BEIJING, Jan. 29 /PRNewswire-Asia-FirstCall/ -- Yucheng Technologies Limited (Nasdaq: YTEC), a leading provider of IT solutions to China's banking industry, today announced financial results for the fourth quarter and the fiscal year 2009.
"2009 has been a time of great achievements and challenges for Yucheng. We have solidified our foundations by installing CRM and ERP systems to gain better control over our business pipeline and our expenses. In addition, Yucheng spun-off two ancillary businesses to our core Software & Solutions strategy by forming a joint-venture with NTT Data, to further develop Yucheng's market leading E-Banking ASP and by divesting the Elegon Infotech joint-venture," stated Weidong Hong, Chairman and CEO of Yucheng.
"We believe that the prospective reserve ratio increase by the People's Bank of China (PBOC) and the possibility that non-performing loans (NPLs) may increase in the near future, which would adversely affect the profits of Chinese banks, caused Chinese banks to reevaluate their spending and contract signings ahead of the New Year. As a result, contracts that management had been negotiating in the fourth quarter 2009 have slipped into 2010, and as negotiations progress may become more limited in scope or provide lower margins. We anticipate banks to remain cautious initiating new projects in the near term. Overall, the shifts in the banking market caused us to experience a revenue shortfall in the fourth quarter of 2009."
2009 Financial Highlights
-- Software & Solutions net revenue totaled USD 43.5M, a 10.4% increase year over year.
-- Total net revenues for 2009 were USD 54.8M compared to USD 54.8M in 2008.
-- Yucheng had a year-end cash position of USD 36.3M compared to USD 35.1M for the same period last year.
Business Outlook
Given the uncertain market situation and mounting gross margin pressures, Yucheng is issuing 2010 guidance based on approximately 25% growth on the top-line and 10% to 15% growth on the bottom-line. Our 2010 annual guidance expectations are revenues of USD 65.0M to USD 68.0M and non-GAAP EPS of USD 0.30 to USD 0.36. This will translate to first quarter 2010 expectations of revenues of USD 11.6M to USD 12.2M and non-GAAP EPS of USD 0.08 to USD 0.10. The net impact from the new joint venture with NTT Data (including a one-time gain of USD 0.06 per share in the first quarter) will be approximately USD -0.06 in 2010.
Fourth Quarter Financial Results
Revenues: The changes in the fourth quarter banking environment had unforeseen consequences on Yucheng's fourth quarter sales. Yucheng anticipates reporting consolidated net revenues of USD 11.2M for the fourth quarter 2009, as compared to fourth quarter 2008 revenues of USD 21.7M and third quarter 2009 revenues of USD 17.0M.
-- Software & Solutions: Software & Solutions revenue in the fourth quarter of 2009 totaled USD 9.0M, a decline of 49.6% compared to the fourth quarter 2008 and 35.0% compared to the third quarter of 2009. Due to the higher expected sales, costs increased during the quarter and the gross margin declined to 36.5% as compared to 54.0% in the fourth quarter of 2008.
-- The Platform & Maintenance business recorded net revenues of USD 1.2M compared to USD 3.1M in fourth quarter 2008 and USD 2.2M in the third quarter 2009. In addition, the mix skewed heavily towards maintenance versus third-party product resales, which compressed gross margins to 22.4% compared to 71.8% in the fourth quarter of the prior year.
-- The POS business was moderately impacted by certain new regulations, which were introduced in the third quarter of 2009. In the fourth quarter, the POS business generated revenues of USD 1.0M compared to USD 0.8M in the fourth quarter of 2008 and USD 1.0M in the third quarter of 2009. The gross margin also increased to 45.6% from 39.6% in the same period last year due to our focus on higher yielding terminals.
Gross Profits: Yucheng's gross profit was USD 4.0M as compared to USD 12.2M in the fourth quarter of 2008 and USD 8.7M in the third quarter of 2009, caused by the reduction in revenues for the period.
Sales, General and Administrative Expenses (SG&A): Consolidated SG&A, excluding a one-time bad debt charge of USD 1.8M remained flat in the fourth quarter at USD 7.8M, as compared to USD 7.5M in the fourth quarter 2008. This was the result of strict SG&A controls that were implemented in the third quarter of 2009.
