GINV.L Regulatory News (GINV)

GLOBAL INVACOM GROUP LIMITED 

(Incorporated in Singapore)

(Company Registration Number 200202428H)

8 Temasek Boulevard, #20-03 Suntec Tower Three, Singapore 038988

Tel: 68848270 Fax: 68848273 Website: www.globalinvacom.com

Full Year Financial Statement Announcement for the year ended 31 December 2014

Global Invacom's FY2014 Revenue Increases 15.9% to US$134.1 Million; Driven By Strong Growth From America And Europe Regions; Seeks Further Strategic Acquisitions

§ Top-line growth driven by revenue increases in America and Europe of 26.3% and 34.1%, respectively

§ Gross profit up 8.9% to US$31.8 million (FY2013: US$29.2 million)

§ Short term impact on gross profit margin, decreased to 23.7% from 25.2% over the comparative periods as a result of higher volume of lower-margin sales and de-stocking of first generation LNB inventory for a major customer (Q4, 2014), ahead of roll out of next generation technology in 2015

§ Net profit after tax of US$8.9 million broadly in line with previous year (FY2013: US$8.0 million), excluding non-recurring US$2.6 million professional fees, restructuring costs, provision against a legal dispute and the forex differential of US$1.2 million between FY2014 and FY2013

§ Transformative year for the Company following listing on AIM, the restructuring of facilities in the U.K. and the successful and strategic acquisition of OnePath Networks Limited ("Foxcom")

§ Strong balance sheet with cash and cash equivalents of US$21.2 million as at 31 December 2014

§ Company continues to seek further strategic acquisitions

§ Declares first and final one-tier tax exempt dividend of 0.525 Singapore cent per share for the year

* calculated based on 254,747,318 weighted average number of ordinary shares for the period ended 31 December 2014

** calculated based on 235,600,286 weighted average number of ordinary shares for the period ended 31 December 2013

# calculated based on 269,059,299 total number of issued shares as at 31 December 2014

## calculated based on 231,802,299 total number of issued shares as at 31 December 2013

Singapore, 26 February 2015 - Global Invacom Group Limited ("Global Invacom" or "the Group") announced today a 15.9% increase in revenue to US$134.1 million for the financial year ended 31 December 2014 ("FY2014") compared to US$115.8 million in FY2013. The Group is also seeking further strategic acquisitions following its recent admission to the London AIM Market.

The Singapore Exchange Mainboard listed satellite communications ("Sat Comms") equipment specialist, which concluded listing on the AIM Market in July 2014, said that revenue grew on the back of strong growth from the American and European markets.

America and Europe revenue rose by US$15.2 million (+26.3%) and US$9.1 million (+34.1%), respectively, due to increased orders from a major U.S. customer and recognition of an incremental US$12.5 million contribution from Global Invacom Manufacturing (UK) Limited ("GIML") - acquired in November 2013.

Asia and the Rest of the World saw a decline in revenue to US$4.1 million (-15.7%) and US$1.8 million (-36.5%), respectively. The like-for-like revenue fall in Asia was anticipated following the completion of a large delivery to a major customer, which had inventory cover during FY2013, impacting sales in the first quarter of 2014.

Gross profit rose 8.9% to US$31.8 million in FY2014 from US$29.2 million in FY2013. Gross profit margin decreased slightly to 23.7%, from 25.2%, over the comparative periods due to higher volume of lower-margin sales and inventory write offs in the last quarter of 2014, ahead of a technology upgrade by a major customer which provides the Group with strong long term prospects.

Administrative expenses - including professional fees of US$1.4 million in respect of the AIM listing and US$0.5 million relating to an acquisition - rose 24.8% to US$25.5 million in FY2014 from US$20.5 million in FY2013. The Group also incurred manpower and expenses of US$2.1 million from the full year inclusion of GIML and restructuring costs of US$0.4 million arising from the closure of a U.K. facility which was no longer fit for purpose. A provision of US$0.4 million has also been made in respect of a legal dispute with a supplier of a U.K. subsidiary, which the Group is strongly defending.

To support new product development for two major customers - including three new low noise blocks and a range of fibre switches - the Group incurred additional research and development ("R&D") costs including the hiring of more radio frequency ("RF") design and production engineers. The next generation of products will position the Group well with existing and prospective customers.

