Advisors Private Limited (formerly known as Canaccord Genuity Singapore Pte. Ltd.) ( Sponsor ), for compliance with the relevant rules of the Singapore Exchange Securities Trading Limited ( SGX-ST ). The Sponsor has not independently verified the contents of this announcement. This announcement has not been examined or approved by the SGX-ST and the SGX-ST assumes no responsibility for the contents of this announcement including the correctness of any of the statements or opinions made or reports contained in this announcement. The contact person for the Sponsor is Ms Goh Mei Xian (Tel: (65) ) at 1 Robinson Road, #21-02 AIA Tower, Singapore PART I - INFORMATION REQUIRED FOR QUARTERLY (Q1, Q2 & Q3), HALF-YEAR AND FULL YEAR ANNOUNCEMENTS 1(a) An income statement and statement of comprehensive income, or a statement of comprehensive income, for the group, together with a comparative statement for the corresponding period of the immediately preceding financial year. 2Q2016 1H Jun Jun-15 Change 30-Jun Jun-15 Change $'000 $'000 % $'000 $'000 % Revenue 75,003 72, , , Cost of sales (52,870) (54,106) (2.3) (96,033) (91,869) 4.5 Gross profit 22,133 18, ,640 29, Other items of income Other income 3, N.M. 4,240 1, Other items of expense Other charges, net (314) (1,044) (69.9) (1,201) (1,181) 1.7 Selling expenses (2,964) (2,539) 16.7 (5,944) (4,684) 26.9 Administrative expenses (13,628) (10,815) 26.0 (26,599) (21,969) 21.1 Finance costs (1,360) (504) (2,944) (1,058) Share of results of associates (270) 79 N.M. (296) 194 N.M. Profit before tax 7,000 4, ,896 1, Income tax expense (1,066) (515) (1,444) (850) 69.9 Profit, net of tax 5,934 3, , Profit, net of tax attributable to: Owners of the Company 4,966 2, Non-controlling interests , ,934 3, , N.M. - Not meaningful Page 1 of 13

2 Statement of comprehensive income 2Q2016 1H Jun Jun-15 Change 30-Jun Jun-15 Change Note $'000 $'000 % $'000 $'000 % Other comprehensive income Exchange differences on translating foreign operations, net of tax 1 (993) (645) 54.0 (2,585) (355) N.M. Other comprehensive income for the period, net of tax (993) (645) 54.0 (2,585) (355) N.M. Total comprehensive income for the period 4,941 2, (1,133) 453 N.M. Total comprehensive income attributable to: Owners of the Company 4,291 2, (1,442) (36) N.M. Non-controlling interests (36.8) Total comprehensive income for the period 4,941 2, (1,133) 453 N.M. Notes to Income Statement Note % % Other income Interest income (10.0) (11.0) Gain on remeasurement of an associate pursuant to a step-up acquisition 2 2,898 - N.M. 2,898 - N.M. Others ,237 1, , N.M. 4,240 1, Other charges, net (Write-back) / Allowance for impairment on trade receivables 4 (115) 76 N.M. (409) 163 N.M. Plant and equipment written off 4 - N.M. 4 - N.M. Provision for stock obsolescence Foreign exchange loss / (gain) (97.8) Gain on disposal of plant and equipment, net 5 (840) (20) N.M. (840) (19) N.M. Amortisation of intangible assets N.M. 1, Others 24 (2) N.M. - (7) N.M ,044 (69.9) 1,201 1, Other items Amortisation of intangible assets (included in cost of sales) (13.2) (12.9) Depreciation of plant and equipment (included in cost of sales and administrative expenses) 7 1,656 1, ,228 2, Interest expenses 8 1, ,944 1, N.M. - Not meaningful Notes (1) Under Other comprehensive income, the amounts of $1.0m and $2.6m for 2Q2016 and 1H2016 respectively, represented the loss arising mainly from the translation of the s net asset foreign operations in America and Europe which are denominated in US dollar (USD) and British Pound (GBP) respectively. The GBP weakened against Singapore dollar ($) by 6.2% in 2Q2016, while the USD and GBP had weakened against the $ by 4.5% and 13.3% in 1H2016 respectively. (2) The remeasurement gain of $2.9m arose from the step-up acquisition of vcargo Cloud Pte Ltd, an associated company of the as at 31 December 2015, which became a subsidiary as at 30 June (3) Others comprised mainly rebates from suppliers, recovery of freight and related costs from customers and government grants. (4) The write-back on impairment of trade receivables for 2Q2016 and 1H2016 arose mainly from the recovery of debts which were previously impaired. (5) The net gain on disposal of plant and equipment of $0.8m for 2Q2016 and 1H2016 was derived from the disposal of old equipment in conjunction with technology refresh. (6) The increase in amortisation expenses in respect of intangible assets was due to additions of intangible assets mainly arising from the acquisitions of Tinglobal Holdings Limited, OSINet Communications Pte Ltd and Pacnet Internet (Thailand) Limited ("PITH"). (7) The increase in depreciation of plant and equipment for 2Q2016 and 1H2016 was mainly due to an increase in new purchases of plant and equipment and also arising from the acquisition of subsidiaries. (8) Interest expenses were higher primarily due to imputed notional non-cash interest cost on the redeemable exchangeable bonds of $6.0m issued by the Company in Jan 2016, as well as more borrowings taken up for acquisitions and funding of working capital. The amount of imputed notional non-cash interest cost amounted to $0.7m and $1.5m for 2Q2016 and 1H2016 respectively. Page 2 of 13

