PART I - INFORMATION REQUIRED FOR QUARTERLY (Q1, Q2 & Q3), HALF-YEAR AND FULL YEAR ANNOUNCEMENTS

Transcription

1 DECLOUT LIMITED (Registration No: W) UNAUDITED FINANCIAL STATEMENTS AND DIVIDEND ANNOUNCEMENT FOR THE THIRD QUARTER ENDED 30 SEPTEMBER 2016 ("3Q2016") This announcement has been prepared by the Company and its contents have been reviewed by the Company s sponsor, SAC Advisors Private Limited ( 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 Lee Khai Yinn (Tel: (65) ) at 1 Robinson Road, #21-02 AIA Tower, Singapore SAC Advisors Private Limited is a wholly owned subsidiary of SAC Capital Private Limited. 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. 3Q2016 9M Sep Sep-15 Change 30-Sep Sep-15 Change $'000 $'000 % $'000 $'000 % Revenue 81,162 67, , , Cost of sales (60,958) (50,540) 20.6 (156,991) (142,409) 10.2 Gross profit 20,204 16, ,844 46, Other items of income Other income N.M. 4,877 1, Other items of expense Other charges, net (1,146) 147 N.M. (2,347) (1,034) Selling expenses (3,222) (3,667) (12.1) (9,166) (8,351) 9.8 Administrative expenses (18,565) (12,267) 51.3 (45,164) (34,236) 31.9 Finance costs (1,013) (822) 23.2 (3,957) (1,880) Share of results of associates (53.7) (277) 235 N.M. (Loss) / Profit before tax (3,086) 463 N.M. (190) 2,121 N.M. Income tax expense (240) (262) (8.4) (1,684) (1,112) 51.4 (Loss) / Profit, net of tax (3,326) 201 N.M. (1,874) 1,009 N.M. Profit, net of tax attributable to: Owners of the Company (3,463) (383) N.M. (3,052) (245) N.M. Non-controlling interests (76.5) 1,178 1,254 (6.1) (3,326) 201 N.M. (1,874) 1,009 N.M. N.M. - Not meaningful Page 1 of 14

2 Statement of comprehensive income 3Q2016 9M Sep Sep-15 Change 30-Sep Sep-15 Change Note $'000 $'000 % $'000 $'000 % Other comprehensive income Foreign currency translation 1 (195) 125 N.M. (2,780) (230) N.M. Other comprehensive income for the period, net of tax (195) 125 N.M. (2,780) (230) N.M. Total comprehensive income for the period (3,521) 326 N.M. (4,654) 779 N.M. Total comprehensive income attributable to: Owners of the Company (3,507) (330) N.M. (4,949) (366) N.M. Non-controlling interests (14) 656 N.M ,145 (74.2) Total comprehensive income for the period (3,521) 326 N.M. (4,654) 779 N.M. Notes to Income Statement Note Other income Interest income (3.6) Gain on remeasurement of an associate pursuant to a step-up acquisition N.M. 2,898 - N.M. Others (4) N.M. 1,790 1, N.M. 4,877 1, Other charges, net Allowance / (Write-back) for impairment on trade receivables (281) 231 N.M. Plant and equipment written off 2 - N.M. 6 - N.M. Provision for stock obsolescence , Foreign exchange (gain) / loss (322) (735) (56.2) 175 (414) N.M. Gain on disposal of plant and equipment, net 5 (194) (270) (28.1) (1,034) (289) Amortisation of intangible assets 6 1, , Others - 8 N.M. - 1 N.M. 1,146 (147) N.M. 2,347 1, Other items Amortisation of intangible assets (included in cost of sales) (12.0) (12.6) Depreciation of plant and equipment 7 1,901 1, ,129 4, Listing expenses (included in administrative expenses) 8 2,181 - N.M. 2,181 - N.M. Interest expenses 9 1, ,957 1, N.M. - Not meaningful Notes (1) Under Other comprehensive income, the amounts of $0.2m and $2.8m for 3Q2016 and nine months ended 30 September 2016 ("9M2016") respectively, represented the loss arising mainly from the translation of the s net asset of foreign operations in America and Europe which are denominated in US dollar (USD) and British Pound (GBP) respectively. The GBP weakened against Singapore dollar ($) by 2.6% in 3Q2016, while the USD and GBP had weakened against the $ by 3.4% and 15.6% in 9M2016 respectively. (2) The remeasurement gain of $2.9m for 9M2016 arose 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 (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 9M2016 arose mainly from the recovery of debts which were previously impaired. (5) The net gains on disposal of plant and equipment of $0.2m and $1.0m for 3Q2016 and 9M2016 respectively, were 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 OSINet Communications Pte Ltd (now known as Pacific Internet (S) Pte Ltd), Procurri Asia Pacific Pte Ltd ("PAP"), certain assets of the Internet Service Provider business of Pacnet Internet (S) Pte Ltd, Pacnet Internet (Thailand) Limited (now known as Pacific Internet (Thailand) Limited), TJ Systems (S) Pte Ltd and VCC. (7) The increase in depreciation of plant and equipment for 3Q2016 and 9M2016 was mainly due to an increase in new purchases of plant and equipment and also arising from the acquisition of subsidiaries. (8) The listing expenses of $2.2m relates to expenses incurred on the initial public offering ("IPO") of Procurri Corporation Limited. (9) The higher interest expenses for 9M2016 were primarily due to imputed notional non-cash interest cost of $1.5m on the redeemable exchangeable bonds of $6.0m issued by the Company in January 2016 and redeemed in July 2016, as well as more borrowings taken up for acquisitions and funding of working capital. Page 2 of 14

