Longtop Financial Technologies Limited Announces Unaudited Financial Results for the Fiscal Quarter Ended June 30, 2009

HONG KONG, Aug. 18  /PRNewswire-Asia/ -- 

  -- Total Revenues of US$28.5 million, an Increase of 47.4% Year-on-Year;
  -- Adjusted(1) Operating  Income of US$11.6 million, an Increase of 27.7%
     Year-on-Year;
  -- Adjusted Net Income of US$10.7 million, an Increase of 36.6%
     Year-on-Year;
  -- Full year Revenue Guidance Increased to US$145.0 million and Adjusted
     EPS Guidance Increased to US$1.22 Per Share;




Longtop Financial Technologies Limited ("Longtop") (NYSE: "LFT"), a leading software developer and solutions provider targeting the financial services industry in China, announced today unaudited financial results for the quarter ended June 30, 2009, which is the first quarter of its fiscal year ending March 31, 2010.

"We are off to a strong start with the results of our first fiscal quarter demonstrating healthy demand from Longtop's customers, which has allowed us to increase our full year guidance.  We are seeing strong demand across all customer and product segments and we see this trend continuing.  Longtop is especially pleased to be recently ranked as the #1 market share leader by IDC for banking solutions and #2 in the insurance IT solution market in China for calendar year 2008.  As we did in calendar 2008, we are working hard to continue to expand our market share and market leadership in China's rapidly growing financial IT solution market," commented Weizhou Lian, CEO of Longtop.

  (1) Explanation of the Company's Adjusted (i.e. non-GAAP) financial
      measures and the related reconciliations to GAAP financial measures
      are included in the accompanying "Non-GAAP Disclosure" and the
      "Consolidated Adjusted Statements of Operations".



  FISCAL FIRST QUARTER DETAILED FINANCIAL RESULTS

  Revenue

  2009 Q1 and 2010 Q1 Revenue-US$000s

                                                 Three months ended
                                           June 30,    June 30,
                                             2008        2009     % Change
  Software Development                     $16,069     $24,717      53.8%
  Other Services                            $3,259      $3,776      15.9%
  Total Revenue                            $19,328     $28,493      47.4%




Total revenues for the quarter ended June 30, 2009, were US$28.5 million, an increase of 47.4% year-on-year (YoY) from US$19.3 million in the corresponding year ago period, and exceeded Company guidance of US$27.0 million. Software development revenues of US$24.7 million increased YoY by 53.8% and exceeded Company guidance of US$23.0 million. Software development revenues contributed 86.7% of total revenues.

  Software Development Revenue by Customer Type-US$000s

                                                 Three months ended
                                            June 30,    June 30,
                                              2008        2009    % Change
  Big Four Banks                             9,166      11,015      20.2%
  Other Banks                                5,249       9,397      79.0%
  Insurance                                    886       2,705     205.3%
  Enterprises                                  768       1,600     108.3%
    Total                                   16,069      24,717      53.8%




Software development revenue from the Big Four Banks in the first quarter ended June 30, 2009 was US$11.0 million, an increase of 20.2% YoY. Big Four Banks accounted for 44.6% of software development revenues for the first quarter, as compared to 57.0% in the corresponding year ago period.

Software development revenue from Other Banks in the first quarter was US$9.4 million, a YoY increase of 79.0%. Other Banks accounted for 38.0% of software development revenues for the three months ended June 30, 2009, as compared to 32.7% in the corresponding year ago period.

Insurance accounted for US$2.7 million, or 10.9% of software development revenue in the first quarter, an increase of 205.3% YoY due to a combination of revenue from new insurance customers and more revenue per existing customer. Sysnet, a leading IT insurance services provider acquired by Longtop in Q1 2010, contributed $190,260 in software development revenue for the three months ended June 30, 2009.

Software development revenue from Enterprises was US$1.6 million, a YoY increase of 108.3% due primarily to first time sales of Longtop's treasury management solutions to Enterprise customers.

