LONDON (Alliance News) - GEONG International Ltd saw its shares slide sharply early Monday after it reported a lower order book, reiterated that it expects to report a loss for the six months to end-September and revenues of about GBP4.1 million, and said it expects its 2014 results to be in line with those it reported this year.
In a trading update, the software company which focuses on large Chinese companies, said its order book stood at GBP10 million at September 30, down from GBP11.5 million a year earlier.
It said trade receivables were about GBP21 million at the end of the period, including about GBP18.3 million of accrued income, down from GBP22.1 million and GBP19.1 million a year earlier. Cash on hand was GBP3.7 million, down from GBP4.6 million.
GEONG added that it repaid GBP1.3 million of loan stock, using cash and an increase in bank borrowings of GBP0.8 million to GBP1.8 million. It spent about GBP0.35 million on research and development in the period and made payments of about GBP0.75 million relating to contracts with Oracle Software arising from a prior period.
"Economic conditions in China have steadied and the Chinese economy is expected to achieve the annual target growth despite concerns expressed earlier in the year," it said in a statement.
The company, who's customers include Bank of Hubei, Bank of Huaxia, Mingshen Bank, New Life Insurance, China Bond and Bank of China Insurance, is focusing on its software as a service business in an attempt to boost margins and shorten payment terms. It said new client wins in this area in the first half are expected to generate about GBP0.5 million in additional annual revenue.
"The board expects that, as the revenue base is rebuilt with the heavier emphasis on SaaS business, the accrued income balances will reduce further and that this will become more evident in
the 2014 annual results," it said.
Geong shares were down 29% at 6.3 pence early Monday, the biggest decline on the AIM Market.
By Steve McGrath; stevemcgrath@alliancenews.com; @SteveMcGrath1
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