HONG KONG, Feb. 21, 2012
/PRNewswire-Asia/ --
Highlights:
For the nine months
ended 31 December 2011:
- The Group recorded turnover of
HK$53,051 million. This was 25.17% higher year-on-year compared
with turnover of HK$42,382 million in the corresponding period of
last fiscal year.
- Overall gross profit margin
increased to 7.52%, representing an increase of 0.7 percentage
point as compared with the corresponding period of last fiscal
year, as the Group's transformation strategy benefited from new
business development and customer value enhancement. Market share
further enhanced across the board.
- Profit attributable to equity
holders of the parent of the Group grew 26.74% year-on-year to
HK$1,051 million. Profit attributable to equity holders for the
first nine months of the current fiscal year exceeded that of the
last entire fiscal year.
- Basic earnings per share were
98.11 HK cents, an increase of 22% from 80.42 HK cents for the same
period last year.
|
Digital China Holdings Limited ("Digital China" or the "Group";
Stock Code: 00861.HK), China's
largest integrated IT services provider, today announced the
unaudited consolidated results of the Company and its subsidiaries
(collectively the "Group") for the nine months ended 31 December 2011 (the "Period").
The Group maintained its strategy to expand its Sm@rt City
business in five areas and achieved record success. These five
areas are 1) industry application software and IT infrastructure,
2) smart devices and mobile solutions, 3) enterprise application
and infrastructure, 4) Sm@rt City operation services and 5) Sm@rt
City collaborative industries.
Mr. Guo Wei, Chairman of the
Board of Digital China said, "The Board is pleased with
management's results and Digital China's revenue and net profit for
the nine-months of FY2011/12. Under management's guidance, Digital
China's momentum remains strong and its installation pipeline is
full for the foreseeable future. We are very happy that management
generated more profit for the first nine months of this fiscal year
than that of the last entire financial year. Management's strategy
of 'driving growth, speeding up transformation and building Sm@rt
City' has been successful and it shall continue its implementation
as it continues to maximize value enhancement at all its
businesses. We are proud that management has been recognized for
its efforts through the inclusion in Forbes Asia's Fab 50 for the
past three consecutive years as well as being named as one of
China's Most Promising Companies
in 2011 by The Asset magazine."
Financial Review
During the Period, the Group achieved record turnover, net
profit, EPS and operating cash flow. The Group recorded turnover of
approximately HK$53,051 million,
representing 25.17% growth as compared to approximately
HK$42,382 million in the nine-months
of FY2010/11. The Group's gross profit margin for the Period was
7.52%, which was 0.7 percentage point higher than 6.82% for the
comparable period of last year. Total gross profit recorded a
significant growth of 37.97% to HK$3,990
million. Profit attributable to equity holders of the parent
of the Group in FY2011/12 3Q was HK$1,051
million, a 26.74% growth as compared to approximately
HK$829 million for the corresponding
period of last fiscal year. Profit attributable to equity holders
reported for the first three quarters of the current fiscal year
has already exceeded the total profit attributable to equity
holders of last entire fiscal year. Basic earnings per share
amounted to 98.11 HK cents, which was 22% higher as compared to
80.42 HK cents for the nine-months of FY2010/11. The profitability
of key businesses continued to grow, creating favorable conditions
for the Group to achieve operating targets for this fiscal
year.
Management improved cash flow through stringent risk controls
and cash flow management amidst a macroeconomic environment
constrained by tightened monetary policies. Net operating cash flow
for the first three quarters of the current fiscal year amounted to
approximately HK$640 million. The
Group's cash turnover was 15.99 days for the first three quarters
of the current fiscal year compared to 14.86 days for the
corresponding period of the last fiscal year.
Segment Results
|
Nine months ended 31
December
|
|
(HK$'
million)
|
2011
|
2010
|
Change
YoY
|
Distribution
*
|
|
|
|
Segment
revenue
|
28,298
|
23,979
|
+18.01%
|
Segment gross
profit
|
1,324
|
983
|
+34.77%
|
Segment
results
|
531
|
317
|
+67.46%
|
Systems
|
|
|
|
Segment
revenue
|
13,765
|
10,573
|
+30.19%
|
Segment gross
profit
|
1,321
|
1,008
|
+31.09%
|
Segment
results
|
664
|
425
|
+56.26%
|
Supply Chain Services
*
|
|
|
|
Segment
revenue
|
5,800
|
3,503
|
+65.57%
|
Segment gross
profit
|
369
|
183
|
+102.14%
|
Segment
results
|
83
|
42
|
+97.13%
|
Services
|
|
|
|
Segment
revenue
|
5,188
|
4,327
|
+19.88%
|
Segment gross
profit
|
975
|
719
|
+35.65%
|
Segment
results
|
236
|
257
|
-8.18%
|
*Restate: The Group started to make adjustments to parts of the
businesses of the Supply Chain Services Business in the previous
financial year. Parts of the operations of the Supply Chain
Services Business will continue to focus on the hi-tech companies
and the industry market providing one-stop supply chain consultancy
and execution services, while others will, in tandem with
adjustments to our business strategy, shift to a distributor focus
on the sale of general IT products, instead of providing one-stop
supply chain consultancy and execution services to the hi-tech
companies. In order to provide a more appropriate presentation for
the operating segment information, the Group reclassified the
results of the Fulfillment business (FA business) from the "Supply
Chain Services" segment into the "Distribution" segment and
restated the related results of the previous financial year.
