TIDMGNG 
 
20 December 2013 
 
                         GEONG International Limited 
 
                          ("GEONG" or the "Company") 
 
                               Interim Results 
 
GEONG International Limited (AIM: GNG.L), a leading Internet 
solution provider and operator in China for large enterprises, announces its 
unaudited interim results for the six months ended 30 September 2013. 
 
Financial Highlights 
 
  - Turnover GBP4.3 million (H1 2012/13: GBP4.3 million) 
  - Gross margin 43.0% (H1 2012/13: 53.5%) 
 
  - Loss before tax GBP0.44million (H1 2012/13: profit GBP0.16 million) 
 
  - Basic and diluted loss per share 1.18 pence (H1 2012/13: basic and 
    diluted earnings per share 0.19 pence) 
  - Trade receivables GBP21.0 million (At 31 March 2013: GBP22.1 million) 
    including accrued income of GBP18.4 million (At 31 March 2013: GBP19.1 million) 
  - Gross cash GBP3.7 million (At 31 March 2013: GBP4.6million) 
  - Order book GBP10.0 million (At 31 March 2013: GBP11.5 million) 
    including , GBP3.0 million for delivery in H2 
 
Key Highlights and New Clients 
 
Since the release of the 2013 annual report, as already outlined in 
the recent trading update, the Company has continued to pursue its strategy 
for achieving greater gross margins and generally shorter payment terms by 
focusing on its SaaS business. The Board expects that, as the revenue base is 
rebuilt, with the heavier emphasis on SaaS business, the benefits should 
become more evident, in particular through a reduction in the level of trade 
receivables. 
 
On the sales side the Company has had a good first half, winning a 
number of new SaaS clients, including Bank of Hubei, Bank of Huaxia, Mingshen 
Bank, New Life Insurance, China Bond and Bank of China Insurance as well as 
two new IaaS clients, Bank of Hubei and Mingshen Bank. It is estimated that 
the annualised value of the new SaaS business is GBP0.5 million and the IaaS 
business is GBP0.3 million in revenue. These client wins take the SaaS client 
base to 26 
 
Commenting on the results, Wang Weidong, Chief Executive Officer 
said: 
 
Although we have had a good first half in terms of business wins, 
the effect of those wins will not be fully realised until for the second half 
of this year at least. We will continue to experience the second half bias to 
our business that we have experienced in the past. 
 
Despite maintaining the same level of revenue in the first half, 
the gross margin was down from 53.5% to 43% when compared with the first half 
of 2012/2013. This was attributable to the mix of IaaS and SaaS clients. The 
benefits of more SaaS clients will be felt in the second half. 
 
We are confident that with the new wins and better balance of 
business, the outturn for H2 will allow us to show a full year result similar 
to last year and, more importantly, leave us well placed for profits growth 
and cash generation in the following years. 
 
Chairman's Statement 
 
Overview 
 
In my statement accompanying the full year financial statements for 
the year ended 31 March 2013, I outlined to shareholders our strategy for 
focusing on SaaS business, which, although it would lead to a short term fall 
in revenues would, in the longer term, generate higher margins and tie up less 
capital as accrued income and receivables balances would reduce. Our team has 
devoted much hard work in driving this strategy and we are now seeing some 
results starting to surface, such as a number of SaaS contract wins and a 
small reduction in accrued income. This strategy is critical to the Company's 
performance and value in the long term but we are at the beginning of the road 
to improvement with much still to do. Nonetheless, the small improvements make 
us confident that as the new strategy takes hold we will see the full benefits 
coming through in H2 and thereafter. 
 
New products and solutions 
 
Our previously developed new Enterprises' Social Business Platform, 
which is designed to provide a one-stop SaaS service to help more than 200 
existing clients, has been performing as expected. The platform's main 
function is to provide a series of functions including social marketing, 
enterprise web analytics and optimization, SNS and social commerce and 
customer experience management, which encompasses the customers' Internet 
buying cycle and drives demand. 
 
