Supply and Distributor Agreements Signed with Teamsun Enhance Efficiency and Sales Capabilities of ASL’s Existing Distribution Channels and Networks 

News Release – October 27, 2010

(Hong Kong, 27 October 2010) – Automated Systems Holdings Limited (“ASL” or “the Group”) (SEHK stock code: 771), a leading IT services provider in Hong Kong, announced its interim results for the six months ended 30 September 2010, with revenue from the continuing operations amounting to HK$633.3 million, higher by HK$15.6 million or 2.5% compared to the corresponding period in 2009. Profit from continuing operations for the six months ended 30 September 2010 was HK$17.8 million, increased by 83.7% compared with the corresponding period last year. With efficient cost structure, the Group continued to maintain growth in profitability. Basic earnings per share from continuing operations for the period under review were HK 5.72 cents (For the six months ended 30 September 2009: HK 3.2 cents).

For the three months ended 30 September 2010, revenue of the Group from the continuing operations was HK$301.9 million, lower by HK$28.7 million or 8.7% compared to the same period last year. Profit from continuing operations for the three months ended 30 September 2010 was HK$9.1 million, higher by HK$5.8 million compared to the same period in 2009.

The Board of Directors declared an interim dividend payment of 4.0 HK cents per share for the six months ended 30 September 2010. (For the six months ended 30 September 2009: Nil) The Group maintained a healthy balance sheet with cash of approximately HK$205.9 million as at 30 September 2010. No debt was recorded during the period under review and the working capital ratio was 1.92:1. The Group’s order book balance was approximately HK$585.0 million.

Mr. Lai Yam Ting, CEO of Automated Systems Holdings Limited, said, “We are delighted to report a satisfactory and sustainable performance during the period under review. Aligning with our stated strategy in promoting cross-territories business in Greater China, we have succeeded in extending the Group’s geographical reach and increasing presence in transportation sector in the region. These advances pave the way for enormous growth opportunities. Besides, our efforts to strategically expand our services business have also paid off as evidenced by the increased profitability with high level of satisfaction and trust gained from Hong Kong and overseas customers during the period under review.”

For the six months ended 30 September 2010, product sales and service revenue from continuing operations amounted to HK$371.7 million and HK$261.6 million, increasing by 0.4% and 5.8% respectively compared with the corresponding period in 2009. Product sales and service revenue contributed 58.7% and 41.3% to the total revenue of the continuing operations respectively. For the three months ended 30 September 2010, product sales and service revenue of the Group’s continuing operations amounted to HK$175.6 million and HK$126.2 million respectively (Three months ended 30 September 2009: HK$196.2 million and HK$134.5 million respectively). The increase in turnkey solution projects and a decrease of simple infrastructure projects were particularly reflected during the three months period ended 30 September 2010.

Commercial and public sector sales from the continuing operations for the six months ended 30 September 2010 accounted for 49.6% and 50.4% of the revenue from the continuing operations respectively, against 46.8% and 53.2% from the corresponding period in 2009. For the three months ended 30 September 2010, commercial and public sector sales from the continuing operations contributed 46.7% and 53.3% to revenue of the continuing operations respectively as compared to 46.0% and 54.0% from the same period last year. The decrease of revenue from education segment under the public sector was the main attributor to the decrease in revenue.

ASL continued to achieve steady growth in its Services Business by particularly securing a number of sizable managed and maintenance services deals which contributed to the recurrent revenue of the Group. Besides, major services contracts were also signed with long time customers, including a Hong Kong-based airline and two statutory bodies which ASL has serviced over a decade.

Satisfactory performance was also recorded in the Group’s Solution and Infrastructure Business with numerous large-scale turnkey solutions and systems integration projects in progress. In Infrastructure Business, the Group is deploying a multi-million dollar firewall system upgrade project secured in June 2010 for a government authority. Another project was awarded by a government department in August 2009 to provide certain professional services, hardware and software for the development of a public-service system. Upon completion of a milestone of that project, in July 2010 the Group received another multi-million order from the same organisation for the implementation of subsequent phases. Such continuation demonstrated the level of satisfaction ASL’s customers enjoyed and their trust in the Group’s capabilities.

