China Information Technology Development Limited — Earnings Release 2005

Nov 10, 2005

GEM

XTEAM SOFTWARE<08178> - Results Announcement

Xteam Software International Limited announced on 10/11/2005:
(stock code: 08178 )
Year end date: 31/12/2005
Currency: HKD
Auditors' Report: N/A
Interim report reviewed by: Audit Committee

Important Note:

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

                                                    (Unaudited )
                                 (Unaudited )       Last
                                 Current            Corresponding
                                 Period             Period
                                 from 01/01/2005    from 01/01/2004
                                 to 30/09/2005      to 30/09/2004
                           Note  ('000      )       ('000      )

Turnover 2 : 38,735 33,056
Profit/(Loss) from Operations : 7,496 (17,847)
Finance cost 3 : (146) (34)
Share of Profit/(Loss) of
Associates : N/A N/A
Share of Profit/(Loss) of
Jointly Controlled Entities : N/A N/A
Profit/(Loss) after Tax & MI : 4,260 (18,894)
% Change over Last Period : N/A %
EPS/(LPS)-Basic (in dollars) 5 : 0.0011 (0.0137)
-Diluted (in dollars) : N/A (0.0137)
Extraordinary (ETD) Gain/(Loss) : N/A N/A
Profit/(Loss) after ETD Items : 4,260 (18,894)
3rd Quarter Dividend : N/A N/A
per Share
(Specify if with other : N/A N/A
options)

B/C Dates for
3rd Quarter Dividend : N/A
Payable Date : N/A
B/C Dates for (-)
General Meeting : N/A
Other Distribution for : N/A
Current Period

B/C Dates for Other
Distribution : N/A

For and on behalf of 
Xteam Software International Limited

Name : Lee May Lun, Janice
Title : Company Secretary

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 Hong Kong Institute of Certified Public Accountants ("HKICPA") has
converged all Hong Kong Financial Reporting Standard ("HKFRSs") with
International Financial Reporting Standard ("IFRSs") issued by the
International Accounting Standard Board at 1 January 2005. As a result,
the HKICPA has aligned HKFRSs with the requirements of IFRSs in all
material respects. The unaudited financial statements have been
prepared in accordance with accounting principles generally accepted
in Hong Kong, accounting standards issued by the HKICPA, and the
disclosure requirements of Rules Governing the Listing of Securities
on the GEM of the Stock Exchange (the "GEM Listing Rules"). They have
been prepared under the historical cost convention.

The principal accounting policies and methods of computation used in
the preparation of the unaudited quarterly financial statements are
consistent with those adopted in the latest annual financial statements
of the Group. In 2005, the Group has adopted all HKFRSs pertinent to
its operation and the 2004 unaudited financial statements have been
restated in accordance with the relevant requirements.

The adoption of HKFRS 3, HKAS 36 and HKAS 38, which was also early
adopted in the audited financial statement for the nine months ended
31 December 2004, has resulted in a change in the accounting policy
for goodwill. Prior to this, goodwill was:

• amortised on a straight-line basis over a period of not exceeding
  20 years; and

• assessed for impairment at each balance sheet date.

In accordance with the provisions of HKFRS 3:

• the Group ceased amortization of goodwill from 1 April 2003;

• accumulated amortization as at 31 March 2003 has been eliminated
  with corresponding decrease in the cost of goodwill;

• from the year ended 31 March 2004 onwards, goodwill is tested
  annually for impairment, as well as when there are indication of
  impairment.

As a result, a prior year adjustment has been made for the year ended
31 March 2004 and, certain comparative amounts have been restated to
conform with the current periods presentation.

1. TURNOVER AND OTHER 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.

Turnover consisted of:

                  Three months ended          Nine months ended
                      30 September               30 September
                    2005          2004          2005          2004
             (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
                 HK$'000       HK$'000       HK$'000       HK$'000

Sales of
computer software - 3,154 - 3,154
Income from software
development and
system integration 9,929 25,654 30,225 29,902
Technical support and
maintenance 3,594 - 8,510 -
-------------------------------------------------
13,523 28,808 38,735 33,056
=================================================

Revenue from the following activities have been included in other
revenue:

                    Three months ended         Nine months ended
                        30 September              30 September
                    2005          2004          2005          2004
             (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
                 HK$'000       HK$'000       HK$'000       HK$'000

Government
subsidies 977 194 2,683 451

Written back of
unclaimed payables - - - 659

Others - - 10 174

                  ------------------------------------------------ 
                    977          194        2,693         1,284
                  ================================================

1. FINANCE COSTS

Finance costs include interest expense paid to Beijing Development(Hong
Kong)Limited("Beijing Development"), its intermediate holding company,
for the three months and nine months ended 30 September 2005, which
amounted to approximately HK$108,000 and HK$205,000 respectively.
No interest expense was paid to Beijing Development for the three
months and nine months ended 30 September 2004.

1. TAX

(i) No provision for profits tax has been made as no income was earned
or derived from Hong Kong during the period.

(ii) No provision for profits tax has been provided in respect of the
Cayman Islands or the British Virgin Islands as there were no
assessable tax for the period in those jurisdictions.

(iii) The tax expenses during the period represent tax charges on the
assessable profits of certain subsidiaries operating in the PRC
calculated at the applicable rates. Certain of the subsidiaries in
the PRC enjoy tax exemptions.

(iv) No deferred tax asset has been recognized due to the
unpredictability of future profit streams.

1. EARNINGS/(LOSS) PER SHARE

The calculation of basic earnings per share for the three months and
nine months ended 30 September 2005 is calculated based on the Group's
unaudited profit attributable to equity holders of the parent of
approximately HK$1,118,000 and HK$4,260,000, respectively (2004:profit
of approximately HK$7,486,000 and loss of HK$18,894,000, respectively),
and on 3,758,471,752 shares in issue during the periods
(2004: 2,725,543,728 shares and 1,375,465,210 shares, respectively).

Diluted earnings per share for the three months and the nine months
ended 30 September 2005 have not been disclosed as the outstanding
options had an anti-dilutive effect on the basis earnings per share for
the current periods.

The comparative diluted earnings per share for the nine months ended
30 September 2004 is based on the weighted average number of
1,377,001,795 shares, taking into account the ordinary shares
deemed to be issued if all outstanding options had been exercised
at the date they were granted.

The comparative diluted earnings per share for the three months ended
30 September 2004 has not been disclosed as the outstanding options
had an anti-dilutive effect on basic earnings per share.

1. COMPARATIVE FIGURES

Certain comparative figures have been reclassified to conform with
current period's presentation.