The Company remains committed to research and development of new 
products and solutions. During the period, the development has focused on 
solutions for SaaS clients in the areas of mobile marketing, business 
operation (B2C and B2B) and CxM (Customer eXperience Management). In addition, 
a new IaaS product, CMS V7.0, was launched to support the existing IaaS 
clients. The total spend on R&D was GBP0.38 million of which GBP0.38 million was 
charged to profit and loss account. 
 
Financial review 
 
Revenue was GBP4.3 million (SaaS GBP0.9 million, IaaS GBP3.4 million), 
approximately the same as in the same period last year (SaaS GBP1.4 million, 
IaaS GBP2.9 million), with the reduction in SaaS revenue being mainly 
responsible for the fall in the gross margin. The increase of SaaS clients 
revenue will be more evident in H2 as the contractual income will be generated 
when work is performed. Selling and distribution expenses are up by 9% on H1 
last year and by 27% from last year due to developing and expanding more focus 
into SaaS clients. The GBP0.1 million of other operating expenses related to 
costs incurred in obtaining short term borrowings. 
 
At 30 September 2013, trade receivables were GBP21.0 million, down by 
GBP1.1 million since 31 March 2013, due to a reduction of GBP0.7 million in 
accrued income and a GBP0.4 million reduction in trade debtors. Cash on hand at 
30 September 2013 was GBP3.7 million (net cash GBP0.9 million) compared to GBP4.6 
million (net cash GBP2.5 million) at 31 March 2013. During the period the 
Company repaid GBP1.3 million of loan stock, which was financed from existing 
cash resources and an increase in bank borrowings by GBP0.8 million to GBP1.8 
million. 
 
This collection pattern is consistent with previous years and the 
accrued come is expected to reduce in the second half of the year as contracts 
are completed, invoices rendered and cash collected. The third quarter is the 
cash collection peak period in China and we anticipate that the cash balance 
will increase and accrued income will decrease during the period to 31 
December 2013. At the end of November, cash on hand was GBP3.9million 
representing an increase of GBP0.2million of cash from the end of September. 
 
The carrying value of intangible assets has decreased by GBP0.3 
million from last year end, primarily due to the exchange difference of GBP0.07 
million and the normal amortisation of GBP0.28 million. 
 
The order book at 30 September 2013 stood at GBP10.0 million and 
included GBP4.0 million in SaaS business. Approximately GBP4.0 million of the 
current order book is recurring, and GBP3.0 million is due for delivery in the 
second half of the year. Within the GBP3.0 million, 40% is with SaaS clients and 
60% is with IaaS clients. 
 
The inventory level at 30 September 2013 was greater than at 31 
March 2013 due to work being performed in H1 which will be invoiced in H2. 
 
Outlook 
 
The Board believes that the number of new client wins in H1 
provides a strong indication that our strategy and our sales team's efforts 
are now paying off and that the combination of an increased client base and 
the development of new products and solutions will help our revenues to grow.. 
In addition, the shift towards SaaS business, which will be more evident in 
H2, will both provide us with a more stable and predictable business and will 
also improve our cash collection, enabling us to invest more in the growth of 
the business. 
 
There are signs that the global economy is improving and we believe 
that this will lead to our clients making use of more of our products and 
solutions to secure a competitive edge. 
 
Henry H.Y. Tse 
 
Chairman 
 
Interim Condensed Statement of Comprehensive Income 
 
For the six months ended 30 September 2013 
 
                           Notes 6 months ended 6 months ended   Year ended 
                                   30 September   30 September     31 March 
                                           2013           2012         2013 
                                      Unaudited      Unaudited      Audited 
                                          GBP'000          GBP'000        GBP'000 
Revenue                      3            4,307          4,306        9,648 
Cost of sales                           (2,453)        (2,001)      (5,401) 
Gross profit                              1,854          2,305        4,247 
 
Selling and distribution 
expenses                                  (470)          (429)        (798) 
Administration expenses                 (1,237)        (1,215)      (2,465) 
Research and development 
costs                                     (381)          (363)        (681) 
Share option expenses                         -            (5)          (5) 
Other operating income                        -              6          162 
Other operating expenses                  (101)              -          (4) 
Profit from operations                    (335)            299          456 
Finance costs                             (105)          (140)        (387) 
Finance income                                1              1           30 
Profit before tax                         (439)            160           99 
Income tax expense           6              (8)           (89)         (85) 
Profit for the period                     (447)             71           14 
 
