TIDMTEL
RNS Number : 0763I
Teliti International Ltd
28 June 2013
28 June 2013
Teliti International Ltd.
("Teliti" or "the Group")
Interim results for the six months ended 31 March 2013
Teliti International Ltd (AIM: TEL), the datacentre and IT
business, announces its interim results for the 6 months ended 31
March 2013.
Financial Summary*
-- Revenues were RM33.9m (H1 2012: RM38.2m)
-- Profit before tax was RM2.0m (H1 2012: RM2.2m)
-- Gross profit was RM4.4m (H1 2012: RM3.8m)
-- Total equity and liabilities at 31 March 2013 were RM274.5m (30 September 2012: RM267.6m)
* As stated in the Group's Admission Document, Teliti
International Ltd was incorporated on 13 November 2009 as a Cayman
Islands company to act as the holding company of Teliti Solutions
Sdn. Bhd., Teliti Services Sdn. Bhd. and Teliti Datacentres Sdn.
Bhd. (the "Subsidiaries") upon Teliti being admitted to AIM. Teliti
was admitted to AIM, and the Subsidiaries became subsidiaries of
the Group, on 3 November 2011. Prior to Teliti being admitted to
AIM, the Subsidiaries were subsidiaries of Teliti Computers Sdn.
Bhd. ("Teliti Computers"). The Group was also a subsidiary of
Teliti Computers during this period. As a result, the figures shown
for the Group for the six months ended 31 March 2012 are
consolidated on a pro forma basis.
Operational Summary
-- Teliti Datacentres Sdn. Bhd. ("Teliti Datacentres"):
o Construction of the superstructure of Teliti's
state-of-the-art datacentre ("the Datacentre") is now substantially
complete
o As announced on 21 June 2013, the Board has not been able to
secure the required funding for the work to complete Phase 1 of the
Datacentre construction on schedule. As a result, it is now
unlikely that the Datacentre will commence operations before the
middle of 2014
o The Board is in discussions with a number of parties with
respect to the funding requirements
-- Teliti Solutions Sdn. Bhd. ("Teliti Solutions") and Teliti
Services Sdn. Bhd. ("Teliti Services"):
o Completed contracts with organisations such as AGRO Bank and
Utusan Melayu (M) Berhad
o Remained active in the private and public sectors and across a
range of industries such as finance, energy, telecommunications and
public service
Enquiries
Teliti International Ltd
--------------------------------------- --------------------
Hj Mohamed Nasir Abdul Majid, Chief
Executive Officer
Rosmida Din, Chief Financial Officer +603 7873 7733
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Daniel Stewart and Company plc
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Antony Legge, James Felix +44 (0)20 7776 6550
--------------------------------------- --------------------
Luther Pendragon
--------------------------------------- --------------------
Harry Chathli, Claire Norbury +44 (0)20 7618 9100
--------------------------------------- --------------------
Operational Review
Teliti Datacentres
At the time of the Group's full year results on 28 March 2013,
Teliti stated that it was in negotiations with various parties to
secure financing solutions by the end of the second quarter of
calendar year 2013 to enable the completion of the Datacentre.
However, as announced on 21 June 2013, the Group has been unable to
raise these funds within the period. As a result, the Board expects
that the Datacentre will not commence operations before the middle
of calendar year 2014.
The funding required to complete the Datacentre and bring the
first three rooms into operation ("Phase 1") is approximately
RM154m, of which approximately RM113m has already been spent and is
included in the Group's balance sheet (under creditors). The
balance of RM41m relates to work still to be carried out. Post the
completion of Phase 1, further work will then be required to bring
the other 13 rooms into operation ("Phase 2").
The Group has secured funding of approximately RM65m leaving a
funding gap of RM89m in relation to Phase 1. However, this RM65m
can only be accessed once the building has achieved its certificate
of completion and compliance ("CCC"), for which RM44m of work needs
to be paid for.
The delay to the Datacentre and the increased costs, especially
in terms of accrued interest during the elongated construction
time, has seriously constrained the Group's cash flows. The Board
is in discussions with a number of parties in respect of the
immediate funding requirement of RM44m to achieve the CCC, the
additional RM45m to complete Phase 1 and then the subsequent
funding for Phase 2. It had been anticipated that one of the
proposals would have completed by the end of June 2013, however,
the Board now believes that it could be a further two months before
a resolution is achieved.
The funding proposals currently being considered by the Board
include the disposal of part, or possibly all, of the Datacentre,
which would require shareholder approval.
Teliti Services and Teliti Solutions
Teliti Services and Teliti Solutions receive revenue via Teliti
Computers, which, as the parent company, invoices the contracted
customer for the work performed. Teliti Services and Teliti
Solutions, through Teliti Computers, remained active in completing
existing projects and winning new contracts during the first six
months of the year.
Teliti Services' largest customer in the first half of financial
year 2013 in revenue, earned through Teliti Computers, was the
Accountant General of Malaysia ("Accountant General"). Teliti
Services, through Teliti Computers, received RM4.4m for the
maintenance of the Accountant General's Financial Management and
Accounting System ("GFMAS"), representing 19% of the subsidiary's
revenue. Teliti Services completed a contract, worth RM3.7m, with
AGRO Bank for the supply, testing and commissioning of IBM
equipment.
