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    Company Registration No. 91211 (Jersey)

UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2009

China Eastsea Business Software Ltd, the AIM listed (CESG) China IT outsourcing provider announces interim results for the six months ended 31 August 2009.

Financial highlights include:

• Revenue remained stable at GBP3.68 million (2008.8.31: GBP3.70million) 

• Distribution costs increased 24.3% to GBP0.628 million (2008.8.31: GBP0.505million)

• Administrative expenses increased 10.9% to GBP1.181 million (2008.8.31: GBP1.065million) 

• Net loss of GBP0.493 million（excluding Foreign exchange losses of £64,000) (2008 net loss: GBP0.126million excluding the Foreign exchange gains of £252,000) 

• Net assets (excluding Minority interests) up to GBP18.34 million (2008: GBP14.91million) 

• Cash at bank down 17.4% to GBP2.74million (2008.8.31: GBP3.32 million) 

Contacts:

China Eastsea	Seymour Pierce Limited
Angie Chen	Chris Howard
Company Secretary	Christopher Wren
Tel: +86 10 6298 8850	Tel: 020 7107 8000
angie.chen@sinbpo.com.cn	enquiries@seymourpierce.com
www.sinobpo.com

 

Chairman's Statement

Financial and operating overview

The revenue of the Group was slightly down by 1% compared with the same period last year. However, revenue from software was down 36%, and revenue from consultancies was down 12.6%. Revenue from system integration increased 14.1%, and this result to the similar poor gross margin as last year. 

The Company is devoted to developing new market and this lead to an increase in distribution costs from GBP0.5 million to GBP0.6 million. In addition, the Company has extended payment terms with some of customers who have suffered heavy losses during the economic downturn and now face short term difficulties in making payments. Trade and other receivables increased 55% to GBP12.36 million (2008: GBP7.905million), and this resulted in cash decreasing 33.9% to GBP2.74million compare with last financial year end.

Eric Zhu
Chairman
5 Nov 2009

  UNAUDITED CONDENSED CONSOLIDATED INCOME STATEMENT

FOR THE SIX MONTHS ENDED 31 AUGUST 2009

	Notes
		Six months		Six months		Full Year
		to 31 August		to 31 August		29 February
		2009		2008		2009
		unaudited		unaudited		audited
		£'000		£'000		£'000
Revenue	3	3,675		3,698		10,624
Cost of sales		(2,352)		(2,374)		(7,651)
Gross profit		1,323		1,324		2,973
Other operating income		62		56		155
Distribution costs		(628)		(505)		(862)
Administrative expenses		(1,181)		(1,065)		(2,346)
Foreign exchange gains/(losses)		(64)		252		742
Share option payment charges		-		-		(261)
Operating profit		(488)		62		401
Interest income		36		46		53
Finance costs		(27)		-		(18)
Operating profit before listing costs		(479)		108		436
Share payment charges		-		-		(189)
Profit before tax		(479)		108		247
Income tax		(6)		(1)		(83)
Profit for the six months		(485)		107		164
Attributable to:
Equity holders of the parent		(429)		126		24
Minority interest		(56)		(19)		140
		(485)		107		164
Equity holders of the parent		(429)		126		24
Listing Costs		-		-		189
Net Profits for the Period		(429)		126		213
Earnings per share		Pence		Pence		Pence
Basic		(0.62)		0.15		0.032
Diluted		(0.62)		0.14		0.032
Adjusted earnings per share
Basic		(0.62)		0.15		0.293
Diluted		(0.62)		0.14		0.293

The notes on pages 4 to 9 form part of these condensed interim financial statements.

