Computer & Technologies Holdings Ltd. · HKEX:46
Computer & Technologies — H1 2004 Earnings Presentation
40 slides from Computer & Technologies's earnings presentation, Sep 23, 2004
Slide 1: Briefing Session: Interim Results of Year 2004
Computer And Technologies Holdings Limited Briefing Session: Interim Results of Year 2004 Mr. C S Ng Chairman and CEO
Slide 2: 1H 2004 Financial Highlights
1H 2004 Financial Highlights Profit and Loss (Compare year-on-year) HK$ (millions) 1H 2004 1H 2003 YoY Change Turnover 102.795 170.070 -39.6% Gross Profit 28.069 40.052 -29.9% Other Revenue 0.447 3.010 -85.1% Gain on deemed disposal of subsidiaries 15.026 N/A N/A Selling and distribution expenses (2
Slide 3: Financial Highlights - Condensed Balance Sheet
Financial Highlights - Condensed Balance Sheet (as of June 30, 2004, in HK$ millions) 30/06/2004 31/12/2003 Non-current Assets 76.157 81.900 Current Assets 361.901 352.241 Current Liabilities (110.798) (117.586) Net Current Assets 251.103 234.655 Total Assets Less Current Liabilities 327.260 316.555
Slide 4: Financial Highlights - Condensed Cash Flow Statement
Financial Highlights - Condensed Cash Flow Statement (as of June 30, 2004, in HK$ millions) 30/06/2004 30/06/2003 Net cash inflow from operating activities (62.149) (39.589) Net cash outflow from investing activities 2.133 (1.172) Net cash inflow / (outflow) before financing (60.016) (40.797) activi
Slide 5: Financial Highlights - Segmental Analysis
Financial Highlights - Segmental Analysis Year-on-Year Comparison HK$ (millions) Turnover Segment results 1H 2004 1H 2003 Change 1H 2004 1H 2003 Change Integration Services 32.355 67.965 -52.4% 1.789 3.740 -52.2% Solutions Services 42.103 73.419 -42.7% (1.716) 3.203 N/A Application Services 11.627 9
Slide 6: Statistics on Company Performance of 1H 2004: Business Divisions
Statistics on Company Performance of 1H 2004 More balanced contribution among business divisions 43.2% 5.5% Integration Services 40.0% Distribution Business 11.3% Solutions Services 1H 2003 Application Services 41.4% 11.4% 1H 2004 15.4% 31.8% Page 6 Interim Results 2004 - Computer And Technologies H
Slide 7: Statistics on Company Performance: Geographical Distribution of Revenue
Statistics on Company Performance of 1H 2004 Geographical distribution of revenue 54.4% 5.1% Mainland China Hong Kong SAR 40.5% Others 1H 2003 61.4% 6.9% 1H 2004 31.8% Page 7 Interim Results 2004 - Computer And Technologies Holdings Limited (September 23, 2004)
Slide 8: Statistics on Company Performance: Turnover Mix by Industry Sector
Statistics on Company Performance of 1H 2004 Group Turnover Mix by Industry Sector (Excluding revenue from Distribution Business, IPL and GETS) 19.0% 48.4% Telecommunications Financial Services Government 5.4% Public Utilities and Transportation 12.1% Manufacturing 7.5% Others 1H 2003 53.4% 20.4% 9.