During the first half of financial year 2013, Teliti Solutions'
largest customer was Utusan Melayu (M) Berhad, a Malaysian media
company. Teliti Solutions completed a project for the design,
supply, relocation, reconfiguration, installation, testing and
commissioning of active components and equipment for the Local Area
Network (LAN) in two new buildings. Teliti Solutions, through
Teliti Computers, earned RM3.8m for this project, representing 38%
of the subsidiary's revenue for the period. Another significant
customer was Tenaga Nasional Berhad, the Malaysian national power
company, which generated, through Teliti Computers, RM3.1m,
representing 31% of the subsidiary's revenue for the period, for
work on the installation of an IT system.
Financial Review
The Group
For the first half of 2013, the Group reported revenues of
RM33.9m and a profit before tax of RM2.0m, compared with RM38.2m
and RM2.2m respectively for the same period last year. The decline
in revenues was due to a slowdown in the award of new projects by
the Malaysian government prior to the General Election, which was
held in May 2013. However, gross profit increased by 15% to RM4.4m
(H1 2012: RM3.8m) due to an increase in margins for Teliti
Services.
Teliti Services
Revenue was RM23.5m compared with RM24.6m for first half of the
prior year. However, profit before tax increased to RM2.0m compared
with RM1.0m, and gross profit increased to RM2.9m compared with
RM1.9m, for the first half of financial year 2012 due to projects
with Kuala Lumpur City Hall and the Accountant General that
included both hardware and software and so carried a higher
margin.
Teliti Solutions
Revenue for Teliti Solutions was RM10.0m compared with RM13.3m
for the first half of financial year 2012, and profit before tax
was RM1.1m as opposed to RM1.5m. Gross profit was RM1.4m compared
with RM1.8m for the same period of the prior year.
Teliti Datacentres
Revenue for Teliti Datacentres was flat at RM0.2m, which was
generated from the rental income from a customer at the Customer
Experience Centre. Profit before tax was RM0.05m compared with
RM0.02m profit for the first half of 2012, and gross profit was
RM0.04m (H1 2012: RM0.1m). This is significantly behind market
expectations due to the delay in the opening of the Datacentre.
Post-period Developments
As announced on 21 June 2013, two of the Group's non-executive
directors, Maurice Keane and Brian Rowbotham, resigned with
immediate effect.
After discussion with its Nominated Adviser, Daniel Stewart, and
in consideration of its current situation, the Group requested that
trading in its shares on AIM be suspended until new non-executive
directors can be appointed. Trading in the Group's shares was
suspended on 21 June 2013.
Outlook
The Board anticipates that revenue for the second half of
financial year 2013 will be broadly in line with the second half of
financial year 2012 resulting in a decline in revenues for full
year 2013 compared with the prior year. For full year 2012, profit
was impacted by the administrative expenses associated with the
admission of the Group to AIM, which will not affect the results
for full year 2013. As a result, the Board anticipates an
improvement in profit for full year 2013. Whilst the delay in the
construction of the Datacentre and the uncertainty surrounding its
future is disappointing, the Board is encouraged by the interest it
is receiving from various parties and wishes to assure shareholders
that it is actively engaged in seeking a solution that will
ultimately deliver shareholder value.
TELITI INTERNATIONAL LTD
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the 6 months ended 31 March 2013
6 months ended 6 months ended
Notes 31 March 2013 31 March 2012
(unaudited) (unaudited)
RM'000 RM'000
Revenue 3 33,857 38,172
Cost of sales (29,441) (34,325)
--------------- ---------------
Gross profit 4,416 3,847
Other operating income - 10
Administrative expenses (2,378) (1,697)
Operating profit 2,038 2,160
Finance costs - net - -
--------------- ---------------
Profit before tax 2,038 2,160
Tax (785) (636)
--------------- ---------------
Total comprehensive
income for the period 1,253 1,524
=============== ===============
Earnings per share 4
- Basic (sen) 4.96 6.47
- Diluted (sen) 4.42 5.73
The above results relate entirely to continuing operations. The
total comprehensive income for both periods is attributable to
equity holders of the Company.
CONDENSED CONSOLIDATED BALANCE SHEET
As at 31 March 2013
31 March 30 September
Notes 2013 2012
(unaudited) (audited)
RM'000 RM'000
NON-CURRENT ASSETS
Property, plant and equipment 5 249,577 245,477
Intangible assets 6 4,304 3,423
Deferred tax assets 297 297
Fixed deposits 509 509
Total non-current assets 254,687 249,706
------------ -------------
CURRENT ASSETS
Trade and other receivables 397 371
Amount due from parent company 15 19,318 17,440
Cash and cash equivalents 107 107
Total current assets 19,822 17,918
------------ -------------
Total assets 274,509 267,624
============ =============
EQUITY
Share capital 8 7,691 7,691
Share premium 8 5,208 5,208
Share-based payments reserve 9 467 467
Other reserve 10 (3,060) (3,060)
Retained earnings 9,570 8,317
Total shareholders' equity 19,876 18,623
------------ -------------
NON-CURRENT LIABILITIES
Borrowings 11 101,214 82,045
Total non-current liabilities 101,214 82,045
------------ -------------
CURRENT LIABILITIES
Trade and other payables 12 114,483 134,442
Income tax payable 2,891 2,568
Amount due to parent company 15 28,199 22,100
Borrowings 11 7,846 7,846
Total current liabilities 153,419 166,956
------------ -------------
Total liabilities 254,633 249,001
------------ -------------
Total equity and liabilities 274,509 267,624
============ =============
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the 6 months ended 31 March 2013
6 months 6 months
ended 31 ended 31
Notes March 2013 March 2012
(unaudited) (unaudited)
RM'000 RM'000
CASH FLOWS FROM OPERATING
ACTIVITIES
Profit before tax 2,037 2,160
Adjustment for non-cash
items:
Depreciation 5 9 9
------------ ------------
Operating profit before
working capital changes 2,046 2,169