The Group reported a net profit after tax of US$5.1 million in FY2014 compared to US$8.0 million in FY2013. Net profit margin decreased to 3.8% from 6.9% in FY2013. Excluding the US$2.6 million one-off professional fees, restructuring costs, provision against a legal dispute and the foreign exchange differential of US$1.2 million between FY2014 and FY2013, the Group would have recorded a net profit after tax of US$8.9 million in FY2014, with a net profit margin of 6.7%.

Earnings per share on a fully diluted basis decreased to 2.00 US cents in FY2014 from 3.41 US cents in FY2013 while net asset value per share rose to 22.33 US cents as at 31 December 2014 from 19.32 US cents as at 31 December 2013.

The Group's balance sheet remains strong with cash and cash equivalents of US$21.2 million as at 31 December 2014 compared to US$14.7 million a year ago, including gross proceeds of US$15.0 million raised from its AIM Market listing, which has been and will be used for business expansion and general corporate working capital purposes.

The Group proposed a first and final one-tier tax exempt dividend of 0.525 Singapore cent per share for FY2014, representing 21.0% of net profit, compared to 0.5 Singapore cent for FY2013. The payment of the dividend is subject to the approval by the Company's shareholders in general meeting on 29 April 2015. Subject to such approval, the shares will be declared ex-dividend on 14 May 2015 and the associated record date will be 15 May 2015. The Company expects the final dividend to be paid on 25 May 2015.

The Group announced on 11 November 2014, the acquisition of Israel-based OnePath Networks Limited (trading as "Foxcom"), one of the pioneers in RF over fibre technology, for US$3.5 million. This acquisition allows the Group to gain new technologies, expand market reach and grow its network of broadcasters while expanding its footprint in existing and new geographies. The Group has commenced integration of Foxcom's operations and has since recognised two months' revenue contribution of US$0.8 million from Foxcom in FY2014.

The Group continues to look out for opportunities to expand its suite of technological capabilities, geographical reach and access to broadcasters. To enhance shareholder value, the Group commenced a share buyback programme in September 2014, and has to date acquired 19.0 million of its own shares, increasing its treasury shares to a total of 25.0 million which can be used for possible mergers and acquisitions.

Commenting on the results, Tony Taylor, Executive Chairman, said "We are delighted to report our maiden set of full year results following our listing on London's AIM last year. The period to 31 December 2014 was a year of transformation for the business with our secondary listing, the restructuring of our U.K. operations and the strategic acquisition of Foxcom which has allowed us access new technologies, expand our market reach and grow our network of broadcasters. We look forward to continuing to grow the business through further strategic acquisitions whilst delivering world-class equipment to our customer base of global leaders in the Sat Comms industry, through the introduction of revolutionary next generation technology this year. We are proud to be the chosen partner of the world's leading Sat Comms businesses which reflect the strength of our business, our powerful R&D capabilities and global manufacturing and distribution network. We look forward to our future with confidence."

For media queries, please contact

Matthew Garner

Chief Financial Officer

Global Invacom Group Limited 

On behalf of Global Invacom Group Limited:

finnCap Ltd (Nominated Adviser and Joint Broker)

Ed Frisby / Christopher Raggett (Corporate Finance)

Rhys Williams (Corporate Broking and Sales)

+44 207 220 0500

Mirabaud Securities LLP (Joint Broker)

Peter Krens (Equity Capital Markets)

+44 207 878 3362

Bell Pottinger LLP (UK Financial PR)

David Rydell / David Bass / Lucy Stewart

+44 203203 772 2500

WeR1 Consultants Pte Ltd (Singapore Financial PR)

Sheryl Sim, sheryl@wer1.net 

Ian Lau, ianlau@wer1.net 

+65 6737 4844

About Global Invacom Group Limited 

Global Invacom Group Limited ("Global Invacom") is listed on the Singapore Exchange Securities Trading Limited Mainboard ("SGX-ST") and its shares are admitted to trading on the AIM Market of the London Stock Exchange in the U.K..

Global Invacom is a fully integrated satellite equipment provider with five manufacturing plants across China, Malaysia and the U.K., providing a full range of LNB receivers, transmitters, switches and video distribution components and electronics manufacturing services in satellite communications, TV peripherals, computer peripherals, medical, and consumer electronics industries. Its customers include satellite broadcasters such as BSkyB of the U.K. and DISH Network of the U.S.A..

