Digital China Announces 3Q Results for the Period Ending December 31, 2006.Financial Highlights: -- Revenue of HK$18,984 million, up 29.04% compared to nine months 2005/06 -- Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. up 11.24% to HK$314 million -- Net income was HK$172 million -- Basic earnings per share of 19.76 HK cents, down 17.25% over 3Q2005/06 -- Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of of 19.67 HK cents, down 17.32% over 3Q2005/06 HONG KONG Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov. -- Digital China Holdings Limited ("Digital China" or "the Group") (HKEx HKEx Hong Kong Exchanges and Clearing Limited : 0861), a leading information technology services company in the People's Republic People's Republic n. A political organization founded and controlled by a national Communist party. of China ("PRC"), announced its results for the nine months ending December 31, 2006. "For the nine months ended 31 December 2006, the Group delivered robust growth, with turnover growth outperforming the market's average, excellent results in operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. , liquidity, and other key aspects of our business, all of which provided a firm foundation for the Group's continuous, stable and healthy development." commented Guo Wei, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Digital China. FINANCIAL REVIEW Revenue for the nine months ended 31 December 2006 was HK$18,984 million, up 29.04% compared to the corresponding period of 2005. This growth rate is far higher than the estimated 14.4% growth rate of the PRC IT market1 and helped the Group sustain its leading position and competitive edge in the market. The growth was mainly attributable to better implementation of the Group's specific growth strategies that have been set for each of the three business segments. The Group's gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. for the nine months ended 31 December 2006 was stable at 6.99% compared to the same period in the previous financial year. Profit attributable to equity holders of the parent for the nine months ending 31 December 2006 was HK$172 million (05/06: HK$206 million) after taking into account a number of special items including (i) a HK$29 million charge for goodwill impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. related to the acquisition of Si-Tech Information Technology Co., Ltd.; (ii) a special account receivables account receivable Any amount owed to a business as the result of a purchase of goods or services from it on a credit basis. Although the firm making the sale receives no written promise of payment, it enters the amount due as a current asset in its books. provision of HK$4 million; (iii) a HK$13 million charge for impairment of intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. ; (iv) a HK$12 million charge impairment of intangible assets for a jointly controlled company and (v) a HK$97 million exchange gain. Basic earnings per share and diluted earnings per share were 19.76 HK cents and 19.67 HK cents respectively. At year end 2006, the number of outstanding shares was 870,729,139 and the diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. number of outstanding shares was 874,661,571. SEGMENT ANALYSIS Distribution Turnover of the distribution business of the Group in the third quarter of this financial year and for the nine months ended 31 December 2006 was HK$3,957 million and HK$11,005 million respectively. Turnover for the nine months grew 28.32% compared to the same period of last year, exceeding the estimated average growth in the PRC IT market. Distribution revenue accounted for 58% of the Group's total revenue for the first nine months, equal to the same period of 2005. [TABLE OMITTED] Segment Contribution > > 9 months 06/07 > 9 months 05/06 (HKD mn) > > > Distribution > > 527 > 403 Systems > > 502 > 376 Services > > 298 > 224 Systems During the first nine months of this financial year, the Group continued to strengthen its cooperation with suppliers and channels for its Systems business, thus maintaining the impetus Impetus is a stimulus or impulse, a moving force that sparks momentum. Impetus may also refer to:
Services The turnover of the Services business for the third quarter of this financial year reached HK$1,029 million, representing an increase of 17.14% compared to the same period of the last financial year. For the nine months ended 31 December 2006, turnover was HK$2,382 million, up 27.51% compared to the same period of the last financial year. Profitability improved with profit margin for the third quarter of this financial year reaching 13.79%, compared to 11.01% for the same period of the last financial year. The gross profit margin of the for the nine months ended 31 December 2006 was 12.51%, a slight increase over 12.00% during the same period of the last year. EXPENSES [TABLE OMITTED] Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. for the first half, as a percentage of total turnover, was 6.16% up from 5.57% last year. Net cash inflow in·flow n. 1. The act or process of flowing in or into: an inflow of water; an inflow of information. 2. from operating activities for the nine months ended 31 December 2006 amounted to approximately HK$ 664 million, an increase of approximately HK$ 250 million compared to the same period of the last financial year. This is mainly attributable to the increase in trade payables Payables Related: Accounts payable and bill payables. The liquidity of the Group for the nine months of this financial year improved substantially, with a decrease of 3.43 days in its overall cash cycle compared to the same period of the last financial year, resulting, among others, from a decrease of 2.11 days and 2.10 days in the turnover rate for trade receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed and inventories. During the first nine months of this financial year, the Group established three new companies in Hefei in Anhui province, Fuzhou in Fujian province and Changsha in Hunan province. While the costs incurred in the establishment of the subsidiaries had a definite impact on the Group's profit for the first nine months of this financial year, the establishment of the three companies has strengthened the effectiveness of Digital China's communication with the local governments and the industry, enhanced its brand, and also provided impetus for the Group's development in these three provinces. The Company expects that these new subsidiaries will contribute to future growth. OUTLOOK The management of the Group is pleased with the results achieved in the first nine months of this financial year. Over the remainder of this financial year, the Group will continue its efforts to create a healthy cash inflow and achieve stable profitability, realising prudent and balanced development between growth and risk control. About Digital China (HKEx: 0861) Digital China Holdings Limited ("Digital China", "the Group"; HKEx: 861) is an information technology services company. Headquartered in Beijing, Digital China has regional centers in 16 major cities in China China is a geographical area encompassing multiple territories, under two states. You may be looking for:
1 Source: IDC China 2006 [TABLE OMITTED] [TABLE OMITTED] |
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