Changes in working capital:
Increase in receivables (26) (2,314)
Decrease in net amounts
owed to related parties 4,213 1,600
(Decrease)/increase in
payables (19,953) 12,302
------------ ------------
Cash from/(used in) operations (13,720) 13,757
Income tax paid (459) -
Net cash used in operating
activities (14,179) 13,757
------------ ------------
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of property, plant
and equipment 5 (4,109) (48,974)
Placement of fixed deposits - (259)
Capitalisation of development
costs 6 (881) (2,442)
Investment in subsidiary - (6,060)
------------ ------------
Net cash used in investing
activities (4,990) (57,735)
------------ ------------
CASH FLOWS FROM FINANCING
ACTIVITIES
Issue of ordinary shares - 8,485
Interest paid - (15)
Payment of finance lease
payables (620) (270)
Drawdown of term loan 19,789 35,778
Net cash from financing
activities 19,169 43,978
------------ ------------
CASH AND CASH EQUIVALENTS
Net changes in cash and
cash equivalents - -
At beginning of financial
period 107 4
At end of financial period 107 4
============ ============
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the 6 months ended 31 March 2013
Group Statement of Changes in Equity
Share-
based
Share Share payment Other Retained Total
capital premium reserve reserve earnings equity
RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
------------------------- ------------------ --------- --------- ----------------- --------
Balance at
1 October 2012 7,691 5,208 467 (3,060) 8,317 18,623
Total comprehensive
income for period - - - - 1,253 1,253
------------------------- ------------------ --------- --------- ----------------- --------
Balance at
31 March 2013 7,691 5,208 467 (3,060) 9,570 19,876
========================= ================== ========= ========= ================= ========
Share-
based
Share Share payment Other Retained Total
capital premium reserve reserve earnings equity
RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
------------------------- --------------- --------- --------- ------------------ --------
Balance at
1 October 2011 7,130 1,354 - (3,060) 16,308 21,732
Total comprehensive
income for period - - - 1,524 1,524
------------------------- --------------- --------- --------- ------------------ --------
Balance at
31 March 2012 7,130 1,354 - (3,060) 17,832 23,256
========================= =============== ========= ========= ================== ========
NOTES TO THE FINANCIAL INFORMATION
For the 6 months ended 31 March 2013
1. General information
TELITI is a company incorporated in the Cayman Islands with its
registered office at Cricket Square, Hutchin Drive, P.O. Box 2681,
Grand Cayman KY1-1111, Cayman Islands.
The financial information relating for the six months ended 31
March 2013 is unaudited and does not constitute statutory
accounts.
The comparative figures for the half year ended 31 March 2012
are unaudited. The comparative financial information as at 30
September 2012, as presented in the Condensed Consolidated Balance
Sheet, is extracted from the audited statutory accounts for the
year ended 30 September 2012. Those audited accounts were approved
by the Board of Directors on 28 March 2013; the reports of the
auditors on those accounts were unqualified and included a
reference to Going Concern Uncertainty to which the auditors drew
attention by way of emphasis of matter, without qualifying their
report.
These unaudited interim financial results were approved by the
Board of Directors on 28 June 2013, are available on the Company's
website, www.teliti.com and are being sent to shareholders. Further
copies are available from TELITI's registered office, Cricket
Square, Hutchin Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman
Islands.
2. Summary of significant accounting policies
2.1 Basis of Presentation
The accounting policies applied by the Company in these
unaudited interim results are in accordance with International
Financial Reporting Standards as adopted by the European Union
("IFRS"), including IAS 34 'Interim Financial Reporting', and in
accordance with the accounting policies which the Company expects
to adopt in its next annual accounts for the year ending 30
September 2013 and are the same as those applied by the Company in
its financial statements for the year ended 30 September 2012.
2.2 Going concern
During the 6 months ended 31 March 2013 the group made a profit
of RM1.253 million. At 31 March 2013 the group had cash and cash
equivalents of RM107,000 and pledged fixed deposits of RM509,000.
The operations of the group are currently being financed by funds
raised from equity and debt fund raisings.
During the 6 months ended 31 March 2013, work continued on the
construction of the datacentre superstructure, which is now
substantially complete (95% completion). The term loan obtained for
funding of the datacentre building has been fully drawn down.
At the date of approval of these interim results, the group has
RM113.2 million of existing payables due and future capital
commitments to complete the datacentre and purchase equipment of
RM40.8 million. Current funding available for these payables and
commitments will come from SME Bank's facility of RM18.5 million
and a government facilitation fund of RM47 million, both of which
were secured during the 6 months ended 31 March 2013. As per the
Admission Document of 3 November 2011, the group still has at its
disposal the Cisco Capital leases and credit facilities, pursuant
to the Master Lease Agreement. However, the group is seeking more
cost effective alternatives and the group is currently in
negotiations with various parties, which are still ongoing, to
secure the most favorable financing solutions for the group.
With Teliti's potential and historic track record of raising
finance the directors are confident that the group will be able to
raise sufficient funding in the fourth quarter of calendar year
2013 to secure delivery of the certificate of completion and
compliance and therefore handover of the datacentre to enable the
datacentre to start to generate incremental revenue for the group
in financial year ending 30 September 2014.