3 1(b)(i) A statement of financial position (for the issuer and group), together with a comparative statement as at the end of the immediately preceding financial year. Company 30-Jun Dec Jun Dec-15 $'000 $'000 $'000 $'000 Non-current assets Property, plant and equipment 22,897 19, Investment in subsidiaries ,656 67,661 Investment in associates 3,402 7, Intangible assets 75,235 58, Finance lease receivables 1,665 1, Other financial receivable 1,465 1, Deferred tax assets 3,736 3, Total non-current assets 108,400 91,954 82,325 68,192 Current assets Inventories 31,351 18, Trade and other receivables 88,099 80,856 38,801 36,605 Finance lease receivables 1,373 1, Other assets 7,021 4, Cash and bank balances 18,996 22, Total current assets 146, ,944 39,519 37,417 Total assets 255, , , ,609 Equity Share capital 107,618 86, ,618 86,953 Retained earnings 11,198 10,787 (10,422) (5,163) Other reserves (26,106) (15,911) 3,499 3,769 Equity attributable to owners of the Company 92,710 81, ,695 85,559 Non-controlling interests 25,041 21, Total equity 117, , ,695 85,559 Non-current liabilities Deferred tax liabilities 1,054 1, Trade and other payables 3,734 3, Loans and borrowings 16,617 17,610 1,000 8,250 Provisions Total non-current liabilities 21,868 22,393 1,238 8,488 Current liabilities Trade and other payables 48,702 49,316 2,183 7,139 Other liabilities 5,925 3, Loans and borrowings 59,531 39,745 17,728 4,423 Income tax payables 1,463 1, Total current liabilities 115,621 93,968 19,911 11,562 Total liabilities 137, ,361 21,149 20,050 Total equity and liabilities 255, , , ,609 Page 3 of 13

4 1(b)(ii) In relation to the aggregate amount of the group's borrowings and debt securities, specify the following as at the end of the current financial period reported on with comparative figures as at the end of the immediately preceding financial year. As at 30-Jun-16 As at 31-Dec-15 Secured Unsecured Total Secured Unsecured Total $'000 $'000 $'000 $'000 $'000 $'000 Amount repayable in one year or less, on demand 23,126 36,405 59,531 21,071 18,674 39,745 Amount repayable after one year 4,041 12,576 16,617 10,346 7,264 17,610 27,167 48,981 76,148 31,417 25,938 57,355 Borrowings comprise of: Bank term loans 6,827 23,098 29,925 13,871 12,533 26,404 Short term trade facilities 17,518 4,086 21,604 15,822 9,131 24,953 Third party loans - 11,751 11,751-2,609 2,609 Finance lease obligations 2, ,823 1, ,564 Convertible redeemable preference shares - 1,098 1,098-1,026 1,026 Embedded derivatives Redeemable exchangeable bonds - 7,514 7, Bank overdrafts - 1,279 1, ,167 48,981 76,148 31,417 25,938 57,355 Details of collaterals Included in secured term loans of $6.8m is an amount of $2.1m (31 December 2015: $2.7m) which is secured by charges over certain properties with a net book value of $4.4m as at 30 June 2016 (31 December 2015: $4.4m). The remaining term loans of $4.7m (31 December 2015: $11.2m) are secured by corporate guarantees issued by the Company and some of its subsidiaries. The secured short-term trade facilities of $17.5m (31 December 2015: $15.8m) included trust receipts and trade receivables factoring. Bank overdrafts are guaranteed by certain directors of a subsidiary and / or secured by pledged deposits. The finance lease obligations of $2.8m as at 30 June 2016 (31 December 2015: $1.2m) are secured by charges over the leased assets (plant and equipment) with a net book value of $1.1m and inventories amounting to $2.3m as at 30 June 2016 (31 December 2015: $1.1m). Redeemable exchangeable bonds of $7.5m comprised the principal amount of $6.0m and imputed notional non-cash interest cost of $1.5m. Page 4 of 13