  Gross Margins
                                                 Three months ended
                                          June 30,    June 30,     Change
                                            2008        2009     (Decrease)
  Adjusted Software Development Gross
   Margin %                                 66.4%       69.1%        2.7%
  Adjusted Other Services Gross Margin %    72.5%       20.2%      (52.3%)
  Adjusted Total Gross Margin %             67.4%       62.6%       (4.8%)




Adjusted Software Development Gross Margin was 69.1% in the first quarter ended June 30, 3009, as compared to 66.4% a year ago. For the three months ended June 30, 2009, 63.5% of software development revenue was from customized solutions as compared to 62.7% in the previous year. Adjusted Other Services Gross Margin declined to 20.2% from 72.5% a year ago due to a YoY decline in system integration revenues, which are recorded on a net basis, while system integration department costs, consisting primarily of headcount and allocated overhead, were stable; investment in additional headcount; and a higher mix of lower gross margin ATM revenues resulting from our acquisition during the 2009 fiscal year of Huayuchang, a provider of ATM maintenance services.  As a result of the decline in Adjusted Other Services Gross Margin, Adjusted Total Gross Margin declined to 62.6% in the first quarter from 67.4% a year ago.

As the first quarter is expected to be the lowest revenue quarter in fiscal 2010, Adjusted Total Gross Margin is expected to increase in future quarters and full year Adjusted Total Gross Margin, including the impact of the Sysnet acquisition, which is dilutive to margins but accretive to earnings, is expected to reach the Company's previous guidance of 67.0%.

  Operating Expenses

                                                Three months ended
                                           June 30,    June 30,
                                             2008        2009     % Change
  Adjusted Operating Expenses - US$000s     3,968       6,280       58.3%
  Adjusted Operating Expenses - % of
   revenue                                  20.5%       22.0%          --
  US GAAP Operating Expenses - US$000s      4,998       7,542       50.9%
  US GAAP Operating Expenses - % of
   revenue                                  25.8%       26.4%          --




Meeting guidance, Adjusted Operating Expenses of $6.3 million were 22.0% of revenue for the three months ended June 30, 2009, as compared to 20.5% in the corresponding year ago period. Adjusted Operating Expenses increased by 58.3% YoY, which was slightly higher than the YoY software development revenue growth of 53.8% primarily due to the inclusion of Sysnet operating expenses for the first time in Q1 2010.

  Operating and Net Income

                                               Three months ended
                                           June 30,    June 30,
                                             2008        2009      % Change
  Adjusted Operating Income - US$000s       9,057      11,565       27.7%
  Adjusted Operating Income - % of
   revenue                                  46.9%       40.6%          --




Adjusted Operating Income of US$11.6 million in the first quarter represented an increase of 27.7% YoY and exceeded Company guidance of US$11.0 million. Adjusted Operating Margin of 40.6% was in line with Company guidance of 41.0% and is expected to increase to 47.0% for the full year, as the first quarter is the lowest revenue quarter.  Sysnet, which was consolidated for the first time in Q1 2010, had an adjusted operating loss for the quarter ended June 30, 2009 of US$583,000 that had not been included in the Company guidance of US$11.0 million. Sysnet is expected to be accretive to operating income for fiscal year 2010.

                                               Three months ended
                                           June 30,    June 30,
                                             2008        2009     % Change
  Adjusted Net Income - US$000s             7,827      10,691       36.6%
  Adjusted Net income per Diluted Share      0.15        0.20       33.3%
  Adjusted Net Income - % of revenue        40.5%       37.5%          --
  US GAAP Net Income - US$000s              6,087       8,384       37.7%
  US GAAP Net income per Diluted Share       0.12        0.16       33.3%
  US GAAP Net Income - % of revenue         31.5%       29.4%          --




  Reconciliation between US GAAP Net Income and Adjusted Net Income

                                                Three months ended
                                          June 30,    June 30,
                                            2008        2009      % Change
  Adjusted Net Income - US$000s            $7,827     $10,691       36.6%

