DeClout reverses losses to post 1Q 2018 net profit

By Digital News Asia May 1, 2018

Revenue rises 12.9% to US$58.83 million in 1Q 2018
Results reflects the execution of a four-pronged strategy

DeClout reverses losses to post 1Q 2018 net profit

SGX Catalist-listed DeClout Limited (DeClout or the company, and together with its subsidiaries and associated companies, the Group), announced today a net profit after tax attributable to owners of the Company (Patmi) for the quarter ended March 31 (1Q) 2018 of S$200,000 {US$150,992} (1Q 2017: S$2.7 million loss).

Revenue rose 12.9% to S$71.3 million (US$58.83 million) in 1Q 2018 (1Q 2017: S$63.1 million), lifted by higher contributions from:

Beaqon – Strong growth as well as first-time revenue contributions from neutral hosting services.
vCargo Cloud (VCC) – First-time overseas revenue contributions from its CamelONE cross-border trade facilitation projects.
Procurri – Revenue rose by 29% year-on-year in 1Q 2018, reflecting success of its efforts to position itself as a leader in global IT hardware life-cycle management.

Gross profit rose 32.8% to S$22.1 million in 1Q 2018 (1Q 2017: S$16.6 million), mainly due to stronger performance by the IT Infrastructure Sales and Services segment and commencement of a VCC project under the Vertical Domain Clouds (VDC) segment.

Patmi rose to S$0.2 million in 1Q 2018 (1Q 2017: S$2.7 million loss), representing a positive swing of S$2.9 million.

DeClout generated S$0.7 million net cash from operating activities in 1Q 2018.

The positive set of results reflects the execution of the four-pronged strategy, as outlined in DeClout’s Corporate and Business Update (CBU) which was announced on March 5, 2018, to accelerate a corporate recovery and return to profitability in the financial year ending Dec 31, 2018 (FY2018).

The four-pronged strategy includes sharpening focus of competencies, capitalising on existing data opportunities to expand revenue streams, accelerating DeClout Investments and improving corporate cost efficiencies.

DeClout chairman and group chief executive officer Vesmond Wong, said, “We have embarked on a new chapter of corporate recovery propelled by our four-pronged strategy which has started to bear fruit, marked by the Group’s return to profitability in 1Q 2018. This underscores the management’s commitment to return to profitability over the course of FY2018.”

Key developments

Beaqon

Revenue contribution from neutral hosting services has commenced in 1Q 2018. These contracts will, barring unforeseen circumstances, generate steady recurring income and provide higher margins than sales and distribution activities.

There has been as increased in the number of neutral hosting sites to 25 sites to date from 17 sites as at end of 2017 and Beaqon is on track to reach 50 sites by end-FY2018.

Beaqon’s order book (excluding neutral hosting services) has increased from S$45 million as at Jan 31 to S$46.4 million as at March 31, 2018. It expects its FY2018 performance to improve due to the order book and commencement of revenue contribution from neutral hosting services.

vCargo Cloud (VCC)

Revenue contribution from CamelONE projects outside of Singapore commenced in 1Q 2018. As deployed projects start to generate revenue, VCC will harness economies of scale and narrow its losses.

In March 2018, VCC was awarded two key contracts. VCC will be implementing a pilot National Single Window e-trade project in Djibouti, Africa. VCC was also awarded a contract by the Ministry of Economy and Finance by the Royal Government of Cambodia to develop and implement Phase 2 of Cambodia’s National Single Window.

In April 2018, VCC extended its presence to Indonesia with the acquisition of a 60%-stake in Indonesian integrated logistics player, PT Gatotkaca Trans Systemindo.

To date, VCC has expanded its global presence to 14 countries from 12 countries as at end of 2017, and will aim to extend its presence to 16 countries in FY2018, with total gross merchandise value to rise to about US$233 billion in FY2018.

Procurri

Procurri has been accelerating its four-pronged roadmap set out in its CBU2 to sharpen its value proposition and Procurri’s net profit in 1Q 2018 rose six-fold to a record first quarter performance of S$1 million from S$164,000 a year ago.

Procurri’s management is building on the momentum of these strategies to validate its return to profitability in FY2018. Barring unforeseen circumstances, Procurri expects the financial results for the second quarter ending June 30, to be profitable.

Outlook

Wong, added, “Over the past few months, we have executed numerous corporate actions that have strengthened DeClout’s foundation and position us well to capture fresh opportunities, especially for Beaqon and VCC. Barring unforeseen circumstances, the Board of Directors expects the Group to reduce its losses over the course of 2018 and return to profitability in FY2018.”