TIDMSFT
RNS Number : 4522K
Sinosoft Technology plc
20 April 2010
SINOSOFT TECHNOLOGY PLC
("Sinosoft" or the "Company" or the "Group")
PRELIMINARY RESULTS FOR THE YEAR ENDING 31 DECEMBER 2009
Sinosoft, the China based developer and provider of e-Government software and
other IT services, announces its preliminary results for the year ended 31
December 2009.
Financial Highlights
l Turnover up 20% to US$14.5m (2008: US$12.1m)
l Gross profit up 12% to US$9.6m (2008: US$8.6m)
l Operating profit maintained at US$3.3m (2008: US$3.3m)
l Profit before tax increased by 16% to US$4.4m (2008: US$3.8m)
l Dividend to be maintained at FY2008 payout of 0.31 pence per share
Operating Highlights
l Strong growth in Tax Software and System Integration division
l Continuing strong cashflow
l Acquired Jiangsu Skyinformation Co., Ltd.
l Integrated 3M's RFID technology with our software
Commenting on the results, Mark Greaves, the newly appointed Chairman of
Sinosoft said: "What started out as a difficult year, improved considerably in
the second half. I am pleased to announce that the Group's revenue and profit
before tax have continued to grow. Our cash position remains strong and we are
in a position to propose a meaningful dividend to shareholders."
-ends-
For further information please contact:
+---------------------+----------------------+--------------------------------+
| Sinosoft Technology | Mr. Yifa Yu |yuyifa@sinosoft-technology.com |
| plc | | |
+---------------------+----------------------+--------------------------------+
| | | |
+---------------------+----------------------+--------------------------------+
| Westhouse | Tim Metcalfe/Richard | 020 7601 6100 |
| Securities Limited | Baty/Zhining Xu | |
| | | |
+---------------------+----------------------+--------------------------------+
| Tavistock | Simon Compton | 020 7920 3150 |
| Communications | | |
+---------------------+----------------------+--------------------------------+
Chairman's Statement
Results
It gives me great pleasure to present my first report as incoming Chairman of
the Company and to reflect on what has been a challenging year, but a year in
which Sinosoft has made significant progress. The Chinese economy has not been
immune to recent financial turmoil and in the face of tightened trading
conditions Sinosoft has been required to adapt.
The difficult trading environment was evidenced by our FY2009 first half
results, when, for the first time in our history we recorded lower revenues than
the comparable period of the previous year. Despite this initial setback the
Group was able to recover lost ground during the second half of the year thanks
in part to the PRC government's stimulus package. The Group's performance
benefited from our strategy of adopting a broadly-based business model that is
not dependent on any one income stream. This strategy enabled Sinosoft to
redeploy staff and to focus the business on sectors where sales continued to
exist.
I am pleased to report that for the full year, the Group was able to report
growth in turnover and net profit. However, gross profit margin was lower due
to the higher proportion of revenue contributed by System Integration, a
traditionally lower margin division. Operating expenses were higher due to
increased spending on R&D, marketing and administration.
We continued to record growth in sales of our export tax software. Whilst the
economic slowdown has exacerbated the delays suffered in the roll-out of the
Company's SAT product outside of Jiangsu, we have continued to generate revenues
through the sale of our value-added products to existing customers. We are
pleased that we are continuing to develop bolt on products that enable us to
leverage from our established customer base and believe that this demonstrates
the inherent value of Sinosoft's export tax products to our clients.
e-Government was the key performer during the year in terms of revenue growth.
This division benefitted from the government restating previously postponed or
delayed projects and increasing its discretionary spending activity in its bid
to stimulate the economy. In addition, the PRC government has been taking
measures to develop the country's IT infrastructure and to improve on the level
of government online services that it provides to its citizens. With our proven
past track record in this field, we have managed to secure an increasing number
of such government contracts. We have bid for and won an e-government project
in Nan An, a city in the Chongqing municipality that was previously dominated by
local software companies. We are hopeful that the Group's first move into South
West China should bring about greater potential for the Group's e-government
business.
As expected, the Group's Information Integration division recorded a decline in
revenues. This division is highly dependent on corporate IT projects and the
economic slowdown has greatly reduced the IT budgets of most corporate clients
and the number of new projects available for tender. To overcome the expected
decline in this division, the Group actively looked for innovative ways to
develop new services. As a first step, the Group has integrated 3M's Radio
Frequency Identification (RFID) tracking technology with the Group's own
software system and has won a project with the Nanjing Library. This contract
made a significant contribution to the revenue for this division. Whilst there
is still uncertainty surrounding the economic recovery, we are not anticipating
a substantial improvement in this division in the near term.
For System Integration, revenue growth and overall contribution to Group
turnover was significantly higher compared to the prior year. Pleasingly this
is mainly due to repeat business from existing clients. The division also
benefited from provincial and national government's increased spending on IT
infrastructure as well as our continued effort to secure new customers. The
Group continues to adopt the strategy of expanding the customer base of this
division as it believes that this will continue to play a vital role in helping
to bring in revenue for our other divisions.
