China Information Technology Development Limited — Interim / Quarterly Report 2016

May 12, 2016

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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(incorporated in the Cayman Islands with limited liability) (Stock Code: 8178)

2016 FIRST QUARTERLY RESULTS ANNOUNCEMENT

The Board of Directors (the “ Board ”) of China Information Technology Development Limited (the “ Company ”) is pleased to announce the unaudited results of the Company and its subsidiaries for the three months ended 31 March 2016. This announcement, containing the full text of the 2016 first quarterly report of the Company, complies with the relevant requirements of The Rules (“ GEM Listing Rules ”) Governing the Listing of Securities on The Growth Enterprises Market (“ GEM ”) of The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”) in relation to information to accompany preliminary announcements of quarterly results. Printed version of the Company’s 2016 first quarterly report will be delivered to the shareholders of the Company and available for viewing on the websites of the Stock Exchange at www.hkexnews.hk and of the Company at www.chinainfotech.com.hk on or before 16 May 2016.

By order of the Board China Information Technology Development Limited Wong Kui Shing, Danny Chairman and Chief Executive Officer

Hong Kong, 12 May 2016

As at the date of this announcement, the Board comprises Mr. Wong Kui Shing, Danny (Chairman and Chief Executive Officer), Mr. Tse Chi Wai, Ms. Wu Jingjing, Mr. Takashi Togo and Mr. Wong Chi Yung as executive Directors; Mr. Hung Hing Man, Mr. May Tai Keung, Nicholas and Dr. Chen Shengrong as independent non-executive Directors.

This announcement, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the GEM Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this announcement is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this announcement misleading.

This announcement will remain on the GEM website at www.hkgem.com on the “Latest Company Announcements” page for seven days from the date of its publication and on the website of the Company at www.chinainfotech.com.hk.

CHARACTERISTICS OF THE GROWTH ENTERPRISE MARKET (“GEM”) OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE “STOCK EXCHANGE”)

GEM has been positioned as a market designed to accommodate companies to which a high investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors.

Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board and no assurance is given that there will be a liquid market in the securities traded on GEM.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this report, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this report.

This report, for which the Directors of the Company collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on the Growth Enterprise Market of the Stock Exchange for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this report is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this report misleading.

This report will be available on the Company’s website http://www.chinainfotech. com.hk and will remain on the “Latest Company Report” page on the GEM website at http://www.hkgem.com for at least 7 days from the date of its posting.

CONTENTS

Corporate Information	2
Management Discussion and Analysis	3
Condensed Consolidated Statement of Profit or Loss	6
Condensed Consolidated Statement of Profit or Loss
and Other Comprehensive Income	7
Notes to Condensed Consolidated Financial Statements	8
General Information	14
Corporate Governance	17

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED FIRST QUARTERLY REPORT 2016

1

CORPORATE INFORMATION EXECUTIVE DIRECTORS

LEGAL ADVISOR

Mr. Wong Kui Shing, Danny (Chairman and Chief Executive Officer)

Mr. Tse Chi Wai

Ms. Wu Jingjing

Mr. Wong Chi Yung

Mr. Takashi Togo

INDEPENDENT NON-EXECUTIVE DIRECTORS

Mr. Hung Hing Man Mr. May Tai Keung, Nicholas Dr. Chen Shengrong

Conyers Dill & Pearman

PRINCIPAL BANKERS

The Hongkong and Shanghai Banking Corporation Limited United Overseas Bank Limited DBS Bank (Hong Kong) Limited

HEAD OFFICE AND PRINCIPAL PLACE OF BUSINESS

Suite No. 5A, 9/F., Sino Plaza 255-257 Gloucester Road Hong Kong

COMPANY SECRETARY

REGISTERED OFFICE

Mr. Tse Chi Wai

COMPLIANCE OFFICER

Mr. Tse Chi Wai

Cricket Square Hutchins Drive, P.O. Box 2681 Grand Cayman KYI-1111 Cayman Islands

