ISP Global Limited — Interim / Quarterly Report 2021

Feb 11, 2021

ISP Global Limited

(incorporated in the Cayman Islands with limited liability)

Stock Code: 8487

Interim Report 2020/2021

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CHARACTERISTICS OF GEM OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE “STOCK EXCHANGE”)

GEM has been positioned as a market designed to accommodate small and mid-sized companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration.

Given that the companies listed on GEM are generally small and mid-sized companies, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board of the Stock Exchange and no assurance is given that there will be a liquid market in the securities traded on GEM.

This report, for which the directors (the “ Directors ”) of ISP Global Limited (the “ Company ”) collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on GEM of the Stock Exchange (the “ GEM Listing Rules ”) for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this report is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this report misleading.

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CONTENTS

CONTENTS
Unaudited Consolidated Statement
of Profit or Loss and Other
Comprehensive Income	3
Unaudited Consolidated Statement
of Financial Position	6
Unaudited Consolidated Statement
of Changes in Equity	8
Unaudited Condensed Consolidated
Cash Flow Statement	10
Notes to the Unaudited Condensed
Consolidated Financial Statements	12
Management Discussion and Analysis	36
Disclosure of Interests and Other
Information	53

UNAUDITED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the three months and six months ended 31 December 2020

UNAUDITED INTERIM RESULTS

The unaudited consolidated interim results of the Company and its subsidiaries (collectively referred to as the “ Group ”) for the three months and six months ended 31 December 2020, together with the unaudited comparative figures for the corresponding periods in 2019, are as follows:

Notes `	Three months ended 31 December Six months ended 31 December 2020 2019 2020 2019 S$ S$ S$ S$ (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenue 3 Costs of sales/services Gross profit Other income Administrative expenses Other gains and losses 4 Share of loss in associates Finance costs 5 Profit (loss) before taxation 6 Income tax (expense) recovered 7 Profit (loss) for the period	3,532,502 1,815,668 4,581,675 3,925,884 (2,614,539) (1,050,613) (3,163,344) (2,451,199)
	917,963 765,055 1,418,331 1,474,685 129,580 27,956 248,436 52,456 (856,894) (769,421) (1,450,612) (1,366,800) (48,585) (137,530) (220,883) (29,430) (15,958) – (15,958) – (5,624) (8,947) (12,286) (18,202)
	120,482 (122,887) (32,972) 112,709 (13,742) (48,762) 44,159 (54,688)
	106,740 (171,649) 11,187 58,021

ISP Global Limited · Interim Report 2020/2021 3

UNAUDITED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the three months and six months ended 31 December 2020

Notes `	Three months ended 31 December Six months ended 31 December 2020 2019 2020 2019 S$ S$ S$ S$ (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Other comprehensive income, after tax Items that may be reclassified subsequently to profit or loss Exchange differences on translation of foreign operations Total comprehensive income (loss) for the period Profit (loss) for the period attributable to: Owners of the Company Non-Controlling Interest Profit (loss) for the period	7,666 52 6,575 15
	114,406 (171,597) 17,762 58,036
	52,737 (171,649) (42,816) 58,021 54,003 – 54,003 –
	106,740 (171,649) 11,187 58,021

4 ISP Global Limited · Interim Report 2020/2021

UNAUDITED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the three months and six months ended 31 December 2020

Notes `	Three months ended 31 December Six months ended 31 December 2020 2019 2020 2019 S$ S$ S$ S$ (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Total comprehensive income (loss) for the period attributable to: Owners of the Company Non-Controlling Interest Total comprehensive income (loss) for the period Earnings (losses) per share Basic and diluted (S$ cents per share) 8	61,261 (171,597) (35,383) 58,036 53,145 – 53,145 –
	114,406 (171,597) 17,762 58,036
	0.01 (0.02) (0.01) 0.01

Details of dividends of the Company are set out in note 9.

ISP Global Limited · Interim Report 2020/2021 5

UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 December 2020

Notes As at 31 December 2020 As at 30 June 2020 S$ S$ (Unaudited) (Audited)	Notes As at 31 December 2020 As at 30 June 2020 S$ S$ (Unaudited) (Audited)
ASSETS Non-current assets Property, plant and equipment 10 Pledged bank deposits 15 Investments in associates Goodwill on consolidation 14 Total non-current assets Current assets Inventories Trade receivables 11 Other receivables, deposits and prepayments 12 Contract assets 13 Bank balances and cash 15 Total current assets Total assets	4,599,377 4,817,053 206,947 206,947 171,430 – 259,668 –
	5,237,422 5,024,000
	2,203,615 547,592 2,315,549 1,434,658 2,912,836 181,631 43,975 40,415 9,843,971 10,022,877
	17,319,946 12,227,173
	22,557,368 17,251,173

6 ISP Global Limited · Interim Report 2020/2021

UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2020

		As at	As at
		31 December	30 June
	Notes	2020	2020
		S$	S$
		(Unaudited)	(Audited)
LIABILITIES AND EQUITY
Current liabilities
Trade and other payables	16	5,946,866	548,673
Contract liabilities	13	55,626	55,012
Borrowings due within
one year	17	166,420	169,453
Income tax payable		177,612	277,919
Total current liabilities		6,346,524	1,051,057
Non-current liabilities
Borrowings due after
one year	17	1,152,557	1,231,318
Deferred tax liabilities	18	34,498	62,327
Total non-current liabilities		1,187,055	1,293,645
Capital and reserves
Share capital	19	1,372,630	1,372,630
Reserves		13,498,458	13,533,841
Non-controlling interest		152,701	–
Total equity		15,023,789	14,906,471
Total liabilities and equity		22,557,368	17,251,173

ISP Global Limited · Interim Report 2020/2021

7

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 31 December 2020

	Attributable to equity shareholders of the Company Share capital Share premium Merger reserve Translation reserves Accumulated profits Equity attributable to owners of the company Non- Controlling Interest Total S$ S$ S$ S$ S$ S$ S$ S$ (Note i)
Balance at 1 July 2020 (Audited) Total comprehensive income (loss) for the period Profit (loss) for the period Other comprehensive income (loss) for the period Total Non-controlling interest, arising from acquisition of a subsidiary representing transactions with owners, recognised directly in equity Balance at 31 December 2020 (Unaudited)	1,372,630 8,593,078 524,983 516 4,415,264 14,906,471 – 14,906,471 – – – – (42,816) (42,816) 54,003 11,187 – – – 7,433 – 7,433 (858) 6,575
	– – – 7,433 (42,816) (35,383) 53,145 17,762
	– – – – – – 99,556 99,556
	1,372,630 8,593,078 524,983 7,949 4,372,448 14,871,088 152,701 15,023,789

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ISP Global Limited · Interim Report 2020/2021

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 31 December 2019

	Attributable to equity shareholders of the Company Share capital Share premium Merger reserve Translation reserves Accumulated profits Total S$ S$ S$ S$ S$ S$ (Note i)
Balance at 30 June 2019 1,372,630 8,593,078 524,983 – 4,183,552 14,674,243 Effects of adopting IFRS 9 – – – – (81,157) (81,157) Effects of adopting IFRS 15 – – – – (72,905) (72,905) Balance at 1 July 2019 (Audited) 1,372,630 8,593,078 524,983 – 4,029,490 14,520,181 Total comprehensive income Profit for the period, attributable to the owners of the Company – – – – 64,385 64,385 Other comprehensive income for the period – – – 176 – 176 Total comprehensive income – – – 176 64,385 64,561 Balance at 31 December 2019 (Unaudited) 1,372,630 8,593,078 524,983 176 4,093,875 14,584,742 Note:	1,372,630 8,593,078 524,983 – 4,183,552 14,674,243 – – – – (81,157) (81,157) – – – – (72,905) (72,905)
	– – – 176 64,385 64,561
	1,372,630 8,593,078 524,983 176 4,093,875 14,584,742

(i) Merger reserve represents the difference between the nominal value of the shares issued by the Company in exchange for the nominal value of the share capital of its subsidiaries arising from the corporate reorganisation undertaken in the preparation for the listing of the Company’s share (the “ Shares ”) on GEM of the Stock Exchange.

