BEIJING, Nov. 30 /PRNewswire-Asia/ -- Sinotel Technologies Ltd. (ADR: SNOXY; "Sinotel" or the "Company") is a China-based, Singapore-listed company traded on the Singapore Exchange under ticker SGX: D3W and also traded in the United States of America as American Depository Receipt ("ADR") ticker, SNOXY, under the ADR program. Bank of New York Mellon is the Company's ADR Depositary Bank. Sinotel is an innovator of wireless telecommunications infrastructure and solutions in China. Today, the Company announced financial results for the third quarter and nine months period ended September 30, 2009.
-- Revenue for the quarter, in RMB, increased by 57.9% on a year-over-year
basis to $20.0 million, driven by strong demand in Wireless Network
Solutions business, while net profit increased 52.0% on a year-over-
year basis to $6.1 million
-- Revenue and net profit through nine months ended September 30, 2009
increased to $55.0 million and $16.5 million respectively, representing
a 39.6% and 27.3% increase, in RMB, over the same periods of last year
Summary Financials
3rd Quarter Ended 9 Months Ended
September 30, 2009 September 30, 2009
3Q 2009 3Q 2008 3Q 2009 Change 9M 2009 9M 2008 9M 2009 Change
RMB'000 RMB'000 US$'000 % RMB'000 RMB'000 US$'000 %
Revenue 136,223 86,289 19,984 57.9% 374,896 268,563 54,997 39.6%
Gross
Profit 59,543 35,706 8,735 66.8% 155,952 115,494 22,878 35.0%
Net Profit 41,767 27,476 6,127 52.0% 112,157 88,117 16,453 27.3%
Note:
1. The Company's reporting currency is Renminbi ("RMB"). The translation
of amounts from RMB to United States dollars ("U.S. Dollar") is solely
for the convenience of the reader. RMB numbers included in this press
release for the three and nine months ended September 30, 2009, have
been translated into U.S. dollars at the exchange rate as at September
30, 2009 of US$1.00 : RMB 6.8166.
2. The financial results are unaudited.
3. Financial results are reported according to Singapore Financial
Reporting Standards (SFRS).
4. Each ADR represents 20 of the Company's ordinary shares.
The percentage changes in the table and elsewhere in this press release reflect the change in line items based on RMB. Since the exchange rate at September 30, 2008 was different from the rate at September 30, 2009, the percentage changes, based on United States dollars, would have been different.
Third Quarter Ended September 30, 2009 Results
Total revenues for the third quarter ended September 30, 2009 reached $20.0 million. The increase of revenues of 57.9% is attributed to increasing demand for wireless network solutions. Specifically, the increase was due to more contracts secured in Shanxi province as well as the increase in sales revenue contribution from the Company's Emergency Mobile Communication System ("EMCS") which was introduced in 2008. Gross profit for the quarter, which was $8.7 million, reflected a 66.8% increase compared to the same period of 2008. The increase in gross profit was driven by the increase in revenue. Gross margin for the three months ended September 30, 2009 was 43.7% versus 41.4% for the same period of the prior year.
General and administrative expenses, which were $1.5 million for the quarter, an increase of 77.4% compared to the same period of last year. The increase in expenses was related directly to the increase in depreciation associated with fixed assets additions during second half of 2008 plus an increase in accrual for performance bonuses. As a percentage of revenue, general and administrative expenses in the third quarter was 7.7%.
Net profit for the quarter ended September 30, 2009 increased by 52.0% to $6.1 million. Net profit margin for the quarter was 30.7%. Earnings per ordinary share for the quarter were $0.02 based on 308,000,000 weighted average number of ordinary shares outstanding. Each Sinotel ADR represents 20 ordinary shares.
Nine Months Ended September 30, 2009
Through the first nine months of 2009, revenues increased to $55.0 million, a 39.6% year-over-year increase. The increase in revenue was contributed from Sinotel's Wireless Network Solutions segment as more contracts were secured from the Shanxi province. The Emergency Mobile Communications System also contributed to the growth of revenues recorded in the nine months period.
