China Information Technology Development Limited — Interim / Quarterly Report 2020

Aug 11, 2020

==> picture [250 x 47] intentionally omitted <==

2020

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

GEM has been positioned as a market designed to accommodate small and mid-sized 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.

Given that the companies listed on GEM are generally small and mid-sized companies, 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 (the “Directors” and each a “Director”) of the China Information Technology Development Limited (the “Company”), together with its subsidiaries, (the “Group”) collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on GEM of the Stock Exchange (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 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.citd.com.hk and will remain on the “Latest Listed Company Information” page on the GEM website at http://www.hkgem.com for at least 7 days from the date of its posting.

CONTENTS

CONTENTS
Corporate Information	2
Summary	3
Management Discussion and Analysis	3
Condensed Consolidated Statement of Profit or Loss	13
Condensed Consolidated Statement of Profit or Loss and
Other Comprehensive Income	14
Condensed Consolidated Statement of Financial Position	15
Condensed Consolidated Statement of Changes in Equity	17
Condensed Consolidated Statement of Cash Flows	18
Notes to Condensed Consolidated Interim Financial Statements	20
General Information	36
Corporate Governance	42

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED INTERIM REPORT 2020

1

CORPORATE INFORMATION EXECUTIVE DIRECTORS

Mr. Wong King Shiu, Daniel (Chairman and Chief Executive Officer) Mr. Wong Kui Shing, Danny Mr. Chan Kai Leung

INDEPENDENT NONEXECUTIVE DIRECTORS

Mr. Hung Hing Man Mr. Wong Hoi Kuen Dr. Chen Shengrong

COMPANY SECRETARY

Mr. Chang Ki Sum Clark

COMPLIANCE OFFICER

Mr. Chang Ki Sum Clark

AUTHORISED REPRESENTATIVES

Mr. Wong Kui Shing, Danny Mr. Chang Ki Sum Clark

NOMINATION COMMITTEE

Mr. Hung Hing Man (Committee Chairman) Mr. Wong Hoi Kuen Dr. Chen Shengrong

REMUNERATION COMMITTEE

Mr. Wong Hoi Kuen (Committee Chairman) Mr. Hung Hing Man Dr. Chen Shengrong

AUDIT COMMITTEE

Mr. Hung Hing Man (Committee Chairman) Mr. Wong Hoi Kuen Dr. Chen Shengrong

PRINCIPAL BANKERS

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

HEAD OFFICE AND PRINCIPAL PLACE OF BUSINESS

Unit 3308, 33/F. Millennium City 6 392 Kwun Tong Road Kwun Tong, Hong Kong

REGISTERED OFFICE

Cricket Square Hutchins Drive, P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICE

SMP Partners (Cayman) Limited 3rd Floor 24 Shedden Road, P. O. Box 1586 Grand Cayman, KY1-1110 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

GEM STOCK CODE

8178

WEB-SITE ADDRESS

www.citd.com.hk

AUDITOR

ZHONGHUI ANDA CPA Limited

LEGAL ADVISOR

Conyers Dill & Pearman

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED INTERIM REPORT 2020

2

SUMMARY

• Revenue for the six months ended 30 June 2020 (the “Period”) was approximately HK$28,925,000, representing a decrease of 4.7% from the corresponding period in last year (2019: approximately HK$30,365,000).

• Loss attributable to owners of the Company for the six months ended 30 June 2020 amounted to approximately HK$14,430,000 (2019: approximately HK$52,026,000). The decrease in loss was mainly attributed to (i) fair value loss on the investment properties of approximately HK$35,286,000 during the six months ended 30 June 2019 and (ii) recognition of an equity-settled sharebased payment amounted to approximately HK$9,628,000 during the six months ended 30 June 2019.

• Loss per share attributable to owners of the Company from continuing operations for the six months ended 30 June 2020 was approximately HK0.25 cents (2019: approximately HK0.91 cents).

• The Board of Directors (the “Board”) does not recommend the payment of an interim dividend for the six months ended 30 June 2020 (2019: Nil).

MANAGEMENT DISCUSSION AND ANALYSIS

Market Overview

The first six months ended 30 June 2020 was by no means an easy start with the global outbreak of the novel coronavirus (“COVID-19”) pandemic and increasing tensions between China and the United States. The volatile economic conditions in addition to the local socio-political instability had created an unprecedently challenging environment for businesses. Many corporates had adopted a cautious approach on their budgets and delayed their projects and investments with the consideration of slowing down of the global economy. Nevertheless, it also accelerated the change of consumption patterns and business model from traditional to new digital and mobile models. The importance of technology has boosted drastically during this pandemic. The various measures implemented in different countries like full lockdowns, travelling restrictions and working-from-home arrangements, gave rise to technologies like artificial intelligence (“AI”), internet of things (IoT) and cloud technology etc, which helped connect people together and made communication and business possible in this time of social distancing.

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED 3 INTERIM REPORT 2020

Business review

In 2016, the Company placed 1,830,792,000 new shares of the Company to not less than six independent placees at a price of HK$0.13 each and raised a net proceeds of approximately HK$230 million (the “Placement”). It was expected that the net proceeds raised would be utilized as follows: HK$73 million for the refurbishment of and operation of the business in the PRC properties as acquired in the acquisition of Joyunited Investments Limited on 7 April 2016 (“PRC Properties”), the Company would have approximately HK$69 million for the general working capital and approximately HK$88 million for the projects that were then in progress. 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. As at 30 June 2020, the use of net proceeds from the Placement was as follows: (1) approximately HK$73.0 million for refurbishment and other expenses relating to the PRC Properties; (2) approximately HK$63.8 million for investment in Macro China Holding Limited, business development under DataCube Research Centre Limited (“DataCube”), IT business in Japan and a data centre in the PRC; (3) approximately HK$24.2 million had been applied to settle the consideration for the PRC Properties; and (4) approximately HK$69.0 million for administrative expenses and other expenses incurred by the Group.

Aiming to provide our clients with business agility for their sustainable business development, during the six months ended 30 June 2020, the Group had continued to improve ourselves to deliver affordable but high quality services and products to our clients.

During the six months ended 30 June 2020, DataCube, a subsidiary of the Company, has cooperated with a subsidiary of a listed company in Hong Kong (“Counterparty”, together with DataCube, the “Parties”), which is one of the leading energy management contract providers in Hong Kong, with an integrated platform for providing solutions ranging from technologies and product customization, investment, development and implementation, to operation and maintenance in the field of renewable energy, energy saving and management (“Cooperation”). With the excellent data science products and the blooming cooperation ecology of DataCube, the Parties shall cooperate closely in product research and development and market exploration in areas including Smart City, predictive analysis development and healthcare and epidemic prevention products.

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED 4 INTERIM REPORT 2020

The recent outbreak of COVID-19 and its suspected spread in certain building in Hong Kong, have proved the importance of an advanced building system in epidemic prevention, the concept of “Epidemic Prevention Building” and the centralised disinfection system, have therefore gained much spotlight in epidemic prevention. The Smart Building Epidemic Prevention Solution upgraded and released by the Counterparty helps to build up and enhance the self-epidemic prevention capability of the buildings by integrating Smart IoT with the centralised disinfection system. Meanwhile, specializing in data science and marketing, DataCube shall provide advanced IoT-based machine learning modelling technology and develop predictive analytics modules to strengthen the building maintenance, energy saving and epidemic prevention capabilities of their Building Operating System.

Together with our knowledge in data science and our team of seasoned and professional data scientists and engineers, we believe that not only can the Cooperation bring synergy effect and create business values for both Parties, it allows us to reinforce our technology and knowledge in smart building management system. We believe that the Cooperation enables us to establish our competitive edge and reputation in smart building management which is increasingly important in epidemic prevention and public health.

Whilst developing the smart building epidemic prevention solution in the above Cooperation, as an Advanced Technology Partner of Huawei Cloud, DataCube shall also introduce the same to the Smart Campus solution of Huawei Cloud. With the vision to jointly promote the concept of “Epidemic Prevention Building” to Greater China and international markets with our business partners, we shall continue to contribute the value of data science in the establishment of Smart City as well as in healthcare and epidemic prevention areas.

During the Period, we also had negotiations with property developer for various project ideas and collaborations to improve their operation and efficiency. For instance, we started the discussion to install a smart system with machine models to automatically analyze the possibility of unethical order stealing of the property agents in the company to help prevent unjust enrichment.

Through these corporations, our client spectrum is further broadened, covering public transportation and energy services companies to retail and healthcare companies as well as financial institutes and banks etc. By understanding more of the needs of different industries, our professional team of data scientists shall continue to develop tailored products and systems that cater to various industries and businesses, providing affordable yet secure and advanced technology to strengthen the business of our clients.

