6th Mar 2006 07:00
Sinosoft Technology plc 06 March 2006 Sinosoft Technology plc Leading Chinese e-Government software provider debuts on AIM Sinosoft Technology plc ('Sinosoft' or the 'Company'), a leading developer and provider of software and IT solutions to Chinese regional and national government agencies and export enterprises in China, today announces its stock market debut on AIM. Founded in 1998 by CEO Ms Xin Yingmei, Sinosoft's principal operating businesses capitalise on opportunities presented by the Chinese Government's continuing drive for digitisation, particularly within export tax management and other areas of interaction between citizens and government. Sinosoft has established itself as the market leader in the provision of export tax rebate software within Jiangsu and Hainan provinces; within those provinces alone over 24,000 export companies use the Company's software. By the end of 2010, as part of the Chinese Government's Golden Tax Project, all 31 provinces in China are scheduled to have digitised their export tax rebate systems. In December 2005, the Company won a contract with the State Administration of Taxation to supply them with export tax software and execute the national roll-out to provincial tax bureaus across China. This in turn will create opportunities for the Company to sell its products to exporting companies across China. The Chinese Government's drive to create centrally accessible administrative systems that collect and transport data to and from users (whether the public or national and regional government departments) extends beyond export tax. The Company has designed a portfolio of e-Government software products to radically simplify interaction with local government across the country. • The Company has raised its target of $17 million before expenses and dealings in its ordinary shares begin today under the ticker symbol SFT. • Following the admission of Sinosoft's shares, the Company's market capitalisation will be approximately $55 million. • The net proceeds of the placing will be used to expand the Company's research and development capabilities and its sales and marketing network, while the remaining funds will be used for working capital and to repay debt. • Westhouse Securities is the Company's Nominated Advisor and Broker. Miss Xin Yingmei, Chief Executive, commented: 'We are delighted by the investor support that has underpinned our flotation on AIM. Sinosoft is uniquely placed to benefit from the exceptionally strong growth in exports from China as well as the broader digitisation of Chinese local and national government departments. We look forward to investing the capital we have raised in growing our business to deliver long-term value creation to our shareholders.' For further information, please contact: M:Communications Tom Hampson / Charlotte Kirkham 020 7153 1530 Westhouse Securities Tim Metcalfe / Richard Baty 020 7601 6100 NOTES TO EDITORS Company information Sinosoft Technology plc is the UK holding company of Infotech Holdings Pte. Limited ('Infotech'), a Singaporean holding company of two trading subsidiaries, Nanjing Skytech Co., Limited ('Skytech') and Nanjing Skytech Software Co., Limited ('Nanjing Software'). The trading companies are registered and operate in the Jiangsu province of China and provide the following products and services to certain government departments and exporting enterprises in the Jiangsu and Hainan provinces of China: • export tax software which enables export tax documentation to be completed and filed electronically, comprising a back-end product suite used by the tax bureaus and a front end product suite utilised by exporting enterprises; • e-Government software which allows government agencies to automate processes at city and provincial level creating a virtual, real-time environment for citizens to access certain services provided by the government; • information integration software which provides existing customers with the opportunity to manage large amounts of information and facilitates the distribution, consolidation and synchronisation of this information across complex, multi-platform, multi-vendor IT environments; and • customised services to existing customers including software upgrades, systems integration, training, customer support and problem resolution and bug fixing. On 8 December 2005 Sinosoft in conjunction with two partners, China National Computer Software and Technology Service Corporation and Taihe Digital won a tender by the Chinese State Administration of Taxation ('SAT') to supply them with export tax rebate software. As part of the Chinese Central Government's Golden Tax Project, which has the objective of automating export tax filings in all Provinces by 2010, SAT will be implementing the roll-out of the back office system across tax bureaus in China. Following the installation and implementation of the back end system by the individual provinces, Sinosoft plans to offer its products to exporting enterprises, following the model utilised in Jiangsu Province. Sinosoft's business has benefited from Chinese technological advancement and the upsurge in Chinese export activity. Chinese Central Government policy has been to actively encourage the improvement of data collection and assessment and in particular the use of information technology. These policies have primarily benefited the Company's export tax software and e-government applications. Background and History Skytech was founded in December 1998 in Nanjing City, Jiangsu