Business Review
Services Business (primary focus on Industries
market)
Revenue growth in the nine-months of FY2011/12 was mainly
attributable to the "Sm@rt City" strategy implemented at the
beginning of the current fiscal year and our "customer-focused and
service-oriented" strategy transformation articulated five years
ago. The nine-months revenue of FY2011/12 from the financial and
government sectors grew 37.70% and 46.51% respectively,
representing a strong growth momentum. In the financial sector, we
extended our reach in core banking application software and
infrastructure services. We also benefitted from the transformation
of local banks to regional and nationwide-banks because of
increased demand for core banking systems. Conversely, these
transformations bolstered our market share of nationwide-banking
clients. Our newly added major customers during the Period include
Shanghai Rural Commercial Bank and Yellow River Rural Commercial
Bank. In the government sector, we focused on the expansion of
local taxation markets with customers from local tax authorities in
Anhui, Shaanxi, Hainan and Shandong. Looking forward, we will make
concerted effort to promote our self-branded services through
productization and standardization of our services, which should
become a new driving force for our future growth.
The Group maintained and strengthened its leading position as
the "China's Sm@rt City expert" in
the current financial year. Our "Sm@rt City" strategy extended to
the regional health-care information platform, the exhibition and
experience center as well as regional social security information
platform. The Group has accomplished the total contracts targeted
for the whole financial year. These projects formed a solid
customer base for our future development and provided a positive
start to the regional implementation of our five strategic
paths.
Systems Business (primary focus on the Industry and
Enterprise Markets)
The Systems Business continued to expand market share with major
vendors. Contributing to this performance was peak procurement from
corporate customers ahead of the year-end. The turnover for
packaged software and storage products grew 89.06% and 52.41%
during the nine-months of FY2011/12, respectively, compared to the
comparable period last year. Meanwhile, networking equipment sales
benefitted from increased market share at major vendors and
additional business from new partners. The gross profit margin of
the Systems Business was maintained by leveraging its ability to
add value through technical knowledge. Elsewhere, our product
solutions, including communications, video conferencing and
security applications, recorded robust year-on-year revenue
growth.
Supply Chain Services Business (primary focus on High tech
Industry, Branded e-Commerce and Online Service Providers and
Platform Operators)
Our Supply Chain Services Business continues to be heavily
influenced by big box Chain Electronic Stores (CES). During the
quarter, we expanded our regional electronic store network and
increased cooperation with potential new customers, such as
Wal-Mart. At the same time, we strengthened our relationship with
our major customer including Gome. To enhance our performance, we
sought to enrich Gome and other customer's product offerings by
introducing higher-end products that command higher profit margins,
such as Apple products and accessories.
The B2C business for e-commerce company segment, a new business
that commenced in the current fiscal year, made considerable
contribution during the nine-months of FY2011/12. The Company
gained valuable experience in further extending its coverage in
this emerging industry through the cooperation with e-commerce
enterprises such as Taobao. Meanwhile, the post-sales service
business enjoyed expansion through cooperation with key
manufacturers including HP, Dell and Lenovo. The outstanding
performance of out-of-warranty services bolstered overall margin in
this segment.
Distribution Business (primary focus on the SMB &
Consumer Markets)
Distribution Business sustained growth by probing opportunities
arising from the demand for accessories, PC servers and consumer IT
products. Driven by increased sales of CPUs and the expansion of
our product lines to include hard disk drives (HDD) and monitors,
the turnover for accessories increased 55.85% as compared to the
corresponding period of last financial year. Turnover growth during
the nine-months of FY2011/12 for PC servers grew 25.32%
year-on-year, attributable to the ongoing replacement of PC servers
by UNIX servers and increased demand from the Small Medium-sized
Business (SMB) market. Meanwhile, the sale of notebook computers, a
core element of the Distribution Business, recorded double-digit
turnover growth during the nine-months of FY2011/12, despite lower
unit selling prices due to intense competition. The turnover for
the third quarter recorded an improvement of 24.91% as compared to
the third quarter of last financial year, as a result of the
consolidated demands reported during the New Year and Lunar New Year. The shortage of HDD supply due to
the flood in Thailand also led to
an increase in the gross profit margin as compared to the third
quarter of last financial year.