AUTHORISED REPRESENTATIVES

Mr. Wong Kui Shing, Danny Mr. Tse Chi Wai

NOMINATION COMMITTEE

Mr. Hung Hing Man (Chairman) Mr. May Tai Keung, Nicholas Dr. Chen Shengrong

REMUNERATION COMMITTEE

Mr. May Tai Keung, Nicholas (Chairman) Mr. Hung Hing Man Dr. Chen Shengrong

AUDIT COMMITTEE

PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICE

Royal Bank of Canada Trust Company (Cayman) Limited

4th Floor, Royal Bank House 24 Shedden Road, George Town Grand Cayman KYI-1110 Cayman Islands

HONG KONG BRANCH SHARE REGISTRAR AND TRANSFER OFFICE

Computershare Hong Kong Investor Services Limited 17th Floor, Hopewell Centre 183 Queen’s Road East, Hong Kong

Mr. Hung Hing Man (Chairman) Mr. May Tai Keung, Nicholas Dr. Chen Shengrong

AUDITOR

ZHONGHUI ANDA CPA Limited

GEM STOCK CODE

8178

WEB-SITE ADDRESS

www.chinainfotech.com.hk

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED FIRST QUARTERLY REPORT 2016

2

SUMMARY

• Turnover for the three months ended 31 March 2016 was HK$1,868,000, representing a decrease of 71.2% from the corresponding period in last year (2015: HK$6,479,000).

• Loss attributable to owners of the Company for the three months ended 31 March 2016 amounted to HK$9,855,000 (2015: HK$4,242,000).

• Loss per share attributable to owners of the Company for the three months ended 31 March 2016 was HK0.25 cents (2015: HK0.16 cents).

• The Board of Director (the “Board”) does not recommend the payment of an interim dividend for the three months ended 31 March 2016 (2015: Nil).

MANAGEMENT DISCUSSION AND ANALYSIS

Business review

There were two matters initiated in late 2015 that are now completed.

In November 2015, Giant Prestige Investments Limited (the “Purchaser”), a wholly owned subsidiary of the Company, entered into an agreement with three independent third parties (the “Vendors”) pursuant to which the Purchaser conditionally agreed to purchase and the Vendors conditionally agreed to sell 100% of the issued share capital of the Joyunited Investments Limited (“Joyunited”) and all obligations, liabilities and debts owing or incurred by the Joyunited to the Vendors on or at any time prior to the completion at the aggregate consideration of RMB178 million (equivalent to approximate HK$215 million) (the “Acquisition”). The transactions were duly passed as ordinary resolutions of the Company at the extraordinary general meeting held on 10 March 2016. More details on the Acquisition had been disclosed in the relevant announcement dated 25 November 2015 and the circular dated 23 February 2016. The Acquisition had been completed on 7 April 2016.

In December 2015, the Company and Kingston Securities Limited, as the placing agent, entered into the placing agreement, pursuant to which, subject to the approval of the shareholders of the Company at the extraordinary general meeting on 7 April 2016, the Company will place up to 1,830,792,000 new shares of the Company to not less than six independent placees at a price of HK$0.13 each on a best effort basis and raise a maximum net proceeds of approximately HK$230 million. It was expected that the net proceed will be: HK$73 million for the refurbishment of and operation of the business in the PRC Properties, the Company would have approximately HK$69 million for the general working capital and approximately HK$88 million for the projects that are currently in progress. The transactions were duly passed as ordinary resolutions of the Company at the extraordinary general meeting held on 7 April 2016. More details on the placement had been disclosed in the relevant announcement of the Company dated 8 December 2015 and the circular dated 18 March 2016. The placement had been completed on 9 May 2016.

3 CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED FIRST QUARTERLY REPORT 2016

Other than the above, during the period under review, revenue from provision of information technology related services in the People’s Republic of China (“PRC”) remained as staple income of the Group.