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-Sep Dec Sep Dec-15 $'000 $'000 $'000 $'000 Non-current assets Property, plant and equipment 23,322 19, Investment in subsidiaries ,418 67,661 Investment in associates 3,421 7, Intangible assets 73,765 58, Finance lease receivables 4,160 1, Other financial receivable 1,522 1, Deferred tax assets 3,630 3, Total non-current assets 109,820 91,954 80,905 68,192 Current assets Inventories 27,399 18, Trade and other receivables 91,049 80,856 42,066 36,605 Finance lease receivables 3,414 1, Other assets 8,174 4, Cash and bank balances 45,334 22,724 1, Total current assets 175, ,944 43,808 37,417 Total assets 285, , , ,609 Equity Share capital 114,053 86, ,053 86,953 Retained earnings 7,735 10,787 (8,129) (5,163) Other reserves (11,225) (15,911) 4,182 3,769 Equity attributable to owners of the Company 110,563 81, ,106 85,559 Non-controlling interests 47,990 21, Total equity 158, , ,106 85,559 Non-current liabilities Deferred tax liabilities 1,284 1, Trade and other payables 3,685 3, Loans and borrowings 14,628 17,610 1,000 8,250 Provisions Total non-current liabilities 20,064 22,393 1,238 8,488 Current liabilities Trade and other payables 41,053 49,316 3,783 7,139 Other liabilities 6,700 3, Loans and borrowings 58,025 39,745 9,586 4,423 Income tax payables 795 1, Total current liabilities 106,573 93,968 13,369 11,562 Total liabilities 126, ,361 14,607 20,050 Total equity and liabilities 285, , , ,609 Page 3 of 14

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-Sep-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 23,545 34,480 58,025 21,071 18,674 39,745 Amount repayable after one year 3,781 10,847 14,628 10,346 7,264 17,610 27,326 45,327 72,653 31,417 25,938 57,355 Details of collaterals The above borrowings of $27.3m are secured by the following: 1 Term loans of $5.8m secured by charges over certain properties and corporate guarantees issued by the Company and some of its subsidiaries. 2 Trade facilities of $19.1m comprising trust receipts and trade receivables factoring. 3 Finance lease obligations of $2.4m secured by charges over the leased assets and inventories. Page 4 of 14

