Teliti International Ltd : Interim Results

29 June 2012

TelitiInternational Ltd.

("Teliti" or the "Company")

Results for the six months ended 31 March 2012

TelitiInternational Ltd (AIM: TEL), the datacentre and IT business, announces its interim results for the six months ended 31 March 2012.

Financial Summary*

· Revenues were RM38.2m

· Profit before tax was RM2.2m

· Gross profit was RM3.8m

· Total equity and liabilities at 31 March 2012 were RM141.6m

* As stated in the Company'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 Company, on 3 November 2011. Prior to Teliti being admitted to AIM, the Subsidiaries were subsidiaries of Teliti Computers Sdn. Bhd. The Company was also a subsidiary of Teliti Computers during this period. As a result, the figures shown for the Company for the six months ended 31 March 2012 are consolidated on a pro forma basis.

Operational Summary

· TelitiDatacentres Sdn. Bhd. ("Teliti Datacentres"):

o Marketing of the Company's state-of-the-art datacentre ("the Datacentre") continued in Malaysia, through Teliti Datacentres' regional marketing office in Singapore

· TelitiSolutions Sdn. Bhd. ("Teliti Solutions ")and Teliti ServicesSdn. Bhd. ("Teliti Services"):

o Completed a number of significant projects, such as for the Accountant General of Malaysia and the City Hall of Kuala Lumpur

o Awarded new contracts, including a further two-year project with the Accountant General of Malaysia and a five-month project worth RM7.4m with Integrasi Naluri Sdn Bgd, a Malaysian telecommunications company

· Teliti was admitted to AIM with dealings in the Company's ordinary shares commencing 3 November 2011 ("Admission")

Post-period Summary

· Raised £1 million (c.RM4.9m) via a subscription for 1,754,386 new ordinary shares, representing approximately 6.93% of the enlarged issued share capital

· As announced on 19 June 2012, due to a delay in payments by the Company's debt provider to the Company's contractors, the construction of the Datacentre is now scheduled to complete in July 2012, but the initial 45,000 sq ft is not anticipated to be operational until the first quarter of calendar year 2013

Commenting on the results, Haji Mohamed Nasir, Chief Executive Officer of Teliti, said: "This has been a mixed period for the Company. Teliti Solutions and Teliti Services remain profitable and, excluding the funding issues for Teliti Datacentres, the Company is cash generative.

"Looking ahead, Teliti Solutions and Teliti Services have entered the second half of the year with a very strong order book, and are expected to grow over 130% year-on-year. There was continued demand in our co-location services and significant interest in our Datacentre. We are confident that as soon as the Datacentre commences operations, this interest will quickly convert into rental contracts. As a result, we believe that the fundamentals of the business are resilient and that Teliti's prospects remain strong."

Enquiries

TelitiInternational Ltd
Hj Mohamed Nasir Abdul Majid, Chief Executive Officer Rosmida Din, Chief Financial Officer	[phone]
Daniel Stewart and Company plc
AntonyLegge, James Felix	[phone]
Luther Pendragon
Harry Chathli, Claire Norbury	[phone]

Operational Review

Teliti International Ltd was incorporated on 13 November 2009 to act as the holding company of Teliti Solutions Sdn. Bhd., Teliti Services Sdn. Bhd. and Teliti Datacentres Sdn. Bhd., which came into force upon the Company being admitted to AIM on 3 November 2011. Teliti's Admission represented an important step in the Company's development, and one that will facilitate its strategy of further market penetration in Malaysia and subsequently across Asia and the Middle East.

Teliti Datacentres

Teliti Datacentres was established to construct and operate state-of-the-art datacentre facilities. Its first facility, a state-of-the-art 'green' Datacentre that is being constructed on the outskirts of Kuala Lumpur, Malaysia, will have a total net lettable area of 120,000 sq ft, with installation of equipment occurring modularly - beginning with an intial 45,000 sq ft. It will offer full datacentre services, including communications connectivity, uninterruptable power supply, distribution building utilities and environmental services, that are all necessary to ensure a continuous environment for customers' equipment.

In January 2012, the Company announced that the opening of the Datacentre would be delayed until July 2012 due to a delay in the delivery and receipt of key equipment (being the generator sets from Europe and chiller equipment). However, as announced on 19 June 2012, delayed payments by the Company's debt provider to the Company's contractors will mean that the Datacentre will not be operational from July 2012 as previously indicated. The Company still expects the Datacentre superstructure to be completed in July, but the initial 45,000 sq ft is not anticipated to be operational until the first quarter of calendar year 2013. As a result, Teliti Datacentres will not generate any significant revenues in the year to 30 September 2012. The Company has currently drawndown RM75.5m of the RM111m debt and is in discussions regarding the release of the remaining funds, which are required to bring the Datacentre into operation. The Board is confident that the matter will be resolved in the near future.

