China National Software & Service Company (600536) investor relations material

Executive summary

• Revenue for 2025 was ¥5.10 billion, down 1.84% year-over-year; net loss attributable to shareholders narrowed 89.96% to ¥41.41 million, reflecting improved profitability from business transformation and enhanced earnings in core government application solutions.

• Total assets increased 30.27% to ¥11.14 billion; net assets attributable to shareholders rose 72.45% to ¥3.59 billion, mainly due to a private placement and minority shareholder capital injection in a key subsidiary.

• The company focused on core businesses: foundational software (notably the Kylin OS) and government application solutions, with continued investment in R&D and market expansion in critical sectors such as tax, finance, customs, and utilities.

Financial highlights

• Operating income: ¥5.10 billion, down 1.84% year-over-year; operating profit: ¥282.74 million, up 78.34%.

• Net loss attributable to shareholders: ¥41.41 million, a significant reduction from ¥412.64 million loss in 2024.

• Basic and diluted EPS: -¥0.05, up from -¥0.48 in 2024.

• Gross margin for foundational software: 81.13% (down 4.66pp); for government solutions: 23.56% (up 5.24pp).

• Cash flow from operations: ¥685.44 million, up 9.45% year-over-year.

• R&D investment: ¥1.14 billion, 22.38% of revenue; 36.5% of R&D was capitalized.

Outlook and guidance

• 2026 revenue target set at ¥5.5 billion, with cost controls to maintain reasonable expense ratios.

• Strategic focus on AI-driven digital transformation, expanding foundational software market share, and deepening government and enterprise solutions.

• Industry trends highlight robust growth in software and IT services, with AI and data integration as key drivers.