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. 3Q2016 9M Sep Sep Sep Sep-15 $'000 $'000 $'000 $'000 Cash flows from operating activities (Loss) / Profit before tax (3,086) 463 (190) 2,121 Depreciation of plant and equipment 1,901 1,494 5,129 4,187 Amortisation of intangible assets 1, ,744 1,287 Gain on disposal of plant and equipment, net (194) (270) (1,034) (289) Plant and equipment written off Share-based payments ,545 2,303 Interest income (84) (78) (189) (196) Interest expenses 1, ,957 1,880 Share of results of associates (19) (41) 277 (235) Gain on remeasurement of an associate pursuant to a step-up acquisition - - (2,898) - Exchange differences (201) 459 (1,817) 780 Operating cash flows before changes in working capital 1,395 4,142 7,530 11,838 Decrease / (Increase) in inventories 4,126 (1,219) (6,916) (5,549) (Increase) / Decrease in trade and other receivables (2,738) 14, ,269 Increase in finance lease receivables (4,593) (785) (4,952) (959) (Increase) / Decrease in other assets (1,154) 1,436 (3,242) 945 Decrease in trade and other payables (7,196) (13,343) (16,766) (7,155) Increase in other liabilities ,793 2,052 Cash (used in) / generated from operations (9,384) 5,113 (21,325) 11,441 Income taxes paid (485) (294) (1,784) (1,811) Net cash flows (used in) / generated from operating activities (9,869) 4,819 (23,109) 9,630 Cash flows from investing activities Purchase of property, plant and equipment (2,495) (836) (8,833) (3,728) Proceeds from disposal of property, plant and equipment (532) 5 1, Net cash (outflows) / inflows from acquisition of subsidiaries - - (1,013) 761 Interest received Net cash flows used in investing activities (2,943) (753) (8,303) (2,746) Cash flows from financing activities Share issuance expenses (8) (8) (32) (24) Dividends paid to non-controlling interests (61) (120) (61) (120) Proceeds from disposal of interests of a subsidiary without a loss in control 36,973-36,973 - Contributions from non-controlling interests 45 2, ,072 Acquisition of non-controlling interests (1,058) (19,333) (1,064) (19,333) Release / (Placement) of fixed deposits pledged for bank facilities 3 - (62) 168 Proceeds from loans and borrowings 37,124 33, ,468 59,086 Repayments of loans and borrowings (32,474) (12,212) (91,391) (39,135) Interest paid (479) (822) (1,651) (1,880) Net cash flows generated from financing activities 40,065 3,722 54,225 2,834 Net increase in cash and cash equivalents 27,253 7,788 22,813 9,718 Cash and cash equivalents at beginning of financial period 17,262 12,291 21,702 10,361 Cash and cash equivalents at end of financial period 44,515 20,079 44,515 20,079 Cash and cash equivalents comprise the following: Cash and bank balances 45,334 20,944 45,334 20,944 Less: Bank overdraft (367) (459) (367) (459) Less: Fixed deposits pledged as collateral for banker's guarantee (253) (197) (253) (197) Less: Fixed deposits pledged as collateral for banking facilities (199) (209) (199) (209) Cash and cash equivalents 44,515 20,079 44,515 20,079 Page 5 of 14

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. For the third quarter ended 30 September Total Equity Attributable to Shareholders Share Capital Other Reserves Retained Earnings Non- Controlling Interests $'000 $'000 $'000 $'000 $'000 $'000 At 1 July ,751 92, ,618 (26,106) 11,198 25,041 Total comprehensive income for the period (3,521) (3,507) - (44) (3,463) (14) Issuance of ordinary shares pursuant to DeClout Performance Share Plan ("PSP") (155) - - Dividends paid to non-controlling interests (61) (61) Contributions from non-controlling interests 37, ,018 Share issuance expense (8) (8) (8) Share-based payments Changes in ownership interests in subsidiaries Changes in non-controlling interests of a subsidiary without a change in control 6,483 20,477 6,288 14,189 - (13,994) At 30 September , , ,053 (11,225) 7,735 47,990 At 1 July ,790 68,920 69,483 (6,510) 5,947 14,870 Total comprehensive income for the period 326 (330) - 53 (383) 656 Issuance of ordinary shares for acquisitions of subsidiaries 4,500 4,500 4, Issuance of ordinary shares pursuant to PSP (136) - - Contributions from non-controlling interests 2, ,615 Share issuance expense (8) (8) (8) Share-based payments Changes in ownership interests in subsidiaries Acquisition of subsidiaries Changes in non-controlling interests of a subsidiary without a change in control (28,433) (21,100) - (21,100) - (7,333) At 30 September ,677 52,771 74,111 (26,904) 5,564 10,906 Page 6 of 14