Outlook and Prospect

Currently, the Pantosoft operation is the main revenue and income drivers of the Group. The Group has also acquired equity interest in two associates in the field of big data analysis and surveillance monitoring.

The Company has also signed a joint venture agreement with Nihon Unisys, Ltd., a market leader in the field of system integration in Japan, with a business objective to promoting and selling Japanese products and related businesses (including and not limited to advertising and consulting services) in the PRC and as well as the ASEAN Countries.

The Acquisition had demonstrated the Company’s determination to broaden the business scope and diversify business of the Group and open up new income source, the Group through the Acquisition had acquired certain PRC office properties with a floor area of approximately 10,500 square meters that are located in the Tianhe area of Guangzhou, the PRC. This Acquisition allows the Group to extend its business footprints into the asset acquisition, management and consultancy services industry in the PRC as well as to build business network in the PRC. Furthermore, the Group is to refurbish the PRC office properties and occupy the same as the Group’s future headquarters in the PRC to tie up the existing and new businesses together and completes the whole strategic business development plan of the Group. In this nurturing ground where different businesses of the Group will be located, the resources and different knowledge gained from various businesses of the Group can be more efficiently utilised and shared. Together with the experience and knowledge of the Group in the IT field, the Group believes that the Acquisition can help further to equip the Group to further expand its existing and future businesses in the PRC and the ASEAN Countries.

With the aforesaid, the Company is fueled up and equipped so as to expand the Group’s footprint in the PRC market with the new headquarter in Guangzhou and the joint venture arrangement described in the above, together with the existing business and other new IT related projects to come in future.

Employees

The total number of full-time employees hired by the Group maintained at 142 as of 31 March 2016. (2015: 152 employees). Total expenses on employee benefits amounted to HK$5,755,000 for the three months ended 31 March 2016 (2015: HK$5,555,000). The management believes the salaries offered by the Group to its employees are competitive.

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED 4 FIRST QUARTERLY REPORT 2016

Financial review

For the three months ended 31 March 2016, the Group recorded a revenue of HK$1,868,000, a decrease of 71.2% from HK$6,479,000 for the corresponding period last year. Pantosoft had a relatively soft quarter for the first quarter of 2016 as compared to 2015.

The Group had a total cost of sales and services of HK$3,005,000 for the first quarter of year 2016, a decrease of 38% compared with HK$4,849,000 for the same period of year 2015. There was a fixed cost element of approximately HK$2.5 million for R&D costs charged as cost of sales and services for a quarter. Other than that, the decrease in cost of sales and services was a direct result of the decrease in revenue.

The gross loss of the Group for the first quarter of year 2016 was HK$1,137,000, compared with a gross profit of HK$1,630,000 for the corresponding period of last year as a result of insufficient gross profit from revenue to cover the fixed cost element mentioned above.

During the three months ended 31 March 2016, the Group generated other income and gains of HK$1,316,000 (2015: HK$930,000) which comprised: (i) bank interest income amounted to HK$2,000 (2015: HK$8,000); (ii) loans interest income amounted to HK$596,000 (2015: nil); (iii) investment income from financial assets at fair value through profit or loss amounted to HK$320,000 (2015: HK$246,000); (iv) government grants amounted to HK$221,000 (2015: HK$399,000); and (v) other income amounted to HK$177,000 (2015: HK$277,000).

The Group’s selling and distribution expenses for the first quarter of year 2016 was HK$1,673,000, which decreased by 35.7% compared with HK$2,602,000 for the corresponding period of year 2015. The decrease was mainly due to the fact that Pantosoft reduced its promotion activity efforts significantly this year.

Administrative expenses for the period were HK$5,536,000, representing an increase of 23.0% as compared to HK$4,500,000 for the corresponding period last year. The increase was mainly attributable to increase in staff cost and travelling expenses incurred to explore new markets.

The Group recorded a mark-to-market loss on held-for-sale investment securities of HK$3,746,000 for the period (2015: gain: HK$358,000).

The Group recorded a loss attributable to owners of the Company of HK$9,855,000 for the three months ended 31 March 2016 (2015: HK$4,242,000).

