亿仕登控股(01656) - 2020 - 中期财报

Company Information Basic corporate governance details of ISDN Holdings Limited, including registration, board members, committees, and auditors Basic Company Information ISDN Holdings Limited's registration details, board members, key committee composition, registered office, joint company secretaries, share registrar, and auditors - Company registration number: 200416788Z[4] - Chairman of the Board: Lim Shan Kai[4] - Registered office: No. 10 Kaki Bukit Road 1, 01-30 KB Industrial Building, Singapore 416175[4] - Chairman of the Audit Committee: Lim Shan Kai[4] Condensed Interim Consolidated Statement of Comprehensive Income Overview of ISDN Holdings Limited's financial performance for the first half of 2020 H1 2020 Financial Performance ISDN Holdings Limited's H1 2020 revenue increased by 13.8% to S$167,185 thousand, gross profit rose 10.5% to S$41,335 thousand, profit for the period surged 54.7% to S$12,882 thousand, and basic EPS increased to 2.23 Singapore cents H1 2020 Financial Performance (S$ thousand) | Indicator | 2020 (Unaudited) | 2019 (Unaudited) | Change | | :--- | :--- | :--- | :--- | | Revenue | 167,185 | 146,963 | +13.8% | | Cost of sales | (125,850) | (109,564) | +14.9% | | Gross profit | 41,335 | 37,399 | +10.5% | | Other operating income | 2,483 | 2,331 | +6.5% | | Distribution costs | (11,534) | (12,363) | -6.7% | | Administrative expenses | (15,328) | (15,179) | +1.0% | | Finance costs | (972) | (827) | +17.5% | | Profit for the period | 12,882 | 8,324 | +54.7% | | Total comprehensive income for the period | 14,925 | 7,262 | +105.5% | | Basic and diluted earnings per share | 2.23 Singapore cents | 1.35 Singapore cents | +65.2% | Condensed Interim Consolidated Statement of Financial Position Overview of ISDN Holdings Limited's financial position as of June 30, 2020 Financial Position as of June 30, 2020 As of June 30, 2020, total assets increased by 15.4% to S$348,386 thousand, with growth in both non-current and current assets, notably in service concession receivables and inventories; total liabilities also rose 31.0% to S$135,182 thousand, driven by increased bank borrowings and trade and other payables Financial Position (S$ thousand) | Indicator | June 30, 2020 (Unaudited) | December 31, 2019 (Audited) | Change | | :--- | :--- | :--- | :--- | | Assets | | | | | Total non-current assets | 128,335 | 98,829 | +29.8% | | Total current assets | 220,051 | 202,933 | +8.4% | | Total assets | 348,386 | 301,762 | +15.4% | | Equity and Liabilities | | | | | Total equity | 213,204 | 198,570 | +7.4% | | Total non-current liabilities | 17,679 | 9,060 | +95.1% | | Total current liabilities | 117,503 | 94,132 | +24.8% | | Total liabilities | 135,182 | 103,192 | +31.0% | Condensed Interim Consolidated Statement of Changes in Equity Overview of ISDN Holdings Limited's equity changes for the first half of 2020 H1 2020 Equity Changes As of June 30, 2020, total equity attributable to equity holders increased from S$152,745 thousand at end-2019 to S$163,816 thousand, primarily due to profit for the period of S$9,572 thousand and an increase in exchange fluctuation reserve; non-controlling interests also rose from S$45,825 thousand to S$49,388 thousand Equity Changes (S$ thousand) | Indicator | June 30, 2020 (Unaudited) | January 1, 2019 (Audited) | | :--- | :--- | :--- | | Total equity attributable to equity holders of the Company | 163,816 | 143,751 | | Non-controlling interests | 49,388 | 44,067 | | Profit for the period (attributable to equity holders of the Company) | 9,572 | 5,548 | | Total comprehensive income for the period (attributable to equity holders of the Company) | 11,071 | 4,625 | | Exchange fluctuation reserve | (2,878) | (2,053) | Condensed Interim Consolidated Statement of Cash Flows Overview of ISDN Holdings Limited's cash flow performance for the first half of 2020 H1 2020 Cash Flows In H1 2020, net cash from operating activities improved significantly to S$3,987 thousand, while net cash from investing activities was S$3,204 thousand, mainly from repayment by an associate and disposal of interest in an associate; net cash from financing activities was S$7,451 thousand, primarily from bank loans, with cash and cash equivalents increasing to S$45,210 thousand at period-end Cash Flows (S$ thousand) | Indicator | 2020 (Unaudited) | 2019 (Unaudited) | Change | | :--- | :--- | :--- | :--- | | Net cash from/(used in) operating activities | 3,987 | (5,318) | Significant improvement | | Net cash from/(used in) investing activities | 3,204 | (2,211) | Significant improvement | | Net cash from financing activities | 7,451 | 4,423 | +68.5% | | Net increase/(decrease) in cash and cash equivalents | 14,642 | (3,106) | Significant improvement | | Cash and cash equivalents at end of period | 45,210 | 34,231 | +32.1% | Notes to the Condensed Interim Consolidated Financial Statements This section details the notes to ISDN Holdings Limited's H1 2020 financial statements, covering company information, accounting policies, segment data, income and expense breakdowns, asset and liability composition, share capital changes, borrowings, capital commitments, guarantees, and related party transactions, providing supplementary information and context for understanding the financial statements 1 General Information ISDN Holdings Limited is a public company registered in Singapore and listed on SGX and HKEX, primarily engaged in technology consulting, training, and management services, with subsidiaries focusing on motion control, industrial computing, specialized engineering solutions, and hydropower plant construction; the company is controlled by Assetraise Holdings Limited, ultimately beneficially owned by Mr. Teo Cher Koon and his spouse - Company registered and headquartered in Singapore, listed on SGX and HKEX Main Board[20] - Primary businesses: Technology consulting, training services, and management services[20] - Subsidiaries' main businesses: Motion control, industrial computing, other specialized engineering solutions, and hydropower plant construction[20] - Direct and ultimate holding company is Assetraise Holdings Limited, beneficially owned by the company's President and Managing Director, Mr. Teo Cher Koon, and his spouse[20] 2 Summary of Significant Accounting Policies This section outlines the significant accounting policies used by ISDN Holdings Limited in preparing its interim consolidated financial statements, including compliance with SFRS(I) 1-34 and HKEX Listing Rules, using