GNG Geong

 
TIDMGNG 
 
23 December 2014 
 
                         GEONG International Limited 
 
                        ("GEONG" or the "Company") 
 
                               Interim Results 
 
GEONG International Limited (AIM: GNG.L), a leading Internet 
solution provider and operator in China for large enterprises, announces its 
unaudited interim results for the six months ended 30 September 2014. 
 
Financial Highlights 
 
  - Turnover GBP4.4 million (H1 2013/14: GBP4.3 million) 
  - Gross margin 34% (H1 2013/14: 43%) 
  - Loss before tax GBP0.17 million (H1 2013/14: Loss GBP0.44 million) 
  - Basic and diluted loss per share 0.46 pence (H1 2013/14: basic and 
    diluted loss per share 1.18 pence) 
  - Trade receivables GBP21.6million (At 31 March 2014: GBP20.1 million) 
    including accrued income of GBP16.8 million (At 31 March 2014: GBP14.3 
    million) 
  - Gross cash GBP3.5 million (At 31 March 2014: GBP3.5 million) 
  - Order book GBP10.0 million (At 31 March 2014: GBP10.2 million) 
    including GBP4.0 million for delivery in H2 
 
Key Highlights and New Clients 
 
The Company continues to execute its strategy of focusing on 
GEONG's top 30 clients (the top 20 existing clients in FSI and the top 10 
existing clients in non-FSI) to achieve better gross margins and shorter 
payment terms. The Board expects that in time this will improve both 
productivity and revenue per account and rebuild a solid revenue formula. 
 
Operational highlights for the six months to 30 September 2014 
include: 
 
1) Further developed the mobile finance platform for China Bond and 
China Construction Bank; 
 
2) Enhanced the direct banking platform, and signed contracts with 
Minsheng Bank and Guangfa Bank; 
 
3) Minsheng Bank and Agricultural Bank of China continued the use 
of (GEONG UxD); and 
 
4) Renewed the core supplier agreement with IBM GDC and GBS for 
another year. 
 
The above developments generated close to GBP1.0 million of revenue 
to the Company in the six months to 30 September 2014. 
 
Commenting on the results, Wang Weidong, Chief Executive Officer 
said: 
 
"The operational highlights above prove that the Company can make 
progress by focusing on its top 30 clients and build a solid foundation for 
the growth. The Company will continue this path in the second half of the 
financial year. 
 
Whilst generating broadly similar revenues in the first half, the 
gross margin fell from 43.0% to 34.3% when compared with the first half of 
2013/2014. In line with the first half last year, this reflects that SaaS 
revenues are expected to be weighted towards the second half of the year with 
a similar cost of sales to that incurred in the first half. 
 
It takes time to reposition a business but we remain confident that 
the strategy will deliver a stronger company." 
 
 
 
For further information, please contact: 
 
GEONG International Limited   www.geong.com   Tel: +86 10 85869655 
 
Henry Tse, Chairman 
Weidong Wang, CEO 
David Tsui, CFO 
 
Nominated Adviser and Broker 
finnCap Limited                               Tel: +44 (0)20 7220 0500 
Stuart Andrews 
Scott Mathieson 
 
 
 
 
 
Chairman's Statement 
 
Overview 
 
In previous statements I have outlined to shareholders our strategy 
of focusing on our larger existing clients and their SaaS business and to 
develop new solutions to create more opportunities within our existing client 
base. As previously stated, the Board believes that in the longer term, this 
should generate higher margins and tie up less capital. Whilst the management 
team has committed to execute the strategy it has taken several years to 
refocus the business and the management team will continue to work hard on the 
repositioning in the second half. Whilst slow, the results of the change in 
strategy are evident and we believe will translate into a satisfactory outturn 
for the current financial year. 
 
New products and solutions 
 
In product R&D, the Company continues to invest into Content 
Management Suite ("CMS") and Mobile Secured Transaction Platform ("MSTP"). 
The new CMS v6.20 is appended to the Big-Data function which allows the user 
to use the smarter one-to-one marketing combined with contents. The system is 
integrated with the popular web-based Weixin and Weibo marketing system which 
has a significantly improved user experience and an enhanced mobile function. 
MSTP targets FSI to enable clients to build their mobile market, mobile 
payment and mobile transaction on both Android and IOS platforms. 
 
Significant progress has been made in relation to both our Direct 
Banking Solution and our Big-Data Marketing Solution for both IaaS and SaaS. 
The Direct Banking Solution is a cutting-edge solution to capture the fast 
growth trend of financial services on the internet in China. 
 
