15 May 2007 07:00
EMBARGOED UNTIL 7AM, 15 MAY 2007
GEONG INTERNATIONAL LIMITED FINAL RESULTS
GEONG International Limited ("the Company"), the AIM listed, Beijing based, provider of content management software and solutions, today announces its final results for the period ended 31 March 2007.
Financial Highlights
* Revenue up 48% to US$8.12 million (2005: US$5.48 million) * Gross profit up 51% to US$4.47 million (2005:US$2.97 million) * Gross profit margin 55% (2005: 54.3%) * Basic earnings per share US cents 5.95 (2005: 5.2 US cents)
Operational Highlights
* IBM core supplier status renewed and Oracle core supplier status awarded * New deals in automotive industry with FAW Volkswagen, Shanghai Automotive Industry Corporation and Shanghai General Motors * Contracts signed in financial services sector with Haitong Securities, Bank of Communications, China Asset Management and China Construction Bank * Contract signed with Lenovo for bespoke PortalAge solution * Awarded `Most Successful Content Management Software Enterprise in China 2006' * Alliance agreement signed for promotion of SmartBox * Canadian representative office established for international promotion of SmartBox
Commenting on the results Henry Tse, Chairman of GEONG said:
"A number of important strategic steps were taken during 2006 including the Company's admission to AIM, launch of SmartBox Express and the continued development of the Company's sales and marketing channels. I am delighted that we have won a number of significant contracts, both in markets where GEONG has traditionally been strong as well as developing a presence in the automotive and the transportation industries. The performance of the business to date has been extremely pleasing and as such the management looks to the future with optimism."
-ends-
For further information visit www.geong.com or contact:
GEONG International LimitedHenry H.Y Tse - ChairmanWang Weidong - Chief Executive OfficerTavistock Communications, Matt RidsdaleSimon ComptonTel: 020 7920 3150Seymour PierceJohn DepesqualeParimal KumarTel : 020 71078000 Chairman's StatementOVERVIEW
I am pleased to report our first final results since our admission to trading on AIM in June 2006. The Company has continued to perform well with strong sales of our flagship PortalAge software for Enterprise Content Management, and increased sales from SmartBox, our boxed solution for SME's with the new release of SmartBox Express, its entry level version. Despite relatively small proceeds from the fund raising at the time of GEONG's admission to AIM, the management team was able to deliver a strong growth in both sales and profitability.
Good progress has been made in all areas of the business during the period with a number of significant contract wins both in industries where GEONG has traditionally been strong such as the financial services sector, as well more nascent markets for us such as automotive and transportation.
It is also particularly pleasing that GEONG was once again recognised in the Deloitte "Technology Fast 50 China 2006" and the "Technology Fast 500 Asia Pacific 2006". To be named among the 50 fastest growing technology companies in China is a great achievement and raises the profile of GEONG as a growing and dynamic software Company.
OPERATIONAL REVIEW
2006 was a successful year with a number of valuable contracts awarded by blue chip companies for the provision of PortalAge solutions. It is particularly pleasing that these contracts included both renewals and extensions of agreements with existing GEONG clients as well as clients that we are now working with for the first time.
In October, GEONG was awarded core supplier status by IBM China Global Business Services following a competitive evaluation process based on a number of key criteria on quality, cost effectiveness, timeliness, flexibility and technical capability. I am delighted that GEONG has been awarded `Core Supplier Status' for the second consecutive year. It is a significant achievement, which not only provide potentially significant deal flow but also demonstrates the success of all of the GEONG team in ensuring that our relationship with customers and partners remains extremely strong.
PortalAge
Significant new contracts to supply Air China, China Construction Bank, Bank of Communications, Haitong Securities, China Asset Management and Huawei 3-Com were awarded during the period. Other important contracts were signed with FAW-Volkswagen, Shanghai General Motors and Shanghai Automotive Industry Corporation, which have helped further establish GEONG as a leading ECM software and solution supplier to China's rapidly developing automotive industry, an area where the management intends to continue to seek opportunities.
SmartBox and SmartBox Express
In February 2007, the Company announced that it had signed an alliance agreement to work with the Shanghai Enterprise Information Promotion Centre ("Shanghai EIPC") to promote SmartBox to Shanghai based SME's.