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED INTERIM REPORT 2020

5

On the other hand, as an epidemic prevention measure, many companies and even the government departments have decided to implement “work from home” arrangement to minimize the risk of spreading of COVID-19 in wider community. Another subsidiary of the Company, Macro Systems Limited (“Macro”), which has been awarded and certified by more than 120 international organisations and obtained certificates, including ISO 27001 & ISO 20000, provides secure and reliable Virtual Desktop Infrastructure (“VDI”) and delivers end-users mobility and access to virtual desktop anytime and anywhere. Our VDI ensures high security level to prevent data leakage while enhancing efficient resource sharing and flexible development. Our clienteles range from various industries from banking, consumer goods, food & beverage, hotel and tourism, manufacturing and construction, property developers to public sectors of the Hong Kong Government and non-governmental organizations. As a result, the demand for remote desktop service shoots up due to the “work from home” arrangement, the number of clients for the VDI services, especially from the banking, finance and insurance sector has increased significantly and we believe that it will have positive impact on the business of the Group.

In view of the uncertain business environment, the Group had taken action to maintain sufficient resources for business operations and development during the Period. In relation to the acquisition of 19% equity interest in 廣州市德煌投資有限公司 (Guangzhou Dehuang Investment Company Limited), a company incorporated in the PRC with limited liability (“Guangzhou Dehuang”) in August 2019, of which the consideration of RMB66,341,000 (equivalent to approximately HK$72,842,000) should initially be satisfied by the promissory note issued on 3 September 2019 on the first anniversary, Guangzhou Deyong (the “Promissory Note”), 廣州市德永科技投資有限公司 (Guangzhou Deyong Technology Investment Limited), an indirect wholly-owned subsidiary of the Company, has agreed with the vendor, an Independent Third Party, to extend the repayment date of the Promissory Note to the second anniversary of the date of Promissory Note.

Macro Group

As a reputable company in providing diverse IT platform, digital solution and business consulting service, Macro Systems Limited upholds the vision of “We Make IT Smart”, and persistently assists worldwide corporate clients to thrive for business success and perform digital transformation by its comprehensive solution and service portfolio. Over the past 23 years, Macro is committed to serving corporate clients with excellent quality which well recognized by the ISO/IEC 27001 international standard and more than 120 global certificates and partnerships.

* For identification purposes only

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED 6 INTERIM REPORT 2020

Macro provides enterprises with the end-to-end product set. The completed IT platform, from IT Infrastructure, Cloud-ready to the Hybrid cloud platform, offers a stable and reliable foundation to support clients’ business development. On top of it, Macro expands clients’ workspace securely by the user-friendly VDI solution. It successfully enables end-users to access their office desktop anywhere, anytime and maintain corporate data security and high productivity, especially in the recent circumstance that many enterprises and even the Hong Kong government department office announced the special work arrangement due to the coronavirus outbreak. In addition to the product and solution, Macro further completes the business scope by its reputable IT managed service brand, PrimeServe series, to deliver all products and solutions to clients in an easy and hassle-free manner that the quality is well proven by ISO/IEC 20000 international recognition.

During the six months ended 30 June 2020, to achieve the corporate vision, Macro allied with various top-class industry elites to continuously push the enterprise market’s digital transformation in Hong Kong. The effort is well affirmed by the sales and quality awards and partnerships title issued by various world-class partners. We are certified by Nutanix as their “Nutanix Certified Sales Expert” and gained “Master Partner”, the highest tier of partnership in the Nutanix Partner Program. Besides, Macro is rewarded “Gold Partner” in Sangfor Technology Channel Partner.

Acting swiftly and flexibly with the changes in market, amid the COVID-19 outbreak, Macro transformed our traditional workshop to online webinars. During the period ended 30 June 2020, we had organized various webinars together with reputable vendors like Nutanix and Sangfor to promote VDI solution as well as AI technology and algorithm. To stay committed with our valued customers and strengthen the Company’s reputation with the aim to share our knowledge especially in this difficult time and furthermore, to promote our webinar‘s content to a wider segment, we have rebuilt our YouTube Channel “Macro Channel”.

By leveraging various technologies, we believe that these transformed marketing activities can benefit our reputation and sales.

Besides of these marketing activities, we also worked with vendors to launch flash sales programme to help clients quickly deploy suitable remote work solutions. In February 2020, Macro partnered with Nutanix to launch the VDI solution sales programme. We also partnered with Sangfor to launch VDA solution sales programme which further expedited the remote work solution deployment by virtual apps. Out of our existing virtual workspace solution, Macro partnered with Hitachi Vantara to launch a sales programme for Hitachi Content Platform (HCP) product. The cooperation and promotion of associated solutions of digital workspace allowed Macro to extend its business network with different partners who can create synergy and positive impact on our business and brand name in the sector during this dynamic market period.

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED 7 INTERIM REPORT 2020

During the six months ended 30 June 2020, to allow our customers to experience the business agility we bring, the Group continued to set up a brand-new, scenario driven business agility zone at our solution centre in Tsimshatsui. This experience zone allows clients to have a first-angle experience of how bank front line staff can work securely and smartly and perform seamless and agile work from office to anywhere by virtual workspace. We believe the experience zone can successfully strengthen clients’ confidence in deploying virtual workspace solution and facilitate the related business project progress.

During the period ended 30 June 2020, Macro Group has contributed a revenue of approximately HK$21,859,000 to the Group. This encouraging result motivates the Directors and the Company to continue developing the business of Macro Group.

DataCube

During the reporting period, DataCube Research Centre was continued to promote data modelling, big data analysis as well as developing related technologies to expedite the adoption and drive the evolution of artificial intelligence and business intelligence (“BI”) and across different industries and regions, so as to provide the technological platform and all related resources to drive the development of Smart Cities in Asia. Its services include machine learning model, visualization analytic dashboard, data engineering services (Data cleaning/ETL/API integration), pre-setting hardware and cloud services. DataCube is here to help companies discover emerging trends and hidden insights, and adjust business strategies in an agile and intelligent manner.

AI Book, is an innovative automated machine learning platform developed by DataCube. It embeds AI technologies such as deep learning, machine learning screening combing and analyzing data through four states. The automatic predictive power based on Internet of Things of AI Book, helps our client to solve complicated business problem and discover the root cause through self-service analytics for optimizing strategy. The AI Book analysis result will then be displayed on the BI Canvas platform. BI Canvas of DataCube is a self-service business intelligence platform, providing a variety of visual charts to help companies understand business value and trends from the data gathered with AI Book. The massive data are transformed into various charts and line graphs in real time mode. It is clear and easy to understand and helps decision makers to spot out business value and hidden trends, quickly response to the market and adjust business deployment.

During the period ended 30 June 2020, DataCube has kicked off to partner with various powerful vertical software partners with the vision to develop AI+ predictive modules jointly for improving the existing and new projects. We had projects with a well-known leading energy Alot, energy saving management contract provider for product research and development and market exploration in areas including Smart City, predictive analysis development and healthcare and epidemic prevention products. Currently, the product has been developed and we believe that it will help generate more benefits on the data centers of “New Infrastructure” (which consumes huge amount of energy) when the product is finalized and matured. At the same time, it shall contribute to the reduction of carbon emission and environmental protection of the society.

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED INTERIM REPORT 2020

8

We also entered into memorandum of understandings and strategic cooperation agreements with various corporations including public transportation and real estates companies. DataCube had discussions with companies in transportation industry for projects aiming for accident prediction and maintenance, which can help to enhance their reliability and safety of their services. Meanwhile, we had made consent with Huawei that we shall jointly cooperate, to take the abovementioned corporation as application scenarios, to improve the development of the abovementioned intelligent solutions, and create opportunities for entering the Chinese mass transportation market. Apart from that, DataCube, as an Advanced Technology Partner of Huawei Cloud, shall also introduce the same to the Smart Campus solution of Huawei Cloud.

Besides, the Group had also entered into another pilot project agreement (“Agreement”) with a corporation which is engaged in the development and sale of properties, property investment, hotel operations and other property development related services globally. Pursuant to the Agreement, the Group shall assist to install a smart system with machine models to automatically analyze the possibility of unethical order stealing of the property agents. It helps to save the unnecessary cost for commission to freeriding property agents and hence enhance efficiency for reviewing orders and management for potential risk of unjust enrichments.