Net Income and Earnings Per Share: Including a one-time bad debt expense of USD 1.8M or USD -0.10 per share, non-GAAP net income totaled USD -4.9M, compared to USD 4.7M in the same period of 2008 and on a GAAP basis USD -5.2M and USD 4.4M for the same periods, respectively. This translates to EPS for fully diluted shares on a consolidated basis of USD -0.26 (non-GAAP) and USD -0.28 (GAAP), compared to USD 0.25 (non-GAAP) and USD 0.24 (GAAP) in the fourth quarter of 2008. Although expense controls did positively impact the fourth quarter financials, the costs related to unsigned contracts and lower revenues caused Yucheng to generate a loss.
Cash: Yucheng had USD 36.3M in cash at year end compared to USD 35.1M at the year end 2008 and USD 21.9M at the end of the third quarter of 2009. Cash increased due to improved collections.
Accounts Receivable: Accounts receivable totaled USD 24.7M in the current period compared to USD 41.1M in the fourth quarter of 2008 and USD 33.1M in the prior quarter. During the fourth quarter it became apparent that approximately USD 1.8M of accounts receivable were no longer collectible and will be taken as a one-time write-off. DSOs in the quarter were 275 days, compared to 105 days in the fourth quarter of 2008. When calculated to include the complete impact of agency services contracts, DSOs totaled 117 days in the fourth quarter, compared to 89 days in the same period last year.
POS: The table below is provided to give greater insight into our POS business, beyond what is available in our consolidated financial statements. The revenue and cost of revenue numbers are provided on a net presentation basis.
Summary of Selected Unaudited Financial Results for the
Fourth Quarter of 2009
(Numbers are in thousands, except shares outstanding,
earnings per share and percentages)
Q4 2009
--------------------------------------------------
Total CORE POS
--------------- --------------- ---------------
% of % of % of
Amount Revenues Amount Revenues Amount Revenues
------ -------- ------ -------- ------ --------
Revenues 11,180 100.0% 10,219 100.0% 961 100.0%
Software & Solutions 8,982 80.3% 8,982 87.9% -
POS 961 8.6% - - 961 100.0%
Platform & Maintenance
Services 1,237 11.1% 1,237 12.1% - 0.0%
Cost of Revenues 7,184 64.3% 6,693 65.5% 492 51.2%
Gross Profit 3,995 35.7% 3,526 34.5% 469 48.8%
Operating Expenses 9,973 89.2% 9,128 89.3% 844 87.8%
R&D 372 3.3% 372 3.6% - -
SG&A 9,600 85.9% 8,756 85.7% 844 87.8%
Income from Operations -5,977 -53.5% -5,602 -54.8% -375 -39.0%
Net Income (GAAP) -5,227 -46.8% -4,955 -48.5% -272 -28.3%
Amortization of
Intangible Assets 336 3.0% 336 3.3%
Non-GAAP Net Income -4,891 -43.7% -4,619 -45.2% -272 -28.3%
Basic GAAP EPS -0.28 -0.27 -0.01
Diluted GAAP EPS -0.28 - -0.27 - -0.01 -
Basic Non-GAAP EPS -0.26 - -0.25 - -0.01 -
Diluted Non-GAAP EPS -0.26 - -0.25 - -0.01 -
Basic Weighted
Average Common
Shares Outstanding 18,560,014 - 18,560,014 - 18,560,014 -
Diluted Weighted
Average Common
Shares Outstanding 18,625,932 - 18,625,932 - 18,625,932 -
Q4 2008
--------------------------------------------------
Total CORE POS
--------------- --------------- ---------------
% of % of % of
Amount Revenues Amount Revenues Amount Revenues
------ -------- ------ -------- ------ --------
Revenues 21,713 100.0% 20,928 100.0% 785 100.0%
Software & Solutions 17,834 82.1% 17,834 85.2% -
POS 785 3.6% 785 100.0%
Platform & Maintenance
Services 3,093 14.2% 3,093 14.8% -
Cost of Revenues 9,544 44.0% 9,070 43.3% 475 60.5%
Gross Profit 12,169 56.0% 11,858 56.7% 311 39.6%
Operating Expenses 7,570 34.9% 6,408 30.6% 1,162 148.0%
R&D 91 0.4% 91 0.4%
SG&A 7,480 34.4% 6,318 30.2% 1,162 148.0%
Income from Operations 4,598 21.2% 5,450 26.0% -851 -108.4%
