China Information Technology Development Limited — Proxy Solicitation & Information Statement 2016

Mar 17, 2016

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker, or other licensed securities dealer, bank manager, solicitors, professional accountant or other professional adviser.

If you have sold or transferred all your shares in China Information Technology Development Limited (the “ Company ”), you should at once hand this circular and accompanying form of proxy to the purchaser or transferee, or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

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

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(incorporated in the Cayman Islands with limited liability)
(Stock Code: 8178)
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PLACING OF NEW SHARES UNDER SPECIFIC MANDATE AND NOTICE OF EXTRAORDINARY GENERAL MEETING

Placing Agent

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A notice convening an extraordinary general meeting of the Company to be held at Suite No. 5A, 9/F., Sino Plaza, 255-257 Gloucester Road, Hong Kong on Thursday, 7 April 2016 at 3:00 p.m. is set out on pages EGM1 to EGM-2 of this circular. A form of proxy for use at the extraordinary general meeting is enclosed with this circular, which is also published on the websites of The Stock Exchange of Hong Kong Limited (www. hkexnews.hk) and the Company.

Whether or not you are able to attend the extraordinary general meeting, you are advised to read the notice and to complete and return the form of proxy, in accordance with the instructions printed thereon and return it to the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not later than 48 hours before the time fixed for holding the extraordinary general meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the extraordinary general meeting or any adjournment thereof should you so wish.

18 March 2016

CONTENTS

	Pages
Characteristics of GEM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	ii
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Notice of EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	EGM-1

– i –

CHARACTERISTICS OF GEM

GEM has been positioned as a market designed to accommodate companies to which a high investment risk may be attached. 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 of the Stock Exchange and no assurance is given that there will be a liquid market in the securities traded on GEM.

– ii –

DEFINITIONS

In this circular, unless the context otherwise requires, the following expressions shall have the following meanings when used herein:

• “Acquisition”

• the acquisition by Giant Prestige Investments Limited of the entire issued share capital of and shareholder’s loan in, Joyunited Investments Limited in accordance with the terms and conditions of the Acquisition Agreement, details of which has been disclosed in the circular of the Company dated 23 February 2016

• “Acquisition Agreement”

• the acquisition agreement dated 25 November 2015 in relation to the Acquisition, details of which has been disclosed in the circular of the Company dated 23 February 2016

• “acting in concert”

• has the meaning ascribed to it under The Hong Kong Code on Takeovers and Mergers

• “ASEAN Countries”

• any countries which are members of the Association of Southeast Asia Nations

• “Announcements”

• the announcements of the Company dated 8 December 2015, 8 January 2016, 29 January 2016 and 2 March 2016 respectively in relation to the Placing

• “associate(s)”

• has the meaning ascribed thereto under the GEM Listing Rules

• “Board”

• the board of Directors

• “Business Day(s)”

being a day (excluding a Saturday and any day on which a tropical cyclone warning no. 8 or above is hoisted or remains hoisted between 9:00 a.m. and 12:00 noon and is not lowered at or before 12:00 noon or on which a “black” rainstorm warning signal is hoisted or remains in effect between 9:00 a.m. and 12:00 noon and is not discontinued at or before 12:00 noon) on which licensed banks in Hong Kong are open for business

– 1 –

DEFINITIONS

China Information Technology Development Limited（中國 信息科技發展有限公司）, a company incorporated in the , a company incorporated in the Cayman Islands with limited liability and the issued Shares of which are listed on GEM

“Company” China Information Technology Development Limited（中國 信息科技發展有限公司）, a company incorporated in the , a company incorporated in the Cayman Islands with limited liability and the issued Shares of which are listed on GEM “Connected Person(s)” has the meaning ascribed to it in the GEM Listing Rules “Director(s)” the director(s) of the Company

the director(s) of the Company

“EGM”

the extraordinary general meeting of the Company to be convened and held at Suite No. 5A, 9/F., Sino Plaza, 255-257 Gloucester Road, Hong Kong on Thursday, 7 April 2016 at 3:00 p.m. to consider and, if thought fit, approve the Placing Agreement and the transactions contemplated thereunder and the proposed grant of the Specific Mandate