Slide 9: Solidifying Foundation from Business Transformation Efforts (1)
Solidifying foundation from business transformation efforts (1) Profit margin improved from 23.6% to 27.3% due to increasing contribution from software and electronic services as well as increased services content from SI projects Strategic partnership with customer with long-term outsourcing serv
Slide 10: Solidifying Foundation from Business Transformation Efforts (2)
Solidifying foundation from business transformation efforts (2) Increasing proportion of revenue with recurring, multi-year basis which will grow further rapidly in the coming years Without taking into accounts of z Subsequent growth in service revenue from GETS z Other service contracts to be s
Slide 11: Solidifying Foundation from Business Transformation Efforts (3)
Solidifying foundation from business transformation efforts (3) Launched Government Electronic Trading Services (GETS) on January 1, 2004 --- 3 months ahead of schedule Increased in marketing and operations expenses to spark and build up its subscriber base Started amortization / depreciation
Slide 12: Financial Highlights – Revenue Decreased
Financial Highlights – Revenue Decreased Substantial decrease in revenue Macro economic control measures in China caused slow activities of SI business in China z Recovering since June with strong order signed Lower revenue from the two large-scale government solution projects z Major chunk of
Slide 13: Financial Highlights – Profit
Financial Highlights – Profit Profit not encouraging Drop in revenue in both Integration and Solution Services Divisions Experienced delay in delivery in one of the government solutions outsourcing contracts z Performance issue incurred additional cost of hardware & software z Prolonged delive
Slide 14: Balance Sheet and Cash Flow (1)
Financial Highlights - Balance Sheet and Cash Flow (1) Substantial cash outflow items Operating cash flow for the delivery of the government solutions outsourcing contracts Increased in operating expenses of GO-Business in relation to the launch of GETS service Decrease of HK$ 32.1 million i
Slide 15: Balance Sheet and Cash Flow (2)
Financial Highlights - Balance Sheet and Cash Flow (2) Major cash inflow Increased project finance by HK$28 million Secured HK$23.4 million additional funding from Investment Partner (China Fund, Inc) as a 20% shareholder in June to accelerate growth of Electronic Services business Maintaine
Slide 16: Group Performance by Business Divisions
Computer And Technologies Holdings Limited Group Performance by Business Divisions
Slide 17: Integration Services (1a)
Group Performance in 1H 2004 (1a) Integration Services Macro economic control of China resulting in a low level of revenue recognized in 1H As of end of the date of this report, more than HK$60 million worth of systems integration contracts on hand Consistently strong order momentum from enter
Slide 18: Integration Services: Strong Orders Signed Since June
Group Performance in 1H 2004 (1b) Integration Services Strong orders signed since June (RMB 60+ million) Jiangsu Post – savings business centralization (2.2 m) China Eastern Airlines – financial application support (3.2 m) China Mobile Jiangsu – systems and storage solution infrastructure (2
Slide 19: Solution Services (2a)
Group Performance in 1H 2004 (2a) Solution Services In the process of delivering multi-year solutions outsourcing contracts from HKSAR Government CCBS for Water Supplies Department z Phase I (Electronic Document Management System) z Completed in 2003 z Implementation of Phase II (Billing and Cus
Slide 20: Solution Services (2b)
Group Performance in 1H 2004 (2b) Solution Services In the process of delivering multi-year solutions outsourcing contracts from HKSAR Government IRIS for Land Registry z User Acceptance Process for entire IRIS Phase I project slipped from Feb. to September z UAT is expected to be completed with
Slide 21: Solution Services (2c): Cash Inflow Projection
Group Performance in 1H 2004 (2c) Solution Services Expected to generate substantial inflow of cash from two major projects 80 250 Cash Inflow Projection 70 200 60 (Accumulative Total in HK$ million) (in HK$ million) 50 150 40 100 30 20 50 10 LR 0 0 WSD Accumulative Sub-Total O ct ov c n De 5-J a
Slide 22: Solution Services (2d): Major Bids Pending
Group Performance in 1H 2004 (2d) Solution Services Major bids pending MTRC Asset Management System (HK$10 million) Immigration Department (HK$330 million) Census & Statistics Department (HK$32 million) Leveraging resources in SZ Development Centre to provide more cost-effective delivery s
Slide 23: Electronic Services – GO-Business (3a)
Group Performance in 1H 2004 (3a) Electronic Services – GO-Business Successfully launched the Government Electronic Trading Services (GETS) ahead of original schedule on January 1, 2004 Position well as a major G2B e-services provider z Electronic Tendering System for government suppliers z Gove
Slide 24: Electronic Services – GO-Business (3b)
Group Performance in 1H 2004 (3b) Electronic Services – GO-Business Kicked-off with encouraging results in 1H 2004 Launched strategic partnership z Hongkong Post to provide ETAS service centre, other door-to-door pick-up service and drop-in box for trade declarations z 15 collection service coun