During the year, we have also collaborated with a Singaporean IT company to
outsource our engineers to help them with programming and coding work for their
projects. From this collaboration, we hope to seek new opportunities to expand
our outsourcing business outside of the PRC.
For the year, the Group experienced an overall net cash inflow, taking our cash
position from US$12.9m to US$14.9m. We continue to be cash generative from our
operations. Cash generated from operations increased by US$3.0m to US$7.0m. Our
main cash outflow during the year related to our continuing investment in R&D.
Trade receivables increased significantly due to increased activity in the
latter months of the year.
In July 2009, we acquired SkyInformation Co. Ltd, a PRC registered software
company. Although this acquisition did not contribute materially to our
performance this year, we expect to use its software license in the future to
further develop new products and apply for government grants that are only
available to PRC registered companies. In addition, this acquisition will allow
the Group to be better placed to win government mandates that were otherwise not
accessible to foreign owned companies.
Dividend
At the operation level the Group has continued to be cash generative. A
resolution proposing a dividend of 0.31 pence per ordinary share (2008: 0.31p
per share) will be proposed at the forthcoming AGM.
Board
On 1 May 2010, Mr Mao Ning will retire from the board and will step down from
his position as Chairman of the Company. Mr Mao Ning has held the position
since Sinosoft's admission to AIM in March 2006 and the Board would like to
thank him for his contribution and unfailing commitment to the Group. I am
honoured to have been asked to take on the role of Chairman, building on my four
years of service as an independent non-executive director of the Company.
What began as a difficult start to the year has ended with reasonably pleasing
results. I believe our strategy of continuously expanding our four core
business areas and yet not being totally dependent on any one revenue stream has
helped us to overcome the recent difficult economic climate. The Group has been
resilient to a difficult trading period and we are cautiously optimistic that as
the economy begins to recover we are well positioned to capitalise from our
investment in our staff, R&D and product development and established customer
base.
On behalf of the Board, I extend my sincere appreciation and thanks for the
support of all our stakeholders, including our shareholders, customers, staff
and advisers. With your continuing support, we look forward to the further
development and success of Sinosoft Technology plc.
Mark Greaves
Non Executive Director and incoming Chairman
19 April 2010
Chief Executive Officer's Report
Group turnover registered a 20% growth from FY2008 to achieve total sales of
US$14.5m (FY2008: US$12.1m). However, gross profit grew by a smaller 12% to
US$9.6m (FY2008: US$8.6m) due to the higher percentage of revenue contributed by
System Integration, a traditionally low margin division. Operating expenses
continued to increase as we increase the number of our staff and increase our
spending to secure and service customers in new provinces.
For FY2009, the sales split across the Group's four divisions, of System
Integration, e-Government, Tax Software and Information Integration, was 37%,
27%, 24% and 12%, respectively (FY2008: 31%, 22%, 26% and 21%).
Tax Software
In tandem with the global economy, China's export industry suffered substantial
slowdown in 2009. The knock on effect was a marked decline in the number of
newly set up export enterprises; prospective customers for our sales of export
tax rebate software. The roll out of our SAT product outside of Jiangsu also
suffered further delay as the central tax bureau amended the timetable in
response to the wider slow down in export levels. To overcome these setbacks,
we have been focusing on the development and sales of value added software to
our existing export tax rebate software users. We are pleased that despite the
difficult market conditions sales from this division increased by 14%. A new
value added product developed in FY2009 which generated revenue during the same
year is our Sinosoft Portable Reporting Software. Stored on a thumb drive, it
allows users to connect to their office computer where the tax rebate software
is located and allow them access to their tax rebate data. This is useful for
users who need to make last minute amendments at the tax office or need remote
access to their tax rebate data.
e-Government
Sales growth was very strong for this division in FY2009 with a 43% increase in
turnover recorded from the previous year. Discretionary spending by the PRC
government picked up pace with the release of the stimulus package during the
early part of FY2009. Our Group was able to benefit greatly from this increase
government spending as we have a well proven track record with both local,
provisional and national government agencies. In addition, with the launch of
six new products in FY2008, we were able to offer a wider suite of functionality
to suit our customers' needs.
Our strategy of continuously investing in R&D and offering new products based on
client requirements has proven to be successful as was demonstrated during the
year with our maiden contract win in Nan An. The division beat other software
companies to secure our first e-government contract in this region.
During the latest Chinese People's Political Consultative Conference (CPPCC)
meeting held in March 2010, the government communicated its intention to improve
the level of IT services that it provides to its citizens in the coming years.
Given our history of successfully securing and completing such projects, this
division should be in a good position to capture a share of any such initiative.
During the year, the division developed two new products; Sinosoft Public
Resource Supervision Software and Sinosoft Integrity Software. The first
software allows the government to supervise the use of public resources such as
funds, manpower, materials etc in projects that they have awarded, to ensure
that resources are not misappropriated. The second software allows the
government to collect data from various agencies to set up a database on the
level of integrity of private contractors. Any government agency is then able
to conduct search on the integrity of any private contractor before a contract
is awarded to them. Both of these products are expected to start generating
revenue in FY2010.