For more information please refer to http://www.globalinvacom.com

Below, statement issued to Singapore Stock Exchange at 11pm GMT on 25 February 2015. A presentation ‎delivered by the Company to analysts in Singapore will be made available on the Company's website at 17:00 Singapore time (09:00 GMT).

FULL YEAR FINANCIAL STATEMENT ANNOUNCEMENT FOR THE YEAR ENDED 31 DECEMBER 2014

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

1(a) A statement of comprehensive income (for the group) together with a comparative statement for the corresponding period of the immediately preceding financial year.

Consolidated Statement of Comprehensive Income for the 12 months ended 31 December 2014. These figures have not been audited.

N.M.: Not Meaningful

Note:

(i) Profit before income tax was determined after (charging)/crediting the following:

1(b)(i) A statement of financial position (for the issuer and group), together with a comparative statement as at the end of the immediately preceding financial year.

1(b)(ii) Aggregate amount of group's borrowings and debt securities.

Amount repayable in one year or less, or on demand

Amount repayable after one year

Details of any collateral

Nil.

1(c) A statement of cash flows (for the group), together with a comparative statement for the corresponding period of the immediately preceding financial year.

Note:

(i) For the purpose of presentation in the consolidated statement of cash flows, the consolidated cash and cash equivalents comprise the following:

* Restricted cash includes fixed deposits amounting to US$400,000 (2013: US$900,000) pledged with the banks for facilities and loans granted to the Group. As at 31 December 2014, the Group did not utilise any of the available facilities and loans.

1(d)(i) A statement (for the issuer and group) showing either (i) all changes in equity or (ii) changes in equity other than those arising from capitalisation issues and distributions to shareholders, together with a comparative statement for the corresponding period of the immediately preceding financial year.

1(d)(ii) Details of any changes in the company's share capital arising from rights issue, bonus issue, share buy-backs, exercise of share options or warrants, conversion of other issues of equity securities, issue of shares for cash or as consideration for acquisition or for any other purpose since the end of the previous period reported on.

State also the number of shares that may be issued on conversion of all the outstanding convertibles, as well as the number of shares held as treasury shares, if any, against the total number of issued shares excluding treasury shares of the issuer, as at the end of the current financial period reported on and as at the end of the corresponding period of the immediately preceding financial year.

There were 13,343,000 and 6,000,000 treasury shares held by the Company as at 31 December 2014 and 31 December 2013 respectively.

1(d)(iii) To show the total number of issued shares excluding treasury shares as at the end of the current financial period and as at the end of the immediately preceding year.

1(d)(iv) A statement showing all sales, transfers, disposal, cancellation and/or use of treasury shares as at the end of the current financial period reported on.

2. Whether the figures have been audited or reviewed and in accordance with which auditing standard or practice.

These figures have not been audited or reviewed.

3. Where the figures have been audited or reviewed, the auditors' report (including any qualifications or emphasis of a matter).

Not applicable.

4. Whether the same accounting policies and methods of computation as in the issuer's most recently audited annual financial statements have been applied.

The accounting policies and methods of computation have been applied consistently for the current financial year ended 31 December 2014 as those used in the audited financial statements for the year ended 31 December 2013, except for the adoption of the new or revised International Financial Reporting Standards ("IFRS") applicable for the financial period beginning 1 January 2014.

5. If there are any changes in the accounting policies and methods of computation, including any required by an accounting standard, what has changed, as well as the reasons for, and the effect of, the change.

The adoption of the new or revised IFRS does not have any financial impact on the Group's financial position or results.

6. Earnings per ordinary share of the group for the current financial period reported on and the corresponding period of the immediately preceding financial year, after deducting any provision for preference dividends.

7. Net asset value (for the issuer and group) per ordinary share based on the total number of issued shares excluding treasury shares of the issuer at the end of the:

(a) current financial period reported on; and

(b) immediately preceding financial year.

8. A review of the performance of the group, to the extent necessary for a reasonable understanding of the group's business. It must include a discussion of the following:

(a) any significant factors that affected the turnover, costs, and earnings of the group for the current financial period reported on, including (where applicable) seasonal or cyclical factors; and

(b) any material factors that affected the cash flow, working capital, assets or liabilities of the group during the current financial period reported on.

