Pansoft Company Limited (NASDAQ: PSOF) ("Pansoft" or the
"Company"), a leading ERP software service provider for the oil and
gas industry in China, today announced unaudited financial results
for the fiscal second quarter of 2012 ended December 31, 2011.
Highlights for Fiscal Second Quarter of
2012:
- Revenues were $9.2 million, an increase
of 28.0% versus the year-ago quarter
- Gross profit was $2.6 million, a decrease of 16.0% versus the year-ago quarter
- Operating profit was $1.2 million,
compared to $1.6 million in the year-ago quarter
- Net income attributable to Pansoft
shareholders was $1.0 million, compared to $1.4 million in the
year-ago quarter
- Net income per diluted share attributable to
Pansoft shareholders was $0.19, compared to $0.26 in the
year-ago quarter
- On February 10, 2012, Pansoft announced that the Special
Committee formed to consider an offer by the Company's Chairman
Hugh Wang representing Timesway Group Limited, to acquire all
outstanding Pansoft shares that it did not already own, engaged
Duff & Phelps, LLC as its independent financial advisor.
Highlights for the First Six Months of Fiscal
2012:
- Revenues were $13.5 million, an increase
of 25.7% from $10.7 million for the six months ended December 31,
2011
- Gross profit was $3.6 million, a decrease of 26.1% compared to $4.8 million in the
year-ago period
- Operating profit was $0.9 million,
compared to $2.7 million in the year-ago period
- Net income attributable to Pansoft common
shareholders was $0.95 million, compared to $2.4 million in
the year-ago period
- Net income per diluted share attributable to
Pansoft shareholders was $0.17, compared to $0.44 in the
year-ago period
"During the fiscal second quarter, Pansoft achieved strong
year-to-year revenue growth that exceeded our expectations due to
strong revenue recognition among recently acquired subsidiaries
from their major clients at the end of the calendar year, including
Langji. We are pleased to have reported a modest profit, as recent
acquisitions have started to make a contribution to our bottom
line," said Hugh Wang, Pansoft's Chairman of the Board. "The delay
in reaching breakeven at Pansoft-Japan and the slower pace of
generating revenue at HongAo continue to pose a challenge for our
bottom line results, yet we remain confident that we will
successfully execute our strategy to improve profitability at our
new ventures."
Financial Results Highlights for the Fiscal
Second-Quarter of 2012
Revenues for the fiscal second quarter ended December 31, 2011
were $9.2 million, compared to $7.2 million in the prior fiscal
year, an increase of 28.0%. The year-over-year revenue growth
exceeded the Company's earlier guidance of about 10%, due to: 1)
the Langji acquisition, which contributed 8% of revenue growth; 2)
HongAo, which contributed 10% of revenue growth, in large part
because the prior fiscal-year quarter included only two months of
revenue; 3) ITLamp, which contributed 7% of the revenue growth due
to higher level of business activity; and 4) Pansoft-Japan, which
contributed 4% of the revenue increase due to an increase in the
scale of its operations. A revenue decline at Pansoft-China hurt
total Pansoft revenue growth by 1%. On a quarterly basis, revenues
grew 118.0% from $4.2 million in the fiscal first quarter ended
September 30, 2011, mainly due to seasonal trends.
Cost of sales was $6.6 million, an increase of 61.1% from $4.1
million in the year-ago quarter. Cost of sales increased faster
than revenues, largely due to: 1) higher headcount and therefore,
higher compensation expense; 2) start-up losses at Pansoft-Japan,
the outsourcing joint venture for testing mobile-phone software;
and 3) a higher proportion of lower-margin hardware purchases for
clients at the HongAo subsidiary.
Gross profit was $2.6 million, a decrease of 16.0% from $3.1
million from the year-ago quarter. Gross margin was 28.2%, as
compared to 42.9% in the year-ago quarter. The decline in the gross
margin was mainly due to the aforementioned reasons. On a quarterly
basis, the gross margin improved 58 basis points from 22.4% in the
fiscal first quarter, primarily due to higher revenues.
Operating expenses were $1.4 million, a decrease of 2.4% from
$1.5 million in the year-ago quarter. The decrease in operating
expense was mainly due to lower selling expense, professional fees,
and stock-based compensation.
Operating profit was $1.2 million, compared to $1.6 million in
the year-ago quarter.
Net profit attributable to Pansoft shareholders as $1.0 million,
compared to $1.4 million in the year-ago quarter and was mainly due
to start-up losses at Pansoft-Japan and higher amortization charges
related to recent acquisitions.
