Trading Update

28 Feb 2011 07:00

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

GEONG International Limited (AIM:GNG), a leading Internet software solutions provider and operator for large enterprises in China is pleased to provide the following update on its current trading.

Since the announcement of the Interim Results on 2 December 2010, we have continued to make good progress in winning new business, in achieving margin improvements and in cash collections. The Board is confident, therefore, of a satisfactory outturn for the full year to 31 March 2011. Moreover, the Group has a strong balance sheet with net cash having increased by £1.0 million to leave a cash balance at the end of January 2011 of £5m.

Much of this improvement has been achieved through the transformation of the business towards a better balance between IaaS and SaaS revenue streams. The SaaS 2.0 business has been developing very strongly, with contract wins worth RMB1.4m in December 2010 and RMB5.0m in January 2011. In contrast to our traditional IaaS business, SaaS 2.0 is a usage charging service and, although it commands lower contract values, it has a constant and continuing revenue stream, shorter payment terms and generates sustainable higher margins

In the interim statement, we commented on the new partnership with IBM and Oracle in the Asia Pacific region. We are now pleased to report that the new, two year service agreement with IBM Global Delivery Group, signed in October 2010, has already resulted in us winning RMB2.7 million worth of new contracts and we expect this agreement to become an additional source of growth for the coming year and beyond. These developments confirm that the Group's strategy is gathering momentum which, in turn, will translate into stronger profit growth and a more cash generative business.

We are also pleased to report that our deepening relationships with IBM and Oracle has enabled us to win some strategic and prestigious contracts and to us providing new solutions and platforms for both of the partners and their respective clients in different industries, including Financial Services, Automotive, Telecommunication, Manufacturing and Insurance. These relationships have enabled us to secure contracts worth an aggregate value of over RMB35 million in the last two months, including contracts from China Bond, China Construction Bank, Haier Group and Shanghai General Motors.

The full impact of the transformation to a better balance of IaaS and SaaS revenue streams, as well as the benefits of the ever deepening relationship with IBM and Oracle and the recent contract wins will be fully realised in the next financial year when we expect to see continued strong growth in both revenue and profits.

The Group will provide a pre-close trading update for the year ending 31 March 2011 on Wednesday 18 May 2011.

For further information, please contact:

GEONG International Limited www.geong.com Tel: +86 10 5222 0999Henry Tse, ChairmanWeidong Wang, CEOAmit Thakar, CFOEvolution Securities Limited Tel: +44 20 7071 4300

(Nominated Adviser and Joint Broker)

Tim Worlledge Esther Lee

About GEONG International Limited

Operational since 2000, GEONG specialises in collaboration and content management software and services. Its products are specifically tailored for the Chinese market, where the Company is recognised by Government agencies and numerous blue chip clients as a leader in its field. GEONG was named The Most Successful Enterprise in ECM Software in China 2007 to 2008 by China's Centre for Information Industry Development and CCID Consulting; and one of the fastest growing companies in Asia at the Deloitte Technology Fast 50 China and Deloitte Technology Fast 500 Asia Pacific awards. The Company has recently expanded into North America setting up operations in Canada.

Registered in Jersey, the Company's operations are headquartered in Beijing. The Company's shares were admitted to AIM in June 2006 and trade under the ticker GNG.L

For more information, please visit www.geong.com