FY2009/10 First Quarter Results AnnouncementUnified Business Support Portal ISP BOSS/BSS Customer...

FY2009/10 First Quarter Results Announcement

27 August 2009

IT·Service·InnovationDisclaimer

This presentation may contain certain projection and forward-looking statements that involve risksThis presentation may contain certain projection and forward looking statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results of Digital China may differ materially from those expressed or implied by such forward-looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statement, including but not limited to any projectionsstatements that could be deemed forward looking statement, including but not limited to any projections of revenue, margins, expenses, charges, earnings or other financial items; any statements of the plans, strategies, and objectives of management for future operations, including execution of any restructuring plans; any statements concerning the expected development, performance or market share relating to products or services; any statements of expectation or belief; and any statements of assumptions p oducts o se ces; a y state e ts o e pectat o o be e ; a d a y state e ts o assu pt o sunderlying any of the foregoing. Risks, uncertainties and assumptions include macroeconomic and geopolitical trends and events; execution and performance of contracts by suppliers, customers and partners; employee management issues; the challenge of managing asset levels, including inventory; the difficulty of aligning expense levels with revenue changes; expectations and assumptions relating to y g g p g ; p p gthe execution and timing of workforce restructuring programs. In addition, statistical and other information relating to the PRC and the technology industry contained in this presentation have been compiled from various publicly available official or unofficial sources p p p ygenerally believed to be reliable. However, the quality of such source materials cannot be guaranteed. Moreover, statistics derived from multiple sources may not be prepared on a comparable basis.

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IT·Service·Innovation

AGENDA

Business Overview

Financial Re ieFinancial Review

Business Review by Segments

Services

Supply Chain Services

Systems

Distribution

Company Outlook

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Business OverviewBusiness Overview

IT·Service·InnovationBusiness Overview

Business Transformation

— “Customer‐Focused & Service‐Oriented” Model

Industry Market (Services)

Major industries FOCUS: FSI, Telco, Gov & Public

E d 2 E d i bilitEnd‐2‐End service capability

High‐tech Industries Market (Supply Chain Services)

DIRECT customer coverageDIRECT customer coverage

High efficient and professional logistic capability

Enterprise Market (Systems)p ( y )

Mid/High‐End product PORTFOLIO & EXPERTISE

VALUE‐ADDED service capability

SMB & Consumer Market (Distribution)

Most COMPLETE product coverage

Effective RISK MANAGEMENT mechanism


Financial ReviewFinancial Review

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IT·Service·InnovationFinancial Highlights

Q1 FY09/10Q1 FY09/10

Turnover up 6.49% yoy to HK$10,660 million

Gross profit margin decreased yoy slightly to 6.42%

Profit from operating activities grew 84 66% yoy to HK$313 millionProfit from operating activities grew 84.66% yoy to HK$313 million

Net profit up 129.86% yoy to HK$262 million

EPS reached 27.24 HK cents, up 130.26% from Q1 FY08/09.

Net cash inflow from operating activities was HK$361 millionp g $

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IT·Service·InnovationIncome Statement Highlights

HK$ millionFY2009/10

Q1FY2008/09

Q1

Turnover 10,660 ↑6.49% 10,011Turnover 10,660 ↑6.49% 10,011

Gross profit margin (%) 6.42 ↓19 bps* 6.61

Other income and gains 194 ↑49.36% 130

Operating expenses 565 ↓9.21% 622

Profit from operating activities 313 ↑84.66% 170

Net profit 262 ↑129 86% 114Net profit 262 ↑129.86% 114

EPS (HK cents) 27.24 ↑130.26% 11.83

A f A f* bps=basic points

As of 30 June 2009

As of 30 June 2008

ROE 7.70% 4.15%

ROA 2 12% 1 01%ROA 2.12% 1.01%

Current Ratio 1.47x 1.43x

Quick Ratio 1.18x 1.06x

Capital Expenditure (HK$ million) 8 15p p ( $ )

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IT·Service·InnovationSegment BreakdownServices Services

Distribution23334%

HK$ million12919%

Supply ChainServices

Distribution19630%

HK$ million15624%

Supply ChainS i

Systems25537%

6710% Systems

27140%

Services396%

HK$ millionDistribution Systems Supply Chain Services Consolidated

09/10 Y-o-Y 09/10 Y-o-Y 09/10 Y-o-Y 09/10 Y-o-Y 09/10 Y-o-Y

FY09/10 Q1 Gross Profit: HK$ 684 million FY08/09 Q1 Gross Profit: HK$ 662 million