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED FIRST QUARTERLY REPORT 2016

5

The board (the “Board”) of directors (the “Directors”) of the Company announces the unaudited results of the Company and its subsidiaries for the three months ended 31 March 2016, together with the unaudited comparative figures for the corresponding period of year 2015, as follows:

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS

OR LOSS
				Three months ended
				31	March
				2016		2015
				(Unaudited)		(Unaudited)
		Notes		HK$’000		HK$’000
Revenue		3		1,868		6,479
Cost of sales and services				(3,005)		(4,849)
Gross (loss)/profit				(1,137)		1,630
Other income and gains		3		1,316		930
Selling and distribution expenses				(1,673)		(2,602)
Administrative expenses				(5,536)		(4,500)
Other expenses				(107)		(269)
Fair value (loss)/gain on financial assets
at fair value through profit or loss				(3,746)		358
Finance costs		4		(20)		(13)
Share of results of associates				430		–
LOSS BEFORE TAX		5		(10,473)		(4,466)
Income tax expenses		6		–		–
LOSS FOR THE PERIOD				(10,473)		(4,466)
Attributable to:
Owners of the Company				(9,855)		(4,242)
Non-controllinginterests				(618)		(224)
				(10,473)		(4,466)
LOSS PER SHARE ATTRIBUTABLE TO
OWNERS OF THE COMPANY		7
Basic and diluted				HK0.25 cents		HK0.16 cents

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED FIRST QUARTERLY REPORT 2016

6

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

		Three months ended	Three months ended	Three months ended	Three months ended
		31 March
		2016			2015
		(Unaudited)		(Unaudited)
		HK$’000			HK$’000
LOSS FOR THE PERIOD		(10,473)			(4,466)
OTHER COMPREHENSIVE (LOSS)/INCOME FOR
THE PERIOD, NET OF INCOME TAX EXPENSES
Exchange differences on translation of
foreign operations		(50)			22
TOTAL COMPREHENSIVE LOSS FOR THE PERIOD		(10,523)			(4,444)
Attributable to:
Owners of the Company		(9,803)			(4,220)
Non-controllinginterests		(720)			(224)
		(10,523)			(4,444)

7 CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED FIRST QUARTERLY REPORT 2016

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of preparation

The unaudited condensed consolidated financial information is prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) (which include all Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (“HKASs”) and Interpretations) issued by the Hong Kong Institute of Certified Public Accountants, accounting principles generally accepted in Hong Kong and the disclosure requirements of the Rules Governing the Listing of Securities on the GEM of the Stock Exchange (the “GEM Listing Rules”).

The accounting policies and basis of preparation used in preparing the unaudited consolidated results are consistent with those used in the Company’s audited consolidated financial statements for the year ended 31 December 2015.

Basis of consolidation

The condensed consolidated financial statements included the condensed financial statements of the Company and its subsidiaries for the three months ended 31 March 2016. Adjustments are made to bring into line any dissimilar accounting policies that may exist. The results of subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. All income, expenses and unrealised gains and losses resulting from intercompany transactions and intercompany balances within the Group are eliminated on consolidation in full.

2. Operating segment information

The following table presents revenue and loss for the Group’s business segments for the three months ended 31 March 2016 and 2015. No further geographical segment information is presented as the majority of the Group’s customers and business operations are located in Mainland China.