Net Income (GAAP) 4,388 20.2% 4,898 23.4% -510 -65.0%
Amortization of
Intangible Assets 336 1.5% 336 1.6%
Non-GAAP Net Income 4,723 21.8% 5,233 25.0% -510 -65.0%
Basic GAAP EPS 0.25 0.28 -0.03
Diluted GAAP EPS 0.24 - 0.26 - -0.03 -
Basic Non-GAAP EPS 0.27 - 0.30 - -0.03 -
Diluted Non-GAAP EPS 0.25 - 0.28 - -0.03 -
Basic Weighted Average
Common Shares
Outstanding 17,575,685 - 17,575,685 - 17,575,685 -
Diluted Weighted
Average Common Shares
Outstanding 18,567,375 - 18,567,375 - 18,567,375 -
CORE POS
---- ---
Y-O-Y Y-O-Y
Change Change
------ ------
Revenues -51.2% 22.4%
Software & Solutions -49.6%
POS 22.4%
Platform & Maintenance Services -60.0%
Cost of Revenues -26.2% 3.6%
Gross Profit -70.3% 51.1%
Operating Expenses 42.4% -27.4%
R&D 310.1%
SG&A 38.6% -27.4%
Income from Operations -202.8% -55.9%
Net Income (GAAP) -201.2% -46.7%
Amortization of Intangible Assets 0.0%
Non-GAAP Net Income -188.3% -46.7%
Basic GAAP EPS -196.4% 66.7%
Diluted GAAP EPS -203.8% 66.7%
Basic Non-GAAP EPS -183.3% 66.7%
Diluted Non-GAAP EPS -189.3% 66.7%
Basic Weighted Average Common Shares Outstanding 5.6% 5.6%
Diluted Weighted Average Common Shares Outstanding 0.3% 0.3%
Note: Due to rounding the table above may have slight discrepancies.
The United States dollar amounts in the above table are calculated based
on an exchange rate of USD 1.00 = RMB 6.8282 for December 31, 2009 and
USD 1.00 = RMB 6.8346 for December 31, 2008.
About Yucheng Technologies Limited
Yucheng Technologies Limited (Nasdaq: YTEC) is a leading IT service provider to the Chinese banking industry. Headquartered in Beijing, China, Yucheng has approximately 2,200 employees and has established an extensive network for serving its banking clients nationwide, with subsidiaries and representative offices in 23 cities. Yucheng provides a comprehensive suite of IT solutions and services to Chinese banks including: (i) Channel Solutions, such as web banking and call centers; (ii) Business Solutions, such as core banking systems, foreign exchange and treasury management; and (iii) Management Solutions, such as risk analytics and business intelligence. Yucheng is also a leading third-party provider of POS merchant acquiring services in partnership with banks in China.
Safe Harbor Statement
This press release includes forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. Forward-looking statements are statements that are not historical facts. Forward-looking statements generally can be identified by the use of forward-looking terminology, such as ''may,'' ''will,'' ''expect,'' ''intend,'' ''estimate,'' ''anticipate,'' ''believe,'' ''project'' or ''continue'' or the negative thereof or other similar words. Such forward-looking statements, based upon the current beliefs and expectations of Yucheng's management, are subject to risks and uncertainties, which could cause actual results to differ from the forward looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: current dependence on the PRC banking industry demand for the products and services of Yucheng; competition from other service providers in the PRC and international consulting firms; the ability to update and expand product and service offerings; retention and hiring of qualified employees; protection of intellectual property; creating and maintaining quality product offerings; operating a business in the PRC with its changing economic and regulatory environment; and the other relevant risks detailed in Yucheng filings with the Securities and Exchange Commission. The information set forth herein should be read in light of such risks. Yucheng assumes no obligation to update the information contained in this press release.
