#1I CS&S 中软国际 ChinaSoft International (0354.HK) Investor Presentation Second Quarter 2013 变革#2ICS&S 中软国际 Disclaimer These presentations and/or other documents have been written and presented by Chinasoft International Limited ("ChinaSoft International" or "the Company"). The information presented or contained in these materials is subject to change without notice and its accuracy is not guaranteed. Neither the presentation nor any of the information contained therein constitutes an offer to sell or issue or the solicitation of an offer to buy or acquire or invitation to purchases or subscribe for any securities of the Company in any jurisdiction or an inducement to enter into investment activity, nor may it or any part of it form the basis of or be relied upon in connection with any contract, commitment or investment decision whatsoever. 2#3ICS&S 中软国际 Background Info 1 Background Info 2 Deep domain expertise in China's most attractive verticals 3 4 5 Comprehensive end-to-end service offerings with superior consulting and solution capabilities Serving blue-chip clients with strong China presence and global delivery capabilities Strategic Partnerships and Growth Strategies 6 Financials 3#4ICS&S 中软国际 Snapshot of ChinaSoft International Service Offering (% of service revenue¹) Professional Services (48.4%) Outsourcing Services (47.9%) Training (3.7%) Headcount 18946 14496 10940 7759 4816 4363 2382 1055 477 238 Vertical Coverage (% of service revenue¹) Government & Manufacturing (24.2%) BFSI (17.3%) Public Services (9.4%) Telecommunications (28.6%) ■Technologies (16.0%) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Total Revenues (In RMB mm) Equipment revenue Service revenue 284 217 Service revenue CAGR 52.3% 227 2,551 184 Service Locations (% of service revenue¹) 1,960 241 253 21 cities in China (77.5%) 1,374 108 148 45 742 921 US, UK, Japan and other (22.5%) 58 187 107 559 2003 2004 235 310 2005 2006 2007 2008 2009 2010 Equipment revenue as % of total 2011 2012 65% 64% 39% 1 For the 12 months ended 12/31/2012 13% 31% 25% 17% 14% 13% 8% 4#5ICS&S 中软国际 Business Distribution Service Revenue by Industry Verticals Telecom 28.6% Hi-Tech 16.0% Others 4.5% Gov't & MFG 24.2% Public Services 9.4% BFSI 17.3% Total 2012 Service Revenue: RMB 2,551mm 5 OSG: IT Outsourcing Services 47.9% Service Revenue by Service Type Charging mode: time and material ESG: Training 3.7% PSG: IT Consulting & Solutions 48.4% Charging mode: fixed price Total 2012 Service Revenue: RMB 2,551mm#6ICS&S 中软国际 Business Development History Leading China based IT Services platform that serves the world with deep domain expertise and end-to-end service offerings 2000 ■Incorporated with headquarters in Beijing China 1st E-business platform China 1st Chinese plug-in UNIX platform China's 1st e-Park Solutions for government 2003 Headcount: 238 ■Industries: Government, Manufacturing Offering: IT Solution ■Area: China ■Service Revenue: S$9m Listed on HK GEM Board • Jointly set up the China E- gov't research centers with the CEC • General system integrator of E-Audit • ResourceOne V1.0, the intellectual property rights product 2005 ■Headcount: 1,055 ■New Industries: High-Tech ■New Offering: IT Outsourcing ■New Area: US ■Service Revenue: US$35m "National Computer Information System Integration First Class Qualification" • "The Prize of China IT Creative Enterprise" • "The Key Software Enterprise Under the National Planning" 6 2007 ■ Headcount: 4,363 ■New Industries: Financial & Banking, Transportation ■New Offering: BPO ■New Area: Japan ■Service Revenue: US$84m • "Deloitte High Tech High Growth Top 50 in China" Core member of the Committee of National IT standardization-SOA work group • "The China Backbone Enterprise" by CSIA • Take on construction of CEC "Internet of Tings" Laboratory 2010 Headcount: 10,940 ■New Industries: Telecommunications ■New Offering: IT Consulting ■New Area: Central and South America, Britain, India, Africa, Southeast Asia, Middle East ■Service Revenue: US$208m Listed on Main Board of HKEX in 2008 IBM's Top SOA Partner General integrator of E- agricultural project "The 2010 Global Outsourcing Top 100" by IAOP • ResouceOne - "The Gold Software Product Prize" by International Soft China 2010 ETC "The National Education Achievement First Prize" . 