historical cost and fair value measurements; it also lists new and amended standards adopted and issued but not yet effective, noting no material impact on financial performance or position 2 (a) Basis of Preparation The interim consolidated financial statements are prepared in accordance with SFRS(I) 1-34 and HKEX Listing Rules Appendix 16 disclosure requirements, on a historical cost basis, with certain financial assets and liabilities measured at fair value, and presented in Singapore Dollars - Prepared in accordance with SFRS(I) 1-34 and HKEX Listing Rules Appendix 16[21] - Measurement basis: Historical cost, with certain financial assets and liabilities measured at fair value[21] - Currency unit: Singapore Dollars (S$ thousand)[21] - Accounting policies are consistent with the audited financial statements for the year ended December 31, 2019[22] 2 (i) Adoption of New and Revised Singapore Financial Reporting Standards (International) Effective The Group has adopted all new and amended SFRS(I) effective from January 1, 2020, including amendments related to long-term interests in associates and joint ventures, business combinations, and interest rate benchmark reform, with no significant changes to accounting policies or material impact on financial performance or position - Adopted new and amended SFRS(I) effective from January 1, 2020[25] - Adopted standards include: Amendments to SFRS(I) 1-28 (Long-term Interests in Associates and Joint Ventures), SFRS(I) 3 (Business Combinations), and SFRS(I) 9, 1-39, 7 (Interest Rate Benchmark Reform)[26] - Adoption of these amendments had no material impact on the Group's accounting policies, financial performance, or financial position[26] 2 (ii) New and Revised Singapore Financial Reporting Standards (International) Issued But Not Yet Effective As of the financial statement date, new and amended SFRS(I) issued but not yet effective include SFRS(I) 16 (COVID-19-Related Rent Concessions, effective June 1, 2020) and SFRS(I) 1 (Classification of Liabilities as Current or Non-current, effective January 1, 2023) - Issued but not yet effective standards: SFRS(I) 16 (Leases - COVID-19-Related Rent Concessions, effective June 1, 2020)[27] - Issued but not yet effective standards: SFRS(I) 1 (Classification of Liabilities as Current or Non-current, effective January 1, 2023)[27] 3 Segment Information This section discloses ISDN Holdings Limited's segment information by business and geographical location, with business segments including motion control, other specialized engineering solutions, and industrial computing solutions, and geographical segments primarily operating in Singapore, China, Hong Kong, and Malaysia, with China contributing the majority of revenue 3 (a) Reportable Operating Segments The Group's businesses are categorized into Engineering Solutions - Motion Control, Other Specialized Engineering Solutions, and Industrial Computing Solutions; in H1 2020, the Engineering Solutions - Motion Control segment generated the highest revenue of S$116,353 thousand and segment results of S$15,251 thousand Segment Performance (S$ thousand) | Segment | External Sales (2020) | External Sales (2019) | Segment Results (2020) | Segment Results (2019) | | :--- | :--- | :--- | :--- | :--- | | Engineering Solutions - Motion Control | 116,353 | 112,080 | 15,251 | 11,077 | | Other Specialized Engineering Solutions | 26,736 | 28,848 | 1,180 | 1,711 | | Industrial Computing Solutions | 4,009 | 3,346 | 791 | 538 | | Others | 20,087 | 2,689 | 727 | (734) | | Total | 167,185 | 146,963 | 17,949 | 12,592 | - Profit before income tax: S$16,633 thousand in H1 2020, S$10,921 thousand in H1 2019[32] - Total consolidated assets: S$348,386 thousand as of June 30, 2020, S$301,762 thousand as of December 31, 2019[32] - Total consolidated liabilities: S$135,182 thousand as of June 30, 2020, S$103,192 thousand as of December 31, 2019[32] 3 (b) Geographical Segments The Group operates in four main geographical regions: Singapore, China, Hong Kong, and Malaysia; in H1 2020, China was the largest revenue contributor at S$100,146 thousand, though slightly down from the prior year, while non-current assets in other regions (including the Indonesia hydropower plant project) significantly increased Geographical Segment Information (S$ thousand) | Region | Revenue from External Customers (2020) | Revenue from External Customers (2019) | Non-Current Assets (June 30, 2020) | Non-Current Assets (December 31, 2019) | | :--- | :--- | :--- | :--- | :--- | | Singapore | 24,794 | 21,753 | 34,890 | 28,127 | | China | 100,146 | 103,186 | 25,940 | 23,616 | | Hong Kong | 3,059 | 2,856 | 1,058 | 1,074 | | Malaysia | 4,266 | 5,171 | 964 | 937 | | Others | 34,920 | 13,997 | 65,483 | 45,075 | | Total | 167,185 | 146,963 | 128,335 | 98,829 | 3 (c) Information About Major Customers Revenue from any single external customer accounts for less than 10%, indicating a diversified customer base and reduced reliance on any one client - Revenue from any single external customer is less than 10%[38] 4 Revenue In H1 2020, the Group's total revenue was S$167,185 thousand, a 13.8% year-on-year increase, with industrial automation solutions revenue at S$147,098 thousand and construction revenue significantly rising to S$20,087 thousand, primarily from the Indonesia mini hydropower plant project Revenue by Source (S$ thousand) | Revenue Source | 2020 (Unaudited) | 2019 (Unaudited) | Change | | :--- | :--- | :--- | :--- | | Industrial automation solutions | 147,098 | 144,335 | +1.9% | | Construction revenue | 20,087 | 2,628 | n.m. (significant growth) | | Total | 167,185 | 146,963 | +13.8% | 5 Other Operating Income Other operating income increased to S$2,483 thousand in H1 2020, up 6.5% year-on-year, primarily driven by net foreign exchange gains (S$716 thousand) and government grants (S$364 thousand), partially offset by reduced commission income and technical service income Other Operating Income (S$ thousand) | Income Item | 2020 (Unaudited) | 2019 (Unaudited) | | :--- | :--- | :--- | | Total interest income | 242 | 204 | | Commission income | 108 | 433 | | Net foreign exchange gain | 716 | - | | Government grants | 364 | 103 | | Miscellaneous income | 481 | 630 | | Operating lease rental income | 278 | 266 | | Property management income | 87 | 178 | | Technical service income | 138 | 222 | | Reversal of provision for obsolete inventories | 46 | 292 | | Total | 2,483 | 2,331 | 6 Finance Costs Finance costs increased to S$972 thousand in H1 2020, up 