Moreover, management has developed and expanded new distribution
channels, including e-commerce retail enterprises and mega chain
retail stores. The Group opened 156 new Digital China "@PORT"
franchise retail outlets and concession counters during the
nine-months of FY2011/12 to bring the total number of "@PORT"
outlets and counters to 790.
Market Outlook
Mr. Lin Yang, the CEO of Digital
China commented, "Management believes that by leveraging its solid
foundation, its continuous focus on service transformation and the
Sm@rt City-focused strategy, the Company can roll-out successful
strategies and fulfill prospective operating targets that will
maximize shareholder value. The current market of global economic
uncertainty resulting from the Euro debt crisis and slowing
domestic growth in the PRC presents the Group with challenges and
opportunities. However, the Group remains confident because of its
commitment to "Sm@rt City" implementation. Meanwhile, the Group
believes it will benefit from increased global IT spending because
of its position as one of the leading IT companies in China. Management will closely monitor market
volatility and related risk indicators. It will maintain
flexibility in order to make tactical adjustments to its business
strategies as well as implement stringent cost control in order to
capture potential business opportunities that could further extend
its lead in the market."
About Digital China
Digital China Holdings Limited ("Digital China" or the "Group";
Stock Code: 00861.HK) is the largest integrated IT services
provider in the Greater China
area. Digital China provides
end-to-end integrated IT services to customers on the back of a
complete IT service value chain that covers IT planning and
consultation, design and implementation of software solutions,
outsourcing of IT system operations and maintenance, systems
integration, IT distribution and maintenance.
With persistent effort in carrying out its "customer-focused and
service-oriented" strategy, Digital China advocates the Sm@rt City
strategy and drives business development in five areas, including
industry application software and IT infrastructure, smart devices
and mobile solutions, enterprise application and infrastructure,
Sm@rt City operation service and Sm@rt City collaborative industry.
Leveraging urbanization and city informatization in China, the Group has become a Sm@rt City
expert with a forward-looking flexible structure and has
implemented the most Sm@rt City installations.
For additional information about Digital China, please visit the
Group's website at www.digitalchina.com.hk.
For investor and media inquiries:
Wycee Liu
Digital China Holdings
Limited
Tel:852-3416-8089
Email:
liuyqa@digitalchina.com
Neal He
Digital China Holdings
Limited
Tel:86-10-8270-5635
Email:
heyongc@digitalchina.com
|
Henry Chik
PRChina
Tel:
852-2522-1368
Email:
hchik@prchina.com.hk
Eric Song
PRChina
Tel:
852-2522-1838
Email:
esong@prchina.com.hk
|
Lily Lai
Digital China Holdings
Limited
Tel:852-3416-8133
Email:
lilylai@hk.digitalchina.com
|
Alan Wong
PRChina
Tel:
852-2522-2823
Email:
awong@prchina.com.hk
|
CONDENSED
CONSOLIDATED INCOME STATEMENT
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
31
December 2011
|
|
Nine months
ended
31
December 2011
|
|
Three months
ended
31 December
2010
|
|
Nine months
ended
31 December
2010
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
HK$'000
|
|
HK$'000
|
|
HK$'000
|
|
HK$'000
|
|
|
|
|
|
|
|
|
|
REVENUE
|
|
18,912,685
|
|
53,050,532
|
|
14,822,670
|
|
42,382,425
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
(17,482,989)
|
|
(49,060,510)
|
|
(13,698,089)
|
|
(39,490,379)
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
1,429,696
|
|
3,990,022
|
|
1,124,581
|
|
2,892,046
|
|
|
|
|
|
|
|
|
|
Other income and
gains
|
|
208,711
|
|
590,367
|
|
191,250
|
|
458,272
|
|
|
|
|
|
|
|
|
|
Selling and distribution
costs
|
|
(838,287)
|
