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Geong International’s full year results were in line with expectations.
The enterprise content management software provider’s recent trading statement guided expectations. Geong made a profit of £1.14m on revenues of £7.61m in the year to March 2008. The reporting currency has changed from $ to £. Revenues increased 77% and profits 28%. A £3.41m fundraising at 65p a share last June diluted earnings per share but they still rose 12% to 3.53p.
One negative in the figures is the high trade receivables number. Net cash increased from £404,000 to £2m but that was all down to last June’s fundraising. The rest of the cash raised went on higher working capital as trade receivables jumped from £2.41m to £5.35m – a large sum considering annual revenues were £7.61m.
Chairman Henry Tse partly puts this down to splitting off some of the business into a new subsidiary affecting payment terms. He feels that this should improve.
Recurring revenues accounted for 44% of the total figure. Part of the rise in revenues was higher sales of third-party products. There are eight customers that account for at least £350,000 in annual revenues. Lenovo accounted for one-fifth of last year’s revenues.
Geong is looking for acquisitions to widen its range of customers to include the likes of government and telecoms and also to take it into Microsoft.NET technology. Geong is registered in Jersey and Tse says that changes to Chinese government policy concerning foreign companies buying Chinese companies have made acquisitions more difficult. Tse believes he will be able to make acquisitions, though.
Geong plans to launch Software as a Service outside China in the second half of this financial year.
The order book for the current year is worth £5m which gives Geong a good platform from which to grow.
The shares jumped 7p to 59p, valuing Geong at £18.6m. That puts the shares on 16 times historic earnings.
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