09/10Q1

Y-o-Ychange

09/10Q1

Y-o-YChange

09/10Q1

Y-o-YChange

09/10Q1

Y-o-YChange

09/10Q1

Y-o-Ychange

Revenue 4,854 ↑3.5% 3,110 ↓5.1% 1,843 ↑139.3% 853 ↓32.9% 10,660 ↑6.5%

Gross Profit 233 ↑18.6% 255 ↓5.9% 67 ↑73.2% 129 ↓17.1% 684 ↑3.4%

G P fit M i (%) 4 79% ↑61 b 8 20% ↓7 b 3 64% ↓139 b 15 18% ↑291 b 6 42% ↓19 bGross Profit Margin (%) 4.79% ↑61 bps 8.20% ↓7 bps 3.64% ↓139 bps 15.18% ↑291 bps 6.42% ↓19 bpsOther Income and Gains 0.2 ↓99.5% 1 ↓97.6% 0 ↓99.9% 6 ↓58.1% 194 ↑49.4%

Operating expenses (131) ↓16.2% (172) ↓30.6% (43) ↑71.3% (132) ↓7.8% (565) ↓9.2%

EBIT 68 ↓8 7% 82 ↓0 8% 23 ↑38 7% 5 ↓82 0% 313 ↑84 7%EBIT 68 ↓8.7% 82 ↓0.8% 23 ↑38.7% 5 ↓82.0% 313 ↑84.7%

Finance Costs (26) ↓37.2%

Tax (18) ↓6.0%

Net profit 262 ↑129.9%

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IT·Service·InnovationConsolidated Balance Sheet

HK$ million 30 Jun 2009 31 Mar 2009 30 Jun 2008

Fixed assetsOther non-current assets

399402

413398

420342

InventoriesTrade and bills receivablesPrepayments, deposits and other receivablesCash and bank balances

2,3125,9211,2632,086

2,1365,4721,3661,734

2,6834,9851,2131,652

Derivative financial instruments,

26,

27,

0

Total assets 12,409 11,546 11,295

Trade and bills payables 5,625 4,698 3,499p yOther current liabilitiesInterest-bearing bank borrowings (current)Interest-bearing bank borrowings (non-current)Bond payable

,1,599

679651226

,1,814

875702226

,1,8702,014

919227Bond payable 226 226 227

Total liabilities 8,780 8,315 8,529

Share capitalOther reserves

961 728

961 583

961 452Other reserves

Retained earningsProposed final dividendMinority interests

1,7281,440

140225

1,5831,321

14091

1,4521,061

14017

Total equity 3,629 3,231 2,766

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IT·Service·InnovationTurnover Days for the Group

A/R Turnover Days Inventory Turnover Days

22 90 25.24

36.89 39.37

48.09

22.90 20.07

FY07/08 Q1 FY08/09 Q1 FY09/10 Q1FY07/08 Q1 FY08/09 Q1 FY09/10 Q1

Cash Cycle DaysA/P Turnover Days

25.72 32.15

22.40

34.07 32.46

45.76

FY07/08 Q1 FY08/09 Q1 FY09/10 Q1FY07/08 Q1 FY08/09 Q1 FY09/10 Q1

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IT·Service·InnovationConcentration Analysis

HP

% of the Group’s total procurement

21%

Business Development

DELL

Cisco 10%

8%

New Initiatives:‐Streamline the organization to be more

Lenovo

Acer 8%

6%

customer‐focused

‐More focus on direct customer coverage

‐Market expansion (product & market

Asus

IBM 6%

4%

share )

‐Cost control

‐ Operating expenses reduced

Oracle

AMD 2%

2%

HK$ illi

‐ Improvement on cash flow

‐Speed up the Service‐oriented Transformation

‐ New operating systems launched in

0 500 1,000 1,500 2,000 2,500

INTEL

Purchase from Top 10 Suppliers accounted for 69% of the Group’s total procurement

2% HK$ million ‐ New operating systems launched in Banking/Telecom/Government area

of the Group’s total procurement

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Business Review:

I d t M k tIndustry Market (Services)( )

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IT·Service·InnovationServices Segment Q1 FY09/10

Gross profit margin up to 15.18%

Net profit sustains the profitability of HKD5 million

Contract values of service solutions grew 55%

Qilu Bank Core banking systemQilu Bank Core banking system launched

Shanxi Telecom BSS launched

Citizen Card launched in Yangzhou City

HK$ million Others9%

Finance15%

2000

Telecom52%

Gov’t24%

500

1000

1500

FY2009/10 Q1 Services Business:

0

500

FY08/09 Q1 Q2 Q3 Q4 FY09/10 Q1

HK$853 millionBU Quarterly Revenue

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IT·Service·InnovationDi it l Chi b ki i d t t t l l ti M d lB@ k 2 0Di it l Chi b ki i d t t t l l ti M d lB@ k 2 0

Customer Value Case Banking SolutionsDigital China banking industry total solution ModelB@nk 2.0Digital China banking industry total solution ModelB@nk 2.0