  Stock compensation                       $1,314      $1,475       12.3%
  Amortization of acquired intangible
   assets                                    $426        $742       74.2%
  Amortization of acquired deferred
   compensation                               $--         $90          --
  Sub-total                                $1,740      $2,307       32.6%

  US GAAP Net Income                       $6,087      $8,384       37.7%





Adjusted Net Income for the quarter ended June 30, 2009 of US$10.7 million or US$0.20 per fully diluted share, represented an increase of 36.6% YoY as compared to Adjusted Net Income of US$7.8 million in the corresponding year ago period and exceeded Company guidance of US$10.0 million. US GAAP net income for the quarter ended June 30, 2009 of US$8.4 million or US$0.16 per fully diluted share, represented an increase of 37.7% as compared to US GAAP net income of US$6.1 million in the corresponding year ago period.

Unrestricted cash balances at June 30, 2009, were US$215.1 million, giving the Company significant resources for potential acquisitions in the still fragmented financial IT services sector in China.

Commenting on the results, Derek Palaschuk, CFO of Longtop, said, "We have executed to deliver outstanding top and bottom line financial results during the first fiscal quarter in what is traditionally our lowest revenue and net income quarter in the fiscal year.  On the back of a strong backlog and pipeline in our core software development business, we are able to increase our full year revenue and net income guidance even though our non-core Other Services business, which accounts for less than fifteen percent of revenues, is facing some headwinds. Consistent with previous years, in Q2 and Q3 2010 we expect significant improvements from this quarter in our margins and cash flow from operations."

  BUSINESS OUTLOOK

  Longtop anticipates for the quarter ending September 30, 2009:



i) Total revenues of US$37.5 million, representing an increase of 33.0% YoY from revenues of US$28.2 million in the corresponding year ago period. Software development revenues are expected to be US$34.0 million, a YoY increase of 44.1% from US$23.6 million in the corresponding year ago period;

ii) Adjusted Operating Income of US$18.5 million, representing an increase of 18.6% YoY from Adjusted Operating Income of US$15.6 million in the corresponding year ago period.

iii) On the assumption a $3.0 million income tax refund for being designated as a "Key Software Company" will be received in Q2 2010, Adjusted Net Income of US$19.5 million or US$0.37 per diluted share, representing an increase of 20.4% YoY from Adjusted Net Income of US$16.2 million in the corresponding year ago period.  If the income tax refund is received in Q3 2010, Adjusted Net Income is expected to be $16.5 million or US$0.31 per diluted share.

Longtop anticipates for its fiscal year ending March 31, 2010:

i) Total revenues of US$145.0 million, representing an increase of 36.4% YoY from revenues of US$106.3 million in fiscal 2009. Software development revenues are expected to be US$127.0 million, a YoY increase of 41.7% from US$89.6 million in fiscal 2009;

ii) Adjusted Operating Income of US$69.0 million, an increase of 31.4% YoY from Adjusted Operating Income of US$52.5 million in fiscal 2009.

iii) Adjusted Net Income of US$65.0 million or US$1.22 per diluted share, an increase of 26.0% YoY from Adjusted Net Income of US$51.6 million in fiscal 2009.

CONFERENCE CALL AND WEBCAST

Longtop's senior management team will host a conference call and audio web cast at 8:00 pm US Eastern Time/ 5:00 pm U.S. Pacific Time on August 18, 2009 (8:00 am Beijing/Hong Kong time on August 19, 2009). The conference call will last for approximately one hour.

  The dial-in numbers for the conference call are as follows:

  U.S. Toll Free: 1866 549 1292
  China Toll Free: 800 701 1223
  Hong Kong and International: [phone]
  Passcode: 765115#



Additionally, a live and archived web cast of this call will be available on Longtop's website at http://www.longtop.com/en .