Shanghai EIPC is a joint venture between the Shanghai government and a number of leading Shanghai universities. Its aim is to help improving the way SME's manage their information systems and business management processes. Shanghai EIPC and GEONG intend to target these companies by holding joint seminars to demonstrate how SmartBox could help SME's in Shanghai achieving such purpose. According to the Shanghai government, in 2005 there were 337,353 SME businesses in the region. The management believes that this agreement is of significant strategic importance as the Company works to drive sales of its SmartBox and SmartBox Express.
In March 2007, Canadian representative office was established for the promotion of SmartBox in overseas market. As a pilot, a NASDAQ/OTCBB listed company in Vancouver signed up SmartBox to help enhance their global operation. This signifies the acceptance of SmartBox by foreign customer and the opening up of a new market opportunity.
FINANCIAL OVERVIEW
The financial results for the year met the all financial targets set by the Board in June 2006. GEONG enjoyed strong growth in both sales and profitability during the period with turnover up 48% to US$8.12 million (2005: US$5.48 million). As anticipated, high margins were maintained 55% (2005: 54.3%) resulting in Gross Profit of US$4.47 million (2005: US$2.97 million) a rise of 51%. Basic earning per share was 5.95 US cents (2005: 5.2 US cents) and cash equivalents improved to $1.01 million ($0.7 million).
It is worth noting that FRS20 "share based payment" was adopted for the first year resulting in an increase of employee cost and thus a charge to profit of $73K. There is no effect on net assets as there is a corresponding credit to profit and loss reserves. Being listed for the first year, additional AIM maintenance cost as compared to FY06 is $373,339.88.
CURRENT TRADING AND OUTLOOK
Following the period end, GEONG announced an important contract with Lenovo Group Limited to design, build, deploy and operate a bespoke dealer management and communications systems, based on PortalAge. The Directors believe this agreement, which is a one-year agreement, has the potential to be worth between $1,860,000 and $2,620,000 and is a cornerstone contract on which to build for the coming year.
The alliance agreement signed with Shanghai EIPC offers considerable opportunities to raise awareness of our SmartBox suite of products and the management intends to seek further agreements of to ensure that the opportunity that SmartBox offers is fully exploited.
We will continue to seek to expand our existing client base and seek further alliances that will promote our products and solutions in new markets. With the dedication and commitment of the management team and staff, the performance of the business to date has been extremely pleasing and as such the management looks to the future with optimism.
Henry H.Y.TseChairmanMay 2007
Report and Financial Statements for the Year Ended 31 March 2007
Consolidated Income Statement
Note 2007 2006 US$000 US$000 Revenue 4 8,123 5,475 Cost of sales (3,648) (2,504) Gross profit 4,475 2,971 Other income 5 154 73 Research and development (181) (95) cost Selling and distribution (634) (335) expenses Administrative expenses (2,091) (1,197) Finance cost 6 (34) (55) Other operating expenses (1) - Profit from operations 7 1,688 1,362 Taxation 8 (155) (81) Profit for the year 1,533 1,281 Earnings per ordinary share Basic 9 5.95 5.2 Diluted 9 5.89 -
Consolidated Balance Sheet 31 March 2007
Note Group Company 2007 2006 2007 US$000 US$000 US$000 ASSETS Non-current assets Property, plant and equipment 10 345 285 - Intangible assets 11 580 89 - Investment in subsidiaries 12 - - 4,508 Total non-current assets 925 374 4,508 Current assets Inventories 13 132 82 - Trade receivables 14 4,728 2,632 - Other receivables 15 442 551 183 Cash and cash equivalents 16 1,011 699 1 Total current assets 6,313 3,964 184 Total assets 7,238 4,338 4,692 LIABILITIES & EQUITY Current liabilities Trade payables 123 174 - Other payables 17 1,348 703 544 Short term loans 18 218 661 - Taxes payables 166 69 - Total current liabilities 1,855 1,607 544 Non-current liabilities Deferred tax 19 76 13 - Total non-current liabilities 76 13 - Total liabilities 1,931 1,620 544 Capital and reserves Share capital 20 490 - 490 Share premium 22 3,971 - 3,971 Equity compensation reserve 22 128 - 122 Merger reserve 22 (1,366) 2,296 - Other reserves 22 157 28 - Retained earnings 22 1,927 394 (435) Total shareholders' equity 5,307 2,718 4,148 Total liabilities & equity 7,238 4,338 4,692
Consolidated Cash Flow Statement
2007 2006 US$000 US$000 Operating activities
Income before taxation from continuing operations 1,688 1,362
Adjustments for: Interest income (4) - Interest expense 34 - Provision for doubtful debts - 18 Depreciation of property, plant and equipment 78 72 Disposal of property, plant and equipment 20 - Amortisation for intangible assets 67 66 Share base payment 73 - Provision for deferred tax - (5)