We achieved a high level of service excellence outside Hong Kong as well. The Group’s subsidiary in Thailand received a multi-million order in October 2010 from a manufacturer of a renowned energy drink in the world for a disaster recovery project. Furthermore, the Group secured a 3-year order valued in excess of HK$1 million from the Thailand branch of an international bank to provide disaster recovery support services. The relationship with the energy drink manufacturer and the Thailand branch of the international bank began in 2007 and 2003 respectively. As time progressed, so as the complexity, volume and spectrum of ASL’s services offered to them. The expanding business exemplified the success of the Group’s subsidiary in Thailand as it celebrates its 10th anniversary in 2010.

ASL has continued to execute its stated strategy on developing cross-territories business to accommodate the extended footholds of its customers. The Group has successfully supported its customers’ geographic expansion across the Taiwan Strait and into China. It has won orders for two IT infrastructure projects from a Hong Kong-listed property developer for setting up its Taiwan operation in July 2010 and its Chengdu office in September 2010. Together with the Xiamen, Chongqing and Fuzhou offices, ASL currently supports this customer’s operations in various major cities throughout China. Besides, the Group has received an order from one of the largest baby goods manufacturers in the world to provide enterprise servers with 3-year 7×24 onsite support services for its Taipei and Dongguan operations. These project wins demonstrated the Group’s growing presence within the Greater China region.

The Group further expanded its PRC business with growing presence in the transportation sector within the Greater China region by winning its first and major order from China Southern Airlines Company Limited, PRC’s largest airline, to collaborate for upgrading the customer’s existing Technical Document Management System and to build a new system architecture and platform.

Moreover, its efforts to explore regional business opportunities subsequent to the termination of territorial agreement continued to yield encouraging results. The Group has successfully extended its services to Bangladesh by setting up a comprehensive IT infrastructure for the new office of a UK supermarket chain during the period under review.

On 6 October 2010, the Group and its ultimate controlling shareholder Beijing Teamsun Technology Co., Ltd (“Teamsun”) have entered into the Supply Agreement and Distributor Agreement . The Group expected the said agreements will allow the sharing of customer base and business knowhow between two groups thereby enhancing the efficiency and sales capabilities of the Group’s existing distribution channels and networks. The cooperation between two groups also allows the realisation of substantial synergies with Teamsun. Under the Distributor Agreement, the Group was granted distributorship of IT products under Teamsun Group outside the PRC, including an exclusive distributorship of “YESKEY”, a security related IT product of Teamsun Group. With synergies created between the two groups, ASL intends to seize the growing market demand for IT security products and solutions.

Mr. Lai concluded, “As the pace of economic recovery picks up, the Group sees abundant opportunities from increasing IT demands, particularly in the financial services and insurance sector in the region, driven by the expected needs for data centres, security services and more robust IT infrastructure. The Group has already embarked on initiatives to realise this potential. In October 2010, the Group secured an infrastructure project valued at approximately HK$10 million from an international bank for its business expansion.”

“Looking ahead, we will continue our stated strategy of expanding our cross-territories business, while leveraging with Teamsun, our ultimate controlling shareholder, for greater synergies expected from the signing of the Supply and Distributor agreements between the two groups. We will continue to actively seize opportunities across the region to achieve inorganic growth in our quest to become one of the leading IT services providers in the region.”

Appendix: Major Contracts & Tenders Secured by ASL for the 6 months ended 30 September 2010

Hong Kong Customers

Scope of Work

Infrastructure business
A publicly-funded tertiary education Supply, installation and implementation of a virtualised infrastructure
A government department Supply of a computer system for Enterprise System Management and provision of related services
Solution business
A government department System implementation and system integration of the serviceability management system for better public service and system management
Sun Hung Kai Securities Limited Provision of software for application performance management
Services business
A renowned university A 3-year multi-million dollar contract for the provision of hardware consolidated maintenance services of servers, systems, network equipments and related peripherals
A subsidiary of an international lifestyle brand Provision of 3-year managed helpdesk support services

Overseas Customers

Scope of Work

An IT services provider Provision of storage hardware for pork safety management with 7×24 maintenance services
A renowned local bank Provision of IT security assessment service
Ocean Glass Public Company Limited Replacement of PCs
Chartis Taiwan Insurance Co., Ltd. Upgrade of IT Infrastructure

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