17.5% year-on-year, mainly due to higher interest expenses on bank borrowings Finance Costs (S$ thousand) | Expense Item | 2020 (Unaudited) | 2019 (Unaudited) | | :--- | :--- | :--- | | Interest expense on bank borrowings | 721 | 767 | | Interest expense on trust receipts | 51 | 27 | | Interest expense on lease liabilities | 78 | 5 | | Other interest expenses | 122 | 28 | | Total | 972 | 827 | 7 Profit Before Income Tax Profit before income tax for H1 2020 was S$16,633 thousand, a significant increase from S$10,921 thousand in the prior year, after deducting expenses such as amortization of land use rights, depreciation of property, plant and equipment, directors' fees and remuneration, staff costs, and provision for obsolete inventories - Profit before income tax: S$16,633 thousand in H1 2020, S$10,921 thousand in H1 2019[7] Profit Before Income Tax Adjustments (S$ thousand) | Item | 2020 (Unaudited) | 2019 (Unaudited) | | :--- | :--- | :--- | | Amortisation of land use rights | 16 | 17 | | Depreciation of property, plant and equipment | 1,918 | 1,036 | | Depreciation of investment property | 8 | 8 | | Directors' fees | 89 | 74 | | Directors' remuneration - salaries and related costs | 2,046 | 2,294 | | Staff costs (excluding directors) - salaries and related costs | 13,634 | 13,787 | | Provision for obsolete inventories | 214 | 192 | | Net foreign exchange loss | - | 339 | | Operating lease rental expense | 82 | 968 | 8 Income Tax Income tax expense increased to S$3,751 thousand in H1 2020, up 44.4% year-on-year, primarily due to higher taxable profit; the company applies different corporate tax rates in Singapore, China, Malaysia, and Hong Kong, with China's corporate income tax rate at 25% Income Tax Expense (S$ thousand) | Item | 2020 (Unaudited) | 2019 (Unaudited) | | :--- | :--- | :--- | | Current income tax - Singapore | 801 | 330 | | Current income tax - China | 2,883 | 2,303 | | Current income tax - outside Singapore and China | 24 | - | | Under/(over) provision in prior years | 43 | (29) | | Deferred tax - over provision in prior years | - | (7) | | Total | 3,751 | 2,597 | - Singapore corporate tax rate: 17%[48] - Malaysia corporate tax rate: 24%[48] - Hong Kong two-tiered profits tax system: 8.25% for assessable profits up to HK$2 million, 16.5% for the remainder[48] - China corporate income tax rate: 25%[48] 9 Earnings Per Share In H1 2020, both basic and diluted earnings per share were 2.23 Singapore cents, a significant increase from 1.35 Singapore cents in H1 2019, primarily due to higher profit for the period attributable to equity holders of the company Earnings Per Share (Singapore cents) | Indicator | 2020 (Unaudited) | 2019 (Unaudited) | | :--- | :--- | :--- | | Basic earnings per share | 2.23 | 1.35 | | Fully diluted earnings per share | 2.23 | 1.35 | - Profit for the period attributable to equity holders of the company: S$9,572 thousand in H1 2020, S$5,548 thousand in H1 2019[53] - Weighted average number of ordinary shares for basic EPS: 429,572,849 shares in H1 2020, 410,344,799 shares in H1 2019[53] 10 Dividends Paid The Board recommended a final tax-exempt dividend of 0.4 Singapore cents per share (2019: 0.7 Singapore cents), totaling S$1,718 thousand, which was approved by shareholders on June 29, 2020, and can be paid in cash or scrip - Recommended final tax-exempt dividend: 0.4 Singapore cents per share (2019: 0.7 Singapore cents)[55] - Total amount: S$1,718 thousand (2019: S$2,952 thousand)[55] - Dividend approved at the AGM on June 29, 2020[56] - Shareholders can elect to receive dividends in cash or scrip[56] 11 Property, Plant and Equipment In H1 2020, the Group added approximately S$1,076 thousand in property, plant and equipment and recognized a S$577 thousand increase in right-of-use assets; as of June 30, 2020, the net book value of leasehold properties pledged for bank borrowings was S$18,349 thousand - Additions to property, plant and equipment in H1 2020: S$1,076 thousand (H1 2019: S$1,594 thousand)[57] - Increase in right-of-use assets recognized in H1 2020: S$577 thousand (H1 2019: nil)[57] - Net book value of leasehold properties pledged for bank borrowings as of June 30, 2020: S$18,349 thousand (2019: S$18,304 thousand)[57] - Net book value of property, plant and equipment held under lease liabilities: S$276 thousand (2019: S$324 thousand)[57] 12 Other Financial Assets As of June 30, 2020, the Group held S$900 thousand in unlisted equity investments, measured at cost, consistent with the company's diversification strategy into renewable energy businesses, focusing on lithium battery management systems - Unlisted equity investments: S$900 thousand (December 31, 2019: S$900 thousand)[58] - Investment represents a 10% unlisted equity interest in a company specializing in the design, development, integration, and sale of lithium battery management systems[58] - Investment aligns with the company's diversification strategy into renewable energy businesses[58] 13 Trade and Other Receivables As of June 30, 2020, service concession receivables significantly increased to S$54,483 thousand; total trade and other receivables were S$103,250 thousand, a decrease from end-2019, primarily due to reduced bills receivable and prepayments, but with an increase in third-party trade receivables Trade and Other Receivables (S$ thousand) | Item | June 30, 2020 (Unaudited) | December 31, 2019 (Audited) | | :--- | :--- | :--- | | Non-current: Service concession receivables | 54,483 | 34,261 | | Current: Trade receivables - Third parties | 66,623 | 59,143 | | Current: Trade receivables - Associates | 2,667 | 2,342 | | Current: Trade receivables - Related parties | 2,422 | 1,695 | | Current: Bills receivable | 4,503 | 10,607 | | Current: Advances to suppliers | 6,181 | 12,192 | | Current: Prepayments | 1,193 | 989 | | Total | 157,733 | 146,065 | - Trade receivables aging analysis: S$33,996 thousand within 30 days, S$26,161 thousand between 31 and 90 days, S$16,058 thousand over 90 days[63] - Trade receivables are interest-free and generally due within 30 to 90 days[63] 14 Share Capital As of June 30, 2020, the company's issued ordinary shares totaled 429,572,849, with share capital amounting to S$78,095 thousand, consistent with end-2019; ordinary shareholders have equal rights to dividends, voting, and residual assets Share Capital (S$ thousand) | Item | June 30, 2020 (Unaudited) | December 31, 2019 (Audited) | | :--- | :--- | :--- | | Share capital at beginning of period/year | 78,095 | 70,984 | | Shares issued | - | 5,397 | | Scrip dividend in lieu of cash | - | 1,714 | | Share capital at end of period/year | 78,095 | 78,095 | - Number of ordinary shares: 429,572,849 shares (December 31, 2019: 429,572,849 shares)[64] - Ordinary shareholders have equal rights to receive dividends, one vote per share, and share in residual assets[64] 15 Bank Borrowings As of June 30, 2020, the Group's total interest-bearing borrowings increased to S$35,726 thousand, up 31.0% from end-2019; non-current secured bank loans significantly increased, while current secured and unsecured bank loans decreased; bank borrowings are secured by land, buildings, service concession receivables, and land use rights Bank Borrowings (S$ thousand) | Item | June 30, 2020 (Unaudited) | December 31, 2019 (Audited) | | :--- | :--- | :--- | | Non-current liabilities: Secured bank loans | 16,809 | 7,096 | | Current liabilities: Secured bank loans | 4,806 | 7,672 | | Current liabilities: Unsecured bank loans | 6,567 | 6,950 | | Current liabilities: Trust receipts | 6,888 | 4,880 | | Current liabilities: Accounts receivable factoring | 656 | 684 | | Total interest-bearing borrowings | 35,726 | 27,282 | - Collateral for bank borrowings: S$18,349 thousand net book value of land and buildings, S$31,928 thousand net book value of service concession receivables, S$1,203 thousand net book value of land use rights[67] 16 Trade and Other Payables As of June 30, 2020, total trade and other payables increased to S$77,781 thousand, up 28.0% from end-2019, primarily due to higher third-party trade payables, other payables, and accrued salaries and bonuses Trade and Other Payables (S$ thousand) | Item | June 30, 2020 (Unaudited) | December 31, 2019 (Audited) | | :--- | :--- | :--- | | Trade payables - Third parties | 29,765 | 25,168 | | Trade payables - Associates | 36 | 97 | | Trade payables - Related parties | 11,210 | 9,729 | | Accrued operating expenses | 4,564 | 4,701 | | Accrued salaries and bonuses | 12,684 | 13,186 | | Other payables | 17,424 | 5,828 | | Total | 77,781 | 60,769 | - Trade payables aging analysis: S$27,292 thousand within 30 days, S$12,398 thousand between 31 and 90 days, S$1,321 thousand over 90 days[70] - Trade payables are interest-free and generally settled within 30 to 90 days[70] 17 Capital Commitments As of June 30, 2020, the Group's contracted but unrecognised capital expenditure was S$30,098 thousand, mainly for Indonesia mini hydropower plant construction and Singapore property purchases, a decrease from end-2019 - Capital expenditure commitments: S$30,098 thousand (December 31, 2019: S$40,553 thousand)[71] - Primarily for Indonesia mini hydropower plant construction and Singapore property purchases[71] 18 Corporate Guarantees As of June 30, 2020, the company provided corporate guarantees of S$62,764 thousand for bank facilities obtained by its subsidiaries, a slight decrease from end-2019 - Corporate guarantees for subsidiaries' bank facilities: S$62,764 thousand (December 31, 2019: S$63,429 thousand)[72] 19 Related Party Transactions This section discloses significant related party transactions for H1 2020, including sales to and purchases from associates and related parties, and rental and interest income, all transacted at agreed terms; related parties are primarily associated with non-controlling interests of certain subsidiaries and their related parties, with the company's President and Managing Director, Mr. Teo, serving as a director of related parties Related Party Transactions (S$ thousand) | Transaction Type | 2020 (Unaudited) | 2019 (Unaudited) | | :--- | :--- | :--- | | Sales to associates | (536) | (770) | | Sales to related parties | (3,306) | (3,396) | | Purchases from associates | 4 | 94 | | Purchases from related parties | 28,126 | 22,865 | | Administrative income from associates | (21) | (24) | | Rental income from associates | (2) | (1) | | Rental income from related parties | (220) | (204) | | Interest paid by associates | (54) | (54) | | Other expenses received from related parties | 77 | 250 | | Other income paid by related parties | (84) | (124) | - Related parties are primarily associated with non-controlling interests of certain subsidiaries and their related parties[75] - The company's President and Managing Director, Mr. Teo, is a director of related parties[76] 20 Events After Reporting Period As of the announcement date, there have been no significant changes after the reporting period for the six months ended June 30, 2020 - No significant events occurred after the reporting period up to the announcement date[77] Management Discussion and Analysis This section reviews ISDN Holdings Limited's H1 2020 business performance and financial position, and outlines future prospects; both revenue and net profit saw significant growth, driven by increased demand for industrial automation solutions in Southeast Asia and contributions from the Indonesia hydropower plant project; the company maintains resilience through business diversification and a focus on Industry 4.0 amidst COVID-19 and trade tensions, planning to consolidate operations and invest prudently to enhance core capabilities Business Review In H1 2020, ISDN Holdings Limited's revenue increased by 13.8% to S$167.2 million, and gross profit rose 10.5% to S$41.3 million, primarily due to increased demand for industrial automation solutions in Southeast Asia and S$20.1 million in construction revenue from the Indonesia mini hydropower plant; despite COVID-19, the company maintained resilience through a diversified business portfolio and observed that the pandemic accelerated global business digitalization, supporting its Industry 4.0 strategy - H1 2020 revenue increased by S$20.2 million (13.8%) to S$167.2 million[79] - Revenue growth primarily attributed to increased demand for industrial automation solutions in Southeast Asia (Singapore, Malaysia, Vietnam) and S$20.1 million in construction revenue from the Indonesia mini hydropower plant[79] - Gross profit increased by 10.5% to S$41.3 million, with gross profit margin decreasing from 25.4% to 24.7%[79] - China operations contributed approximately 60.0% of revenue (H1 2019: 70.2%)[79] - COVID-19 pandemic accelerated global business digitalization, supporting the company's long-term growth prospects focused on Industry 4.0[80] - H1 2020 revenue and net profit surged to S$167.2 million and S$9.6 million, respectively[80] Future Outlook Facing a challenging market environment (COVID-19 and US-China trade tensions), ISDN Holdings