Outlook and Prospect

The outbreak of COVID-19 during the first half of 2020 devastated the world economy. Worse still, the intensified relationship between China and the United States, and the local social chaos had made the economy of Hong Kong and China under severe strain. Their negative impacts have begun to reveal in the second half of 2020. Some even project that the world economy will experience the worst downturn since the Great Depression. As a response to the difficult business environment, many companies tend to cancel or postpone their projects in the second half of the year. Nevertheless, in such crisis like no other, it also creates opportunities, especially with the reliance on technology during times of containment.

Amid of pandemic, having the mission to bring business agility to our clients, our VDI solution enables our client to continue their operations anywhere, anytime when “work from home” is practicing in many offices in Hong Kong and even government departments. Recently, the demand for remote desktop service shoots up due to the “work from home” arrangement, the number of clients for the VDI solution, especially from the banking, finance and insurance sector has increased significantly and we believe that it will have positive impact on the business of the Company. The pandemic had turned client’s attitude and reliance towards digital transformation, in the future, we shall continue to improve and provide our event in webinar format. To provide our clients the most updated information and to catch up with the trend of digital transformation in a quick and safe manner, we are preparing for webinars focusing on Cloud and VDI in the coming months.

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED 9 INTERIM REPORT 2020

For the next half-year, Macro formulated a strategic event plan to further engage clients and promote the digital workspace blueprint. We will organize monthly webinars, and each theme is a part of the end-to-end digital workspace. Starting from June 2020, the first webinar theme was “Collaboration”. We allied with the reputable Japanese brand, Hitachi Vantara, to introduce their content sharing platform, which can generate synergy with Macro’s solid virtual desktop solution. Upcoming, Macro will keep partnering with other industry elites to organize webinars in other relevant themes to promote the comprehensive digital workspace structure and raise its solution demand accordingly.

Leveraging the membership of Hong Kong Smart City Consortium of the Company, Macro shall cement our brand name in the market and contribute to the establishment of Smart City in both Hong Kong and China by organizing various webinar or workshops to keep our client update and continue our market activities in the virtual platform. We have planned to participate in the largest exhibition of the technology industry, the Cloud Expo 2020 in September 2020 as a virtual exhibitor to increase brand awareness, hence further expand our business footprints. Encouraged by the Nutanix Master Partner we achieved earlier in 2020, to enhance our competitiveness, we shall continue to strive for partnerships and recognitions.

Since the pandemic had awakened the market’s adoption of technology, DataCube will utilize this trend to further promote out flagship intelligent products in the next quarters, such as the AI webinar series co-organized with Huawei and Macro in July. In the year to come, we will leverage our research and development footprint in Guangzhou, to continue our sales activities in not only the Hong Kong but the entire Guangdong-Hong Kong-Macau Greater Bay Area market.

We believe the business direction and activities will benefit our sales and market awareness.

Meanwhile, to allow our customers to experience the business agility we bring, the Group shall continue to promote our brand-new, scenario driven business agility zone at our solution centre in Tsimshatsui and shall start inviting clients to experience the services we provide.

Looking ahead, to cope with the potential risk, the Group shall prudently maintain and develop the business of the Group. With the support of national policies in the IT industry and rapid development of technologies like 5G, AI and data center etc, the Group shall deploy its capacity to keep pace with the latest technological advancements and continue to create business agility or our clients and create values for the Company and its shareholders.

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED INTERIM REPORT 2020

10

Employees

The total number of full-time employees hired by the Group maintained at 80 as of 30 June 2020 (2019: 72 employees). Total expenses on employee benefits amounted to approximately HK$9,598,000 for the six months ended 30 June 2020, of which HK$745,000 related to equity-settled share-based payment (2019: approximately HK$13,782,000 of which HK$2,664,000 related to equity-settled share-based payments). The management believes the salaries offered by the Group to its employees are competitive.

Financial review

For the six months ended 30 June 2020, the Group recorded a revenue of approximately HK$28,925,000, a decrease of 4.7% from approximately HK$30,365,000 in the corresponding period in last year. The revenue from contracts with customers decreased from approximately HK$25,292,000 for the six months ended 30 June 2019 to HK$21,859,000 for the six months ended 30 June 2020. The decrease is mainly due to the slowing down of projects caused by the outbreak of COVID-19 pandemic for the Period.

The Group had a total cost of sales and services of approximately HK$16,025,000 for the first half of year 2020, a decrease of 17.1% compared with approximately HK$19,328,000 in the same period of year 2019. The decrease is in line with the decrease in revenue from contracts with customers which was affected by the outbreak of COVID-19 pandemic.

The gross profit of the Group for the first half of year 2020 was approximately HK$12,900,000, an increase of 16.9% from approximately HK$11,037,000. The increase mainly due to the increase in loan interest income during the Period.

The Group’s selling and distribution expenses for the first half of year 2020 were approximately HK$351,000, a decrease of 78.3% compared with approximately HK$1,620,000 in the corresponding period in 2019. The significant decrease was mainly due to temporary closure of offices in PRC caused by the COVID-19 pandemic.

Administrative expenses for the Period were approximately HK$15,944,000, a decrease of 45.9% as compared to approximately HK$29,446,000 for the corresponding period last year. The decrease was mainly due to the recognition of share options granted to employees and consultants for the amount of approximately HK$9,628,000 in 2019 and the control of expenditure implemented during the Period.

During the six month ended 30 June 2019, the Group recognised a decrease in fair value of investment properties of approximately HK$35,286,000 due to the recession of property market in the PRC.

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED 11 INTERIM REPORT 2020

During the first half of 2020, the Group recorded a loss on trading of marketable securities of approximately HK$6,238,000 (2019: gain of approximately HK$3,831,000).

The Group’s loss attributable to owners of the Company was approximately HK$14,430,000 for the six months ended 30 June 2020 (2019: approximately HK$52,026,000).

Financial position

As at 30 June 2020, the Group had cash and bank balances of approximately HK$8,991,000 (31 December 2019: approximately HK$4,959,000).

As at 30 June 2020, the Group’s total borrowings amounted approximately HK$103,525,000 (31 December 2019: approximately HK$106,712,000). The gearing ratio (calculated as total borrowings over total equity) of the Group was 0.29 (31 December 2019: 0.28).

As the Group carried out a major portion of its operations in the PRC and Hong Kong and substantially all of its business transactions, assets and liabilities are denominated in either Renminbi or Hong Kong dollars, the foreign exchange risk of the Group was considered minimal thus no hedging activities were conducted.

Capital expenditure

The Group incurred a capital expenditure of approximately HK$43,000 (31 December 2019: approximately HK$2,630,000) for addition of property, plant and equipment and approximately HK$16,000 for refurbishment construction works of investment properties for the six months ended 30 June 2020 (31 December 2019: approximately HK$295,000).

Contingent liabilities

The Group did not have any significant contingent liabilities as at 30 June 2020 and 31 December 2019 respectively.

Capital commitment

The Group did not have any material capital commitments as at 30 June 2020 and 31 December 2019.

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED INTERIM REPORT 2020

12

The Board of Directors announces the unaudited results of the Company and its subsidiaries for the six months ended 30 June 2020, together with the unaudited comparative figures for the corresponding period of year 2019, as follows:

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS

				Three months ended	Three months ended	Three months ended		Six months ended	Six months ended	Six months ended
				30 June				30 June
				2020		2019		2020		2019
				(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
		Notes		HK$’000		HK$’000		HK$’000		HK$’000
Interest revenue				3,519		2,055		7,066		5,073
Other revenue				9,291		11,269		21,859		25,292
Revenue		4		12,810		13,324		28,925		30,365
Cost of sales and services				(6,500)		(7,869)		(16,025)		(19,328)
Gross profit				6,310		5,455		12,900		11,037
Other income and gains		4		295		36		428		116
Selling and distribution expenses				(170)		(834)		(351)		(1,620)
Administrative expenses				(8,905)		(22,366)		(15,944)		(29,446)
Fair value (loss)/gain on investments
at fair value through profit or loss				(910)		(3,434)		(6,238)		3,831
Change in fair value of investment properties				—		(35,286)		—		(35,286)
Finance costs		5		(2,869)		(932)		(5,789)		(1,846)
LOSS BEFORE TAX		6		(6,249)		(57,361)		(14,994)		(53,214)
Income tax expenses		7		—		—		—		—
LOSS FOR THE PERIOD				(6,249)		(57,361)		(14,994)		(53,214)
Attributable to:
Owners of the Company				(6,013)		(56,464)		(14,430)		(52,026)
Non–controlling interests				(236)		(897)		(564)		(1,188)
				(6,249)		(57,361)		(14,994)		(53,214)
Basic and diluted loss per share		8	HK(0.10) cents			HK(0.99) cents	HK(0.25) cents			HK(0.91) cents