7 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. For the nine months ended 30 September 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 (4,654) (4,949) - (1,897) (3,052) 295 Issuance of ordinary shares for acquisitions of subsidiaries 11,550 11,550 11, Issuance of ordinary shares pursuant to PSP - - 2,294 (2,294) - - Dividends paid to non-controlling interests (61) (61) Contributions from non-controlling interests 37, ,018 Share issuance expense (32) (32) (32) Share-based payments 1,545 1,545-1, 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 6,477 19,405 13,288 6,117 - (12,928) At 30 September , , ,053 (11,225) 7,735 47,990 At 1 January ,484 46,964 41,775 (620) 5,809 12,520 Total comprehensive income for the period 779 (366) - (121) (245) 1,145 Issuance of ordinary shares for acquisitions of subsidiaries 31,286 31,286 31, Issuance of ordinary shares pursuant to PSP - - 1,074 (1,074) - - Dividends paid to non-controlling interests Contributions from non-controlling interests Share issuance expense Share-based payments Changes in ownership interests in subsidiaries (120) (120) 3, ,974 (24) (24) (24) ,303 2,303-2, Acquisition of subsidiaries Changes in non-controlling interests of subsidiaries without a change in control (34,103) (27,392) - (27,392) - (6,711) At 30 September ,677 52,771 74,111 (26,904) 5,564 10,906 Page 7 of 14

8 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 third quarter ended 30 September Total Share Other Retained Equity Capital Reserves Earnings $'000 $'000 $'000 $'000 At 1 July , ,618 3,499 (10,422) Total comprehensive income for the period 2, ,293 Issuance of ordinary shares for acquisitions of subsidiaries 6,288 6, Issuance of ordinary shares pursuant to PSP (155) - Share issuance expense (8) (8) - - Share-based payments Changes in ownership interests in subsidiaries Acquisition of subsidiaries At 30 September , ,053 4,182 (8,129) At 1 July ,084 69,483 1,812 (2,211) Total comprehensive income for the period (1,954) - - (1,954) Issuance of ordinary shares for acquisitions of subsidiaries 4,500 4, Issuance of ordinary shares pursuant to PSP (136) - Share issuance expense (8) (8) - - Share-based payments At 30 September ,411 74,111 2,465 (4,165) Company For the nine months ended 30 September 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 (2,966) - - (2,966) Issuance of ordinary shares for acquisitions of subsidiaries 24,838 24, Issuance of ordinary shares pursuant to PSP - 2,294 (2,294) - Share issuance expense (32) (32) - - Share-based payments 1,492-1,492 - Changes in ownership interests in subsidiaries Acquisition of subsidiaries 1,215-1,215 - At 30 September , ,053 4,182 (8,129) At 1 January ,311 41,775 1,236 (700) Total comprehensive income for the period (3,465) - - (3,465) Issuance of ordinary shares for acquisitions of subsidiaries 31,286 31, Issuance of ordinary shares pursuant to PSP - 1,074 (1,074) - Share issuance expense (24) (24) - - Share-based payments 2,303-2,303 - At 30 September ,411 74,111 2,465 (4,165) Page 8 of 14

9 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 issuance expenses - (16) As at 31 March , ,626 Issuance of ordinary shares pursuant to acquisition of a subsidiary 20,000 4,000 Share issuance expenses - (8) As at 30 June , ,618 Issuance of ordinary shares pursuant to acquisition of non-controlling interests 31,400 6,288 Issuance of ordinary shares pursuant to performance share plan Share issuance expenses - (8) As at 30 September , ,053 B) Shares options - employee share option scheme Between 1 January 2016 and 30 September 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 September 2016, unchanged from the balance as at 30 September Details of the outstanding options as at 30 September 2016 are as follows: Outstanding Options as at Exercise Price Exercisable Period 30-Sep-15 and 30-Sep-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 September 2016, the number of outstanding awards granted under the performance share plan was 16,515,000 (30 September 2015: 20,857,500). 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 September 2016 and 30 September Save as disclosed above, the Company has no other outstanding convertibles as at 30 September 2016 and 30 September 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 September 2016 was 670,934,090 (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 9 of 14

10 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 third quarter ended 30 September 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. 3Q2016 9M Sep Sep Sep Sep-15 Basic earnings per share (cents) (0.56) (0.09) (0.49) (0.06) Weighted average number of shares ('000) 617, , , ,539 Fully diluted earnings per share (cents) (0.54) (0.08) (0.47) (0.05) Weighted average number of shares ('000) 645, , , ,912 Excluding the one-time expenses arising as a consequence of Procurri s listing, the EPS for both basic and on a fully diluted basis would be as follows: 3Q2016 9M2016 Basic earnings per share (cents) (0.34) (0.13) Fully diluted earnings per share (cents) (0.33) (0.12) 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-Sep Dec Sep Dec-15 Net asset value per share (cents) Number of shares in issue ('000) , , , ,618 Page 10 of 14