For the nine-month period ended September 30, 2009, gross profit was $22.9 million, an increase- of 35.0% compared to the same period of last year. Gross margin for the nine months period ended September 30, 2009 was 41.6% versus 43.0% for the first nine months of 2008.
General and administrative expenses, which were $3.9 million for nine-month period of 2009, reflected an increase of 63.8% compared to the same period of last year. The increase in expenses was related directly to the increase in depreciation associated with fixed assets additions during second half of last year plus an increase in accrual for performance bonuses as reported in the third quarter. The increase was offset by a decrease in staff costs and decrease in other expenses, which include office expenses and professional fees.
The finance costs for third quarter and nine months periods ended September 30, 2009 increased as a result of increased borrowings.
Net profit for the first nine months was $16.4 million, reflecting a 27.3% increase over the same period of last year. Net profit margin for the nine months period ended September 30, 2009 was 29.9% versus 32.8% for the same period of 2008. The slight decrease in net margin was mainly due to increase in general and administrative expenses as well as finance costs.
Earnings per ordinary share for the nine months period ended September 30, 2009 were $0.06 based on the weighted average number of ordinary shares outstanding for nine months period ended September 30, 2009.
Mr. Jia Yue Ting, Executive Chairman of Sinotel commented, "The Group posted a remarkable set of results for the third quarter and nine months this year amidst growing demand for wireless network solutions. Due to the pressing timeline given by our customers, several projects were completed ahead of schedule giving rise to the better than expected figures."
Outlook and Future Plans
Sinotel believes the overall macro environment for China's telecommunications industry remains favorable. The sector continues to enjoy progressive growth driven by the telecom operator's spending on infrastructure and through the development of the country's 3G mobile network.
Mr. Jia Yue Ting added, "China's 3G rollout has been progressing well, and now most of the key cities are 3G capable. We anticipate that the next stage of development will be to increase the capacity of the new network and broaden its coverage to smaller cities."
Going forward, Sinotel intends to focus on developing its business within the eight existing provinces, seeking orders from new cities and penetrating deeper into the rural areas. The Company is confident that its financial outlook will remain favorable for the rest of the financial year 2009.
Balance Sheet and Cash Flow Discussion
As of September 30, 2009, cash and cash equivalents totaled $11.3 million, $53.4 million in accounts receivable with an average days sales outstanding of 197 which, the Company believes, was consistent with that of industry peers, and shareholders' equity of $81.2 million.
About Sinotel Technologies Ltd.
Founded in 2002, Sinotel Technologies was listed on the Main Board of the SGX-ST on November 12, 2007. The Company is a wireless telecommunications innovator that provides a wide range of customized applications and solutions across the telecommunication value chain in eight major provinces. Sinotel Technologies services the major telecommunications companies including China Unicom and China Mobile. The Group's key Network Infrastructure Solution is its proprietary multi-carrier wireless system, which enhances customers' wireless telecommunication networks and is compatible with various communication networks such as GSM, CDMA, PHS and WLAN as well as 3G networks such as WCDMA and CDMA2000. The Company's Network Support Solutions can be integrated into existing telecommunication network infrastructure to deploy new and enhanced voice communication services for wireless communication users and manage provision of increasingly popular value-added data services. For more information, please visit its website at http://www.sinotel.com.sg .
More information about the Company can be found on: http://www.sgx.com and/or http://www.bnymellon.com/dr . Information of these websites or any other websites does not constitute a portion of this press release.
FORWARD-LOOKING STATEMENTS
This release contains certain "forward-looking statements" relating to the business of the Company. These forward looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions. Such forward looking statements involve known and unknown risks and uncertainties that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those relating to the telecommunications industry in China, the exchange ratio of RMB to United States dollars and factors relating to the Chinese and world economic condition and Chinese government policies and regulations. All forward-looking statements attributable to the Company or to persons acting on its behalf are expressly qualified in their entirety by these factors other than as required under the securities laws. The Company does not assume a duty to update these forward-looking statements.