5 1(c) A statement of cash flows (for the ), together with a comparative statement for the corresponding period of the immediately preceding financial year. 2Q2016 1H Jun Jun Jun Jun-15 $'000 $'000 $'000 $'000 Cash flows from operating activities Profit before tax 7,000 4,009 2,896 1,658 Depreciation of property, plant and equipment 1,656 1,371 3,228 2,693 Amortisation of intangible assets , (Gain) / Loss on disposal of plant and equipment, net (840) (20) (840) (19) Plant and equipment written off Share-based payments ,514 Interest income (54) (60) (105) (118) Interest expenses 1, ,944 1,058 Share of results of associates 270 (79) 296 (194) Gain on remeasurement of an associate pursuant to a step-up acquisition (2,898) - (2,898) - Foreign exchange (427) 81 (1,616) 321 Operating cash flows before changes in working capital 7,261 6,967 6,135 7,696 Increase in inventories (5,177) (2,786) (11,042) (4,330) (Increase) / Decrease in trade and other receivables (1,579) (23,160) 2,966 (4,265) (Increase) / Decrease in finance lease receivables (365) 331 (359) (174) Decrease / (Increase) in other assets 178 (653) (2,088) (491) (Decrease) / Increase in trade and other payables (4,705) 26,321 (9,570) 6,188 (Decrease) / Increase in other liabilities (628) 771 2,017 1,704 Net cash flows (used in) / generated from operations (5,015) 7,791 (11,941) 6,328 Income taxes paid (1,063) (609) (1,299) (1,517) Net cash (used in) / generated from operating activities (6,078) 7,182 (13,240) 4,811 Cash flows from investing activities Purchase of property, plant and equipment (4,325) (2,239) (6,338) (2,892) Additions to intangible assets 3, Proceeds from disposal of property, plant and equipment 1,886-1,886 - Net cash (outflows) / inflows from acquisition of subsidiaries (3,608) - (1,013) 761 Interest received Net cash used in investing activities (2,694) (2,159) (5,360) (1,993) Cash flows from financing activities Share issue expenses (8) - (24) (16) Contributions from non-controlling shareholders of a subsidiary, net - 1,359-1,359 Acquisition of non-controlling interests - - (6) - (Placement) / Release of fixed deposits pledged as collateral for bank facilities (54) 168 (65) 168 Proceeds from loans and borrowings 39,812 23,603 74,344 25,582 Repayments of loans and borrowings (28,115) (26,923) (58,917) (26,923) Interest paid (164) (754) (1,172) (1,058) Net cash generated from / (used in) financing activities 11,471 (2,547) 14,160 (888) Net increase / (decrease) in cash and cash equivalents 2,699 2,476 (4,440) 1,930 Cash and cash equivalents at beginning of financial period 14,563 9,815 21,702 10,361 Cash and cash equivalents at end of financial period 17,262 12,291 17,262 12,291 Cash and cash equivalents comprise the following: Cash and bank balances 18,996 13,357 18,996 13,357 Less: Bank overdraft (1,279) (660) (1,279) (660) Less: Fixed deposits pledged as collateral for banker's guarantee (253) (197) (253) (197) Less: Fixed deposits pledged as collateral for banking facilities (202) (209) (202) (209) Cash and cash equivalents 17,262 12,291 17,262 12,291 Page 5 of 13

6 1(d)(i) A statement (for the Issuer and ) showing either (i) all changes in equity or (ii) changes in equity other than those arising from capitalisation issues and distributions to shareholders, together with a comparative statement for the corresponding period of the immediately preceding financial year. Total Equity Attributable to Shareholders Share Capital Other Reserves Retained Earnings Non- Controlling Interests $'000 $'000 $'000 $'000 $'000 $'000 For the second quarter ended 30 June At 1 April ,523 84, ,626 (25,830) 6,232 21,495 Total comprehensive income for the period 4,941 4,291 - (675) 4, Issuance of ordinary shares for acquisitions of subsidiaries 4,000 4,000 4, Share issuance expense (8) (8) (8) Share-based payments Changes in ownership interests in subsidiaries Acquisition of subsidiaries 2,947 1,215-1,215-1,732 Changes in non-controlling interests of a subsidiary without a change in control - (1,164) - (1,164) - 1,164 At 30 June ,751 92, ,618 (26,106) 11,198 25,041 At 1 April ,936 66,579 69,483 (6,147) 3,243 12,357 Total comprehensive income for the period 2,849 2,256 - (448) 2, Dividends paid to non-controlling interests (61) (61) Contributions from non-controlling interests 1, ,359 Share-based payments Changes in ownership interests in subsidiaries Changes in non-controlling interests of a subsidiary without a change in control - (622) - (622) At 30 June ,790 68,920 69,483 (6,510) 5,947 14,870 For the first half year ended 30 June Total Equity Attributable to Shareholders Share Capital Other Reserves Retained Earnings Non- Controlling Interests $'000 $'000 $'000 $'000 $'000 $'000 At 1 January ,537 81,829 86,953 (15,911) 10,787 21,708 Total comprehensive income for the period (1,133) (1,442) - (1,853) Issuance of ordinary shares for acquisitions of subsidiaries 11,550 11,550 11, Issuance of ordinary shares pursuant to PSP - - 2,139 (2,139) - - Share issuance expense (24) (24) (24) Share-based payments Changes in ownership interests in subsidiaries Acquisition of subsidiaries 3,173 1,215-1,215-1,958 Changes in non-controlling interests of subsidiaries without a change in control (6) (1,072) 7,000 (8,072) - 1,066 At 30 June ,751 92, ,618 (26,106) 11,198 25,041 At 1 January ,484 46,964 41,775 (620) 5,809 12,520 Total comprehensive income for the period 453 (36) - (174) Issuance of ordinary shares for acquisitions of subsidiaries 26,786 26,786 26, Issuance of ordinary shares pursuant to PSP (938) - - Dividends paid to non-controlling interests Contributions from non-controlling interests Share issuance expense Share-based payments Changes in ownership interests in subsidiaries Changes in non-controlling interests of a subsidiary without a change in control (120) (120) 1, ,359 (16) (16) (16) ,514 1,514-1, (5,670) (6,292) - (6,292) At 30 June ,790 68,920 69,483 (6,510) 5,947 14,870 Page 6 of 13

7 1(d)(i) Company A statement (for the Issuer and ) showing either (i) all changes in equity or (ii) changes in equity other than those arising from capitalisation issues and distributions to shareholders, together with a comparative statement for the corresponding period of the immediately preceding financial year. For the second quarter ended 30 June Total Share Other Retained Equity Capital Reserves Earnings $'000 $'000 $'000 $'000 At 1 April , ,626 1,936 (7,693) Total comprehensive income for the period (2,729) - - (2,729) Issuance of ordinary shares for acquisitions of subsidiaries 4,000 4, Share issuance expense (8) (8) - - Share-based payments Changes in ownership interests in subsidiaries Acquisition of subsidiaries 1,215-1,215 - At 30 June , ,618 3,499 (10,422) At 1 April ,693 69,483 1,105 (2,895) Total comprehensive income for the period Share-based payments At 30 June ,084 69,483 1,812 (2,211) Company For the first half year ended 30 June Total Share Other Retained Equity Capital Reserves Earnings $'000 $'000 $'000 $'000 At 1 January ,559 86,953 3,769 (5,163) Total comprehensive income for the period (5,259) - - (5,259) Issuance of ordinary shares for acquisitions of subsidiaries 18,550 18, Issuance of ordinary shares pursuant to PSP - 2,139 (2,139) - Share issuance expense (24) (24) - - Share-based payments Changes in ownership interests in subsidiaries Acquisition of subsidiaries 1,215-1,215 - At 30 June , ,618 3,499 (10,422) At 1 January ,311 41,775 1,236 (700) Total comprehensive income for the period (1,511) - - (1,511) Issuance of ordinary shares for acquisitions of subsidiaries 26,786 26, Issuance of ordinary shares pursuant to PSP (938) - Share issuance expense (16) (16) - - Share-based payments 1,514-1,514 - At 30 June ,084 69,483 1,812 (2,211) Page 7 of 13

8 1(d)(ii) Details of any changes in the Company's share capital arising from rights issue, bonus issue, share buy-backs, exercise of share options or warrants, conversion of other issues of equity securities, issue of shares for cash or as consideration for acquisition or for any other purpose since the end of the previous period reported on. State also the number of shares that may be issued on conversion of all the outstanding convertibles, as well as the number of shares held as treasury shares, if any, against the total number of issued shares excluding treasury shares of the issuer, as at the end of the current financial period reported on and as at the end of the corresponding period of the immediately preceding financial year. A) Changes in share capital during the financial period Number of Ordinary Shares Issued and Paid-up Share Capital '000 $'000 As at 1 January ,618 86,953 Issuance of ordinary shares pursuant to acquisition of a subsidiary 15,000 3,000 Issuance of ordinary shares pursuant to acquisition of non-controlling interests 56,863 11,550 Issuance of ordinary shares pursuant to performance share plan 8,370 2,139 Share issue expenses - (16) As at 31 March , ,626 Issuance of ordinary shares pursuant to acquisition of a subsidiary 20,000 4,000 Share issue expenses - (8) As at 30 June , ,618 B) Shares options - employee share option scheme Between 1 January 2016 and 30 June 2016, the Company did not issue any shares under the employee share option scheme (the Scheme ). Under the Scheme, options to subscribe for 7,581,393 shares remained outstanding as at 30 June 2016, unchanged from the balance as at 30 June Details of the outstanding options as at 30 June 2016 are as follows: Outstanding Options as at Exercise Price Exercisable Period 30-Jun-15 and 30-Jun-16 $ From To C) Performance share plan 1,674, May-15 9-May-23 1,674, May-16 