YUCHENG TECHNOLOGIES LIMITED AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 2009 and September 30, 2009
2009.12.31 2009.9.30
USD USD
Assets
Current assets:
Cash and cash equivalent 36,258,689 21,893,313
Trade accounts receivable, net (Includes bad debt
write-offs of USD 1,839,755 in the fourth
quarter 2009 and 0 in the fourth quarter 2008) 24,679,515 33,106,616
Costs and estimated earnings in excess of
billings on uncompleted contracts 16,173,044 24,311,219
Amounts due from related companies 248,659 623,776
Inventories 496,943 3,058,452
Pre-contract costs 1,318,379 665,396
Other current assets 5,809,149 7,434,529
--------- ---------
Total current assets 84,984,378 91,093,301
Investments in and advances to affiliates 1,108,659 504,041
Fixed assets 14,005,736 13,710,998
Less: Accumulated depreciation (4,928,501) (4,447,620)
---------- ----------
Fixed assets, net 9,077,235 9,263,378
Intangible assets, net 4,429,924 4,735,659
Goodwill 27,680,735 27,677,493
Deferred income taxes - Non-current 3,263,811 3,003,404
--------- ---------
Total assets 130,544,742 136,277,276
=========== ===========
YUCHENG TECHNOLOGIES LIMITED AND SUBSIDIARIES
Consolidated Balance Sheets (continued)
December 31, 2009 and September 30, 2009
2009.12.31 2009.9.30
USD USD
Liabilities and stockholders' equity
Current liabilities:
Short term loan 11,716,118 11,714,746
Obligations under capital leases 334,275 386,058
Trade accounts payables 14,111,275 11,414,696
Billings in excess of costs and estimated
earnings on uncompleted contracts 2,647,307 2,349,567
Employee and payroll accruals 25,353 1,724,066
Dividends payable to ex-owners 580,005 808,524
Deemed distribution to ex-owners 2,047,133
Outstanding payment in relation to
business acquisitions 253,004 1,109,698
Income taxes payable 2,079,227 2,443,655
Other current liabilities 8,813,575 6,865,867
Deferred income taxes - Current 135,791 59,064
------- ------
Total current liabilities 40,695,930 40,923,074
Obligations under capital leases 46,065 103,054
Deferred income taxes 251,353 424,258
------- -------
Total liabilities 40,993,348 41,450,386
Stockholders' equity
Preferred stock, $0.0001 par value, authorized
2,000,000 shares and none issued; Common stock,
$0.0001 par value, authorized 60,000,000 shares;
17,580,935 and 18,560,014 shares issued and
outstanding as of June 30, 2009 and
September 30, 2009 2,930,201 2,929,858
Additional paid-in capital 56,437,075 56,430,463
Reserves 5,994,414 5,410,409
Retained earnings 23,196,945 29,004,054
Accumulated other comprehensive loss (326,639) (331,445)
Minority interests 1,319,398 1,383,551
--------- ---------
Total stockholders' equity 89,551,394 94,826,890
---------- ----------
Liabilities and stockholders' equity 130,544,742 136,277,276
=========== ===========
YUCHENG TECHNOLOGIES LIMITED AND SUBSIDIARIES
Consolidated Statements of Income
Three months ended December 31, 2009 and 2008
2009 Q4 2008 Q4
USD USD
Revenues:
Software & solutions 8,982,193 17,834,222
Platform & maintenance services (net) 1,236,804 3,093,337
POS 960,845 785,285
------- -------
Total revenues (non-GAAP) 11,179,842 21,712,844
Platform pass-through costs (1,496,219) 12,334,488
Total revenues 9,683,623 34,047,332
Cost of revenues:
Cost of revenues (net) (7,184,486) (9,544,269)
Platform pass-through costs 1,496,219 (12,334,488)
Total cost of revenues (5,688,267) (21,878,757)
Gross profit 3,995,356 12,168,575
Operating expenses:
Research and development (372,105) (90,729)
Selling and marketing (2,225,860) (2,339,304)
General and administrative (Includes bad
debt write-offs of USD 1,839,755 in the
fourth quarter 2009 and 0 in the fourth
quarter 2008) (7,374,641) (5,140,325)
Total operating expenses (9,972,606) (7,570,358)
---------- ----------
