Neusoft Earns 29.35million yuan in the First Half of This Year

Business Adjustment ,Quarterly Deficit Reversed

Neusoft Co.,Ltd (stock no. 600718) the first software company listed on stock market, has achieved major takings of 930,287,025 yuan in the first half of this year, upped 4.58% compared with that of the same period of last year, according to its half-year report, published on August 23,2003. Neusoft successfully reversed the deficit trend of the first quarter this year, and achieved retained profits of 29,351,630 yuan.

Firstly, Neusoft has successfully overcome the unfavorable situation in solution market, which helps to further its Circling Digital Territory strategy. Besides its endeavor to expand its core business, and to increase its market share, Neusoft also strived to improve its core competitiveness and service quality, hoping to get a high degree of satisfaction from its various customers. Thus, its domestic solution business has maintained to develop contunally and stably.

Secondly, Neusoft has paid a special attention to the development of software export during its business structure adjustment. In the first half of this year, Neusoft has expanded the scale of its Japan-oriented business, and enlarged Neusoft-Japanese cooperation areas. Meanwhile, WORKFLOW, a workflow product has also been exported to the United States.

During these 6 months, profits made from software export have reached 8.12 million US dollars, with an increase of 37.63% compared with that of the same period of last year ,and with a share of 7.23% in the company smajor takings. Right now, companies like NEC, HITACHI, SONY, ALPINE, DAIWA and ALPS are all among Neusoft s stable customers.

Thirdly, Neusoft has emphasized to develop digital medical business and digital medical has become a new profit-making area. Neusoft strengthened the research and development of digital medical products, raised the ratio of quality to price and enhanced the core competitiveness of it. In this way, the products market share has increased and achieved the profits of 248 million, upped 99.

31% compared with that of the same period of last year, accounting for 26.26% in its major takings despite of the severe market competition. In addition, Neusoft has successfully exported CT and MRI products to the United States.

At the same time, Neusoft strengthened the management of internal operation and improved management quality. Firstly, it strengthened the construction of a internal information system, which effectively promoted the improvement of its management quality.

Secondly, it has set up a customer service center at its headquarter. Cored with it, Neusoft established a nation wide customer service system.

Thirdly, it has also put a special emphasis on human resource management. Neusoft has a strict control over the number of its employees, and tries to improve per capita output. In this way, it got a reasonable distribution of employees in the whole industry, an improved structure of human resource as well as a controlled growing personnel cost.

Fourthly, it has effectively controlled the growing company cost. Period cost went up 14,119,862 yuan more than the same period of last year. But the increase rate of 6.62% is lower than that of 49% during the first half of last year, lower than that of 28% throughout the whole last year.

Fifthly, it strengthened its control over the execution of contracts, and paid more attention to the funds to get back. Thus, though Neusoft expanded its business scale, it still slowed down the growing trend of that effectively. Compared with that of the same period of last year, the number of these funds to get back only increased by 1.97%. It greatly lowered the company s funds risk.

Neusoft s profit structure indicates that the strategy of business adjustment has begun to show its benefits. Moreover, a series of active and effective measures Neusoft employed have also improved its business operation in the first half of this year.