Other comprehensive income 
Exchange differences on 
translating foreign 
operations                                (825)          (304)        1,055 
Total comprehensive income 
for the period                          (1,272)          (233)        1,069 
 
Earnings per ordinary        7 
share 
(pence) 
Basic                                    (1.18)           0.19         0.04 
Diluted                                  (1.18)           0.19         0.04 
 
Interim Condensed Statement of Financial Position 
 
As at 30 September 2013 
 
                         Notes  30 September 30 September  31 March 
                                        2013         2012      2013 
                                   Unaudited    Unaudited   Audited 
                                       GBP'000        GBP'000     GBP'000 
Assets 
Non-current assets 
Property, plant and 
equipment                  8             331          261       387 
Intangible assets          8           1,556        1,772     1,910 
Total non-current 
assets                                 1,887        2,033     2,297 
 
Current assets 
Inventories                            1,112          481       439 
Trade receivables and 
accrued 
income                     9          21,021       19,856    22,138 
Other receivables                      1,184        1,121     1,270 
Cash and cash 
equivalents                            3,657        3,989     4,592 
Total current assets                  26,974       25,447    28,439 
 
Total assets                          28,861       27,480    30,736 
 
Liabilities and equity 
Current liabilities 
Short-term borrowings     10           1,813          498     1,140 
Trade payables                           860          781     1,255 
Other payables                         2,961        1,703     3,686 
Bonds payable                            961            -         - 
Tax liabilities                        1,889        1,855     1,989 
Total current 
liabilities                            8,484        4,837     8,070 
 
Non-current liabilities 
Long-term borrowings                       -        2,374       961 
Deferred tax 
liabilities                            1,738        1,683     1,799 
Deferred revenue                           9           10         4 
Total non-current 
liabilities                            1,747        4,067     2,764 
 
Total liabilities                     10,231        8,904    10,834 
 
Capital and reserves 
Share capital             11             378          378       378 
Reserves                              18,252       18,198    19,524 
Total shareholders' 
equity                                18,630       18,576    19,902 
 
Total liabilities and 
equity                                28,861       27,480    30,736 
 
Interim Condensed Statement of Cash Flows 
 
As at 30 September 2013 
 
                                     6 months ended 6 months ended Year ended 
                                       30 September   30 September   31 March 
                                               2013           2012       2013 
                                          Unaudited      Unaudited    Audited 
                                              GBP'000          GBP'000      GBP'000 
Cash flows from operating activities 
Profit/(Loss) before tax                      (439)            160         99 
Allowance for doubtful debts                      -            (1)         20 
Depreciation of property, plant and 
equipment                                        60             16        103 
Amortisation of intangible assets               281            304        652 
Loss on disposal of fixed assets, 
net                                               -              -         10 
Interest expenses                               104            139        388 
Net foreign exchange loss                         -              -          - 
Expense for share-based payments                  -              5          5 
                                                  6            623      1,277 
Movements in working capital 
Increase in receivables                         256        (1,116)    (2,134) 
(Increase)/decrease in inventories            (690)           (98)       (30) 
Increase/(decrease) in payables                 337            333      1,332 
Cash used in operations                        (91)          (258)        445 
Interest paid                                   102          (109)       (30) 
Income taxes paid                                 -              -          - 
Net cash used in operating 
activities                                       11          (367)        415 
 
Cash flows from investing activities 
Interest received                                 -              1         30 
Purchase of property, plant and 
equipment                                     (117)           (17)      (226) 
Purchase of intangible assets                     -          (854)    (1,232) 
Net cash used in investing 
activities                                    (117)          (870)    (1,428) 
 
Cash flows from financing activities 
Net proceeds from issue of 
convertible notes                                 -              -          - 
Interest paid                                 (119)              -      (241) 
Repayment of convertible bonds and 
short term loans                            (1,586)          (488)        618 
Proceeds from short term loans                1,007            498      (213) 
 