We have the advantage of working with worldwide leading partners, 
such as IBM and Oracle, as well as the leading customers in the industry, such 
as CCB in FSI and SH GM in automotive, which gives us a combined advantage of 
advanced technical knowhow and practical industry expertise. 
 
Financial review 
 
Revenue for the six months was GBP4.4 million (SaaS GBP1.4 million, 
IaaS GBP3.0 million), marginally higher than the same period last year which 
recorded GBP4.3 million (SaaS GBP0.9 million, IaaS GBP3.4 million). It is 
expected that the increase in SaaS clients' revenue will be stronger in H2 
and that this will result in a higher gross margin in H2. Selling and 
distribution expenses (GBP0.235 million) are down by 50% compared to the first 
half of last year (GBP0.47 million) due to more focus on the top 30 existing 
clients as well as their SaaS businesses. The GBP0.1 million of other operating 
expenses related to costs incurred in obtaining short term borrowings. 
 
At 30 September 2014, trade receivables were GBP21.6 million, up by 
GBP1.5 million since 31 March 2014, due to an increase of GBP2.55 million in 
accrued income and a GBP1.0 million reduction in trade debtors. Cash on hand at 
30 September 2014 was GBP3.5 million (net cash GBP1.0 million) compared to GBP3.5 
million (net cash GBP1.4 million) at 31 March 2014. During the period, the 
Company has increased bank borrowings from GBP1.1 million to GBP1.5 million. 
 
With respect to trade receivables, as previously stated 
traditionally the third quarter is the peak collection period for the Company 
and this is expected to reduce the level of trade receivables in H2 and 
overall. 
 
The inventory level at 30 September 2014 was GBP0.25 million higher 
than 31 March 2014 due to work being delivered in the first half of the year 
which will be invoiced in the second half. The carrying value of intangible 
assets has decreased by GBP0.25 million from last year end, primarily due to an 
exchange difference of GBP0.1 million and the normal amortisation of GBP0.33 
million. 
 
The order book at 30 September 2014 was at GBP10.0 million which 
included GBP4.0 million in SaaS business, of which approximately 40% the 
current order book is recurring. GBP4.0 million is due for delivery in the 
second half of the year. Within the GBP4.0 million which is to be delivered in 
the second half, 60% is SaaS business and 40% is IaaS business. 
 
Outlook 
 
The Company continues to gain traction with its top 30 existing 
clients and generate more business from them which is encouraging for the 
future. Despite the difficulties with cash collection over the last few years 
the Company is still endorsed highly by its clients and peers, and remains 
competitive within the industry. Whilst the change of strategy is slowly 
coming to fruition, the Board remains confident in the outlook for the Company 
and that the strategy will deliver a more robust business. 
 
 
Henry H.Y. Tse 
 
Chairman 
 
 
 
 
Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income 
 
For the period ended 30 September 2014 
 
                              Notes  6 months ended    6 months Year ended 
                                       30 September    ended 30         31 
                                               2014   September      March 
                                                           2013       2014 
                                          Unaudited   Unaudited    Audited 
 
                                              GBP'000       GBP'000      GBP'000 
Revenue                         3             4,423       4,307      9,493 
Cost of sales                               (2,904)     (2,453)    (4,791) 
Gross profit                                  1,519       1,854      4,702 
 
Selling and distribution 
expenses                                      (235)       (470)      (861) 
Administration expenses                     (1,020)     (1,237)    (2,743) 
 
Research and development 
costs                                         (350)       (381)      (692) 
Share option expenses                             -           -          - 
Other operating income                           37           -      (141) 
Other operating expenses                       (22)       (101)        (8) 
Profit/(loss) from operations                  (72)       (335)        257 
Finance costs                                 (103)       (105)      (212) 
Finance income                                    0           1          2 
Profit/(loss) before taxation                 (174)       (439)         47 
Income tax expense              6                 -         (8)       (39) 
Profit/(loss) for the period                  (174)       (447)          8 
 
Other comprehensive income 
Exchange differences on 
translating foreign 
operations                                      470       (825)    (1,443) 
Total comprehensive income 
for the period 
                                                296     (1,272)    (1,435) 
 
Earnings per ordinary share     7 
(pence) 
Basic                                        (0.46)      (1.18)       0.02 
Diluted                                      (0.46)      (1.18)       0.02 
 
 
 
 
Condensed Consolidated Statement of Financial Position 
 
As at 30 September 2014 
 

Geong (LSE:GNG)
Historical Stock Chart
From Dec 2024 to Jan 2025

Geong (LSE:GNG)
Historical Stock Chart
From Jan 2024 to Jan 2025