2012 Headcount: 18,946 ■New Industries: Energy, Insurance ■New Offering: Mobile technology ■Service Revenue: US$405m Strategic partnership with Hony Capital and Microsoft JV with Huawei officially began and started operation 2011 Microsoft Preferred Supplier Program Excellence Award "The 2012 Global Outsourcing Top 100" by IAOP "The Key Software Enterprise Under the National Planning" • Establishment of a Ten- Thousand-Staff Base in Xi'an HIDZ Software Park#7ICS&S 中软国际 Leading IT Services Company in Fast- Growing Chinese Market China Domestic Software Industry MarketⓇ Others Data Process & (RMB bn) Operation Services 2000 38% 19% 1500 16% 21% 10% 1000 20% 16% 21% 9% 17% IT Consulting Services 9% 22% 500 21% 33% 31% 33% 0 Information System Integartion Services Software Products 2010年 2011年 2012年H1 Global IT Outsourcing to China Leadership in China IT Services Ranked Top 2 by IDC in IT Outsourcing for Americas and Europe in 2007-2011 Ranked Top 3 by IDC in Consulting & Solutions for Government industry vertical in 2007-2011 New Opportunities in 12th Five Year Planning Period In 12th five year planning period, China will focus on fostering knowledge-intensive service industries with a core of new generation information industry 1. Market scale of China's software and IT services will grow from 1.12 trillion in 2010 to more than 3 trillion in 2015². ° • (USD Mn) 14,000 30 12,000 25 10,000 20 8,000 • 15 6.000 • 10 4,000 5 2,000 0 0 2011 2012 2013 2014 2015 2016 ①China Software Industry Economic Operation Data from Ministry of Industry and Information Technology 2IDC China-based Offshores Software Development 2012-2016 Forecast & Analysis 7 The scales of following strategic emerging industries are expected to reach 2: Government: USD 1.6 billion in 2012 Banking and insurance: USD 2.2 billion in 2012 Telecommunications: USD 3.0 billion in 2012 Manufacturing: USD 3.5 billion in 2012 Mobile Internet: USD 35.0 billion in 2012 Internet of Things: USD 700 billion in 2015 2012-2015, total investment plan of China's top 40 large state- owned enterprises (SOE) in the IT services will be more than USD 1200 billion.(30 billion per each SOE in average) 1 Quote from "the CPC Central Committee proposed 12th Five-Year Plan", "the State Council decision on accelerating the development of strategic emerging industries". 2 Data Source: CCID, IDC, Analysis International, CCW Research#8ICS&S 中软国际 Deep Domain Expertise 1 Background Info 2 Deep domain expertise in China's most attractive verticals Comprehensive end-to-end service offerings with superior 3 consulting and solution capabilities 4 5 Serving blue-chip clients with strong China presence and global delivery capabilities Strategic Partnerships and Growth Strategies 6 Financials 8#9Industry Solutions I CS&S 中软国际 Deep Domain Expertise in China's Most Attractive Verticals Government Manufacturing & Distribution Banking& Insurance Public Service Telecom Auditing & Supervision Management Social Security and Welfare Management State-owned Assets Supervision Enterprise Resource Planning (ERP) Customer Relationship Management (CRM) ■Manufacturing Execution System ■ Payment & Clearing System Collection System Credit Management Bank Card System Credit Card System Risk Control System Smart Card Solution Automatic Fare Collection (AFC) System Mobile Payment Mobile IM Mobile SNS Food and Drug Management Meteorology and Scourge Warning Executive Permission Management Decision Support System Logistics Execution System Safety Production Management Warehouse Management System E-marketing Supply Chain Finance Insurance Business System Insurance E-Commerce System Insurance Exhibition Industry Support System Reinsurance Business System AFC Clearing Center(ACC) ■Intelligent Transportation Solution Enterprise Microblog Mobile App-store Push-to-talk Online Application and Approval Office Automation Portal Website Sets Enterprise Application Integration Goods Digital Tracking and Tracing Image Management System Insurance Sales Management System Insurance Task Quality Analysis & Monitoring System