Information Integration
This division is the only one to record a revenue decrease of 29%. Being highly
dependent on corporate IT spending, this decline was the direct outcome of the
decrease in most corporates' IT spending due to the financial crisis that began
in the last quarter of 2008. With the global economic recovery still patchy,
the outlook for this division will continue to be uncertain.
During the year, we developed two new products: Sinosoft RFID Integrated
Software and Sinosoft Export Enterprise Management Software. The first software
was used in our successful bid for Nanjing Library which integrated RFID
technology developed by 3M (www.3M.com) to provide a new archiving, cataloguing
and book borrowing system. The second software is a product that helps export
enterprises to integrate information from various departments into a single
interface. This product is expected to start generating revenue in FY2010.
Outsourcing
During the year, the Group entered into an outsourcing collaboration with a
Singaporean IT company whereby our engineers helped to provide coding and
programming services to the company. We hope that this collaboration will
further open doors to help the Group secure new contracts in Singapore.
Systems Integration
Revenue of Systems Integration increased significantly by 41% during the year.
Traditionally a lower margin division, it accounted for 37% of the Group's total
revenue as compared to 31% in FY2008. This has resulted in a lower overall gross
profit margin for the Group as compared to the prior year.
This growth in this business was primarily due to a higher number of our
existing and previous clients turning to us for their IT upgrade during FY2009.
In addition, this division also greatly benefitted from the government's
increased spending as a result of the stimulus package. Even though margin is
low for this division, we continued to pursue System Integration projects and
secure new clients. These new customers also helped to contribute to the higher
revenue during the whole year.
Management continues to maintain the view that active courting of new projects
in this low margin division is a necessary strategy because such projects are
highly effective in increasing the client's hardware compatibility with our
other products, thus making it easier to sell our proprietary software to them
in the future.
Other
Even though our operations were somewhat affected by the global downturn, the
crisis nevertheless also presented us with the opportunity to acquire Jiangsu
Skyinformation Co. Ltd at a competitive price. The acquisition has and will
enable the Group to secure government contracts that were otherwise not
available to our two foreign owned trading subsidiaries.
Towards the end of FY2010, the Company will be relocating to its new premises
located in Nanjing's Pukou District. With this new premise, the Company will
have the necessary space to continue its investment in R&D. During the year,
the number of R&D personnel employed increased from 230 in FY2008 to 270. Our
intangible assets of development cost and patents similarly increased to US$7.5m
(FY2008: US$5.1m). We expect part of this to start generating revenues in
FY2010 and beyond.
Xin Yingmei
Chief Executive Officer
19 April 2010
+-------------------------------+-------------+-------------+
| CONSOLIDATED INCOME STATEMENT | 2009 | 2008 |
| for the year ended 31 | | |
| December 2009 | | |
| | | |
| | | |
| | | |
+-------------------------------+-------------+-------------+
| | US$ | US$ |
+-------------------------------+-------------+-------------+
| | | |
+-------------------------------+-------------+-------------+
| Revenue | 14,513,309 | 12,078,124 |
+-------------------------------+-------------+-------------+
| Cost of sales | (4,919,180) | (3,494,992) |
+-------------------------------+-------------+-------------+
| | | |
+-------------------------------+-------------+-------------+
| Gross profit | 9,594,129 | 8,583,132 |
+-------------------------------+-------------+-------------+
| Other income | 866,233 | 620,974 |
+-------------------------------+-------------+-------------+
| Research and development cost | (2,206,895) | (1,986,680) |
+-------------------------------+-------------+-------------+
| Selling and distribution | (2,152,110) | (1,357,692) |
| expenses | | |
+-------------------------------+-------------+-------------+
| Administrative expenses | (3,242,317) | (2,566,871) |
+-------------------------------+-------------+-------------+
| Excess on acquisition of fair | | |
| value of | 445,573 | - |
| net assets of subsidiary over | | |
| cost | | |
+-------------------------------+-------------+-------------+
| Operating profit before | 3,304,613 | 3,292,863 |
| exceptional items | | |
+-------------------------------+-------------+-------------+
| | | |
+-------------------------------+-------------+-------------+
| Impairment losses | (6,049) | - |
+-------------------------------+-------------+-------------+
| | | |
+-------------------------------+-------------+-------------+
| Operating profit | 3,298,564 | 3,292,863 |
+-------------------------------+-------------+-------------+
| | | |
+-------------------------------+-------------+-------------+
| Finance cost | (1,147,509) | (20,791) |
+-------------------------------+-------------+-------------+
| Finance income | 2,256,244 | 515,632 |
+-------------------------------+-------------+-------------+
| | | |
+-------------------------------+-------------+-------------+
| Profit before tax | 4,407,299 | 3,787,704 |
+-------------------------------+-------------+-------------+
| | | |
+-------------------------------+-------------+-------------+
| Taxation | (752,486) | (358,014) |
+-------------------------------+-------------+-------------+
| | | |
+-------------------------------+-------------+-------------+
| Profit for the year | 3,654,813 | 3,429,690 |
+-------------------------------+-------------+-------------+
| | | |
+-------------------------------+-------------+-------------+
| Earnings per ordinary share | | |
