NetSol Achieves 50% Increase in Net Revenues


Najeeb Ghauri

Calabasas, CA: NetSol Technologies, Inc., "NetSol" (NASDAQ:NTWK), a multinational provider of enterprise software and services for equipment financing, has announced financial results for its fiscal year end, June 30, 2006.
"Fiscal year 2006 was an exciting time in the history of NetSol and significant in our success was the support of our long-term investors and business partners," said NetSol CEO Naeem Ghauri. "In year over year comparables, the company's projected increase in net revenues is a positive indicator that our September 11, 2006 fiscal year 2007 guidance of approximately $30 million, a 60 percent increase in revenue growth, is on target."
In fiscal year 2006, NetSol successfully integrated one acquisition in the UK, completed the acquisition of Silicon Valley-based McCue Systems, dramatically expanded the company's global footprint, and development center, NetSol Technologies, Ltd., achieved the rare honor of a CMMI Level 5 rating by the Carnegie Mellon University Software Engineering Institute, a gold standard placing NetSol in a very selective group of 100 preferred global software providers.
"The financial challenge of investing in global growth inevitably shows a reflection on certain aspects of a company's bottom line," commented NetSol CFO Tina Gilger. "Considering the time and resources spent on the following activities during the year, our acquisition of McCue Systems and CQ Systems, a natural disaster in one of our key operating areas in the second quarter, the hiring of more than 90 technical personnel, the creation of five new business divisions and, the opening of several new sales offices in emerging markets including the Peoples Republic of China, we remain very confident in our September guidance for strong revenue growth and improved margins in 2007."
"The normal encumbrances of organic growth and the brand awareness campaigns for NetSol-UK and NetSol-US combined with the expenses associated with enhancement procurements for the infrastructure of new operations, including our newly acquired development centers of CQ Systems in the UK, and McCue Systems in the US, a support team in Beijing, China, and Adelaide, Australia, have produced some predictable short-term losses," said CFO Gilger. "The additional costs of maintaining our corporate governance at the highest standard through training and increased third party audits were also expected in positioning the company as a true global provider."
2006 Fiscal Year End Highlights:
• Net revenues for the year ended June 30, 2006 were $18,690,412, as compared to $12,437,653 for the year ended June 30, 2005, an approximate 50 percent increase in net revenues year over year.
• Gross profit was $9,669,894 for the year ended June 30, 2006, as compared to $7,682,904 for the fiscal year 2005, a 26 percent increase in year over year comparables.
• Legacy applications: As the company sells more software licenses; management believes it is possible that the margins could increase as high as 70 percent.
• The cash payment of $1,968,339 to CQ Systems' shareholders for the final payment of the acquisition was made on July 5, 2006.
"The dedication of NetSol management and financial resources in fiscal 2006 to grow beyond a regional presence in several countries to an enterprise provider that can service customers anywhere in the world has been a substantial task," said NetSol Technologies Chairman, Najeeb U. Ghauri, "Having gained our new, hard-earned status in the world marketplace, we are now committed in fiscal 2007 to a solidification of our assets and a refinement of our operations that will increase profitability and shareholder value. NetSol is now a global solution provider, with regional solutions for our customers in North America, Europe and Asia Pacific.
"NetSol is a strategic business partner for DaimlerChrysler Financial Services, which accounts for approximately 11 percent and 20 percent of revenue for our fiscal year end of 2006 and 2005, respectively, and Toyota Leasing which accounts for approximately 12 percent and 35 percent of revenue for our fiscal year end of 2006 and 2005, respectively," continued Chairman Ghauri. "While increasing our revenues from these partners year over year, the acquisitions of CQ Systems and McCue Systems have provided NetSol with a wide diversification of customers that further secures our business and makes us less dependent on any single partner to produce revenues and income.”
2006 Year to Date Highlights for NetSol:
• NetSol Chairman Najeeb U. Ghauri rings closing bell at NASDAQ before global audience.
• NetSol featured in Lehman Brothers analytical Computer Services Sector Report of August 15, 2006.
• NetSol integrates LeasePak at City National Bank.
• NetSol implements end to end LeaseSoft solutions at Toyota Leasing Thailand and signed a new license agreement with Toyota and Daimler offices in China.
• NetSol received coveted Level 5 rating by the Carnegie Institute honoring the company as a global preferred software provider. Less than 100 companies in the world have achieved this distinction including IBM, GE, and Microsoft.
• NetSol expands operations to include: the Peoples Republic of China, the United Kingdom, the United States, Pakistan, and penetrates new markets in South Africa, Europe, and the Asia-Pacific rim.
• NetSol Technologies, Ltd. in Pakistan launched five new divisions to leverage its position and gain from the expansion of IT services due to privatization and economic growth.
• NetSol founders purchase shares of stock in the open market.
• NetSol acquires McCue Systems in the US
• NetSol integrates CQ Systems acquisition of 2005 into daily operations
• NetSol assembles a formidable and highly seasoned management team across the globe both through acquisitions and new hiring
• NetSol attracted five new institutional investors representing approximately15 percent ownership in the company.
• NetSol's Technology Campus, inaugurated in Lahore, Pakistan in May 2004, which consists of 50,000 square feet of computer and general office space dedicated for IT and software development (the first of its kind in Pakistan), signed a strategic alliance agreement with the IT ministry of Pakistan to convert the technology campus into a technology park.
About NetSol Technologies, Inc.
NetSol Technologies is a U.S.-based multinational provider of enterprise software and services for equipment finance. Headquartered in Calabasas, CA, NetSol Technologies, Inc. operates on a global basis with locations in the U.S., Europe, East Asia and Asia Pacific, including: London, Los Angeles, San Francisco, Sydney, Beijing, Toronto, and Lahore, Pakistan.
The Netsol family of products includes: the LeaseSoft Contract Management System, LeaseSoft Credit Application Processing, LeaseSoft Wholesale Finance System, LeaseSoft Premium Finance System, LeaseSoft EPO system, and the LeasePak system. NetSol clients include: Motorola, CitiGroup, BMW, Toyota, Yamaha, Quest Communications, and Investec. Netsol's largest customer: Daimler-Chyrsler Services, a division of Daimler-Chrysler, the worlds' fifth largest carmaker, ranks NetSol as a preferred vendor in 40-plus countries.
NetSol Technologies helps its clients identify, evaluate and implement technology solutions to meet their strategic business challenges and maximize their bottom line. By utilizing its worldwide resources, NetSol Technologies delivers high-quality, cost-effective equipment finance portfolio management solutions and IT services ranging from consulting and application development to systems integration and outsourcing. NetSol Technologies' commitment to quality is demonstrated by its achievement of both ISO 9001 and SEI (Software Engineering Institute) CMMl (Capability Maturity Model) Level 5 assessment. For more information, visit NetSol Technologies' web site at www.netsoltek.com.

CONTACTS:
Investor Relations Counsel:
Marty Tullio
McCloud Communications, LLC
949.553.9748
marty@McCloudCommunications.com


NetSol Technologies Inc:
Najeeb U. Ghauri, Chairman, or Tina Gilger, CFO
818.222.9195
najeeb@netsoltek.com
tina@netsoltek.com

 


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Editor: Akhtar M. Faruqui
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