NON-GAAP DISCLOSURE ("ADJUSTED")

To supplement the unaudited consolidated financial statements presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), Longtop's management reports and uses non-GAAP ("Adjusted") measures of revenues, cost of revenues, operating expenses, net income and net income per share, which are adjusted from results based on GAAP.  To supplement our financial results presented on a GAAP basis, we use the non-GAAP measures to exclude certain business combination accounting entries and expenses related to acquisitions, as well as other significant expenses including stock-based compensation that we believe are helpful in understanding our past financial performance and our future results. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Compensation of our executives is based in part on the performance of our business based on these non-GAAP measures.  Management believes these non-GAAP financial measures enhance the user's overall understanding of our current financial performance and our prospects for the future. Specifically, we believe the non-GAAP financial measures provide useful information to both management and investors by excluding certain items that we believe are not indicative of our core operating results. The presentation of this additional information is not meant to be considered superior to, in isolation from or as a substitute for results prepared in accordance with US GAAP. We encourage investors to examine the reconciling adjustments between the GAAP and non-GAAP measures contained in this release and which we discuss below.  Readers are cautioned not to view non-GAAP results on a stand-alone basis or as a substitute for results under GAAP, or as being comparable to results reported or forecasted by other companies.

Definitions of Non-GAAP Measures

Adjusted Cost of Revenue is defined as cost of revenue excluding, if applicable: (1) non-cash compensation expense and (2) amortization of acquired intangibles.

Adjusted Gross Margin is defined as Adjusted Revenue less Adjusted Cost of Revenue.

Adjusted Operating Expenses is defined as operating expenses excluding, if applicable: (1) non-cash compensation expense, (2) amortization of acquired intangibles, deferred compensation arising on acquisition and goodwill impairment, and (3) one-time items.

Adjusted Operating Income is defined as Adjusted Gross Margin less Adjusted Operating Expenses.

Adjusted Net Income is defined as Adjusted Operating Income plus/minus other income/(expenses), less income taxes, excluding: (1) one-time items and (2) discontinued operations.

Adjusted EPS is defined as Adjusted Net Income divided by diluted shares.

One-Time Items, if applicable, are excluded from Adjusted Operating Income and Adjusted Net Income.  These items are one-time in nature and non-recurring, infrequent or unusual, and have not occurred in the past two years or are not expected to recur in the next two years. GAAP results include one-time items.

Expenses That Are Excluded From Our Non-GAAP Measures

Non-cash compensation expense consists principally of expense associated with the grants, including unvested grants assumed in acquisitions, of restricted stock, restricted stock units and stock options. These expenses are not paid in cash, and we include the related shares in our fully diluted shares outstanding which, for restricted stock units and stock options, are included on a treasury method basis. Longtop's management believes excluding the share-based compensation expense from its non-GAAP financial measure is useful for itself and investors. Although share-based compensation is a key incentive offered to our employees, and we believe such compensation contributed to the revenues earned during the periods presented and also believe it will contribute to the generation of future period revenues, and as share-based compensation expense does not involve any upfront or subsequent cash outflow, Longtop does not factor this in when evaluating and approving expenditures or when determining the allocation of its resources to its business segments. As a result, the monthly financial results for internal reporting and any performance measure for commission and bonus are based on non-GAAP financial measures that exclude share-based compensation expense.

Amortization of acquired intangibles is a non-cash expense relating to acquisitions. At the time of an acquisition, the intangible assets of the acquired company, such as backlog, customer relationships, and intellectual property, are valued and amortized over their estimated lives. While it is likely that we will have significant intangible amortization expense as we continue to acquire companies, we have excluded the effect of amortization of intangible assets from our non-GAAP financial measures. Amortization of intangible assets is inconsistent in amount and frequency and is significantly affected by the timing and size of our acquisitions. Investors should note that the use of intangible assets contributed to revenues earned during the periods presented and will contribute to future period revenues as well.