There is no guarantee that the remaining funds required of
RM88.5 million will become available and consequently a material
uncertainty exists that may cast significant doubt on the group's
ability to meet its commitments in relation to the completion of
the datacentre. The directors are however confident that funding
will be available and that the group will have sufficient cash to
fund its datacentre development to completion and to continue its
operations for the foreseeable future. The half year financial
information has, therefore, been prepared on the going concern
basis and does not include the adjustments that would result if the
group was unable to continue in operation.
2.3 Segmental reporting
The activities of the group are divided into operating segments
in accordance with the requirements of IFRS 8 'Operating Segments'.
Operating segments are identified on the same basis that is used
internally to manage and report on performance and takes account of
the organisational structure of the group based on the various
services of the reportable segments. The activities of the group
are broken down into three operating segments: Services, Solutions
and Datacentre.
Internal management and reporting segment information is
prepared in conformity with the accounting policies adopted for
preparing and presenting the group financial statements.
Operating segments are reported in a manner consistent with the
internal reporting provided to the 'chief operating decision-maker'
who is responsible for allocating resources and assessing
performance of the operating segments and which has been identified
as the Board of Directors that make strategic decisions. In order
to assist the decision making process, various measures of segment
result and of segment assets have been set for the different
operating segments. The Services and Solutions segments are managed
on the basis of the profit after taxation. Capital expenditure on
non-current assets is the corresponding measure of segment assets
used to determine how to allocate resources. Further details on the
group's operating segments are shown in note 3 below.
2.4 Basis of consolidation and comparative information
presented
The consolidated financial information incorporate the financial
information of the company and its subsidiary undertakings. The
financial information of the subsidiaries is prepared for the same
reporting period as the parent company using consistent accounting
policies. Intra-group sales, transactions and results are
eliminated on consolidation.
The consolidated financial statements incorporate the financial
statements of the company and its subsidiary undertakings. The
financial information of the subsidiaries is prepared for the same
reporting period as the parent company using consistent accounting
policies. Intra-group sales, transactions and results are
eliminated on consolidation.
Business combinations involving entities under common
control
The company was incorporated on 13 November 2009 and the company
acquired Teliti Services, Teliti Solutions, Teliti Datacentres and
Teliti International (M) Sdn Bhd (together "the Teliti Group") by
means of a share-for-share exchange as part of a reorganisation on
its admission to AIM; this, under IFRS3 'Business Combinations',
has resulted in a business combination involving entities under
common control, where no acquirer is identified.
As the company acquired other companies, by means of such a
share-for-share exchange, resulting in a business combination
involving entities under common control and where no acquirer is
identified, the "pooling of interests" method of consolidation has
been used. Therefore, the difference between the purchase
consideration and the carrying value of the share capital acquired
is adjusted to equity and the comparative consolidated figures are
stated on a combined basis.
2.5 Property, plant and equipment
Property, plant and equipment are stated at cost less
depreciation. Depreciation is provided at rates calculated to write
off the cost less estimated residual value of each asset over its
expected useful life, as follows:
Computer, equipment and software Straight line at 20%
Property, plant and equipment are reviewed for impairment losses
whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is
recognised for the amount by which the carrying amount of the asset
exceeds its recoverable amount which is the higher of an asset's
net selling price and value in use.
The residual values, useful life and depreciation method are
reviewed at each financial year end to ensure that the amount,
method and period of depreciation are consistent with previous
estimates and the expected pattern of consumption of the future
economic benefits are expected in the items of property, plant and
equipment.
Property, plant and equipment is derecognised upon disposal or
when no future economic benefits are expected from its use or
disposal. Gains or losses arising on the disposal of property,
plant and equipment are determined as the difference between the
disposal proceeds and the carrying amount of the assets and are
recognised in profit or loss in the financial year in which the
asset is derecognised.
Capital work-in-progress consists of the datacentre building
under construction for intended use within the business. The amount
is stated at cost and no depreciation is charged until the
datacentre is completed.
2.6 Intangible assets
Development expenditures represent group staff and consultancy
costs relating to the development of the datacentre infrastructure
and operations and is recognised as an intangible asset when the
group can demonstrate:
-- The technical feasibility of completing the intangible asset
so that it will be available for use or sale;
-- Its intention to complete and its ability to use or sell the asset;
-- How the asset will generate future economic benefits;
-- The availability of resources to complete the asset;
-- The ability to measure reliably the expenditure during development.
Following initial recognition of the development expenditure as
an asset, the cost model is applied requiring the asset to be
carried at cost less any accumulated amortisation and accumulated
impairment losses. Amortisation of the development asset will
commence when development is complete and the datacentre is
available for use. The development asset will be amortised over the
period of expected future economic benefit to the group.
Amortisation will be included in the income statement. During the
period of development, the asset is tested for impairment
annually.
2.7 Revenue recognition
Revenue is recognised to the extent that it is probable that
economic benefits will flow to the group and the revenue can be
reliably measured. Revenue is measured at the fair value of
consideration received and receivable.
Contract revenue represents revenue earned from information
technology related activities which includes providing information
technology and computer related services, and supplying of
computers and related equipment.
All of the revenue of Teliti Solutions and Teliti Services is
allocated to them from Teliti Computers who invoices the contract
customer for the work performed.
The group's parent company, Teliti Computers, holds licenses and
agency agreements permitting it to bid for open tenders issued by
Malaysian government bodies, agencies and government linked
companies or other private companies. Those licenses and agency
agreements are only valid for Teliti Computers. The contracts are
allocated to Teliti Services and Teliti Solutions on a normal
commercial basis and any loss or cost overrun on each contract is
recognised in the company that has carried out the work. The work
is invoiced to the contract customer by Teliti Computers in
accordance with the licence agreement. All amounts due to/from
contract customers are recognised in the balance sheet of Teliti
Computers and collected by Teliti Computers.