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ISP Global Limited · Interim Report 2020/2021

UNAUDITED CONDENSED CONSOLIDATED CASH FLOW STATEMENT

For the six months ended 31 December 2020

	Six months ended	Six months ended
	31 December
	2020	2019
	S$	S$
	(Unaudited)	(Unaudited)
Operating activities
(Loss)profit before taxation	(35,383)	112,709
Adjustments for:
Share of losses of associates	15,958	–
Depreciation of property, plant
and equipment	266,410	262,685
Unrealised foreign exchange loss	45,376	18,460
Impairment losses, net of reversals,
on financial assets and
other items subject to ECL	41,058	–
Interest income	(6,430)	(52,456)
Finance costs	12,286	18,202
Operating cash flows before
movements in working capital	339,275	359,600
Movements in working capital
Increase in trade receivables	(921,949)	(478,269)
Increase in other receivables,
deposits and prepayments	(2,731,205)	(38,947)
(Increase) decrease in contract
assets	(3,560)	49,060
Decrease in contract costs	–	36,000
Increase in inventories	(1,656,023)	(39,290)
Increase (decrease) in contract
liabilities	614	(31,411)
Increase in trade and
other payables	5,398,193	169,190
Cash generated from operations	425,345	25,933
Interest received	6,430	52,456
Income tax paid	(83,977)	(109,069)

10 ISP Global Limited · Interim Report 2020/2021

UNAUDITED CONDENSED CONSOLIDATED CASH FLOW STATEMENT

For the six months ended 31 December 2020

	Six months ended	Six months ended
	31 December
	2020	2019
	S$	S$
	(Unaudited)	(Unaudited)
Net cash generated from (used in)
operating activities	347,798	(30,680)
Investing activities
Acquisition of property, plant and
equipment	(48,342)	(25,692)
Additions to investment in associates	(188,570)	–
Net cash used in investing activities	(236,912)	(25,692)
Financing activities
Repayment of borrowings	(81,794)	(78,030)
Interest paid	(12,286)	(28,295)
Net cash used in financing activities	(94,080)	(106,325)
Net increase (decrease) in cash and
cash equivalents	16,806	(162,697)
Cash and cash equivalents at
beginning of the period	10,022,877	9,675,472
Effect of foreign exchange rate
changes on the balance of
cash held in foreign currencies	(195,712)	(19,080)
Cash and cash equivalents at end
of the period represented
by bank balances and cash	9,843,971	9,493,695

ISP Global Limited · Interim Report 2020/2021 11

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. GENERAL INFORMATION

ISP Global Limited was incorporated and registered as an exempted Company in the Cayman Islands with limited liability on 21 July 2017 and its registered office is Clifton House, 75 Fort Street, P.O. Box 1350, Grand Cayman KY1-1108, Cayman Islands. The Company was registered with the Registrar of Companies in Hong Kong as a non-Hong Kong company under Part 16 of the Companies Ordinance (Chapter 622 of the laws of Hong Kong) on 8 September 2017 and the principal place of business in Hong Kong registered is Suites 1801-03, 18/F, One Taikoo Place, 979 King’s Road, Quarry Bay, Hong Kong. The head office and principal place of business of the Group is at No. 3 Ang Mo Kio Street 62, #01-39, LINK@AMK, Singapore 569139. The Shares have been listed on GEM of the Stock Exchange with effect from 16 January 2018.

The Company is an investment holding company and the principal activities of its operating subsidiaries are sale of sound and communication systems and related services, provision of integrated services of sound and communication systems, provision of alert alarm system services in Singapore, and provision of e-commerce services.

The unaudited condensed consolidated financial statements are presented in Singapore Dollars (“ S$ ”), which is also the functional currency of the Company.

The unaudited condensed consolidated financial statements are approved by the board of Directors (the “ Board ”) on 11 February 2021.

12 ISP Global Limited · Interim Report 2020/2021

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2. BASIS OF PREPARATION AND APPLICATION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS

For the purpose of preparing and presenting the unaudited condensed consolidated financial statement for the reporting period, the Group has consistently applied IFRSs that are effective for the financial year beginning on 1 July 2020 throughout the reporting period. At the date of issuance of this report, the Group has not applied the following new IFRSs, amendments to IFRSs, amendments to International Accounting Standards (“ IASs ”), and the new interpretations that have been issued but are not yet effective:

Amendments to References to the Conceptual Framework in IFRSs[1]

Amendments resulting from Annual Improvements to IFRS Standards 2018-2020[1]

1. Effective for annual periods beginning on or after 1 January 2022, with early application permitted.

ISP Global Limited · Interim Report 2020/2021 13

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3. REVENUE AND SEGMENT INFORMATION

Revenue represents the fair value of amounts received and receivable from (1) sale of sound and communication systems and related services (“ Sale of Sound and Communication Systems and Related Services ”), (2) provision of integrated services of sound and communication systems, which includes installation and customisation of sound and communication systems in buildings in Singapore (“ Integrated Services of Sound and Communication Systems ”), (3) provision of alert alarm system services (“ Alert Alarm System Services ”), (4) provision E-commerce services (“ E-commerce ”) to external customers. An analysis of the Group’s revenue is as follows:

	Three months ended 31 December Six months ended 31 December 2020 2019 2020 2019 S$ S$ S$ S$ (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenue from: Sale of Sound and Communication Systems and Related Services Integrated Services of Sound and Communication Systems Alert Alarm System Services E-commerce	1,126,164 1,278,352 1,846,451 2,954,620 – 318,430 110,000 533,492 218,886 218,886 437,772 437,772 2,187,452 – 2,187,452 –
	3,532,502 1,815,668 4,581,675 3,925,884

14 ISP Global Limited · Interim Report 2020/2021

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3. REVENUE AND SEGMENT INFORMATION (Cont’d)

Information about the Major Customers

Revenue from external customers contributing over 10% of total revenue of the Group are as follows:

	Six months ended 31 December	Six months ended 31 December
	2020	2019
	S$	S$
	(Unaudited)	(Unaudited)
Customer I	–^	539,832
Customer II	–^	519,830
Customer III	–^	439,172

^ For the six months ended 31 December 2020, the corresponding revenue from that customer did not amount to more than 10% of total Group revenue for the period.

ISP Global Limited · Interim Report 2020/2021 15

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3. REVENUE AND SEGMENT INFORMATION (Cont’d)

Geographical information

The Group revenue from customers and information about its specified non-current assets, comprising property, plant and equipment, goodwill on consolidation, and interest in an associate, by geographical location are detailed below.

a) Revenue from external customers

	Three months ended 31 December Six months ended 31 December 2020 2019 2020 2019 S$ S$ S$ S$ (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Singapore China	1,345,050 1,815,668 2,394,223 3,925,884 2,187,452 – 2,187,452 –
	3,532,502 1,815,668 4,581,675 3,925,884

b) Non-current assets

	As at 31 December 2020 As at 30 June 2020 S$ S$ (Unaudited) (Unaudited)
Singapore China Malaysia	4,802,170 5,024,000 431,098 – 4,154 –
	5,237,422 5,024,000

16 ISP Global Limited · Interim Report 2020/2021

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

4. OTHER GAINS AND LOSSES

	Three months ended 31 December Six months ended 31 December 2020 2019 2020 2019 S$ S$ S$ S$ (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net foreign exchange loss Loss (reversed) recognised on expected credit losses (“ECL”) on trade receivables	79,928 121,904 179,825 24,699 (31,343) 15,626 41,058 4,731
	48,585 137,530 220,883 29,430

5. FINANCE COSTS

		Three months ended	Three months ended	Six months	ended
		31 December		31 December
		2020	2019	2020	2019
		S$	S$	S$	S$
		(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
Interest	on:
Banking	borrowings	5,624	8,947	12,286	18,202