+-------------------------------+-------------+-------------+
| Basic | 0.0221 | 0.0207 |
+-------------------------------+-------------+-------------+
| Diluted | 0.0221 | 0.0207 |
+-------------------------------+-------------+-------------+
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2009
+----------------------------------+----------+--------------+-+-------------+----------+
| | | | |
+----------------------------------+-------------------------+---------------+----------+
| | 2009 | 2008 |
+---------------------------------------------+----------------+------------------------+
| | US$ | US$ |
+---------------------------------------------+----------------+------------------------+
| | | |
+---------------------------------------------+----------------+------------------------+
| Profit for the year | 3,654,813 | 3,429,690 |
+---------------------------------------------+----------------+------------------------+
| Currency translation losses on foreign | (322,259) | (1,429,690) |
| operations | | |
+---------------------------------------------+----------------+------------------------+
| Total comprehensive income for the year | | |
| | 3,332,554 | 2,346,968 |
+---------------------------------------------+----------------+------------------------+
| | | | | | |
+----------------------------------+----------+--------------+-+-------------+----------+
CONSOLIDATED BALANCE SHEET
at 31 December 2009
+----------------------------+---------------+--------------+
| | 2009 | 2008 |
+----------------------------+---------------+--------------+
| | US$ | US$ |
+----------------------------+---------------+--------------+
| ASSETS | | |
+----------------------------+---------------+--------------+
| Non-current assets | | |
+----------------------------+---------------+--------------+
| Property, plant and | 802,919 | 979,087 |
| equipment | | |
+----------------------------+---------------+--------------+
| Intangible assets | 7,524,899 | 5,109,922 |
+----------------------------+---------------+--------------+
| Investments | 4,406,969 | 4,402,842 |
+----------------------------+---------------+--------------+
| Total non-current assets | 12,734,787 | 10,491,851 |
+----------------------------+---------------+--------------+
| | | |
+----------------------------+---------------+--------------+
| Current assets | | |
+----------------------------+---------------+--------------+
| Inventories | 716,392 | 643,877 |
+----------------------------+---------------+--------------+
| Trade receivables | 10,561,671 | 6,283,869 |
+----------------------------+---------------+--------------+
| Other receivables | 1,815,086 | 3,707,876 |
+----------------------------+---------------+--------------+
| Investments | 29,775 | 1,463,143 |
+----------------------------+---------------+--------------+
| Cash deposits | - | 460,276 |
+----------------------------+---------------+--------------+
| Cash and cash equivalents | 14,935,073 | 12,452,387 |
+----------------------------+---------------+--------------+
| Total current assets | 28,057,997 | 25,011,428 |
+----------------------------+---------------+--------------+
| | | |
+----------------------------+---------------+--------------+
| Total assets | 40,792,784 | 35,503,279 |
+----------------------------+---------------+--------------+
| | | |
+----------------------------+---------------+--------------+
| LIABILITIES & EQUITY | | |
+----------------------------+---------------+--------------+
| Current liabilities | | |
+----------------------------+---------------+--------------+
| Short term loans | 1,171,612 | 1,170,515 |
+----------------------------+---------------+--------------+
| Trade payables | 3,412,871 | 973,835 |
+----------------------------+---------------+--------------+
| Other payables | 1,584,884 | 1,790,061 |
+----------------------------+---------------+--------------+
| Deferred income | - | - |
+----------------------------+---------------+--------------+
| Total current liabilities | 6,169,367 | 3,934,411 |
+----------------------------+---------------+--------------+
| | | |
+----------------------------+---------------+--------------+
| Non-current liabilities | | |
+----------------------------+---------------+--------------+
| | | |
+----------------------------+---------------+--------------+
| Deferred tax | 1,299,631 | 647,126 |
+----------------------------+---------------+--------------+
| Total non-current | 1,299,631 | 647,126 |
| liabilities | | |
+----------------------------+---------------+--------------+
| | | |
+----------------------------+---------------+--------------+
| Total liabilities | 7,468,998 | 4,581,537 |
+----------------------------+---------------+--------------+
| | | |
+----------------------------+---------------+--------------+
| 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 | 7,649,913 | 7,785,172 |
+----------------------------+---------------+--------------+
| Retained earnings | 15,084,350 | 12,547,047 |
+----------------------------+---------------+--------------+
| Total shareholders' equity | 33,323,786 | 30,921,742 |
+----------------------------+---------------+--------------+
| | | |
+----------------------------+---------------+--------------+
| Total liabilities & equity | 40,792,784 | 35,503,279 |
+----------------------------+---------------+--------------+
COMPANY BALANCE SHEET
at 31 December 2009
+--------------------------+--------------+--------------+
| | 2009 | 2008 |
+--------------------------+--------------+--------------+
| | US$ | US$ |
+--------------------------+--------------+--------------+
| | | |
+--------------------------+--------------+--------------+
| ASSETS | | |
+--------------------------+--------------+--------------+
| Non-current assets | | |
+--------------------------+--------------+--------------+
| Investments | 287,786 | 258,755 |
+--------------------------+--------------+--------------+
| Total non-current assets | 287,786 | 258,755 |
+--------------------------+--------------+--------------+
| | | |
+--------------------------+--------------+--------------+