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED 13 INTERIM REPORT 2020

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

		Three months ended	Three months ended	Three months ended		Six months ended	Six months ended	Six months ended
		30 June				30 June
		2020		2019		2020		2019
		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
		HK$’000		HK$’000		HK$’000		HK$’000
LOSS FOR THE PERIOD		(6,249)		(57,361)		(14,994)		(53,214)
OTHER COMPREHENSIVE (LOSS)/
INCOME FOR THE PERIOD, NET
OF INCOME TAX
— Exchange differences
on translation of
foreign operations		(2,179)		(3,510)		(3,995)		560
TOTAL COMPREHENSIVE LOSS
FOR THE PERIOD		(8,428)		(60,871)		(18,989)		(52,654)
Attributable to:
Owners of the Company		(8,192)		(59,973)		(18,444)		(51,447)
Non-controlling interests		(236)		(898)		(545)		(1,207)
		(8,428)		(60,871)		(18,989)		(52,654)

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED INTERIM REPORT 2020

14

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

POSITION
		As at		As at
		30 June	31 December
		2020		2019
		(Unaudited)		(Audited)
	Notes	HK$’000		HK$’000
NON-CURRENT ASSETS
Investment properties	10	292,919		298,672
Property, plant and equipment	11	4,723		5,601
Goodwill		3,865		3,865
Right-of-use assets		4,163		5,670
Other intangible assets		5,528		5,920
Equity investments at fair value through other
comprehensive income		9,012		9,012
Prepayments, deposits and other receivables	12	1,021		1,053
Deferred tax assets		3,525		3,525
Loan receivable	14	48,040		45,849
Total non-current assets		372,796		379,167
CURRENT ASSETS
Inventories		1,375		385
Trade receivables	13	5,796		9,778
Contract assets and contract costs		—		186
Prepayments, deposits and other receivables	12	24,670		37,692
Loan receivables	14	68,299		70,728
Investments at fair value through profit or loss		24,638		45,478
Bank and cash balances		8,991		4,959
Total current assets		133,769		169,206
CURRENT LIABILITIES
Trade payables	15	10,616		9,169
Contract liabilities		1,478		4,053
Other payables and accruals	16	21,115		38,591
Lease liabilities		2,492		3,045
Current tax liabilities		64		163
Promissory note payables	20	—		63,553
Bank and other borrowings	17	33,876		40,106
Total current liabilities		69,641		158,680

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED 15 INTERIM REPORT 2020

		As at		As at
		30 June	31 December
		2020		2019
		(Unaudited)		(Audited)
	Notes	HK$’000		HK$’000
NET CURRENT ASSETS		64,128		10,526
TOTAL ASSETS LESS CURRENT LIABILITIES		436,924		389,693
NON-CURRENT LIABILITIES
Loan from a shareholder	18	3,098		3,053
Amount due to a director	19	6,006		9,006
Promissory note payables	20	66,551		—
Lease liabilities		2,090		3,085
		77,745		15,144
NET ASSETS		359,179		374,549
EQUITY
Equity attributable to owners of the Company
Share capital	21	574,419		572,216
Reserves		(212,947)		(195,919)
		361,472		376,297
Non-controlling interests		(2,293)		(1,748)
TOTAL EQUITY		359,179		374,549

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED INTERIM REPORT 2020

16

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

	Attributable to owners of the Company Share capital Share premium account Share-based payment reserve Foreign currency translation reserve Accumulated losses Investment revaluation reserve Total Non-controlling interests Total equity (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
At 1 January 2019, as restated Loss for the period Other comprehensive (loss)/ income — Exchange differences on translation of foreign operations	571,215 107,108 81,250 (9,469) (305,498) 2,471 447,077 (708) 446,369 — — — — (52,026) — (52,026) (1,188) (53,214) — — — 579 — — 579 (19) 560
Total comprehensive income (loss) for the period Equity-settled share-based payment expenses	/ — — — 579 (52,026) — (51,447) (1,207) (52,654) — — 9,628 — — — 9,628 — 9,628
At 30 June 2019	571,215 107,108 90,878 (8,890) (357,524) 2,471 405,258 (1,915) 403,343
At 1 January 2020 Loss for the period Other comprehensive (loss)/ income — Exchange differences o translation of foreign operations	572,216 107,551 90,434 (15,053) (375,164) (3,687) 376,297 (1,748) 374,549 — — — — (14,430) — (14,430) (564) (14,994) n — — — (4,014) — — (4,014) 19 (3,995)
Total comprehensive loss for the period Equity-settled share-based payment expenses Exercise of share options Lapsed of share options	— — — (4,014) (14,430) — (18,444) (545) (18,989) — — 1,416 — — — 1,416 — 1,416 2,203 740 (740) — — — 2,203 — 2,203 — — (52,201) — 52,201 — — — —
At 30 June 2020	574,419 108,291 38,909 (19,067) (337,393) (3,687) 361,472 (2,293) 359,179

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED 17 INTERIM REPORT 2020

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FLOWS
	For six months ended
	30 June
	2020	2019
	(Unaudited)	(Unaudited)
	HK$’000	HK$’000
NET CASH GENERATED FROM OPERATING
ACTIVITIES	12,723	4,621
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment	(43)	(477)
Payment for construction works of
investment properties	(16)	(598)
Proceeds from disposal of equity investments at fair
value through profit or loss	—	2,181
Bank interest received	21	1
NET CASH (USED IN)/GENERATED FROM
INVESTING ACTIVITIES	(38)	1,107
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of amount due to a director	(3,000)	—
Lease interest paid	(141)	—
Proceeds from issue of shares	2,203	—
Repayment of lease liabilities	(1,548)	(2,278)
Repayment of bank and other borrowings	(4,891)	(3,284)
NET CASH USED IN FINANCING ACTIVITIES	(7,377)	(5,562)
NET INCREASE IN CASH AND
CASH EQUIVALENTS	5,308	166
Cash and cash equivalents at beginning of the period	4,708	4,407
Effect of foreign exchange rate changes, net	(1,276)	110
CASH AND CASH EQUIVALENTS
AT END OF THE PERIOD	8,740	4,683

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED INTERIM REPORT 2020

18

	For six months ended	For six months ended
	30 June
	2020	2019
	(Unaudited)	(Unaudited)
	HK$’000	HK$’000
ANALYSIS OF BALANCES OF CASH AND CASH
EQUIVALENTS
Cash and bank balances other than time deposits	8,740	4,683
Time deposits	251	251
Cash and bank balances as stated in the condensed
consolidated statement of financial position	8,991	4,934
Less: Time deposits with maturity of more than
three months when acquired	(251)	(251)
Cash and cash equivalents as stated in the condensed
consolidated statement of cash flows	8,740	4,683

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED INTERIM REPORT 2020

19

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1. Accounting policies

These unaudited condensed consolidated interim financial statements for the six months ended 30 June 2020 have been prepared in accordance with Hong Kong Accounting Standard (“HKAS”) 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) and applicable disclosure requirements of the Rules Governing the Listing of Securities on the GEM of The Stock Exchange of Hong Kong Limited.

These unaudited condensed consolidated interim financial statements should be read in conjunction with the annual consolidated financial statements for the year ended 31 December 2019, which have been prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”). The accounting policies and methods of computation used in the preparation of these unaudited condensed interim financial statements are consistent with those used in the annual consolidated financial statements for the year ended 31 December 2019.

2. Adoption of new and revised Hong Kong financial reporting standards

In the current period, the Group has adopted all the new and revised HKFRSs issued by the HKICPA that are relevant to its operations and effective for its accounting year beginning on 1 January 2020. HKFRSs comprise Hong Kong Financial Reporting Standards (“HKFRS”); HKAS and Interpretations. The adoption of these new and revised HKFRSs did not result in significant changes to the Group’s accounting policies, presentation of the Group’s financial statements and amounts reported for the current period and prior period.

The Group has not applied the new HKFRSs that have been issued but are not yet effective. The Group has already commenced an assessment of the impact of these new HKFRSs but is not yet in a position to state whether these new HKFRSs would have a material impact on its results of operations and financial position.

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED 20 INTERIM REPORT 2020

3. Operating segment information

The Group has three reportable segments as follows:

• provision of IT infrastructure solutions and maintenance services (“IT solutions and maintenance”);

• money lending; and

• Securities trading (“Securities investments”).

Segment assets exclude equity investments at fair value through other comprehensive income and other unallocated head office and corporate assets.

Segment liabilities exclude income tax payables, deferred tax liabilities and other unallocated head office and corporate liabilities.