Limited will continue to benefit from its diversified customer, industry, and geographical portfolio; the company plans to develop emerging energy businesses, enhance core industrial automation, explore smart manufacturing solutions, and actively address long-term growth opportunities from Industry 4.0; additionally, a joint venture with ERST Project GmbH in Germany will provide disinfectant solutions to meet pandemic-driven market demand - Challenging market environment, but the company benefits from diversified customers, end-industries, and geographies[81] - Company will develop emerging energy businesses and enhance core industrial automation through smart manufacturing solutions[81] - COVID-19 accelerated digitalization and Industry 4.0 automation, from which the company expects to benefit[81] - Joint venture with ERST Project GmbH (Germany) to provide Waterliq and Erstotizer disinfectant solutions for Asia Pacific[87] - Industrial automation market expected to grow steadily, with motion control market CAGR exceeding 3%[87] - Company will consolidate engineering and administrative operations for productivity and invest prudently to enhance core capabilities[88] Financial Review This section details the changes in ISDN Holdings Limited's H1 2020 financial metrics; total revenue and gross profit increased, but gross profit margin slightly declined; other operating income, finance costs, and income tax expense increased, while distribution costs and other operating expenses decreased; on the balance sheet, property, plant and equipment, service concession receivables, and inventories increased, trade and other receivables decreased, and bank borrowings and trade and other payables increased; the company maintains good liquidity, but its debt-to-asset ratio has risen Revenue and Gross Profit Margin Total revenue for H1 2020 was S$167.2 million, up 13.8% year-on-year, driven by increased demand for industrial automation solutions in Southeast Asia and construction revenue from the Indonesia hydropower plant; gross profit increased 10.5% to S$41.3 million, but the overall gross profit margin slightly decreased from 25.4% to 24.7%; excluding hydropower plant gross profit, the margin would have increased to 27.1% Revenue and Gross Profit Margin (S$ thousand) | Indicator | H1 2020 | H1 2019 | Change Percentage | | :--- | :--- | :--- | :--- | | Industrial Automation Solutions | | | | | Revenue | 147,098 | 144,335 | 1.9% | | Gross profit | 39,846 | 37,204 | 7.1% | | Gross profit margin | 27.1% | 25.8% | 1.3 percentage points | | Construction Revenue | | | | | Revenue | 20,087 | 2,628 | n.m. | | Gross profit | 1,489 | 195 | n.m. | | Gross profit margin | 7.4% | 7.4% | 0.0 percentage points | | Total | | | | | Revenue | 167,185 | 146,963 | 13.8% | | Gross profit | 41,335 | 37,399 | 10.5% | | Gross profit margin | 24.7% | 25.4% | (0.7) percentage points | - Excluding hydropower plant gross profit margin, the Group's gross profit margin was 27.1%, an increase of 1.3 percentage points year-on-year[91] Other Operating Income Other operating income increased by S$0.2 million (6.5%) to S$2.5 million in H1 2020, primarily driven by higher net foreign exchange gains and government grants, partially offset by reduced commission income, technical consulting fees, and property management income - Other operating income increased by S$0.2 million (6.5%) to S$2.5 million[92] - Main reasons for increase: S$0.7 million increase in net foreign exchange gains, S$0.3 million increase in government grants[92] - Partially offset by: S$0.2 million decrease in reversal of obsolete inventory provision, S$0.3 million decrease in commission income, S$0.1 million decrease in technical consulting fees, S$0.1 million decrease in property management income[92] Distribution Costs Distribution costs decreased by S$0.8 million (6.7%) to S$11.5 million in H1 2020, primarily due to reduced office expenses, personnel and related expenses, and travel expenses, partially offset by increased sales and marketing expenses - Distribution costs decreased by S$0.8 million (6.7%) to S$11.5 million[93] - Main reasons for decrease: S$0.3 million reduction in office expenses, S$0.2 million reduction in personnel and related expenses, S$0.4 million reduction in travel expenses[93] Administrative Expenses Administrative expenses increased by S$0.2 million (1.0%) to S$15.3 million in H1 2020, primarily due to the consolidation of new subsidiaries, higher legal and professional fees for bank financing, and increased depreciation of right-of-use assets, partially offset by reduced personnel expenses due to government grants and lower travel expenses - Administrative expenses increased by S$0.2 million (1.0%) to S$15.3 million[94] - Main reasons for increase: S$0.5 million from consolidation of new subsidiaries, S$0.3 million increase in legal and professional fees for bank financing, S$0.2 million increase in depreciation of right-of-use assets[94] - Partially offset by: S$0.6 million reduction in personnel expenses due to government grants, S$0.1 million reduction in travel expenses[94] Other Operating Expenses Other operating expenses decreased by S$0.5 million (68.9%) to S$0.2 million in H1 2020, primarily due to the absence of net foreign exchange losses and reduced inventory write-downs - Other operating expenses decreased by S$0.5 million (68.9%) to S$0.2 million[95] - Main reasons for decrease: Absence of S$0.3 million net foreign exchange losses, S$0.2 million reduction in inventory write-downs[95] Finance Costs Finance costs increased by S$0.1 million (17.5%) to S$1.0 million in H1 2020, primarily due to increased bank borrowings - Finance costs increased by S$0.1 million (17.5%) to S$1.0 million[96] - Main reason: Increased bank borrowings[96] Income Tax Expense Income tax expense increased by S$1.2 million (44.4%) to S$3.8 million in H1 2020, primarily due to higher taxable profit - Income tax expense increased by S$1.2 million (44.4%) to S$3.8 million[97] - Main reason: Higher taxable profit[97] Property, Plant and Equipment As of June 30, 2020, property, plant and equipment increased by S$9.6 million (21.7%), primarily due to Indonesia hydropower plant construction costs, purchase of plant and machinery, and recognition of right-of-use assets, partially offset by depreciation expense - Property, plant and equipment increased by S$9.6 million (21.7%)[100] - Main reasons for increase: S$9.7 million in Indonesia hydropower plant construction costs, S$1.1 million in plant and