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED FIRST QUARTERLY REPORT 2016 8

Reporting segment information

	Three months ended 31 March
	Software development and system integration Technical support and maintenance services In-house developed products Total 2016 2015 2016 2015 2016 2015 2016 2015 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Segment revenue: Sales to external customers Other income and gains	1,868 6,479 – – – – 1,868 6,479 221 639 – – – – 221 639
Reconciliation: Bank interest income Loans interest income Investment income from financial asset at fair value through profit or loss Unallocated gains	2,089 7,118 – – – – 2,089 7,118 2 8 596 s 320 246 177 37
Revenue, other income and gains	3,184 7,409
Segment loss Reconciliation: Bank interest income Loans interest income Investment income from financial asset at fair value through profit or loss Unallocated gains Corporate and other unallocated expenses Fair value (loss)/gain on financial assets at fair value through profit or loss Share of results of associates Finance costs	(4,041) (2,118) (54) – (108) (24) (4,203) (2,142) 2 8 596 – s 320 246 177 37 (4,029) (2,973) (3,746) 358 430 (20)
Loss before tax Income tax expenses	(10,473) (4,466) – –
Loss for the period	(10,473) (4,466)

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED FIRST QUARTERLY REPORT 2016

9

3. Revenue, other income and gains

Revenue, which is also the Group’s turnover, represents (1) an appropriate proportion of contract revenue from the provision of software development and system integration services, net of value-added tax, business tax and government surcharges; (2) the aggregate of the invoiced value of goods sold, net of value-added tax and government surcharges, and after allowances for returns and trade discounts; and (3) an appropriate proportion of contract revenue from the provision of the technical support and maintenance services, net of business tax and government surcharges.

An analysis of revenue, other income and gains is as follows:

		Three months ended	Three months ended	Three months ended
		31 March
		2016		2015
		(Unaudited)		(Unaudited)
		HK$’000		HK$’000
Revenue
Provision of software development and
system integration services		1,843		6,479
Provision of technical support and
maintenance services		25		–
		1,868		6,479
		Three months ended
		31 March
		2016		2015
		(Unaudited)		(Unaudited)
		HK$’000		HK$’000
Other income and gains
Bank interest income		2		8
Loans interest income		596		–
Investment income from financial assets at
fair value through profit or loss		320		246
Government grants		221		399
Others		177		277
		1,316		930

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED FIRST QUARTERLY REPORT 2016

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4. Finance costs

	Finance costs
			Three months ended
				31 March
				2016		2015
			(Unaudited)			(Unaudited)
			HK$’000			HK$’000
	Interest on other loans			8		–
	Interest on finance lease			12		13
				20		13
	Loss before tax
	Loss before tax was arrived at after charging the following:
			Three months ended
				31 March
				2016		2015
			(Unaudited)			(Unaudited)
			HK$’000			HK$’000
	Depreciation			315		204
	Amortisation of other intangible assets			–		56

5. Loss before tax

6. Income tax expenses

No provision for Hong Kong Profits Tax has been made for the three months ended 31 March 2016 as the Group did not generate any assessable profits arising in Hong Kong during the period (2015: Nil).

Under the Law of the PRC on Enterprise Income Tax (the “EIT Law”) and implementation Regulation of the EIT Law, the tax rate of subsidiaries of the Company in the PRC is 15% to 25% for both periods. No provision for PRC corporate income tax has been made for the three months ended 31 March 2016 as the company’s subsidiaries in PRC incurred tax losses during the period (2015: nil).

	Three months ended	Three months ended
	31 March
	2016	2015
	(Unaudited)	(Unaudited)
	HK$’000	HK$’000
Current – Hong Kong	–	–
Current – PRC	–	–
Total tax charge for the period	–	–

11 CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED FIRST QUARTERLY REPORT 2016

7. Loss per share for the period attributable to owners of the Company

• (a) Loss attributable to the owners of the Company:

		Three months ended	Three months ended	Three months ended
		31 March
		2016		2015
		(Unaudited)		(Unaudited)
		HK$’000		HK$’000
Loss for the purpose of calculating
basic and diluted loss per share		9,855		4,242

• (b) Weighted average number of ordinary shares:

	Three months ended	Three months ended
	31 March
	2016	2015
	(Unaudited)	(Unaudited)
Total number of ordinary shares in issue
at the end of theperiod	3,881,359,908	2,695,471,908
Weighted average number of ordinary
shares in issue during the period	3,881,359,908	2,695,471,908

No adjustment has been made to the basic earnings per share amounts presented for the periods ended 31 March 2016 and 2015 in respect of a dilution as the Group had no potentially dilutive ordinary shares in issue during those periods.