Insurance Audit System Airport Operating Management System Embedded Browser Mobile Advertising Platform General Solutions ■ CRM ■Office Automation (OA) ■Business Intelligence ( BI ) ■Portal Website Sets Radio-frequency Identification ( RFID ) Geographic Information System (GIS) ■Auto Ticketing Electric Power Core Products Power Materials Management Solutions Power Marketing Management Solutions ResourceOne® (R1) middleware platform based on SOA ■widely used in government, manufacturing, etc ■Ranked No. 1 Brand in e-gov sector for 5 consecutive years by CCID TopLink/TSA+Platform used in general China Unionpay center and national and provincial bank card switching centers ■support cross-bank and cross-area online bank cards businesses 9#10I CS&S 中软国际 Case Study: Government - The Nationwide Auditing Program Our Position The only Strategic Partner Total solution provider Core application developer 11 Years of relationship Achievements Implementation of national audit office system (80,000 on-site installation) Application expanded to finance, social security, enterprise internal audit and other extensive government audit industries Vertical Mode National Auditing Office Central Government 18 Special Offices 31 Provincial Government and Department Provincial Branches 400 Urban Branches Urban Government and Department 2,000 County Branches 80,000 Audit Agents County Government and Department 1,800,000 Units to be audited Vertical Characteristics Strong central policy setting and administration ■Dynamic requirements and strong needs for help ■Lack of trust in foreign suppliers, and long time needed in building trust with domestic suppliers ■ Very loyal to existing partners Capabilities ■Developing business and penetrating this vertical in government's centrally controlled environment ■Consulting-driven services Large-scale project management and implementation Standard and replicable technology platform ■Brand name building and recognition 10#11中软国际 Case Study: Manufacturing - Nationwide Tobacco Program Our Position Only Strategic Partner 9 Years of relationship 红金龙 Achievements Business & Decision System, Management Execution System, Logistics Execution System, Warehouse Management System, ERP, RFID, etc Nationwide service network: 31 capital cities and 60+ non-capital cities, 800+ organizations Complete industry workflow application, including agriculture, production, and sales & distribution 100% coverage of top 100 cigarettes brands ■Setting standards of the manufacturing system Baisha 白沙烟 Ligun 思想力,行动力 乌鲁木齐 拉萨 |中南海 熊猫香烟 哈尔滨 {2 (3) HONGHE Capital cities • Non-capital cities 呼和浩特 北京 大菱 银川 T 000 西安 南 石家庄 ° 蘇 HH fxbh 南昌 要烦 YanYan Vertical Characteristics Diversified requirements from different operations Complicated system in workflow and geographic span ■Customer satisfaction is key in winning new business ■High barrier of entry to new players Capabilities 3P model to grow business: Project → Program → Partnership ■Setting standard for the industry application Dominant platform as entry point for other vendors and applications (i.e., SAP, Oracle, IBM, Siemens, etc) 11#12中软国际 Case Study: Banking & Insurance- China UnionPay Our Position Only domestic provider for the switching system ■Total system integrator, and core application software developer ■9 Years of relationship Achievements Top5 International Card Organizations VISA UnionPay RDX China Unionpay MasterCard Implementation of China's largest real- time financial exchange system for settlement and clearing System processing capacity above 10,000 transactions per second, daily volume above 15 million, with over 40% annual business growth Core technologies also deployed for China Post, ICBC, CCB, CITIC Bank, Payment Pass, Expo ticket, etc 90 Nations and Areas 美国货 银联 USA 暾地利, 澳大利亚 Australia 哈萨克斯坦 韩国 Korea com AMERICAN EXPRESS Diners Club International® Corporate Member 银联电子支付 CHINAPAY 银联商务 China Ums 121 Member Banks, 1.35M Merchants, 2.11M POS Terminals, 180,000 ATMs Vertical Characteristics ■Only working with proven technology and leading brands ■ High demand on system capacity, processing power, and reliability, with no tolerance to failure ■More business opportunity