ISP Global Limited · Interim Report 2020/2021 17

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6. PROFIT (LOSS) BEFORE TAXATION

Profit (loss) before income tax is arrived at after charging/ (crediting):

	Three months ended 31 December Six months ended 31 December 2020 2019 2020 2019 S$ S$ S$ S$ (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Depreciation of property, plant and equipment (Note a) 133,741 131,708 266,410 262,685 Directors’ remuneration 234,660 299,902 442,530 531,959 Other staff costs – Salaries, wages and other benefit 469,507 510,705 860,131 1,035,358 – Defined contribution plans, including retirement benefits 22,231 20,207 42,433 38,541 – Foreign worker levy and skill development levy 40,002 66,463 44,495 136,432 Total staff costs (inclusive of Directors’ remuneration) (Note b) 766,400 897,277 1,389,589 1,742,290 Cost of materials recognised as costs of sales/services 2,150,627 485,385 2,279,495 1,197,263 Subcontractor costs recognised as costs of sales/services 24,036 48,270 68,396 154,836	133,741 131,708 266,410 262,685
	234,660 299,902 442,530 531,959 469,507 510,705 860,131 1,035,358 22,231 20,207 42,433 38,541 40,002 66,463 44,495 136,432
	2,150,627 485,385 2,279,495 1,197,263 24,036 48,270 68,396 154,836

Notes:

• a. For the Relevant Period, depreciation of S$198,149 (period ended 31 December 2019: S$198,149) is included in costs of sales/services.

• b. For the Relevant Period, staff costs of S$617,305 (period ended 31 December 2019: S$900,952) is included in costs of sales/services.

18 ISP Global Limited · Interim Report 2020/2021

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

7. INCOME TAX EXPENSE (RECOVERED)

Singapore corporate income tax has been provided at the rate of 17% (six months ended 31 December 2019: 17%). Singapore corporate income tax has been provided at the rate of 17%. The People’s Republic of China (“ PRC ”) corporate income tax has been provided at the rate of 25%. A breakdown of the income tax expenses is as follows:

	Three months ended 31 December Six months ended 31 December 2020 2019 2020 2019 S$ S$ S$ S$ (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Current tax expense (recovered) – Singapore corporate income tax Current tax – PRC corporate income tax Deferred tax	21,714 66,871 (22,166) 90,906 5,836 – 5,836 – (13,808) (18,109) (27,829) (36,218)
	13,742 48,762 (44,159) 54,688

ISP Global Limited · Interim Report 2020/2021 19

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

8. EARNINGS (LOSSES) PER SHARE FOR THE PERIOD

	Three months ended 31 December Six months ended 31 December 2020 2019 2020 2019 S$ S$ S$ S$ (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Profit (loss) for the period attributable to owners of the Company Weighted average number of ordinary shares (’000) (Note (a)) Basic and diluted earnings (losses) per share (S$ cents per share)	52,737 (171,649) (42,816) 58,021 800,000 800,000 800,000 800,000
	0.01 (0.02) (0.01) 0.01

Note:

• (a) The calculation of basic earnings (losses) per share is based on the profit (loss) for the period attributable to owners of the Company and the weighted average number of shares in issue.

The diluted earnings (losses) per share is equal to the basic earnings (losses) per share as there were no dilutive potential ordinary shares in issue during the respective periods.

20 ISP Global Limited · Interim Report 2020/2021

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

9. DIVIDENDS

No dividends have been proposed or paid by the Company or any of its subsidiaries during the six months ended 31 December 2020 (six months ended 31 December 2019: Nil).

10. PROPERTY, PLANT AND EQUIPMENT

During the six months ended 31 December 2020, the Group acquired equipment amounting to approximately S$48,342 (six months ended 31 December 2019: S$25,692).

11. TRADE RECEIVABLES

As of the end of the reporting period, the aging analysis of trade receivables (which are included in trade and other receivables), based on the invoice date, is as follows:

	As at	As at
	31 December	30 June
	2020	2020
	S$	S$
	(Unaudited)	(Audited)
Trade receivables	2,369,739	1,464,362
Unbilled revenue (Note)	54,632	38,060
Loss allowance	(108,822)	(67,764)
	2,315,549	1,434,658

ISP Global Limited · Interim Report 2020/2021 21

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

11. TRADE RECEIVABLES (Cont’d)

Note: Unbilled revenue relates to accrued revenue for which the contract works has been performed before period end but no billing has been raised to customers. The Group’s rights of the unbilled revenue are unconditional.

The Group grants credit terms to customers typically between 30 to 90 days (30 June 2020: 30 to 90 days) from the invoice date for trade receivables. The Group does not charge interest nor hold any collateral over these balances.

In 2020, the loss allowance for trade receivables is measured at an amount equal to lifetime ECL. The ECL on trade receivables are estimated using a provision matrix by reference to past default experience of the debtor and an analysis of the debtor’s current financial position, adjusted for factors that are specific to the debtors, general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecast direction of conditions at the reporting date.

There has been no change in the estimation techniques or significant assumptions made during the current reporting period.

A trade receivable is written off when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery.

22 ISP Global Limited · Interim Report 2020/2021

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

11. TRADE RECEIVABLES (Cont’d)

The following table details the risk profile of trade receivables from contracts with customers based on the Group’s provision matrix. As the Group’s historical credit loss experience does not show significantly different loss patterns for different customer segments, the provision for loss allowance based on past due status is not further distinguished between the Group’s different customer base.

Group Trade receivables – days past due December 31, 2020 < 30 days 31 – 90 days 91 – 180 days 181 – 365 days >365 days	Total
ECL rate – – – 45% 82% Estimated total gross carrying amount at default 1,912,927 209,425 74,541 210,026 17,452 Lifetime ECL – – – (94,512) (14,310) Group Trade receivables – days past due June 30, 2020 < 30 days 31 – 90 days 91 – 180 days 181 – 365 days >365 days	2,424,371 (108,822)
	2,315,549
	Total
ECL rate – – – 45% 82% Estimated total gross carrying amount at default 641,975 514,488 207,259 124,243 14,457 Lifetime ECL – – – (55,909) (11,855)	1,502,422 (67,764)
	1,434,658

ISP Global Limited · Interim Report 2020/2021 23

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

11. TRADE RECEIVABLES (Cont’d)

The table below shows the movement in lifetime ECL that has been recognised for trade receivables in accordance with the simplified approach set out in IFRS 9.

Group	Lifetime ECL – credit-impaired As at 31 December 2020 As at 30 June 2020 S$ S$ (Unaudited) (Audited)
Balance as at 1 July 2020 and 2019 Change in loss allowance due to new trade receivables originated, net of those derecognised due to settlement Balance as at end of period	67,764 36,094 41,058 31,670
	108,822 67,764

24 ISP Global Limited · Interim Report 2020/2021

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

12. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

	As at 31 December 2020 As at 30 June 2020 S$ S$ (Unaudited) (Audited) 78,771 43,131 2,811,475 122,486 22,590 16,014 2,912,836 181,631
Deposits Prepayments Advances to staff

13. CONTRACT ASSETS AND CONTRACT LIABILITIES

	As at 31 December 2020 As at 30 June 2020 S$ S$ (Unaudited) (Audited) 43,975 40,415 55,626 55,012
Contract assets Retention receivables Contract liabilities Advance billing to customer

ISP Global Limited · Interim Report 2020/2021 25

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

13. CONTRACT ASSETS AND CONTRACT LIABILITIES (Cont’d)

Contract Assets

The contract assets include retention receivables which represent monies withheld by customers of contract works that will be released after the end of warranty period of the relevant contracts, and are classified as current as they are expected to be received within the Group’s normal operating cycle. Any amount previously recognised as a contract asset is reclassified to trade receivables at the point at which it becomes unconditional and is invoiced to the customer.