8. Dividend

The Board does not recommend the payment of an interim dividend for the three months period ended 31 March 2016 (2015: Nil).

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED FIRST QUARTERLY REPORT 2016

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9. Reserves

	Attributable to owners of the Company Share capital Share premium account Foreign currency translation reserve PRC reserve funds Retained earnings/ (Accumulated losses) Total Non- controlling interests Total equity (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
At 1 January 2015 Loss for the period Other comprehensive income – Exchange differences on translation of foreign operations	269,547 26,243 3,128 844 4,276 304,038 (1,070) 302,968 – – – – (4,242) (4,242) (224) (4,466) – – 22 – – 22 – 22
Total comprehensive gain/(loss) for the period	– – 22 – (4,242) (4,220) (224) (4,444)
At 31 March 2015	269,547 26,243 3,150 844 34 299,818 (1,294) 298,524
At 1 January 2016 Loss for the period Other comprehensive income/(loss) – Exchange differences on translation of foreign operations	388,136 69,212 3,015 844 (101,186) 360,021 (1,306) 358,715 – – – – (9,855) (9,855) (618) (10,473) – – 52 – – 52 (102) (50)
Total comprehensive gain/(loss) for the period	– – 52 – (9,855) (9,803) (720) (10,523)
At 31 March 2016	388,136 69,212 3,067 844 (111,041) 350,218 (2,026) 348,192

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED FIRST QUARTERLY REPORT 2016

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GENERAL INFORMATION

Directors’ service contracts

At 31 March 2016, none of the Directors had any existing or proposed service contract with the Company which is not determinable by the Company within one year without payment of compensation, other than statutory compensation.

Directors’ interests in contracts

No Director had a material interest, either directly or indirectly, in any contract of significance to the business of the Group to which the Company, or any of its subsidiaries or fellow subsidiaries was a party during the three months ended 31 March 2016.

Directors’ interests in shares and short positions in shares and

underlying shares

At 31 March 2016, the interests and short positions of the Directors in the share capital and underlying shares of the Company or its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (the “SFO”)), as recorded in the register required to be kept by the Company pursuant to section 352 of the SFO, or as other wise required pursuant to Rules 5.46 to 5.68 of the GEM Listing Rules to be notified to the Company and the Stock Exchange, were as follows:

(1) Long positions in ordinary shares of the Company:

						Percentage of
						the Company’s
				Number of		issued share
		Capacity and		ordinary		capital at
Name		nature of interest		shares held		31 March 2016
Mr. Wong Kui Shing, Danny		Through controlled corporation		388,131,449		10%

(2) Long positions in the share options of the Company: Nil

Save as disclosed above and in the section headed “Share Option”, as at 31 March 2016 and as at the date of this report, none of the Directors or chief executive had registered an interest or a short position in the shares, underlying shares or debentures of the Company or any of its associated corporations that was required to be recorded pursuant to Section 352 of the SFO, or as other wise required pursuant to Rules 5.46 to 5.68 of the GEM Listing Rules to be notified to the Company and the Stock Exchange.

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED FIRST QUARTERLY REPORT 2016

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Directors’ rights to acquire shares or debentures

Save as disclosed in the sections “Directors’ interests and short positions in shares and underlying shares” and “Share Option”, at no time during the three months ended 31 March 2016 and as at the date of this report were rights to acquire benefits by means of the acquisition of shares in or debentures of the Company granted to any Director or their respective spouses or minor children, or were any such rights exercised by them; or was the Company, or any of its subsidiaries or fellow subsidiaries a party to any arrangement to enable the Directors to acquire such rights in any other body corporate.