9-May-23 2,232, May-17 9-May , Jan-15 1-Jan , Jan-16 1-Jan , Jan-17 1-Jan-24 7,581,393 1(d)(iii) 1(d)(iv) As at 30 June 2016, the number of outstanding awards granted under the performance share plan was 10,831,500 (30 June 2015: 19,925,000). The shares to be issued pursuant to the awards are subject to certain performance conditions to be satisfied by the respective participants. Once the performance conditions are satisfied, the shares shall be released to the respective participants after the respective performance periods. D) Treasury shares No treasury shares were held by the Company as at 30 June 2016 and 30 June Save as disclosed above, the Company has no other outstanding convertibles as at 30 June 2016 and 30 June Total number of issued shares excluding treasury shares as at the end of the current financial period and as at the end of the immediately preceding year. The total number of issued shares as at 30 June 2016 was 638,850,590 (31 December 2015: 538,617,530). The Company has no treasury shares. A statement showing all sales, transfers, disposals, cancellation and/or use of treasury shares as at the end of the current financial period reported on. Not applicable as the Company has no treasury shares. Page 8 of 13

9 2 Whether the figures have been audited or reviewed, and in accordance with which auditing standard or practice. The figures have not been audited or reviewed by the Company s auditors. 3 Where the figures have been audited or reviewed, the auditors report (including any qualifications or emphasis of matter). Not applicable. 4 Whether the same accounting policies and methods of computation as in the issuer s most recently audited annual financial statements have been applied. The has consistently applied the same accounting policies and methods of computation in the financial statements for the current financial period compared with those of the audited financial statements for the financial year ended 31 December 2015, except for the adoption of the Singapore Financial Reporting Standards ( SFRS ), including improvements to SFRS and Interpretations of FRS ( INT FRS ) that are mandatory for financial years beginning on or after 1 January 2016, during the second quarter ended 30 June 2016, where applicable. The adoption of these new / revised standards and interpretations applicable for the financial year beginning 1 January 2016 did not result in significant change to the s accounting policies and did not have a material impact on the s results. 5 If there are any changes in the accounting policies and methods of computation, including any required by an accounting standard, what has changed, as well as the reasons for, and the effect of, the change. Please refer to item 4 above. 6 Earnings per ordinary share of the for the current financial period reported on and the corresponding period of the immediately preceding financial year, after deducting any provision for preference dividends. 2Q2016 1H Jun Jun Jun Jun-15 Basic earnings per share (cents) Weighted average number of shares ('000) 600, , , ,348 Fully diluted earnings per share (cents) Weighted average number of shares ('000) 626, , , ,912 7 Net asset value (for the Issuer and ) per ordinary share based on the total number of issued shares excluding treasury shares of the issuer at the end of the:- a) current financial period reported on; and b) immediately preceding financial year. Company 30-Jun Dec Jun Dec-15 Net asset value per share (cents) Number of shares in issue ('000) , , , ,618 Page 9 of 13

10 8 A review of the performance of the, to the extent necessary for a reasonable understanding of the s business. It must include a discussion of the following:- a) any significant factors that affected the turnover, costs, and earnings of the for the current financial period reported on, including (where applicable) seasonal or cyclical factors; and b) any material factors that affected the cash flow, working capital, assets or liabilities of the during the current financial period reported on. Review of performance for second quarter ended 30 June 2016 ("2Q2016") Revenue ($'000) IT Infra VDC Total Gross Profit Gross Profit Margin 2Q2016 2Q2015 Change (%) 64,410 57, ,593 15,351 (31.0) 75,003 72, ,133 18, % 25.3% 4.2 The s revenue increased 3.5% or $2.5m to $75.0m in 2Q2016 from $72.5m in 2Q2015. This was mainly from the IT Infrastructure Services ("IT Infra") segment, which grew 12.8% or $7.3m to $64.4m in 2Q2016 from $57.1m in 2Q2015. Existing businesses contributed 7.4% and newly acquired subsidiaries contributed 5.4% to the total growth. Revenue for Vertical Domain