亿仕登控股(01656) - 2019 - 中期财报

Company Information Basic Company Information ISDN Holdings Limited is a public company incorporated in Singapore, listed on the mainboards of SGX and HKEX - Company Registration Number: 200416788Z[5] - Listed on the mainboards of the Singapore Exchange Securities Trading Limited (SGX-ST) and The Stock Exchange of Hong Kong Limited (HKEX)[15] - Board members include Lim See Kiat (Chairman), Teo Cher Koon, Kong De Yang, Soh Meng Kiat, Tan Soon Liang, Toh Hsiang-Wen Keith[5] - Auditor is Mazars LLP[5] Condensed Interim Consolidated Statement of Comprehensive Income Financial Performance Overview For the six months ended June 30, 2019, the Group's revenue decreased by 9.3% to S$146,963 thousand, gross profit decreased by 10.3% to S$37,399 thousand, profit for the period significantly dropped by 38.4% to S$8,324 thousand, and basic earnings per share fell from 2.55 S$ cents to 1.35 S$ cents Financial Performance Summary (S$ thousand) | Metric | H1 2019 (S$ thousand) | H1 2018 (S$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 146,963 | 162,104 | -9.3% | | Gross Profit | 37,399 | 41,703 | -10.3% | | Profit Before Income Tax | 10,921 | 18,034 | -39.4% | | Profit for the Period | 8,324 | 13,524 | -38.4% | | Profit for the Period Attributable to Owners of the Company | 5,548 | 10,076 | -44.9% | | Basic Earnings Per Share (S$ cents) | 1.35 | 2.55 | -47.0% | Condensed Interim Consolidated Statement of Financial Position Assets and Liabilities Position As of June 30, 2019, the Group's total assets increased to S$292,722 thousand, driven by growth in non-current and current assets, while total liabilities slightly decreased, leading to an increase in total equity Assets and Liabilities Summary (S$ thousand) | Metric | As of June 30, 2019 (S$ thousand) | As of Dec 31, 2018 (S$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Total Non-Current Assets | 92,702 | 89,816 | +3.2% | | Total Current Assets | 200,020 | 193,285 | +3.5% | | Total Assets | 292,722 | 283,101 | +3.4% | | Total Equity | 194,565 | 182,208 | +6.8% | | Total Liabilities | 98,157 | 100,893 | -2.7% | - Among non-current assets, service concession receivables increased to S$32,576 thousand (Dec 31, 2018: S$30,233 thousand), and other financial assets increased by S$900 thousand[8] - Among current assets, trade and other receivables increased to S$108,299 thousand (Dec 31, 2018: S$96,225 thousand), while inventories decreased to S$50,650 thousand (Dec 31, 2018: S$55,183 thousand)[8] Condensed Interim Consolidated Statement of Changes in Equity Analysis of Changes in Equity For the six months ended June 30, 2019, equity attributable to owners of the company increased from S$143,751 thousand at the beginning of the period to S$153,773 thousand at the end, primarily due to profit for the period and new share issuance, with non-controlling interests also increasing - Equity attributable to owners of the company totaled S$153,773 thousand at period-end, from S$143,751 thousand at period-start[10] - Share capital increased by S$5,397 thousand to S$76,381 thousand, primarily due to new share issuance[10][63] - Retained earnings increased by S$5,548 thousand to S$75,984 thousand[10] - Non-controlling interests totaled S$40,792 thousand at period-end, from S$38,457 thousand at period-start[10] Condensed Interim Consolidated Statement of Cash Flows Cash Flows from Operating Activities For the six months ended June 30, 2019, net cash used in operating activities was S$5,318 thousand, compared to an inflow of S$1,801 thousand in the prior year, mainly due to working capital changes and increased income tax payments - Net cash used in operating activities: (S$5,318) thousand (2018: S$1,801 thousand)[12] - Working capital changes: inventory change from outflow to inflow of S$4,409 thousand; trade and other receivables from outflow of S$26,554 thousand to outflow of S$10,782 thousand; trade and other payables from inflow of S$15,800 thousand to outflow of S$5,953 thousand[12] - Income tax paid increased to S$3,582 thousand (2018: S$2,492 thousand)[12] Cash Flows from Investing Activities For the six months ended June 30, 2019, net cash used in investing activities was S$2,211 thousand, a slight increase from the prior year, mainly due to property, plant, and equipment additions and acquisition of other financial assets - Net cash used in investing activities: (S$2,211) thousand (2018: (S$1,951) thousand)[14] - Additions to property, plant and equipment: (S$1,594) thousand (H1 2018: (S$1,681) thousand)[14] - New acquisition of other financial assets: (S$900) thousand[14] Cash Flows from Financing Activities For the six months ended