Futong Technology down 24.5%to HK$30mn

Revenue from IT services provision up 162% as the company puts greater emphasis on IT Services, which paves the way for future growth.

Futong Technology Development Holdings Limited (“Futong Technology”), the leading value-added distributor of enterprise IT products in the PRC, on Tuesday announced its unaudited interim results for the six months ended 30 June 2011 (“2011 1H”).

During the period under review, revenue of the Group amounted to HK$1,156 million, a decrease of 17.9% compared with the corresponding period in 2010. The drop in revenue was mainly due to a delay in the delivery schedule of certain IBM products ordered by customers to the second half of 2011. Gross profit declined by 5.5% to HK$116.4 million while gross profit margin climbed to 10.1% (2010 1H: 8.7%) as a result of a substantial rise in revenue contribution generated by provision of IT services to customers. Profit attributable to equity shareholders of the Company decreased by 24.5% to approximately HK$30.0 million. Basic earnings per share for the year were 10 HK cents (2010 1H: 13 HK cents), according to a Futong Technology report.

As at 30 June 2011, the Group’s cash and cash equivalents amounted to HK$94.7 million. Bank borrowings totaled HK$ 367.3 million, among which HK$266.0 million were newly obtained during the period under review.

Mr Chen Jian, Chairman of Futong Technology, said, “Leveraging our healthy financial position and expertise, the Group is well positioned to expand our core business and capitalise on the huge market opportunities. Observing the booming demand for IT services in the PRC, the Group succeeded in expanding our presence in the IT services sector which has further advanced our gross profit margin”.

As China’s economy is growing steadily, China's enterprises are increasingly implementing informatisation through upgrade and integration of IT resources. Looking ahead, the Group believes the IT industry in the PRC will remain vibrant and booming, highlighted by the policy support for promoting cloud computing at the enterprise level. The Group will maintain its close relationship with Centrin Data Systems Co. Ltd which owns and operates data centres in China, to capture the business opportunities in promoting cloud computing solution based on the data Centre.

“It is expected that sales of products for which delivery was postponed would bring in revenue in the second half of 2011. Our growth strategy is to broaden our product sourcing networks, expand the scope of our IT services – a key growth driver – in the PRC and cooperate with industry leaders. Based on our solid strategic position and the anticipated product sales we remain confident that our leading position in the IT industry within the PRC will be strengthened”. Mr Chen concluded.