Net profit per diluted share attributable to Pansoft
shareholders was $0.19, as compared to $0.26 in the year-ago
quarter.
Financial Results Highlights for the First Six
Months of Fiscal 2012
Revenues for the six months ended December 31, 2011 were $13.5
million, compared to $10.7 million in the same period last year, an
increase of 25.7%. Cost of sales was $9.9 million, an increase of
67.9% from $5.9 million in the six months ended December 31, 2010.
Gross profit was $3.6 million, a decrease of 26.1% from $4.8
million in the six months ended December 31, 2010. Gross margin was
26.4%, compared to 44.9% in the six months ended December 31, 2010.
Operating expenses were $2.7 million, an increase of 25.9% from
$2.1 million in the six months ended December 31, 2010. Operating
profit was $0.9 million, compared to $2.7 million in the six months
ended December 31, 2010. Net income attributable to Pansoft
shareholders was $1.0 million, compared to $2.4 million in the
corresponding period in 2010. Net profit per diluted share
attributable to Pansoft shareholders was $0.17, compared to $0.44
in the corresponding period in 2010.
Subsidiary Performance
The Company reports financial results for four subsidiaries: (1)
Pansoft-China with major business focusing on design, development,
implementation and servicing of ERP systems for the energy industry
such as oil/gas and coal mining; (2) HongAo, which provides
technology solutions and related services to the thermal power
industry; (3) Pansoft-Japan, which provides outsourcing services
for mobile-phone software testing and development; and 4) Langji,
which focuses on human-resource management software solution
development and sale to the coal mining industry
- Pansoft-China and ITLamp represent the
core business of the Company and are engaged in the design,
development, implementation and servicing of ERP systems for the
energy industry such as oil/gas and coal mining, which together
contributed 61.0% of total revenue for the fiscal second quarter
ended December 31, 2011. In the quarter, revenues were $5.6
million, and net income was $1.4 million. ITLamp, which was
acquired in June 2010, operates as an oilfield software development
and service provider, primarily serving the Tarim Oilfield in
Xinjiang province. In the quarter, ITLamp recorded revenues of $1.0
million (10.6% of quarterly revenue) and net income of $0.2
million.
- HongAo, in which Pansoft acquired a
55.01% stake in October 2010, serves the thermal power industry as
a technical service provider in Shandong province. Net revenues
were $2.5 million (26.7% of quarterly revenue), and net income was
$0.01 million.
- Pansoft-Japan was established in August
2010 to provide outsourcing functions for Japanese clients,
initially in the area of cell phone software testing. The new
testing operation was set up in Jinan, China with a front office in
Osaka, Japan. Pansoft-Japan continues to incur start-up losses
exceeding initial budget expectations. Net revenues were $0.5
million (5.7% of quarterly revenue) and the net loss was $0.3
million.
- Langji, which Pansoft acquired in October
2011, serves China's coal-mining industry as a leading HR solution
provider. Net revenues were $0.6 million (6.5% of quarterly
revenue) and net income was $0.09 million.
Pansoft Segment Income Statement
Three Months Ended December 31, 2011
(in USD)
Pansoft-CN
+ ITLamp HongAo Pansoft-JP Langji Total
Revenues $5,639,279 $2,467,771 $ 530,071 $602,916 $ 9,240,037
-------------------------------------------------------
Cost of revenues 3,525,062 2,027,765 730,412 353,471 6,636,710
-------------------------------------------------------
Gross profit 2,114,217 440,006 (200,341) 249,445 2,603,327
-------------------------------------------------------
Total operating
expenses 697,395 429,003 140,144 156,712 1,423,254
-------------------------------------------------------
Income from
operations 1,416,822 11,003 (340,485) 92,733 1,180,073
-------------------------------------------------------
Pansoft Segment Income Statement
Six Months Ended December 31, 2011
(in USD)
Revenues $8,464,106 $3,356,022 $1,056,303 $602,916 $13,479,347
-------------------------------------------------------
Cost of revenues 5,460,523 2,577,651 1,532,877 353,471 9,924,522
-------------------------------------------------------
Gross profit 3,003,583 778,371 (476,574) 249,445 3,554,825
-------------------------------------------------------
Total operating
expenses 1,351,238 839,985 308,690 156,712 2,656,625
-------------------------------------------------------
Income from
operations 1,652,345 (61,614) (785,264) 92,733 898,200
-------------------------------------------------------
Financial Condition
As of December 31, 2011, Pansoft had $10.8 million in cash and
equivalents, as compared to $3.7 million as of June 30, 2011. Cash
and cash equivalents exclude $1.1 million in short-term
investments, versus $6.8 million as of June 30, 2011, as some
certificates of deposit had matured during the quarter and were
turned into cash. Total current assets were $29.1 million, as of
December 31, 2011, versus $24.1 million as of June 30, 2011,
including a $3.8 million increase in accounts receivable. Current
liabilities were $11.5 million as of September 30, 2011, up from
$6.8 million as of June 30, 2011. Total stockholders' equity was
$25.0 million as of December 31, 2011 versus $23.5 million as of
June 30, 2011.