June 30, 2019, net cash from financing activities was S$4,423 thousand, compared to an outflow of S$5,242 thousand in the prior year, primarily benefiting from proceeds from new share issuance - Net cash from financing activities: S$4,423 thousand (2018: (S$5,242) thousand)[14] - Proceeds from issuance of new shares: S$5,397 thousand[14] - Proceeds from bank loans: S$11,478 thousand, repayment of bank loans: S$12,218 thousand[14] Notes to the Condensed Interim Consolidated Financial Statements 1 General Information The company is a Singapore-incorporated public company, primarily engaged in technology consulting, training, and management services, with subsidiaries focusing on motion control, industrial computing, specialized engineering solutions, and hydropower plant construction - Company's country of incorporation and domicile: Singapore[15] - Principal activities: technology consulting, training, and management services[15] - Principal activities of subsidiaries: motion control, industrial computing, other specialized engineering solutions, and hydropower plant construction[15] 2 Summary of Significant Accounting Policies The consolidated financial statements are prepared in accordance with the Singapore Companies Act and Singapore Financial Reporting Standards, adopting new and revised standards effective January 1, 2019, without significant impact on financial performance or position - Basis of preparation: Chapter 50 of the Singapore Companies Act and Singapore Financial Reporting Standards (International)[16] - Adoption of new standards: All new and revised Singapore Financial Reporting Standards (International) effective January 1, 2019, have been adopted, resulting in no significant changes or impact[19][20] - Standards not yet effective: Lists new and revised standards issued but not yet effective, including amendments to SFRI 10, SFRI 1-28, SFRI 3, SFRI 1-1, SFRI 1-8[21] 3 Segment Information The Group's operations are divided into three segments: motion control, other specialized engineering solutions, and industrial computing solutions, operating in regions such as Singapore, China, and Malaysia, with China being the largest revenue contributor - Business segments: Engineering solutions—motion control, other specialized engineering solutions, industrial computing solutions[22] - Geographical segments: Singapore, China, Malaysia[36] Revenue and Non-Current Assets by Region (S$ thousand) | Region | H1 2019 Revenue (S$ thousand) | H1 2018 Revenue (S$ thousand) | Non-Current Assets as of June 30, 2019 (S$ thousand) | | :--- | :--- | :--- | :--- | | Singapore | 21,753 | 23,402 | 21,820 | | China | 103,186 | 113,235 | 21,855 | | Hong Kong | 2,856 | 9,070 | 1,139 | | Malaysia | 5,171 | 4,074 | 895 | | Others | 13,997 | 12,323 | 46,993 | | Total | 146,963 | 162,104 | 92,702 | - Revenue from any single external customer was less than 10%[37] 4 Revenue Total revenue for H1 2019 was S$146,963 thousand, comprising S$144,335 thousand from engineering solutions and S$2,628 thousand from construction revenue Revenue by Type (S$ thousand) | Revenue Type | H1 2019 (S$ thousand) | H1 2018 (S$ thousand) | | :--- | :--- | :--- | | Engineering Solutions | 144,335 | 162,104 | | Construction Revenue | 2,628 | - | | Total Revenue | 146,963 | 162,104 | 5 Other Operating Income Other operating income for H1 2019 was S$2,331 thousand, a decrease from S$3,627 thousand in H1 2018, mainly due to lower net foreign exchange gains and the absence of gain on disposal of a subsidiary Other Operating Income Sources (S$ thousand) | Income Source | H1 2019 (S$ thousand) | H1 2018 (S$ thousand) | | :--- | :--- | :--- | | Interest on bank deposits | 150 | 152 | | Interest on loans to an associate | 54 | 116 | | Commission income | 433 | 520 | | Net foreign exchange gain | - | 818 | | Gain on disposal of interest in a subsidiary | - | 180 | | Government grants | 103 | 92 | | Reversal of allowance for obsolete inventories | 295 | 34 | | Total | 2,331 | 3,627 | 6 Finance Costs Finance costs for H1 2019 increased significantly to S$827 thousand from S$416 thousand in H1 2018, primarily due to higher interest expenses on bank borrowings Finance Costs by Type (S$ thousand) | Cost Type | H1 2019 (S$ thousand) | H1 2018 (S$ thousand) | | :--- | :--- | :--- | | Interest on bank borrowings | 767 | 365 | | Interest on trust receipts | 27 | 28 | | Interest on finance leases | 5 | 9 | | Other interest | 28 | 14 | | Total | 827 | 416 | 7 Profit Before Income Tax Profit before income tax was S$10,921 thousand, a significant decrease from S$18,034 thousand in the prior year, with key deductions including depreciation, directors' remuneration, and