“GEM”

“GEM” the Growth Enterprise Market of the Stock Exchange “GEM Listing Rules” the Rules Governing the Listing of Securities on GEM “Group” the Company and its subsidiaries

“Hong Kong”

the Hong Kong Special Administrative Region of the PRC

“Independent Third Party” third party(ies) independent of and not connected with the Company and its connected persons or not acting in concert with any of the connected persons of the Company or any of their respective associates (as defined under the GEM Listing Rules)

“Long Stop Date” 5:00 p.m. on the date falling on the 30th day after the date of EGM or such other date as the Placing Agent and the Company may agree in writing

“Last Trading Day” 8 December 2015, being the last trading day for the Shares before the signing of the Placing Agreement

– 2 –

DEFINITIONS

“Latest Practicable Date”	14 March 2016, being the latest practicable date prior to
	the printing of this circular for the purpose of ascertaining
	certain information for the inclusion in this circular
“Placee(s)”	any professional, institutional or other investor(s) procured
	by the Placing Agent to subscribe for any of the Placing
	Shares pursuant to the Placing Agent’s obligations under
	the Placing Agreement
“Placing”	the placing of up to 1,830,792,000 Placing Shares by the
	Placing Agent on a best effort basis, pursuant to the terms
	of Placing Agreement
“Placing Agent”	Kingston Securities Limited, a licensed corporation to
	carry on business in Type 1 regulated activity (dealing
	in securities) under the Securities and Futures Ordinance
	(Chapter 571 of the Laws of Hong Kong)
“Placing Agreement”	the placing agreement dated 8 December 2015 and entered
	into between the Company and the Placing Agent in respect
	of the Placing
“Placing Price”	HK$0.13 per Placing Share
“Placing Share(s)”	a maximum of 1,830,792,000 new Share(s) to be issued by
	the Company pursuant to the Placing Agreement
“PRC”	the People’s Republic of China, which for the purpose
	of this circular, excludes Hong Kong, the Macau Special
	Administrative Region of the People’s Republic of China
	and Taiwan
“PRC Properties”	the eleven properties situated at No. 123 Lujing Road,
	Tianhe District, Guangzhou City, the PRC to be acquired
	pursuant to the Acquisition Agreement
“Shareholder(s)”	the shareholder(s) of the Company

– 3 –

DEFINITIONS

“Share(s)”	the ordinary share(s) of HK$0.10 each in the share capital
	of the Company
“Specific Mandate”	a specific mandate to allot and issue new Shares to be
	sought from the Shareholders at the EGM to satisfy the
	Placing Shares pursuant to the Placing
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“HK$”	Hong Kong dollar(s), the lawful currency of Hong Kong
“%”	per cent

– 4 –

LETTER FROM THE BOARD

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(incorporated in the Cayman Islands with limited liability)

(Stock Code: 8178)

Executive Directors: Mr. Wong Kui Shing, Danny (Chairman and Chief Executive Officer) Mr. Tse Chi Wai Ms. Wu Jingjing Mr. Takashi Togo Mr. Wong Chi Yung

Independent non-executive Directors: Mr. Hung Hing Man Mr. May Tai Keung, Nicholas Dr. Chen Shengrong

Registered office: Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

Principal place of business in Hong Kong: Suite No. 5A, 9/F., Sino Plaza 255-257 Gloucester Road Hong Kong

18 March 2016

To the Shareholders

Dear Sir or Madam,

PLACING OF NEW SHARES UNDER SPECIFIC MANDATE

INTRODUCTION

References are made to the Announcements.

On 8 December 2015 (after trading hours), the Company and the Placing Agent entered into the Placing Agreement whereby the Company agreed to place, through the Placing Agent, on a best effort basis, up to 1,830,792,000 new Shares to not less than six independent Placees at the Placing Price of HK$0.13 per Placing Share.

The allotment and issue of the Placing Shares will be made under the Specific Mandate to be sought from the Shareholders at the EGM.

– 5 –

LETTER FROM THE BOARD

The purpose of this circular is to provide you with, among other things, further details of the Placing Agreement, the proposed grant of the Specific Mandate together with a notice convening the EGM to consider and, if thought fit, to approve the Placing contemplated under the Placing Agreement and the proposed grant of the Specific Mandate.