Contract revenue in the consolidated statement of comprehensive
income is recognised upon delivery of goods and services rendered
to the contract customers of Teliti Computers. Foreseeable losses,
if any, are provided for in full as and when it can be reasonably
ascertained that the contract will result in a loss.
The contract revenue is recognised by reference to the stage of
completion of the transaction at the end of the reporting period.
The outcome of a transaction is estimated reliably and all the
following conditions are satisfied:
a) the amount of revenue can be measured reliably;
b) the economic benefits associated with the transaction flow to the company;
c) the costs incurred for the transaction and the costs to
complete the transaction can be measured reliably.
2.8 Financial and borrowing expenses
Financial expenses comprise interest payable on bank loans,
finance lease charges and other financial costs and charges.
Interest payable is recognised on an accrual basis.
Interest costs on borrowings to finance the construction of
property, plant and equipment are capitalised as part of the cost
of those assets during the period of time that is required to
complete and prepare the assets for their intended use.
All other borrowing costs are expensed in the year in which they
are incurred.
2.9 Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each of the
group's entities are measured using the currency of the primary
economic environment in which the entity operates ("the functional
currency"). The consolidated financial statements are presented in
Malaysian Ringgit ("RM"), which is the group's presentation
currency.
Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year
end exchange rates of monetary assets and liabilities denominated
in foreign currencies are recognised in the income statement.
3. Segment Reporting
For the purposes of presenting segment information, the
activities of the group are divided into operating segments in
accordance with IFRS 8 'Operating Segments'. Operating segments are
identified on the same basis that is used internally to manage and
report on performance and takes account of the organisational
structure of the group based on the various services of the
reportable segments. Management regularly review segment
information based on the services provided to its customers such as
provision of IT software solutions specialising in SAP software
("Solutions"), reselling of IBM products, providing maintenance and
support services ("Services") and rental of data centre space
("Data Centre"). All operations are conducted in one geographical
segment, being Malaysia.
The Group's reportable segments under IFRS 8 are therefore as
follows:
6 months ended 31 March
2012 Services Solutions Data Centre Consolidated
(unaudited) (unaudited) (unaudited) (unaudited)
RM'000 RM'000 RM'000 RM'000
Revenue 24,562 13,326 284 38,172
Cost of sales (22,665) (11,500) (160) (34,325)
---------------- ----------------- ------------ -------------
Gross profit 1,897 1,826 124 3,847
Other operating income - 7 3 10
Administrative expenses (879) (329) (111) (1,319)
---------------- ----------------- ------------ -------------
Segment Result 1,018 1,504 16 2,538
---------------- ----------------- ------------
Corporate costs (378)
-------------
Profit before tax 2,160
Taxation (636)
-------------
Total comprehensive
income for the period 1,524
=============
6 months ended 31 March
2013 Services Solutions Data Centre Consolidated
(unaudited) (unaudited) (unaudited) (unaudited)
RM'000 RM'000 RM'000 RM'000
Revenue 23,540 10,036 281 33,857
Cost of sales (20,606) (8,600) (235) (29,441
---------------- ----------------- ------------ -------------
Gross profit 2,934 1,436 46 4,416
Other operating income - - - -
Administrative expenses (893) (344) (40) (1,277)
---------------- ----------------- ------------ -------------
Segment Result 2,041 1,092 6 3,139
---------------- ----------------- ------------
Corporate costs (1,101)
-------------
Profit before tax 2,038
Taxation (785)
-------------
Total comprehensive
income for the period 1,253
=============
Major customers
All of the revenue of Teliti Solutions and Teliti Services is
allocated from Teliti Computers who invoices the contract customer
for the work performed. Of the contracts allocated to the Services
and Solutions segments, four contract customers represented more
than 50% of total group revenues during the 6 months to 31 March
2013. The Services segment had one customer that represented 13% of
that segment's total revenues. One customer represented 38% of the
revenue of the Solutions segment and 19% of the Services
segment.
Segment profit represents the profit earned by each segment
without allocation of central administration costs, directors'
salaries, and finance costs. This is the measure reported to the
chief operating decision maker for the purposes of resource
allocation and assessment of segment performance. The segment
assets and liabilities at 31 March 2013 and capital expenditure for
the period ended are as follows:
Data Central Consolidated
At 31 March 2013 Services Solution Centre assets 2013
RM'000 RM'000 RM'000 RM'000 RM'000
--------- --------- -------- ---------- -------------
Assets and liabilities:
Segment assets 15,372 3,754 255,092 6,351 274,509
Total assets 15,372 3,754 255,092 6,351 274,509
--------- --------- -------- ---------- -------------
Segment liabilities 2,308 855 250,465 1,007 254,633
Total liabilities 2,308 855 250,465 1,007 254,633
--------- --------- -------- ---------- -------------
Other segment information:
Amount due from
Teliti Computers 15,370 3,752 - 196 19,318
--------- --------- -------- ---------- -------------
Amount due to Teliti
Computers - - 28,199 - 28,199
--------- --------- -------- ---------- -------------
Depreciation - - 9 - 9
Capital expenditure - - 4,109 - 4,109
--------- --------- -------- ---------- -------------
4. Earnings per share
The calculation for earnings per share, based on the weighted
average number of shares, is shown in the table below:
Six months
ended 31 March
2012
(unaudited)
RM'000
Net profit for the financial period after
taxation
attributable to members (RM'000) 1,524
================
Weighted average number of ordinary shares
for basic
earnings per share ('000) 23,530
================
Diluted weighted average number of ordinary
shares for basic
earnings per share ('000) 26,600
================
Six months
ended 31 March
2013
(unaudited)
RM'000
Net profit for the financial period after
taxation
attributable to members (RM'000) 1,253
================
Weighted average number of ordinary shares
for basic earnings per share ('000) 25,284
================
Diluted weighted average number of ordinary
shares for basic
earnings per share ('000) 28,354
================
The diluted weighted average number of shares in issue and to be
issued for 2012 is pursuant to a warrant deed dated 30 August 2012
(the "Karvandi Warrant Deed") in the company has created and issued
warrants to RBC Trustees (C1) limited as trustee of the Karvandi
Family Trust to subscribe for 3,070,175 Ordinary Shares at
12.5p.
