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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Software Circle Plc | LSE:SFT | London | Ordinary Share | GB0009638130 | ORD 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 17.00 | 16.00 | 18.00 | 17.00 | 17.00 | 17.00 | 0.00 | 08:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Miscellaneous Publishing | 12.55M | -1.61M | -0.0041 | -41.46 | 66.31M |
RNS Number:2001T Sinosoft Technology plc 28 April 2008 SINOSOFT TECHNOLOGY PLC PRELIMINARY RESULTS FOR THE YEAR ENDING 31 DECEMBER 2007 Sinosoft Technology plc, the China based developer and provider of e-Government software and services, announces preliminary results for the year ended 31 December 2007. Financial Highlights * Turnover up 15% to US$10.6M (2006: US$9.2M) * Gross profit up 8.3% to US$7.2M (2006: US$6.7M) * Research & Development expenditure up 96% to US$1.6M (2006: US$0.8M) * Operating profit up 35% to US$4.8M (2006: US$3.5M) * Profit for the year up 29.4% to US$4.8M of which US$1.35M relates to profit on investment (2006: US$3.7M) Operating Highlights * SAT progressing in line with amended timetable * Roll-out will commence in Anhui and Zhejiang Province in the near future * Beijing office in operation * Significant growth in outsourcing business * Six new products developed of which four generated revenues in 2007 Commenting on the results, Mao Ning, Chairman of Sinosoft said: "It has been another successful year for Sinosoft as we continue to expand our product offering and diversify revenue streams in order to derive maximum benefit from the skills of our team and the technology at our disposal. The SAT programme has experienced some delays but we are confident that having liaised closely with the provincial governments, the long term roll out plans will be significantly enhanced. The continued success of our other divisions gives the Board confidence for the future and we look forward to a successful 2008. -ends- A conference call will be held this morning at 10.00am where the management will give a presentation and then invite Q&A. In order to participate, please call +44 (0) 203 003 2666. For further information please contact: Hanson Westhouse Limited Tim Metcalfe/Richard Baty 020 7601 6100 Tavistock Communications Simon Compton 020 7920 3150 Chairman's Statement Results I am delighted to report on another successful year for the Group, which has seen growth of 15% in turnover (US$10.6M) and 29% in net profit (US$4.8M). The strongest growth seen in 2007 has been in the Group's e-government division, which has seen its revenues increase by 52%, meaning it now contributes about 29% of the Group's total turnover. The revenue increases within e-government are due both to the successful launch of four new products developed in 2007, and to the emergence of a number of new contracts with district government agencies in Nanjing. The Group has also witnessed significant growth within its information integration division, with turnover increasing by 14%, enabling it to contribute about 20% of the Group's total turnover. Three new products within this area are expected to generate increased sales in 2008. Tax software, which accounts for around 18% of Group turnover, has also continued to grow, although the rate of growth slowed to 0.4% due to the previously announced delays in the SAT rollout. These delays were caused by a shift in provincial government regulations and procedures for export tax exemption. Whilst the main platform of the software (around 90%) remains the same for each province, slight differences in provincial regulations means the remainder of the software (around 10%) currently has to be tailored to meet the requirements of individual regions. Despite this inconvenience we believe that once the regulation changes have been resolved, the enhancements made to the software will significantly increase its value and will allow an acceleration in the roll out. Gross profit margin has fallen slightly during 2007 to 68% (2006:72%). The principal reason for the slight reduction in gross profitability is the lower margin derived from sales of system integration services. Whilst system integration services result in slightly lower margin revenues they are nevertheless important for the Group as they increase our customer base and have resulted in subsequent sales of software and other services. Throughout the course of the year, the Group has expanded its outsourcing business and won an outsourcing contract with United Wise Development Limited, a Hong Kong company. The Group's Beijing office has opened and operated successfully and we have started to identify and evaluate potential acquisition targets. In addition, we have expanded our research and development department with a total staff of 170 in December 2007 (2006: 121 staff). Dividend The Group has continued to be cash generative and a resolution proposing Sinosoft's maiden dividend of a total of US$1M will be proposed at the forthcoming