China Information Technology Development Limited — Interim / Quarterly Report 2003

Nov 11, 2002

GEM

XTEAM SOFTWARE<08178> - Results Announcement (Q2, 2002/2003, Summary)

Xteam Software International Limited announced on 08/11/2002
(stock codes: Ord: 08178)

Year end date :31/03/2003
Currency :HKD
Auditors' report :N/A
Review of 2nd Quarterly Report by :Audit Committee & Auditors

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 01/04/2002   from 01/04/2001
                                     to 30/09/2002     to 30/09/2001
                                             $'000             $'000

Turnover : 15,504 13,340
Profit/(Loss) from Operations : 3,174 2,983
Finance cost : (125) (11)
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 : 3,049 2,972
% Change Over the Last Period : +2.59%
EPS / (LPS)
Basic (in dollar) : HKD 0.0054 HKD 0.0066
Diluted (in dollar) : HKD 0.005 N/A
Extraordinary (ETD) Gain/(Loss) : N/A N/A
Profit (Loss) after ETD Items : 3,049 2,972
2nd Quarterly Dividends per Share : NIL NIL
(specify if with other options) : N/A N/A
B/C Dates for 2nd 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

                                   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.

1. Principal accounting policies

The unaudited interim financial statements have been prepared in
accordance with Hong Kong Statement of Standard Accounting Practice
25 `Interim Financial Reporting', and on a basis consistent with the
accounting policies adopted by the Group in preparation of its
financial statements for the year ended 31st March, 2002.

The financial statements are prepared on historical convention and
in accordance with the disclosure requirements of the Hong Kong
Companies Ordinance and the GEM Listing Rules.

1. 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.

Turnover consisted of:
Three Six months
months ended 30th
ended 30th September,
September,
2002 2001 2002 2001
HK$'000 HK$'000 HK$'000 HK$'000
(Unaudited) (Unaudited) (Unaudited) (Unaudited)

Sales of 7,871 4,490 14,921 13,340
computer
software
Provision - - 583 -
of software
development
and related
services

         7,871        4,490        15,504       13,340

1. Profit before taxation

Profit before taxation was arrived at after crediting and charging
the following:

                      Three                     Six months  
                      months                    ended 30th  
                      ended 30th                September,  
                      September,                            
         2002         2001         2002         2001        
         HK$'000      HK$'000      HK$'000      HK$'000     
         (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited)

Crediting:
Interest 39 10 52 48
income on
bank
deposits

Charging:
Depreciation 97 95 190 181
of fixed
assets
Amortization 916 633 1,830 1,149
of
intangible
assets
Provision - 930 - 930
of bad
debts

1. 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.

1. Earnings per share

The calculation of basic earnings per share for the six months and
three months ended 30th September, 2002 is based on the Group's
unaudited profits after tax of approximately HK$3,049,000 and
HK$483,000, respectively (2001: HK$2,972,000 and HK$133,000,
respectively), and on the weighted average number of 561,233,231
shares and 572,093,882 shares, respectively, in issue during the
period (2001: 448,114,286 shares and 448,114,286 shares,
respectively).

The calculation of diluted earnings per share for the six months
ended 30th September, 2002 is based on the Group's unaudited profit
after tax of approximately HK$3,049,000 and HK$483,000, respectively,
and the weighted average number of 611,206,113 shares and 595,854,993
shares, 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. Diluted earnings per share figures
for the comparative periods are not shown as no dilutive events took
place in that period.

1. Dividend

The Board does not recommend the payment of an interim dividend for
the period (2001: Nil).