Profit before taxation from the continuing operations for the first half of FY10 was HK$13.1 million (FY09 interim: HK$21.5 million). The decrease was mainly attributed to the drop in product sales in the commercial sector though the profit of service business from continuing operations of the Group increased slightly to 4.6% which helped offset the shrunk. Profit before and after taxation of the discontinued operations, which arose from the disposal of Global Managed Service Business (“GMS business”), for the first six months of FY10 was HK$4.2 million and HK$3.5 million respectively. (FY09 interim: HK$5.1 million and HK$4.3 million respectively). The post-tax gain on disposal from the GMS business was HK$69.1 million.
The Board of Directors declared a special dividend of HK 92 cents per share during the period under review. After the payment of special dividend of approximately HK$286.5 million, the Group maintained a healthy balance sheet with net cash of approximately HK$169.1 million as at 30 September 2009. The order book carried a total value of approximately HK$554 million. There were no debts during this period and working capital ratio was 1.75:1.
Mr. Lai Yam Ting, Managing Director of Automated Systems Holdings Limited, said, “We are pleased with the steady performance of the Group with profit reported for the period under review. Our IT infrastructure business continued to perform satisfactorily while solution business grew steadily at the continuous efforts of the Group to promote tailor-made solutions that can maximize value for customers. Service business also recorded stable performance and lays a solid foundation for the Group’s achievement during the quarter under review.”
Product sales and service revenue from the continuing operations for the first six months decreased 15.8% and 2.1% respectively, accounted for 60% and 40% of the Group’s turnover. Commercial and public sector sales made up 46.8% and 53.2% of the Group’s total revenue from the continuing operations respectively, against 55.8% and 44.2% in the corresponding period last year. As for overseas business, it sustained satisfactory performance during the review period with turnover from continuing operations amounted to HK$68.8 million (FY09 interim: HK$ 87.3 million).
During the review period, the Group continued to secure sizable and long-term services contracts from customers, particularly from government and statutory bodies. Automated Systems (HK) Limited, one of our subsidiaries in Hong Kong, was awarded an over HK$50 million contract from the Hong Kong Examinations and Assessment Authority (“HKEAA”) to provide certain professional services, hardware and software for the development of the Hong Kong Diploma of Secondary Education (“HKDSE”) Examination System. Significant additional income will be generated from this contract if we are able to secure the upcoming maintenance services contracts upon system completion.
On 24 April 2009, a Share Purchase Agreement[1] 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 the 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 Share Purchase Agreement is conditional upon the fulfillment of certain conditions including the payment of a special dividend (the “Special Dividend”). Subsequently, Teamsun issued an unconditional mandatory cash offer for all the issued shares in ASL (other than those already owned by or agreed to be acquired by Teamsun and parties acting in concert with it) (the “General Offer”) and to cancel all outstanding options of ASL (the “Option Offer”). The General Offer and the Option Offer were closed on 20 October, 2009. Upon the closing of the General Offer, Teamsun held 203,532,996 shares of ASL, representing approximately 65.4% of the issued share capital of ASL as at 20 October, 2009.
The Group and the CSC Group also entered into the GAC Special Deal Agreements, together with the Special Dividend, were approved unanimously by shareholders at the Group’s Special General Meeting held on 17 July, 2009. The Global Account Transfer Agreement forming part of GAC Special Deal Agreements was completed on 28 August 2009, lifting the geographical delineation of business between ASL and the CSC Group, hence has given opportunities for the Group to boost presence in PRC and other markets in Asia. The Share Purchase Agreement was completed on 23 September 2009, in which Teamsun becomes the controlling shareholder of ASL.
The Group is optimistic about the numerous opportunities in China by creating synergies with Teamsun to seize the Mainland China’s untapped potential. In October 2009, leveraging the local resources, technical competitive advantages and capability of Teamsun, the two companies together secured a million-plus dollar deal to implement a networking system for a whole office tower in Shanghai for one of the largest independent banks in Hong Kong. Such first-of-its kind joint project stands as evidence of the potential of cross-territories business of the Group and the importance of tightening business relationship with leading technology vendors.
Mr. Lai said, “We will continue to focus on our stated strategy on promoting our cross-territories business. Riding on the strong support network and huge coverage of Teamsun in China together with our solid foundation and broad base of clientele, we see our advantages in developing the cross-territories business in China. To start with, we decided to set up seven new customer service centers in Shenzhen, Beijing, Hangzhou, Shanghai, Shenyang and Tianjin and Zhuhai to allow us to better serve customers. In addition to supporting our existing clients to expand their businesses in Mainland China, we are also ready to help new clients in Mainland China to pursue their businesses to nearby regions.”
Aside from focusing on cross-territories business, the Group will continue to provide quality services to customers in Hong Kong and Southeast Asian region. Of note was a 36-month tender received by Automated Systems (HK) Limited for the provision of Hardware Maintenance Services of NT Servers, Personal Computers, Printers, and Related Peripherals to the Hospital Authority (Category A), effective from 1 October, 2009 and has an value of approximately HK$20 million. The Group’s capability in excellent and comprehensive service delivery was once again acknowledged recently. In October, 2009, Automated Systems (HK) Limited was granted the “Capital CEO Supreme Brands Award 2009 – Total IT Service category”. Indeed, the Group has remained its strong position within the Hong Kong market. According to IDC Asia/ Pacific Semiannual IT Services Tracker, 1H 2009, Automated Systems (HK) Ltd. was one of the top 5 IT services players in Hong Kong in 1H 2009.
“Looking ahead, the growing sign of the economy in Greater China region and the partnership with Teamsun are going to boost the Group’s performance in the months to come. In the meantime, we will continue to control costs by optimizing utility from existing resources. Building on the many accomplishments made in the first half year and more still since after, we are positive about our performance in the rest of the year,” Mr. Lai concluded.
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[1] As defined in the Joint Announcement dated 6 May 2009