if providing the core platform 12 Capabilities Deep understanding of banking industry ■Large-scale and high-efficiency technology platform design and development Standard solutions replicable to other industries#13ICS&S Case Study: Telecom - China Mobile 中软国际 Our Position ■Strategic partner at North Base for Mobile Payment and at South Base for Mobile Internet such as Wireless City Strategic partner with Beijing Branch and Shanghai Branch Achievements Joint mobile IT Service with China Mobile targeting multiple industries: Audit, agriculture, tobacco, social security, quality control, pharmaceutical, banking, transportation, state-owned enterprises Key supplier to China Mobile's strategic services, Wireless City, Instant Messaging (Fetion), Application Store (Mobile Market), Social Networking (139.com), and Mobile Payment(World Expo. Cell Phone Ticket). Multiple cooperation areas with China Mobile Mobile Application Mobile Music Mobile Store IM music Mobile Mobile Music Market Mobile Read Mobile Read Mobile Search Fetion Cooperated with a Xinhua News Agency Mobile Mobile Game Game 中国移动通信 CHINA MOBILE Mobile TV Moternet hlernet Mobile Portal Mobile Video Mobile CHINA MOBLE 无线城市 Wireless City 139 139 mail Mobile TV NAN-AN Wallet Mobile Video Mobile Payment Wireless City Mobile Mail Vertical Characteristics High growth on data services and mobile internet applications High spending in building these services to avoid becoming a pipe provider High reliance on service know-how and operation capability Difficult to switch vendor or platform when services grow and subscribers increase Capabilities Expert and know-how on mobile internet such as Wireless City services and applications ■Consumer oriented service design ■On-going service operation and management support ■Leading innovated technologies with proprietary IP 13#14I CS&S 中软国际 Proprietary Advantage: ResourceOne Ⓡ Product Positioning middleware platform Middleware platform based on SOA and components to support rapid application development, application integration and engineering project management and control Production and migration tools for cloud applications Assets governance and integration tools for cloud applications Integration of ICT and cloud service aggregation capability Cloud computing, cloud services, PAAS and SAAS support Business Anywhere Model: ICT and mobile internet adaptation Establish alliances and community development partners Business compoment based development platform of application SAAS support, Enhanced Enterprise Integration, IT asset management SOA Suite support third-party prouct exchange swap such as IBM Reuse, governance, user experience, integration The full support of SOA architecture Flexible architecture, mining the value of IT, Business-driven Component Based, Distributed Application Integration/3.5 Industry-level infrastructure Support huge project delivery V3.0 Collaberation and connective V4.0 V2.0 J2EE, Enterprise Integration Architecture Appication Builder Application Service Provider V1.5 Rapid Develepment Framework V1.0 V5 V4.5 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1998 2011 14 Ability Integration construct integrate skeleton, provide the ability of function management, integration, interaction in whole company even entire industry; integration solution of user, interactive access, component, process and data. Develop, assembly of business component: based on SOA architecture provide component-based development and management for application, implement solution for common or special requirements rapidly, such as business process, approval report in, data collection, data analysis, decision- making support. Quality control, Delivery and project management: realize macro-control for project, by means of develop, submit, integrate from mulit-developers; achieve the goal of application as IT assets, through intensive component segmentation, develop control, review, assembly etc Achievements ■Self-owned intellectual property with over 60 software copyrights for R1 and derivative products "The Gold Software Product Prize" by International Soft China No. 1 Brand of China E-government Application Platform by CCID