| Current assets | | |
+--------------------------+--------------+--------------+
| Other receivables | 5,891,111 | 6,747,506 |
+--------------------------+--------------+--------------+
| Cash and cash | 8,841,131 | 8,126,015 |
| equivalents | | |
+--------------------------+--------------+--------------+
| Total current assets | 14,732,242 | 14,873,521 |
+--------------------------+--------------+--------------+
| | | |
+--------------------------+--------------+--------------+
| Total assets | 15,020,028 | 15,132,276 |
+--------------------------+--------------+--------------+
| | | |
+--------------------------+--------------+--------------+
| LIABILITIES & EQUITY | | |
+--------------------------+--------------+--------------+
| Current liabilities | | |
+--------------------------+--------------+--------------+
| Other payables | 148,580 | 114,625 |
+--------------------------+--------------+--------------+
| Total current | 148,580 | 114,625 |
| liabilities | | |
+--------------------------+--------------+--------------+
| | | |
+--------------------------+--------------+--------------+
| Total liabilities | 148,580 | 114,625 |
+--------------------------+--------------+--------------+
| | | |
+--------------------------+--------------+--------------+
| Capital and reserves | | |
+--------------------------+--------------+--------------+
| Share capital | 424,023 | 424,023 |
+--------------------------+--------------+--------------+
| Share premium | 11,283,551 | 11,283,551 |
+--------------------------+--------------+--------------+
| Other reserves | (1,922,214) | (2,300,985) |
+--------------------------+--------------+--------------+
| Retained earnings | 5,086,088 | 5,611,062 |
+--------------------------+--------------+--------------+
| | | |
+--------------------------+--------------+--------------+
| Total shareholders' | 14,871,448 | 15,017,651 |
| equity | | |
+--------------------------+--------------+--------------+
| | | |
+--------------------------+--------------+--------------+
| Total liabilities & | 15,020,028 | 15,132,276 |
| equity | | |
+--------------------------+--------------+--------------+
CONSOLIDATED CASHFLOW STATEMENT
for the year ended 31 December 2009
+-------------------------------------+--------------+--------------+
| | 2009 | 2008 |
+-------------------------------------+--------------+--------------+
| | US$ | US$ |
+-------------------------------------+--------------+--------------+
| Operating activities | | |
+-------------------------------------+--------------+--------------+
| Income before taxation from | 4,407,299 | 3,787,704 |
| continuing operations | | |
+-------------------------------------+--------------+--------------+
| Adjustments for: | | |
+-------------------------------------+--------------+--------------+
| Interest income | (422,972) | (671,089) |
+-------------------------------------+--------------+--------------+
| Interest expense | 19,567 | 2,303 |
+-------------------------------------+--------------+--------------+
| Exchange difference | 1,127,941 | 18,488 |
+-------------------------------------+--------------+--------------+
| Excess on acquisition of fair value | (445,573) | - |
| net assets of subsidiary over cost | | |
+-------------------------------------+--------------+--------------+
| Gain on disposal of quoted | - | (158,166) |
| securities | | |
+-------------------------------------+--------------+--------------+
| Impairment loss in receivables | (119,345) | 90,597 |
+-------------------------------------+--------------+--------------+
| Depreciation of property, plant and | 115,120 | 165,870 |
| equipment | | |
+-------------------------------------+--------------+--------------+
| Impairment of property, plant and | 6,052 | - |
| equipment | | |
+-------------------------------------+--------------+--------------+
| Amortisation for intangible assets | 2,957,106 | 1,592,818 |
+-------------------------------------+--------------+--------------+
| Share based payments | 23,142 | - |
+-------------------------------------+--------------+--------------+
| | | |
+-------------------------------------+--------------+--------------+
| Operating cash generated before | 7,668,337 | 4,828,525 |
| working capital changes | | |
+-------------------------------------+--------------+--------------+
| (Increase)/decrease in inventories | (72,515) | 904,621 |
+-------------------------------------+--------------+--------------+
| Increase in trade and other | (2,265,667) | (2,828,519) |
| receivables | | |
+-------------------------------------+--------------+--------------+
| Increase in trade and other | 1,873,203 | 1,178,229 |
| payables | | |
+-------------------------------------+--------------+--------------+
| | | |
+-------------------------------------+--------------+--------------+
| Cash generated by operations | 7,203,358 | 4,082,856 |
+-------------------------------------+--------------+--------------+
| Income taxes paid | (158,474) | (128,065) |
+-------------------------------------+--------------+--------------+
| Interest paid | (19,567) | (2,303) |
+-------------------------------------+--------------+--------------+
| NET CASH GENERATED FROM OPERATING | 7,025,317 | 3,952,488 |
| ACTIVITIES | | |
+-------------------------------------+--------------+--------------+
| | | |
+-------------------------------------+--------------+--------------+
| Investing activities | | |
+-------------------------------------+--------------+--------------+
| Interest received | 422,972 | 671,089 |
+-------------------------------------+--------------+--------------+
| Proceeds on disposal of trading | - | 463,730 |
| investment | | |
+-------------------------------------+--------------+--------------+
| Purchase of property, plant and | (55,201) | (418,824) |
| equipment | | |
+-------------------------------------+--------------+--------------+
| Proceeds on disposal of property, | 111,471 | - |
| plant and equipment | | |
+-------------------------------------+--------------+--------------+