Operating income (5,977,250) 4,598,217
YUCHENG TECHNOLOGIES LIMITED AND SUBSIDIARIES
Consolidated Statements of Income (continued)
Three months ended December 31, 2009 and 2008
2009 Q4 2008 Q4
USD USD
Other income (expenses):
Interest income 17,570 36,084
Interest expense (152,669) (161,471)
Investment gain (loss) 126,904 (492,821)
Other income (expense), net (32,340) 74,276
------- ------
Income (loss) before income tax and minority
interests (6,017,785) 4,054,285
Income tax benefit (expense) 726,333 275,683
Minority interests 64,315 57,614
------ ------
Net income (loss)(GAAP) (5,227,137) 4,387,582
Amortization for intangible assets 335,836 335,521
------- -------
Net income (loss)(non-GAAP) (4,891,301) 4,723,103
========== =========
YUCHENG TECHNOLOGIES LIMITED AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Three months ended December 31, 2009 and 2008
2009 Q4 2008 Q4
USD USD
Cash flows from operating activities:
Net income (loss) (5,227,137) 4,387,582
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation 522,273 3,277,798
Amortization 661,456 (1,752,721)
Bad debt provision 1,839,755 -
Loss on disposal fixed assets 23,778 (12,029)
Loss (gain) on disposal of affiliates - 9,639
Minority interests (64,315) (57,614)
Share of equity in affiliate company (146,898) 408,481
Shares issued to independent directors - 142,376
Decrease (increase) in trade accounts
receivable, net 6,822,263 (4,242,987)
Decrease (increase) in costs and estimated
earnings in excess of billing on
uncompleted contracts 7,909,985 1,479,249
Decrease (increase) in due from related parties 375,190 1,020,911
Decrease (increase) in inventories 2,561,867 3,797,431
Decrease (increase) in precontract costs (652,905) 1,166,183
Decrease (increase) in other current assets 1,632,917 1,365,056
Decrease (increase) in deferred income taxes
assets - Current - 776,550
Decrease (increase) in deferred income
taxes assets - Non-current (260,055) (1,095,635)
Increase (decrease) in trade accounts payable 2,695,242 6,620,144
Increase (decrease) in billings in excess
of costs and estimated earnings on
uncompleted contracts 297,465 876,891
Increase (decrease) in employee and
payroll accruals (1,698,915) 102,273
Increase (decrease) in income taxes payable (364,715) 23,905
Increase (decrease) in other current
liabilities 2,104,543 2,831,609
Increase (decrease) in deferred income
taxes liabilities (96,234) (130,888)
------- --------
Net cash provided by (used in) operating
activities 18,935,560 20,994,204
---------- ----------
YUCHENG TECHNOLOGIES LIMITED AND SUBSIDIARIES
Consolidated Statements of Cash Flows (continued)
Three months ended December 31, 2009 and 2008
2009 Q4 2008 Q4
USD USD
Cash flows from investing activities:
Capital expenditures (880,883) (1,099,800)
Payment of purchase of subsidiaries (856,682) (2,120,855)
New investment of joint venture (457,661) -
Proceeds from disposal of fixed assets (293) 22,834
Proceeds from disposal of investments
under equity method - (342,181)
--- --------
Net cash provided by (used in) investing
activities (2,195,519) (3,540,002)
Cash flows from financing activities:
Deemed distribution (2,043,172) (845,494)
Payment of capital leases (96,318) (305,040)
Dividends paid to ex-owners (228,613) -
Proceeds from bank borrowings 4,393,544 2,926,287
Repayments of bank borrowings (4,393,544) (2,926,287)
---------- ----------
Net cash provided by financing activities (2,368,103) (1,150,534)
Net increase in cash and cash equivalents 14,371,938 16,303,668
Cash at beginning of period 21,893,313 18,775,350
---------- ----------
Cash at end of period 36,265,251 35,079,018
========== ==========
For Further Information
Steve Dai
+86 10 5913 7889
sdai@yuchengtech.com
SOURCE Yucheng Technologies Limited