11 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. The achieved a major milestone on the spin-off of its subsidiary, Procurri Corporation Limited ( Procurri ), on 20 July 2016 with a market capitalization of $157m based on its initial public offering price. The s shareholding in Procurri is diluted from approximately 69.0% to approximately 47.3% after the listing, notwithstanding, continues to consolidate Procurri s results under the applicable accounting standards as it continues to hold substantive voting rights in Procurri. With this accounting treatment, a dilution gain of $18.9m was recorded as a movement in reserves. A mark-to-market revaluation gain based on the initial public offering price on Procurri s listing of approximately $44m is not recognised in the s financial statements. Review of performance for third quarter ended 30 September 2016 ("3Q2016") Revenue ($'000) IT Infra VDC Total Gross Profit ($'000) IT Infra VDC Total Gross Profit Margin (%) IT Infra VDC Total 3Q2016 3Q2015 Change (%) 64,211 60, ,951 7, ,162 67, ,766 16, , ,204 16, % 26.6% 8.5% 12.8% 24.9% 25.1% The s revenue increased 20.2% or $13.7m from $67.5m in 3Q2015 to $81.2m in 3Q2016. The Vertical Domain Cloud ("VDC") segment and IT Infrastructure Services ("IT Infra") segment grew 134.4% ($9.7m) and 6.5% ($4.0m) respectively. Existing businesses contributed 10.7% and newly acquired subsidiaries contributed 9.5% to the total growth. Had GBP not nose-dive by 17.4% against $ due to Brexit, revenue for 3Q2016 from IT Infra segment would have been higher by $2.0m, increase in revenue would have been 23.3% or $15.7m. Gross profit for the increased 19.1% or $3.2m from $17.0m for 3Q2015 to $20.2m for 3Q2016. The growth is in tandem with growth in revenue from both segments. On basis, gross profit margin ("GPM") is relatively unchanged though there is an increase in IT Infra's GPM of 2.6 percentage points, it was fully offset by lower margins from the platform business under the VDC segment. The increase in other income of $0.6m comprised mainly rebates from suppliers and recovery of freight costs. Other charges of $1.1m consisted mainly of amortisation of intangible assets arising from the acquisition of a few subsidiaries since 4Q2015. Selling expenses decreased by 12.1% or $0.5m from $3.7m in 3Q2015 to $3.2m in 3Q2016, mainly due to a drop in sales commission arising from one of the subsidiaries from the IT Infra segment. Administrative expenses increased by 51.3% or $6.3m from $12.3m in 3Q2015 to $18.6m in 3Q2016. The increase in administrative expenses were attributable to Procurri's listing expenses of $2.2m, increase of $2.9m from newly acquired subsidiaries and new operations which were not active in prior year, and increase in operating costs of $1.2m from existing operations. Finance costs increased by 23.2% or $0.2m from $0.8m in 3Q2015 to $1.0m in 3Q2016 mainly due to an increase in loans and borrowings to support the growth in the 's business operations and M&A activities. The recorded a loss before tax of $3.1m for 3Q2016 as compared to a profit $0.5m for 3Q2015. After deducting tax expenses of $0.2m, this resulted in a net loss after tax of $3.3m for 3Q2016, as compared to a profit of $0.2m for 3Q2015. Excluding the one-time Procurri s listing expenses, the loss after tax would be $1.1m which is mainly attributed to operating losses from subsidiaries in VDC segment as we continue to invest, develop and grow our market share. The loss after tax attributable to the is $3.5m for 3Q2016, significantly higher as compared to a loss of $0.4m for 3Q2015, mainly attributable to the s share of Procurri s listing expenses and lower share of profit after its listing as a result of the s dilution in shareholding from 69.0% to approximately 47.3%. Excluding the one-time expenses arising as a consequence of Procurri s listing, the loss after tax attributable to the would be $2.1m, attributed mainly to the operating losses of companies in VDC segment as we continue to invest, develop and grow our market share. Page 11 of 14