The following table presents revenue and loss for the Group’s operating segments for the six months ended 30 June 2020 and 2019 respectively.

Reporting segment information

	Six months ended 30 June
	IT solutions and maintenance Money lending Securities investments Total 2020 2019 2020 2019 2020 2019 2020 2019 (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	24,954 25,292 3,971 5,073 — — 28,925 30,365
Segment profit/(loss) Reconciliation: Bank interest income Change in fair value of investment properties Unallocated gains Corporate and other unallocated expenses Finance costs	1,634 (2,172) 3,876 4,978 (6,353) 3,820 (843) 6,626 21 1 — (35,286) 265 — (8,648) (22,709) (5,789) (1,846)
Loss before tax	(14,994) (53,214)

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED 21 INTERIM REPORT 2020

		IT solutions and	IT solutions and	IT solutions and						Securities	Securities	Securities
		maintenance				Money	lending			investments					Total
		30.6.2020		31.12.2019		30.6.2020		31.12.2019		30.6.2020		31.12.2019			30.6.2020		31.12.2019
		(Unaudited)		(Audited)		(Unaudited)		(Audited)		(Unaudited)		(Audited)			(Unaudited)		(Audited)
		HK$’000		HK$’000		HK$’000		HK$’000		HK$’000		HK$’000			HK$’000		HK$’000
Segment assets		84,483		89,791		68,852		71,352		24,705			39,947		178,040		201,090
Reconciliation:
Corporate and other
unallocated assets															328,525		347,283
Total assets															506,565		548,373
Segment liabilities		(79,676)		(80,422)		(119)		(226)		(10,565)		(11,581)			(90,360)		(92,229)
Reconciliation:
Corporate and other
unallocated liabilities															(57,026)		(81,595)
Total liabilities															(147,386)		(173,824)

Geographical information

Geographical information
	Revenue
	30.6.2020	30.6.2019
	(Unaudited)	(Unaudited)
	HK$’000	HK$’000
Hong Kong	25,528	30,163
PRC except Hong Kong	3,397	202
Consolidated total	28,925	30,365

In preparing the geographical information, revenue is based on the locations of the customers.

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED INTERIM REPORT 2020

22

4. Revenue, other income and gains

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

		Three months ended	Three months ended	Three months ended	Three months ended		Six months ended	Six months ended	Six months ended	Six months ended
		30	June				30 June
		2020			2019		2020			2019
		(Unaudited)			(Unaudited)		(Unaudited)		(Unaudited)
		HK$’000			HK$’000		HK$’000			HK$’000
Revenue
Sale of computer hardware
and software		7,953			9,120		18,467			19,943
Provision of technical
support and maintenance
services		1,338			2,149		3,392			5,349
Revenue from contracts
with customers		9,291			11,269		21,859			25,292
Loans interest income		3,519			2,055		7,066			5,073
		12,810			13,324		28,925			30,365
Disaggregation of revenue
from contracts with
customers:
Geographical markets
Hong Kong		9,142			11,091		21,557			25,090
PRC except Hong Kong		149			178		302			202
		9,291			11,269		21,859			25,292
Major products/services
Sale of computer hardware
and software		7,953			9,120		18,467			19,943
Provision of technical
support and maintenance
services		1,338			2,149		3,392			5,349
Total		9,291			11,269		21,859			25,292
Timing of revenue
recognition
At a point in time		7,953			9,120		18,467			19,943
Over time		1,338			2,149		3,392			5,349
Total		9,291			11,269		21,859			25,292
Other income and gains
Bank interest income		12			1		21			1
Government grant		243			—		243			—
Others		40			35		164			115
		295			36		428			116

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED 23 INTERIM REPORT 2020

5. Finance costs

Finance costs
		Three months ended					Six months ended
		30	June				30 June
		2020			2019		2020			2019
		(Unaudited)			(Unaudited)		(Unaudited)		(Unaudited)
		HK$’000			HK$’000		HK$’000			HK$’000
Interest on bank loan		351			502		736			1,034
Interest on other loans		345			365		660			747
Lease interests		66			65		141			65
Imputed interest on
promissory notes		2,107			—		4,252			—
		2,869			932		5,789			1,846

6. Loss before tax

Loss before tax was arrived at after charging the following:

		Three months ended	Three months ended	Three months ended	Three months ended		Six months ended	Six months ended	Six months ended	Six months ended
		30	June				30 June
		2020			2019		2020			2019
		(Unaudited)			(Unaudited)		(Unaudited)		(Unaudited)
		HK$’000			HK$’000		HK$’000			HK$’000
					(Restated)				(Restated)
Amortisation of other
intangible assets		195			195		391			391
Change in fair value of
investment properties		—			35,286		—			35,286
Depreciation on property,
plant and equipment		450			349		905			687
Depreciation on
right-of-use assets		750			2,140		1,503			2,140
Directors’ remuneration		450			1,127		900			2,217
Equity-settled share based
payment to employees**		745			2,664		745			2,664
Equity-settled share-based
payment to consultants**		671			6,964		671			6,964

** This item is included in “administrative expenses” of the condensed consolidated statement of profit or loss.

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED INTERIM REPORT 2020

24

7. Income tax expenses

No provision for Hong Kong Profits Tax has been made for the six months ended 30 June 2020 as the Group has accumulated tax losses brought forward from previous year (2019: Nil).

No provision of the PRC corporate income tax has been made for the six months ended 30 June 2020 as the Group did not generate any assessable profits in the PRC during the period (2019: Nil).

8. Loss per share

The calculation of the loss per share attributable to the owners of the Company is based on the following data:

		Three months ended	Three months ended	Three months ended		Six months ended	Six months ended	Six months ended
		30 June				30 June
		2020		2019		2020		2019
		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
		HK$’000		HK$’000		HK$’000		HK$’000
Loss for the period attributable to
owners of the Company		(6,013)		(56,464)		(14,430)		(52,026)
		Three months ended				Six months ended
		30 June				30 June
		2020		2019		2020		2019
		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Weighted average number of
ordinary shares for basic and
diluted loss per share		5,739,831,908		5,712,151,908		5,730,947,090		5,712,151,908

For the six months ended 30 June 2020, diluted loss per share is the same as the basic loss per share as the computation of diluted loss per share does not assume the exercise of the Company’s share options since their exercise would result in an anti-dilutive effect on loss per share during the six months ended 30 June 2020 and 2019.

9. Interim dividend

The Board does not recommend the payment of any interim dividend for the six months ended 30 June 2020 (2019: Nil).

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED INTERIM REPORT 2020

25

10. Investment properties

Investment properties
		(Unaudited)
		HK$’000
Valuation
At 1 January 2020		298,672
Additions		16
Exchange differences		(5,769)
At 30 June 2020		292,919

At 30 June 2020, the carrying amount of investment properties pledged as security for the Group’s bank loans amounted to approximately HK$23,312,000 (31 December 2019: approximately HK$28,525,000).

11. Additions in property, plant and equipment

During the six months ended 30 June 2020, the Company spent approximately HK$43,000 (30 June 2019: approximately HK$477,000) for additions of property, plant and equipment.

12. Prepayments, deposits and other receivables

		As at	As at
		30 June	31 December
		2020	2019
		(Unaudited)	(Audited)
		HK$’000	HK$’000
Prepayments		1,125	1,281
Deposits and other receivables		24,566	37,464
		25,691	38,745
Non-current portion:
Prepayments		1,021	1,041
Deposits and other receivables		—	12
		1,021	1,053
Current portion:
Prepayments		104	240
Deposits and other receivables		24,566	37,452
		24,670	37,692
		25,691	38,745

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED INTERIM REPORT 2020

26

13. Trade receivables

An aging analysis of the trade receivables as at the end of the reporting period, based on the invoice date and net of impairment, is as follows:

		As at	As at
		30 June	31 December
		2020	2019
		(Unaudited)	(Audited)
		HK$’000	HK$’000
Within 1 month		5,372	8,400
1 to 2 months		5	1,081
2 to 3 months		—	286
Over 3 months		419	11
		5,796	9,778

The Group has granted credit terms to its customers ranging from 30 to 90 days. In certain cases, the Group would request payment in advance from the customers. The Group does not hold any collateral or other credit enhancements over its trade receivable balances. Trade receivables are non-interest bearing.

14. Loan receivables

		As at	As at
		30 June	31 December
		2020	2019
		(Unaudited)	(Audited)
		HK$’000	HK$’000
Loan receivables		116,339	116,577
Analysed as:
Non-current assets		48,040	45,849
Current assets		68,299	70,728
		116,339	116,577

Notes:

(a) Loan receivables of approximately HK$68,299,000 carried fixed interest rate at 12% per annum (31 December 2019: 12% per annum) and with the terms ranging from 3 months to 18 months.