Acquisition proceeds allocated to deferred compensation arises where a portion of the purchase price paid to shareholders is considered compensation expense rather than purchase price under US GAAP. Deferred compensation arising on acquisition is inconsistent in amount and frequency and is significantly affected by the timing and size of our acquisitions. Investors should note that the use of deferred compensation arising on acquisition contributed to revenues earned during the periods presented and will contribute to future period revenues as well.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

It is currently expected that the Business Outlook will not be updated until the release of Longtop's next quarterly earnings announcement; however, Longtop reserves the right to update its Business Outlook at any time for any reason.

This announcement contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by such terms as "believes," "expects," "anticipates," "intends," "estimates," the negative of these terms, or other comparable terminology. Factors that could cause actual results to differ include the growth of the financial services industry in China; the amount and seasonality of IT spending by banks and other financial services companies; competition and potential pricing pressures; our revenue growth and solution and service mix; our ability to successfully develop, introduce and market new solutions and services; our ability to effectively manage our operating costs and expenses; our reliance on a limited number of customers that account for a high percentage of our revenues; a possible future shortage or limited availability of employees; general economic and business conditions; the volatility of our operating results and financial condition; our ability to attract or retain qualified senior management personnel and research and development staff; the outbreak of health epidemics; the planned relocation of our headquarters; People's Republic of China, or PRC, regulatory changes and interpretations;  and other risks detailed in the Company's filings with the Securities and Exchange Commission. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the companies and the industry. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward looking statements are reasonable, they cannot assure you that their expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results. Our actual results of operations for the quarter and year ended March 31, 2009 are not necessarily indicative of our operating results for any future periods. Any projections in this release are based on limited information currently available to us, which is subject to change.

About Longtop Financial Technologies Limited

Longtop is a leading software development and solutions provider targeting the financial services industry in China. Longtop develops and delivers a comprehensive range of software applications and solutions with a focus on meeting the rapidly growing IT needs of the financial services institutions in China.  Longtop has six solution delivery centers, three research and development centers and seventy-five ATM service centers located in 27 provinces throughout China. For more information, please visit: http://www.longtop.com/en

  For more information, please contact:

  For Investors:
   Longtop Financial Technologies Limited
   Charles Zhang, CFA
   Email: 
   Phone: [phone]

  For Media:
   IR Inside BV
   Caroline Straathof
   Email: 
   Phone: [phone]



                         CONSOLIDATED BALANCE SHEETS

                                               March 31,           June 30,
                                                  2009               2009
                                           (In U.S. dollar thousands, except
                                               share and per share data)
  Assets
  Current assets:
    Cash and cash equivalents                   $238,295          $215,121
    Restricted cash                                  463                38
    Accounts receivable, net                      29,861            41,514
    Inventories                                    4,982             4,246
    Amounts due from related parties                 682             1,181
    Deferred tax assets                              979               673
    Other current assets                           4,712            10,512

    Total current assets                         279,974           273,285

  Fixed assets, net                               14,858            20,137
  Prepaid land use right                           5,167             5,143
  Intangible assets, net                          11,526            28,081
  Goodwill                                        24,837            38,651
  Deferred tax assets                              1,479             1,479
  Other assets                                       632               541

    Total assets                                $338,473          $367,317

  Liabilities and shareholders' equity
  Current liabilities:
    Short-term borrowings                           $486            $4,788
    Accounts payable                               3,299             3,995
    Deferred revenue                              16,010            15,745
    Amounts due to related parties                    17                36
    Deferred tax liabilities                         867               933
    Accrued and other current liabilities         23,810            29,092

    Total current liabilities                     44,489            54,589

  Long-term liabilities:
    Obligations under capital leases, net
     of current portion                               98                --
    Deferred tax liabilities                       1,242             5,554
    Other non-current liabilities                    286             3,662

    Total liabilities                             46,115            63,805


  Shareholders' equity:
  Ordinary shares $0.01 par value
   (1,500,000,000 shares authorized,
   51,036,816 and 51,295,811 shares
   issued and outstanding as of March
   31, 2009 and June 30, 2009,
   respectively)                                    $510              $513
  Additional paid-in capital                     243,194           245,811
  Retained earnings                               29,451            37,835
  Accumulated other comprehensive
   income                                         19,203            19,353