staff costs - Profit before income tax: S$10,921 thousand (2018: S$18,034 thousand)[7] - Key deductions: depreciation of property, plant and equipment of S$1,036 thousand (2018: S$1,050 thousand)[46] - Key deductions: directors' salaries and related costs of S$2,294 thousand (2018: S$2,941 thousand), staff costs (excluding directors) salaries and related costs of S$13,787 thousand (2018: S$12,502 thousand)[46] 8 Income Tax Income tax expense for H1 2019 was S$2,597 thousand, a reduction from S$4,510 thousand in H1 2018, primarily due to lower taxable profit Income Tax Expense by Type (S$ thousand) | Income Tax Type | H1 2019 (S$ thousand) | H1 2018 (S$ thousand) | | :--- | :--- | :--- | | Current income tax - Singapore | 330 | 818 | | Current income tax - China | 2,303 | 2,663 | | Current income tax - (Over)/Under provision in prior years | (29) | 702 | | Deferred tax - (Over)/Under provision in prior years | (7) | 317 | | Total | 2,597 | 4,510 | - Applicable corporate tax rates: Singapore 17%, Malaysia 24%, China 25%[47][48] - Hong Kong introduced a two-tiered profits tax regime, with a tax rate of 8.25% for the first HK$2 million of assessable profits for qualifying corporations, and 16.5% for the remaining profits[48] 9 Earnings Per Share Basic and diluted earnings per share for H1 2019 were both 1.35 S$ cents, a significant decrease from 2.55 S$ cents in H1 2018 Earnings Per Share (S$ cents) | Metric | H1 2019 | H1 2018 | | :--- | :--- | :--- | | Basic Earnings Per Share (S$ cents) | 1.35 | 2.55 | | Diluted Earnings Per Share (S$ cents) | 1.35 | 2.55 | - Profit for the period attributable to owners of the company: S$5,548 thousand (2018: S$10,076 thousand)[53] - Weighted average number of ordinary shares: 410,344,799 shares (2018: 394,684,950 shares)[53] 10 Dividends Paid The Board recommended a final tax-exempt dividend of 0.7 S$ cents per share (2018: 0.6 S$ cents), totaling S$2,952 thousand, with a scrip dividend scheme option - Proposed final tax-exempt dividend: 0.7 S$ cents per ordinary share (2018: 0.6 S$ cents)[54] - Total dividend amount: S$2,952 thousand (2018: S$2,289 thousand)[54] - Dividend payment date: August 28, 2019, with a scrip dividend scheme option[54] 11 Property, Plant and Equipment Additions to property, plant, and equipment amounted to approximately S$1,594 thousand in H1 2019, and as of June 30, 2019, the net book value of leasehold properties pledged for bank borrowings was S$17,970 thousand - Additions to property, plant and equipment: S$1,594 thousand (H1 2018: S$1,681 thousand)[55] - Net book value of pledged leasehold properties: S$17,970 thousand (2018: S$18,503 thousand)[55] - Net book value of property, plant and equipment held under finance leases: S$371 thousand (2018: S$432 thousand)[55] 12 Other Financial Assets A new S$900 thousand investment in unlisted equity, representing a 10% stake in a lithium battery management system company, aligns with the company's renewable energy diversification strategy - Unlisted equity investment: S$900 thousand (2018: S$0 thousand)[56] - Investee: a company specializing in the design, development, integration, and sale of lithium battery management systems, holding a 10% equity stake[56] - Strategic significance: consistent with the company's diversification strategy into renewable energy businesses[56] 13 Trade and Other Receivables As of June 30, 2019, total trade and other receivables increased to S$108,299 thousand, primarily due to higher trade receivables from third parties, with service concession receivables also slightly increasing Trade and Other Receivables (S$ thousand) | Receivable Type | As of June 30, 2019 (S$ thousand) | As of Dec 31, 2018 (S$ thousand) | | :--- | :--- | :--- | | Non-current: Service concession receivables | 32,576 | 30,233 | | Current: Trade receivables (third parties) | 69,774 | 61,651 | | Current: Trade receivables (bills receivable) | 5,133 | 6,669 | | Current: Advances to suppliers | 11,614 | 8,953 | | Total | 140,875 | 126,458 | - Trade receivables aging analysis: S$31,051 thousand within 30 days, S$21,460 thousand between 31 and 90 days, S$27,102 thousand over 90 days[61] - Trade receivables are generally interest-free and due within 30 to 90 days[62] 14 Share Capital As of June 30, 2019, the number of issued ordinary shares increased to 421,676,481, and share capital amounted to S$76,381 thousand, mainly due to new share issuance Share Capital Details | Metric | As of June 30, 2019 | As of Dec 31, 2018 | | :--- | :--- | :--- | | Number of ordinary shares | 421,676,481 | 394,689,186 | | Amount (S$ thousand) | 76,381 | 70,984 | - Issuance of 26,987,295 shares, increasing share capital by