Operating cash generated before working capital changes 1,956 1,513
Increase in inventories (47) (79) Increase in trade and other receivables (1,873) (876)
Increase/(decrease) in trade and other payables 551 (137)
Cash generated by operations 587 421 Interest paid (34) - NET CASH GENERATED FROM OPERATING ACTIVITIES 554 421 Investing activities Interest received 4 - Purchase of property, plant and equipment (141) (130) Purchase of intangible assets (555) (156) NET CASH USED IN INVESTING ACTIVITIES (693) (286) Financing activities Net proceeds from issue of shares 898 136 Repayment of borrowing (477) - Short term loans - 283 NET CASH GENERATED FROM FINANCING ACTIVITIES 421 419 NET INCREASE IN CASH AND CASH EQUIVALENTS 281 554 Effect of exchange rate changes 31 25
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 699 120
CASH AND CASH EQUIVALENTS AT THE END OF YEAR 1,011 699
1. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS
1.1 General information
The Company was incorporated in Jersey on 21 December 2005 as a limited company and was admitted to the Alternative Investment Market ("AIM") on 23 June 2006.
The Company's registered office is P O Box 72, 44 Esplanade, St Helier, Jersey JE4 8PN, Channel Islands.
The Group financial statements consolidate the financial statements of Geong International Limited and its subsidiaries for year ended 31 March 2007.
1.2 Statement of compliance
These financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") and IFRIC interpretations endorsed by the European Union and those parts of the Companies Act 1985 applicable to companies reporting under IFRS.
The company has adopted IFRS since the date of its registration. These financial statements have been prepared under the historical cost convention except as disclosed in the accounting policies below.
1.3 Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and the subsidiaries controlled by the Company up to 31 March each year.
All intra group transactions, balances, income and expenses are eliminated on consolidation.
1.4 Merger accounting
The Company was incorporated in Jersey on 21 December 2005 and entered into an agreement to acquire the entire share capital of Conceptual Approach Limited on 10 May 2006. The acquisition was effected by way of issue of shares. The acquisition has been accounted for using merger accounting principles under UK standard FRS 6 (Acquisition and Mergers) as the directors believe that this is not a business combination in the scope of IFRS 3 (Business Combinations) and there is no international accounting standard dealing with business combinations outside the scope of IFRS 3.
Accordingly, the financial information for the current and previous year has been presented as if the Geong International Limited, and its subsidiaries, had been owned throughout the current and comparative periods.
1.5 Management estimates
The presentation of financial information under IFRS requires management to make prudent estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial information preparation and the reported amounts of revenue and expenses during the reporting year. Estimates have been made principally in respect of the amounts capitalised as, and the useful economic life of, intangible assets, useful economic life of property, plant and equipment, provisions for impairment of accounts receivable and investments.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 Functional and presentation currency
Sterling is the functional currency of Geong as it is the currency of the primary economic environment in which it operates. The US Dollar ("US$") is the currency used to present the financial information in order to improve understanding of the financial position of Geong by increasing comparability with the financial information of its subsidiaries whose functional currencies are the US Dollar and the Chinese Renmibi.
2.2 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts and sales related taxes. Geong generates revenue through providing content management solution software products and related services. Revenue is realised or realisable and earned when all of the following criteria are met:
* Persuasive evidence of an arrangement exists; * Delivery has occurred or services have been rendered; * The seller's price to the buyer is fixed or determinable; and * Collectibles are reasonably assured.
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial assets to that asset's net carrying amount.
2.3 Employee benefits
Post-employment benefit plans cost
Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into separate entities such as the Mandatory Provident Fund ("MPF") scheme in the Peoples' Republic of China, and will have no legal or constructive obligation to pay further contributions if any of the funds do not hold sufficient assets to pay all employee benefits relating to employee service in the current and preceding financial years. The Group's contribution to defined contribution plans are recognised in the financial year to which they relate.