5. Property, plant and equipment
Computers,
equipment Capital Total
and work-in
software progress
RM'000 RM'000 RM'000
------------ ---------- ----------
Cost
At 1 October 2011 89 57,450 57,539
Additions in year - 187,960 187,960
------------ ---------- ----------
At 30 September 2012 89 245,410 245,499
Additions in period - 4,109 4,109
------------ ---------- ----------
At 31 March 2013 89 249,519 249,608
------------ ---------- ----------
Accumulated depreciation
At 1 October 2011 4 - 4
Charge for year 18 - 18
------------ ---------- ----------
At 30 September 2012 22 - 22
------------ ---------- ----------
Charge for period 9 - 9
------------ ---------- ----------
At 31 March 2013 31 - 31
------------ ---------- ----------
Net book values
At 31 March 2013 58 249,519 249,577
============ ========== ==========
At 30 September 2012 67 245,410 245,477
============ ========== ==========
The capital work-in-progress is the cost for construction of the
datacentre building. Included in capital work-in-progress is land
with a carrying amount of RM5,494,441 (30 September 2012:
RM5,494,441) which has been charged to a licensed bank as security
for banking facility granted to Teliti Datacentres.
The capital commitment at 31 March 2013 required to complete the
construction of the datacentre is RM40,800,000.
The group started the construction of a datacentre in January
2010. This project is expected to be completed in by the middle of
calendar year 2014. The carrying amount of the datacentre at 31
March 2013 was RM249,519,000 (Sept 2012: RM245,410,000).
The amount of borrowing costs capitalised during the six months
ended 31 March 2013 was RM4 million (year to 30 September 2012:
RM5.9 milion).
6. Intangible assets - Development costs
Development costs consists of group staff costs and consultancy
costs relating to the development of the datacentre infrastructure
and operations. Investment will continue until the datacentre is
ready to commence operations. The costs capitalised to date are as
follows:
31 March 30 September
2013 2012
(unaudited) (audited)
------------ -------------
RM '000 RM '000
------------ -------------
Consultancy 45 45
Rental of office and equipment 916 722
Staffs costs 3,343 2,656
4,304 3,423
============ =============
Following initial recognition of the development expenditure as
an asset, the cost model is applied requiring the asset to be
carried at cost less any accumulated amortisation and accumulated
impairment losses. The datacentre is expected to commence
operations in the third quarter of 2014 at which time amortisation
of the intangible asset will commence. The development costs will
be amortised throughout the datacentre's economic useful life to
the group, estimated to be 30 years.
The asset is assessed for impairment annually by considering the
technical feasibility of completing the asset, the intention to
complete and ability to use the asset as intended, how the asset
will generate future economic benefits and the availability of
resources to complete the asset. The directors are of the opinion
that no impairment is currently considered necessary.
7. Investments in subsidiaries
At 31 March 2013, the company had the following
subsidiaries:
Subsidiary Companies Nature of business Country of Share capital
incorporation held
------------------------- -------------------- ---------------- --------------
Teliti Services Sdn Bhd Hardware reseller Malaysia 100%
------------------------- -------------------- ---------------- --------------
Teliti Solutions Sdn
Bhd Software reseller Malaysia 100%
------------------------- -------------------- ---------------- --------------
Teliti Datacentres Sdn
Bhd Datacentres Malaysia 100%
------------------------- -------------------- ---------------- --------------
Teliti International
(M) Sdn Bhd Dormant Malaysia 100%
------------------------- -------------------- ---------------- --------------
8. Share capital
31 March 30 September
2013 2012
(unaudited) (audited)
------------ -------------
RM '000 RM '000
------------ -------------
Allotted, called up and fully paid
25,284,386 Ordinary shares of US$0.10
each 7,691 7,691
============ =============
The movements in issued share capital of the company from the
date of incorporation to 31 March 2013 and the related share
premium arising was as follows:
Ordinary Share Share
shares
of capital premium
US$0.10 Nominal
value
Number RM'000 RM'000
----------- --------- ---------
Shares issued on incorporation
and at 1 October 2011 1 - -
* Shares issued on acquisition of subsidiaries 19,999,999 6,060 -
* Shares issued on conversion of loan stock 3,530,000 1,070 1,354
- Shares issued for cash 1,754,386 561 4,354
Costs of share issues - - (500)
At 31 March 2013 25,284,386 7,691 5,208
=========== ========= =========
Teliti International is a company incorporated in the Cayman
Islands with its registered office at Cricket Square, Hutchin
Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands. The
company had an authorised share capital of US$500,000 comprising
50,000,000 ordinary shares of US$0.10 each on incorporation. One
ordinary share was issued fully paid at par value of US$0.10 at
incorporation.