    Total shareholders' equity                   292,358           303,512

    Total liabilities and shareholders'
     equity                                     $338,473          $367,317



                  CONSOLIDATED STATEMENTS OF OPERATIONS

                                                    Three Months Ended
                                                June 30,           June 30,
                                                  2008               2009
                                           (In U.S. dollar thousands, except
                                               share and per share data)

  Revenues:
    Software development                         $16,069            $24,717
    Other services                                 3,259              3,776
    Total revenues                                19,328             28,493

  Cost of revenues:
    Software development                           5,808              8,319
    Other services                                 1,205              3,374
    Total cost of revenues                         7,013             11,693
  Gross profit                                    12,315             16,800

  Operating expenses:
    Research and development                        1,109             1,517
    Sales and marketing                             1,792             3,259
    General and administrative                      2,097             2,766
    Total operating expenses                        4,998             7,542
  Income from operations                            7,317             9,258

  Other income (expenses):
    Interest income                                 1,907             1,008
    Interest expense                                 (267)              (16)
    Other income (expense), net                    (1,012)               85

    Total other income                                628             1,077

  Income before income tax expense                  7,945            10,335
    Income tax expense                             (1,858)           (1,951)

  Net income                                        6,087             8,384

  Net income per share:
    Basic ordinary share                            $0.12             $0.16
    Diluted                                         $0.12             $0.16

  Shares used in computation of net
   income per share:
    Basic ordinary share                       50,322,038        51,191,640
    Diluted                                    52,512,824        53,237,958

  Includes share-based compensation
   related to:
  Cost of revenues software
   development                                       $360              $438
  Cost of revenues other services                      59                69
  General and administrative
   expenses                                           472               440
  Sales and marketing expenses                        342               428
  Research and development expenses                    81               100



           UNAUDITED CONSOLIDATED ADJUSTED STATEMENTS OF OPERATIONS

                                                 Three Months Ended
                                        June 30, 2008          June 30, 2009
                                         (In U.S. dollar thousands, except
                                             share and per share data)
  Revenues:
    Software development                    16,069                   24,717
    Other services                           3,259                    3,776
    Total revenues                          19,328                   28,493

  Cost of revenues:
    Software development                     5,808                    8,319
    Other services                           1,205                    3,374
    Total cost of revenues                   7,013                   11,693

  Cost of revenue adjustments:
    Share-based compensation
     software development                     (360)                    (438)
    Share-based compensation other
     services                                  (59)                     (69)
    Amortization of acquired
     intangible assets other
     services                                 (249)                    (257)
    Amortization of acquired
     intangible assets software
     development                               (42)                    (191)
    Amortization of acquired
     deferred compensation other
     services                                   --                      (33)
    Amortization of acquired
     deferred compensation software
     development                                --                      (57)

  Adjusted cost of revenues:
    Software development                     5,406                    7,633
    Other services                             897                    3,015
    Total adjusted cost of revenues          6,303                   10,648

  Gross profit                              12,315                   16,800

  Adjusted gross profit                     13,025                   17,845


  Operating expenses:
    Research and development                 1,109                    1,517
    Sales and marketing                      1,792                    3,259
    General and administrative               2,097                    2,766
    Total operating expenses                 4,998                    7,542

  Operating expense adjustments:
    Share-based compensation
     research and development                  (81)                    (100)
    Share-based compensation sales
     and marketing                            (342)                    (428)
    Share-based compensation
     general and administrative               (472)                    (440)
    Amortization of acquired
     intangible assets sales and
     marketing                                (107)                    (230)
    Amortization of acquired
     intangible assets general and
     administrative                            (28)                     (64)

  Adjusted operating expenses:
    Research and development                 1,028                    1,417
    Sales and marketing                      1,343                    2,601
    General and administrative               1,597                    2,262
    Total adjusted operating
     expenses                                3,968                    6,280