12 Review of performance for nine months ended 30 September 2016 ("9M2016") Revenue ($'000) IT Infra VDC Total Gross Profit ($'000) IT Infra VDC Total Gross Profit Margin (%) IT Infra VDC Total Review of financial position Non-current assets 9M2016 9M2015 Change (%) 178, , ,654 26, , , ,427 40, ,417 5,463 (37.5) 55,844 46, % 25.0% 9.9% 21.0% 26.2% 24.4% The s revenue increased 12.9% or $24.3m from $188.5m in 9M2015 to $212.8m in 9M2016. The VDC segment and IT Infra segment grew 33.1% ($8.6m) and 9.7% ($15.7m) respectively. Existing businesses contributed 5.8% and newly acquired subsidiaries contributed 7.1% to the total growth. Had GBP not devalued by 8.9% against $ due to Brexit, revenue for 9M2016 from IT Infra segment would have been higher by $2.8m, increase in revenue would have been 14.4% or $27.1m. Gross profit for the increased 21.2% or $9.8m from $46.0m for 9M2015 to $55.8m for 9M2016. Gross profit margin ( GPM ) increased by 1.8 percentage points from 24.4% in 9M2015 to 26.2% in 9M2016. IT Infra segment s GPM increased 4.4 percentage points contributed by a favourable sales mix comprising a higher proportion of recurring revenue which had better margins. This increase is partially offset by a 11.1 percentage points drop in VDC segment s GPM due to the absence of high-margin blockbuster game titles, as well as the venture into the new platform business whereby initial promotional discounts were granted to gain market share and user base, thereby eroding the margins. Other income increased by $3.5m primarily due to a re-measurement gain of $2.9m arising from the step-up acquisition of an associated company of the which has become a subsidiary in June The remaining $0.6m comprised mainly rebates from suppliers and recovery of freight costs. Other charges increased by $1.3m mainly due to $1.5m higher amortisation charge of intangible assets arising from new subsidiaries acquired since 4Q2015. The higher amount of provision for stock obsolescence and foreign currency losses were offset by a gain on disposal of plant & equipment and write-back on impairment of receivables. Selling expenses increased by 9.8% or $0.8m from $8.4m in 9M2015 to $9.2m in 9M2016, mainly due to an increase in marketing activites and higher commission costs. Administrative expenses increased by 31.9% or $11.0m from $34.2m in 9M2015 to $45.2m in 9M2016. The increase in administrative expenses were attributable to Procurri's listing expenses of $2.2m, increase of $6.6m from newly acquired subsidiaries and new operations which were not active in prior year, and increase in operating costs of $2.2m from existing operations. Finance costs increased by 110.5% or $2.1m from $1.9m in 9M2015 to $4.0m in 9M2016 mainly due to imputed notional non-cash interest cost of $1.5m on the redeemable exchangeable bonds which were issued in January 2016 and subsequently redeemed in July 2016 upon Procurri's listing on the Main Board of SGX-ST, as well as an increase in loans and borrowings to support the growth in the 's business operations and M&A activities. Loss before tax for 9M2016 is $0.2m, compare to a profit of $2.1m in 9M2015. After deducting tax expenses of $1.7m, this resulted in a net loss after tax of $1.9m for 9M2016, as compared to a profit of $1.0m for 9M2015. Excluding the one-time Procurri's listing expenses of $2.2m and part of imputed notional interest cost of $0.9m recognized as a consequence of the listing, 9M2016 profit after tax would be $1.2m. The loss after tax attributable to the is $3.1m for 9M2016, significantly higher as compared to a loss of $0.2m for 9M2015, mainly attributable to the s share of Procurri s listing expenses and lower share of profit after its listing as a result of the s dilution in shareholding from 69.0% to approximately 47.3%. Excluding the one-time expenses arising as a consequence of Procurri s listing, the loss after tax attributable to the would be $0.8m, attributed mainly to the operating losses of companies in VDC segment as we continue to invest, develop and grow our market share. a) Property, plant and equipment increased by $3.9m arising from the acquisition of new subsidiaries in 9M2016, 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 an associated company of the as at 31 December 2015, increased via a step-up acquisition in 2Q2016, and had become a subsidiary. c) Intangible assets increased by $15.7m mainly due to the 's acquisitions of entities in 9M2016 which gave rise to goodwill of $10.5m and intangibles of $9.4m, partially offset by amortisation charges of $2.7m and translation losses of $1.5m. Current assets d) Inventories went up by $8.9m, of which $3.3m arose from the acquisition of a subsidiary in 9M2016. The remaining $5.6m 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 $10.2m, of which $5.2m was from the acquisition of new subsidiaries in 9M2016. The remaining $5.0m was primarily due to the s growth in business activities. At the Company's level, the increase in trade and other receivables of $5.5m 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) Finance lease receivables (current and non-current) increased by $4.9m due to new leases secured during the period. g) Other assets increased by $3.6m mainly due to non-trade prepayments and advance payments made to suppliers. h) The movement in cash and bank balances is illustrated in the statement of cash flows and review of cash flows. Page 12 of 14