Cloud ("VDC") segment was affected by the seasonal nature of the game distribution business, with few blockbuster game launches in 1H2016. Revenue in this segment decreased by $4.8m or 31.0% from $15.4m in 2Q2015 to $10.6m in 2Q2016. Gross profit for the increased 20.6% or $3.7m to $22.1m for 2Q2016 from $18.4m for 2Q2015. Gross profit margin increased by 4.2 percentage points to 29.5% in 2Q2016 from 25.3% in 2Q2015, due to a favourable sales mix comprising a higher proportion of IT Infra recurring revenue which had better margins. Other income increased by $2.9m to $3.4m in 2Q2016 from $0.5m in 2Q2015 primarily due to a remeasurement gain arising from the step-up acquisition of vcargo Cloud Pte Ltd ("VCC"), an associated company of the as at 31 December 2015, whereby the 's shareholding in VCC was increased from 30% to 50.01% as at 30 June Other charges consisted mainly of gain/loss on disposal of plant & equipment, impairment of trade receivables and inventory, amortisation of intangible assets and foreign exchange differences. It decreased to $0.3m for 2Q2016 from $1.0m for 2Q2015 mainly due to a gain of $0.8m from the disposal of plant & equipment, partially offset by higher provision for stock obsolescence, depreciation expense and amortisation of intangible assets arising from M&A activities. Selling expenses increased by 16.7% or $0.5m from $2.5m in 2Q2015 to $3.0m in 2Q2016, mainly due to an increase in marketing activites and higher commission costs. In tandem with the growth in the 's operations, administrative expenses increased by 26.0% or $2.8m from $10.8m in 2Q2015 to $13.6m in 2Q2016. The increase in administrative expenses were attributable to increase in staff costs of $1.6m as a result of additional headcount, as well as rental and other administrative expenses of $1.2m arising from the full period's contribution from newly acquired subsidiaries. Finance costs increased by 169.8% or $0.9m from $0.5m in 2Q2015 to $1.4m in 2Q2016 mainly due to imputed notional non-cash interest cost of $0.7m on the redeemable exchangeable bonds of $6.0m issued by the Company in Jan 2016, as well as an increase in loans and borrowings to support the growth in the 's business operations and M&A activities. The recorded a profit before tax of $7.0m for 2Q2016 as compared to $4.0m for 2Q2015, primarily due to a stronger gross profit and higher other income, partially offset by higher finance costs and maiden operating expenses from newly acquired subsidiaries. After deducting tax expenses of $1.1m, this resulted in a net profit after tax of $5.9m for 2Q2016, an increase of 69.8% from $3.5m for 2Q2015, and a profit attributable to owners of the Company of $5.0m for 2Q2016 as compared to $2.7m for 2Q2015. Review of performance for first half year ended 30 June 2016 ("1H2016") Revenue ($'000) IT Infra VDC Total Gross Profit Gross Profit Margin 1H2016 1H2015 Change (%) 113, , ,703 18,803 (5.9) 131, , ,640 29, % 24.1% 3.0 The s revenue jumped 8.8% or $10.7m to $131.7m in 1H2016 from $121.0m in 1H2015. This was mainly due to good performance from IT Infra segment, which revenue grew 11.6% or $11.8m to $114.0m in 1H2016 from $102.2m in 1H2015. Existing businesses contributed 4.8% and newly acquired subsidiaries contributed 6.8% to the total growth. The revenue for VDC segment decreased by $1.1m or 5.9% from $18.8m in 1H2015 to $17.7m in 1H2016, primarily due its seasonal nature of game distribution businesses. There were few blockbuster game launches in 1H2016 as opposed to a strong pipeline of game launches and hence its distribution in 1H2015. Gross profit for the increased 22.5% or $6.5m to $35.6m for 1H2016 from $29.1m for 1H2015. Gross profit margin increased by 3.0 percentage points to 27.1% in 1H2016 from 24.1% in 1H2015, due to a favourable sales mix comprising a higher proportion of IT Infra recurring revenue which had better margins. Other income increased by $2.9m primarily due to a remeasurement gain arising from the step-up acquisition of vcargo Cloud Pte Ltd ("VCC"), an associated company of the as at 31 December 2015, whereby the 's shareholding in VCC was increased from 30% to 50.01% as at 30 June Page 10 of 13