THE PLACING AGREEMENT

Set out below are the principal terms of the Placing Agreement:

Date: 8 December 2015 (after trading hours) Issuer: the Company Placing Agent: Kingston Securities Limited

To the best of the Directors’ knowledge, information and belief and having made all reasonable enquiries, the Placing Agent is an Independent Third Party.

Placing

The Company and the Placing Agent entered into the Placing Agreement whereby the Company agreed to place, through the Placing Agent, on a best effort basis, up to 1,830,792,000 new Shares to not less than six independent Placees at the Placing Price of HK$0.13 per Placing Share.

Placing Shares

Assuming that there will be no change in the issued share capital of the Company between the Latest Practicable Date and completion of the Placing, the maximum of 1,830,792,000 Placing Shares to be allotted and issued pursuant to the Placing represent approximately:

• (a) 47.17% of the total number of issued Shares as at the Latest Practicable Date; and

• (b) 32.05% of the total number of issued Shares as enlarged by the allotment and issue of the maximum number of the Placing Shares.

Based on the closing price of the Shares of HK$0.21 per Share on 8 December 2015, being the date of the Placing Agreement, the Placing Shares have a market value of HK$384,466,320. The Placing Shares have an aggregate nominal value of HK$183,079,200.

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LETTER FROM THE BOARD

The Placing Shares will rank pari passu in all respects with the Shares in issue as at the date of allotment and issue of the Placing Shares.

Placing Price

The Placing Price of HK$0.13 per Placing Share represents:

• (a) a discount of approximately 38.10% to the closing price of HK$0.21 per Share as quoted on the Stock Exchange on the Last Trading Day;

• (b) a discount of approximately 43.23% to the average closing price of approximately HK$0.229 per Share as quoted on the Stock Exchange for the last five consecutive trading days immediately prior to the Last Trading Day;

• (c) a discount of approximately 40.09% to the average closing price of approximately HK$0.217 per Share as quoted on the Stock Exchange for the last ten consecutive trading days immediately prior to the Last Trading Day;

• (d) a premium of approximately 23.81% over the unaudited net assets value per share of approximately HK$0.105 as at 30 September 2015; and

• (e) a discount of approximately 34.01% to the closing price of HK$0.197 per Share as quoted on the Stock Exchange on the Latest Practicable Date.

The Placing Price was determined after arm’s length negotiations between the Company and the Placing Agent with reference to, among other factors, the historical trading prices of the Shares, the historical trading liquidity of the Shares and the imminent capital needs of the Group. In considering such factors, the Board made reference to (i) the fluctuation of the market prices of the Shares in the previous 12-month period prior to the date of the Placing Agreement ranging from HK$0.091 per Share to HK$0.345 per Share; (ii) the thin trading liquidity of the Shares during the twelve months prior to the date of the Placing Agreement, up to and including the Last Trading Day, where the daily trading volume of the Shares ranged from the highest of approximately 343 million Shares to nil and the average daily trading volume of the Shares during the aforementioned period was approximately 22 million Shares, or 0.58% of the total number of issued Shares as at the date of the Placing Agreement; and (iii) the cash and bank balance of the Group as at 31 November 2015, which is insufficient to cover the refurbishment of and operation of the business in the PRC Properties, repayment of bank loan and interest and payment of operating expenses incurred in the PRC Properties in the coming 12 months.

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LETTER FROM THE BOARD

In view of the latest unstable political and economic conditions worldwide and the volatility of the securities markets in Hong Kong and the PRC, investment sentiments have been adversely affected and investors are becoming more cautious when making investment decisions. The Directors consider that a lower placing price is required to encourage investments in the Company by the potential investors and the Placing Price will enable the Company to raise necessary fund to improve its cash flow given its imminent funding needs and accordingly, they are of the view that it is fair and reasonable and in the interest of the Company and the Shareholders as a whole under the current market conditions.

Placing Commission

The Placing Agent will receive a placing commission of 2.5% of the aggregate amount equal to the Placing Price multiplied by the actual number of the Placing Shares being placed in the Placing in accordance with the Placing Agreement upon completion of the Placing.