| Purchase of intangible assets | (4,202,061) | (2,797,073) |
+-------------------------------------+--------------+--------------+
| Acquisition of subsidiary | (308,581) | - |
+-------------------------------------+--------------+--------------+
| Entrust loans received/ (made) | 1,433,369 | (5,865,985) |
+-------------------------------------+--------------+--------------+
| Purchase of investments for trading | - | (305,564) |
+-------------------------------------+--------------+--------------+
| (Decrease)/Increase in pledged bank | 460,276 | (177,182) |
| deposits | | |
+-------------------------------------+--------------+--------------+
| NET CASH USED IN INVESTING | (2,137,755) | (8,429,809) |
| ACTIVITIES | | |
+-------------------------------------+--------------+--------------+
| | | |
+-------------------------------------+--------------+--------------+
| Financing activities | | |
+-------------------------------------+--------------+--------------+
| Proceeds from short-term bank loans | - | 1,170,515 |
+-------------------------------------+--------------+--------------+
| Dividend paid | (953,653) | (1,027,075) |
+-------------------------------------+--------------+--------------+
| NET CASH GENERATED FROM FINANCING | (953,653) | 143,440 |
| ACTIVITIES | | |
+-------------------------------------+--------------+--------------+
| GROUP CASHFLOW STATEMENT-CONTINUED | | |
| for the year ended 31 December 2009 | | |
| | | |
| | | |
+-------------------------------------+--------------+--------------+
| | 2009 | 2008 |
| | US$ | US$ |
+-------------------------------------+--------------+--------------+
| NET (DECREASE)/INCREASE IN CASH AND | 3,933,909 | (4,33,881 |
| CASH EQUIVALENTS | | |
+-------------------------------------+--------------+--------------+
| Effect of exchange rate changes | (1,451,222) | (1,332,884) |
+-------------------------------------+--------------+--------------+
| CASH AND CASH EQUIVALENTS AT | 12,452,387 | 18,119,152 |
| BEGINNING OF YEAR | | |
+-------------------------------------+--------------+--------------+
| | | |
+-------------------------------------+--------------+--------------+
| CASH AND CASH EQUIVALENTS AT THE | 14,935,073 | 12,452,387 |
| END OF YEAR | | |
+-------------------------------------+--------------+--------------+
CONSOLIDATED STATEMENT OF SHAREHOLDERS'FUNDS AND STATEMENT OF CHANGES IN
SHAREHOLDERS'EQUITY
at 31 December 2009
+---------------+---------------+------------+-------------+-------------+-------------+-------------+
| | Share | Share | Merger | Other | Retained | Total |
| | capital | premium | reserve | reserves | earnings | |
+ +---------------+------------+-------------+-------------+-------------+-------------+
| | US$ | US$ | US$ | US$ | US$ | US$ |
+ +---------------+------------+-------------+-------------+-------------+-------------+
| | | | | | | |
+---------------+---------------+------------+-------------+-------------+-------------+-------------+
| | | | | | | |
+---------------+---------------+------------+-------------+-------------+-------------+-------------+
| Balance at 31 | 424,023 | 11,283,551 | (1,118,051) | 8,336,500 | 10,675,826 | 29,601,849 |
| December 2007 | | | | | | |
+---------------+---------------+------------+-------------+-------------+-------------+-------------+
| | | | | | | |
+---------------+---------------+------------+-------------+-------------+-------------+-------------+
| Profit for | - | - | - | - | 3,429,690 | 3,429,690 |
| the year | | | | | | |
+---------------+---------------+------------+-------------+-------------+-------------+-------------+
| Currency | | | | | | |
| translation | | | | | | |
| differences | - | - | - | (1,082,722) | - | (1,082,722) |
| on foreign | | | | | | |
| operations | | | | | | |
+---------------+---------------+------------+-------------+-------------+-------------+-------------+
| Total | | | | | | |
| comprehensive | - | - | - | (1,082,722) | 3,429,690 | 2,346,968 |
| income for | | | | | | |
| the year | | | | | | |
+---------------+---------------+------------+-------------+-------------+-------------+-------------+
| Transfer to | | | | | | |
| statutory | - | - | - | 531,394 | (531,394) | - |
| reserve | | | | | | |
+---------------+---------------+------------+-------------+-------------+-------------+-------------+
| Transfer to | | | | | | |
| capital | - | - | - | - | (1,027,075) | (1,027,075) |
| reserve | | | | | | |
+---------------+---------------+------------+-------------+-------------+-------------+-------------+
| | | | | | | |
+---------------+---------------+------------+-------------+-------------+-------------+-------------+
| Balance at 31 | 424,023 | 11,283,551 | (1,118,051) | 7,785,172 | 12,547,047 | 30,921,742 |
| December 2008 | | | | | | |
+---------------+---------------+------------+-------------+-------------+-------------+-------------+
| | | | | | | |
+---------------+---------------+------------+-------------+-------------+-------------+-------------+
| Profit for | - | - | - | - | 3,654,813 | 3,654,813 |
| the year | | | | | | |
+---------------+---------------+------------+-------------+-------------+-------------+-------------+
| Currency | | | | | | |
| translation | | | | | | |
| differences | - | - | - | (322,259) | - | (322,259) |
| on foreign | | | | | | |
| operations | | | | | | |
+---------------+---------------+------------+-------------+-------------+-------------+-------------+
| Total | | | | | | |
| comprehensive | - | - | - | (322,259) | 3,654,813 | 3,332,554 |
| income for | | | | | | |
| the year | | | | | | |
+---------------+---------------+------------+-------------+-------------+-------------+-------------+
| Transfer to | | | | | | |
| statutory | - | - | - | 163,857 | (163,857) | - |
| reserve | | | | | | |
+---------------+---------------+------------+-------------+-------------+-------------+-------------+
| Share based | | | | | | |
| payments | - | - | - | 23,142 | - | 23,142 |
+---------------+---------------+------------+-------------+-------------+-------------+-------------+