(b) As at 30 June 2020, included in loan receivables are receivable from Dehuang of approximately HK$48,040,000 (31 December 2019: HK$45,849,000) which is unsecured, non-interest bearing, repayable on 2 September 2021 and measured at amortised cost using effective interest rate of 14.42%.

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED 27 INTERIM REPORT 2020

15. Trade payables

An aging analysis of the trade payables as at the end of the reporting period, based on the invoice date, is as follows:

			As at	As at
			30 June	31 December
			2020	2019
			(Unaudited)	(Audited)
			HK$’000	HK$’000
	Within 1 month		4,805	4,783
	1 to 2 months		2,520	4,362
	2 to 3 months		—	23
	Over 3 months		3,291	1
			10,616	9,169
	Other payables and accruals
			As at	As at
			30 June	31 December
			2020	2019
			(Unaudited)	(Audited)
			HK$’000	HK$’000
	Accruals		5,296	4,621
	Other payables		15,819	33,970
			21,115	38,591

16. Other payables and accruals

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED INTERIM REPORT 2020

28

17. Bank and other borrowings

Bank and other borrowings
		As at	As at
		30 June	31 December
		2020	2019
		(Unaudited)	(Audited)
	Notes	HK$’000	HK$’000
Bank loan:
Mortgage loan	(i)	23,312	28,525
Other loans:
Margin loan	(ii)	10,564	11,581
		33,876	40,106

Notes:

(i) The mortgage loan has terms of 10 years until 2022 with a repayable on demand clause exercisable by a bank. The average interest rate was 5.39%.

The mortgage loan is secured by a charge over the Group’s investment properties and personal guarantee by former shareholders of a subsidiary.

• (ii) The margin loan is secured by the Group’s equity securities listed in Hong Kong with fair value of HK$14,670,000 (31 December 2019: HK$16,726,000) and repayable on demand. The loan is charged at a fixed interest rate of 8.375% (31 December 2019: 8.375%) per annum.

18. Loan from a shareholder

As at 30 June 2020, loan from a shareholder is advanced from Mr. Zhang Rong and is unsecured, interest bearing at 3% per annum and due for repayment on 1 January 2022.

19. Amount due to a director

As at 30 June 2020, the amount is unsecured, interest-free and due for repayment on 1 January 2022.

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED INTERIM REPORT 2020

29

20. Promissory note payables

Promissory note payables
		(Unaudited)
		HK$’000
At 1 January 2020		63,553
Imputed interest		4,252
Exchange realignment		(1,254)
At 30 June 2020		66,551

The promissory note is unsecured, interest bearing at 10% per annum and repayable on 2 September 2021. The fair value of the promissory notes approximates its carrying amount. As at 30 June 2020, the promissory note is measured at amortised cost using effective interest rate of 14.28%.

21. Share capital

Share capital
		Number of
		shares	Amount
			HK$’000
Authorised:
Ordinary shares of HK$0.1 each at
31 December 2019 and 30 June 2020	12,000,000,000		1,200,000
Issued and fully paid:
Ordinary shares of HK$0.1 each
At 1 January 2020		5,722,159,908	572,216
Exercise of share options		22,032,000	2,203
At 30 June 2020		5,744,191,908	574,419

On 7 April 2020, an employee exercised 2,016,000 share options at the exercise price of HK$0.1. The grant date of the share options was 6 April 2020. The weighted average closing price of shares immediately before the date of exercise by the employee was HK$0.076 per share.

On 20 April 2020, a consultant, Huang Guozhen, exercised 20,016,000 share options at the exercise price of HK$0.1. The grant date of the share options was 6 April 2020. The weighted average closing price of shares immediately before the date of exercise by the consultant was HK$0.076 per share.

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED INTERIM REPORT 2020

30

22. Fair value measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following disclosures of fair value measurements use a fair value hierarchy that categorises into three levels the inputs to valuation techniques used to measure fair value:

Level 1 inputs: quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date.

Level 2 inputs: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs: unobservable inputs for the asset or liability.

The Group’s policy is to recognise transfers into and transfers out of any of the three levels as of the date of the event or change in circumstances that caused the transfer.

(a) Disclosures of level in fair value hierarchy:

		Fair value measurements	Fair value measurements	Fair value measurements	Fair value measurements	Fair value measurements
		as at		30 June 2020 using:				Total
Description		Level 1		Level 2		Level 3		2020
		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
		HK$’000		HK$’000		HK$’000		HK$’000
Recurring fair value measurements:
Investments at fair value through profit
or loss
Equity securities — listed in Hong
Kong		24,638		—		—		24,638
Equity investments at fair value through
other comprehensive income
Equity securities — unlisted
investments		—		—		9,012		9,012
Investment properties
Commercial — PRC		—		—		292,919		292,919
Total recurring fair value measurement		24,638		—		301,931		326,569

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED 31 INTERIM REPORT 2020

		Fair	value measurements	value measurements	value measurements	value measurements
		as at 31		December 2019 using:				Total
Description		Level 1		Level 2		Level 3		2019
		(Audited)		(Audited)		(Audited)		(Audited)
		HK$’000		HK$’000		HK$’000		HK$’000
Recurring fair value measurements:
Investments at fair value through profit
or loss
Equity securities — listed in Hong
Kong		39,885		—		—		39,885
Investment fund		—		—		5,593		5,593
Equity investments at fair value through
other comprehensive income
Equity securities — unlisted
investments		—		—		9,012		9,012
Investment properties
Commercial — PRC		—		—		298,672		298,672
Total recurring fair value measurement		39,885		—		313,277		353,162

(b) Reconciliation of assets measured at fair value based on level 3:

At 30 June 2020

	Equity
	investments
	at fair value
	through other
	comprehensive	Investment	2020
Description	income	properties	Total
	(Unaudited)	(Unaudited)	(Unaudited)
	HK$’000	HK$’000	HK$’000
At 1 January	9,012	298,672	307,684
Additions	—	16	16
Exchange realignment	—	(5,769)	(5,769)
At 30 June	9,012	292,919	301,931

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED INTERIM REPORT 2020

32

At 31 December 2019

				Equity
				investments
		Investments		at fair value
		at fair value		through other
	through profit or			comprehensive		Investment		2019
Description		loss		income		properties		Total
		(Audited)		(Audited)		(Audited)		(Audited)
		HK$’000		HK$’000		HK$’000		HK$’000
At beginning of year		—		17,197		336,971		354,168
Total losses recognised in
— consolidated profit or loss (#)		—		—		(33,196)		(33,196)
— other comprehensive income		—		4,852		—		4,852
Additions		5,593		12,647		295		18,535
Disposal		—		(25,372)		—		(25,372)
Exchange realignment		—		(312)		(5,398)		(5,710)
At end of year		5,593		9,012		298,672		313,277
(#) Include losses for assets held at
end of reporting period		—		—		(33,196)		(33,196)

(c) Disclosure of valuation process used by the Group and valuation techniques and inputs used in fair value measurements:

The Group’s financial controller is responsible for the fair value measurements of assets and liabilities required for financial reporting purposes, including level 3 fair value measurements. The financial controller reports directly to the Board of Directors for these fair value measurements. Discussions of valuation processes and results are held between the financial controller and the Board of Directors at least twice a year.

For level 3 fair value measurements, the Group will normally engage external valuation experts with the recognised professional qualifications and recent experience to perform the valuations.