2.4 Taxation
Income tax expense represents the sum of tax currently payable and deferred tax.
Current taxation
The tax currently payable is based on the taxable profit for the year. Taxable profit differs from profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantially enacted by the relevant balance sheet date.
Deferred taxation
Deferred tax is determined on the basis of tax effect accounting, using the liability method, and it is applied to all significant temporary differences arising between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, except that the
potential tax savings relating to a tax loss carry forward is not recorded as an asset unless there is a reasonable expectation of realisation in the foreseeable future.
Deferred tax assets and liabilities are measured using the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantially enacted by the balance sheet date. Deferred tax is charged or credited to the profit or loss statement, except when it relates to items charged or credited to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same tax authority.
2.5 Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and cash held on demand with banks, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
2.6 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.
2.7 Property, plant and equipment
Property, plant and equipment are recorded at historic cost, less accumulated depreciation and any impairment loss where the recoverable amount of the asset is estimated to be lower than its carrying amount.
Property in the course of construction for production or administrative purposes is carried at cost, less any recognised impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the Group's accounting policy. Depreciation of these assets commences when the assets are ready for their intended use.
Depreciation is charged so as to write off the cost of the assets over their estimated useful lives, using the straight-line method, as follows:
Electronic equipment, furniture and fixtures - 5 years
Leasehold improvement - 5 years
The assets' residual values and useful lives are reviewed, and adjusted, if appropriate, at each balance sheet date.
The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
2.8 Internally generated intangible assets - research and development
expenditure
Research expenditure is recognised as an expense as incurred.
Costs incurred on development projects are recognised as internally generated intangible assets only if all of the following conditions are met:
* the technical feasibility of completing the intangible assets so that it will be available for use or sales; * its intention to complete the intangible asset and use or sell it; * its ability to use or sell the intangible assets; * how the intangible asset will generate probable future economic benefits; * the availability of adequate technical financial and other resources to complete the development and use or sell the intangible assets; and * its ability to measure reliably the expenditure attributable to the intangible assets during its development.
Internally generated intangible assets are amortised on a straight-line basis over their estimated useful lives, from the date the intangible is ready for use.
Development costs that have been capitalised as intangible assets are amortised on a straight-line basis over the period of its expected benefits, which normally does not exceed 3 years. In prior year, development costs were amortised over a period of 18 months. The change is to better reflect the useful life of the intangible assets. The impact of the change has been assessed to be immaterial to the Group.
2.9 Impairment of tangible and intangible assets
At each balance sheet date, the Group reviews the carrying amounts of its assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated to determine the extent of the impairment loss (if any).
When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. Impairment losses are recognised as an expense immediately.
When an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as income immediately.
2.10 Financial assets
The principal financial assets are cash, trade receivables, other receivables and other investments. Trade and other receivables are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts. The accounting policy of other investments is outlined above.
2.11 Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. Significant financial liabilities include interest-bearing short-term bank loans, trade and other payables.
Interest-bearing short-term bank loans are recorded at the proceeds received, net of direct issue costs. Finance charges, including premiums payable on settlement or redemption, are accounted for on an accrual basis and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise. Finance costs are accounted for on an accrual basis (effective yield method) and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.
Trade and other payables are stated at their nominal value.
Equity instruments are recorded at the fair value of consideration received, net of direct issue costs.
2.12 Borrowings and borrowing costs
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is taken to the profit and loss statement over the period of the borrowings using the effective interest method.
All borrowing costs are taken to the profit and loss statement over the period of borrowing using the effective interest method.
2.13 Foreign currency transactions
In preparing the financial statements of the individual entities, transactions in currencies other than the entity's functional currencies are recorded at rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary balances denominated in foreign currencies are retranslated at the rates ruling at the balance sheet date.
Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in the income statement for the year.
2.14 Provisions
Provisions are recognised when the combined entity has a present legal or constructive obligation as a result of a past event where it is probable that the obligation will result in an outflow of economic benefits that can be reasonably estimated.
2.15 Leases
Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as the lease income. Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the lease term.
2.20 Dividends
Dividends on ordinary shares are recognised as a liability in the period in which they are declared.
2.21 Related parties
For purposes of these financial statements, parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence. Related parties may be individuals (being members of key management personnel, significant shareholders and/or their close family members) or other entities and include entities which are under significant influence of related parties of the Group where those parties are individuals, and post-employment benefit plans which are for the benefit of employees of the Group or of any entity that is a related party of the Group.