Review of Financial Performance

Revenue

The Group's revenue increased by US$18.4 million, or 15.9%, to US$134.1 million in FY2014 from US$115.8 million in FY2013. This improvement included increased orders from a major customer in the United States and the recognition of an incremental US$12.5 million contribution from Global Invacom Manufacturing (UK) Limited ("GIML"), which was acquired in November 2013 and whose revenue has increased since acquisition, together with US$5.0 million from the Contract Manufacturing segment which received additional subcontract assembly work from their customers. The Group also recognised US$0.8 million contribution from two months trading of its latest acquisition, OnePath Networks Limited (trading as "Foxcom") in Israel.

Geographically, revenue from the America and Europe regions rose by US$15.2 million (26.3%) and US$9.1 million (34.1%), respectively, driven by customer demand. Market performance in Asia and the Rest of the World market declined by US$4.1 million (15.7%) and US$1.8 million (36.5%), respectively. The like-for-like revenue fall in Asia was expected after completing a large delivery to a major new customer during FY2013. The customer had inventory cover at the end of 2013 which affected sales in the first quarter of the year but these recovered in the second quarter of FY2014.

2H FY2014 revenues declined against 1H FY2014 due to a reduction in the Contract Manufacturing segment. There was also a reduction within Satellite Communications segment sales, driven by a major customer reducing stock levels prior to a technological change and the introduction of their next generation electronics. A strike by dock workers on the West Coast of the United States also delayed Q4 sales.

Gross Profit

Gross profit increased by US$2.6 million or 8.9% to US$31.8 million in FY2014 from US$29.2 million in FY2013 while gross profit margin reduced to 23.7% in FY2014 from 25.2% in FY2013. This fall in margin was in part due to the increased requirement from a US customer for lower margin product and from the write-off of inventories in last quarter of 2014, pending an upcoming technology change with a major customer. The full year inclusion of GIML which produces lower margin satellite dishes has also influenced the gross margin for the Group.

Administrative Expenses

Administrative expenses increased by US$5.1 million or 24.8% to US$25.5 million in FY2014 from US$20.5 million in FY2013, representing 19.0% and 17.7% of revenue, respectively. This was attributed to the US$1.4 million and US$0.5 million one-off professional fees in respect of the AIM Market listing and the acquisition of Foxcom respectively and manpower and expenses of US$2.1 million from GIML. The Group also incurred restructuring costs of US$0.4 million due to the closure of a United Kingdom facility which was no longer fit for purpose and additional research and development costs as two of the Group's major customers are in the process of upgrading their technical solutions to next generation technology (DCS) leading to the concurrent development of three new Low Noise Blocks and a range of fibre switches. Recruitment of extra Radio Frequency ("RF") design and production engineers along with development costs have increased current expenses, but will put the Group in a strong position with both these customers in their next generation delivery solutions. A provision of US$0.4 million has also been made in respect of a legal dispute with a supplier of one of the subsidiaries in the United Kingdom that it is strongly defending.

Other Operating Expenses

Other operating expenses increased in FY2014 compared to FY2013 mainly attributable to foreign exchange losses from the weakening of the Renminbi and Malaysia Ringgit against the US Dollar and the translation loss on disposal of a subsidiary which amounted to US$0.2 million.

Profit before Tax

The Group's profit before tax decreased by US$3.8 million, or 40.6%, to US$5.5 million in FY2014 from US$9.3 million in FY2013 giving a margin of 4.1% compared to 8.0% respectively.

Excluding the US$2.6 million one-off professional fees, restructuring cost, provision against a legal dispute and the foreign exchange differential of US$1.2 million between FY2014 and FY2013, the Group would have recorded a profit before tax of US$9.3 million in FY2014 with a margin of 7.0%.

Taxation

Income tax reduced by US$0.8 million or 66.7% to US$0.4 million in FY2014 from US$1.2 million in FY2013 mainly due to the recognition of deferred tax asset in the United Kingdom.

Net Profit

Overall, the Group has a net profit of US$5.1 million in FY2014 down from US$8.0 million in FY2013, while net profit margin decreased to 3.8% compared to 6.9%, respectively.

Excluding the US$2.6 million one-off professional fees, restructuring cost, provision against a legal dispute and the foreign exchange differential of US$1.2 million between FY2014 and FY2013, the Group would have recorded a net profit of US$8.9 million in FY2014 with a net profit margin of 6.6%.