machinery purchases, S$0.6 million in right-of-use asset recognition[100] - Partially offset by S$1.9 million in depreciation expense[100] Interests in Associates As of June 30, 2020, interests in associates decreased by S$0.2 million (4.3%), primarily due to the disposal of interest in SPHP Co., Pte. Ltd., partially offset by the share of profit from associates - Interests in associates decreased by S$0.2 million (4.3%)[101] - Main reason: S$0.7 million from disposal of interest in SPHP Co., Pte. Ltd[101] - Partially offset by S$0.5 million share of profit from associates[101] Service Concession Receivables As of June 30, 2020, service concession receivables increased by S$20.2 million (59.0%) to S$54.5 million, primarily due to construction revenue recognized from the mini hydropower plant under service concession arrangements and net foreign exchange gains - Service concession receivables increased by S$20.2 million (59.0%) to S$54.5 million[102] - Main reasons: S$20.1 million in mini hydropower plant construction revenue, S$0.1 million in net foreign exchange gains[102] - These receivables are classified as long-term assets and will be collected over the power purchase agreement term[102] Inventories As of June 30, 2020, inventories increased by S$11.5 million (21.7%) to S$64.7 million, primarily to fulfill customer orders for H2 2020 - Inventories increased by S$11.5 million (21.7%) to S$64.7 million[103] - Main reason: To fulfill customer orders for H2 2020[103] Trade and Other Receivables As of June 30, 2020, trade and other receivables decreased by S$8.6 million (7.7%) to S$103.3 million, primarily due to reduced bills receivable, prepayments to suppliers, and loans to associates, partially offset by increased trade receivables from third parties, associates, and related parties - Trade and other receivables decreased by S$8.6 million (7.7%) to S$103.3 million[104] - Main reasons for decrease: S$6.1 million reduction in bills receivable, S$6.0 million reduction in prepayments to suppliers, S$3.4 million reduction in loans to associates[104] - Partially offset by: S$7.5 million increase in third-party trade receivables, S$0.3 million increase in associate trade receivables, S$0.7 million increase in related party trade receivables[104] Trade and Other Payables As of June 30, 2020, trade and other payables increased by S$17.0 million (28.0%) to S$77.8 million, primarily due to increased trade purchases and accrued construction costs related to the mini hydropower plant, partially offset by reduced accrued operating expenses and staff costs - Trade and other payables increased by S$17.0 million (28.0%) to S$77.8 million[105] - Main reasons for increase: S$6.0 million increase in trade purchases, S$11.6 million increase in accrued construction costs for the mini hydropower plant[105] - Partially offset by: S$0.1 million reduction in accrued operating expenses, S$0.5 million reduction in accrued staff costs[105] Bank Borrowings (Current and Non-Current) As of June 30, 2020, total bank borrowings increased by S$8.4 million (31.0%) to S$35.7 million, primarily due to S$19.7 million in new bank borrowings, partially offset by S$11.3 million in repayments - Bank borrowings increased by S$8.4 million (31.0%) to S$35.7 million[106] - Main reason: S$19.7 million in new bank borrowings, offset by S$11.3 million in repayments[106] Capital Expenditure In H1 2020, the Group's capital expenditure was S$1,076 thousand, primarily for additions to property, plant and equipment and construction in progress, a decrease from the prior year - H1 2020 capital expenditure: S$1,076 thousand (H1 2019: S$1,594 thousand)[108] - Primarily for additions to property, plant and equipment and construction in progress[108] Material Acquisitions and Disposals and Material Investments On June 2, 2020, the company's indirect wholly-owned subsidiary disposed of a 33% equity interest in SPHP Co., Pte. Ltd - On June 2, 2020, disposed of 33% ordinary shares in SPHP Co., Pte. Ltd[109] Future Plans for Material Investments or Capital Assets As of June 30, 2020, the Group had no future plans for material investments or capital assets - As of June 30, 2020, no future plans for material investments or capital assets[110] Liquidity and Financial Resources As of June 30, 2020, the Group's cash and bank balances increased to S$52.1 million, with a quick ratio of 1.3 times; total borrowings rose to S$35.9 million, with a weighted average effective interest rate of 2.51%; the company faces foreign exchange risks primarily from RMB and USD - Cash and bank balances: S$52.1 million (December 31, 2019: S$38.0 million), an increase of 37.2%[111] - Quick ratio: 1.3 times (December 31, 2019: 1.6 times)[111] - Total long-term and short-term bank borrowings: S$35.7 million[111] - Weighted average effective interest rate: 2.51% (December 31, 2019: 6.62%)[111] - Total borrowings (including finance leases): S$35.9 million (December 31, 2019: S$27.5 million)[111] Cash and Bank Balances vs. Bank Borrowings by Currency (S$ thousand) | Currency | Cash & Bank Balances (2020) | Bank Borrowings (2020) | Cash & Bank Balances (2019) | Bank Borrowings (2019) | | :--- | :--- | :--- | :--- | :--- | | RMB | 28,965 | 5,421 | 18,496 | 5,792 | | USD | 11,635 | 24,783 | 8,502 | 15,475 | | SGD | 3,369 | 3,853 | 3,305 | 4,194 | | HKD | 262 | - | 380 | - | | CHF | 1,246 | - | 465 | - | | EUR | 840 | 434 | 696 | 375 | | Others | 5,813 | 1,235 | 6,154 | 1,446 | | Consolidated | 52,130 | 35,726 | 37,998 | 27,282 | Use of Proceeds from Securities Issue The company disclosed the updated use of net proceeds from its 2013 placement and 2019 subscription; of the S$10,415 thousand net proceeds from the 2013 placement, S$6,715 thousand remains unutilized, mainly for high-tech industrial park facilities and working capital for mining-related businesses; all S$5,300 thousand net proceeds from the 2019 subscription remain unutilized, planned for business expansion and general working capital Use of Proceeds from 2013 Placement (S$ thousand) | Purpose | Allocated Amount | Utilized as of June 30, 2020 | Unutilized as of June 30, 2020 | Expected Timeline for Full Utilization | | :--- | :--- | :--- | :--- | :--- | | Construction of high-tech industrial park facilities | 1,815 | 1,200 | 615 | December 2023 | | Working capital for mining-related businesses | 6,600 | 500 | 6,100 | December 2023 | | Evaluation of power plant investment opportunities | 2,000 | 2,000 | - | Not applicable | | Total | 10,415 | 3,700 | 6,715 | | Use