2.22 Segment reporting
A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and returns that are different from those of segments operating in other economic environments.
Business Segment
The Group comprises mainly the software development and system installation divisions.
Geographical Segment
No geographical segment analysis of the Group is presented as the Group's business operates mainly in the People's Republic of China ("PRC").
2.23 Statutory reserve
Statutory reserve is in respect of the PRC companies and has been set aside in accordance with the legislation in the country.
3 FINANCIAL RISKS AND MANAGEMENT
Financial risk factors
The Group's activities expose it to a variety of financial risks. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group.
Risk management is carried out by the Group's Board of Directors. The Board identifies, evaluates financial risks in close co-ordination with the Group's operating units. The Board provides principles for overall risk management, as well as policies covering specific areas such as credit risk, interest rate risk, foreign currency risk and liquidity risk.
(i) Credit risk
The Group has no significant concentration of credit risk. The Group has policies in place to ensure that sales are made to customers with an appropriate credit history.
(ii) Interest rate risk
The Group obtains additional financing through bank borrowings. The Group's policy is to obtain the most favourable interest rates available. The terms and interest rates payable are disclosed in relevant notes to the Group financial information.
Surplus funds are placed with reputable banks.
(iii) Foreign currency risk
The Group's sales and purchases are mainly denominated in Chinese Renminbi (RMB). The residual risk after the natural hedging effects of any foreign currencies denominated assets and liabilities are not expected to have a significant impact on the Group's financial position and future cash flows.
(iv) Liquidity risk
The Group has sufficient cash and cash equivalents to meet its operational requirements.
(v) Fair values of financial assets and financial liabilities
The carrying amounts of financial assets and financial liabilities reported in the balance sheet approximate their fair values.
4. REVENUE AND SEGMENTAL ANALYSIS
The Group's revenue for continuing operations, is as follows:
Group 2007 2006 US$000 US$000 PortalAge 7,515 5,094 SmartBox 608 381 8,123 5,475
The Group's revenue and profit before taxation were all derived from its principal activity. All revenue originates in the PRC.
5. OTHER INCOME Group 2007 2006 US$000 US$000 VAT refund 96 53 Interest income 4 1 Exchange gain 54 19 154 73
Interest income earned ranged from 0.5% to 14.82% (2006: 0.5 %) per annum.
6. FINANCE COST Group 2007 2006 US$000 US$000 Interest on a third party loan 34 55
7. OTHER OPERATING EXPENSES
The profit from operations is stated after charging/ (crediting) the following:
Group 2007 2006 US$000 US$000 Allowance for doubtful debts, trade 1 18 Auditors' remuneration: - audit fee 24 - - non-audit fee 6 - Amortisation charge 67 66 Depreciation charge 78 72 Directors' remuneration 182 97
Disposal of property, plant and equipment 20 -
Incorporation expenses 12 - 8. TAXATION
The tax expense recognised in the consolidated profit and loss account:
Group 2007 2006 US$000 US$000 Current year: Current tax 94 63 Deferred tax expenses (note 20) 61 18 155 81
Reconciliation of effective tax rate:
Group 2007 2006 US$000 US$000 Profit before tax 1,688 1,362 Tax at applicable income tax rate 253 102 Tax effect of non-deductible expenses 13 30 Tax effect of exempt income (165) (53) Tax effect of income not taxable (7) (16) Tax expense for the year 94 63 9. EARNINGS PER SHAREBasic earnings per share
The calculation of basic per share at 31 March 2007 was based on the profit attributable to equity shareholders of the Company of US$1,533,009 (2006: US$1,281,281 ) and a weighted average number of ordinary shares outstanding during the year ended 31 March 2007 of 25,774,970 (2006: 24,532,262), calculated as follows:
Weighted average number of ordinary shares
2007 2006
Issued ordinary shares at beginning of the 5,578,569 24,532,262 year
Effect of shares issued in June 2006 18,323,544 - Effect of shares issued in March 2007 1,872,857 - At 31 March 2007 25,774,970 24,532,262 Diluted earnings per share