Review of Financial Position

Non-current assets increased by US$3.3 million to US$20.4 million as at 31 December 2014 from US$17.2 million as at 31 December 2013. The net increase was mainly attributable to continued investment in new machinery and equipment to improve efficiency, reduce manufacturing costs and support the development of new products by its subsidiaries in China, Malaysia and United Kingdom, coupled with the increase in capitalised development cost in United Kingdom as well as the recognition of a deferred tax asset.

Net current assets increased by US$7.0 million to US$40.6 million as at 31 December 2014 from US$33.6 million as at 31 December 2013, mainly due to the increase of inventories by US$1.2 million to US$27.0 million predominately in the US warehousing site as part of a process to further improve support to our customers in the America combined with a strike by dock workers on the West Coast of the United States which has delayed deliveries of product. A change in organisation structure at another customer also caused supply delays in FY2014 and the inclusion of US$1.2 million from Foxcom in the year. Trade and other receivables reduced by US$3.6 million to US$18.1 million with improved collections from customers. Cash and cash equivalents rose by US$6.5 million to US$21.2 million with proceeds raised in conjunction with the AIM Market listing, coupled with the purchase of treasury shares of US$2.5 million and the payment of the first dividend of US$0.9 million after the reverse acquisition. This was offset by the decrease in trade and other payables by US$2.4 million to US$25.1 million and the full repayment of borrowings.

Non-current liabilities reduced by US$5.0 million mainly with the cash consideration paid for the reverse acquisition in the second half of the year.

Overall, the net asset value of the Group strengthened by US$15.3 million to US$60.0 million as at 31 December 2014 from US$44.8 million as at 31 December 2013, bringing the reserve balance to a positive of US$3.1 million.

Review of Cash Flows

Net cash generated from operating activities during the year was US$7.8 million, comprising cash flow from operating cash activities before working capital changes of US$8.9 million, net working capital inflow of US$0.6 million and payment of income tax expense of US$1.7 million.

Net cash used in investing activities was US$11.3 million, which comprised the purchase of machinery and equipment and increase in capitalised development cost, the acquisition of Foxcom and the cash consideration paid for the reverse acquisition.

Net cash generated from financing activities was US$11.0 million, with net proceeds raised in connection with the AIM Market listing and decrease in restricted cash, offset by the payment of dividends, the purchase of treasury shares and the repayment of borrowings.

Overall, the Group generated a net increase in cash and cash equivalents of US$7.6 million in FY2014 bringing cash and cash equivalents per the consolidated statement of cash flows to US$20.6 million as at 31 December 2014.

9. Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results.

In line with the earlier guidance on the last results announcement made by the Company on 14 August 2014 that "the Board of Directors expects the financial performance in FY2014 to remain profitable", the Group's FY2014 results have shown profitability in both earnings and margins.

10. A commentary at the date of the announcement of the significant trends and competitive conditions of the industry in which the group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months.

The Satellite Communications ("Sat Comms") industry continues to expand on the back of growth of the global satellite pay-TV industry, albeit amidst an increasingly competitive landscape. In addition, higher demand for consumer ground equipment continues to drive satellite revenues at a time of technological advancements and increased demand for HD and shortly 4K content, especially HD in emerging markets.

The Group continues to strengthen its value proposition to be a global integrated Sat Comms equipment player that combines research and development and a global manufacturing footprint. In line with this, the Group raised its international profile after completing its AIM Market listing. Trading of its ordinary shares commenced on 2 July 2014, raising gross proceeds of US$15.0 million which has been and will be used for business expansion and general corporate working capital purposes.

Following the completion of the AIM Market listing, the Group announced on 11 November 2014 that it had acquired Israel-based Foxcom, one of the pioneers in RF over fibre technology, for US$3.5 million. The acquisition allows the Group to gain new technologies, expand market reach and grow its network of broadcasters while expanding its footprint in existing and new geographies. The Group has commenced integration of the operations of Foxcom and has since recognised two months of financial contribution in FY2014.

The Group continues to look out for acquisition opportunities to further expand its suite of technological capabilities, geographical reach, access to broadcasters, or a combination of the above. Towards this end, the Group had commenced a share buyback programme in September 2014, and has to date acquired 19.0 million of its own shares, increasing its treasury shares to a total of 25.0 million. In line with our stated acquisition methodology, these treasury shares can be used for mergers and acquisitions as the Group continues to expand its capabilities.