Province, China, by Sinosoft's Chief Executive Officer, Xin Yingmei, in conjunction with six founder shareholders. Skytech's activities have to date been focused in Jiangsu province, which was the first Chinese province to fully embark on the digitisation of export tax management in China. Jiangsu province has consistently ranked among the top three provinces in China in terms of its import and export value and its level of foreign investment. In 2005 Infotech acquired the shares in Skytech. In January 2006, Sinosoft acquired all the shares in Infotech by way of a share for share exchange. Key Strengths Large and increasing customer base The Company currently has over 28,000 users. Well positioned to sell software in other provinces Jiangsu and Hainan are the early adopters of export tax software. The Directors anticipate that tax departments of other Chinese provinces will by 2010 become fully digitised by virtue of the Golden Tax Project and that Skytech is well positioned to benefit from this. The awarding of the Golden Tax Tender by SAT will, in the opinion of the Directors, enable Skytech to target exporting enterprises across China. Strong cross selling opportunity Skytech plans to leverage its large and increasing user base to roll out future software products and services and provide a more complete service for its customers. High barriers to entry - export tax software Jiangsu Province became the first province in China to impose compulsory electronic tax filing on exporting enterprises. The Directors believe that this shift towards electronic filing for export tax and the selection of Skytech's export tax management software by the Jiangsu Tax Bureau has created a high entry barrier for competitors to compete in relation to export tax software in Jiangsu Province. Product line and integrated product solutions Over several years Skytech has developed a range of software products providing integrated IT solutions for its customers. Skytech responds quickly to changes in Chinese tax regulations and seeks to develop and launch software upgrades rapidly to meet its customers' needs. Strong management and technical team Sinosoft's Chief Executive Officer, Xin Yingmei, is an experienced manager and entrepreneur. The Skytech technical team, led by Chief Technological Officer, Wang Xiaogang, has considerable experience and expertise in software technology. Skytech is represented on the China National e-Government Standards Committee and Dr Zhu Jianjang, the head of the Tax Software division at Skytech, is a member of the project team for the Golden Tax Project which sets nationwide standards for export tax software. Software Products The Company's range of software products focuses on three areas: (i) export tax (ii) e-Government; and (iii) information and systems integration. (i) Export Tax Approximately 35 per cent. of Skytech's business is derived from the sale of packaged export tax-related software products to exporting enterprises in Jiangsu Province. Exporting enterprises traditionally made export tax filings using a paper-based method where all data and information was submitted in hand written form. Skytech's export tax-related software enables them to submit export tax filings to the relevant tax authorities and agencies electronically via diskettes or over the internet. (ii) e-Government services These products are in use throughout government departments and agencies at provincial, city and district level in Jiangsu Province. These are designed to simplify delivery of services to citizens and streamline government operations. (iii) Information Integration This standardised software can be modified or adapted to a customer's technology infrastructure. Information integration is the efficient and useful management of large amounts of information and data. By employing information integration technology, large collections of information can be distributed, consolidated, and synchronised across complex, multi-platform, multi-vendor IT environments. Software-related services Skytech provides support to its client and its licensed agents (for export tax software) as follows: • Software upgrades • Problem Resolution and Bug Fixing • Customer support • Training • System integration Objectives and strategy Expanding the sales and marketing network Following the Golden Tax Tender, the Directors intend to increase Skytech's market coverage in China by expanding its sales and marketing network. The Directors plan to set up additional sales and marketing offices or branches in other areas such as Beijing and Shanghai in order to facilitate the promotion and delivery of software products and services, and to provide more efficient post-sales support and services to its customers in those areas. Expand software research and development capabilities The software design and development market in China is characterised by continual advancement in technology. Skytech's ability not only to maintain its position, but also grow, is largely dependent on its ability to design and develop software products that contain, or are compatible with, the latest software technology. In order to maintain its position and grow Skytech plans to increase the size of its R&D team by recruiting additional IT professionals with relevant skills and expertise to develop the next generation of software products and further plans to establish a R&D centre and a software testing centre in Nanjing Hi-Tech Zone in 2006. Expand the range of software products and services Skytech aims to expand its range