For more information, please contact:
COMPANY:
Ben Ng, VP, Corporate Communications
Tel: +65-9168-9988
Email: ben@sinotel.com.sg
INVESTOR RELATIONS:
John Mattio
HC International, Inc.
Tel: +1-203-616-5144
Email: john.mattio@hcinternational.net
Web: http://www.hcinternational.net
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2009 and DECEMBER 31, 2008
THE GROUP
As at As at As at
30-Sep-09 31-Dec-08 30-Sep-09
RMB'000 RMB'000 USD'000
Non-current assets
Plant and equipment 91,865 88,228 13,477
Intangible assets 22,737 8,008 3,336
114,602 96,236 16,813
Current assets
Inventories 205,321 151,080 30,121
Trade and bills receivables 363,954 181,763 53,392
Other receivables 36,448 5,679 5,347
Cash and cash equivalents 77,432 36,829 11,359
683,155 375,351 100,219
Total assets 797,757 471,587 117,032
Non-current liabilities
Deferred tax liabilities 1,176 572 173
Current liabilities
Trade payables 87,474 14,492 12,833
Other payables and accruals 71,678 46,207 10,515
Bank borrowings 83,700 33,700 12,279
242,852 94,399 35,627
Total liabilities 244,028 94,971 35,800
Net assets 553,729 376,616 81,232
Shareholders' equity
Share capital 255,758 190,852 37,520
Translation reserves (6,927) (6,977) (1,016)
Accumulated profits 304,898 192,741 44,729
Total equity 553,729 376,616 81,232
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 and 2008
THE GROUP
3Q09 3Q08 3Q09 Increase/
(Decrease)
RMB '000 RMB '000 USD '000 %
Revenue 136,223 86,289 19,984 57.9 %
Cost of sales (76,680) (50,583) (11,249) 51.6 %
Gross profit 59,543 35,706 8,735 66.8 %
Other Income 66 3,150 10 (97.9)%
Selling and distribution expenses (5,669) (5,013) (832) 13.1 %
General and administrative expenses (10,523) (5,933) (1,544) 77.4 %
Finance costs (1,419) (299) (208) 374.6 %
Profit before income tax 41,998 27,611 6,161 52.1 %
Income tax expense (231) (135) (34) 71.1 %
Net profit for the period 41,767 27,476 6,127 52.0 %
Other comprehensive (losses)/
income, after tax:
- Currency translation differences 224 (4,006) 33
Total comprehensive profit 41,991 23,470 6,160
for the period
THE GROUP
9-mth 09 9-mth 08 9-mth 09 Increase/
(Decrease)
RMB '000 RMB '000 USD '000 %
Revenue 374,896 268,563 54,997 39.6 %
Cost of sales (218,944) (153,069) (32,119) 43.0 %
Gross profit 155,952 115,494 22,878 35.0 %
Other Income 146 4,149 21 (96.5)%
Selling and distribution expenses (13,498) (13,752) (1,980) (1.8)%
General and administrative expenses (26,903) (16,424) (3,946) 63.8 %
Finance costs (2,936) (888) (431) 230.6 %
Profit before income tax 112,761 88,579 16,542 27.3 %
Income tax expense (604) (462) (89) 30.7 %
Net profit for the period 112,157 88,117 16,453 27.3 %
Other comprehensive (losses)/
income, after tax:
- Currency translation differences 50 (4,323) 7
Total comprehensive profit 112,207 83,794 16,460
for the period
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 and 2008
THE GROUP
3Q09 3Q08 3Q09
RMB'000 RMB'000 USD'000
Cash flows from operating activities
Profit before income tax 41,998 27,611 6,161
Adjustments for:
Write-back of allowance for
stock obsolescence -- -- --
Allowance/(Write-back of
allowance) for doubtful
trade receivables 47 -- 7
Depreciation expense 3,810 1,241 559
Amortisation of intangible
assets 1,748 710 256
Loss on disposal of plant and
equipment -- 283 --
Property, plant and equipment
written off -- -- --
Interest expense 1,321 275 194
Interest income (53) (65) (8)
Currency translation differences 824 (201) 121