AGM. Board In October 2007, we welcomed Alfred Ho as the Finance Director. Alfred's appointment is a significant milestone for the Group as he has expertise in accounting, taxation and financial management which will be of significant value to the Group. He is also likely to prove a useful bridge between the Group and investors as he is fluent in English (educated in Canada and a Canadian chartered accountant), Cantonese and a competent Mandarin speaker. Outlook The long-term objective for the business remains the same, that is, the continued expansion of the four core business areas. The Group also continues to identify new sources of revenue as well as merger and acquisition opportunities. Mao Ning Chairman 28 April 2008 Chief Executive Officer's Report Over the year, turnover has increased by 15% with the major contribution coming from our e-government division which has increased revenues by 52%. Turnover growth was also supported by the information integration division, which saw revenues increase by 14%. Gross profit was up 8.3% with operating profit up 35% and the profit for the year rising by 29%. Basic earnings per share were US$0.0291 (2006: US$0.0269) while the diluted earnings per share were US$0.0291 (2006: US$0.0263). The Group's major product remains our e-government solutions which contribute around 29% of the total turnover. The information integration contributes 20% and tax software contributes 19% towards total turnover. E-Government 2007 saw continued growth within this area of the business through the development of four new products and the targeting of several new markets. I am pleased to announce that the four new products developed in 2007 were: (1) Sinosoft workflow platform software V1.0, (2) TianDun online training system software V2.0, (3) Sinosoft integrated public security information management system platform software V1.0, and (4) Digital governance Information System Platform Software V1.0. Sinosoft workflow platform software is a middleware product specialised in E-governance software development. TianDun online training system software is aimed at training programmes for government officials. This system includes training plan, training content and on-line exams. Sinosoft integrated public security information management system platform software is a product for the public security departments. The software covers internal management, on-line approval process, case process control management and public management platform set up for future concerns. Digital governance Information System Platform Software has been developed to meet the new e-governance development needs. It analyzes the data from various sources and is provided as a reference for government officials to make important decisions. Currently our main customers are located in cities such as Nanjing, Taizhou, Suqian, Lianyungang in Jiangsu Province and in provinces such as Henan and Canton. The Group has focussed on targeting new bureaus and district government agencies both in Nanjing and in other cities in China and as a result of this a number of new contracts materialised in 2007 resulting in revenues being ahead of expectations for this sector of the business. We have also entered into agreements with Henan Province and the City of Shenzhen to purchase our e-government products which will generate 2008 sales of around US$0.07M and US$0.05M, respectively. Information Integration Information integration has seen turnover up by 14% and now contributes 20% of the Group's total turnover, whilst providing a steady stream of revenue. We expect to launch three new products in 2008. These are: (1) Sinosoft TianDun computer data security protection software system, (2) Sinosoft Civil auto answer system for civil airline individual travellers' seat booking system software, (3) Sinosoft flight quality analysis system software. The three newly developed products are focussed mainly on the supervision of information of the existing airline companies' flights. They also analyze and manage travellers' ticket booking information. These systems will enable airline companies to reduce operating costs and dramatically improve staff working efficiency. The current client base for these systems includes China Eastern airlines and Sichuan airlines. In addition, there are some 20 other airline companies in China who represent realistic potential targets for this division, affording the Group a great opportunity to explore business in a new industry. Tax Software Tax software is currently the most difficult area for the Group but we are confident that it represents a significant potential growth area once the current problems have been solved. Whilst the software was developed in line with the Chinese Central Government's policy for VAT export refunds which constitutes about 90% of the total software structure, there are different regulations and procedures for different provinces which constitute about 10% of the total software structure. This