of software products for its core businesses by leveraging its R&D capabilities and resources, as well as by using its expertise in its core business areas. The Directors intend to expand the software development business into new areas which they believe offers strong market potential. The Group will consider acquiring or investing in boutique IT firms operating in specialised software sectors so as to expedite their breakthrough into such software niches. Leverage increasing user base to cross-sell full range of software products and services Skytech enjoys market leadership in the sale and provision of its export tax software and related services in Jiangsu Province, so that the majority of exporting enterprises in Jiangsu Province choose to file export tax documentation electronically, using Skytech's software. The Directors believe that there is still scope for the Group to grow in Jiangsu Province. The strategy is to leverage the increasing user base to sell other software products and services to them. Exploit nationwide e-Government initiatives With encouragement from the Chinese central government, provincial and city level governments are increasingly implementing e-Government products and services. As Skytech has already successfully penetrated some cities in Jiangsu Province, including Nanjing, Lianyugang, Changzhou and Taizhou, with its suite of e-Government products, Skytech plans to extend its e-Government platform and office automation software to other cities and districts in Jiangsu Province. Board of Directors Mao Ning, Non-Executive Chairman, aged 50 Mr Mao is currently a professor of finance in Nanjing University Business School and is also the director and associate dean of Nanjing University Business School, positions which he has held concurrently with his professorship since 2003. Mr Mao is also an independent director of Tonmac International Co., Ltd., a company listed on the Shanghai Stock Exchange, and the executive president of the Jiangsu Province Association of Quantitative Economics and Management Science. Mr Mao holds a PhD in System Science from the National University of Defence Technology. Xin Yingmei, Chief Executive Officer, aged 38 Ms Xin is a co-founder of Nanjing Skytech and began her career on the IT technical staff of the Beijing Olympic Electronics Engineering Co., Ltd, a company engaged in information technology services, where she worked from 1987 to 1992. From 1992 to 1995, she held the position of general manager in Nanjing Olympic Computer Co., Ltd., a distributor of software and provider of information integration services, from 1995 to 1998 she was the general manager and vice-chairwoman of Nanjing Honest Electronics Co., Ltd, a company distributing computer hardware, and was in charge of the general management of the company. In 1998, Ms Xin co-founded Nanjing Skytech and assumed the position of chairwoman of Nanjing Skytech. Ms Xin is a senior member of the Nanjing Association of Software Industry. Dai Jianbiao, Chief Operating Officer, aged 38 Dr. Dai joined Skytech in August 2005 having worked from 2002 to 2004 as General Manager of Shanghai Zenitek Information Industry Co., Ltd. From 2001 to 2002, he worked as general manager at Shanghai Dragon Zhangjiang IT Inc. In 2000, Dr. Dai was awarded a PhD degree in Electronic Engineering and Applied Science from the University of New Orleans, USA which followed on from his MS degree in Statistics from the same university which he received in 1999. He was appointed adjunct assistant professor in the University of New Orleans in 2002, and adjunct professor of the Dillard University, USA, in 2003. Teo Kean Eek, Non-Executive Director, aged 38 Mr Teo has over 11 years of strategic planning and venture capital experience in the USA, China and Singapore. Prior to founding Agile Partners, a financial advisory company in China, he was the Principal of Shanghai NewMargin Ventures in-charge of investment, divestment and portfolio monitoring. Mr Teo became a Chartered Financial Analyst (CFA) in 2000. Mr Teo holds a Master's Degree in Engineering Economics System from Stanford University and a Bachelor's Degree in Electrical Engineering from Arizona State University. He is on the board of directors and a member of the audit committee of Pharmesis International Ltd. Mark Christopher Greaves, Non-Executive Director, aged 49 Mr Greaves graduated with an MA in Economics from Cambridge University in 1977 and joined N.M. Rothschild & Sons Limited in London, spending the next 25 years with Rothschild in London, Hong Kong and Singapore. He was appointed Managing Director in 1994 and assumed overall management responsibility for all the group's businesses in Asia. In 2002, he left Rothschild to set up Anglo FarEast Group, an advisory and consulting business specialising in transactions involving Asia and the UK. In December 2004, Mark became the Chief Executive of Hanson Capital, with the primary objective of further developing that firm's business in Asia. Mark is a member of the Institute of Directors in London, is registered with the FSA and was, for many years, a Council Member of the Singapore Investment Banking Association. He is an independent non-executive director of Gome Electrical Appliances Holding Limited, China's largest electrical and electronics retail group which is listed in Hong Kong with a market capitalisation at 31 December 2005 of approximately US$1.24 billion. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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