Contract Liabilities

The contract liabilities represent the Group’s obligation to transfer services to customers for which the Group has received consideration (or an amount of consideration is due) from the customers and remains as contract liabilities until the Group has transferred the control of the services to the customers.

The Group recognised revenue of S$55,012 (30 June 2020: S$57,723) which was included in the contract liability balance at the beginning of the period. There was no revenue recognised in the current reporting period relating to performance obligations which were satisfied in a prior year.

26 ISP Global Limited · Interim Report 2020/2021

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

14. GOODWILL ON CONSOLIDATION

	As at 31 December 2020 S$ (Unaudited) – 259,668 259,668
Cost: At 1 July 2020 Arising on acquisition of a subsidiary At 31 December 2020

Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units (“ CGUs ”) that are expected to benefit from that business combination. Before recognition of impairment losses, the carrying amount of goodwill had been allocated as follows:

	As at 31 December 2020 S$ (Unaudited) 259,668 259,668
E-commerce: 團多多（深圳）商業顧問有限公司 (single CGU)

ISP Global Limited · Interim Report 2020/2021 27

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

15. PLEDGED BANK DEPOSITS/BANK BALANCES AND CASH

	As at	As at
	31 December	30 June
	2020	2020
	S$	S$
	(Unaudited)	(Audited)
Pledged bank deposits
(Note a)	206,947	206,947
Bank balances and
cash (Note b)	9,843,871	10,022,877

Notes:

• a. The balances represent deposits placed to a bank for corresponding amounts of performance guarantee granted to the Group in favour of a customer with a maturity term of 36 months ending in April 2022. The balances carry interest rate of 0.65% (30 June 2020: 0.65%) per annum at 31 December 2020.

• b. Approximately S$609,000 (30 June 2020: S$5,813,000) included in bank balances carry interest rate of approximately 0.05% (30 June 2020: ranging from 0.05% to 2.75%) per annum at 31 December 2020. The remaining bank balances and cash are interest free.

28 ISP Global Limited · Interim Report 2020/2021

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

16. TRADE AND OTHER PAYABLES

	As at	As at
	31 December	30 June
	2020	2020
	S$	S$
	(Unaudited)	(Audited)
Trade payables	5,691,042	91,311
Retention payables	26,500	26,500
	5,717,542	117,811
Other payables:
Goods and
Services Tax
(“GST”) payable	49,666	60,449
Accrued operating
expenses	118,073	324,142
Accrued payroll costs	52,330	42,056
Others	9,255	4,215
	5,946,866	548,673

ISP Global Limited · Interim Report 2020/2021 29

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

16. TRADE AND OTHER PAYABLES (Cont’d)

The following is an aged analysis of trade payables presented based on the invoice date at the end of each reporting period:

	As at 31 December 2020 As at 30 June 2020 S$ S$ (Unaudited) (Audited)
Within 30 days 31 days to 90 days 91 days to 180 days Over 180 days	5,654,633 26,012 31,916 27,666 50 33,851 4,443 3,782
	5,691,042 91,311

The credit period on purchases from suppliers and subcontractors is between 30 to 60 days (30 June 2020: 30 to 60 days) or payable upon delivery.

30 ISP Global Limited · Interim Report 2020/2021

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

17. BORROWINGS

	As at	As at
	31 December	30 June
	2020	2020
	S$	S$
	(Unaudited)	(Audited)
Bank loans – Secured	1,318,977	1,400,771
Analysed as:
Carrying amount
repayable within
1 year	166,420	169,453
Carrying amount
repayable more
than 1 year, but not
exceeding 2 years	160,003	173,108
Carrying amount
repayable more
than 2 years, but not
exceeding 5 years	497,347	479,113
Carrying amount
repayable more than
5 years	495,207	579,097
	1,318,977	1,400,771
Less: Amount due
within 1 year
(shown under
current liabilities)	(166,420)	(169,453)
Amount shown under
non-current liabilities	1,152,557	1,231,318

ISP Global Limited · Interim Report 2020/2021 31

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

17. BORROWINGS (Cont’d)

The loans were secured by the legal mortgage over the Group’s leasehold land and property (Note 10) with corporate guarantee provided by the Company. The loans bear floating interest rates with weighted average effective interest rate at 1.75% (30 June 2020: 2.38%) per annum as at 31 December 2020.

18. DEFERRED TAX LIABILITIES

	As at 31 December 2020 As at 30 June 2020 S$ S$ (Unaudited) (Audited)
As at period beginning 1 July 2020, 2019 Credited to profit or loss for the period: Accelerated tax depreciation As at period end	62,327 133,435 (27,829) (71,108)
	34,498 62,327

The deferred tax liabilities resulted from temporary taxable differences arising from accelerated depreciation in relation to capital allowance claims on qualified assets in accordance with prevailing tax laws in Singapore.

32 ISP Global Limited · Interim Report 2020/2021

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

19. SHARE CAPITAL

			Company	Company
	As at		As at		As at
	31	As at	31	As at	31	As at
	December	30 June	December	30 June	December	30 June
	2020	2020	2020	2020	2020	2020
Notes	Number	of shares	Par Value		Share	Capital
	’000,000	’000,000	HK$	HK$	HK$’000	HK$’000

Authorised share capital of the Company: At beginning of the year or incorporation of the Company on 21 July 2017 (a) Increase on 14 December 2017 (c) As at end of the period/year	1,500 10 0.01 0.01 15,000 100 – 1,490 – 0.01 – 14,900
	1,500 1,500 0.01 0.01 15,000 15,000

ISP Global Limited · Interim Report 2020/2021 33

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

19. SHARE CAPITAL (Cont’d)

	Company As at 31 December 2020 As at 30 June 2020 As at 31 December 2020 As at 30 June 2020 Number of shares Share capital HK$ S$
Issued and fully paid share capital: At the beginning of the year or incorporation of the Company on 21 July 2017 (a) Issue of shares pursuant to the reorganisation (b) Issue of shares pursuant to the capitalisation issue (c) Issue of shares under the Share Offer (d) As at end of the year	800,000,000 1 1 – – 9,999 9,999 17 – 599,990,000 599,990,000 1,034,483 – 200,000,000 200,000,000 338,130
	800,000,000 800,000,000 800,000,000 1,372,630

Fully paid ordinary shares, which have no par value, carry one vote per share and a right to dividends as and when declared by the Group.

Notes:

• a. On 21 July 2017, the Company was incorporated in the Cayman Islands with an authorised share capital of HK$100,000 divided into 10,000,000 shares of HK$0.01 each, of which one share was allotted and issued in nil-paid form to the initial subscriber, an independent third party. The said share was transferred to Express Ventures, a company not forming part of the Group and is controlled by Mr. Mong and Ms. Choon on the same date.

34 ISP Global Limited · Interim Report 2020/2021

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

19. SHARE CAPITAL (Cont’d)

• b. On 8 December 2017, the Company issued and allotted 9,999 new shares of par value HK0.01 each to Express Ventures at the instructions of the Controlling Shareholders, all credited as fully paid.

• c. Pursuant to written resolution of the sole shareholder of the Company passed on 14 December 2017, it is resolved, among other things:

• the authorised share capital of the Company was increased from HK$100,000 to HK$15,000,000 by the creation of an additional 1,490,000,000 ordinary shares of HK$0.01 each; and

• conditional upon the share premium account of the Company being credited as a result of the share offer, the Company was authorised to capitalise the amount of HK$5,999,900 (equivalent to approximately S$1,034,483) from the amount standing to the credit of the share premium account of the Company by applying such sum to pay up in full at par a total of 599,990,000 ordinary shares for allotment, ranking pari passu in all respects with the existing shares.

• d. The shares of the Company were successfully listed on GEM of the Stock Exchange on 16 January 2018 by way of placing of 180,000,000 ordinary shares and public offer of 20,000,000 ordinary shares at the price of HK$0.35 per share (“ Share Offer ”). The Company’s share of net proceeds after deducting the underwriting commissions and estimated expenses paid or payable by the Company in relation to the Share Offer amounted to approximately HK$44 million (S$7 million).