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED 33 INTERIM REPORT 2020

As at 30 June 2020

				Effect on
				fair value for
	Valuation	Unobservable		increase of
Description	technique	inputs	Range	inputs	Fair value
					(Unaudited)
					HK$’000
Investment properties	Direct comparison	Market price of office	RMB31,000 per	Increase	292,919
	approach		square meter
		Market price of	RMB32,000 per	Increase
		commercial	square meter
		Market price of	RMB190,000 per unit	Increase
		carpark
		Unexpended	RMB11,184,000	Decrease
		construction cost
Private equity investments	(i) Investment method	Capitalization rate	6.50%	Decrease	9,012
classified as equity	(for properties)
investments at fair		Monthly market rent	RMB28 per square	Increase
value through other			meter
comprehensive income
	(ii) Direct comparison	Market price	RMB1,690 per square	Increase
	method (for land)		meter
		Unexpended	RMB23,000,000	Decrease
		construction cost
	(iii) Discounted cash	Discount rate	14.42%	Decrease
	flow (for financial
	assets and liabilities
	at amortised costs)

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED INTERIM REPORT 2020

34

As at 31 December 2019

				Effect on
				fair value for
	Valuation	Unobservable		increase of
Description	technique	inputs	Range	inputs	Fair value
					(Audited)
					HK$’000
Investment properties	Direct comparison	Market price of	RMB31,000 per	Increase	298,672
	approach	office	square meter
		Market price of	RMB32,000 per	Increase
		commercial	square meter
		Market price of	RMB190,000 per	Increase
		carpark	unit
		Unexpended	RMB11,184,000	Decrease
		construction cost
Private equity	(i) Investment	Capitalization rate	6.50%	Decrease	9,012
investments	method (for
classified as equity	properties)	Monthly market rent	RMB28 per square	Increase
investments at fair			meter
value through other
comprehensive	(ii) Direct comparison	Market price	RMB1,690 per	Increase
income	method (for land)		square meter
		Unexpended	RMB23,000,000	Decrease
		construction cost
	(iii) Discounted	Discount rate	14.42%	Decrease
	cash flow (for
	financial assets
	and liabilities at
	amortised costs)
Investments at fair value	Discounted cash flow	Rate of return	2.31%	Increase	5,593
through profit or loss

23. Contingent liabilities

As at 30 June 2020, the Group did not have any significant contingent liabilities (31 December 2019: Nil).

24. Approval of the condensed consolidated interim financial statements

These condensed consolidated interim financial statements were approved and authorised for issue by the Board on 7 August 2020.

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED INTERIM REPORT 2020

35

GENERAL INFORMATION

Directors’ service contracts

At 30 June 2020, 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

None of the Directors 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 six months ended 30 June 2020.

Directors’ interests and short positions in shares and underlying

shares

At 30 June 2020, 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 otherwise required pursuant to Rules 5.46 to 5.67 of the GEM Listing Rules to be notified to the Company and the Stock Exchange were as follows:

Long positions in ordinary shares of the Company:

Long positions in ordinary shares of	the Company:
Name Capacity	Nature of Interest Percentage of the Company’s issued share capital (approximately %) Registered Shareholder Underlying Interest (Note (a))
Mr. Wong Kui Shing, Danny Through controlled corporation_(Note (b))_ Beneficially owned Mr. Wong King Shiu, Daniel Beneficially owned	403,971,449 7.03% 137,816,000 5,688,000 2.50% 10,008,000 57,000,000 1.17%

Notes:

• (a) The percentage is calculated based on the total number of ordinary shares of the Company in issue as at the date of this report, which was 5,744,191,908 Shares.

• (b) The 403,971,449 Shares are held by Discover Wide Investments Limited (“Discover Wide”), which is wholly-owned by Mr. Wong Kui Shing, Danny. Pursuant to the Division 7 and 8 of Part XV of the SFO, Mr. Wong is deemed to have an interest in all shares in which Discover Wide has, or deemed to have an interest.

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED INTERIM REPORT 2020

36

Save as disclosed above and in the section headed “Share Options”, as at 30 June 2020 and as at of 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 otherwise required pursuant to Rules 5.46 to 5.67 of the GEM Listing Rules to be notified to the Company and the Stock Exchange.

Directors’ rights to acquire shares or debentures

Save as disclosed in the section “Directors’ interests and short positions in shares and underlying shares” and “Share Options”, at no time during the six months ended 30 June 2020, 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 children under 18 years of age, 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.

Share Options

On 11 April 2017, the Company granted a total of 571,200,000 Options with rights to subscribe for 571,200,000 ordinary shares of HK$0.1 each in the share capital of the Company under the Share Option Scheme.

On 27 September 2017, the Company granted a total of 571,200,000 Options with rights to subscribe 571,200,000 ordinary shares of HK$0.1 each in the share capital of the Company under the Share Option Scheme.

On 21 June 2019, the Company granted a total of 217,056,000 Options with rights to subscribe 571,200,000 ordinary shares of HK$0.1 each in the share capital of the Company under the Share Option Scheme.

On 6 April 2020, the Company granted a total of 42,192,000 Options with rights to subscribe 42,192,000 ordinary shares of HK$0.1 each in the share capital of the Company under the Share Option Scheme.

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED 37 INTERIM REPORT 2020

As at 30 June 2020, details for Options granted and remain effective are as follows:-

Batch of Grant (Note) Name Title Exercise price Date of Grant (HK$)	Number of share options
	Outstanding as at 1 January 2020 Lapsed during the period Cancelled during the period Exercised during the period Outstanding as at 30 June 2020
DIRECTORS A WONG Kui Shing, Danny Executive Director 0.154 11/4/2017 A CHEN Shengrong Independent non-executive Director (“INED”) 0.154 11/4/2017 A HUNG Hing Man INED 0.154 11/4/2017 B WONG King Shiu, Daniel Executive Director 0.130 27/9/2017 B CHAN Kai Leung Executive Director 0.130 27/9/2017 B WONG Hoi Kuen INED 0.130 27/9/2017 FORMER DIRECTORS A TSE Chi Wai Former Executive Director (Currently a consultant of Company) (“Consultant”) 0.154 11/4/2017 A Takashi TOGO Former Executive Director (Currently a Consultant) 0.154 11/4/2017 A WU Jingjing Former Executive Director (Currently a Vice President of the Business Development department) 0.154 11/4/2017 A WONG Chi Yung Former Non-Executive Director (Currently a Consultant) 0.154 11/4/2017	5,688,000 — — — 5,688,000 2,016,000 — — — 2,016,000 2,016,000 — — — 2,016,000 57,000,000 — — — 57,000,000 5,016,000 — — — 5,016,000 2,016,000 — — — 2,016,000 57,000,000 — — — 57,000,000 57,000,000 — — — 57,000,000 2,016,000 — — — 2,016,000 33,000,000 — — — 33,000,000
Sub-total:	222,768,000 — — — 222,768,000
EMPLOYEES A 0.154 11/4/2017 B 0.130 27/9/2017 C 0.100 21/6/2019 D 0.100 6/4/2020	232,968,000 — (232,968,000) — — 334,680,000 — (254,112,000) — 80,568,000 60,048,000 (10,008,000) — — 50,040,000 22,176,000 — — (2,016,000) 20,160,000
Sub-total:	649,872,000 (10,008,000) (487,080,000) (2,016,000) 150,768,000
CONSULTANTS A Star Rich Consultants Limited Business Consultant 0.154 11/4/2017 A LAM Wai Hung Business Consultant 0.154 11/4/2017 A LI Hi Choi Consultant — Marketing 0.154 11/4/2017 A WONG Ka Ching Consultant — Corporate Finance Advisory 0.154 11/4/2017 A TAM Tsz Yeung, Alan Consultant — Software Development 0.154 11/4/2017 B Gain Rich Consultants Limited Business Consultant 0.130 27/9/2017 B CHOI Kam Yan Simon Consultant — Investment 0.130 27/9/2017 B CHENG Shing Tak Consultant — Big Data Business 0.130 27/9/2017 C CHAN Wing Chang Business Consultant (Japan) 0.100 21/6/2019 C LEUNG Po Ting, Doris Business Consultant (Japan) 0.100 21/6/2019 C CHAN King Wai Business Consultant (Japan) 0.100 21/6/2019 C Strategist Digital Limited Marketing — Consultant 0.100 21/6/2019 C LAM Wai Hung Business Consultant 0.100 21/6/2019 D HUANG Guozhen Consultant — AI Development 0.100 6/4/2020	52,992,000 — (52,992,000) — — 30,000,000 — (30,000,000) — — 30,000,000 — (30,000,000) — — 30,000,000 — (30,000,000) — — 30,000,000 — (30,000,000) — — 57,000,000 — — — 57,000,000 57,000,000 — — — 57,000,000 57,000,000 (57,000,000) — — — 30,000,000 — — — 30,000,000 30,000,000 — — — 30,000,000 30,000,000 — — — 30,000,000 30,000,000 — — — 30,000,000 27,000,000 — — — 27,000,000 20,016,000 — — (20,016,000) —
Sub-total:	511,008,000 (57,000,000) (172,992,000) (20,016,000) 261,000,000
TOTAL:	1,383,648,000 (67,008,000) (660,072,000) (22,032,000) 634,536,000

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED INTERIM REPORT 2020

38

Note:

• A: The Options were granted on 11 April 2017 under Scheme Mandate Limit refreshed on 30 June 2016 with no vesting period. The exercise period is from 11 April 2017 to 10 April 2027. The closing price per share immediately before the date of grant on 11 April 2017 was HK$0.145.

