The Unifiedcomms customer base has traditionally been concentrated in the SEA region. This has not changed in 2015, with Unifiedcomms SEA region revenues continuing to account for above 80% of the total revenue achieved for the year.

Unifiedcomms Revenue by Geographical Regions (S\$000)

Our GlobeOSS business experienced a decline in both system sale and managed service contract revenues in 2015 after the significant increase in system sales enjoyed in 2014. System sales decreased to S\$3.6 million in 2015, while managed service revenue also declined by S\$0.3 million to S\$1.9 million.

GlobeOSS Revenue by Type of Contract (S\$000)

GlobeOSS continues to have both its system sale and managed service business concentrated in the SEA region. The S\$1.6 million decline in revenue from the SEA region is mirrored by the combination of a S\$1.3 million drop in system sales and a S\$0.3 million drop in managed service revenues between 2014 and 2015.

GlobeOSS Revenue by Geographical Regions (S\$000)

# Group-wide system sale revenue decline

The decline in Group revenue this year against last year was mainly attributable to the 19% or S\$1.4 million decline in GlobeOSS system sale contract revenues, and a decline of S\$0.8 million in the managed service contract revenues across both Unifiedcomms and GlobeOSS businesses.

Revenue by Type of Contract (S\$000)

We expected 2015 to continue to be a challenging year for our businesses on the system sale front. The region that proved most disappointing was SEA, which had its contribution fall from S\$18.3 million to S\$16.9 million. The MEA region’s contribution to the total Group revenue also declined in 2015 to S\$1.4 million from S\$2.1 million the year before. The SA region remained disappointing, due yet again to the underperformance of certain managed service contracts.

Revenue by Geographical Regions (S\$000)

In 2015, SEA, our Group’s home region, continues to be the largest geographic source of revenue, accounting for 87.8% of Group revenue.

# Higher gross profit achieved, despite having lower revenue

Although Group revenue was lower in 2015, gross profit achieved for the year was higher compared to 2014. Group gross profit for 2015 was S\$11.7 million, up by S\$0.8 million or 7.2% against 2014. The higher gross profit was mainly due to higher overall gross profit margin earned on Group revenue of

61.0% as compared to 50.9% recorded the year before. Average gross profit margin on system sale revenues improved to 60.4% in 2015, primarily due to lower third-party component cost incurred at both GlobeOSS and Unifiedcomms. Gross profit margin earned on managed service contract revenues also improved from 56.8% in 2014 to 61.2% this year. This improvement was primarily due to lower amortisation of intellectual property in 2015.

Gross Profit Margin by Type of Contract (S\$000)

Gross Profit Margin by Type of Contract (%)

The sales mix of our Group continues to exceed our target of having greater than fifty percent of Group revenue being derived from managed service contracts. This year managed service contract revenues accounted for 68.7% of Group revenue, up from 65.4% in 2014.

# Lower total opex this year, before and after exceptional items

Our Group’s operating expenditure for the year decreased to S\$8.4 million as compared to S\$9.0 million in 2014. In 2014 we had a foreign exchange gain due to the strengthening of the Pakistan Rupee and US Dollar against the Singapore Dollar and a provision that was made for the impairment of intellectual property that had been assessed as being no longer able to generate previously expected future cash flows.

This year, we had a higher foreign exchange gain due to the strengthening of the US Dollar against the Singapore Dollar and an impairment loss on plant and equipment - that was lower against 2014’s impairment loss on intellectual property assets - to take into our income statement. The impairment this year relates to a managed service contract that has been assessed as being no longer able to generate previously expected income and returns.

Operating Expenditure (S\$000)

Excluding the efect of exceptional items such as the impairment loss this year, our opex for 2015 was S\$0.4 million lower at S\$8.2 million compared to S\$8.6 million for 2014. This decrease was due to a reduction in the technical, and sales and business development headcount of the Group.

Operating Expenditure before Exceptional Items (S\$000)

# Improved bottom line – a further year of improvement in our underlying business

2015 marks our eighth consecutive year of being in the black. Group net profit for the year, at S\$3 million, is 33.1% higher than the S\$2.3 million achieved in 2014. The double-digit growth of our Group’s bottom line reflected the improvement in the performance of our underlying businesses.

When the bottom line numbers are examined more closely, to exclude exceptional gains such as the fair value gains enjoyed on the acquisition of Ahead Mobile Sdn Bhd (‘AMSB’) across 2012 and 2013, the improvement in profit performance of our underlying businesses is more pronounced. The ‘adjusted’ net profit generated by our businesses grew more than seven-fold, from S\$0.4 million in 2013 to S\$3 million this year.