On 10 October 2011, the company issued US$800,000 loan notes
("Loan Notes"). The Loan Notes automatically converted into
3,530,000 ordinary shares of US$0.10 of the company on the date of
admission to the Alternative Investment Market (AIM) of the London
Stock Exchange.
On 26 October 2011, the authorised share capital of the company
increased from US$500,000 to US$5,000,000 by the creation of an
additional 49,500,000 ordinary shares of US$0.10 each.
On 26 October 2011, the company entered into a Share Purchase
Agreement with the Teliti Computers Sdn Bhd to acquire the entire
issued share capital of Teliti Services Sdn Bhd, Teliti Solutions
Sdn Bhd, and Teliti Datacentres Sdn Bhd, companies incorporated in
Malaysia, for a total consideration by way of issue of 19,999,999
ordinary shares of US$0.10 each of the company with a total nominal
value of RM6.060 million.
On 3 November 2011, the company was successfully admitted to
AIM, as a result the Loan Notes converted into 3,530,000 ordinary
shares of US$0.10 each of the company.
On 14 June 2012, the company issued an additional 1,754,386
ordinary shares of US$0.10 each to raise GBP1 million (c.RM4.9
million). This represented approximately 6.93% of the enlarged
issued share capital at that date.
9. Share warrants
On 27 October 2011 the company entered into a deed of warrant
with Daniel Stewart, conditional upon admission to AIM, to
subscribe for 2% of the aggregate value of the shares of the
company at the exercise date. The shares are exercisable at any
time up to five years from the date of admission at the Placing
price of GBP0.58. These shares were granted for services rendered
relating to the AIM Admission. The warrant has not yet been
exercised. The number of shares expected to be issued at the period
end is 505,688 (2% of the issued share capital).
Date of grant Number granted Fair Value Expiry date
27 October 2011 505,688 18p 27 October 2016
Using the Black Scholes method, the fair value of these warrants
was calculated to be RM466,667 and the charge was shown as an
expense in the income statement for the year ended 30 September
2012.
Pursuant to a warrant deed dated 27 October 2011 (the "Warrant
Deed") the company has created and issued warrants to Teliti
Computers for it to subscribe for such number of Ordinary Shares at
the Admission Price (as defined in the Warrant Deed) as shall
equate to up to 25 per cent of the fully diluted issued share
capital of the company as at Admission. The Teliti Computer
warrants shall vest and become exercisable in two instalments, the
first being for 10 per cent of the fully diluted share capital of
the company as at Admission, subject to the share price of the
company (based on a five day average price) increasing by not less
than 50 per cent more than the Admission Price at any time during
the 18 month period following Admission. The second instalment of
the Teliti Computer warrants, shall be for an additional 15 per
cent of the fully diluted share capital of the company as at
Admission if the share price of the company (based on a five day
average price) increases by not less than 100 per cent more than
Admission Price at any time during the 30 month period following
Admission. If, in respect of the first instalment, the share price
increase is not attained during the 18 month period and therefore
the respective instalment has not vested at that time, such
instalment shall vest at the same time as the second instalment if
the share price increase required is attained at any time during
the relevant 30 month period. As these warrants were not granted in
respect of the supply of goods or services, there is no income
statement effect in the group accounts.
Pursuant to a warrant deed dated 30 August 2012 (the "Karvandi
Warrant Deed") the company has created and issued warrants to RBC
Trustees (C1) Limited as trustee of the Karvandi Family Trust to
subscribe for 3,070,175 Ordinary Shares at 12.5p. The warrants are
exercisable within 5 years of the date of the Karvandi Warrant
Deed. As these warrants were not granted in respect of the supply
of goods or services, there is no income statement effect in the
group accounts.
10. Other reserve
The other reserve arose from the acquisition of Teliti Services,
Teliti Solutions, and Teliti Datacentres during the financial year
by a share-for-share exchange, as follows:
31 March 30 September
2013 2012
(unaudited) (audited)
------------ -------------
Pooling of interests reserve RM '000 RM '000
------------ -------------
Nominal value of shares issued by
the company 6,060 6,060
Less: nominal values of share capital
of subsidiaries acquired (3,000) (3,000)
------------ -------------
3,060 3,060
============ =============
As the company acquired its subsidiary companies, by means of a
share-for-share exchange, resulting in a business combination
involving entities under common control and where no acquirer is
identified, the "pooling of interests" method of consolidation has
been used. Therefore, the difference between the purchase
consideration and the carrying value of the share capital and any
share premium acquired is adjusted to equity and the comparative
consolidated figures are stated on a combined basis.
