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iSoftStone
iSoftStone-Huawei Joint Venture
Investor Briefing
September 4, 2012
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Safe Harbor Statement
The following presentation has been prepared by iSoftStone Holdings Limited (“iSoftStone” or the “Company”) solely for informational purposes and is not an offer to buy or sell or a solicitation of an offer to buy or sell any securities or instrument or to participate in any trading strategy. The information included herein was obtained from various sources, including certain third parties, and has not been independently verified. No representation or warranty, expressed or implied, is made and no reliance should be placed on the accuracy, fairness or completeness of the information or sources presented or contained in these materials or with respect to the terms of any future offer of securities conforming to the terms hereof. Any such offer of securities would be made pursuant to an effective registration statement and prospectus prepared by the Company that would contain material information not contained herein and to which any prospective purchasers are referred. In the event of any such offering, this information shall be deemed superseded, amended and supplemented in its entirety by such prospectus. Such prospectus will contain all material information in respect of any securities offered thereby and any decision to invest in such securities should be made solely in reliance on such prospectus. By viewing or accessing the information contained in this material, the recipient hereby acknowledges and agrees that neither the Company nor any of the representatives of the Company accepts any responsibility for or makes any representation or warranty, express or implied, with respect to the truth, accuracy, fairness, completeness or reasonableness of the information contained in, and omissions from, these materials and that neither the Company nor any of its affiliates, advisers or representatives accepts any liability whatsoever for any loss howsoever arising from any information presented or contained in these materials. The information presented or contained in these materials is subject to change without notice and its accuracy is not guaranteed.
These materials are highly confidential, are being given solely for your information and for your use and may not be copied, reproduced, redistributed or passed on, directly or indirectly, to any other person in any manner. Unauthorized copying, reproduction or redistribution of these materials into the United States or to any United States person (as defined in Regulation S under the United States Securities Act of 1933, as amended) or to any other third party in any country (including any journalist) could result in a substantial delay to, or otherwise prejudice, the success of any future offering. By viewing or accessing the information contained in these materials, you hereby acknowledge and agree to keep the contents of this presentation and these materials confidential and you acknowledge and agree that such presentation and materials form a part of the Confidential Information, as defined in the confidentiality agreement previously executed by you and/or any organization or entity you represent. No part of these materials may be retained following this presentation. By viewing, accessing or participating in this presentation, you agree to be bound by the foregoing limitations.
These materials do not contain all relevant information relating to the Company or its securities, particularly with respect to the risks and special considerations involved with an investment in the securities of the Company, and these materials are qualified in their entirety by reference to the detailed information appearing in the prospectus. Furthermore, certain statements in this presentation, and other statements that the Company may make, may contain forward-looking statements with respect to the Company’s future financial or business performance, strategies or expectations. The Company cautions that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. The Company assumes no duty to and does not undertake to update any forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could materially differ from historical performance.
iSoftStone |
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Summary of JV
iSoftStone and Huawei entered into a partnership/JV agreement on September 4, 2012
Vision of JV: To build a leading IT service provider in the global Technology &
Communication (T&C) industry
Definition of T&C: Telecommunications carriers, telecommunications equipment
manufacturers, e-commerce and internet companies, and makers
of computer software, semiconductors, and computer peripherals
Formation and Operation: JV’s formation starts immediately. JV will officially start operation in
January, 2013
Registered Capital: RMB 100 million (75 million from iSoftStone, 25 million from Huawei)
Ownership Structure: iSoftStone owns 75%; Huawei owns 25%
Board Structure: 3 Directors from iSoftStone; 2 Directors from Huawei
Management Team: iSoftStone appoints CEO, CFO, COO, CHO
Huawei appoints Financial Controller of JV, Vice General Manager
and Chief Quality Officer of JV’s Huawei-related business
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Contributions to JV by iSoftStone and Huawei
iSoftStone
Huawei
iSoftStone contributes its T&C Business to JV
Including:
• Existing Huawei business
• Selected non-Huawei T&C business
Excluding:
• Certain specific clients agreed to between the parties
• Product distribution and system integration services to non-T&C clients
• iSoftStone’s US business
Non-Huawei Business: JV will grow non-Huawei client business revenues to 50% of JV’s total revenues by the end of 2015
Minimum Services to Purchase from JV: totaling $443 million in next 3 years
in US$ million
103 150 190
2013 2014 2015
Billing Rate: increase in billing rate
DSO: shortening of payment cycle
Profit Allocation: iSoftStone is entitled to 100% of the JV’s profit in 2003 and 75% thereafter
After 2015: will have good-faith discussions on Huawei’s purchase commitment
iSoftStone
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iSoftStone Business Structure
Pre-JV
iSoftStone
BFSI Business (Banking, Financial Services & Insurance)
ETP Business (Energy, Transportation & Public)
Other Business
T&C Business
T&C US
Huawei
T&C China
T&C Japan
T&C Europe
Post-JV
iSoftStone
BFSI Business (Banking, Financial Services & Insurance)
ETP Business (Energy, Transportation & Public)
Other Business
T&C Business
T&C US
T&C Retained
JV
Huawei
T&C China
T&C Japan
T&C Europe
iSoftStone
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JV Brings iSoftStone Significant Strategic Value
Secures a long-term, sizable business account so we are more focused and more resilient in today’s challenging macro environment
Incorporates Huawei’s domain knowledge in the technology and communications industry to deepen our own domain expertise
Provides significant cross-selling opportunities to diversify our client base
Benefits from Huawei’s global footprint and relationships to help us develop overseas markets, including Europe and Asia-Pacific region
iSoftStone
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JV Is Financially Attractive
Ensures minimum revenue commitments from Huawei for the next 3 years with very attractive growth rate
Receives favorable terms in billing rates and payment terms
During the first 3 years, all JV’s profits will be reinvested into the business. In 2013, iSoftStone is entitled to 100% of the profit allocation
Expects more local business incentives, tax benefits, and new business opportunities
iSoftStone
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JV Has Several Operational Benefits
Provides us access to Huawei’s best practices in management and R&D
Expects improvement in delivery quality and operational efficiency
Provides us with experience in managing and competing for larger scale engagements
Creates SG&A leverage through business scale and management focus
iSoftStone
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Proposed JV Leadership Structure
Board
iSoftStone:3 / Huawei:2
CEO
COO CHO CFO Financial Controller
Huawei Business Division Non-Huawei Business Division Region/City Offices
General Manager General Manager
Legend
Vice General Vice General
Manager Manager iSoftStone Designation
Chief Quality Officer Chief Quality Officer (CQO) (CQO) Huawei Designation
iSoftStone
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JV is a Great Fit & Potential Game Changer for iSoftStone
This JV provides iSoftStone with a compelling value proposition strategically, financially, and operationally
JV’s formation and operation are expected to be rather smooth, because we have been working with Huawei for many years
This T&C focused JV, together with our BFSI and ETP verticals, will accelerate our pace to achieve US$ 1 billion in revenue
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iSoftStone
THANKS!