The calculation of diluted earnings per share at 31 March 2007 was based on profit attributable to equity shareholders of the Company of US1,533,009 (2006: US$1,281,281) and a weighted average number of ordinary shares outstanding during the year ended 31 March 2007 of 25,774,970 (2005: 24,532,262), calculated as follows:
Weighted average number of ordinary shares (diluted)
2007 2006
Weighted average number of ordinary shares 25,774,970 24,532,262
at 31 March Effect of conversion share options 248,055 - At 31 March 2007 26,023,025 24,532,262
10. PROPERTY, PLANT AND EQUIPMENT -GROUP
Electronic Leasehold Total equipment improvement US$000 US$000 US$000 Cost: At 1 April 2005 756 238 994 Additions 76 54 130 At 30 March 2006 832 292 1,124 Additions 141 - 141 Disposals (22) - (22) Translation difference 53 18 71 At 31 March 2007 1,004 310 1,314 Accumulated Depreciation: At 1 April 2005 611 156 767 Depreciation charge 40 32 72 At 31 March 2006 651 188 839 Depreciation charge 42 36 78 Disposals (1) - (1) Translation difference 42 12 54 At 31 March 2007 733 236 969 Net book value: At 31 March 2007 271 74 345 At 31 March 2006 181 104 285
11. INTANGIBLE ASSETS - GROUP
Development costs US$000 Cost: At 1 April 2005 Additions 156 Translation difference At 31 March 2006 156 Additions 555 Translation difference 6 At 31 March 2007 717 Accumulated amortisation At 1 April 2005 Additions 66 Translation difference 1 At 31 March 2006 67 Charge for the year 66 Translation difference 4 At 31 March 2007 137 Net book value: At 31 March 2007 580 At 31 March 2006 89
12. INVESTMENT IN SUBSIDIARIES - COMPANY
2007 US$000 Unquoted equity, at cost 4,508
Investment in subsidiaries consists of:
Name of subsidiary Principal activities Place of Equity
Incorporation interest
Conceptual Approach Limited Investment holding British Virgin 100%
("CAL") Island
Held by CAL:
Geong Business Network Ltd Provision of Content Peoples' Republic 100%
Management software Of China
product
Geong Information Technology Ltd Provision of Content Peoples' Republic 100%
Management software of ChinaProduct13. INVENTORIES Group 2007 2006 US$000 US$000 At cost: Goods for resale 9 - Work in progress 123 82 132 82 14. TRADE RECEIVABLES Group 2007 2006 US$000 US$000 Trade receivables 4,745 2,663 Less: allowance for doubtful debts Balance at 1 January 31 13 Allowance made during the period 1 18 Written off against allowance (15) - Balance at 31 December 17 31 4,728 2,632 15. OTHER RECEIVABLES Group Company 2007 2006 2007 US$000 US$000 US$000 Other receivables 117 305 - Staff advance 74 - Amount due from related party - - 183 VAT receivable 124 - - Prepayments 39 246 - Deposits 88 - - 442 551 183
16. CASH AND CASH EQUIVALENTS
Group Company 2007 2006 2007 US$000 US$000 US$000 Petty cash 5 3 - Bank balances 1,006 696 1 1,011 699 1 17. OTHER PAYABLES Group Company 2007 2006 2007 US$000 US$000 US$000 Received in advance 2 1 - Other tax payable 390 210 - Accrued payroll 366 214 - Accruals 133 80 59 Amount due to related parties - - 343 Amount due to directors 73 - 73 Other payables 384 198 70 1,348 703 545 Amount due to related parties and directors is unsecured, interest free with nofixed terms of repayment.18. SHORT TERM LOANS -GROUP Interest 2007 Interest 2006 rate US$000 rate US$000 Hichens, Harrison & Co. plc 7.5% - 7.5% 300 Miu Jee Wah 12.0% 115 12.0% 261 Wang Weidong 10.5% 103 10.5% 100 218 661 19. DEFERRED TAXATION
Movements in deferred taxation during the year are as follows:
Group 2007 2006 US$000 US$000 At 1 April 13 - Exchange adjustment 2 - Charged to profit and loss account 61 13 At 31 March 76 13 20. SHARE CAPITAL Company No of ordinary shares US$000 Authorised share capital:
Ordinary share shares (‚£0.01 per ordinary 100,000,000 1,000 share)
Issued and paid up: Date No. US$'000 Ordinary shares of ‚£0.01 each Allotted on incorporation 1
Allotted on acquisition of Conceptual 10 May 2006 24,532,362 457 Approach Limited
Capitalisation of short term loan at 23 June 2006 710,792 13 exercise price of ‚£0.24 each
Allotted on placing on AiM 23 June 2006 882,310 16 Exercise of option 14 Mar 2007 166,667 4 At 31 March 2007 26,292032 490
On 23 June 2006, the Company's shares were listed on AIM and issued and allotted 882,310 new ordinary shares and 1,617,690 existing ordinary shares of ‚£0.01 at ‚£0.30 each.