11 Review of performance for 1H2016 (cont'd) Other charges consisted mainly of gain/loss on disposal of plant & equipment, impairment of trade receivables and inventory, amortisation of intangible assets and foreign exchange differences. It remained relatively unchanged from 1H2015 mainly due to higher provision for stock obsolescence and amortisation expenses on intangible assets arising from M&A activities, fully offset by a gain of $0.8m on disposal of plant & equipment and write-back of $0.5m on impairment of trade receivables. Selling expenses increased by 26.9% or $1.2m from $4.7m in 1H2015 to $5.9m in 1H2016, mainly due to an increase in marketing activites and higher commission costs. In tandem with the growth in the 's operations, administrative expenses increased by 21.1% or $4.6m from $22.0m in 1H2015 to $26.6m in 1H2016. The increase in administrative expenses were attributable to increase in staff costs of $2.8m as a result of additional headcount, as well as rental and other administrative expenses of $1.8m arising from the full period's contribution from newly acquired subsidiaries. Finance costs increased by 178.3% or $1.8m from $1.1m in 1H2015 to $2.9m in 1H2016 mainly due to imputed notional non-cash interest cost of $1.5m on the redeemable exchangeable bonds of $6.0m issued by the Company in Jan 2016, as well as an increase in loans and borrowings to support the growth in the 's business operations and M&A activities. The recorded a profit before tax of $2.9m for 1H2016 as compared to $1.7m for 1H2015, primarily due to a stronger gross profit and higher other income, partially offset by higher finance costs and maiden operating expenses from newly acquired subsidiaries. After deducting tax expenses of $1.4m, this resulted in a net profit after tax of $1.5m for 1H2016, an increase of 79.7% from $0.8m for 1H2015, and a profit attributable to owners of the Company of $0.4m for 1H2016 as compared to $0.1m for 1H2015. Review of financial position Non-current assets a) Property, plant and equipment increased by $3.4m arising from the acquisition of new subsidiaries in 1H2016, office renovation costs and purchases of new equipment, partially offset by depreciation charges. b) Investment in associates decreased by $4.4m as the shareholding interest in VCC, an associated company of the as at 31 December 2015, increased via a step-up acquisition, and VCC had become a subsidiary as at 30 June c) Intangible assets increased by $17.2m mainly due to the 's acquisitions of entities in 1H2016 which gave rise to goodwill of $15.5m and intangibles of $4.5m, partially offset by amortisation charges of $1.6m and translation losses of $1.2m. Current assets d) Inventories went up by $12.8m, of which $4.5m arose from the acquisition of a subsidiary in 1H2016. The remaining $8.4m was mainly due to an increase in inventory levels to meet anticipated orders under the IT Infra segment. e) Trade and other receivables increased by $7.2m, of which $3.0m was from the acquisition of new subsidiaries in 1H2016. The remaining $4.2m was primarily due to the s growth in business activities. At the Company's level, the increase in trade and other receivables of $2.2m mainly relates to owings from subsidiaries for corporate service charges, cash extended to and the Company's shares issued for M&A activities at the respective subsidiaries' levels. f) Other assets increased by $2.4m mainly due to non-trade prepayments and advance payments made to suppliers. g) The movement in cash and bank balances is illustrated in the statement of cash flows and review of cash flows. Equity h) Share capital increased by $20.7m due to the following: Acquisition of non-controlling interests of Procurri Asia Pacific Pte Ltd Acquisition of non-controlling interests of Epicsoft Asia Pte Ltd Acquisition of TJ Systems Pte Ltd Acquisition of vcargo Cloud Pte Ltd Issuance of new shares under the Performance Share Plan Share issue expenses Total $'000 7,000 4,550 3,000 4,000 2,139 (24) 20,665 i) The increase in negative other reserves of $10.2m comprised the premium of $6.9m paid for the acquisition of Procurri Asia Pacific Pte Ltd's remaining non-controlling interest, $2.1m from the issuance of performance shares and comprehensive income of $1.9m, partially offset by share-based payments of $0.7m. Liabilities j) The increase in loans and borrowings (both current and non-current) of $18.8m comprised $7.5m of redeemable exchangeable bonds and $11.3m mainly from loans to fund working capital. k) Other liabilities (current) increased by $2.2m mainly due to advance payments by customers. Page 11 of 13