Operating profit before working
capital changes 49,695 29,854 7,290
Changes in working capital:
Inventories 6,922 (18,815) 1,015
Trade receivables (64,324) 20,499 (9,436)
Other receivables (12,967) 15,224 (1,902)
Trade payables 12,188 (8,630) 1,787
Other payables and accruals (14,356) 2,624 (2,106)
Cash (used in)/generated from
operations (22,842) 40,756 (3,352)
Interest received 53 65 8
Net cash (used in)/generated from
operating activities (22,789) 40,821 (3,344)
Cash flows from investing activities
Purchase of plant and equipment (14,927) (61,209) (2,190)
Intangible assets acquired (7,834) -- (1,149)
Net cash used in investing activities (22,761) (61,209) (3,339)
Cash flows from financing activities
Interest paid (1,321) (275) (194)
Repayment of bank loans 20,000 16,223 2,934
Deposit pledged (4,713) (4,794) (691)
Proceeds of shares issuance 64,906 -- 9,522
Net cash generated from/(used in) 78,872 11,154 11,571
financing activities
Net increase/(decrease) in cash and
cash equivalents 33,322 (9,234) 4,888
Cash and cash equivalents at
beginning of the financial period 13,347 37,302 1,958
Effect of currency translation on
cash and cash equivalents (637) (3,805) (93)
Cash and cash equivalents at end of
the financial period 46,032 24,263 6,753
Cash and cash equivalents represented
by:
Cash and bank balances 77,432 30,602 11,359
Less: Deposits pledged (31,400) (6,339) (4,606)
46,032 24,263 6,753
THE GROUP
9-mth 09 9-mth 08 9-mth 09
RMB'000 RMB'000 USD'000
Cash flows from operating activities
Profit before income tax 112,761 88,579 16,542
Adjustments for:
Write-back of allowance for stock
obsolescence -- (266) --
Allowance/(Write-back of
allowance) for doubtful
trade receivables 47 (793) 7
Depreciation expense 11,456 2,395 1,681
Amortisation of intangible assets 3,631 881 533
Loss on disposal of plant and
equipment -- 283 --
Property, plant and equipment
written off 12 -- 2
Interest expense 2,737 819 402
Interest income (123) (246) (18)
Currency translation differences 920 (398) 135
Operating profit before working
capital changes 131,441 91,254 19,284
Changes in working capital:
Inventories (54,242) (86,975) (7,957)
Trade receivables (182,237) (16,825) (26,734)
Other receivables (30,769) 4,396 (4,514)
Trade payables 71,460 (7,346) 10,482
Other payables and accruals 23,355 11,188 3,426
Cash (used in)/generated from
operations (40,992) (4,308) (6,013)
Interest received 123 246 18
Net cash (used in)/generated from
operating activities (40,869) (4,062) (5,995)
Cash flows from investing activities
Purchase of plant and equipment (15,105) (66,834) (2,216)
Intangible assets acquired (14,792) (7,609) (2,170)
Net cash used in investing activities (29,897) (74,443) (4,386)
Cash flows from financing activities
Interest paid (2,737) (819) (402)
Repayment of bank loans 50,000 (30,743) 7,335
Deposit pledged (16,713) 890 (2,452)
Proceeds of shares issuance 64,906 -- 9,522
Net cash generated from/(used in) 95,456 (30,672) 14,003
financing activities
Net increase/(decrease) in cash and
cash equivalents 24,690 (109,177) 3,622
Cash and cash equivalents at beginning
of the financial period 22,142 137,365 3,248
Effect of currency translation on cash
and cash equivalents (800) (3,925) (117)
Cash and cash equivalents at end of
the financial period 46,032 24,263 6,753
Cash and cash equivalents represented
by:
Cash and bank balances 77,432 30,602 11,359
Less: Deposits pledged (31,400) (6,339) (4,606)
46,032 24,263 6,753