Under merger accounting principles, Conceptual Approach Limited is presented as though it had been owned throughout the current and comparative accounting periods. According, the shares issued to acquire Conceptual Approach Limited have been shown as though in existence throughout both periods.
21. SHARE BASED PAYMENTS
At the end of the year, unissued ordinary shares of ‚£0.30 each of the Company granted/conditionally awarded to eligible executives and entities involved in the admission of AIM under equity-compensation plan are 353,672.
Under the option agreement dated 10 May 2006, the Company granted options of 391,880 Ordinary Shares of ‚£0.30 vest over a period of three year commencing the date of admission to AIM and at prices at the market value at the date of grant. As at year end, none of the options had been exercised.
The estimated fair value of each share option granted in the share option agreement is 30 pence. This estimated fair value was calculated by applying a Black-Scholes model. The model inputs were:
* share price at grant date of 30 pence * exercise price of 30 pence * expected volatility of 30 per cent * no expected dividends * contractual life of 3 years, and * a risk-free interest rate of 5.75 per cent 22. RESERVES Group Company 2007 2006 2007 US$000 US$000 US$000 Share premium 3,971 - 3,971 Merger reserve (1,366) 2,296 - Currency translation reserve 157 28 - Equity Compensation reserve 128 - 122 Retained earnings 1,927 394 (435) 4,817 2,718 3,658 a. Share premium
The application of the share premium is governed by the Companies Act 1985.
b. Merger reserve
The merger reserve represents the difference between the nominal value of the share capital of the subsidiaries acquired as a result of restructuring exercises and the nominal value of the share capital of the company issued in exchanged thereof.
c. Reserve fund
Statutory reserve-enterprises established in the PRC
Subsidiaries of the group in the PRC, which are wholly foreign-owned enterprises, follow the accounting principles and relevant financial regulations of PRC applicable to wholly foreign-owned enterprises ("PRC GAAP-WOFE"), in the preparation of its accounting records and financial statements. The subsidiaries are required to appropriate no less than 10% of the profit arrived at in accordance with PRC GAAP-WFOE for each year to a statutory reserve. Profit must be used initially to set off against any accumulated losses, must be made before the distribution of dividends to shareholders. The appropriation is required until the statutory reserve reaches 50% of the registered capital. This statutory reserve is not distributable in the form of cash dividends, but may be used to set off losses or be converted into paid-in capital. The Group opts to appropriate 15% of the net profit.
d. Currency translation reserve
This comprises all foreign exchange differences arising from the translation of financial statements of foreign entities whose presentation currency is different from that of the Company, the translation of foreign currency.
e. Equity compensation reserve
This comprises the cumulative value of services rendered by personnel assisted in the process of admission to AIM in June 2006 for the issue of share options.
23. OPERATING LEASE ARRANGEMENTS
Group 2007 2006 US$000 US$000 Minimum lease payments under operating leases 230 216included in the income statement
At the balance sheet date, the commitments in respect of non-cancellable operating leases for office building, workshop and warehouses with a term of more than one year were as follows:
Group 2007 2006 US$000 US$000 Future minimum lease payments payable: Within one year 173 227 In two to five years 334 140 507 367
24. RELATED PARTY TRANSACTIONS
Transactions within the Group have been eliminated in the preparation of the financial information set out in this report and are not disclosed in this note. Balances with related parties had been disclosed under the relevant notes.
GEONG INTERNATIONAL LIMITED REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2007
CONSOLIDATED INCOME STATEMENT
GEONG INTERNATIONAL LIMITED REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2007
CONSOLIDATED BALANCE SHEET AS AT 31 MARCH 2007
GEONG INTERNATIONAL LIMITED REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2007
CONSOLIDATED CASH FLOW STATEMENT
GEONG INTERNATIONAL LIMITED