Net cash generated from financing 
activities                                    (698)             10        164 
 
Net (decrease)/increase in cash and 
cash equivalents                              (804)        (1,227)      (849) 
 
Cash and cash equivalents at the 
beginning of 
the period                                    4,592          5,290      5,290 
Effects of exchange rate changes              (131)           (74)        151 
Cash and cash equivalents at the end 
of the 
period                                        3,657          3,989      4,592 
 
Interim Condensed Statement of Changes in Equity 
 
For the six months ended 30 September 2013 
 
                                                                               Equity 
                               Share   Share Convertible   Other  Merger Compensation Retained Exchange 
                             capital premium       notes reserve reserve      reserve earnings  reserve   Total 
                               GBP'000   GBP'000       GBP'000   GBP'000   GBP'000        GBP'000    GBP'000    GBP'000   GBP'000 
Balance at 1 April 2012          378   7,616         104      28   (698)          374    7,336    3,666  18,804 
Comprehensive income 
Profit for the period              -       -           -       -       -            -       71        -      71 
Foreign exchange movement          -       -           -       -       -            -        -    (304)   (304) 
Total comprehensive income         -       -           -       -       -            -       71    (304)   (233) 
for the year 
Shares options expenses            -       -           -       -       -            5        -        -       5 
Balance at 30 September 2012     378   7,616         104      28   (698)          379    7,407    3,362  18,576 
 
Balance at 1 April 2013          378   7,616          24      45   (698)          379    7,438    4,720  19,902 
Comprehensive income 
Profit for the period              -       -           -       -       -            -    (447)        -   (447) 
Foreign exchange movement          -       -           -       -       -            -        -    (825)   (825) 
Total comprehensive income         -       -           -       -       -            -    (447)    (825) (1,272) 
for the year 
Shares options expenses            -       -           -       -       -            -        -        -       - 
Balance at 30 September 2013     378   7,616          24      45   (698)          379    6,991    3,895  18,630 
 
Notes to the Condensed Financial Statements for the period ended 30 September 
2013 
 
1. Corporate Information 
 
 The Company's registered office is 28 - 30 The Parade, St Helier, 
Jersey, JE1 1EQ, Channel Islands. The Company is domiciled in Jersey. 
 
 The Group has provided content management software and solutions 
since its establishment in September 2000 and has earned a reputation as a 
local technology leader in the Chinese Enterprise Content Management (ECM) 
market, especially in the financial services industry. 
 
2. Basis of preparation 
 
 The Company's unaudited condensed financial statements for the six 
months ended 30 September 2013 has been prepared in accordance with the 
International Accounting Standard 34 Interim Financial Reporting. 
 
 The same accounting policies, presentation and methods of 
computation have been followed in these condensed financial statements as were 
applied in the preparation of the Group's financial statements for the year 
ended 31 March 2013. 
 
 The results for the period ended 30 September 2013 set out in this 
Interim Report do not constitute the Company's statutory accounts. 
 
3. Segment Reporting 
 
                                6 months ended             6 months ended 
                                  30 September               30 September 
                                          2013                       2012 
ãEUREUR                    IaaS  SaaS Consolidated   IaaS   SaaS Consolidated 
ãEUREUR                   GBP'000 GBP'000        GBP'000  GBP'000  GBP'000        GBP'000 
Revenue and Expenses 
Revenue               3,365   942        4,307  2,911  1,395        4,306 
Inter-segment             -     -            -      -      -            - 
revenue 
Total Revenue         3,365   942        4,307  2,911  1,395        4,306 
Results 
Segment results       1,250   604        1,854  1,444    861        2,305 
Unallocated expenses                   (2,088)                    (2,006) 
Results from                             (234)                        299 
operating activities 
Finance expenses                         (104)                      (140) 
(net) 
Other income                             (101)                          6 
(expenses) 
Share option expense                         -                        (5) 
Income tax expenses                        (8)                       (89) 
Profit for the                           (447)                         71 
period 
Assets and 
liabilities 
Segment assets       18,476 5,172       23,648 14,683  7,036       21,719 
Unallocated assets                       5,213                      5,761 
Total assets                            28,861                     27,480 
Segment liabilities   5,159 1,444        6,603  3,627  1,738        5,365 
Unallocated                              3,628                      3,539 
liabilities 
Total liabilities                       10,231                      8,904 
 