Included in share issue expenses are audit fees and non-audit fees of S$35,000 and S$11,250 paid to the auditors of the Company respectively, and non-audit fees of S$42,500 paid to other auditors of the Group.

ISP Global Limited · Interim Report 2020/2021 35

MANAGEMENT DISCUSSION AND ANALYSIS

DEVELOPMENT OF BUSINESS AND PROSPECTS

The Group is principally engaged in the sales, installation and maintenance of sound and communication system solutions, and alert alarm systems in Singapore and e-commerce services in China.

For the six months ended 31 December 2020 (the “ Relevant Period ”), the Group recorded a net profit of approximately S$58 thousand as compared to approximately S$64 thousand for the same period in 2019. The Directors are of the view that the reduction in net profit was mainly attributable to, among other things, (i) the increase of approximately S$84 thousand, or 6.1%, in administrative costs and expenses related to funding of business opportunities in the Group’s new E-commerce segment in China from approximately S$1.4 million for the six months ended 31 December 2019 to approximately S$1.5 million for the Relevant Period; and (ii) the decrease in gross profits in the Group’s integrated services of sound and communication systems segment which was primarily due to delays in project completion in the Relevant Period.

OUTLOOK

The Group always strives to improve its operation efficiency and profitability of its business.

Due to the Singapore government’s response to the global pandemic caused by the Novel Coronavirus Sars-CoV II (“ COVID-19 ”), the Group’s business in Singapore had been adversely affected by in sales and projects delays. The Group recorded a significant decline in revenues and incurred losses due to slowdown in demand for sales, installation and maintenance of sound and communication

36 ISP Global Limited · Interim Report 2020/2021

MANAGEMENT DISCUSSION AND ANALYSIS

system solutions, and alert alarm systems in Singapore during 2020. Throughout the pandemic, the Group adopted contingency plans and optimised our cost structure through maintaining customer relationships in the Healthcare and Education sectors through contactless means, and increasing our professional expertise through the hiring of employees with relevant experience. The Group adopted social distancing measures and emphasised on increased workplace health and safety measures to ensure employee wellbeing and to prevent the spread of COVID-19 within the Group.

The Group has also been assessing the viability of business expansion opportunities in the geographical territories of China and south-eastern Asia. The COVID-19 control measures in China was successful to a substantial extent, managing to sufficiently quell the spread of the virus within China. Moreover, with the introduction of antitrust laws in China in recent years, the Group believes there is an opportunity for new entrants to develop and compete against any existing large incumbents in the market.

ESTABLISHING BUSINESS EXPANSION IN CHINA TO INCREASE SHAREHOLDER VALUE

A Nielsen study on global trends and analysis revealed that the COVID-19 global pandemic not only caused huge disruptions to the retail industry around the world, but also catalysed a shift in consumer spending habits towards online transactions. Due to the pandemic causing disruptions in the retail industry, some iconic American retailers, which were unable to keep up with online transaction trends, have filed for bankruptcy. On the other hand, retailers with online presence such as Amazon, Target and Walmart

ISP Global Limited · Interim Report 2020/2021 37

MANAGEMENT DISCUSSION AND ANALYSIS

are not significantly affected and in fact Amazon continues to forecast a 7% increase in online sales fulfilment in 2020 when compared to 2019, bringing the total to US$4.75 trillion. With the pandemic here to stay, the Group intends to explore new business opportunities within the online retailing space.

In a separate forecast report by the International Monetary Fund, China is expected to be the only major economy in the world to achieve positive growth during this pandemic so far. This could be due to the effective prevention and control of the pandemic in China, resulting in consumption recovery which was boosted by the boom in online retail sales during the pandemic, the reestablishment of offline retail sales channels and demand, and the resumption of community activities. According to data released by the National Bureau of Statistics of China, the total retail sales of consumer goods in the third quarter of 2020 increased by 0.9%, representing the first positive quarterly growth rate this year since the pandemic began.

According to the abovementioned macroeconomic trends, the Group will diversify its offerings to include e-commerce of certain brands appealing to consumers in China (“ E-commerce segment ”). For the avoidance of doubt, in alignment with the use of proceeds as disclosed in the prospectus issued by the Company on 29 December 2017 (the “ Prospectus ”), the Group will not apply funds obtained from the Share Offer in connection with the abovementioned business expansion. Instead, the Group will expect to apply funds generated from operating cash flows in operating subsidiary ISPL Pte Ltd (“ ISPL ”).

38 ISP Global Limited · Interim Report 2020/2021

MANAGEMENT DISCUSSION AND ANALYSIS

THE E-COMMERCE MARKET IN CHINA

E-commerce is an industry that has developed with e-commerce platforms and is vital for brand merchants and e-commerce platforms in stakeholder engagement. Online store building, digital marketing, warehousing logistics, data operations, consumer management, customer service, etc. provide integrated online marketing services to help brands successfully achieve digital marketing. The revenue of the e-commerce industry mainly comes from (1) managing the supply chain of contracted brands, and (2) fee revenue from online marketing services of contracted brands.

The Group believes there are high growth opportunities in China’s Business-to-Consumer (“ B2C ”) e-commerce market due to high growth rates in user base and increased penetration rates due to the switch towards consumers’ online spending habit. In 2019, China’s online retail market reached 10.6 trillion Chinese Yuan, representing a 16.5% year-on-year increase, and is considered to be a high-growth industry. Within the online retail market, the B2C e-commerce segment share increased 15.2% from 2018, to 78.0% in 2019. Accordingly, the e-commerce market also grew rapidly, reaching a market size of 563.5 billion Chinese Yuan in 2019 with a combined growth rate between 2016 to 2019 of 39.2%, and the market penetration rate of 10.5%. According to iResearch data, the total value of e-commerce industry is expected to be at 2.04 trillion Chinese Yuan, with a penetration rate increased to 13.7%. This is due to the mobility restrictions incurred by COVID-19 which has catalysed the need for brands to develop online e-commerce capabilities to augment the digital transformation of the brand, expand the brand outreach, and substitute the offline product distribution channels.

ISP Global Limited · Interim Report 2020/2021 39

MANAGEMENT DISCUSSION AND ANALYSIS

Data from iResearch suggests that in 2019, 80%-90% of international brands in China reported to have used brand service providers, due to the fact that 1) outsourcing to brand service providers has cost advantages as opposed to the relatively high cost of setting up Chinese domestic e-commerce teams by international brands, and; 2) gaining domestic consumer insights and understanding through brand service providers, can help international brands to better focus their resources in China. In terms of domestic Chinese brands, the demand proportion for brand service providers is about 20%-30% amongst all and the demand for such services is driven by different needs: 1) For those traditional Chinese domestic brands which have suffered from slow adoption of online channels, and are typically dealing with products which have been in the market for a long time, these brands could use e-commerce service providers to achieve rapid growth in customer outreach and radical supply chain transformation. 2) For those domestic small and medium-sized Chinese brands, usage of e-commerce service providers will greatly improve cost efficiency in both the short run and the long run.

THE GROUP’S MARKET-ENTRY STRATEGY IN CHINA’S E-COMMERCE MARKET

The Group will establish a new operating team in mainland China to carry out relevant business, mainly through (1) forming a new subsidiary company (wholly-owned or holding) to recruit outstanding e-commerce operation talent; and (2) acquiring or merging with outstanding companies in the industry for the Group to quickly enter this new market.

40 ISP Global Limited · Interim Report 2020/2021

MANAGEMENT DISCUSSION AND ANALYSIS

In light of recent developments, the Group will continue to expand its business operation team, and work together with our clients, the brand owners, to provide valuable e-commerce operations services for our clients in order to increase their market penetration and share and thereby creating more value for the Group’s shareholders.