of Proceeds from 2019 Subscription (S$ thousand) | Purpose | Allocated Amount | Utilized as of June 30, 2020 | Unutilized as of June 30, 2020 | Expected Timeline for Full Utilization | | :--- | :--- | :--- | :--- | :--- | | Business expansion | 4,770 | - | 4,770 | December 2021 | | General working capital | 530 | - | 530 | December 2020 | | Total | 5,300 | - | 5,300 | | Gearing Ratio As of H1 2020, the Group's gearing ratio was approximately 21.9%, an increase from 18.0% at end-2019, primarily due to increased bank borrowings - Gearing ratio: 21.9% (December 31, 2019: 18.0%)[118] - Increase primarily due to increased bank borrowings[119] Treasury Policy The Group adopts a prudent treasury policy, maintaining good liquidity, managing credit risk through continuous credit assessment, and closely monitoring liquidity to meet funding needs; the company may use bank borrowings for funding and leverage currency alignment with subsidiary functional currencies for foreign exchange hedging; no interest rate risk hedging was undertaken in H1 2020 - Adopts a prudent treasury policy, maintaining good liquidity[120] - Manages credit risk through continuous credit assessment[120] - Closely monitors liquidity to ensure compliance with funding requirements[120] - May use bank borrowings for funding and leverage currency alignment for foreign exchange hedging[120] - No interest rate risk hedging undertaken in H1 2020[120] Foreign Exchange Risk The Group primarily faces foreign exchange risks from RMB and USD, particularly for component purchases in mainland China denominated in RMB; the company has used financial instruments to hedge foreign exchange risk - Major foreign currency transactions denominated in RMB and USD[121] - Faces foreign exchange risk from RMB-denominated component purchases and assets/liabilities denominated in RMB and other currencies[121] - Financial instruments used to hedge foreign exchange risk in H1 2020[121] Employees and Remuneration Policy As of H1 2020, the Group had 913 employees; employee remuneration is determined by market conditions and individual performance, with benefits including medical and life insurance; the company also incentivizes directors and eligible participants through an Employee Share Option Scheme (ESOS) and Employee Performance Share Plan (EPSP), and provides on-the-job training - Total employees as of H1 2020: 913 (2019: 916)[122] - Remuneration policy: Determined by market conditions and individual performance, with benefits including medical and life insurance[122] - Incentive plans: 2016 Employee Share Option Scheme (ESOS) and ISDN Employee Performance Share Plan (EPSP)[122] - Provides on-the-job training[122] Material Investments Held Apart from investments in subsidiaries and associates, the Group held no other material equity investments in H1 2020 - No other material equity investments held in H1 2020, apart from subsidiaries and associates[123] Risk Management This section outlines the Group's risk management strategy, including contingent liabilities and asset pledges Contingent Liabilities As of June 30, 2020, the Group had no material contingent liabilities or unreleased guarantees related to third-party payment obligations - As of June 30, 2020, no material contingent liabilities or unreleased guarantees for third-party payment obligations[126] Pledges of the Group's Assets As of June 30, 2020, approximately S$3.1 million in cash and cash equivalents and S$19.6 million in property, plant and equipment were pledged to banks by the Group to secure general banking facilities - Cash and cash equivalents pledged to banks: S$3.1 million (2019: S$3.1 million)[127] - Net book value of property, plant and equipment pledged to banks: S$19.6 million (2019: S$18.6 million)[127] Interim Dividend The Board did not recommend an interim dividend for H1 2020 - Board did not recommend an interim dividend for H1 2020[128] Other Information This section discloses the share interests of directors and major shareholders in the company and its associated corporations, including Mr. Teo and Mr. Toh's holdings; it also covers the implementation of share option and employee performance share plans, trading of listed securities, compliance with non-competition undertakings, corporate governance practices, changes in director information, and the audit committee's responsibilities and report publication methods Directors' and Chief Executive's Interests in Shares, Underlying Shares, and Debentures of the Company or Any Associated Corporation As of June 30, 2020, the company's directors and chief executive held interests in the shares of the company and its associated corporations; Mr. Teo held 31.80% of the company's shares through the holding company Assetraise, and Mr. Toh Hsiang-Wen Keith held 8.92% through NTCP; Mr. Teo also had personal interests in Dirak Asia Pte Ltd and Assetraise (i) Long Positions in Shares, Underlying Shares, and Debentures of the Company As of June 30, 2020, Mr. Teo held 136,602,480 shares, representing 31.80% of the issued share capital, through his controlled company Assetraise; Mr. Kong De Yang held 2,050,000 shares in personal capacity; Mr. Toh Hsiang-Wen Keith held 38,323,401 shares, representing 8.92%, through his controlled company NTCP Directors' and Chief Executive's Long Positions in Shares | Director Name | Capacity | Personal Interest | Corporate Interest | Total | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | :--- | :--- | | Mr. Teo | Interest in controlled corporation | - | 136,602,480 | 136,602,480 | 31.80% | | Mr. Kong De Yang | Beneficial owner | 2,050,000 | - | 2,050,000 | 0.48% | | Mr. Toh Hsiang-Wen Keith | Interest in controlled corporation | - | 38,323,401 | 38,323,401 | 8.92% | - Mr. Teo holds shares through his controlling company, Assetraise[132] - Mr. Toh holds shares through NTCP, which is wholly owned by NT Fund 2, where NEG 2 is the general partner of NT Fund 2, and Mr. Toh controls not less than 20% of the voting rights in NEG 2[132] (ii) Long Positions in Shares, Underlying Shares, and Debentures of Associated Corporations of the Company As of June 30, 2020, Mr. Teo held a 1% personal equity interest (5,547 ordinary shares) in Dirak Asia Pte Ltd and a 50% personal equity interest (1 ordinary share) in Assetraise - Mr. Teo holds 5,547 ordinary shares (1%) in Dirak Asia Pte Ltd[133] - Mr. Teo holds 1 ordinary share (50%) in Assetraise[133] Share Options The company's Employee Share Option Scheme (ESOS) was approved by shareholders in 2016; as