4. Seasonality 
 
 The operating result is slightly affected by the seasonality in 
particular relation to the IaaS customers which the spilt is approximately 40% 
in the first half of the year and 60% in the second half. For SaaS customers, 
the income stream is not affected by the seasonality. 
 
5. Exchange rates of principal currencies 
 
The following significant exchange rates applied during the period: 
 
                Average rate            Reporting date spot rate 
       6 months  6 months 
         ended     ended   Year ended 
       30.9.2013 30.9.2012 31.3.2013  30.9.2013 30.9.2012 31.3.2013 
           GBP         GBP         GBP          GBP         GBP         GBP 
  USD1  0.64820   0.63240   0.63280    0.61950   0.61850   0.65750 
  CNY1  0.10470   0.09990   0.10030    0.10070   0.09760   0.09800 
 
 
6. Taxation 
 
 The Company's operating subsidiaries in PRC are subject to 
preferential tax rate of 15% due to their high technology enterprise status. 
Therefore, the tax charge for the six months ended 30 September 2013 is 
calculated based on the tax rate of 15%. 
 
7. Earnings per share 
 
 7.1 Basic earnings per share 
 
 The earnings and weighted average number of ordinary shares used 
in the calculation of basic earnings per share are as follows: 
 
                                6 months ended 6 months ended Year ended 
                                  30 September   30 September   31 March 
                                          2013           2012       2013 
Earnings used in the 
calculation of total 
basic earnings per share (GBP)         (447,041)         71,489     14,038 
Weighted average number of 
ordinary 
shares for the purposes of 
basic earnings 
per share                           37,834,622     37,834,622 37,834,622 
Basic earnings per share (pence 
per 
share)                                  (1.18)           0.19       0.04 
 
 7.2 Diluted earnings per share 
 
 The earnings used in the calculation of diluted earnings per share 
are as follows: 
 
                                6 months ended 6 months ended Year ended 
                                  30 September   30 September   31 March 
                                          2013           2012       2013 
Earnings used in the 
calculation of total 
diluted earnings per share (GBP)       (447,041)         71,489     14,038 
 
 The weighted average number of ordinary shares for the purposes of 
diluted earnings per share reconciles to the weighted average number of 
ordinary shares used in the calculation of basic earnings per share as 
follows. 
 
                                6 months ended 6 months ended Year ended 
                                  30 September   30 September   31 March 
                                          2013           2012       2013 
Weighted average number of 
ordinary 
shares used in the calculation 
of basic 
loss per share                      37,834,622     37,834,622 37,834,622 
Shares deemed to be issued for 
no 
consideration in respect of 
employee 
options                                      -              -          - 
Weighted average number of 
ordinary 
shares used in 
the calculation of diluted loss 
per share                           37,834,622     37,834,622 37,834,622 
Diluted loss per share (pence)          (1.18)           0.19       0.04 
 
The 7.5% GBP1.0 million convertible unsecured loan issued in March 
this year potentially increases the number of ordinary shares but is not 
dilutive for the period because the Company made a loss and are therefore 
excluded from the weighted average number of ordinary shares for the purposes 
of diluted earnings per share. 
 
8. Property, plant and equipment 
 
 During the period, the Company purchased computer server and 
related items of GBP0.02 million and office renovation costs of GBP0.1 million 
were incurred in the period. 
 
Intangibles assets. 
 
 There was no increase in intangibles. 
 
