SMIT Announces 2018 Annual Results

Highlights

• The Group has achieved a major breakthrough in the IC design business, and received requisite PRC Central Government approval for the implementation of a National Science and Technology Major Project with sub-category title "Development and Application of Full Process Electronic Design Automation (EDA) System for Chip Design"
  
• The Group has made some key investments and acquisitions aiming to create synergies with its existing businesses. Key investments and acquisitions made during the year included StorArt Technology (Shenzhen) Co., Ltd ("StorArt"), a company specializing in IC design for flash memory control device; Sensel Inc. ("Sensel"), a U.S. advanced touch solutions company; and, S2C Tech Inc ("S2C"), a hardware-based rapid verification system and software supplier
  
• For the CAM business, sales in Russia and other emerging markets accounted for approximately 31% of its total revenue, an increase of approximately 14% as compared with last year. Sales to new customers contributed approximately 10% of the total revenue. During the year, the Group have obtained official CI Plus ECP certification on its CAM products, which helped further developing emerging markets including the Balkans, India, etc.
  
• For the mPOS business, the Group has entered into framework cooperation agreements with several third party payment companies, and also secured a small volume overseas order from a Korean payment software integrated circuit (IC) company for terminal product. The Group's newly developed mobile payment terminal, mPOS-SM32, has obtained PCI 5.x certification, which is the most stringent and top-level security standard certification in the payment card industry worldwide

HONG KONG, March 1, 2019 /PRNewswire/ -- SMIT Holdings Limited ("SMIT" or the "Company," together with its subsidiaries, the "Group") (stock code: 2239), a global leading CAM supplier and a major mPOS supplier in China, has announced its annual results for the year ended 31 December 2018 (the "Year").

2018 was a challenging year, yet it was an important year as the Group progressed forward with planning and external development in diversifying its business. Notwithstanding the negative impact on the Group's results caused by changes in the macro-environment, we have continued to optimize its business structure and concentrate its resources on developing integrated circuit (IC) design business. The Group recorded revenue of US$41.3 million and net profit of US$1.3 million in 2018. Basic earnings per share for the year were US0.4cents (2017: US3.7 cents). In return for shareholders' support, the Board has proposed a final dividend payment of US0.1cents per share, with a total dividend payout of US$402,964.

Mr. Shuai Hongyu, President of SMIT, said, "In 2018, the Group's management decided to suspend the Blockchain server business and shift its focus to the application sector involving the integration of Blockchain technology and security chipsets. The reasons for this strategic shift included the sharp increase in the number of players in the existing Blockchain server industry, difficulty in maintaining the supply chain and raw materials, significant investment required for the continuous technology advancement for chipset production, the potential over-supply in the market and the greater business risks following the implementation of stricter policies and regulations in China. The Group will continue to develop technologies related to the IC security segment and formulate product solutions based on the characteristics and specifications of its customers so as to strengthen market penetration of its products. Meanwhile, SMIT will explore cooperation or investment opportunity on outstanding companies that have technological edges in the industry or industry chain, aiming to create synergies with its existing businesses and to complement and strengthen our technologies."

During the year, the Group has made some key investments and acquisitions to diversify its business and strategically expand into the IC design sector. SMIT has also achieved a major breakthrough in this area as it received requisite PRC Central Government approval for the implementation of a National Science and Technology Major Project with sub-category title "Development and Application of Full Process Electronic Design Automation (EDA) System for Chip Design". representing a recognition and solid support from the PRC Central Government on our technological capability in the IC design sector. Through the R&D of EDA technology, the Group can further diversify its product lines, enhance its industry standing in the integrated circuit industry and build up a solid foundation on a high entry barrier industry for achieving a sustainable growth in the future.

This year the Group have obtained official CI Plus ECP certification on its CAM products, thus meeting the security demand of operators of high-value pay-TV programs. It helped developing emerging markets including the Balkans, Indi, etc. The existing CAM business covers Russia and other emerging markets, of which the sales accounted for approximately 31% of its total revenue, an increase of approximately 14% as compared with last year. Sales to new customers contributed approximately 10% of the total revenue, showing remarkable business performance. During the year, the Group has also collaborated with StarTimes, a leading digital TV operator in Africa, to distribute and promote CI +1.3 CAMs with an operator profile function in the African market, enabling over 16 million end-users to enjoy more convenience. The partnership creates synergies from the strengths of both parties and represents a giant leap forward in SMIT's development plan in the African market.

As a major mPOS supplier, the Group has been strengthening technological development and product functionality of its mPOS devices. During the year, the Group's newly developed mobile payment terminal, mPOS-SM32, has obtained PCI 5.x certification, the most stringent and top-level security standard certification in the payment card industry worldwide, and It features a unique advanced protection mechanism in addition to anti-intrusion detection and a self-destruct input (SDI) pin. Attaining the above certification is testimony to the product's functionality and security which meets the strict requirements by customers on payment terminals. Meanwhile, the Group has achieved progress in prospecting for new customers, recently entering into framework cooperation agreements with several third party payment companies respectively. It has also secured a small volume order overseas from a Korean payment software integrated circuit (IC) company for terminal products, marking a significant step forward in penetrating the international market.

During the year, the Group has acquired S2C in a major strategic advance, a hardware-based rapid verification system and software company, thereby further diversifying its business and revenue streams. S2C principally provides hardware-based rapid verification solutions. The SoC/ASIC developed by S2C helps to reduce the SoC design cycle. With over 400 customers and more than 2,000 systems installed to date, the solution has recorded a strong performance in China, Japan, Korea and Taiwan. The acquisition has not only added a new and strategically significant resource to facilitate SMIT's ongoing business development, but also facilitated the Group's expansion into the hardware-based rapid verification industry thereby diversifying its revenue streams.

Meanwhile, the Group completed its investment in StorArt, a company specializing in IC design for flash memory control devices. The company is one of the very few technology companies around the globe with all-round capability to develop high-end controllers, and it possess more than 40 scientific firmware IPs and patents. Besides, the Group also invested in Sensel, a U.S. advanced touch solutions company that has developed next-generation touch technology, and incorporates new cutting-edge user interfaces and enable user experiences.

Looking ahead to 2019, with the continued economic advancement in China and buttressed by the Chinese government's strong support, it presents tremendous development opportunities to the Group's IC design business and hardware-based rapid verification business. The Group will continue to move forward in the future. The Group will leverage its sophisticated integrated technology in the IC design sector to diversifying its business and broadening its revenue stream, together with leveraging its position as a leading provider of security devices used in pay-TV broadcasting access and mPOS payment systems in China, and expanding its R&D efforts in IC related technology and total solutions through strategic acquisition, the Group will bring greater returns to its shareholders.

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About SMIT Holdings Limited (Stock code: 2239)

SMIT Holdings Limited is a leading security devices provider for pay TV broadcasting access worldwide and for mobile point-of-sale,or mPOS,payment systems in China. We focus on IC security chip design and solutions, chip design and verification tool development. At present, our main products include conditional access module (or CAM) for secure video decryption and transmission in the field of broadcast and TV payment, mobile point-of-sale (or mPOS) and rapid verification system and software.

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