Recent Developments
On February 10, 2012, Pansoft announced that the Special
Committee formed to consider an offer by the Company's Chairman
Hugh Wang representing Timesway Group Limited, to acquire all
outstanding Pansoft shares that it did not already own, engaged
Duff & Phelps, LLC as its independent financial advisor. In
addition, the Special Committee retained Morgan, Lewis &
Bockius, LLP to serve as its United States legal counsel and Maples
and Calder to serve as its British Virgin Islands legal
counsel.
On January 7, 2012, the Company's Board of Directors received an
offer from Chairman Hugh Wang, representing Timesway Group Limited,
to acquire all outstanding Pansoft shares that it did not already
own at a price of $3.76 per share. Timesway Group Limited is
controlled by Chairman Hugh Wang and CEO Guoqiang Li, and had
voting power over 64% of the Company's voting securities as of June
30, 2011.
The Special Committee is continuing its evaluation of the offer.
There can be no assurance that any definitive offer will be made,
that any agreement will be executed or that this or any other
transaction will be approved or consummated.
Business Outlook
Pansoft continues to expand its team for future business growth.
The Company will continue to focus on the coal mining and oil field
markets, with a priority on software solutions and project
development under the Business Process Management System. "We plan
to provide a business update for the remaining quarters of 2012
fiscal year when visibility improves," concluded Mr. Wang.
About Pansoft Company Limited Pansoft is a
leading enterprise resource planning ("ERP") software and
professional services provider for the oil and gas industry in
China. Its ERP software offers comprehensive solutions in various
business operations including accounting, order processing,
delivery, invoicing, inventory control, and customer relationship
management. For more information visit http://www.pansoft.com.
Forward-Looking Statements This press
release contains forward-looking statements concerning Pansoft
Company Limited, including but are not limited to, statements
regarding Pansoft's acquisition strategies, projected revenue
growth, contracts with customers, timing of development projects,
and efforts to achieve business growth. The actual results may
differ materially depending on a number of risk factors including
but not limited to, the following: general economic and business
conditions, development, shipment and market acceptance of
products, additional competition from existing and new competitors,
purchase cycle of major customers, changes in technology or product
techniques, and various other factors beyond its control. All
forward-looking statements are expressly qualified in their
entirety by this Cautionary Statement and the risk factors detailed
in the Company's reports filed with the Securities and Exchange
Commission. Pansoft Company Limited undertakes no duty to revise or
update any forward-looking statements to reflect events or
circumstances after the date of this release.