9. Trade Receivables 
 
                           As at        As at    As at 
                    30 September 30 September 31 March 
                            2013         2012     2013 
                           GBP'000        GBP'000    GBP'000 
Trade receivables          2,953        4,669    3,380 
Accrued income            18,395       15,504   19,098 
                          21,348       20,173   22,478 
Less: allowance for 
doubtful debts             (327)        (317)    (340) 
Total                     21,021       19,856   22,138 
 
 
Out of the total trade receivables of GBP21.0 million, GBP18.4 million was related 
to accrued income and GBP0.12 million (last year the same period was GBP1.73 
million related to one single customer which is IBM Huawei. Accrued income 
level from Huawei has gradually come down. 
 
 The accrued income represents amounts not yet invoiced, but for 
which specific milestones have been met, which is in accordance with common 
practice in PRC. 
 
10. Borrowings 
 
Bank borrowings 
 
The short term loan was the renewal of the loan from:- 
 
(1) Bank of Beijing for amount of GBP0.806 million (RMB 8.0 million). This loan 
bears interest at 7.8% pa and is repayable within one year. 
 
(2) China Construction Bank for amount of GBP0.806 million (RMB 8.0 
million). This loan bears interest at 7.2 % pa and is repayable within one 
year and 
 
(3) Nanyuen Commercial Bank for amount of GBP0.21 million (RMB 2.0 
million).This loan also bears interest at 7.2 % pa and is repayable within one 
year. 
 
These borrowings are collateralised and secured by the trade 
receivables (note 9) and certain copyrights and by personal guarantees 
provided by Mr.Weidong Wang and another employee. 
 
Convertible Loan Note 
 
As reported in the annual report and accounts, the GBP2.5 million convertible A 
Notes ("A Notes"), which had previously been due for repayment on 30 June 
2014, became due for repayment as a result of the Company failing to make an 
interest payment on the due date and therefore falling into default. The 
Company reached an agreement with the holders of the A Notes whereby GBP1.5 
million of the outstanding amount was repaid during H1 and GBP1 million of new 
convertible A Notes, carrying a coupon of 7.5% and with a conversion price of 
5 pence per share, were issued. The new A Notes may be converted at any time 
between 26 March 2013 and 30 June 2014, on which date they shall be redeemed 
if not previously converted 
 
Since 31 March 2013, the Company has repaid GBP1,287,400 in principal to the 
note holder. The remaining balance has been included within other payables. 
 
The net proceeds received from the issue of the A Notes have been 
split between the liability component and an equity component, representing 
the residual attributable to the option to convert the liability into equity 
of the Group, as follows: 
 
                                         Group 
                                    2013       2012 
                                   GBP'000      GBP'000 
Face value of convertible            985      2,478 
Equity conversion component         (24)      (104) 
 
Fair value of debts                  961      2,374 
Represented by: 
Current liabilities                  961          - 
Non-current liabilities                -      2,374 
Fair value of debt                   961      2,374 
 
11. Share capital 
 
The total authorised number of ordinary shares is 100,000,000 with 
GBP0.01 par value per share. The issued share capital of the Company as at 30 
September 2013 is 37,834,622 fully paid shares. There were no movements in the 
issued share capital of the Company in the current interim reporting period. 
 
The holders of ordinary shares are entitled to receive dividends as 
declared from time to time and are entitled to one vote per share at meetings 
of the Company. All shares rank equally with regard to the Company's residual 
assets. 
 
12. Related party transactions 
 
 Transactions within the Group have been eliminated in the 
preparation of the financial information set out in this report and are not 
disclosed in this note. 
 
 There are no other related party transactions apart from the 
remuneration of key management. 
 
13. Share options: 
 
At 30 September 2013, the Company had the following outstanding share options: 
 
Number  Exercise   Date of      Exercise period 
        price (GBP)   grant 
326,241   0.30    23.06.2006 23.06.2009-22.06.2016 
346,814   0.65    11.06.2007 11.06.2010-10.06.2017 
248,424   0.56    19.06.2008 19.06.2011-18.06.2018 
571,201   0.33    23.06.2009 23.06.2012-22.06.2019 
 
 
14. Events after the end of the reporting period 
 
There are no material events to report after the reporting period. 
 
15. Approval of interim financial statements 
 
 The interim financial statements were approved by the Board of 
Directors on 17 December 2013. 
 
 
 
 
END