In the 2007, 2008, 2009 Central Government centralized purchase of information product protocol supply list ICT strategic cooperation agreement with China Mobile Beijing Branch in 2010, with R1 as application cooperative platform product Application Integration and support platform for Gold Audit and Gold Agriculture#15ICS&S 中软国际 Comprehensive End-to-End Service Offerings 1 Background Info 2 Deep domain expertise in China's most attractive verticals 3 4 5 Comprehensive end-to-end service offerings with superior consulting and solution capabilities Serving blue-chip clients with strong China presence and global delivery capabilities Strategic Partnerships and Growth Strategies 6 Financials 15#16ICS&S 中软国际 Moving Up the Value Chain Strengthening core competitiveness Moving up the value chain Enhancing profitability Intelligence focused (Analytics, BI) 智慧型服务 ESG Emerging Services Group Experience focused 经验型服务 Efficiency focused 效率型服务 16 PSG Professional Service Group OSG Outsourcing Service Group#17I CS&S 中软国际 Comprehensive End-to-End Service PSG Consulting & Solutions Number of employees : 6851 1 Charging mode: fixed price Offerings IT Consulting IT Solutions IT Outsourcing Strategy and Business Consulting Information Technology Consulting Vertical Application Software and Solution Services • . Government & Manufactory Solution Financial & Banking Solution • Telecom Data Service Solution • Traffic Industrial Solution Product Services • Resource One • TopLink Product Engineering ADM (Application Development and Maintenance) EAS (Enterprise Application Service) Infrastructure Managed Service Data Processing OSG Outsourcing Services Number of employees: 11389 1 Charging mode: time and material End-to-end service offerings present multiple revenue drivers and cross-selling opportunities ■Differentiated Consulting & Solution capabilities from China-based peers Business Process CAD Outsourcing Call Center 1 ended 12/31/2012 17#18ICS&S 中软国际 Our Customers... 1 Background Info 2 Deep domain expertise in China's most attractive verticals 3 4 5 Comprehensive end-to-end service offerings with superior consulting and solution capabilities Serving blue-chip clients with strong China presence and global delivery capabilities Strategic Partnerships and Growth Strategies 6 Financials 18#19ICS&S 中软国际 77.0% Customers Analysis Top Customers Concentration 58.0% 65.0% 57.0% Top 10 Clients % 43.7% 2007 2008 2009 2010 2011 Customer Analysis 43.6% 2012 • For the 2012, the service revenue from the top 5 customers accounted for 38.5% of the Group's total service revenue, remained the same level as 2011's 38.4%. For the 2012, the service revenue from the top 10 customers accounted for 43.6% of the Group's total service revenue, remained the same level as 2011's 43.7%. The Group had 995 active customers for 2012 compared to 855 in 2011, of which 402 were new customers compared to 320 in 2011. For 2012, CSI had 61 major customers each generating annual service revenue of more than RMB6 million, this is also better than 2011's 58. 19#20ICS&S 中软国际 "Gold Audit" "Gold Quality" "Gold Insurance" "Gold Agriculture" "Gold Macroeconomics" "Gold Card" Blue-Chip Clients 20 Ministries of China Government 6 of 12 "Gold Projects" 100% covering China Top 100 Cigarette Brands 2 of the top 3 China Automobile Companies 4 of the top 5 China Machinery Manufacturers 5 of the top 10 China Steel Manufacturers Government Manufacturing G d 中国中钢集团公司 GSK 日照钢铁 ZHAO STEEL |深圳宝安国际机场 shenzhen international airport OTSINOSTEEL CORPORATION CHERY C 中国烟草 CHINA TOBACCO KOMATSU 吉利控股集团 Pfizer DEC 中国东方电气集团有限公司 DONGFANG ELECTRIC CORPORATION GEELY HOLDING GROUP GLIUGONG 柳工 Microsoft® IBM hp ORACLE® 中国移动通信 CHINA MOBILE China unicom中国联通 ④ 中国电信 CHINA TELECOM 4 of the top 5 Global Software Companies Hi-tech HUAWEI ERICSSON TAKING YOU FORWARD & Distribution Banking& Insurance Telecom Public Service 100% covering China Top 5 National Banks 12 of the top 20 Global Banks 2 of the top 3 China Insurance Companies UnionPay R 银联 中国银行 BANK OF CHINA China Unionpay █法兴银行 SOCIETE GENERALE 中国农业银行 HSBC AGRICULTURAL BANK OF CHINA 宮 中国工商银行 中国建设银行 China Construction Bank SMBC 三井住友銀行 Citibank |太平洋保险 中国平安 