FINANCIAL REVIEW

Revenue

During the Relevant Period, the Group’s revenue amounted to approximately S$4.6 million, which had increased by approximately S$0.7 million, or 16.7%, from approximately S$3.9 million for the six months ended 31 December 2019. This was principally due to the contributions of S$2.2 million by the Group’s new E-commerce segment. Such increase is offset by a decrease in revenues of S$1.5 million, compared with the corresponding period in 2019, during the Relevant Period as there were less projects being awarded to the Group in both the integrated sales of sound and communication and sales of sound and communication systems and related services segments.

ISP Global Limited · Interim Report 2020/2021 41

MANAGEMENT DISCUSSION AND ANALYSIS

Gross profit and gross profit margin

The Group’s gross profit decreased by approximately S$0.1 million, or 3.8%, from approximately S$1.5 million for the six months ended 31 December 2019, to approximately S$1.4 million for the Relevant Period. Accordingly, the Group’s gross profit margin decreased from 37.6% for the six months ended 31 December 2019, to 31.0% for the Relevant Period. The decrease in the Group’s gross profit was primarily due to higher material purchase costs and lower gross margins of the new E-commerce segment.

Other income, gains and losses

Other income, gains and losses increased by approximately S$5 thousand, or 19.7%, from a net gain of approximately S$23 thousand for the six months ended 31 December 2019, to a net gain of approximately S$28 thousand for the Relevant Period. The increase was mainly attributed to the increased governmental grant income from the Singapore government to help enterprises to offset payroll costs of operating in the built environment in Singapore. This is substantially offset by the increase in foreign exchange losses from settlement of trade expenses held in currencies other than S$, such as CNY, US$ and HK$, which had appreciated against the S$ during the Relevant Period.

Administrative expenses

Administrative expenses increased by approximately S$0.1 million or 6.1%, from approximately S$1.4 million for the six months ended 31 December 2019, to approximately S$1.5 million for the Relevant Period. The increase was primarily due to an increase of administrative costs related to funding of business opportunities in the Group’s new E-commerce segment in China.

42 ISP Global Limited · Interim Report 2020/2021

MANAGEMENT DISCUSSION AND ANALYSIS

Finance costs

Finance costs decreased slightly from approximately S$18 thousand for the six months ended 31 December 2019 to approximately S$12 thousand for the Relevant Period. Such decrease of the finance costs was due to the repayment of mortgage loan principal during the Relevant Period.

Share of losses in associates

The share of losses in associates which were newly acquired during the Relevant Period amounted to approximately S$16 thousand.

Profit (loss) attributable to the owners for the period

During the Relevant Period, the Group recorded a net loss attributable to the owners of the Company of approximately S$43 thousand as compared to a net profit of approximately S$58 thousand for the same period in 2019. The Directors are of the view that the reduction in net profit was mainly attributable to, among other things, (i) the increase of approximately S$84 thousand, or 6.1%, in administrative costs and expenses related to funding of business opportunities in the Group’s new E-commerce segment in China from approximately S$1.4 million for the six months ended 31 December 2019 to approximately S$1.5 million for the Relevant Period; and (ii) the decrease in gross profits in the Group’s integrated services of sound and communication systems segment which was primarily due to delays in project completion in the Relevant Period.

Interim dividends

The Directors do not recommend the payment of an interim dividend for the Relevant Period (six months ended 31 December 2019: S$ Nil).

ISP Global Limited · Interim Report 2020/2021 43

MANAGEMENT DISCUSSION AND ANALYSIS

Use of proceeds from Share Offer and Comparison of Business Objectives with Actual Business Progress

Up to 31 December 2020, the net proceeds raised from the listing of shares of the Company were utilised in accordance with the designated uses set out in the Prospectus and the supplemental announcement issued on 31 July 2020 (the “ Supplemental Announcement ”) as follows:

Description

Amount designated in the Prospectus Actual use of proceeds as at 31/12/20 Unutilised amount as at 31/12/20 % utilised as at 31/12/20 Expected date to fully utilise the unutilised amount HK$M HK$M HK$M % utilised

Strengthen our marketing efforts in the sound and communication industry in Singapore Expand and train our sales and marketing, technical and support workforce Purchase transportation vehicles Setting up of a new sales office in Singapore Partial repayment of bank loan Resources for the provision of performance bonds Take steps to obtain higher grade level under our current mechanical and electrical workhead General working capital and general corporate purposes Grand total

1.4 0.4 1.0 28.6% 31/12/22 11.6 5.9 5.7 50.9% 30/06/23 3.0 0.7 2.3 23.3% 30/06/23 10.0 – 10.0 0.0% 30/06/22 10.0 10.0 Nil 100.0% N/A 2.0 0.2 1.8 10.0% 30/06/21 2.5 – 2.5 0.0% 30/06/23 3.5 3.5 Nil 100.0% N/A 44.0 20.7 23.3 47.0%

44 ISP Global Limited · Interim Report 2020/2021

MANAGEMENT DISCUSSION AND ANALYSIS

The following table sets forth the designated and actual implementation plan up to 31 December 2020:

Purpose	Implementation Plan	Actual implementation activities
Strengthen our marketing	• Implement corporate branding	• Maintained and improved our
efforts in the sound and	and identity for our sound and	corporate websites, by using in-
communication industry	communication services solution	house resources to develop and
in Singapore	operations in Singapore which includes	maintain the Group’s website
	printing of marketing materials and	instead of engaging external
	advertisement	website designers
	• Maintain and improve our corporate
	websites by the external consultant for
	customised website development
	• Participate in industry trade show(s)
Expand and train our sales	• Staff costs for retaining the	• New headcount of approximately
and marketing,	approximately one project manager,	8 technicians were recruited by
technical and support	two engineers and 10 technicians to	June 2018
workforce	be recruited by February 2018, and the	• New headcount of approximately
	associated staff accommodation costs	two engineers and 9 technicians

• Maintained and improved our corporate websites, by using inhouse resources to develop and maintain the Group’s website instead of engaging external website designers

• New headcount of approximately two engineers and 9 technicians were recruited by June 2019

• Staff costs for retaining the approximately one sales manager, two sales and marketing executives and 10 technicians to be recruited by July 2018, and the associated staff accommodation costs

• New headcount of approximately two sales and marketing executives were recruited by June 2019

• Provided internal and external trainings and workshops to our technical staff

• To provide internal and external trainings and workshops to our sales and technical staff

• In the process of seeking suitable candidates to the remaining positions

ISP Global Limited · Interim Report 2020/2021 45

MANAGEMENT DISCUSSION AND ANALYSIS

Purpose	Implementation Plan	Actual implementation activities
Purchase transportation	• Purchase of three vans for maintenance	• Purchased two vans for
vehicles	operations and, transportation of	maintenance, operations and
	relevant equipment and/or labour	transportation of relevant
	• Purchase of two lorries for delivery	equipment and/or labour
	and transportation of larger equipment	• Considered and monitored the
	and/or labour	Group’s current project portfolio
		but postponed the purchase of
		lorry due to current different
		project requirements
Setting up a new sales	• Purchase of one new property	• Considered and monitored the
office in Singapore	to be used by our sales and	Group’s project tenders and
	contract department and act as a	plan was postponed due to the
	demonstration facility for our sound	latest observation of industry
	and communication systems	customers’ requirements and
		the property prices in Singapore
		were surged up higher than
		expected which the Group
		requires additional time to
		identify the suitable premises
		in order to meet the Group’s
		financial budget
Partial repayment of	• Partial repayment for the bank loan in	• The mortgage loan was partially
bank loan	relation to the mortgage loan secured	repaid on 11 July 2018
	for the purchase of our head office in
	Singapore

46 ISP Global Limited · Interim Report 2020/2021

MANAGEMENT DISCUSSION AND ANALYSIS

Purpose	Implementation Plan	Actual implementation activities
Expansion of our sound	• To explore, evaluate and tender for	• Postponed due to performance
and communication	potential integrated services of sound	bond not required in recent
services solution	and communication systems projects	awarded tenders to the Group
business	in Singapore, particularly larger scale	• In the process of exploring
	projects which may be required for the	large scale potential projects
	provision of performance bonds.	which requires the provision of
		performance bonds
Take steps to obtain	• Satisfy the minimum financial	• Considered and monitored the
higher grade level	requirements for “L6” grade under	Group’s project portfolio and
under our current	our current mechanical and electrical	postponed to April 2020
mechanical and	workhead	• The Group is currently
electrical workhead		accumulating the necessary track
		record requirement

The net proceeds raised from the listing of the shares of the Company on GEM of the Stock Exchange, after deducting the related expenses, were approximately HK$44.0 million. As at the disclosures stated in the Supplemental Announcement, the expected timeline for fully utilise the unutilised proceeds disclosed above is based on the best estimation from the Board with latest information available. Given the recent adverse impacts on Singapore economy as a results of the outbreak of COVID-19, it is expected that the unutilised proceeds will be utilised on or before 30 June 2023.