Substantial shareholders’ and other persons’ interests in shares

and underlying shares

At 31 March 2016, the following interests of 10% or more of the issued share capital of the Company were recorded in the register of interests required to be kept by the Company pursuant to Section 336 of the SFO:

Long positions in ordinary shares of the Company:

								Percentage of
								the Company’s
						Number of		issued share
			Capacity and			ordinary		capital at
Name		Notes	nature of interest			shares held		31 March 2016
Discover Wide			Directly beneficially owned			388,131,449		10%
Investments Limited
Mr. Wong Kui Shing,		(a)	Through controlled			388,131,449		10%
Danny				corporation

Notes:

(a) Mr. Wong Kui Shing, Danny was deemed to be interested in the 388,131,449 shares by virtue of his controlling interests in Discover Wide Investments Limited.

Save as disclosed above, as at 31 March 2016, no person, other than the Directors of the Company, whose interests are set out in the section “Directors’ interests and short positions in shares and underlying shares” above, had registered an interest or short position in the shares or underlying shares of the Company that was required to be recorded pursuant to Section 336 of the SFO.

15 CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED FIRST QUARTERLY REPORT 2016

Share option

On 11 April 2016, the Company granted a total of 323,448,000 share options with rights to subscribe for 323,448,000 ordinary shares of HK$0.1 each in the share capital of the Company under the New Share Option Scheme. A total of 105,984,000 share options were granted to directors of the Company. Details of the share options granted are as follows:–

Name of Grantees Position held with the Company	Number of share options
	Outstanding as at 1 January 2016 Granted during the period Outstanding as at 31 March 2016
Mr. Wong Kui Shing, Danny Executive Director and substantial shareholder of the Company 0 936,000 936,000 Mr. Tse Chi Wai Executive Director 0 32,328,000 32,328,000 Mr. Takashi Togo Executive Director 0 32,328,000 32,328,000 Mr. Wong Chi Yung Executive Director 0 32,328,000 32,328,000 Ms. Wu Jingjing Executive Director 0 2,016,000 2,016,000 Mr. Hung Hing Man Independent non-executive Director 0 2,016,000 2,016,000 Mr. May Tai Keung, Nicholas Independent non-executive Director 0 2,016,000 2,016,000 Dr. Chen Shengrong Independent non-executive Director 0 2,016,000 2,016,000
Sub-total 0 105,984,000 105,984,000
Other staff and consultants 0 217,464,000 217,464,000
Total 0 323,448,000 323,448,000

All the above share options granted are exercisable during the period from date of grant to 10 April 2017 at an exercise price of HK$0.185 per share.

The closing price per share immediately before the date of grant was HK$0.177. No share options were exercised, cancelled or lapsed during the period ended 31 March 2016.

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Purchase, sale or redemption of the Company’s listed securities

During the three months ended 31 March 2016, neither the Company, nor any of its subsidiaries purchased, sold or redeemed any of Company’s listed securities.

Competing interests

During the period under review, none of the Directors or the management shareholders (as defined in the GEM Listing Rules) of the Company were considered to have interests in a business which competes or is likely to compete, either directly or indirectly, with the business of the Group.

CORPORATE GOVERNANCE

Corporate governance practices

During the three months ended 31 March 2016, the Company has complied with the codes on Corporate Governance Code (the “Code”) as set out in Appendix 15 of the GEM Listing Rules, except for the following:

Code Provision A.2.1

Code Provision A.2.1 stipulates the roles of chairman and chief executive should be separate and should not be performed by the same individual.

Mr. Wong Kui Shing, Danny (“Mr Wong”) now serves as both the chairman (the “Chariman”) and the chief executive officer of the Company (the “Chief Executive Officer”), such practice deviates from code provision A.2.1 of the Code. The Board is of the opinion that it is appropriate and in the best interests of the Company for Mr. Wong to hold both positions as it helps maintain the continuity of the policies and the stability of the operations of the Company. The Company has been proactively recruiting candidates for the post of Chief Executive Officer through different means so as to fulfill the requirements of A.2.1 of the Code as soon as possible.

Code Provision A.4.1

Code Provision A.4.1 stipulates that non-executive directors should be appointed for a specific term.