| Dividend | | | | | | |
| payable on | - | - | - | - | (953,653) | (953,653) |
| common stock | | | | | | |
+---------------+---------------+------------+-------------+-------------+-------------+-------------+
| | | | | | | |
+---------------+---------------+------------+-------------+-------------+-------------+-------------+
| Balance at 31 | 424,023 | 11,283,551 | (1,118,051) | 7,649,912 | 15,084,350 | 33,323,786 |
| December 2009 | | | | | | |
+---------------+---------------+------------+-------------+-------------+-------------+-------------+
NOTES TO THE FINANCIAL STATEMENTS
1 BASIS OF PREPARATION
This preliminary announcement has been prepared in accordance with International
Financial Reporting Standards (IFRS) as adopted by the European Union (EU), the
Companies Act 2006 applicable to companies reporting under IFRS and under the
historical cost convention.
2. REVENUE AND SEGMENT INFORMATION
The segment reporting format is determined to be business segments, as the
Group's principal activity is conducted in the People's Republic of China.
The Group's operations are organised into two operating divisions namely
software development and system integration.
The software segment provides export tax, e-government and information
integration software.
The system integration provides consultancy and the implementation of IT
solutions, which includes provision of hardware and peripherals.
+------------------------------+-------------+-------------+-------------+
| 2009 | Software | System | |
| | development | integration | Total |
+------------------------------+-------------+-------------+-------------+
| | US$ | US$ | US$ |
+------------------------------+-------------+-------------+-------------+
| Segment Revenue (excl. VAT | 8,305,265 | 5,305,044 | 13,610,309 |
| refund) | | | |
+------------------------------+-------------+-------------+-------------+
| VAT refund | 903,000 | - | 903,000 |
+------------------------------+-------------+-------------+-------------+
| Segment Revenue (incl. VAT | 9,208,265 | 5,305,044 | 14,513,309 |
| refund) | | | |
+------------------------------+-------------+-------------+-------------+
| Segment Cost of Sales | (100,673) | (4,818,507) | (4,919,180) |
+------------------------------+-------------+-------------+-------------+
| Segment gross profit | 9,107,592 | 486,537 | 9,594,129 |
+------------------------------+-------------+-------------+-------------+
| Other income | | | 866,233 |
+------------------------------+-------------+-------------+-------------+
| Excess on acquisition of | | | |
| fair value of net assets of | | | 445,573 |
| subsidiary over cost | | | |
+------------------------------+-------------+-------------+-------------+
| Research and development | | |(2,206,895) |
| cost | | | |
+------------------------------+-------------+-------------+-------------+
| Selling and distribution | | |(2,152,110) |
| expenses | | | |
+------------------------------+-------------+-------------+-------------+
| Administrative expenses | | |(3,242,317) |
+------------------------------+-------------+-------------+-------------+
| Impairment loss on Property, | | | |
| plant and equipment | | | (6,049) |
+------------------------------+-------------+-------------+-------------+
| Operating profit | | | 3,298,564 |
+------------------------------+-------------+-------------+-------------+
| Finance income | | | 2,256,244 |
+------------------------------+-------------+-------------+-------------+
| Finance cost | | |(1,147,509) |
+------------------------------+-------------+-------------+-------------+
| Profit before tax | | | 4,407,299 |
+------------------------------+-------------+-------------+-------------+
+----------------------------+-------------+-------------+-------------+
| 2008 | Software | System | |
| | development | integration | Total |
+----------------------------+-------------+-------------+-------------+
| | US$ | US$ | US$ |
+----------------------------+-------------+-------------+-------------+
| Segment Revenue (excl. VAT | 7,862,890 | 3,767,250 | 11,630,140 |
| refund) | | | |
+----------------------------+-------------+-------------+-------------+
| VAT refund | 447,984 | - | 447,984 |
+----------------------------+-------------+-------------+-------------+
| Segment Revenue (incl. VAT | 8,310,874 | 3,767,250 | 12,078,124 |
| refund) | | | |
+----------------------------+-------------+-------------+-------------+
| Segment Cost of Sales | (69,605) | (3,425,387) | (3,494,992) |
+----------------------------+-------------+-------------+-------------+
| Segment gross profit | 8,241,269 | 341,863 | 8,583,132 |
+----------------------------+-------------+-------------+-------------+
| Other income | | | 620,974 |
+----------------------------+-------------+-------------+-------------+
| Excess on acquisition of | | | |
| fair value of net assets | | | - |
| of subsidiary over cost | | | |
+----------------------------+-------------+-------------+-------------+
| Research and development | | |(1,986,680) |
| cost | | | |
+----------------------------+-------------+-------------+-------------+
| Selling and distribution | | |(1,357,692) |
| expenses | | | |
+----------------------------+-------------+-------------+-------------+
| Administrative expenses | | |(2,566,871) |
+----------------------------+-------------+-------------+-------------+
| Impairment loss on | | | |
| Property, plant and | | | - |
| equipment | | | |
+----------------------------+-------------+-------------+-------------+
| Operating profit | | | 3,292,863 |
+----------------------------+-------------+-------------+-------------+
| Finance income | | | 515,632 |
+----------------------------+-------------+-------------+-------------+
| Finance cost | | | (20,791) |
+----------------------------+-------------+-------------+-------------+
| Profit before tax | | | 3,787,704 |
+----------------------------+-------------+-------------+-------------+
The Group's revenue was all derived from its principal activity. All revenue
originates in the People's Republic of China.
