22 February 2012
GEONG International Limited
("GEONG" or the "Company")
GEONG International Limited (AIM: GNG), a leading Internet software solutions
provider and operator for large enterprises in China, is pleased to present the
following trading statement for the nine months ended 31 December 2011.
Total revenues for the period were marginally lower than in the same period
last year at approximately £7.6m, of which £2.8m was generated in the three
months ended 31 December 2011 a pro-rata increase of 17% over the £4.8m in the
previous six months. SaaS business accounted for 21% of total revenue or £1.6m
in the nine months, of which £0.5m, approximately the same level as in each of
the previous 3 month periods, was in the three months to 31 December 2011. SaaS
revenue comprises two elements, being the monthly fixed charges to our
customers and the performance related fees which are dependent on the increased
level of the customers' business performance, with the majority of the latter
arising in the fourth trading quarter, ie after the calendar year end.
Accordingly, we anticipate that the current quarter will therefore see SaaS
revenue being significantly higher than in the previous three quarters.
As at 31 December 2011, amounts due from customers were £17.3m, comprising £
4.4m invoiced trade receivables and £12.9m of accrued income, down from £5.3m
and £13.2m respectively, as at 30 September 2011.
In the period from 30 September 2011 to 31 December 2011, accrued income
increased by £2.4m as a result of services provided which have not yet been
invoiced and reduced by £2.7m as a result of previously accrued income which
has now been invoiced. Furthermore, £0.5m of new business has been invoiced to
customers and £1.9m, 59% of the invoiced amounts' has already been collected in
the period to 31 December 2011 in accordance with its payment terms. Total
collections, including previously invoiced amounts, totalled £4.1m in the
quarter to 31 December 2011 and the cash balance at that date was £6.1m.
Investors should expect accrued income to continue to represent a relatively
large proportion of amounts due from customers as this arises from our efforts
to manage our cash flows most effectively. Many of our major customers, as is
common in the PRC, settle invoices from suppliers only on an annual or,
sometimes, semi-annual basis. However, business enterprises are required to
account for and pay both business tax and VAT in the month following the issue
of invoice. We therefore seek to manage the timing of our invoices so that they
are rendered as closely as possible to coincide with the payment cycle of our
customers in order to reduce to a minimum the levels of unrecovered business
tax and VAT that we have paid. Moreover, in China, unlike the UK, business tax
and VAT on bad debts is not recoverable and, although GEONG has experienced a
very low incidence of bad debts, by delaying invoicing until near the payment
date collectability is better assured.
Your board is pleased with the continued steady progress and, with a current
order book of approximately £14m (slightly reduced as the business activities
move more towards the short-term SaaS business and away from the longer-term
Iaas business), is confident of a satisfactory outcome for the full year
despite the onset of a less certain economic environment in China.
The Company expects to give a full year trading update in mid June 2012 with
the results scheduled to be announced during the second half of July 2012.
For further information, please contact:
GEONG International Limited www.geong.com Tel: +86 10 5222 0999
Henry Tse, Chairman
Weidong Wang, CEO
Amit Thakar, CFO
Evolution Securities Limited Tel: +44 20 7071 4300
(Nominated Adviser and Joint Broker)
About GEONG International Limited
GEONG is recognised as a leading independent Internet software solutions
provider and operator for large enterprises in China.
Registered in Jersey, the Company's operations are headquartered in Beijing,
China. GEONG International Ltd. (GEONG or the Company) has been quoted on the
London Stock Exchange (LSE AIM: GNG.L) since June 2006. The Company has since
transformed from an ECM (Enterprise Content Management) software and service
centric business to an internet business centric company and both revenues and
profits have almost trebled over the last six years.
GEONG is an internet solutions and service software company managed by a world
class management and professional team who collectively own 26% of the
business. The Company's mission is to help its clients to improve their
business efficiency and customer satisfaction through smarter internet
For more information, please visit www.geong.com