The expected timeline for fully utilise the unutilised proceeds disclosed above is based on the best estimation from the Board with latest information as at the date of this report. The Board confirms that there is no material change in the business nature of the Group as

ISP Global Limited · Interim Report 2020/2021 47

MANAGEMENT DISCUSSION AND ANALYSIS

set out in the Prospectus and the Group continue to being invited for tender and being awarded projects from its customers during the relevant periods and therefore considers that the delay in use of proceeds and business expansion do not have any material adverse impacts on the operation of the Group. However, due to the adverse impacts of the outbreak of COVID-19 on worldwide economies and the three-phased approach embarked by the Singapore government to resume usual daily activities after the 2020 Singapore Circuit Breaker measures, the Board will continue closely monitor the situation and evaluate the impacts on the timeline to utilise the unutilised proceeds and will keep shareholders and potential investors informed if there is any material changes.

Capital structure, liquidity and financial resources

The Company was listed on the GEM by way of share offer on 16 January 2018 and there has been no change in the capital structure of the Group after the Share Offer. The capital of the Group only comprises of ordinary shares.

As at 31 December 2020, the Group had total assets of approximately S$22.6 million, total liabilities and shareholders’ equity of approximately S$7.5 million and S$15.0 million, respectively. The Group’s current ratio as at 31 December 2020 was approximately 2.7 compared to 11.6 as at 30 June 2020. The significant decrease in current ratio was primarily due to S$5.4 million increase in accounts payables in relation to the new E-commerce segment as at 31 December 2020.

48 ISP Global Limited · Interim Report 2020/2021

MANAGEMENT DISCUSSION AND ANALYSIS

The gearing ratio for the Group as at 31 December 2020 was 8.8% (30 June 2020: 9.4%). It was calculated by dividing total obligations under total bank borrowings by total equity as at the end of each reporting period multiplied by 100%.

Material acquisitions and disposals of subsidiaries and affiliated companies

During Relevant Period, the Company completed the acquisition of 100% equity interest in Haohui Industries Co. Ltd. (灝輝實業有限 公司), a Hong Kong company and its PRC subsidiary (collectively, the “ Haohui Group* ”), which is principally engaged in the E-commerce business and operating in the brand name of “團多多” in China.

Save as disclosed above, there were no other significant investments, material acquisitions and disposals of subsidiaries and associated companies by the Company during the Relevant Period.

Foreign exchange exposure

The Group’s transactions are mainly denominated in Singapore Dollar which is the functional and presentation currency of the Group. Significant fluctuations in unrealised foreign exchange losses observed in the Relevant Period amounted to approximately S$0.18 million due to the monies held in currencies other than Singapore Dollar, such as in United State Dollar, Hong Kong Dollar, and Chinese Yuan.

ISP Global Limited · Interim Report 2020/2021 49

MANAGEMENT DISCUSSION AND ANALYSIS

Capital expenditure

Total capital expenditure for the Relevant Period was approximately S$48,342, which was used to purchase property, plant and equipment.

Contingent liabilities

As at 31 December 2020, the Group had no significant contingent liabilities.

Commitments

As at 31 December 2020, the Group had no significant capital and operating lease commitments.

Employees and Remuneration Policy

As at 31 December 2020, the total number of employees of the Group was 74 (31 December 2019: 65) and the Directors’ emoluments incurred during the Relevant Period were approximately S$0.4 million (six months ended 31 December 2019: approximately S$0.5 million).

The Group recognises employees as valuable assets and the Group’s success is underpinned by every employees. In line with the Human Resources policies, the Group is committed to providing attractive remuneration packages, and a fair and harmonious working environment to safeguard the legitimate rights and interests of the employees. The Group regularly reviews our Human Resources policies which outline the Group’s compensation, working hours, rest periods and other benefits and welfare, to ensure compliance with laws and regulations. The Group always places emphasis on attracting

50 ISP Global Limited · Interim Report 2020/2021

MANAGEMENT DISCUSSION AND ANALYSIS

qualified applicants by offering competitive remuneration packages which would be reviewed based on employees’ performance and reference to prevailing market conditions, and these remuneration packages would be adjusted in a timely manner to keep them competitive in line with market benchmarking.

The Group operates the retirement scheme for employees which is outlined in the Central Provident Fund Act, (Chapter 36 of Singapore). In addition, the Company has conditionally adopted a share option scheme, (the “ Share Option Scheme ”) on 14 December 2017 so as to motivate, attract and retain the appropriate employees.

Share Option Scheme

The Company has adopted the Share Option Scheme on 14 December 2017.

As of the report date, no share option has been granted, exercised, cancelled, or lapsed under the Share Option Scheme since its adoption on 14 December 2017.

Events after reporting period

Pursuant to the announcement of the Company dated 29 January 2021, the board lot size of the ordinary shares in the Company will be changed from 10,000 Shares to 2,000 Shares with effect from 9:00 a.m. on Tuesday, 23 February 2021.

ISP Global Limited · Interim Report 2020/2021 51

MANAGEMENT DISCUSSION AND ANALYSIS

On 5 February 2021, Haohui Shenzhen (“ Haohui Shenzhen ”), an indirect wholly-owned subsidiary of the Company, entered into a sale and purchase agreement with three vendors who are independent third parties, pursuant to which Haohui Shenzhen conditionally agreed to acquired entire interest in Global Sourcing Supply Chain Management (Shanghai) Co., Ltd.* (上海格洛博森供應鏈管理有限 公司) for a consideration of RMB2.17 million in cash. For details, please refer to the announcement of the Company dated 5 February 2021. As at the date of this report, the said acquisition has not been completed.

Other than stated above, the Group had no other significant events which were subsequent to the end of the reporting period of this report.

52 ISP Global Limited · Interim Report 2020/2021

DISCLOSURE OF INTERESTS AND OTHER INFORMATION

DIRECTORS’ AND CHIEF EXECUTIVE’S INTERESTS AND/OR SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES OF THE COMPANY OR ANY ASSOCIATED CORPORATIONS

As at 31 December 2020, the interests and short positions of the Directors and chief executive in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571 of Laws of Hong Kong) (the “ SFO ”)) which were notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which he/she is taken or deemed to have under such provisions of the SFO, or which were recorded in the register required to be kept by the Company under Section 352 of the SFO), or which were required, pursuant to Rules 5.46 to 5.67 of the GEM Listing Rules, to be notified to the Company and the Stock Exchange, were as follows:

Long position in ordinary shares of the Company

		Number of	Percentage
		Shares held/	of
Name	Capacity/Nature	interested	shareholding
Mr. Mong Kean Yeow	Interest in a controlled	120,000,000	15.00%
(Note)	corporation; interest
	held jointly with another
	person
Ms. Choon Shew Lang	Interest in a controlled	120,000,000	15.00%
(Note)	corporation; interest
	held jointly with another
	person

ISP Global Limited · Interim Report 2020/2021 53

DISCLOSURE OF INTERESTS AND OTHER INFORMATION

• Note: Express Ventures is beneficially owned as to 97.14% by Mr. Mong Kean Yeow and 2.86% by Ms. Choon Shew Lang. On 22 August 2017, Mr. Mong Kean Yeow and Ms. Choon Shew Lang entered into an acting in concert confirmation to acknowledge and confirm, among other things, that they are parties acting in concert within the meaning of the Hong Kong Code on Takeovers and Mergers. By virtue of the SFO, Mr. Mong Kean Yeow and Ms. Choon Shew Lang are deemed to be interested in the shares of the Company held by Express Ventures.