  Income from operations                     7,317                    9,258

  Adjusted income from operations            9,057                   11,565


  Other income (expenses):
    Interest income                          1,907                    1,008
    Interest expense                          (267)                     (16)
    Other (expenses) income, net            (1,012)                      85

    Total other income                         628                    1,077


  Income before income tax expense           7,945                   10,335

  Adjusted income before income tax
   expense                                   9,685                   12,642

    Income tax expense                      (1,858)                  (1,951)

  Net income                                 6,087                    8,384

  Adjusted net income                        7,827                   10,691


  Net income per share:
    Basic ordinary share                     $0.12                    $0.16
    Diluted                                  $0.12                    $0.16

  Adjusted net income per share:
    Basic ordinary share                     $0.16                    $0.21
    Diluted                                  $0.15                    $0.20

  Shares used in computation of net
   income and adjusted net income per
   share:
    Basic ordinary share                50,322,038               51,191,640
    Diluted                             52,512,824               53,237,958




                   CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                    Three Months Ended
                                            June 30, 2008      June 30, 2009
                                           (In U.S. dollar thousands, except
                                               share and per share data)
  Cash flows from operating activities:
  Net income                                      $6,087            $8,384

  Adjustments to reconcile net income
   to net cash provided by operating
   activities:
    Share-based compensation                       1,314             1,474
    Depreciation of fixed assets                     614               703
    Amortization of intangible assets                471               833
    Provision for doubtful accounts                 (110)              (26)
    Loss on disposal of fixed assets                   1                 5

  Deferred income taxes                               29               307

  Changes in assets and liabilities,
   net of effects of acquisitions:
    Accounts receivable                           (4,434)          (11,347)
    Inventories                                   (1,623)              816
    Other current assets                            (859)           (5,657)
    Amounts due from related parties                  --              (498)
    Prepaid land use right                        (5,275)               27
    Other non-current assets                          99                91
    Other non-current liabilities                   (194)                4
    Accounts payable                               4,889              (821)
    Deferred revenue                               1,873              (274)
    Amounts due to related parties                    --                19
    Accrued and other current liabilities         (6,257)           (1,968)

  Net cash used in operating activities           (3,375)           (7,928)

  Cash flows from investing activities:
    Change in restricted cash                      4,526               425
    Purchase of fixed assets                      (5,594)           (3,902)
    Purchase of intangible assets                     (3)             (138)
    Long term investment                          (2,613)               --
    Acquisitions, net of cash acquired                --           (16,779)

  Net cash used in investing activities           (3,684)          (20,394)

  Cash flows from financing activities:
    Proceeds from short-term borrowings               --             4,391
    Stock options exercised                          513               824
    Repayments of capital leases
     obligations                                    (433)             (187)
    Amounts due to related parties                   (54)               --

  Net cash provided by financing
   activities                                         26             5,028

  Effect of exchange rates differences             4,035               120

  Net decrease in cash and cash
   equivalents                                    (2,998)          (23,174)

  Cash and cash equivalents, beginning
   of period                                     204,526           238,295
  Cash and cash equivalents, end of
   period                                       $201,528          $215,121

  Supplemental disclosure of cash flow
   information:
    Income taxes paid                             $2,023            $1,471
    Interest paid                                   $270               $16
  Supplemental disclosure of non-cash
   investing and financing activities:
    Fixed assets purchased under capital
     leases                                         $569               $--
  Acquisition:
    Cash consideration                            $2,613           $16,779
    Cash consideration payable                       $--           $10,550
    Assets acquired                               $2,613           $27,329


DATASOURCE: Longtop Financial Technologies Limited



CONTACT:  For Investors: Longtop Financial Technologies Limited - Charles

Zhang, CFA, , or [phone]; For Media: IR Inside BV -

Caroline Straathof, , or [phone] 



Web Site:  http://www.longtop.com/en 

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