11. Borrowings
31 March 30 September
2013 2012
(unaudited) (audited)
------------ -------------
RM '000 RM '000
------------ -------------
Long term borrowings
Secured
Term loan 100,877 81,098
Finance lease liabilities 337 947
------------ -------------
101,214 82,045
------------ -------------
Short term borrowings
Secured
Term loan 6,859 6,859
Finance lease liabilities 987 987
7,846 7,846
------------ -------------
Total borrowings 109,060 89,891
============ =============
The term loan and bank overdraft are secured by the
following:-
Ø A legal charge over a piece of vacant land held under Title No
HS(D) 173679, PT 29470 and HS(D) 173680, PT29471 in Bandar Baru
Enstek, Mukim Labu, Daerah Seremban, Negeri Sembilan;
Ø Pledge against a fixed deposit amounting to RM500,000 for
upfront one (1) month interest;
Ø Corporate guarantee for RM111,506,741 has been executed by the
following corporate shareholders of the company:
Corporate Shareholders Amount
Teliti Computers Sdn Bhd RM111,506,741
NTH Technology Sdn Bhd (shareholder of RM111,506,741
Teliti Computers)
Ø Joint & Several guarantee for RM111,506,741 is executed by
the following persons in their personal capacity:
Director
Mohamed Nasir Bin Abdul
Majid
Ithnin Bin Yacob
The borrowings bear interest rates ranging from 1.75% to 2.0%
per annum plus BLR.
Details of the terms of repayment on the term loan are as
follow:
Number of
monthly Monthly Date of commencement 31 March 30 September
instalments instalment of repayment 2013 2012
(unaudited) (audited)
RM'000 RM '000 RM '000
Term loan
1 120 61 1 Feb 2013 4,864 4,945
Term loan
2 120 825 1 Feb 2013 66,279 67,000
Term loan
3 120 456 1 Feb 2013 36,602 16,012
Finance lease liabilities
31 March 30 September
2013 2012
(unaudited) (audited)
------------ -------------
RM '000 RM '000
------------ -------------
Payables within 1 year 1,167 1,167
Payables after 1 year but no later
than 5 years 378 998
1,545 2,165
Less: interest charge (231) (231)
1,314 1,934
============ =============
Present value of finance lease payables:
- within 1 year 987 987
- within 1 year but not later than
5
years 327 947
1,314 1,934
============ =============
The finance lease liabilities are secured on the assets
leased.
12 Trade and other payables
31 March 30 September
2013 2012
(unaudited) (audited)
------------ -------------
RM '000 RM '000
------------ -------------
Accruals 715 715
Other payables 113,768 133,727
------------ -------------
114,483 134,442
============ =============
Other payables mainly consisted of construction costs payable to
main contractors for the construction of the datacentre building of
RM39.2 million and RM66 million for the equipment. The decrease as
at 31 March 2013 was due to the payments by the group's debt
provider to the main contractor.
13. Capital commitments
31 March 30 September
2013 2012
(unaudited) (audited)
------------ -------------
RM '000 RM '000
------------ -------------
Capital expenditure for the construction
on the datacentre:
- Approved and contracted for
property, plant and equipment 40,800 41,541
============ =============
14. Financial commitments
At the period end date the group had the following outstanding
commitments for future minimum lease payments under non-cancellable
operating leases, which fall due:
Land and buildings Plant and machinery
31 March 30 September 31 March 30 September
2013 2012 2013 2012
(unaudited) (audited) (unaudited) (audited)
RM '000 RM '000 RM '000 RM '000
Within one year - - 930 930
In two to five years - - 327 947
------------- -------------- ------------ -------------
- - 1,257 1,877
============= ===================================== ============ =============
15. Control and amounts due from/(due to) ultimate parent company
The amount due from/(due to) the ultimate parent company of the
group, Teliti Computers Sdn Bhd ("Teliti Computers"), as at 31
March 2013 is as follows:
31 March 30 September
2013 2012
(unaudited) (audited)
------------ -------------
RM '000 RM '000
------------ -------------
Amount due from Teliti Computers:
* Teliti International 196 991
* Teliti Solutions 3,752 2,755
* Teliti Services 15,370 13,694
------------ -------------
Total amount due from Teliti Computers 19,318 17,440
------------ -------------
Amount due to Teliti Computers
* Teliti Datacentres (28,196) (22,097)
* Teliti International (M) S.B (3) (3)
------------ -------------
Total amount due to Teliti Computers (28,199) (22,100)
------------ -------------
Net balance due to Teliti Computers (8,881) (4,660)
============ =============
Teliti Computers is the ultimate parent company of the group as
it owns 79% of Teliti International.
Teliti Computers holds licenses and agency agreements permitting
it to bid for opened tenders issued by Malaysian government bodies,
agencies and government linked companies or other private
companies. Those licenses and agency agreements are only valid for
Teliti Computers.
All of the revenue of Teliti Solutions and Teliti Services is
allocated to them from Teliti Computers which invoices the contract
customer for the work performed.
The contracts are allocated to Teliti Services and Teliti
Solutions on a normal commercial basis and any loss or cost overrun
on each contract is recognised in the company that has carried out
the work. The work is invoiced to the contract customer by Teliti
Computers in accordance with the licence agreement. All amounts due
to/from contract customers are recognised in the balance sheet of
Teliti Computers and collected by them.
All other operating income is collected by Teliti Computers
whilst the cost of sales incurred, administrative expenses and
payment for income tax to the Malaysian Inland Revenue are paid by
Teliti Computers on behalf of Teliti Solutions and Teliti
Services.
Amounts due from Teliti Computers to the group are unsecured,
bears no interest and are repayable on demand.
16. Subsequent events
Subsequent to 31 March 2013, the following events took
place:
On 22 April 2013, Teliti Computers won the Preventive And
Corrective Maintenance for Equipment and Software tender for Royal
Malaysia Police for the value of RM4.63 million. All the revenue
for this project will be allocated to Teliti Solutions Sdn Bhd.
The Tenancy Agreement between Teliti Datacentres and ACGT Sdn
Bhd (the customer at the Customer Experience Centre) was terminated
effective from the month of May 2013. This was due to the delay in
the completion of the datacentre.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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