China Information Technology Reports Financial Results
Sep 05, 2013 (Close-Up Media via COMTEX) --
China Information Technology, Inc., a provider of information technologies (IT) and display technologies (DT) based in China, announced its financial results for the first six months ended June 30.
In a release on August 30, the Company reported that first half-year 2013 financial highlights include:
-Revenue year over year increased 26.1 percent to $37.3 million
-Gross profit year over year decreased 11.2 percent to $7.7 million
-Operating loss of $51.6 million, increased from an operating loss of $20.3 million for the same period of 2012
-Net loss of $50.5 million, increased from a net loss of $19.7 million in the comparable 2012 six-month period
-Adjusted net loss of $5.2 million, decreased from adjusted net loss of $8.3 million in the first six months of 2012
-Fully diluted net loss per share of $1.87, increased from fully diluted net loss per share of $0.73 in the six months ended June 30, 2012
-Adjusted net loss per share of $0.19, decreased from adjusted net loss per share of $0.31 in the six months ended June 30, 2012
Jiang Huai Lin, Chairman and Chief Executive Officer of the Company, said, "The year of 2013 will continue to be a challenging transitional year as the Company experienced financial losses in the first half of the year. However, we believe our transition strategies have begun to see positive results. Our revenue increased 26.1 percent year-over-year in the first-half 2013 as our DT revenue increased by 95 percent, reflecting strong sales in our valued-added display products with integrated proprietary software. We have also reduced our adjusted net losses from $8.3 million to $5.2 million as we continued to focus on quality of earnings."
"Our early-mover advantage in the highly-functional display technology arena has generated robust results for the Company, especially in the area of digital education, as reflected in numerous contracts we have secured in the first half of the year, for example, a $4.5 million contract to provide our IT-Pad products embedded with proprietary software to the educational institutions in the city of Chongqing, and a $2.5 million contract to provide our smart interactive products to a communication client in Shanxi Province."
Revenue is generated from the sales of software and hardware products, fully integrated total solutions, and the related after-sales services. For the six months ended June 30, revenue was $37.28 million, compared to $29.56 million for the six months ended June 30, 2012, an increase of $7.72 million, or 26.11 percent. The increase was primarily due to the rapid sales growth of the IT-Pad and DS-Pad lines of products as the Company continues to focus on introducing value-added products and services that effectively integrate its expertise of both hardware and software businesses. The government sector continued to remain lackluster, thus leading to a decline in government revenue, which off-set some of the non-government revenue growth.
Specifically, the Company's product sales increased by $12.72 million, or 101.87 percent, to $25.21 million for the six months ended June 30, as compared to $12.49 million in the same period of 2012. Product sales constituted 67.62 percent of total revenue during the six month period ended June 30, as compared with 42.24 percent during the same period in 2012. The increase in product sales primarily reflected the Company's success in introducing and selling enhance-featured DT products, including the IT-Pad and DS-Pad lines in various industry sectors, especially in the rapidly growing China digital education market during the first half of 2013.
Software sales decreased by $1.30 million, or 15.29 percent, to $7.23 million for the six months ended June 30, from $8.53 million for the same period in 2012. Software sales decreased to 19.38 percent of total revenue, from 28.85 percent during the same period in the prior year. The decrease was mainly due to the continued challenging government sector as various levels of the government face austere fiscal constraints. In addition, the Company instituted more stringent customer acceptance policies, which limited new projects to those with more solid credit credentials and long-term business prospects in light of the unfavorable government fiscal environment.
Sales of system integration services decreased by $3.81 million, or 48.88 percent, to $3.99 million for the six months ended June 30, from $7.80 million for the same period in 2012. The decrease was mainly the result of the relatively sluggish macro-economic growth in the first half 2013 and a lack of new large system integration solutions engagements in connection with large IT infrastructural projects. As a percentage of revenue, system integration sales decreased from 26.39 percent during the six months ended June 30, 2012 to 10.70 percent during the six months ended June 30.
Other revenue increased by $0.11 million, or 15.48 percent, from $0.74 million in the six months ended June 30, 2012 to $0.86 million in the same period of 2013. The increase was mainly due to the increase in maintenance services during the current period.
As indicated in the tables above, cost of revenue increased by $8.69 million, or 41.57 percent, to $29.60 million for the six months ended June 30, as compared with $20.91 million for the six months ended June 30, 2012. As a percentage of revenue, cost of revenue increased to 79.39 percent during the six months ended June 30, from 70.72 percent in the same period of 2012. As a result, gross margin was 20.61 percent for the six months ended June 30, a decrease of 867 basis points from 29.28 percent in the same period of 2012.
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