Long position in ordinary shares of associated corporation – Express Ventures

			Number of	Percentage
	Name of associated		Shares held/	of
Name	corporation	Capacity/Nature	interested	shareholding
Mr. Mong Kean	Express Ventures	Beneficial owner	510	97.14%
Yeow
Ms. Choon Shew	Express Ventures	Beneficial owner	15	2.86%
Lang

Long position in ordinary shares of associated corporation – Global Premium (Zhengzhou) Network Technology Co., Ltd.* （環球優品（鄭州）網絡科技有限公司）

			Percentage
	Name of associated	Capacity/	of
Name	corporation	Nature	shareholding
Mr. Yuan	Global Premium (Zhengzhou)	Beneficial	60.00%
Jianzhong	Network Technology Co., Ltd.*	owner
	（環球優品（鄭州）網絡科技
	有限公司）

54 ISP Global Limited · Interim Report 2020/2021

DISCLOSURE OF INTERESTS AND OTHER INFORMATION

Save as disclosed above, as at 31 December 2020, none of the Directors and chief executive of the Company had an interest or short position in the shares, underlying shares and debentures of the Company or any of its associated corporations that was notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO, or was recorded in the register required to be kept by the Company pursuant to Section 352 of the SFO, or as otherwise required to be notified to the Company and the Stock Exchange pursuant to Rules 5.46 to 5.67 of the GEM Listing Rules.

SUBSTANTIAL SHAREHOLDERS’ AND OTHER PERSONS’ INTERESTS AND SHORT POSITIONS IN SHARES AND UNDERLYING SHARES AND DEBENTURES OF THE COMPANY

As at 31 December 2020, so far as is known to the Directors, the following person (other than Directors or chief executive of the Company) had or were deemed or taken to have interests and short positions in the shares or underlying shares of the Company which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO or which were recorded in the register required to be kept by the Company under Section 336 of the SFO was as follows:

ISP Global Limited · Interim Report 2020/2021 55

DISCLOSURE OF INTERESTS AND OTHER INFORMATION

Long position in ordinary shares of the Company

		Number of	Percentage
		Shares held/	of
Name	Capacity/Nature	interested	shareholding
Express Ventures	Beneficial owner	120,000,000	15.00%
Li Chao	Beneficial owner	100,000,000	12.50%
Cao Chunmeng	Beneficial owner	76,800,000	9.60%
Cai Linzhou	Beneficial owner	41,400,000	5.18%

Save as disclosed above, as at 31 December 2020, so far as is known to the Directors or chief executive of the Company, no other persons, other than the Directors and chief executive of the Company whose interests are set out in the section “ DIRECTORS’ AND CHIEF

EXECUTIVE’S INTERESTS AND/OR SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES OF THE COMPANY OR

ANY ASSOCIATED CORPORATIONS ” above, had any interest or a short position in the shares or underlying shares of the Company which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept by the Company under Section 336 of the SFO.

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DISCLOSURE OF INTERESTS AND OTHER INFORMATION

CODE OF CONDUCT FOR SECURITIES TRANSACTIONS BY DIRECTORS

The Company has adopted the required standard of dealing, as set out in Rules 5.48 to 5.67 of the GEM Listing Rules as the code of conduct for securities transactions by the Directors in respect of the shares of the Company. Having made specific enquiry of all Directors, all Directors have confirmed that they have complied with the required standard of dealing and the code of conduct for securities transactions by the Directors during the Relevant Period.

NO CHANGE IN INFORMATION OF DIRECTORS

There was no change in the information of Directors required to be disclosed pursuant to Rule 17.50A(1) of the GEM Listing Rules.

SUFFICIENCY OF PUBLIC FLOAT

Based on the information that is publicly available to the Company and within the best knowledge of the Directors, Directors confirmed that the Company has maintained a sufficient amount of public float for its shares of the Company as required under the GEM Listing Rules.

COMPETITION AND CONFLICT OF INTERESTS

None of the Directors, the Controlling Shareholders or substantial shareholders of the Company or any of their respective close associates (as defined in the GEM Listing Rules) has engaged in any business or interest that competes or may compete, either directly or indirectly, with the businesses of the Group, or has any other conflict of interests with the Group as required to be disclosed pursuant to Rule 11.04 of the GEM Listing Rules during the Relevant Period.

ISP Global Limited · Interim Report 2020/2021 57

DISCLOSURE OF INTERESTS AND OTHER INFORMATION

PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES OF THE COMPANY

The Board confirms that during the Relevant Period, neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the Company’s listed securities.

COMPLIANCE WITH CORPORATE GOVERNANCE CODE

The Company is committed to achieve a high standard of corporate governance practices in enhancing the confidence of shareholders, investors, employees, creditors and business partners and also the growth of its business. The Board has and will continue to review and improve the Company’s corporate governance practices from time to time in order to increase its transparency and accountability to shareholders. The Company has adopted the code provisions as set out in the Corporate Governance Code (the “ CG Code ”) contained in Appendix 15 of the GEM Listing Rules as its own corporate governance code since the shares of the Company were listed on GEM of Stock Exchange on 16 January 2018. The Company has, so far as applicable, principally complied with the CG Code throughout the Relevant Period.

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DISCLOSURE OF INTERESTS AND OTHER INFORMATION

AUDIT COMMITTEE

The Company established an audit committee with written terms of reference in compliance with Rules 5.28 to 5.33 of the GEM Listing Rules on 14 December 2017 and revised on 11 January 2019 (the “ Audit Committee ”). The primary duties of the audit committee include, among others, (a) making recommendations to our Board on the appointment, re-appointment and removal of the external auditor and approving the remuneration and terms of engagement of the external auditor; (b) reviewing the Group’s financial statements, annual report and accounts, half-year report, and quarterly report and significant financial reporting judgements contained therein; and (c) reviewing the financial control, internal control and risk management systems of the Group. As at the date of this report, the Audit Committee comprises of three independent non-executive Directors, namely Mr. Tang Chi Wai, Dr. Cai Rongxin and Mr. Yan Xiaotian. Mr. Tang Chi Wai is the chairman of the Audit Committee.

The unaudited interim results of the Company for the Relevant Period not been audited by the Company’s independent auditors, but have been reviewed by the Audit Committee members who have provided advice and comments thereon.

ISP Global Limited · Interim Report 2020/2021 59

DISCLOSURE OF INTERESTS AND OTHER INFORMATION

Unless otherwise specified in this report and for the purpose of illustration only, S$ is translated into HK$ at the rate of S$1 = HK$5.85. No representation is made that any amounts in S$ have been or could be converted at the above rate of at any other rates or at all.

By order of the Board ISP Global Limited Mong Kean Yeow Chairman and executive Director

Hong Kong, 11 February 2021

As at the date of this report, the executive Directors are Mr. Mong Kean Yeow, Ms. Choon Shew Lang and Mr. Yuan Jianzhong, the non-executive Director is Mr. Cao Chunmeng and the independent non-executive Directors are Dr. Cai Rongxin, Mr. Tang Chi Wai, Mr. Yan Xiaotian, and Mr. Yuan Shuangshun.

This report will remain on the “Latest Company Announcements” page of the GEM website at www.hkgem.com for at least 7 days from the date of its posting. This report will also be published on the Company’s website at www.ispg.hk.

• English name for identification purpose only

60 ISP Global Limited · Interim Report 2020/2021