Major customers
During the year revenues of $3,483,733 (2008: $3,782,022) arose from three
customers from within the Software Development division. Within that figure,
revenue derived from Chinese government and companies within the control of the
Chinese government accounted for 59% (2008: 34%).
During the year revenues of $6,806,267 (2008: $7,310,193) arose from three
customers from within the System Integration division. Within that figure,
revenue derived from Chinese government and companies within the control of the
Chinese government accounted for 84% (2008: 53%).
The assets and liabilities of the Group cannot be allocated to the above
segments. For internal reporting purposes balance sheets are not split into
segments.
3. OTHER INCOME
+----------------------------------------+----------+----------+
| | Group |
+----------------------------------------+---------------------+
| | 2009 | 2008 |
+----------------------------------------+----------+----------+
| | US$ | US$ |
+----------------------------------------+----------+----------+
| | | |
+----------------------------------------+----------+----------+
| Gain on disposal of quoted securities | - | 158,166 |
+----------------------------------------+----------+----------+
| Government grants and rebates | 282,904 | 306,195 |
+----------------------------------------+----------+----------+
| Interest on entrusted loans | 422,972 | 155,457 |
+----------------------------------------+----------+----------+
| Other income | 160,357 | 1,156 |
+----------------------------------------+----------+----------+
| | 866,233 | 620,974 |
+----------------------------------------+----------+----------+
4. EARNINGS PER SHARE
+-----------------------------------------+--------------+-------------+
| | 2009 | 2008 |
+-----------------------------------------+--------------+-------------+
| | | |
+-----------------------------------------+--------------+-------------+
| Profit for the year | US$ | US$ |
| | 3,654,813 | 3,429,690 |
+-----------------------------------------+--------------+-------------+
| | | |
+-----------------------------------------+--------------+-------------+
| Number of shares - weighted average - | 165,582,189 |165,582,189 |
| basic | | |
+-----------------------------------------+--------------+-------------+
| Basic earnings per share | US$ 0.0221 | US$ 0.0207 |
+-----------------------------------------+--------------+-------------+
| | | |
+-----------------------------------------+--------------+-------------+
| Number of shares - weighted average - | 165,700,706 |165,582,189 |
| diluted | | |
+-----------------------------------------+--------------+-------------+
| Diluted earnings per share | US$ 0.0221 | US$ 0.0207 |
+-----------------------------------------+--------------+-------------+
5. DIVIDEND
Subject to approval at the forthcoming AGM, the Company will declare a dividend
of 0.31p per ordinary share. The dividend will be paid to shareholders on the
register on 18 June 2010. The Company's shares will trade 'Ex-dividend' on 16
June 2010 and the proposed payment date is 19 July 2010.
6. PUBLICATION OF NON-STATUTORY ACCOUNTS
The financial information in the preliminary statement of results does not
constitute the Company's statutory accounts for the years ended 31 December 2009
or 2008. Statutory accounts for 2008 have been delivered to the registrar of
companies, and those for 2009 will be delivered in due course. The auditors have
reported on those accounts; their reports were (i) unqualified, (ii) did not
include references to any matters to which the auditors drew attention by way of
emphasis without qualifying their reports and (iii) did not contain a statement
under section 237(2) or (3) of the Companies Act 1985 in respect of the accounts
for 2008, nor a statement under section 498(2) or (3) of the Companies Act 2006
in respect of the accounts for 2009.
The financial statements, and this preliminary statement, of the Group for the
year ended 31 December 2009 were authorised for issue by the Board of Directors
on 19 April 2010
7. 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 am on 25 May 2010 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 KKKDPOBKKPQB
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