means that about 10% of the Group's tax software has had to be tailor made for each province. We have around 50 staff working on the technical specifications and testing. This has delayed the roll-out of the technology, but we are currently testing the new system and have successfully identified distribution partners to assist in the delivery of the roll-out. Whilst the delays have been frustrating we are confident that the developments currently being made to the technology will significantly enhance the Group's rollout in other provinces in the long term. Outsourcing We intend to continue the expansion of our software outsourcing business. The success of this part of the business has created a new income stream and we are keen to exploit this opportunity. The Group views this as an important area as it looks to expand both within the domestic PRC market and to overseas markets. We have already entered into a US$2 million agreement with Schenker for three years starting in 2008. We expect to generate revenue of US$0.5M in 2008. Schenker has been one of the world's leading providers of integrated logistics services for 135 years and we will be providing outsourcing services in the area of logistic systems. Furthermore, Sinosoft opened its new office in Beijing and this has already been of significant value to the Company with the winning of a substantial outsourcing contract with United Wise Development Limited, a textile machinery business based in Hong Kong. This work began in November 2007 and was completed within Q1 2008 with revenues recognised in both years. We are hopeful that this is a stepping stone to increasing our business within Hong Kong. Change in Accounting Policy Following a review of the accounting treatment of VAT refunds, we have decided to reclassify the VAT refund from government grants to turnover. This would better reflect our operation. Revenues for 2006 have accordingly also been restated. Note 2 to the financial statements provides further analysis of the Group's revenues. Xin Yingmei Chief Executive Officer 28 April 2008 GROUP INCOME STATEMENT 2007 2006 US$ US$ Revenue 10,615,673 9,203,040 Cost of sales (3,385,934) (2,528,187) Gross profit 7,229,739 6,674,853 Other income 1,744,653 233,441 Research and development cost (1,565,550) (800,992) Selling and distribution expenses (889,937) (852,856) Administrative expenses (1,712,729) (1,671,387) Other operating expenses (23,331) (40,625) Profit from operations 4,782,845 3,542,434 Finance cost - (32,692) Finance income 439,185 305,537 Exchange gain or loss (27,845) - Profit before tax 5,194,185 3,815,279 Taxation (377,195) (91,822) Profit for the year 4,816,990 3,723,457 Earnings per ordinary share Basic 0.0291 0.0269 Diluted 0.0291 0.0263 GROUP BALANCE SHEET 2007 2006 US$ US$ ASSETS Non-current assets Property, plant and equipment 682,150 397,764 Intangible assets 3,680,683 2,100,933 Total non-current assets 4,362,833 2,498,697 Current assets Inventories 1,548,498 228,884 Trade receivables 3,490,923 2,646,712 Other receivables 3,798,672 3,750,172 Investments - 296,059 Cash deposits 283,094 171,352 Cash and cash equivalents 18,119,152 15,030,483 Total current assets 27,240,339 22,123,662 Total assets 31,603,172 24,622,359 LIABILITIES & EQUITY Current liabilities Trade payables 1,248,594 629,473 Other payables 337,073 479,776 Deferred income 126,369 - Total current liabilities 1,712,036 1,109,249 Non-current liabilities Deferred tax 289,287 140,562 Total non-current liabilities 289,287 140,562 Total liabilities 2,001,323 1,249,811 Capital and reserves Share capital 424,023 424,023 Share premium 11,283,551 11,283,551 Merger reserve (1,118,051) (1,118,051) Other reserves 8,336,500 3,956,096 Retained earnings 10,675,826 8,826,929 Total shareholders' equity 29,601,849 23,372,548 Total liabilities & equity 31,603,172 24,622,359 COMPANY BALANCE SHEET 2007 2006 US$ US$ ASSETS Non-current assets Investments 357,302 350,464 Total non-current assets 357,302 350,464 Current assets Other receivables 9,400,460 6,685,804 Cash and cash equivalents 4,030,382 6,817,357 Total current assets 13,430,842 13,503,161 Total assets 13,788,144 13,853,625 LIABILITIES & EQUITY Current liabilities Other payables 27,889 158,810 Total current liabilities 27,889 158,810 Total liabilities 27,889 158,810 Capital and reserves Share capital 424,023 424,023 Share premium 11,283,551 11,283,551 Other reserves 2,868,889 2,601,211 Retained earnings (816,208) (613,970) Total shareholders' equity 13,760,255 13,694,815 Total liabilities & equity 13,788,144 13,853,625 GROUP CASHFLOW STATEMENT 2007 2006 US$ US$ Operating activities Income before taxation from continuing 5,194,185 3,815,279 operations Adjustments for: Interest income (439,185) (305,537) Interest expense - 32,692 Exchange difference 27,845 - Gain on disposal of investments (35,509) (228,161) Investment income (1,353,211) - Share based payment - 310,816 Impairment loss in receivables 69,157 20,687 Depreciation of property, plant