• B: The Options were granted on 27 September 2017 under Scheme Mandate Limit refreshed on 30 June 2017 with no vesting period. The exercise period is from 27 September 2017 to 26 September 2027. The closing price per share immediately before the date of grant on 27 September 2017 was HK$0.130.

• C: The Options were granted on 21 June 2019 under Scheme Mandate Limit refreshed on 28 June 2018 with no vesting period. The exercise period is from 21 June 2019 to 20 June 2029. The closing price per share immediately before the date of grant on 21 June 2019 was HK$0.091.

• D: The Options were granted on 6 April 2020 under Scheme Mandate Limit refreshed on 28 June 2018 with no vesting period. The exercise period is from 6 April 2020 to 5 April 2030. The closing price per share immediately before the date of grant on 6 April 2020 was HK$0.071.

The Board of Directors, especially the executive Directors of the Company are responsible for overseeing the operation of the Company as well as providing leadership for the Company to put forward the business strategy and work towards the business goals of the Company. Meanwhile, the independent non-executive Directors provide independent opinions to Board as appropriate.

The employees of the Company are responsible for the daily operations of Company’s business in various aspects, including but not limited to financial, compliance, human resources, public relations of the Company. Some of the employees are responsible for different projects and businesses of the Company, including but not limited to projects in PRC and Japan.

The consultants are engaged for providing advice on various Company operations, including but not limited to marketing, webcast business in Japan, Artificial Intelligence (“AI”) and other IT developments. Some of them shall introduce potential investors and projects to the Company. As the IT and AI market trends are ever-changing, the consultants shall provide us the updated advice and/or bring potential projects for the benefits of sustainable development of the Company.

Options are granted to them as they are engaged with only options as service fees. Some of the Options to them were granted at premium of the closing prices of Shares on the respective date of grant. The Company believes that this provides motivations for the consultants to create value for the Company without affecting the operating cost of the Company. The number of Options granted to each consultant is determined with reference to the market and the potential benefits and/or income they may bring to the Company with the projects they involved.

Save as disclosed above, none of the outstanding Options were exercised or cancelled or lapsed during the six months ended 30 June 2020.

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED INTERIM REPORT 2020

39

Substantial shareholders’ and other persons’ interests in shares and underlying shares

At 30 June 2020, the following interests of 5% 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
			Capacity and			Number of	issued share
Name		Notes	nature of interest			ordinary shares held	capital
							(Note (c))
Mr. Zhang Rong			Directly beneficially owned			724,240,000	12.61%
						(Registered Shareholder)
		(a)	Through controlled			1,704,000	0.03%
				corporation		(Beneficial Owner)
Discover Wide			Directly beneficially owned			403,971,449	7.03%
						(Registered Shareholder)
Mr. Wong Kui Shing,		(b)	Through controlled			403,971,449	7.03%
Danny				corporation		(Beneficial Owner)
			Beneficially owned			5,688,000	0.10%
						(Underlying Interest)
						137,816,000	2.40%
						(Registered Shareholder)

Notes:

• (a) The 1,704,000 Shares are held by Corporate Advisory Limited (“Corporate Advisory”), which is wholly-owned by Mr. Zhang Rong. Pursuant to the Division 7 and 8 of Part XV of the SFO, Mr. Zhang is deemed to have an interest in all shares in which Corporate Advisory has, or deemed to have an interest.

• (b) Mr. Wong Kui Shing, Danny was deemed to be interested in the 403,971,449 shares by virtue of his controlling interests in Discover Wide.

• (c) The percentage is calculated based on the total number of ordinary shares of the Company in issue as at the date of this report, which was 5,744,191,908 Shares.

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED INTERIM REPORT 2020

40

Save as disclosed above, as at 30 June 2020, 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.

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

During the six months ended 30 June 2020, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of Company’s listed securities.

Competing Interests of Directors and controlling shareholders

During the six months ended 30 June 2020 and up to the date of this report, the Directors had an interest in any business apart from the Group’s business, which competes or is likely to compete, either directly or indirectly, with the Group’s business that need to be disclosed pursuant to the GEM Listing Rules were as follows:

Name of Director	Name of Company	Name of Company	Nature of Business	Nature of Business	Nature of interest	Nature of interest
Wong King Shiu, Daniel	Huisheng International		Money Lending Business		Independent non-executive
		Holdings Limited				director of Huisheng
		(“Huisheng”),
		Stock Code: 1340
Wong Kui Shing, Danny	TFG International Group		Money Lending Business		Non-executive director of
		Limited (“TFG”),				TFG
		Stock Code: 542

As the Board is independent to the boards of the above mentioned companies, the Group is capable of carrying on its business independently of and at arm’s length, from the business of those companies.

During the six months ended 30 June 2020 and up to the date of this report, save as disclosed above, none of the Directors or the controlling 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.

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED 41 INTERIM REPORT 2020

CORPORATE GOVERNANCE

Corporate governance practices

During the six months ended 30 June 2020, the Company has complied with the code provisions on the Corporate Governance Code (the “Code”) as set out in Appendix 15 to the GEM Listing Rules, except for the followings:

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 King Shiu, Daniel (“Mr. Wong”) now serves as both the chairman (the “Chairman”) 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.

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.

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 5.48 to 5.67 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 six months ended 30 June 2020.

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED 42 INTERIM REPORT 2020

Audit Committee

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

The primary duties of the audit committee of the Company (the “Audit Committee”) include supervising the financial reporting procedure and reviewing the financial statements of the Group, examining and monitoring the internal control and risk management system adopted by the Group and reviewing the relevant work of the Group’s external auditor.

The Audit Committee currently has three members, including Mr. Hung Hing Man (Audit Committee chairman), Mr. Wong Hoi Kuen and Dr. Chen Shengrong. All Audit Committee Members are independent non-executive Directors.

The Group’s unaudited condensed consolidated interim financial statements for the six months ended 30 June 2020 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 established a nomination committee with written terms of reference in compliance with Code Provisions A.5.1 to A.5.6 of Appendix 15 to the GEM Listing Rules.

The primary duties of the nomination committee of the Company (the “Nomination Committee”) include 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, including Mr. Hung Hing Man (Nomination Committee chairman) and Mr. Wong Hoi Kuen and Dr. Chen Shengrong being the members. All Nomination Committee Members are independent nonexecutive Directors.

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED INTERIM REPORT 2020

43

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.

The primary duties of the remuneration committee of the Company (the “Remuneration Committee”)include 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 nonexecutive 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 of the Company.

The Remuneration Committee currently has three members, including Mr. Wong Hoi Kuen (Remuneration Committee chairman), Mr. Hung Hing Man and Dr. Chen Shengrong. All Remuneration Committee members are independent non-executive Directors.

Change in information of Directors

Pursuant to the Rule 17.50A(1) of the GEM Listing Rules, the changes in information of Directors during the six months ended 30 June 2020 and as at the date of this report are set out below:

Mr. Wong Kui Shing, Danny has resigned as the executive director of Tech Pro Technology Development Limited, of which the listing of shares had been cancelled under Rule 6.01A on 2 March 2020.

Save as disclosed above, there are no other matters required to be disclosed pursuant to 17.50A of the GEM Listing Rules.

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED 44 INTERIM REPORT 2020

Internal control and Risk management

The Board has the ultimate responsibility to maintain sound and effective internal control and risk management 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 Group has established a risk management framework which consists of the Board, the Audit Committee and the senior management of the Group. The Board determines the nature and extent of risks that shall be taken in achieving the Group’s strategic objectives. The Audit Committee is responsible for reviewing the effectiveness of the internal control and risk management systems and reporting to the Board. The Board, through the Audit Committee, conducts reviews of the effectiveness of such systems at least annually, covering all material controls including financial, operational and compliance controls.

Interim dividend

The Board does not recommend the payment of any interim dividend for the six months ended 30 June 2020 (2019: Nil).

Events after reporting period

Save as disclosed in this report, there was no other significant event after the reporting period.

By Order of the Board China Information Technology Development Limited Wong King Shiu, Daniel

Chairman and Chief Executive Officer

Hong Kong, 7 August 2020

As at the date of this report, the Board comprises Mr. Wong King Shiu, Daniel (Chairman and Chief Executive Officer), Mr. Wong Kui Shing, Danny and Mr. Chan Kai Leung as executive Directors; Mr. Hung Hing Man, Mr. Wong Hoi Kuen and Dr. Chen Shengrong as independent non-executive Directors.

CHINA INFORMATION TECHNOLOGY DEVELOPMENT LIMITED INTERIM REPORT 2020

45