12 Review of cash flows During 1H2016, the 's cash and cash equivalents decreased by $4.4m to $17.3m as of 30 June 2016 from $21.7m as at 31 December The significant cash movements during 1H2016 are as follows: i) Net cash used in operating activities in 1H2016 amounted to $13.2m as compared to an inflow of $4.8m in 1H2015. This was mainly due to increases in inventories and payables amounting to $11.0m and $9.6m respectively and taxes paid of $1.3m, partially offset by an operating cash inflow (before changes in working capital) of $6.1m and net decrease in receivables of $2.6m. ii) Net cash used in investing activities in 1H2016 was $5.4m as compared to $2.0m in 1H2015. This was mainly due to purchases of plant and equipment amounting to $6.3m, net cash inflows outflows of $1.0m from the acquisition of subsidiaries, partially offset by proceeds of $1.9m from the disposal of plant and equipment. iii) Net cash generated from the financing activities in 1H2016 was $14.2m as compared to an outflow of $0.9m in 1H2015. This was mainly due to net proceeds from loans and borrowings amounting to $15.4m, partially offset by interest paid of $1.2m. 9 Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results. Not applicable. No forecast or prospect statement had been previously disclosed to shareholders for the second quarter and first half year ended 30 June A commentary at the date of the announcement of the significant trends and competitive conditions of the industry in which the operates and any known factors or events that may affect the in the next reporting period and the next 12 months. The has successfully spun off its portfolio company, Procurri Corporation Limited which was listed on the Main Board of the SGX-ST on 20 July 2016 with a market capitalization of approximately $157 million based on its initial offering price, few-fold its net book value. With a 47% interest in Procurri, the will continue to participate in Procurri s long-term growth. Concurrently, the listing allows Procurri to independently finance its own growth and expansion and in turn, allows the to focus its capital and resources on the rest of the business groups. The 1H2016 performance of the remaining 2 business groups under the IT Infra segment, Acclivis and Beaqon were also boosted with the integration of Pacific Internet into Acclivis as well as the acquisition and integration of TJ Systems into Beaqon. With both business groups expecting to sustain their momentum into the second half of the financial year, the will work towards the harvest of these two business groups to generate attractive returns to shareholders. The will focus on growth for the second half of the year which is traditionally much stronger in performance than the first half of the year. It will also continue to extract synergies of our business operations by improving productivity; consolidation of operations and incubate new business initiatives when opportunities arise. In May 2016, DeClout Limited ("DeClout") was awarded a $10 million venture capital fund by the National Research Foundation (NRF). Under the scheme, NRF will match investments by DeClout on a 1:1 basis with a focus on big data analytics, smart logistics, cyber security and financial technology (fintech). Beyond the NRF co-investment and barring any unforeseen circumstances, the expects to grow in all its business groups with other co-investments. 11 Dividend (a) Current Financial Period Reported On Any dividend declared for the current financial period reported on? None. (b) Corresponding Period of the Immediately Preceding Financial Year Any dividend declared for the corresponding period of the immediately preceding financial year? None. (c) Date payable Not applicable. (d) Book closure date Not applicable. Page 12 of 13

13 12 If no dividend has been declared (recommended), a statement to that effect. No dividend has been declared or recommended for the second quarter ended 30 June If the has obtained a general mandate from shareholders for Interested Person Transactions (IPTs), the aggregate value of such transactions as required under Rule 920(1)(a)(ii). If no IPT mandate has been obtained, a statement to that effect. The has not obtained a general mandate from shareholders for IPTs. There was no IPT for the second quarter and first half year ended 30 June Confirmation pursuant to Rule 705 (5) of the Listing Manual To the best of our knowledge, nothing has come to the attention of the Board of Directors of DeClout Limited, which may render the unaudited interim financial statements of the and the Company for the second quarter and first half year ended 30 June 2016 to be false or misleading in any material aspect. 15 Confirmation pursuant to Rule 720 (1) of the Listing Manual The Company confirms that it has procured the Undertakings from all its Directors and Executive Officers in the format set out in Appendix 7H pursuant to Rule 720(1) of the Listing Manual. BY ORDER OF THE BOARD Lee Bee Fong Company Secretary 11 August 2016 Page 13 of 13