Agenda 2019 Annual Results 1
Disclaimer This presentation and/or other documents have been written and presented by Chinasoft International Limited (“Chinasoft International” or “the Company”). The information presented or contained in these materials is subject to change without notice and its accuracy is not guaranteed. Neither the presentation nor any of the information contained therein constitutes an offer to sell or issue or the solicitation of an offer to buy or acquire or invitation to purchases or subscribe for any securities of the Company in any jurisdiction or an inducement to enter into investment activity, nor may it or any part of it form the basis of or be relied upon in connection with any contract, commitment or investment decision whatsoever. 2
Agenda 1. Company Overview 2. Financial Results 3. Business Transformation and Outlooks 4. Investment Highlights 3
About Chinasoft International Chinasoft International is a global IT services, business solutions and cloud services provider • partnering with the world’s leading clients in their transformational journeys. 100 Services in 1911 Ranked Top 100 in Global 32 countries active customers ITS market share by Gartner (1 of 4 Chinese companies) MSCI China small-cap Index 60,000+ Employees Top 3 constituents Ranks Revenue （ Million USD ） Market Share Growth % Ranking Among ITS Vendors Chinese Peers 2017 2018 2017 2018 2017 2018 2017 – 2018 (2018) 1 1 IBM 46,129 47,048 5.0% 4.7% 2.0% - 2 2 Accenture 36,834 40,718 4.0% 4.1% 10.5% - ...... 52 46 China Telecom 3,522 4,205 0.4% 0.4% 19.4% - 1 65 65 Huawei 2,435 2,517 0.3% 0.3% 3.4% - 2 108 67 Alibaba 1,298 2,499 0.1% 0.3% 92.6% - 3 92 95 Mitsubishi Electric Information 1,510 1,567 0.2% 0.2% 3.8% - 107 96 Chinasoft International 1,304 1,564 0.1% 0.2% 19.9% - 4 95 97 TTEC 1,477 1,509 0.2% 0.2% 2.2% - 99 98 Fiducia & GAD IT 1,377 1,485 0.1% 0.1% 7.8% - Sources ： Gartner ， <Market Share: IT Services, 2018> 4
Broad Blue-Chip Customer Base Finance Telecom Internet Hi-tech Manufacturing & Logistics Civil Aviation Energy Government BJ XA KS CQ QD HF WX XZ…… NJ 5
Rich Industry Solution Capabilities Audit management Online Audit Application Food and Medicine management Government Social insurance and Benefits Administrative Management Public Portal State-owned Asset Mgmt Policy Planning System Cloud Migration & Integration ERP Safety Production Management Product Code tracking Manufacture CRM MES WMS $Logistics OA LES EAI Industrial Solutions General Solutions BI Supply Chain Leverage Payment System Credit Card System Portal Group Digital Insurance System Receivable System Risk Management System Finance Insurance Dev. Support Credit System Digital Marketing RFID Reimbursement System Bank Card System Supply Chain Leverage GIS Public One Card Access ACC Electronic Ticketing Airport Operating System Services AFC Smart Transportation System Embedded Browser Mobile Payment Corporate blog Telecom Mobile Instant Communication Mobile Application Store Mobile Advertisement Platform Mobile Community One-Click Dial Product development Hi-tech Consulting & solution implementation Mobile terminal development Software & hardware testing UI design E-commerce solutions Embedded software development Internet Offshore delivery center Web development solution . Ark Middleware Middleware Platform ResourceOne is Based on SOA and Cloud TopLink/TSA+Platform One-stop big Core Products Popular in Government and Manufacturing Verticals – trusted cloud Used in Union Pay, Government, and Provinces Centers data dev. Named the Best Government Platform by CCID 5 Years In a Row Support Cross Regional Bank Card Online Transaction platform 6
Company Overview Introduction Shareholders Sustained high growth (CAGR 31.9%) ， Significantly faster than industry growth (ITS Established 2000 expenditure in China CAGR 19%) HK GEM Listing 2003 HK Main Board 2008 Million RMB Listing Code 354.HK Revenue in 2019 12 Billion RMB Business structure IT Outsourcing Legacy Business Solutions JointForce Cloud & Smart Cloud Products Business Cloud Services Big Data 7
Agenda 1. Company Overview 2. Financial Results 3. Business Transformation and Outlooks 4. Investment Highlights 8
2.1.1 Financial Results RMB'K 2019 2018 Growth 12,041,895 10,585,013 13.8% Revenue 11,636,730 10,339,012 12.6% Service revenue 3,583,093 3,244,657 10.4% Gross profit Profit for the Year 756,686 716,171 5.7% Profit for the Year Attributable to 754,888 715,803 5.5% Owners of the Company 30.71 29.54 4.0% Basic EPS (RMB cents) 9