and 75,085 47,695 equipment Amortisation for intangible assets 967,522 434,700 Operating cash generated before working 4,505,889 4,128,171 capital changes (Increase)/decrease in inventories (1,319,614) 328,531 Increase in trade and other receivables (892,711) (1,517,937) Increase in trade and other payables 476,418 174,746 Cash generated by operations 2,769,982 3,113,511 Income taxes paid (16,125) - Interest paid - (124,252) NET CASH GENERATED FROM OPERATING 2,753,857 2,989,259 ACTIVITIES Investing activities Interest received 439,185 305,537 Proceeds on disposal of trading investment 3,169,208 717,485 Purchase of property, plant and equipment (335,097) (1,678,181) Purchase of intangible assets (2,440,609) (1,255,010) Purchase of investments for trading (1,484,429) (599,588) Increase in pledged bank deposits (111,742) (171,352) NET CASH USED IN INVESTING ACTIVITIES (763,484) (2,681,109) Financing activities Net proceeds from issue of shares - 12,020,824 Repayment of borrowing - (2,671,591) Dividend paid - (61,346) NET CASH GENERATED FROM FINANCING - 9,287,887 ACTIVITIES NET INCREASE IN CASH AND CASH EQUIVALENTS 1,990,373 9,596,037 Effect of exchange rate changes 1,098,296 1,468,732 CASH AND CASH EQUIVALENTS AT BEGINNING OF 15,030,483 3,965,714 YEAR CASH AND CASH EQUIVALENTS AT THE END OF 18,119,152 15,030,483 YEAR GROUP STATEMENT OF SHAREHOLDERS'FUNDS AND STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY Share Share Merger Other Retained Total premium reserve reserves earnings capital US$ US$ US$ US$ US$ US$ (note 26) Balance at 31 107,656 - (917,326) 916,972 5,687,405 5,794,707 December 2005 Profit for the - - - - 3,723,457 3,723,457 year Transfer to - - - 583,933 (583,933) - statutory reserve Effect of - - - 1,522,744 - 1,522,744 exchange rates Issue of share 316,367 14,666,233 (200,725) - - 14,781,875 capital Issue expenses - (2,761,050) - - - (2,761,050) Issue of options - (621,632) - 932,447 - 310,815 Balance at 31 424,023 11,283,551 (1,118,051) 3,956,096 8,826,929 23,372,548 December 2006 Profit for the - - - - 4,816,990 4,816,990 year Transfer to - - - 404,109 (404,109) - statutory reserve Effect of - - - 1,412,311 - 1,412,311 exchange rates Transfer to - - - 2,563,984 (2,563,984) - capital reserve Balance at 31 424,023 11,283,551 (1,118,051) 8,336,500 10,675,826 29,601,849 December 2007 NOTES TO THE FINANCIAL STATEMENTS 1 Financial information The financial information set out in this announcement does not constitute the Company's statutory accounts for the years ended 31 December 2007 or 2006. The statutory accounts for the year ended 31 December 2007 will be finalised on the basis of the financial information presented by the directors in this preli minary announcement and will be delivered to the Registrar of Companies. 2. REVENUE AND SEGMENTAL ANALYSIS The Group's operations are organised into one operating division namely software development which includes sales of software products and system integration. Group 2007 2006 US$ US$ Software 6,540,438 5,729,937 System integration 3,540,268 2,716,225 VAT rebate 534,967 756,878 10,615,673 9,203,040 The Group's revenue and profit before taxation were all derived from its prin cipal activity. All revenue originates in the People's Republic of China. VAT rebate is a preferential policy for software companies granted by the Chinese government. Any VAT over 3% generated from sales of software and paid by the software companies will be rebated by the government. Since this tax rebate is generated from the sales of software and directly related to the sales, the Company recognizes it as revenue and list the tax rebate in the sales accounts accordingly. The amount of VAT rebate for 2007 and 2006 are US$534,967 and US$756,878 respectively. 3. OTHER INCOME Group 2007 2006 US$ US$ Gain on disposal of quoted securities 1,353,211 228,161 Investment income 35,509 - Government grants and rebates 353,960 - Other income 1,973 5,280 1,744,653 233,441 4. EARNINGS PER SHARE 2007 2006 Profit for the year US$ 4,816,990 US$ 3,723,457 Number of shares - weighted average - 165,582,189 138,556,608 basic Basic earnings per share US$ 0.0291 US$ 0.0269 Number of shares - weighted average - 165,582,189 141,679,987 diluted Diluted earnings per share US$ 0.0291 US$ 0.0263 5. Timetable and distribution of accounts The report and financial statements together with the Notice of AGM and Proxy form will be despatched to shareholders in May. The annual general meeting will be held at 10.00am on 9 June 2008 at the offices of the Tavistock Communications, 131 Finsbury Pavement, London, EC2A 1NT. Additional copies of the Annual Report and Accounts, Notice of AGM and Proxy Form may be requested directly from the Company and will be available following distribution to shareholders on the Company's website www. sinosoft-technology.com. This information is provided by RNS The company news service from the London Stock Exchange END FR PUUPUCUPRUMR
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