13 Review of financial position (cont'd) Equity i) Share capital increased by $27.1m due to issuance of shares for 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 (S) Pte Ltd Acquisition of vcargo Cloud Pte Ltd Issuance of new shares under the Performance Share Plan Acquisition of non-controlling interests of Play-E Pte Ltd Share issuance expenses Total $'000 7,000 4,550 3,000 4,000 2,294 6,288 (32) 27,100 j) The decrease in negative other reserves of $4.7m is made up of (i) $6.1m which comprised $18.9m of gain from the dilution of interests in Procurri post IPO partially offset by premiums paid for the acquisition of remaining non-controlling interests of PAP and Play-E Pte Ltd, (ii) $1.2m from the step-up acquisition of an associated company which became a subsidiary, (iii) share based payments of $1.6m, and deducting (iv) other comprehensive income of $1.9m and (v) issuance of performance shares of $2.3m. Liabilities k) The increase in loans and borrowings (both current and non-current) of $15.3m comprised mainly of loans to fund working capital and utilisation of trade facilities for business activities. l) The decrease in trade and other payables (current) of $8.3m was mainly for payments made to suppliers. m) Other liabilities (current) increased by $3.0m mainly due to advance payments by customers. Review of cash flows During 9M2016, the 's cash and cash equivalents increased by $22.8m to $44.5m as of 30 September 2016 from $21.7m as at 31 December The significant cash movements during 9M2016 were as follows: i) Net cash used in operating activities in 9M2016 amounted to $23.1m as compared to an inflow of $9.6m in 9M2015. This was mainly due to increases in inventories, finance lease receivables and other assets totaling $15.1m, decrease in payables of $16.8m and taxes paid of $1.8m, partially offset by an operating cash inflow (before changes in working capital) of $7.5m and increase in other liabilities of $2.8m. ii) Net cash used in investing activities in 9M2016 was $8.3m as compared to $2.7m in 9M2015. This was mainly due to purchases of plant and equipment amounting to $8.8m and net cash outflows of $1.0m from the acquisition of subsidiaries, partially offset by proceeds of $1.4m from the disposal of plant and equipment. iii) Net cash generated from the financing activities in 9M2016 was $54.2m as compared to $2.8m in 9M2015. This was mainly due to contributions of $37.0m from non-controlling interests ("NCI") of Procurri post IPO and proceeds from loans and borrowings of $111.5m, partially offset by repayment of loans and borrowings totaling $91.4m, interest payment of $1.7m and acquisition of NCI amounting to $1.1m. 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 third quarter and nine months ended 30 September 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. We begin to feel the impact from Brexit s weakening GBP and the weak economy in the United Kingdom (UK) are expected to persist in the near future, dragging down our UK operation performance which contributed more than 10% to the s revenue. The weaker economic outlook in Singapore and the volatility of global markets will continue to pose challenges for our operations both locally and globally. Overall, we expect the external economic and political environment may have a negative impact on the. In 3Q2016, the has raised $38.6m with the IPO of Procurri and expects to raise another $45.6 from the divestment of Acclivis (which is pending legal completion of the divestment transaction). We have positioned ourselves well for the upcoming volatile environment. On 12 October 2016, the announced the proposed disposal of Acclivis, which it had subsequently obtained shareholders approval for the said disposal at an extraordinary general meeting held on 28 October This disposal allows the to generate greater value for the shareholders. The transaction is expected to add liquidity to the, strengthen the s balance sheet, turn the from a net debt to net cash position and provide better opportunity for the to expand its existing businesses and in the search for new business initiatives. The gain arising from the disposal will boost the 's performance in the final quarter of the year, which is also traditionally the strongest quarter for our businesses. Moving forward, the has lined up plans to grow its remaining businesses organically and inorganically to offset the revenue and profit gap left by the divestment of Acclivis from the. It has also setup joint venture with entity of National Research Foundation ("NRF") to activate its $10 million NRF grant to commence investing in a pipeline of identified start-ups. Page 13 of 14

14 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. 12 If no dividend has been declared (recommended), a statement to that effect. No dividend has been declared or recommended for the third quarter ended 30 September 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 third quarter and nine months ended 30 September 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 third quarter and nine months ended 30 September 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 Teo Meng Keong Company Secretary 10 November 2016 Page 14 of 14