2.1.2 Financial Results Revenue Gross profit RMB’ 100M RMB’ 100M YoY 10.4% CAGR 23.8% 35.83 YoY 13.8% CAGR 23.8% 120.42 32.45 105.85 27.50 92.44 20.16 67.83 15.23 51.29 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Profit for the Year Attributable to Owners of the Company EPS RMB ’ 100M RMB’ Cent YoY 5.5% CAGR 28.1% CAGR 21.6% YoY 4.0% 7.55 30.71 7.16 29.54 5.66 23.59 20.34 4.42 14.05 2.80 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 10
2.2 Financial Analysis Of Service Of Service Rmb’000￥ 2019 Of Revenue% 2018 Of Revenue% Revenue% Growth% Revenue% 13.8% Revenue 12,041,895 N/A N/A 10,585,013 N/A N/A 12.6% 11,636,730 N/A N/A 10,339,012 N/A N/A Service revenue (71.2%) (73.6%) 16.7% (8,569,550) Cost of sales (7,340,356) (69.3%) (71.0%) 28.8% 29.8% 7.0% Gross profit 3,472,345 3,244,657 30.7% 31.4% 1.5% 1.5% 177.5% Other income 177,811 64,078 0.6% 0.6% Loss from decognition of financial assets (0.0%) (0.0%) (36.3%) (4,544) measured at amortised cost (7,139) (0.1%) (0.1%) (0.6%) (0.7%) 118.7% (76,986) Impairment losses, net of reversal (35,200) (0.3%) (0.3%) (0.3%) (0.3%) 524.0% (35,373) Other gains or losses (5,669) (0.1%) (0.1%) (5.1%) (5.3%) 24.6% (617,554) (495,524) (4.7%) (4.8%) Selling and distribution costs (9.0%) (9.3%) (0.6%) (1,085,127) Administrative expenses (1,091,148) (10.3%) (10.6%) (6.7%) (7.0%) 9.4% (808,949) Research and development costs (739,434) (7.0%) (7.2%) (0.5%) (0.5%) (13.8%) (58,929) (68,402) (0.6%) (0.7%) Other expenses (1.4%) (1.4%) 40.7% (166,045) Finance costs (117,987) (1.1%) (1.1%) Share of results of investments accounted (0.0%) (0.0%) (102.7%) (328) 12,222 for using the equity method 0.1% 0.1% 6.6% 6.8% 4.7% 796,321 760,454 7.2% 7.4% Profit before taxation (0.3%) (0.4%) (5.6%) (41,810) Income tax expense (44,283) (0.4%) (0.4%) 754,511 6.3% 6.5% 716,171 6.8% 6.9% 11 5.4% Profit for the year
2.3 Balance Sheet RMB ’000 2019 2018 RMB ’000 2019 2018 Current liabilities Current assets Trade and other payables 1,240,856 1,497,011 Inventories 54,421 63,698 Bills payable 22,051 45,280 Trade and other receivables 3,295,664 2,585,247 Lease liabilities 125,668 - Contract liabilities 138,815 166,078 Bills receivable 4,443 22,212 Amounts due to related companies 3,101 18,185 Contract assets 2,227,434 2,819,117 Dividend payable 233 81 Prepaid lease payments - 860 Taxation payable 83,808 125,174 Amounts due from related companies 75,126 67,765 Convertible loan notes 23,829 198,263 Pledged deposits 12,861 19,426 Borrowings 1,523,187 1,675,646 3,161,548 3,725,718 Bank balances and cash 2,525,741 2,646,375 Net current assets 5,034,142 4,498,982 8,195,690 8,224,700 7,585,678 6,762,526 Total assets less current liabilities Non-current assets Non-current liabilities Property, plant and equipment 802,423 837,634 Deferred tax liabilities 14,291 11,062 Convertible loan notes 715,888 719,941 Right-of-use assets 278,646 - Lease liabilities 123,734 - Intangible assets 127,382 148,172 Borrowings 200,000 - Goodwill 973,856 1,006,337 1,053,913 731,003 Investments accounted for using the equity method 277,607 144,280 6,531,765 6,031,523 Capital and reserves Equity instruments at fair value through other comprehensive 62,901 51,508 Share capital 116,325 112,994 income Share premium 3,145,241 2,982,319 Prepaid lease payments - 37,003 Treasury share (470,752) (76,451) Other receivable 66,180 29,935 Reserves 3,674,621 2,948,128 Deferred tax assets 12,541 8,675 Equity attributable to owners of the 6,465,435 5,966,990 Company 2,551,536 2,263,544 12 Non-controlling interests 66,330 64,533
Agenda 1. Company Overview 2. Financial Results 3. Business Transformation and Outlooks 4. Investment Highlights 13
Strategy Moving Forward: Old and New Cloud& Smart Emerging CAGR 60% (2019-2021) Business Jointforce Platform ： IT outsourcing & Solutions Plan Z ： Expand the middle and • long tail market CAGR 15% (2019-2021) Cloud Integrative Market ： • 1 st largest Customer: Huawei Government IT procurement 2 nd largest Customer: HSBC Legacy Full-stack cloud business ： Business SaaS, SolaaS, DaaS, PaaS Develop customers with USD 100 million revenue contribution PingAn, Tencent, Alibaba, Microsoft • AIA, Standard Chartered, GE • 14
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