S$5,397 thousand[63] 15 Issuance of Warrants As of June 30, 2019, all warrants had either expired or been converted into shares, resulting in zero warrants outstanding at period-end - Warrants outstanding at beginning of period: 179,972,475 units[64] - 4,236 warrants were exercised and converted into shares, with the remaining warrants expiring on November 9, 2018[64] - Warrants outstanding and their amount were zero at period-end[64] 16 Bank Borrowings As of June 30, 2019, total interest-bearing borrowings increased to S$29,642 thousand, comprising S$11,692 thousand in non-current liabilities and S$17,950 thousand in current liabilities Bank Borrowings (S$ thousand) | Borrowing Type | As of June 30, 2019 (S$ thousand) | As of Dec 31, 2018 (S$ thousand) | | :--- | :--- | :--- | | Non-current liabilities: Secured bank loans | 11,692 | 11,792 | | Current liabilities: Secured bank loans | 2,316 | 2,742 | | Current liabilities: Unsecured bank loans | 8,652 | 8,812 | | Current liabilities: Trust receipts | 6,194 | 4,088 | | Total interest-bearing borrowings | 29,642 | 28,265 | - Collateral for bank borrowings includes land and buildings with a net book value of S$17,970 thousand and land use rights with a net book value of S$1,236 thousand[66] 17 Trade and Other Payables As of June 30, 2019, total trade and other payables amounted to S$66,289 thousand, a decrease from December 31, 2018, primarily due to lower trade payables Trade and Other Payables (S$ thousand) | Payable Type | As of June 30, 2019 (S$ thousand) | As of Dec 31, 2018 (S$ thousand) | | :--- | :--- | :--- | | Trade payables (third parties) | 24,219 | 27,394 | | Trade payables (bills payable) | 590 | - | | Advances from customers | 11,465 | 10,597 | | Accrued operating expenses | 16,949 | 18,889 | | Total | 66,289 | 69,380 | - Trade payables aging analysis: S$19,823 thousand within 30 days, S$9,990 thousand between 31 and 90 days, S$1,149 thousand over 90 days[69] - Trade payables are generally interest-free and settled within 30 to 90 days[69] 18 Capital Commitments As of June 30, 2019, contracted but unrecognised capital expenditure was S$43,653 thousand, primarily for plant and equipment - Contracted but unrecognised capital expenditure: S$43,653 thousand (Dec 31, 2018: S$44,279 thousand)[70] - Primarily for plant and equipment[70] 19 Corporate Guarantees As of June 30, 2019, the company provided corporate guarantees of S$32,775 thousand for subsidiary bank facilities - Corporate guarantees provided for subsidiary bank facilities: S$32,775 thousand (Dec 31, 2018: S$30,185 thousand)[71] 20 Related Party Transactions The report discloses significant transactions between the Group and its associates and related parties, including sales, purchases, administrative income, and rent collection Related Party Transactions (S$ thousand) | Transaction Type | H1 2019 (S$ thousand) | H1 2018 (S$ thousand) | | :--- | :--- | :--- | | Sales to associates | (770) | (942) | | Sales to related parties | (3,396) | (2,929) | | Purchases from associates | 94 | 203 | | Purchases from related parties | 22,865 | 22,288 | | Administrative income paid by associates | (24) | - | | Other expenses collected from related parties | 250 | 148 | - Related parties primarily relate to non-controlling interests of certain subsidiaries and their related parties[73] - Mr. Teo, the Company's President and Managing Director, is a director of a related party[74] 21 Events After Reporting Period As of the announcement date, there have been no significant changes in the Group after the reporting period - No significant changes from the reporting period to the announcement date[75] Management Discussion and Analysis Business Review H1 2019 revenue decreased by 9.3% to S$147.0 million, and gross profit declined by 10.3%, primarily due to trade tensions and cyclical headwinds in the semiconductor industry, with China remaining the main revenue contributor - Revenue decreased by 9.3% to S$147.0 million (H1 2018: S$162.1 million)[79] - Gross profit decreased by 10.3% to S$37.4 million (H1 2018: S$41.7 million), with gross profit margin declining by 0.3 percentage points to 25.4%[79] - China contributed approximately 70.2% of revenue (H1 2018: 69.9%)[79] - Market conditions were challenging, impacted by trade wars and semiconductor industry headwinds[79] Future Outlook Despite challenging mid-term market conditions, the Group remains confident in the long-term prospects of its industrial automation business, anticipating continued growth in China's motion control solutions market, and will pursue additional revenue streams through diversification and renewable energy investments - China's motion