Trading Statement

20 Apr 2012 10:10

GEONG International Limited ("GEONG" or the "Company") Trading Update

Further to the trading statement released on 22 February 2012 and following the conclusion of the financial year ended 31 March 2012, GEONG provides the following update ahead of the Company's preliminary announcement of results which is expected to be released during July 2012.

The Company, as in previous years, had originally anticipated strong trading during the fourth quarter based on an expectation of receiving high margin performance fee revenues (where the operating costs have already been absorbed against the quarterly fixed revenues) on certain SaaS contracts. Unfortunately these performance fees have been at a lower level than anticipated as the impact of the slowing economic growth in China has caused many of the KPI's set by the Company's clients proving to be too optimistic with the result that the level of performance fees is greatly reduced.

In addition a long standing global delivery agreement with a major partner was anticipated to deliver significant revenues in the final quarter of the financial year. In the event, only a third of these anticipated IaaS contracts were delivered. The executive has reviewed the reasons for this with the partner and believe it to be a direct result of the uncertain global economic environment rather than the quality and appeal of the offering.

As a result of these factors, the Directors now expect to report revenue materially below that recorded last year. In addition, since a proportion of the revenue shortfall related to performance fees, which achieve a higher margin, the operating profitability will be significantly reduced from last year's level. Investors should also note that the Company will incur a non-recurring charge to profits of approximately £350,000 from the aborted acquisition during the financial year. Despite the significant revenue shortfall in the final quarter, the Company had cash of £5.3 million at 31 March 2012

Notwithstanding the reduced profitability the Board remains confident of GEONG's business model and its potential. The Company is still getting new IaaS clients in its core markets and new industries with two strategic partners, and has not lost any IaaS clients during the quarter and its business partner has not moved any business to the Company's competitors. Indeed, the SaaS business gained 2 new SaaS clients during the final quarter of the financial year, a total of 16 SaaS clients during the year and is in current negotiations with another 5 potential new SaaS clients.

For further information, please contact:

GEONG International Limited www.geong.com Tel: +86 10 5222 0999Henry Tse, ChairmanWeidong Wang, CEOAmit Thakar, CFONomad and joint broker

finnCap Tel: +44 (0) 20 7220 0500

Stuart Andrews

Ben Thompson

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 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 applications.

For more information, please visit www.geong.com