At the same time, the Group continues to invest in research and development to enhance its competitive position to drive sustainable growth in the long run and is currently developing the next generation of satellite electronics for two of its major broadcasters which are expected to go into production in 2015. Typically each generation has a life cycle of approximately 10 years.

FX rate exposures arise from exchange rate movements against US dollar, the Group's reporting currency.  Fluctuations in FX rates of key currencies against US dollar introduce volatility in reported EPS, cashflow and the balance sheet driven by translation into US dollar of our financial results.

11. Dividend

(a) Current Financial Period Reported On

Any dividend declared for the current financial period reported on?

Yes.

(b) Corresponding Period of the Immediately Preceding Financial Year

Any dividend declared for the corresponding period of the immediately preceding financial year?

Yes.

(c) Date payable

Subject to shareholders' approval in the Annual General Meeting to be held on 29 April 2015, the proposed final dividend will be payable on 25 May 2015.

(d) Books closure date

The Share Transfer Books and Register of Members of the Company will be closed from 5.00 pm on 14 May 2015 for the preparation of dividend. Registrable Transfers received by the Company up to 5.00 pm on 14 May 2015 will be registered to determine shareholders' entitlements to the proposed final dividend.

12. If no dividend has been declared/recommended, a statement to that effect.

Not applicable.

PART II - ADDITIONAL INFORMATION REQUIRED FOR FULL YEAR ANNOUNCEMENT

(This part is not applicable to Q1, Q2, Q3 or Half Year Results)

13. Segmented revenue and results for business or geographical segments (of the group) in the form presented in the issuer's most recently audited annual financial statements, with comparative information for the immediately preceding year.

13(a) Reportable Operating Segments

The business of the Group is organised into the following product segments:

· Satellite Communications ("Sat Comms")

· Contract Manufacturing ("CM")

For management purposes, the Group is organised into business segments based on their products as the Group's risks and rates of return are affected predominantly by differences in the products produced. Each product segment represents a strategic business unit and management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment.

Segment results represent the profit earned by each segment without allocation of finance income/costs and taxation. Segment assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprised mainly corporate assets and liabilities, borrowings and income taxes. Segment revenue includes transfers between operating segments. Such transfers are accounted for at competitive market prices charged to unaffiliated customers for similar goods. The transfers are eliminated on consolidation. No operating segments have been aggregated to form the following reportable operating segments.

13(b) Geographical Information

Revenue and non-current assets information based on the geographical location of customers and assets respectively are as follows:

14. In the review of performance, the factors leading to any material changes in contributions to turnover and earnings by the business or geographical segments.

Please refer to Note 8.

15. A breakdown of sales.

16. A breakdown of the total annual dividend (in dollar value) for the issuer's latest full year and its previous full year.

17. If the Group has obtained a general mandate from shareholders for Interested Person Transactions ("IPTs"), the aggregate value of such transactions as required under Rule 920(1)(a)(ii). If no IPTs mandate has been obtained, a statement to that effect.

The Company does not have a shareholders' mandate for IPTs and there were no IPTs for the year ended 31 December 2014.

18. Disclosure of person occupying a managerial position in the issuer or any of its principal subsidiaries who is a relative of a director or chief executive officer or substantial shareholder of the issuer pursuant to Rule 704(10) in the format below. If there are no such persons, the issuer must make an appropriate negative statement.

Neither Global Invacom Group Limited nor any of its principal subsidiaries have any person occupying a managerial position who is related to a director, chief executive officer or substantial shareholder.

19. Status on the use of proceeds raised from IPO and any offerings pursuant to Chapter 8 and whether the use of proceeds is in accordance with stated use.

The Company completed the listing of the Company's shares on the AIM market of the London Stock Exchange on 2 July 2014 which raised net proceeds of US$12.9 million. As at 31 December 2014, the net proceeds has been utilised as follows:

(a) the net proceeds of US$3.5 million to pay for the cash consideration less the retention in relation to the acquisition of Foxcom.

The above utilisation of the net proceeds is in accordance with the stated use and in accordance with the amount and percentage allocated to such utilisation in the admission document dated 27 June 2014.

BY ORDER OF THE BOARD

Anthony Brian Taylor

Chairman

26 February 2015