China Information Technology Development Limited — Earnings Release 2003

Feb 13, 2003

GEM

XTEAM SOFTWARE<08178> - Results Announcement (Q3, 2002/2003, Summary)

Xteam Software International Limited announced on 12/02/2003
(stock code: 08178 )

Year end date :31/03/2003
Currency :HKD
Auditors' report :N/A
Review of 3rd Quarterly Report by :Audit Committee

Important Note :

This result announcement form only contains extracted information from
and should be read in conjunction with the detailed results announcement
of the issuer, which can be viewed on the GEM website at
http://www.hkgem.com

                                      (Unaudited)      (Unaudited)
                                     Current    Last Corresponding
                                           Period           Period
                                  from 01/04/2000  from 01/04/2001
                                    to 31/12/2002    to 31/12/2001
                                            $'000            $'000

Turnover : 30,110 19,273
Profit/(Loss) from Operations : 2,756 3,861
Finance cost : (141) (36)
Share of Profit/(Loss) of Associates : N/A N/A
Share of Profit/(Loss) of Jointly
Controlled Entites : N/A N/A
Profit/(Loss) after Taxation & MI : 1,987 3,825
% Change Over the Last Period : -48.05%
EPS / (LPS)
Basic (in dollar) : HKD 0.0035 HKD 0.0084
Diluted (in dollar) : HKD 0.0033 HKD 0.0076
Extraordinary (ETD) Gain/(Loss) : N/A N/A
Profit (Loss) after ETD Items : 1,987 3,825
3rd Quarterly Dividends per Share : NIL NIL
(specify if with other options) : N/A N/A
B/C Dates for 3rd Quarterly Dividends : N/A
Payable Date : N/A
B/C Dates for (-) General Meeting : N/A
Other Distribution for Current Period : NIL
B/C Dates for Other Distribution : N/A
(bdi: both days inclusive)

                                   For and on behalf of
                                   Xteam Software International Limited
                        Signature :
                             Name :    Mak To Wai
                            Title :      Director

Responsibility statement

The directors of the Company (the "Directors") as at the date hereof
hereby collectively and individually accept full responsibility for the
accuracy of the information contained in this results announcement form
(the "Information") and confirm, having made all reasonable inquiries,
that to the best of their knowledge and belief the Information are
accurate and complete in all material respects and not misleading and
that there are no other matters the omission of which would make the
Information herein inaccurate or misleading. The Directors acknowledge
that the Stock Exchange has no responsibility whatsoever with regard
to the Information and undertake to indemnify the Exchange against all
liability incurred and all losses suffered by the Exchange in connection
with or relating to the Information.

Remarks:
1.
Basis of presentation
The Company was incorporated as an exempted company with limited
liability in the Cayman Islands on 24th May, 2001 under the Companies
Law (2001 Second Revision) of the Cayman Islands. The shares of the
Company have been listed on GEM of the Stock Exchange since 11th
December 2001.

Pursuant to a group re-organization (the `Reorganization') in
preparation for the listing of the shares of the Company on GEM, the
Company became the holding company of the subsidiaries now comprising
the Group. Details of the Reorganization and corporate structure were
set out in the prospectus of the Company dated 30th November, 2001
(`Prospectus').

The Company is an investment holding company. The Group is
principally engaged in the provision of the Chinese Linux operating
system with kernel rewritten to cater for Chinese users and software
based on the Linux operating platform for various hardware appliances
including servers and personal computers in the PRC. It also provides
technical support and after-sales services to its customers.

2.
Turnover and revenue
Turnover represents the invoiced value of goods sold and services
rendered, net of value added tax and business tax in the PRC, and
after allowances for goods returned and trade discounts.

3.
Taxation
(i)
No provision for taxation in the Cayman Islands, the British Virgin
Islands and Hong Kong has been made as the Group had no income
assessable to tax for the period in those jurisdictions.

(ii)
Under the Income Tax Law of the People's Republic of China (the
`PRC'), pursuant to an approval document issued by the relevant PRC
tax authorities, the Company's subsidiary in the PRC is subject to
income tax at the rate of 15% as an advanced-technology enterprise.
The subsidiary in the PRC is exempted from income tax for the first
two profitable years of operations and thereafter is entitled to a
50% relief from income tax for the following three years subject to a
minimum overall tax rate of 10%. The subsidiary in the PRC has
submitted an application for the aforementioned preferential tax
exemptions.

(iii)
No provision for deferred taxation has been made as the Group had
overall deferred tax benefits which will be recognized when
realization of such benefits is assured beyond reasonable doubt.

4.
Earnings/(loss) per share
The calculation of basic earnings/(loss) per share for the nine
months and three months ended 31st December, 2002, respectively, is
based on the Group's unaudited profit/(loss) attributable to
shareholders of approximately HK$1,987,000 and HK$(1,062,000),
respectively (2001: profits of approximately HK$3,825,000 and
HK$853,000, respectively), and on the weighted average number of
568,402,108 shares and 577,377,910 shares, respectively, in issue
during the period (2001: 456,734,259 shares and
473,880,510 shares, respectively).

The calculation of diluted earnings/(loss) per share for the nine
months and three months ended 31st December, 2002 is based on the
Group's unaudited profit/(loss) attributable to shareholders
of approximately HK$1,987,000 and HK$(1,062,000), respectively
(2001: profits of approximately HK$3,825,000 and HK$853,000,
respectively), and the weighted average number of 610,002,108 shares
and 586,876,277 shares, respectively (2001: 502,097,700
shares and 519,243,951, respectively), taking into account the
options granted to certain executive directors of the Company and
employees of the Group to subscribe for a total of 91,000,000 shares
of the Company under the Pre-IPO Share Option Scheme.