The placing commission was determined after arm’s length negotiation between the Company and the Placing Agent with reference to the market rate and after taking into account the size of the Placing and the time allowed for the Placing Agent to procure the prospective Placees.

The Directors (including the independent non-executive Directors) consider that the commission for the Placing is fair and reasonable.

Placee(s)

The Placing Shares shall be offered by the Placing Agent to not less than six Placee(s), who, and its (their) ultimate beneficial owner(s), will be Independent Third Party(ies). It is expected that none of the Placee(s) (together with parties acting in concert with him/her/it) will become a substantial Shareholder (as defined in the GEM Listing Rules) immediately after completion of the Placing.

Conditions of the Placing

Completion of the Placing is conditional upon satisfaction of the following:

• (a) the Listing Committee of the Stock Exchange granting or agreeing to grant the listing of, and permission to deal in, the Placing Shares;

• (b) the passing of resolution(s) by the Shareholders to approve the Placing Agreement and the transactions contemplated thereunder, including the grant of the Specific Mandate for the allotment and issue of the Placing Shares, at the EGM; and

– 8 –

LETTER FROM THE BOARD

• (c) the obligations of the Placing Agent under this Placing Agreement becoming unconditional and not being terminated in accordance with the terms thereof, including provisions regarding the force majeure events.

If the above conditions are not satisfied and/or waived in whole or in part by the Placing Agent prior to the Long Stop Date, the Placing Agreement will be terminated and the Placing will not proceed and all obligations and liabilities of the parties thereunder will forthwith cease and determine and no party will have any claim against the other (save for any antecedent breaches thereof).

As at the Latest Practicable Date, none of the conditions above have been fulfilled.

Completion of the Placing

Completion of the Placing will take place within four Business Days after the fulfilment (or waiver, as the case may be) of the last outstanding conditions set out above or such later date to be agreed between the Company and the Placing Agent.

Application for Listing

Application will be made by the Company to the Stock Exchange for the listing of, and permission to deal in, the Placing Shares.

Termination of the Placing Agreement

The Placing Agent reserves its right to terminate the Placing Agreement by notice in writing prior to 9:00 a.m. on the date of completion of the Placing if:

• (a) there develops, occurs or comes into force the following force majeure events which would materially and adversely affect the success of the Placing:

• (i) the introduction of any new laws or regulations or any change in existing laws or regulations (or the judicial interpretation thereof) or other occurrence of any nature whatsoever which may, in the absolute opinion of the Placing Agent, materially and adversely affect the business or the financial or trading position or prospects of the Group as a whole; or

– 9 –

LETTER FROM THE BOARD

• (ii) the occurrence of any local, national or international event or change (whether or not forming part of a series of events or changes occurring or continuing before and/or after the date of the Placing Agreement) of a political, military, financial, economic, currency (including a change in the system under which the value of the Hong Kong currency is linked to the currency of the United States of America) or other nature (whether or not sui generis with any of the foregoing), or in the nature of any local, national, international outbreak or escalation of hostilities or armed conflict, or affecting local securities market or the occurrence of any combination of circumstances which may, in the absolute opinion of the Placing Agent, materially and adversely affect the business or the financial or trading position or prospects of the Group as a whole or adversely prejudices the success of the placing of the Placing Shares to potential investor(s) or otherwise makes it inexpedient or inadvisable for the Company or the Placing Agent to proceed with the Placing; or

• (iii) any change in market conditions or combination of circumstances in Hong Kong (including without limitation to suspension or material restriction or trading in securities) occurs which affect the success of the Placing (such success being the placing of the Placing Shares to the Placee(s)) or otherwise in the absolute opinion of the Placing Agent makes it inexpedient or inadvisable or inappropriate for the Company or the Placing Agent to proceed with the Placing; or

• (b) the Company commits any material breach of or omits to observe any of the obligations or undertakings expressed or assumed under the Placing Agreement; or

• (c) any suspension in the trading of the Shares on the Stock Exchange for more than ten consecutive trading days save for the purposes of clearing of the announcement(s) and/or circular(s) relating to the Placing; or

• (d) the Placing Agent shall become aware of the fact that any of the representations or warranties contained in the Placing Agreement was, when given, untrue or inaccurate or would in any respect be untrue or inaccurate if repeated and the Placing Agent shall determine that any such untrue representation or warranty represents or is likely to represent a material adverse change in the financial or trading position or prospects of the Group taken as a whole or will otherwise likely to have a material prejudicial effect on the Placing.