of H1 2020, no options under this scheme were granted to controlling shareholders or their close associates, company directors or employees, nor did any participant receive options representing 5% or more of the total shares, and there were no outstanding options - Share option scheme approved by shareholders on April 22, 2016, and December 16, 2016[136] - As of H1 2020, no share options granted to controlling shareholders or their close associates[137] - No participant received share options representing 5% or more of the total shares[138] - No share options granted to directors or employees of the company or its subsidiaries[139] - No shares issued from the exercise of options to repurchase unissued shares[140] - As of H1 2020, no outstanding share options[141] Employee Performance Share Plan The company's Employee Performance Share Plan (EPSP) was approved by shareholders in 2012 and 2016, managed by the Board's Remuneration Committee; all directors, as well as controlling shareholder Mr. Teo and his spouse Ms. Tang, are eligible to participate in the plan - Employee Performance Share Plan approved by shareholders on February 17, 2012, and December 16, 2016[142] - Plan managed by the Board's Remuneration Committee[143] - All directors, controlling shareholder Mr. Teo, and his spouse Ms. Tang are eligible to participate in the plan[144] Purchase, Sale or Redemption of the Company's Listed Securities As of H1 2020 and the date of this interim report, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities - Neither the company nor its subsidiaries purchased, sold, or redeemed any listed securities[145] Non-Competition Undertaking The company has received confirmation from controlling shareholders Mr. Teo and Ms. Tang regarding the terms of the non-competition undertaking, and has reviewed and confirmed their compliance, with the company also having enforced the undertaking's terms - Controlling shareholders Mr. Teo and Ms. Tang confirmed and complied with the non-competition undertaking terms[147] - Independent non-executive directors reviewed and confirmed controlling shareholders' compliance[147] - Company has enforced the non-competition undertaking terms[147] Interests and Short Positions of Substantial Shareholders and Other Persons in Shares and Underlying Shares As of June 30, 2020, substantial shareholder Assetraise held 31.80% of the company's shares, with Ms. Tang (Mr. Teo's spouse) holding the same proportion through Assetraise; NTCP, Mr. Loke Wai San, NEG 2, and NT Fund 2 each held 8.92% of the company's shares Substantial Shareholders' and Other Persons' Long Positions in Shares | Name | Capacity | Personal Interest | Corporate Interest | Total | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | :--- | :--- | | Assetraise | Interest owner | 136,602,480 | - | 136,602,480 | 31.80% | | Ms. Tang | Interest in controlled corporation | - | 136,602,480 | 136,602,480 | 31.80% | | NTCP | Interest owner | 38,323,401 | - | 38,323,401 | 8.92% | | Mr. Loke Wai San | Interest in controlled corporation | - | 38,323,401 | 38,323,401 | 8.92% | | NEG 2 | Interest in controlled corporation | - | 38,323,401 | 38,323,401 | 8.92% | | NT Fund 2 | Interest in controlled corporation | - | 38,323,401 | 38,323,401 | 8.92% | - Assetraise is beneficially owned by Mr. Teo and his spouse Ms. Tang[150] - NTCP is wholly owned by NT Fund 2, where NEG 2 is the general partner of NT Fund 2, and Mr. Loke controls not less than 20% of the voting rights in NEG 2[150] Corporate Governance The Group adheres to the principles and provisions of the Revised Code of Corporate Governance 2018 (Singapore) and the Hong Kong Corporate Governance Code, aiming to protect shareholder interests and enhance long-term shareholder value, complying with the stricter provisions in case of conflict; as of H1 2020, the Group has complied with both codes - Adheres to the Revised Code of Corporate Governance 2018 (Singapore) and the Hong Kong Corporate Governance Code[151] - Goal is to protect shareholder interests and enhance long-term shareholder value[151] - Complies with the stricter provisions in case of code conflict[151] - Complied with both codes in H1 2020[151] Compliance with SGX Listing Manual and HKEX Model Code The company has adopted an internal compliance code, adhering to the SGX Listing Manual rules and HKEX Model Code for Securities Transactions by Directors of Listed Issuers best practices; all directors confirmed compliance with the Model Code in H1 2020; the company and its officers are prohibited from trading company shares during specific "blackout periods" before results announcements - Company adopted internal compliance code, adhering to SGX Listing Manual rules and HKEX Model Code[152] - All directors confirmed compliance with the Model Code in H1 2020[152] - Company and its officers are prohibited from trading company shares during "blackout periods" 30 days before interim results and 60 days before full-year results until announcement date[152] Changes in Directors' Information Since the date of the 2019 Annual Report, Mr. Soh Ming Kwang retired as the Lead Independent Director of China Haida International Holdings Limited on June 29, 2020 - Mr. Soh Ming Kwang retired as Lead Independent Director of China Haida International Holdings Limited on June 29, 2020[155] Audit Committee The Board established an Audit Committee, whose terms of reference were revised and implemented on January 1, 2019, primarily responsible for evaluating and overseeing the company's financial reporting process, risk management, and internal controls; the committee comprises three independent non-executive directors, with Mr. Lim Shan Kai as Chairman, and has reviewed the unaudited group consolidated results for this interim report - Audit Committee's terms of reference revised and implemented on January 1, 2019[156] - Primary responsibilities: Evaluate and oversee the company's financial reporting process, risk management, and internal controls[156] - Members: Three independent non-executive directors (Mr. Lim Shan Kai, Mr. Soh Ming Kwang, Mr. Tan Soon Liang), with Mr. Lim Shan Kai as Chairman[157] - Committee reviewed the unaudited group consolidated results for H1 2020 and this interim report[157] Publication of Interim Report The interim report for the six months ended June 30, 2020, has been published on the HKEXnews website (www.hkexnews.hk) and the company's website (www.isdnholdings.com) - Interim report published on HKEXnews website and company website[158]