All amounts are derived from continuing operations.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET

AT 31 AUGUST 2009

	Notes	As at		As at		Full Year
		31 August		31 August		29 February
		2009		2008		2009
		unaudited		unaudited		audited
		£'000		£'000		£'000
Non-current assets
Goodwill		3,189		3,125		3,189
Deferred tax assets				32
Intangible assets		2,035		1,036		2,055
Property, plant and equipment		2,115		1,633		2,126
		7,339		5,826		7,370
Current assets
Inventories		472		1,342		186
Trade and other receivables		12,364		7,905		11,388
Cash and cash equivalents		2,740		3,316		4,145
		15,576		12,563		15,719
Total assets	22,915			18,389		23,089
Current liabilities
Trade and other payables		(2,954)		(3,233)		(3,050)
Current tax liabilities		(350)		(192)		(88)
Short term borrowings		(1,171)				(1,026)
	(4,475)			(3,425)		(4,164)
Net current assets		11,101		9,138		11,555
Non-current liabilities
Deferred tax liabilities		(99)		(57)		(99)
Total liabilities		(4,574)		(3,482)		(4,263)
Net assets		18,341		14,907		18,826
Equity
Share capital		3,866		3,601		3,866
Shares to be issued		749		749		749
Share premium		3,124		2,827		3,124
Share option reserve		139		607		139
Other reserves		(1,739)	(1,739)			(1,739)
Translation reserves		4,055	1,411			4,055
Retained earnings		5,984		6,046		6,413
Equity attributable to equity holders of the parent		16,178		13,502		16,607
Minority interest		2,163		1,405		2,219
Total equity		18,341		14,907		18,826

The notes on pages 4 to 9 form part of these condensed interim financial statements.

All amounts are derived from continuing operations.

    

UNAUDITED CONDENSED CONSOLIDATED CASH FLOW STATEMENT 

FOR THE PERIOD ENDED 31 AUGUST 2009

	Notes	Six months		Six months		Full Year
		to 31 August		to 31 August		to 29 Feb
		2009		2008		2009
		unaudited		unaudited		audited
		£'000		£'000		£'000
Net cash from/(used in) operating activities	4	(1650)		(97)		(593)
Investing activities
Interest received		9		46		53
Purchase of property, plant and equipment		10		(227)		(218)
Acquisition of subsidiary net of cash		-		(1,193)		(1,049)
Expenditure on intangibles		-		(384)		(1,004)
Exchange difference		(44)		489		-
Net cash (used in)/from investing activities		(25)		(1,269)		(2,218)
Financing activities
Proceeds on issue of shares		-		-		900
Repayment of borrowings		-		-		733
Dividends paid to minority interest		272				(198)
Net cash (used in)/ from financing activities		272		-		1,475
Net (decrease)/increase in cash and cash equivalents		(1,403)		(1,366)		(1,336)
Cash and cash equivalents at beginning of year		4,143		4,076		4,076
Exchange difference		(20)		606		1,405
Cash and cash equivalents at end of period		2,720		3,316		4,145

 

  NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 

FOR THE PERIOD ENDED 31 AUGUST 2009

1.     General information

China Eastsea Business Software Limited is a company incorporated in Jersey under the Companies (Jersey) Law 1991. The nature of the Group's operations and its principal activities are the provision of IT outsourcing services for the energy and public sectors. These condensed interim financial statements are presented in pound sterling unless otherwise stated, and were approved for issue by the Board on [ ] November 2009.

2.     SIGNIFICANT ACCOUNTING POLICIES

2.1    Basis of accounting

The condensed interim financial statements have been prepared in accordance with International Financial Reporting Standards adopted by the European Union (''IFRS'') and therefore the Group Interim financial statements comply with Article 4 of the EU IAS Regulation. 

The Interim group financial statements were drawn up in Chinese Yuan (RMB), the main functional currency for the Group. Therefore the financial information in the financial statements has been translated from RMB to pound sterling at the relevant exchange rates for reporting in the United Kingdom.

2.2    Basis of consolidation

The condensed interim consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.