control solutions market is projected to grow at a CAGR of 7.9% between 2015-2020, reaching S$3.76 billion by 2020[81] - China's smart manufacturing investments grew by 46% to RMB69.6 billion in 2018[81] - The Group adopts a diversification strategy, expanding customer end-markets, geographical presence, and solution base for its core motion control business[82] - Developing additional revenue streams through renewable energy investments, with the first two mini-hydropower plants expected to commence production in H2 2019, and the third in FY2020, totaling 24.2 MW capacity[86] - S$2.6 million in construction revenue for hydropower plants recognized in H1 2019[86] Financial Review A detailed review of changes in revenue, gross profit margin, other operating income, distribution costs, administrative expenses, other operating expenses, finance costs, income tax expense, share of results of associates, service concession receivables, other financial assets, inventories, trade and other receivables, trade and other payables, and bank borrowings Revenue and Gross Profit Margin Total revenue for H1 2019 decreased by 9.3% to S$147.0 million, gross profit declined by 10.3% to S$37.4 million, and gross profit margin slightly fell by 0.3 percentage points to 25.4%, with construction revenue contributing S$2.6 million Revenue and Gross Profit Margin (S$ thousand) | Metric | H1 2019 (S$ thousand) | H1 2018 (S$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Engineering solutions revenue | 144,335 | 162,104 | (11.0%) | | Engineering solutions gross profit | 37,204 | 41,703 | (10.8%) | | Engineering solutions gross profit margin | 25.8% | 25.7% | 0.1% percentage points | | Construction revenue | 2,628 | - | n.m. | | Construction gross profit | 195 | - | n.m. | | Construction gross profit margin | 7.4% | - | n.m. | | Total Revenue | 146,963 | 162,104 | (9.3%) | | Total Gross Profit | 37,399 | 41,703 | (10.3%) | | Total Gross Profit Margin | 25.4% | 25.7% | (0.3 percentage points) | - The core motion control solutions segment remains the primary revenue source, accounting for approximately 98.2% of total revenue[87] - Slight decline in gross profit margin primarily due to global trade tensions and cyclical headwinds in the semiconductor sector[92] Other Operating Income Other operating income decreased by 35.7% to S$2.3 million, mainly due to the absence of net foreign exchange gains and a one-off gain from subsidiary disposal, partially offset by inventory and trade receivable reversals - Other operating income decreased by S$1.3 million or 35.7% to S$2.3 million[93] - Primary reasons for decrease: absence of S$0.8 million in net foreign exchange gains and a one-off gain of approximately S$0.2 million from subsidiary disposal[93] - Partially offset by reversal of allowance for obsolete inventories (S$0.3 million) and reversal of allowance for trade receivables (S$0.1 million)[93] Distribution Costs Distribution costs increased by 2.5% to S$12.4 million, primarily due to increased investment in regional marketing efforts - Distribution costs increased by S$0.3 million or 2.5% to S$12.4 million[94] - Primary reason: increased investment in regional marketing efforts[94] Administrative Expenses Administrative expenses remained relatively stable in H1 2019 compared to the prior year - Administrative expenses remained relatively stable[95] Other Operating Expenses Other operating expenses increased by S$0.6 million, mainly due to higher net foreign exchange losses from the depreciation of the USD against the SGD and increased allowance for obsolete inventories - Other operating expenses increased by S$0.6 million[96] - Primary reasons: increased net foreign exchange losses due to depreciation of USD against SGD, and increased allowance for obsolete inventories[96] Finance Costs Finance costs increased by 98.8% to S$0.8 million, primarily due to higher bank borrowings - Finance costs increased by S$0.4 million or 98.8% to S$0.8 million[97] - Primary reason: increased bank borrowings[97] Income Tax Expense Income tax expense decreased by 42.4% to S$2.6 million, primarily due to lower taxable profit - Income tax expense decreased by S$1.9 million or 42.4% to S$2.6 million[100] - Primary reason: lower taxable profit[100] Share of Results of Associates Share of results of associates decreased by S$0.3 million or 5.6%, primarily offset by dividends declared by associates and share of associates' results - Share of results of associates decreased by S$0.3 million or 5.6%[101] - Primary reasons: dividends declared by associates of S$0.7 million (S$0.2 million received), offset by share of associates' results of S$0.3 