None of the non-executive Directors is appointed for a specific term, which constitutes a deviation from Code Provision A.4.1. Nonetheless, in accordance with the articles of association of the Company, all non-executive directors are subject to retirement by rotation. The Company considers that there are sufficient measures to ensure the corporate governance standard of the Company is not less exacting than the Code.

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Code of conduct regarding securities transactions by Directors

The Company has adopted a code of conduct regarding Directors’ securities transactions on terms no less exacting than the required standard of dealings set out in Rules 5.46 to 5.68 of the GEM Listing Rules. Having made specific enquiry of all Directors, the Directors have complied with such code of conduct and the required standard of dealings and its code of conduct regarding securities transactions by the Directors during the three months ended 31 March 2016.

Audit committee

The Company established an audit committee with written terms of reference in compliance with Rules 5.28 to 5.33 of the GEM Listing Rules.

The primary duties of the audit committee include supervising the financial reporting procedure and reviewing the financial statements of the Group, examining and monitoring the internal control system adopted by the Group and reviewing the relevant work of the Group’s external auditor.

As at the date of this report, the audit committee comprises three members, including Mr. Hung Hing Man (audit committee chairman), Mr. May Tai Keung, Nicholas and Dr. Chen Shengrong. All of them are independent non-executive Directors.

The Group’s unaudited condensed consolidated financial statements for the three months ended 31 March 2016 have been reviewed by the audit committee, which was of the opinion that the preparation of such results complied with the applicable accounting standards.

Nomination Committee

The Company has set up a nomination committee which is responsible for reviewing the structure, size and composition of the Board and making recommendations on any proposed changes to the Board to complement the Company’s corporate strategy, identifying individuals suitable qualified to become Board members and selecting or making recommendations to the board on the selection of individuals nominated for directorships, assessing the independence of Independent Non-executive Directors and making recommendations to the Board on the appointment, re-appointment and succession of director. The nomination committee currently has three members, with Mr. Hung Hing Man being the chairman and Mr. May Tai Keung, Nicholas and Dr. Chen Shengrong being the members. All nomination committee members are independent non-executive Directors of the Company.

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Remuneration committee

The Company established a remuneration committee with written terms of reference in compliance with Rules 5.34 to 5.36 of the GEM Listing Rules.

As at the date of this report, members of the remuneration committee are Mr. May Tai Keung, Nicholas (remuneration committee chairman), Mr. Hung Hing Man and Dr. Chen Shengrong. All the remuneration committee members are Independent Nonexecutive Directors.

The main role and function included the determination of specific remuneration packages of all Executive Directors, including benefits in kind, pension rights and compensation payments, any compensation payable for loss or termination of their office or appointment, and making recommendations to the Board on the remuneration of Non-executive Directors.

The remuneration committee meets regularly to determine the policy for the remuneration of Directors and assess the performance of Executive Directors and certain senior management personnel of the Company.

Internal controls

The Board has the ultimate responsibility to maintain a sound and effective risk management and internal control systems for the Group to safeguard the shareholders’ investment and the Group’s assets and to ensure strict compliance with relevant laws, rules and regulations. The audit committee of the Company is responsible for reviewing the effectiveness of the risk management and internal control systems and reporting to the Board. The scope of risk management and internal control relates to areas including effectiveness and efficiency of operations, reliability of financial reporting and compliance with applicable laws and regulations.

By Order of the Board China Information Technology Development Limited Wong Kui Shing, Danny Chairman and Chief Executive Officer

Hong Kong, 12 May 2016

As at the date of this report, the Board comprises Mr. Wong Kui Shing, Danny (Chairman and Chief Executive Officer), Mr. Tse Chi Wai, Ms. Wu Jingjing, Mr. Takashi Togo and Mr. Wong Chi Yung as executive Directors; Mr. Hung Hing Man, Mr. May Tai Keung, Nicholas and Dr. Chen Shengrong as independent non-executive Directors.

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