PINGAN CPIC 100% covering China Top 3 Telecom Operators 2 of the top 3 Global Telecom Equipment Providers 20 7 of the top 10 China Cities by GDP • Shanghai . Chongqing • Beijing • Hangzhou Shenzhen Qingdao • Tianjin#21ICS&S 中软国际 Global Delivery Capabilities 25 Sales and Delivery Centers Worldwide Supporting global customers with abundant HR platform (city and headcount¹) B Beijing-4,427 Shanghai-2,595 Serving over 100 Multinational companies ■Multilingual services provided to different industries London-10 NZ B Shenzhen-2,379 Xi'an-2,007 Nanjing-1,958 Dalian-1,076 Guangzhou-722 Chengdu-683 Tokyo-54 ■ Seattle-140 Princeton-27 Sales & Delivery Center Offshore Service Coverage 1 As the end of 2012 21#22ICS&S 中软国际 Strategic Partnerships and Growth Strategies 1 Background Info 2 Deep domain expertise in China's most attractive verticals Comprehensive end-to-end service offerings with superior 3 consulting and solution capabilities 4 5 Serving blue-chip clients with strong China presence and global delivery capabilities Strategic Partnerships and Growth Strategies 6 Financials 22#23ICS&S 中软国际 Huawei Strategic Partnership with Huawei Our 60%-40% JV with Huawei will support strong growth in OSG business Chinasoft will be Huawei's top supplier in IT outsourcing Offering services to product lines in ten R&D bases of Huawei ■Beyond Huawei - Provide Outsourcing services to Huawei's overseas clients ■Leverage CSI's PSG knowledge base and cross sell Solutions business to clients Huawei overseas I CS&S 中软国际 HUAWEI Service Revenue from Huawei ITO (InRMBmm) 99 CAGR 79% 269 402 573 优秀合作团队奖 优秀合作团队奖 优秀合作团队奖 优秀合作团队奖 优秀合作团队业 优秀合作团队奖。 23 2009 2010 2011 2012#24ICS&S 中软国际 Microsoft Strategic Partnership with Microsoft I CS&S 中软国际 Microsoft® ■GoBig opportunity to Expand Current MS Business 360° Relationship Develop cloud technology with Azure Develop relationship with major MS clients in China and abroad Seattle Delivery London Delivery China 1st Chinese company as Top 10 MSIT Global Vender and 1st Enterprise Center Center Based Delivery Center Partner in China ■ The prestigious 2011 Microsoft Preferred Supplier Program Excellence Award for Value Excellence Global delivery capability for Microsoft outsourcing in US, Europe and China ■Microsoft is one of Chinasoft's major shareholders 24 Service Revenue from Microsoft Business (InRMBmm) CAGR 36% 281 238 147 154 154 87 113 32 2005 2006 2007 2008 2009 2010 2011 2012#25ICS&S 中软国际 Hony Capital Strategic Partnership with Hony Capital ICS&S 弘毅投資 中软国际 HONY CAPITAL ■ Hony Capital will strongly support our PSG business development Hony Capital is our largest substantial shareholder Chinasoft has become the integration platform for Hony Capital's future investments in the IT domain Hony Capital participates in the Chinasoft's strategic and corporate development management Chinasoft will be the major IT service provider for the Hony Capital's portfolio companies lenovo SUNING 中联重科 Zoomlion 苏宁电器 Consistent Objective NCI 新华保险 O 中银国际证券有限责任公司 BOC International (China) Limited BIOSENSORS INTERNATIONAL GINWA U'young 传媒MEDIA Sincere 先声药业 25 Similar Culture 6 联想控股 LEGEND HOLDINGS Complementary Strategic Resource#26I CS&S 中软 New Focus and Growth in New Decade Last Decade FOCUS in the NEXT decade • Cloud Enabling to Next Decade • Cloud Based Services FOCUS in the LAST decade • Service Capabilities • Verticals • Region Coverage • Platform Centric Operations 450 million USD 2012 2015 2020 (In RMB mm) 2,768 2,244 1,601 1,105 983 812 294 382 355 53 114 166 ZUUT 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 26#27ICS&S 中软国际 Growth Strategies Strategic Relationships Expand Current Business Effectively use of M&A • • . Identify industry sectors with native and dominating customer (ƒ),e.g. tobacco, electricity; Forge strong strategic relationships with this customer, first through projects, then programs and finally partnership (3P); goal: become the de-facto IT service arm of client Acquire smaller competitors to consolidate around this customer For large verticals such as Banking and Mobile technology, aggressively leverage current PSG business to expand to OSG business, and vice-a-versa, aiming to achieve