Marketing of the Datacentre has continued in Malaysia and through Teliti Datacentres' regional marketing office in Singapore (covering Singapore and Hong Kong), and interest in the facility remains strong. As of 28 June 2012, Teliti was in advanced discussions to sign rental agreements for approximately 20,000 sq ft, or c.44% of the initial 45,000 sq ft of net lettable area.

In addition, Teliti signed a Memorandum of Understanding in June 2012 with Computer Recovery Facility Sdn. Bhd. ("CRF") to accommodate its potential clients' requirements for co-location space at CRF's datacentre in Petaling Jaya, Malaysia.Teliti is also in discussions with a datacentre provider based in Singapore to rent space in its facility. This will enable Teliti to service customers ahead of the opening of the Datacentre.

The Company is continuing to progress discussions with its partners for the provision of cloud computing services and expects this offering to be ready for when the Datacentre is opened.

Teliti Services and Teliti Solutions

During the period Teliti Services and Teliti Solutions were active in completing existing projects and winning new contracts. In particular, the Accountant General of Malaysia's Government awarded a two-year extension contract, worth RM22.4m, for the maintenance of Financial Management and Accounting System ("GFMAS") to be carried out by Teliti Solutions and Teliti Services, which followed the successful completion in November 2011 of the previous three-year project.

Other significant projects completed during the six months ended 31 March 2012 included server supply, installation and maintenance for Lembaga Hasil Dalam Negeri, the City Hall of Kuala Lumpur, which had a value of RM41.7m for the three-year contract. In addition, Teliti Services was awarded a contract by Integrasi Naluri Sdn Bhd, a Malaysian telecommunications company, worth RM7.4m for a five-month project for the delivery, installation and server maintenance for the Malaysian National Archives, part of Malaysia's Ministry of Information, Communications and Culture.

Financial Review

The Company

Teliti was incorporated on 13 November 2009 as a Cayman Islands company to act as the holding company of Teliti Solutions, Teliti Services and Teliti Datacentres upon the Company's admission to AIM. Teliti listed on AIM on 3 November 2011. Prior to the Company being admitted to AIM, Teliti Solutions, Teliti Services and Teliti Datacentres were subsidiaries of Teliti Computers, the parent company of Teliti. As a result, for the half-year ended 31 March 2012, the Subsidiaries made a five-month financial contribution to the Company. In addition, Teliti incurred RM0.37m in administrative expenses.

TelitiSolutions

Revenue almost doubled to RM13.3m compared with RM6.7m for the six months ended 31 March 2011. However, gross profit was broadly similar at RM1.8m and profit before tax decreased to RM1.5m (H1 2011: RM2.6m) due to a significant proportion of revenue for the first half of 2012 being derived from a lower margin contract. This trend is expected to reverse in the second half, with some high margin contracts being undertaken, and Teliti Solutions is anticipated to achieve its targets for the full year.

Teliti Services

Revenue increased by 61% to RM24.6m compared with RM15.2m for the same period in the prior year, and profit before tax was RM1.0m as opposed to RM0.6m. This growth was primarily due to an increase in revenue and decrease in administrative expenses compared to the same period in the prior year. However, the growth was lower than expected as a result of a delay in the completion of a number of significant projects resulting in the billing for those contracts being pushed into the second half of 2012. Gross profit declined to RM1.9m compared with RM2.2m for the prior period due to a large proportion of revenue for the first half of 2012 being derived from a lower margin contract. Overall, the picture for the year remains strong with contracted revenues for the second half of over RM40.0m. In addition, Teliti Services has a pipeline of potential projects of over RM100m. 

TelitiDatacentres

During the six months ended 31 March 2012, Teliti Datacentres earned RM0.28m from the rental income from its first customer at the Customer Experience Centre, which is contracted for 386 sq ft on a two-year term. The gross profit for the period was RM0.12m and profit before tax was RM0.02m. This is significantly behind market expectations due to the delay in the opening of the Datacentre.

Outlook

The delay in the completion of the Datacentre will have an adverse material impact on the Company's results for the full year 2012. Despite the Company expecting overall growth for the full year 2012, and Teliti Solutions and Teliti Services on track to meet expectations, the pre-tax profits for the Company will be less than half market expectations. This is due to the loss of any significant revenue contribution from Teliti Datacentres for the year, although this is partially offset by the reduced interest charges resulting from the delay in drawing down on the Company's banking facility. The Board is in discussions with the bank regarding the release of the remaining funds, which are required to bring the Datacentre into operation. The Board is confident that the matter will be resolved in the near future, however further delays would result in the Datacentre not being opening until 2013.

Teliti Solutions and Teliti Services remain profitable and, excluding the funding issues for Teliti Datacentres, the Company is cash generative. There continues to be significant interest in the Datacentre and the Board is confident that as soon as the Datacentre commences operations, this demand will quickly convert into rental contracts. Teliti Solutions and Teliti Services have entered the second half of the year with a robust order book, and are expected to grow over 130% year-on-year. Whilst the Board is disappointed by the delay to the Datacentre and the impact on the 2012 financial results, they believe that the fundamentals of the business are resilient and that Teliti's prospects remain strong.