|
(2,204,387)
|
|
(625,016)
|
|
(1,577,117)
|
Administrative
expenses
|
|
(132,097)
|
|
(397,038)
|
|
(92,513)
|
|
(284,828)
|
Other operating
expenses, net
|
|
(100,275)
|
|
(397,782)
|
|
(124,156)
|
|
(290,148)
|
Total operating
expenses
|
|
(1,070,659)
|
|
(2,999,207)
|
|
(841,685)
|
|
(2,152,093)
|
|
|
|
|
|
|
|
|
|
Finance costs
|
|
(67,211)
|
|
(229,345)
|
|
(59,508)
|
|
(150,316)
|
Share of profits and
losses of:
|
|
|
|
|
|
|
|
|
Jointly-controlled
entities
|
|
(1,053)
|
|
(1,462)
|
|
1,498
|
|
2,893
|
Associates
|
|
37,096
|
|
51,929
|
|
8,665
|
|
21,026
|
|
|
|
|
|
|
|
|
|
PROFIT BEFORE
TAX
|
|
536,580
|
|
1,402,304
|
|
424,801
|
|
1,071,828
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
(109,249)
|
|
(258,382)
|
|
(84,860)
|
|
(181,524)
|
|
|
|
|
|
|
|
|
|
PROFIT FOR THE
PERIOD
|
|
427,331
|
|
1,143,922
|
|
339,941
|
|
890,304
|
|
|
|
|
|
|
|
|
|
Attributable
to:
|
|
|
|
|
|
|
|
|
Equity holders of
the parent
|
|
385,551
|
|
1,050,871
|
|
292,237
|
|
829,178
|
Non-controlling
interests
|
|
41,780
|
|
93,051
|
|
47,704
|
|
61,126
|
|
|
|
|
|
|
|
|
|
|
|
427,331
|
|
1,143,922
|
|
339,941
|
|
890,304
|
|
|
|
|
|
|
|
|
|
EARNINGS PER SHARE
ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE
PARENT
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
98.11 HK
cents
|
|
|
|
80.42 HK
cents
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
|
97.61 HK
cents
|
|
|
|
80.09 HK
cents
|
CONDENSED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
|
|
|
|
|
|
|
|
At
31
December 2011
|
|
At
31 March 2011
|
|
|
(Unaudited)
|
|
(Audited)
|
|
|
HK$'000
|
|
HK$'000
|
NON-CURRENT
ASSETS
|
|
|
|
|
Property, plant and
equipment
|
|
1,152,209
|
|
697,812
|
Investment
properties
|
|
274,970
|
|
265,581
|
Prepaid land
premiums
|
|
122,485
|
|
85,409
|
Goodwill
|
|
236,684
|
|
228,601
|
Intangible assets
|
|
4,793
|
|
3,439
|
Investments in
jointly-controlled entities
|
|
35,352
|
|
33,322
|
Investments in
associates
|
|
785,206
|
|
675,337
|
Available-for-sale
investments
|
|
133,475
|
|
1,596
|
Other receivables
|
|
-
|
|
353,559
|
Deposits paid for acquisition
of property and
land use
right
|
|
-
|
|
184,280
|
Deferred tax assets
|
|
53,216
|
|
40,263
|
Total non-current
assets
|
|
2,798,390
|
|
2,569,199
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
Inventories
|
|
4,687,748
|
|
4,145,298
|
Trade and bills
receivables
|
|
10,896,376
|
|
8,323,230
|
Prepayments, deposits and
other receivables
|
|
3,809,675
|
|
1,838,190
|
Derivative financial
instruments
|
|
28,628
|
|
20,203
|
Cash and cash
equivalents
|
|
3,983,959
|
|
3,049,455
|
Total current
assets
|
|
23,406,386
|
|
17,376,376
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
Trade and bills
payables
|
|
12,185,568
|
|
8,842,950
|
Other payables and
accruals
|
|
2,664,298
|
|
2,401,391
|
Tax payable
|
|
266,387
|
|
161,434
|
Interest-bearing bank
borrowings
|
|
1,423,348
|
|
651,980
|
Total current
liabilities
|
|
16,539,601
|
|
12,057,755
|
|
|
|
|
|
NET CURRENT
ASSETS
|
|
6,866,785
|
|
5,318,621
|
|
|
|
|
|
TOTAL ASSETS LESS
CURRENT LIABILITIES
|
|
9,665,175
|
|
7,887,820
|
|
|
|
|
|
NON-CURRENT
LIABILITIES
|
|
|
|
|
Interest-bearing bank
borrowings
|
|
2,366,960
|
|
1,281,576
|
Bond payable
|
|
36,663
|
|
35,411
|
Total non-current
liabilities
|
|
2,403,623
|
|
1,316,987
|
|
|
|
|
|
NET
ASSETS
|
|
7,261,552
|
|
6,570,833
|
|
|
|
|
|
CONDENSED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(continued)
|
|
|
|
|
|
|
|
At
31
December 2011
|
|
At
31 March 2011
|
|
|
(Unaudited)
|
|
(Audited)
|
|
|
HK$'000
|
|
HK$'000
|
EQUITY
|
|
|
|
|
Equity attributable
to equity holders of the parent
|
|
|
|
|
Issued capital
|
|
109,228
|
|
109,121
|
Reserves
|
|
6,453,801
|
|
5,571,959
|
Proposed
final dividend
|
|
-
|
|
351,916
|
|
|
6,563,029
|
|
6,032,996
|
Non-controlling
interests
|
|
698,523
|
|
537,837
|
|
|
|
|
|
TOTAL
EQUITY
|
|
7,261,552
|
|
6,570,833
|
SOURCE Digital China Holdings Limited