million[101] Service Concession Receivables Service concession receivables increased by S$2.3 million or 7.7% to S$32.6 million, mainly due to the recognition of mini-hydropower plant construction revenue - Service concession receivables increased by S$2.3 million or 7.7% to S$32.6 million[102] - Primary reasons: recognition of approximately S$2.6 million in mini-hydropower plant construction revenue, partially offset by foreign exchange losses of approximately S$0.3 million[102] Other Financial Assets Other financial assets increased by S$0.9 million, primarily due to an investment in a 10% unlisted equity stake in a lithium battery management system company - Other financial assets increased by S$0.9 million[103] - Primary reason: investment in a 10% unlisted equity stake in a lithium battery management system company[103] Inventories Inventories decreased by S$4.5 million or 8.2% to S$50.7 million, primarily depending on the fulfillment of customer orders during the financial period - Inventories decreased by S$4.5 million or 8.2% to S$50.7 million[104] - Primary reason: fulfillment of customer orders[104] Trade and Other Receivables Trade and other receivables increased by S$12.1 million or 12.5% to S$108.3 million, mainly due to higher trade receivables from third parties and advances to suppliers - Trade and other receivables increased by S$12.1 million or 12.5% to S$108.3 million[105] - Primary reasons: S$8.1 million increase in third-party trade receivables, S$2.7 million increase in advances to suppliers, and S$2.6 million increase in other receivables[105] - Partially offset by a S$1.5 million decrease in bills receivable[105] Trade and Other Payables Trade and other payables decreased by S$3.1 million or 4.5% to S$66.3 million, mainly due to lower trade payables and accrued salaries - Trade and other payables decreased by S$3.1 million or 4.5% to S$66.3 million[106] - Primary reasons: S$3.4 million decrease in trade payables and S$0.7 million decrease in accrued salaries[106] - Partially offset by a S$0.9 million increase in advances from customers[106] Bank Borrowings Bank borrowings increased by S$1.4 million to S$29.6 million, primarily due to net new borrowings after repayments - Bank borrowings increased by S$1.4 million to S$29.6 million[107] - Primary reason: S$13.6 million in bank borrowings offset by S$12.2 million in bank repayments[107] Capital Expenditure Capital expenditure for H1 2019 was S$1,594 thousand, primarily for additions to property, plant, and equipment and construction in progress - Capital expenditure: S$1,594 thousand (H1 2018: S$1,681 thousand)[108] - Purpose: additions to property, plant and equipment and construction in progress[108] Material Acquisitions and Disposals of Subsidiaries, Associates, and Joint Ventures The Group had no material acquisitions or disposals in H1 2019 - No material acquisitions or disposals in H1 2019[109] Future Plans for Material Investments or Capital Assets As of June 30, 2019, the Group had no plans for material investments or capital assets - No plans for material investments or capital assets as of June 30, 2019[109] Liquidity and Financial Resources As of June 30, 2019, cash and bank balances slightly decreased, the current ratio remained at 1.7x, total borrowings increased to S$29.9 million, and the weighted average effective interest rate was 3.74% - Cash and bank balances: S$41.1 million (Dec 31, 2018: S$41.9 million), a 1.9% decrease[110] - Current ratio: 1.7 times (Dec 31, 2018: 1.6 times)[110] - Total long-term and short-term bank borrowings: S$29.6 million[110] - Weighted average effective interest rate: 3.74% (Dec 31, 2018: 4.18%)[110] - Total borrowings (including finance leases): S$29.9 million (Dec 31, 2018: S$28.6 million)[110] Cash and Bank Balances vs. Bank Borrowings by Currency (S$ thousand) | Currency | Cash and Bank Balances as of June 30, 2019 (S$ thousand) | Bank Borrowings as of June 30, 2019 (S$ thousand) | | :--- | :--- | :--- | | RMB | 18,279 | 6,984 | | USD | 8,134 | 18,441 | | SGD | 4,212 | 2,739 | | HKD | 243 | - | | CHF | 1,473 | 353 | | EUR | 1,099 | 382 | | Others | 7,631 | 743 | | Consolidated Total | 41,071 | 29,642 | Issuance of Shares and Use of Proceeds The company issued 26,987,295 shares through a subscription, raising net proceeds of approximately S$5.3 million, planned for business development and general working capital, with no actual use as of June 30, 2019 - Shares issued: 26,987,295 shares[114] - Net subscription price: approximately S$0.196 per share[114] - Net proceeds: approximately S$5.3 million[114] - Purpose: business development (S$4,770 thousand) and general working capital (S$530 thousand), none