MB Finteractive MB Finnovator MB FintelligenMB Fusion

Risk ManagementFinancial Product & ServiceCRM Risk Management

Intermediate

Business

Card

Cash Managem

en

Loan

Wealth

CRM

Loyalty

ECIF

integration contract

Branch

TellerCredit

ALM

Operation

PBOC

CBRC

SAFE

Regulatory

e t

Channel Integration

Multi‐Chanel Platform

E‐Banking

Interne

Mobile

ATM

Payment Gateway

CNAPS CUP SWIFT

Telephon

G

Contri

ManagAccou

Finance & Performance

Core Banking

Treas

Trade Fi

Loa

Depo

PaymMarketing & Sales

CustoSer v

Marke

Sale

Bank & Corp. Direct Link

VIP

et e ne

ESB & Financial Service Definition

GL ibution

gement

unting

ury

nance

n osit

ent

mer

vice

eting

esVIP

ESB & Financial Service Definition

Data Integration Platform & Financial Data Model

Software Infrastructure（Middle Ware, Database, Operation System）

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IT·Service·InnovationCustomer Value Case Telecom Solution

ISPUnified Business Support Portal

BOSS/BSS

ISPCustomerService

pp

BSS ApOperation Analysis

System

CRM

tem

B2B Integ

CorpCustomer

D t I t ti

plication ProSystem

Billing & Settlement

rmation Syst

ration Porta

CorpService

Data Integration Portal

ocess Integra

G &

emen

t Infor

C l i t

Settlement

Channel Mgt

Customer Service

l

Products

ation PortalHR & Knowledge

Gateway & Monitoring

Man

ag

Quality Control

Complaints Channel Mgt

Product Mgt

3rd PartySolutionConcerted Network

HR & KnowledgeManagement

Gateway / Integrated Business Portal / ISP Systems

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IT·Service·InnovationCustomer Analysis

Alibaba 8.99%

% as of Services Business’s revenue

China Mobile

Zhongjie 7.43%

5.66%

China Telecom

CNC

2.97%

4.26%

Bank of Jinzhou

China Unicom

2.21%

2.78%

CCB

China Tietong

1.81%

2.05%

0 20 40 60 80 100

Taikang HK$ million0.78%

S l t T 10 C t t d f 38 94% f S i B i ’Sales to Top 10 Customers accounted for 36.51% of Services Business’s revenue

Sales to Top 10 Customers accounted for 38.94% of Services Business’ revenue

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Business Review:

Hi h t h I d t i M k tHigh‐tech Industries Market(Supply Chain Services)( pp y )

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IT·Service·InnovationSupply Chain Services Segment Q1 FY09/10

DistributionBefore

Supply ChainServices

DistributionNow

One‐stop supply chain, comprising logistics business flow capital flowlogistics, business flow, capital flow and information flow

Targeting IT corporations, major account customers in vertical market

CES21%account customers in vertical market

segments, and other high‐value products manufacturers

Include FA, CES and others business

Others3%

FA76%

Include FA, CES and others business model

Revenue up 139.26% to HKD$ 1,843 million

FY09/10 Q1 Supply Chain Services Business:HK$1,843 millionmillion $ ,

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Business Review:

E t i M k tEnterprise Market (Systems)( y )

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IT·Service·InnovationSystems Segment Q1 FY09/10

Turnover decreased by 5.13% yoy.

Effective business expansion into Key Regional Clients turnover increased by

Digital China awarded the first IPv6 Ready DHCPv6 Server Certification in the WorldRegional Clients, turnover increased by

31.63% yoy

Focused on catering business requests for these key clients with stable

DHCPv6 Server Certification in the World

for these key clients with stable financing capability

Product‐based services revenue sustained a “faster than industry‐sustained a faster than industry‐average” growing trend

Storageproducts

Packagedsoftware12%

products16%Unix servers

20%

Others 21%Networkingproducts31%

FY09/10 Q1 Systems Business: HK$3,110 million

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Business Review:SMB & Consumer MarketSMB & Consumer Market

(Distribution)

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IT·Service·InnovationDistribution Segment Q1 FY09/10

Turnover grew 3.48% yoy

Aggressive expansion into 4th‐6th tier cities, turnover increased 45% yoy

Notebook grew 40% yoy

In depth coverage of 460 citiesIn‐depth coverage of 460 cities

NotebookComputers

PC Servers13%

DesktopComputers

11%

38%

Others 1%

Accessories9%

DataProjectors

3%Others 1%

Consumer ITProducts11%

Peripherals15%

FY09/10 Q1 Distribution Business:HK$4 854 millionHK$4,854 million

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Company Outlookp y

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IT·Service·InnovationCompany Outlook

Focus on the business model transformation and furtherFocus on the business model transformation, and further expand into high-marginal business segments

Fully accelerate sales to guarantee a better than market top-Fully accelerate sales to guarantee a better than market top-line growth by initiating different management mechanism

Supported by a focused & solid customer-base deploymentSupported by a focused & solid customer base deployment, the sustaining & stable IT investment by our key customers can guarantee the positive results for the group, as we keep our commitment of delivering value to our customersour commitment of delivering value to our customers

Further strengthening the rigid risk management mechanism to guarantee a healthy business environmentg y

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Thank You

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FY2009/10 First Quarter Results AnnouncementUnified Business Support Portal ISP BOSS/BSS Customer...

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