Slide 25: Electronic Services – GO-Business (3c)
Group Performance in 1H 2004 (3c) Electronic Services – GO-Business Kicked-off with encouraging results in 1H 2004 Launched strategic partnership z A market leader of courier service in Hong Kong to co-market e-Selling service platform to the courier’s SME customers z The courier service leader
Slide 26: Electronic Services – GO-Business (3d): Business Performance
Group Performance in 1H 2004 (3d) Electronic Services – GO-Business Business Performance Progressive growth in market share of TDEC market 30.0% Monthly Growth Rate in Market Share 20.0% 10.0% 0.0% Feb Mar Apr May Jun Jul 25.8% 5.2% 4.0% 11.8% 13.6% 15.2% Page 26 Interim Results 2004 - Computer
Slide 27: Electronic Services – GO-Business (3e): Business Performance
Group Performance in 1H 2004 (3e) Electronic Services – GO-Business Business Performance Reported solid growth in all sales channels July-August monthly-average vs. January-June monthly-average TDEC Transaction Volume 167% Volume of channels Major Accounts 141% ETAS 383% SME Accounts 422% Page 2
Slide 28: CFI Investment in GO-Business
CFI Investment in GO-Business The Group entered into agreement with China Fund, Inc. (“CFI”) on June 9 for CFI to subscribe for 20% shares of GO- Business for a consideration of HK$23.4 million 80% 20% Transaction completed on June 18, 2004 Recognized an exceptional gain of HK$15 million as de
Slide 29: Electronic Services – GO-Business (3f): Financial Performance
Group Performance in 1H 2004 (3f) Electronic Services – GO-Business Financial Performance If we were not investing further to accelerate growth of customer base, GO-Business could have achieved close to EBITDA break even with existing market share Investment for growth z Implementing large-sca
Slide 30: Electronic Services – GO-Business (3g): New GETS Services
Group Performance in 1H 2004 (3g) Electronic Services – GO-Business New GETS services Dutiable Commodity Permits (DCP) z All tobacco and liquor importers z Around 140k transactions per year and HKD 18-33 per transaction z Launched in September 2004 Certificates of Origin (CO) and Production No
Slide 31: Electronic Services – GO-Business (3h): Medium-term Directions
Group Performance in 1H 2004 (3h) Electronic Services – GO-Business Medium-term business development directions z Import / Export Industry of Hong Kong by leveraging various encouraging economic factors z Strong growth in the first 7 months of 2004 z Value of total exports of goods rose by 15.7% z
Slide 32: Enterprise Application – IPL Research (4a)
Group Performance in 1H 2004 (4a) Enterprise Application – IPL Research Acquisition taken place for 3 years and smoothly integrated into the Group with synergy effects Improved market position z Project range improved to capture more sizable contracts from large multinational accounts z Jardine
Slide 33: Application Services – IPL Research (4b)
Group Performance in 1H 2004 (4b) Application Services – IPL Research IPL’s Employee Self Services Modules Page 33 Interim Results 2004 - Computer And Technologies Holdings Limited (September 23, 2004)
Slide 34: Enterprise Application – IPL Research (4b): Major Opportunities
Group Performance in 1H 2004 (4b) Enterprise Application – IPL Research Major opportunities Pending tenders for a number of government departments in Hong Kong MNCs and Hong Kong companies expanding into China due to CEPA and WTO arrangements Continuously strong demand for the newly launched
Slide 35: Distribution Business (5)
Group Performance in 1H 2004 (5) Distribution Business While remaining profitable, Maxfair reported a lower than expected revenue and contribution Slowing in video / audio capturing market Launch new related products aiming to boost performance in 2H In the process of establishing a joint ve
Slide 36: Outlook and Major Opportunities
Computer And Technologies Holdings Limited Outlook and Major Opportunities
Slide 37: Outlook – Overall
Outlook – Overall The Group will be able to benefit from the sustainable momentum of the business transformation Strategic partnership with customer with long-term outsourcing service engagement Project Base with Repeated sales of software maintenance income license with IP right plus recurring ma
Slide 38: Major Orders On-hand and Steady Recurring Revenue (1)
Major Orders On-hand and Steady Recurring Revenue (1) Substantial backlog in Solutions Services CCBS project for Water Supplies Department z HK$30 million development service to be delivered in 2H 2004 and 2005 z HK$185 million outsourcing service for next 10 years IRIS for Land Registry z HK$
Slide 39: Major Orders On-hand and Steady Recurring Revenue (2)
Major Orders On-hand and Steady Recurring Revenue (2) Strong backlog and customer base for HRMS Software Contracts on hand about HK$4 million Steady recurring maintenance and servicing revenue of close to HK$6 million per year from existing business and customer base of IPL Increasing revenu
Slide 40: Questions and Answers Session
Computer And Technologies Holdings Limited Questions and Answers Session
Computer And Technologies Holdings — H1 2004 Earnings Presentation on 6ix