of which were actually used as of June 30, 2019[116] - Unused proceeds are expected to be fully utilized by end of 2019[116] Gearing Ratio As of H1 2019, the Group's gearing ratio decreased to 19.4%, primarily due to an increase in equity excluding non-controlling interests - Gearing ratio: 19.4% (H1 2018: 19.9%)[117] - Calculation method: total borrowings (excluding trade and other payables) divided by total shareholders' equity (excluding non-controlling interests)[117] - Reason for decrease: increase in equity excluding non-controlling interests[118] Treasury Policy The Group adopts a prudent treasury policy, maintaining good liquidity, continuously assessing credit, and closely monitoring liquidity risks - Adopts a prudent treasury policy, maintaining good liquidity[119] - Continuously conducts credit assessments on customers, committed to reducing credit risk[119] - Closely monitors liquidity position to ensure compliance with funding requirements[119] Foreign Exchange Risk The Group faces foreign exchange risk from RMB and USD denominated transactions and balances but has not committed to hedging with financial instruments as of H1 2019 - Foreign currency transactions are primarily denominated in RMB and USD[120] - Faces foreign exchange risk arising from future commercial transactions and recognized assets and liabilities denominated in RMB[120] - No commitment to hedge foreign currency risks with any financial instruments as of H1 2019[120] Employees and Remuneration Policy As of H1 2019, the Group had 916 employees, with remuneration determined by market conditions and performance, offering share option schemes and on-the-job training - Total number of employees: 916 (2018: 868)[120] - Remuneration policy: determined by market conditions and individual performance, with medical and life insurance provided[120] - Incentive schemes: 2016 Employee Share Option Scheme and Employee Performance Share Plan[120] - Provides on-the-job training[120] Material Investments Held Apart from investments in subsidiaries and associates, the Group held no other material equity investments in H1 2019 - No other material equity investments held in H1 2019, apart from subsidiaries and associates[121] Risk Management As of June 30, 2019, the Group had no material contingent liabilities, but S$3.2 million in cash and cash equivalents were pledged to banks as security - No material contingent liabilities or outstanding guarantees for third-party payment obligations[122] - Cash and cash equivalents of approximately S$3.2 million were pledged to banks as security for general banking facilities (2018: S$0.3 million)[123] Other Information Interim Dividend The Board did not recommend an interim dividend for H1 2019 - The Board did not recommend an interim dividend (H1 2018: nil)[126] Directors' and Chief Executive's Interests in Shares, Underlying Shares, and Debentures of the Company or any Associated Corporation As of June 30, 2019, Mr. Teo held a 31.34% share interest through controlled corporations, Mr. Kong De Yang held a 0.49% personal interest, and Mr. Toh held a 6.40% share interest through controlled corporations Directors' Interests in Shares | Director's Name | Capacity | Total Shares | Approximate % of Issued Share Capital | | :--- | :--- | :--- | :--- | | Mr. Teo | Interest in controlled corporation | 132,155,150 | 31.34% | | Kong De Yang | Beneficial owner | 2,050,000 | 0.49% | | Mr. Toh Hsiang-Wen Keith | Interest in controlled corporation | 26,987,295 | 6.40% | - Mr. Teo's interest is held by Assetraise Holdings Limited, beneficially owned by Mr. Teo and his spouse, Mdm. Tang[127] - Mr. Toh's interest is held by NTCP SPV VI, where Mr. Toh has the right to control not less than 20% of the voting rights in its general partner, NEG 2[128] - Mr. Teo also holds a 1% personal interest in Dirak Asia Pte Ltd[129] Share Options As of H1 2019, the company had not granted any share options to controlling shareholders, close associates, directors, or employees, nor issued any shares from option exercises, and had no outstanding options - No share options granted to controlling shareholders and their close associates[132] - No participant received share options representing 5% or more of the total shares[133] - No share options granted to directors and employees, nor any shares issued from option exercises[134][135] - No outstanding share options in H1 2019[136] Employee Performance Share Plan The company's Employee Performance Share Plan is administered by the Board's Remuneration Committee, with all directors and controlling shareholder Mr. Teo and his spouse Mdm. Tang eligible to participate - The plan is