Mr. Lai Yam Ting, Managing Director of ASL, said, "We are pleased to deliver steady performance with profit despite the challenging economic environment. We continued to secure sizable projects from both public and private sectors. With focus on expanding the higher margin and recurrent revenue based businesses, we are also glad to see both solution and service businesses grew in the quarter under review."
Product sales and service revenue for the first quarter contributed to the Group's turnover 56.8% and 43.2% respectively. Commercial and public sector sales made up 51.0% and 49.0% respectively of the total turnover of the Group for the period under review, against 58.7% and 41.3% in the same period last year. As for the overseas business of the Group, it sustained satisfactory performance during the review period. Turnover from the overseas business slightly decreased by 1.6% to HK$40.4 million compared with the same period last year.
The Group maintained a healthy balance sheet with net cash of approximately HK$338.1 million as at 30 June 2009. The order book carried a total value of approximately HK$550.6 million. There were no debts during this period and working capital ratio was 2.28:1.
In the first quarter of FY10, the Group continued to receive significant contribution from the IT infrastructure business. Besides, the Group's solution business recorded stable performance during the quarter under review. It secured various deals entailing provision of tailor-made solutions to help customers achieve operational efficiency, costs saving and to maintain service level.
During the review period, the Group continued to devote efforts to expanding its IT services segment which generally has a higher margin than sales of products. The Group obtained several significant deals from the public sector. The Group's subsidiary, ELM Computer Technologies Ltd., was awarded a 3-year contract worth over HK$40 million for the provision of Information Technology Development Services for the Hong Kong Housing Authority ("HKHA"). Other sizable contracts included a multi-million dollar tender to provide Computer Technician Support Services for 32 public libraries in Hong Kong.
Subsequent to the review period, the Group continued to perform satisfactorily in the public sector and its subsidiary, Automated Systems (HK) Ltd., continued to be awarded a number of sizable contracts from customers, particularly from government departments and statutory bodies. In July, Automated Systems (HK) Ltd. continued its success to enter into a new set of Standing Offer Agreements, referred to as Standing Offer Agreement for Quality Professional Services 2 (SOA-QPS2), with the Government of the HKSAR from its first win in 2005. Under this agreement, ASL will provide the Information Technology Professional Services to government bureaux and departments under four service categories (Category 1, Category 2 and 3 in Major Service Group and Category 4) with a period of 48 months, effective from 31 July 2009. In addition, the Group's services capability was further demonstrated by another tender won in the same month. Automated Systems (HK) Ltd. obtained a 3-year Standing Offer Agreement from the Office of the Government Chief Information Officer (OGCIO) for the provision of information technology (IT) contract staff services to government departments. The Group is one of the eleven contractors who have been given the IT contract staff services agreement.
In August, Automated Systems (HK) Ltd. was awarded a multi-million dollar contract from the Hong Kong Examinations and Assessment Authority (HKEAA) for the provision of certain professional services, hardware and software for the development of the Hong Kong Diploma of Secondary Education (HKDSE) Examination System. The HKDSE Examination, which is to be implemented in 2012 under the new 3+3+4 academic structure, will replace the existing Hong Kong Certificate of Education Examination (HKCEE) and the Hong Kong Advanced Level Examination (HKALE). The new, web-based and automated system can support HKDSE which will adopt the standards-referenced reporting.
Mr. Lai added, "The contract of HKEAA is one of the largest turnkey solution orders the Group has received to date since its listing on the Stock Exchange of Hong Kong Limited. Being able to consistently win sizable service contracts from both the private and public sectors, we demonstrate to clients our ability to provide a wide range of large-scale and long-term IT support services. In fact, the Group has maintained a strong position within the Hong Kong market. According to IDC Asia/ Pacific Semiannual IT Services Tracker, 2H 2008, Automated Systems (HK) Ltd. was one of the top 5 IT services players in Hong Kong in 2008."
On 24 April 2009, a Share Purchase Agreement was signed between the CSC Group and Teamsun Technology (HK) Limited ("Teamsun"), a wholly-owned Hong Kong subsidiary of Beijing Teamsun Technology Co., Ltd. (SHSE stock code: 600410). Under the Share Purchase Agreement, Teamsun has conditionally agreed to acquire CSC Group's entire holding of 203,431,896 shares (the "Sale Shares") in ASL at a total consideration of approximately HK$262.4 million. The ASL Group and the CSC Group also entered into the GAC Special Deal Agreements[1] which was approved unanimously by shareholders at the Group's Special General Meeting held on 17 July 2009. The GAC Special Deal Agreements lifted the geographical delineation of business between the ASL Group and the CSC Group and has provided opportunities for the Group to boost its presence in PRC and other markets in Asia.
Mr. Lai concluded, "With the termination of the Territorial Agreement, we are now free to pursue expansion both in China and Asian markets. We see opportunities to capture IT demand from customers who have operations in China or are keen to pursue Mainland's untapped potential. We are now examining Chinese Central Government's policy on the development of the Pearl River Delta and the role of Hong Kong is to play in the plan. We see the potential to expand our operation within the Pearl River Delta region."
"Beyond the Pearl River Delta region, we have also spotted opportunities in Shanghai as an international finance centre in the region, with a number of Hong Kong-based and overseas banks and financial firms have already established presence. The Group will continue to align with the regional development needs of its customers and provide them with quality IT services. Although the global economy has only recently begun showing signs of recovery, strong support from the public sector will continue to bolster the Group's position in the market and can foster our income base. Finally, we will also maintain stringent cost control policies by eliminating unnecessary costs while maximizing utilisation of existing resources. We are confident of our performance in the rest of the year."
[1] As defined in the Joint Announcement dated 6 May 2009