end-to-end value chain for customer, thus achieving higher quality of service and increasing customer stickiness. We intend to grow existing business at 30% p.a. • • M&A to provide additional 15% to 20% p.a. growth in the following way: Consolidate smaller competitors around strategic customers Buy service capability: IP-analytic applications, Cloud PaaS: CEAP & CEIP, Utility model for application-> platform centric model • Extend regional reach in 1) US around MS, 2) Internationally via Huawei SMAC • Stay atop in the world of Social networking, Mobile, Analytics and Cloud technologies. Form partnerships and JVs with world-class new technology players; Be part of the new technology paradigm (Alibaba Cloud, Wireless City with China Mobile) 27#28ICS&S 中软国际 Growth via Acquisition Growth by acquisition has been, and will continue to be, a significant part of ChinaSoft International's growth strategy. (Please see a list of companies at the end of this presentation that CIS acquired in the past.) We typically acquire to 1) expand presence in a specific industry sector (around a strategic customer) or 2) obtain new service capability or 3) expand regional reach. Current M&A Policy and Target Guidelines: High Growth: Target should be growing at > 30% per year (revenue) □ Appropriate Size: Target is < 13% of CSI in terms of business volume ☐ Sector penetration acquisitions will depend on strategic customer needs (3p- Project, Program, Partner) □ Service capability acquisitions will center around proprietary technology ☐ Financing: Open to both debt and equity or a combination; specific model determined on a case-by-case basis; Strive to be very EPS accretive. 28#29ICS&S 中软国际 Financials 1 Background Info 2 Deep domain expertise in China's most attractive verticals 3 4 5 Comprehensive end-to-end service offerings with superior consulting and solution capabilities Serving blue-chip clients with strong China presence and global delivery capabilities Strategic Partnerships and Growth Strategies 6 Financials 29#30ICS&S 中软国际 Key Financial and Operating Data RMB'000 2012 2011 Growth% Revenue 2,768,171 2,243,754 23.4% Service Revenue Gross Profit EBITDA* 2,551,395 1,959,885 30.2% 915,341 729,491 25.5% 328,838 293,184 12.2% Non-GAAP Operating Profit** 293,805 278,998 5.3% Net Profit attributable to Equity Shareholders 133,189 110,594 20.4% Non-GAAP Net Profit attributable to Equity 155,686 145,250 7.2% Shareholders* Non-GAAP Basic EPS* (RMB cents) Non-GAAP Diluted EPS* (RMB cents) 9.34 10.76 -13.2% 9.04 9.93 -9.0% * Excluding the changes in Impairment loss on goodwill, Gain arising from changes in fair value of contingent consideration payable on acquisition of business, fair value of redeemable convertible preferred shares, and Loss on deemed disposal of associates. ** Excluding share option expenses and amortization of intangible. 30#31ICS&S Financial and Operating Ratio Analysis RMB' 000 2012 Per Revenue% Per Service revenue% Per Per Service 2011 Growth% Revenue% revenue% Revenue 2,768,171 2,243,754 23.4% Service Revenue 2,551,395 92.2% 1,959,885 87.3% 30.2% Cost of sales (1,852,830) -66.9% -72.6% (1,514,263) -67.5% -77.3% 22.4% -Salary Costs (1,314,209) -47.5% -51.5% -971,942 -43.3% -49.6% 35.2% Gross Profit 915,341 33.1% 35.9% 729,491 32.5% 37.2% 25.5% Other Income 55,235 2.0% 2.2% 46,036 2.1% 2.3% 20.0% Selling Expenses (160,692) -5.8% -6.3% (148,706) -6.6% -7.6% 8.1% Administration Expenses (454,761) -16.4% -17.8% (309,278) -13.8% -15.8% 47.0% R&D cost expensed (57,055) -2.1% -2.2% (45,989) -2.0% -2.3% 24.1% Allowance for Doubtful Debt (15,807) -0.6% -0.6% (17,417) -0.8% -0.9% -9.2% Amortization (42,967) -1.6% -1.7% (47,514) -2.1% -2.4% -9.6% Gain from FV changes of contingent 5,557 0.2% 0.2% 71,718 3.2% 3.7% -92.3% consideration payable Impairment loss on goodwill (28,054) -1.0% -1.1% (68,982) -3.1% -3.5% -59.3% Finance Cost (31,111) -1.1% -1.2% (23,898) -1.1% -1.2% 30.2% Share of result of associates 2,030 0.1% 0.1% 2,618 0.1% 0.1% -22.5% Loss arising from P shares FV changes 0.0% 0.0% (37,287) -1.7% -1.9% -100.0% Profit before taxation Taxation Profit for the Year 187,716 6.8% 7.4% 150,687 6.7% 7.7% 24.6% (37,574) -1.4% -1.5% -29,611 -1.3% -1.5% 26.9% 150,142 5.4% 5.9% 121,076 5.4% 6.2% 24.0% 31#32ICS&S 中软国 Non-GAAP and GAAP Reconciliations RMB' 000 2012 Per Revenue % Per Service revenue % Per Per Service 2011 Revenue % Growth% revenue % GAAP Net Profit 133,189 4.8% 5.2% 110,594 4.9% 5.6% 20.4% Adjustments: +Loss in FV changes of p shares 0 0.0% 0.0% 37,287 1.7% 1.9% -100.0% +Impairment loss 28,054 1.0% 1.1% 68,982 3.1% 3.5% -59.3% +loss on deemed disposal of associates 0 0.0% 0.0% 105 0.0% 0.0% -100.0% -Gain from FV changes of contingent -5,557 -0.2% -0.2% -71,718 -3.2% -3.7% -92.3% consideration payable Non-GAAP Net Profit 155,686 5.6% 6.1% 145,250 6.5% 7.4% 7.2% RMB' 000 2012 Per Revenue % Per Service revenue 2011 Per Revenue % % Per Service revenue % Growth% GAAP Operating Profit 239,294 8.6% 9.4% 206,623 9.2% 10.5% 15.8% Adjustments: +Amortisation 42,967 1.6% +Share option expense 11,544 0.4% 1.7% 0.5% 47,514 24,861 2.1% 2.4% -9.6% 1.1% 1.3% -53.6% Non-GAAP Operating Profit 293,805 10.6% 11.5% 278,998 12.4% 14.2% 5.3% 32#33ICS&S 中软国际 Balance Sheet RMB' 000 Current assets Inventories Trade and other receivables (Audited) (Audited) 31 Dec, 2012 31 Dec, 2011 (Audited) RMB' 000 31 Dec, 2012 (Audited) 31 Dec, 2011 Current liabilities 23,989 1,039,396 24,405 Trade and other payables Bills payable 668,918 613,149 7,071 21,525 760,648 Amounts due to customers for contract work 110,506 56,142 Prepaid lease payments 1,038 178 Amounts due to related companies 9,196 3,765 Amounts due from associate 10,182 5,859 Amounts due from customers for Dividend payable to shareholders Taxation payable 75 75 39,312 29,849 561,359 363,683 contract work Borrowings 309,300 165,600 Convertible loan notes 199087 Amount due from related 205 394 1,343,465 890,105 companies Net current assets 1,072,019 1,050,583 Pledged deposits 4,468 12,571 Total assets less current liabilities 2,098,885 2,057,429 Bank balances and cash 774,847 772,950 Non-current liabilities 2,415,484 1,940,688 Deferred tax liabilities 17,602 24,767 Borrowings 19,000 29,600 Non-current assets Consideration payable on acquisition 5,557 Property, plant and equipment 132,853 131,456 of business Convertible loan notes 193,820 Intangible assets 159,330 157,172 36,602 253,744 Goodwill 629,075 657,129 2,062,283 1,803,685 Interests in associates 27,616 25,551 Capital and reserves Share capital 81,804 77,879 Available-for-sale investment 25,000 25,000 Share premium 1,466,006 1,392,651 Prepaid trademark use right Reserves 379,814 255,142 42,477 469 payments Deferred tax assets 10,515 1,026,866 10,069 1,006,846 Equity attributable to equity holders of the Company 1,927,624 1,725,672 Non-controlling interests Total equity 134,659 2,062,283 78,013 1,803,685 33#34ICS&S 中软国际 Operating Cash flow (In RMBmm) 123 44 12 Net Cash flow from Operating Activities 92 92 86 98 38 121 -78 2005 2006 2007 2008 2009 2010 2011 2012 34#35ICS&S 中软 Days Receivable Comparison with Peers 185 142 151 137 134 126 pactera 119 156 SOFTSTONE -软通动力- 157 WAN camelot 206 TION OF ICS&S 156 中软国际 2006 2007 2008 2009 2010 2011 2012 35#36ICS&S "Aging Analysis of Accounts Receivables (Audited) (Audited) RMB'000 % % 2012 versus 2011 31 Dec, 2012 31 Dec, 2011 Within 90 days 601,133 43% 483,793 48% 117,340 24% Between 91-180 days 116,221 8% 80,316 8% 35,905 45% Between 181-365 days 54,822 4% 39,804 4% 15,018 38% Between 1-2 years 56,828 4% 30,293 3% 26,535 88% Over 2 years 805 0% 5,728 1% -4,923 -86% Billed AR 829,809 60% 639,934 64% 189,875 30% Unbilled AR 561,359 40% 363,683 36% 197,676 54% Total AR 1,391,168 100% 1,003,617 100% 387,551 39% 36#37I CS&S 中软国际 THANK YOU IR Contacts Janet Lai Tel +852 2915-2830 Email [email protected] 变革#38ICS&S 中软国际 Others 46.5% Shareholdings Structure Shareholdings Structure As of 2013 May 31 % of No. of Shares Ordinary Shares Hony Capital 19.4% Hony Capital 335,076,453 19.4% Dr. Chen Yuhong 171,579,039 9.9% Dr. Chen Yuhong 9.9% Greater Pacific Capital 119,268,639 6.9% Far East Holdings 113,399,822 6.6% International Microsoft 97,250,000 5.6% GPC 6.9% Atlantis Investment 87,000,000 5.0% Management Far East 6.6% Others Atlantis Microsoft 5.6% 5.0% *As of 2013 May 31 Total 801,216,706 46.5% 1,724,790,659 100.0% 38