Minority interests in the net assets of consolidated subsidiaries are identified separately from the Group's equity therein. Minority interests consist of the amount of those interests at the date of the original business combination (see below) and the minority's share of changes in equity since the date of the combination. Losses applicable to the minority in excess of the minority's interest in the subsidiary's equity are allocated against the interests of the Group except to the extent that the minority has a binding obligation and is able to make an additional investment to cover the losses. 

The results of subsidiaries acquired or disposed of during the period to the six months are included in the condensed interim consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the condensed interim financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

2.3  Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, VAT and other sales related taxes.

Sales of goods are recognised when goods are delivered and title has passed.

Sales of services are recognised in the accounting periods in which the services are rendered, by reference to stage of completion of the specific project assessed on the basis of the actual service provided as a proportion of the total services to be provided as at the balance sheet date.

 

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 

FOR THE PERIOD ENDED 31 AUGUST 2009 - continued

3  REVENUE

The total revenue of the Group for the six months has been derived from its principal activity which is the provision of IT outsourcing services for the petrochemical, petroleum industries and government sector which are mainly undertaken in China. 

Continuing operations	Six months	Six months	Full Year
	to 31 August	to 31 August	29 February
	2009	2008	2009
	unaudited	unaudited	audited
	£'000	£'000	£'000
System integration	2,476	2,170	6,478
Software	370	579	2,093
Consultancy	829	949	2,053
	3,675	3,698	10,624

            There is no discontinued operation during the six months to 31 August 2009

3.1   BUSINESS AND GEOGRAPHICAL SEGMENTS

Business segments

For management purposes, the Group is currently organised into three operating divisions - system integration, sale of software and consultancy services. These divisions are the basis on which the Group reports its primary segment information.

Principal activities are as follows

System integration              - supply and installation of systems based on customer's requirement. 

Software                            -  sale of software developed by the company.

Consultancy                      -  provision of consultancy services.

Segment information about the Group's continuing operations is presented below.

 

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 

FOR THE PERIOD ENDED 31 AUGUST 2009 - continued

Six months to 31 August 2009

	System  integration		Software		Consultancy		Elimination		Total
	£'000		£'000		£'000		£'000		£'000
Revenue
External sales	2,476		370		829				3,675
	2,476		370		829				3,675

Result
Segment result	102		58		27		-		187
Unallocated expenses									(644)
Operating profit									(457)
Interest income									(22)
Profit before taxation									(479)
Taxation									(6)
Profit for the six months to 31 August 2009									(485)

 

Business segments - continued

 

Six months to 31 August 2008

 

	System  integration		Software		Consultancy		Elimination		Total
	£'000		£'000		£'000		£'000		£'000
Revenue
External sales	2,170		579		949				3,698
	2,170		579		949				3,698

Result
Segment result	132		55		32		-		219
Unallocated expenses									(157)
Operating profit									62
Interest income									46
Profit before taxation									108
Taxation									(1)
Profit for the six months to 31 August 2009									107

 

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 

FOR THE PERIOD ENDED 31 AUGUST 2009 - continued

4  NOTES TO THE CASH FLOW STATEMENT

		Six Months		Six Months		Full Year
		to August		to August		29 February
		2009		2008		2009
		unaudited		unaudited		audited
		£'000		£'000		£'000
Profit/(loss) from operations		(488)		62		2,892
Adjustments for:
Depreciation of property, plant and equipment		128		119		179
Amortisation of intangible assets		42		37		134
Currency adjustments		22				25
Share option charges		-		-		-
Operating cash flows before movements in working capital		(296)		218		3,230
Decrease/(increase) in inventories		(285)		(1,164)		370
Increase trade and other receivables		(975)		(619)		(2,886)
(Decrease)/increase in trade payables		(156)		1,359		(189)
Net cash generated from operations		(1712)		(206)		525
Income taxes refunded		62		109		(26)
Interest paid		-		-		(17)
Net cash from operating activities		(1650)		(97)		482

ENDIR CKAKNFBDKODK