Pansoft Company Limited
Consolidated Statements of Operations and Comprehensive Income
For the Three- and Six-month ended December 31, 2011 and 2010
(in U.S. Dollars)
For the Three Months For the Six Months Ended
Ended Dec. 31, Dec. 31,
---------------------- ------------------------
2011 2010 2011 2010
---------- ---------- ----------- -----------
Sales $9,240,037 $7,217,736 $13,479,347 $10,724,068
Cost of sales 6,636,710 4,119,349 9,924,522 5,912,196
---------- ---------- ----------- -----------
Gross profit 2,603,327 3,098,387 3,554,825 4,811,872
Expenses
General and
administrative expenses 785,932 616,681 1,397,504 1,032,161
Amortization expenses of
the intangible assets 311,038 330,533 552,396 330,533
Selling expenses 220,742 328,078 426,702 403,549
Professional fees 71,140 123,229 190,255 188,527
Stock based compensation 33,923 59,505 80,618 154,354
(Gain) on disposition of
property and equipment 478 366 9,148 366
---------- ---------- ----------- -----------
1,423,253 1,458,392 2,656,623 2,109,490
Income from operations 1,180,074 1,639,995 898,202 2,702,382
Fair value change on
liabilities (P&L) 53,832 - 53,832 -
Extinguishment of
liabilities (1,753) - (1,753) -
Other income (expenses),
net 132,420 (1,777) 218,886 (3,712)
Government Subsidy 115,405 157,655 134,104 201,755
Finance cost (1,242) (15,922) 3,099 (22,710)
Impairment loss on
intangible assets - - - -
Interest income 4,053 68,508 6,273 141,341
---------- ---------- ----------- -----------
Income before provision
from income taxes 1,482,789 1,848,459 1,312,643 3,019,056
Provision for current
income taxes 712,198 603,288 714,728 603,288
Provision for deferred
income taxes (381,291) (192,910) (367,629) (15,409)
Net income 1,151,882 1,438,081 965,544 2,431,177
Less: Net Income
attributable to
noncontrolling
interests 112,343 52,579 10,881 52,579
Net Income attributable
to Pansoft Common
Shareholders 1,039,538 1,385,501 954,662 2,378,598
Other comprehensive
(loss) income 512,853 188,640 491,242 389,844
---------- ---------- ----------- -----------
Comprehensive income $1,552,391 $1,574,141 $ 1,445,905 $ 2,768,442
========== ========== =========== ===========
Basic net income per
share $ 0.19 $ 0.26 $ 0.18 $ 0.44
========== ========== =========== ===========
Diluted net income per
share $ 0.19 $ 0.26 $ 0.17 $ 0.44
========== ========== =========== ===========
Basic weighted average
number of
shares outstanding 5,389,323 5,438,232 5,389,323 5,438,232
========== ========== =========== ===========
Diluted weighted average
number of shares
outstanding 5,572,695 5,467,087 5,572,695 5,467,087
Pansoft Company Limited
Consolidated Balance Sheet
(in U.S. Dollars)
Dec. 31, 2011 June 30, 2011
-------------- --------------
Assets
Current assets
Cash and cash equivalents $ 10,818,202 $ 3,680,716
Account receivables, net 7,454,416 3,678,463
Unbilled revenues, net 4,292,659 7,025,926
Prepayment, deposits and other
receivables 3,379,305 1,868,101
Deferred and prepaid expenses 80,757 -
Inventory 2,005,872 1,010,582
Short term investments 1,063,340 6,829,841
-------------- --------------
Total current assets 29,094,551 24,093,629
Non-current assets
Property and equipment, net 2,321,303 2,312,590
Deposit for acquisitions - -
Long term equity investment 29,188 28,418
Deferred software development cost 170,943 -
Intangible assets 2,583,847 2,706,197
Goodwill on acquisition 2,364,428 1,373,708
-------------- --------------
Total assets $ 36,564,260 $ 30,514,542
============== ==============
Liabilities
Current liabilities
Accounts payable $ 2,044,478 $ 969,998
Accrual and other current liabilities 2,490,456 2,012,202
Acquisition payable 1,978,318 525,709
Short-term borrowing - -
Deferred revenue 2,704,945 2,048,859
Income tax payable 607,803 31,667
Deferred income taxes 551,415 570,711
Unearned government research revenue 1,165,223 683,286
-------------- --------------
Total current liabilities 11,542,638 6,842,432
Non - Current liabilities
Deferred income taxes - 181,611
Total Liabilities 11,542,638 7,024,043
Shareholders' equity
Common stock (30,000,000 common shares
authorized; par value of $0.0059 per
share; 5,438,232 shares issued and
outstanding as of June 30, 2009)
Share capital 32,080 32,080
Treasure stocks, at cost (641,714) (503,602)
Additional paid-in capital 9,468,626 9,281,753
Retained earnings 10,083,517 9,782,874
Statutory reserves 1,567,475 1,429,858
Non-controlling interests 2,471,488 1,940,239
Accumulated other comprehensive income 2,040,150 1,527,297
-------------- --------------
Total stockholders' equity 25,021,622 23,490,499
Total liabilities and stockholders' equity $ 36,564,260 $ 30,514,542
============== ==============
Company Contact: Pansoft Company Limited Allen Zhang
Chief Financial Officer Phone: +86-531-8887-4455 E-mail:
allen.zhang@pansoft.com Investor Contact: CCG Investor
Relations Mr. John Harmon CFA, Sr. Account Manager Phone:
+86-10-8573 1014 (Beijing) E-mail: john.harmon@ccgir.com
www.ccgirasia.com
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