administered by the Board's Remuneration Committee[138] - All directors and controlling shareholder Mr. Teo and his spouse Mdm. Tang are eligible to participate[139] Purchase, Sale or Redemption of the Company's Listed Securities As of H1 2019 and the date of this interim report, neither the company nor its subsidiaries had purchased, sold, or redeemed any of its listed securities - Neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[140] Non-Competition Undertaking Controlling shareholders Mr. Teo and Mdm. Tang confirmed compliance with the non-competition undertaking, which was reviewed and confirmed by independent non-executive directors - Mr. Teo and Mdm. Tang have confirmed in writing their compliance with the terms of the non-competition undertaking[142] - Independent non-executive directors have reviewed and confirmed the controlling shareholders' compliance with the non-competition undertaking[142] Interests and Short Positions of Substantial Shareholders and Other Persons in Shares and Underlying Shares As of June 30, 2019, Assetraise and Mdm. Tang each held a 31.34% share interest, while NTCP SPV VI, Mr. Loke, NEG 2, and NT Fund 2 each held a 6.40% share interest Substantial Shareholders' Interests in Shares | Entity/Person | Capacity | Total Shares | Approximate % of Issued Share Capital | | :--- | :--- | :--- | :--- | | Assetraise | Interest owner | 132,155,150 | 31.34% | | Mdm. Tang | Interest in controlled corporation | 132,155,150 | 31.34% | | NTCP SPV VI | Interest owner | 26,987,295 | 6.40% | | Mr. Loke Wai San | Interest in controlled corporation | 26,987,295 | 6.40% | | NEG 2 | Interest in controlled corporation | 26,987,295 | 6.40% | | NT Fund 2 | Interest in controlled corporation | 26,987,295 | 6.40% | - Assetraise is beneficially owned by Mr. Teo and his spouse, Mdm. Tang[145] - The share interest in NTCP SPV VI is owned by NT Fund 2, where NEG 2 is the general partner of NT Fund 2, and Mr. Loke controls not less than 60% of the voting rights in NEG 2[146] Corporate Governance The Group complies with Singapore and Hong Kong corporate governance codes, adhering to stricter provisions when conflicts arise, and is committed to protecting shareholder interests and enhancing long-term shareholder value - Complies with applicable guidelines of the Singapore Code of Corporate Governance 2012 and the Hong Kong Corporate Governance Code[147] - Adheres to stricter provisions when conflicts arise[147] - Committed to protecting shareholder interests and enhancing long-term shareholder value[147] Compliance with SGX Listing Manual and HKEX Model Code The company has adopted an internal compliance code, all directors confirmed compliance with the Model Code during the reporting period, and trading in company securities is prohibited during specific blackout periods before earnings announcements - The company adopted an internal compliance code, adhering to SGX-ST and Model Code best practices regarding securities dealings[148] - All directors confirmed compliance with the Model Code during the reporting period[148] - Prohibited from dealing in company securities during the 30-day period before quarterly results announcements and the 60-day period before full-year results announcements until the announcement date[148] Changes in Directors' Information Mr. Lim See Kiat was appointed as a Non-Executive Director of D'nonce Technology Berhad and subsequently re-designated as Non-Independent and Non-Executive Chairman - Mr. Lim See Kiat was appointed as a Non-Executive Director of D'nonce Technology Berhad on June 12, 2019[149] - Re-designated as Non-Independent and Non-Executive Chairman effective July 12, 2019[149] Audit Committee The Audit Committee, comprising three independent non-executive directors chaired by Mr. Lim See Kiat, is responsible for reviewing and overseeing the company's financial reporting process and internal controls - The Audit Committee's terms of reference were revised and implemented on January 1, 2019[151] - Primary duties: review and oversee the company's financial reporting process and internal controls[151] - Members: three independent non-executive directors, Mr. Lim See Kiat (Chairman), Mr. Soh Meng Kiat, and Mr. Tan Soon Liang[152] - Reviewed the unaudited Group consolidated results for H1 2019 and found them to be in compliance with applicable accounting standards and disclosure requirements[152] Publication of Interim Report The interim report for H1 2019 has been published on the HKEX and company websites - The interim report announcement is **published on the HKEX website (www.hkexnews.hk) and the company's website (www.isdnholdings.com)**[153](index=153&type=chunk)