– 10 –

LETTER FROM THE BOARD

In the event that the Placing Agreement is terminated pursuant to the above, all obligations of the Placing Agent thereunder shall cease and determine and no party shall have any claim against any other parties in respect of any matter or thing arising out of or in connection with the Placing Agreement, save for any antecedent breaches.

ISSUE OF NEW SHARES UNDER SPECIFIC MANDATE

The allotment and issue of the Placing Shares will be made under the Specific Mandate to be sought from the Shareholders at the EGM.

REASONS FOR AND BENEFITS IN THE PLACING

The Group is principally engaged in the development and sale of computer software and hardware, the provision of system integration and related support services in the PRC. The PRC Properties, once acquired, would become the headquarters of the Group in the PRC to capture new business opportunities and investment projects in the IT market in the PRC.

Currently, software development and system integration business and sale of in-house developed products via Pantosoft remains the stable business of the Group. The Group had devoted relatively more resources to develop market for the Pantosoft products in the PRC in 2015. The marketing effort spent is paying off as the business of Pantosoft is continuously improving. Nonetheless, to keep pace with the market situation and IT development, the Group still have to improve its overall business performance for both the existing and new business of the Group.

The Group is dedicated to diversify its business and open up new income source and the Directors have been persistently and pro-actively considering and exploring opportunities for different investment projects with a view to broadening the scope of investments of the Group according to the market conditions.

As stated in the prospectus of the Company dated 13 February 2014, the Company intended to invest on certain IT projects relating to automated control and monitoring system for new steel refining technology (“ ACM ”) and medical related information technology system (“ MRS ”).The ACM projects are IT-related projects which involve the development of automated control and monitoring system for new steel refining technology and the MRS projects are IT-related projects which involve the development of medical related information technology system.

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LETTER FROM THE BOARD

Besides, one of the associate companies of the Company is focusing on solutions in big data and analytics for business intelligence, with the close connection with this associate company, the Company may be able to utlitise the big data collected and analysed from the internet platform and develop a comprehensive ERP system which will be able to attract clients with useful data analysis. As such, it creates synergy effect to the existing business of the Company while expanding the Group’s business territory with an objective to broaden its income source and enhance its financial performance. As announced by the Company on 13 November 2015, the Company has formed a joint venture with Nihon Unisys, Ltd. with a business objective to promoting and selling the Japanese products (such as groceries, cosmetics and electronic products) and its related business (such as advertising and consulting services and investments) in the PRC, Hong Kong and the ASEAN Countries. Electronic products would be one of the products that the joint venture plans to sell and promote, including but not limited to software, hardware, information system and applications and IT-related consulting services. By providing these IT– related products and services, the Company can utilise the existing skills and knowledge that it possesses in its existing business so that the resources of the Company can be better utilised and the existing business of the Company can be strengthened. Also, it provides a channel for the Company to explore different business opportunities in Japan and other ASEAN countries. As the joint venture has just been set up, the Company is still in the discussion and preliminary planning as to how to actualise the business plan subject to the market condition.

Also, as announced by the Company on 25 November 2015 and 23 February 2016, the Group intends to further expand its network and business in the PRC by acquiring Joyunited Investments Limited. The Company is of the view that the growth of the IT market in the PRC is very rapid as there is a huge market spanning through the various provinces in the PRC and the market has a great interest and demand in information technologies. Accordingly, the Company considers it appropriate to acquire the PRC Properties for headquarters in the PRC to support the existing business of the Company, such as software development and system integration. The Company expects to employ 25 employees in the PRC for, including but not limited to, business development, marketing and sales, daily operation of the PRC Properties and financial aspects. By acquiring the PRC Properties as the headquarters of the Company, the Company would be able to easily connect and build networks with different PRC clients. Besides, upon refurbishment of the PRC Properties, the Company will be able to set up a centralised server system and IT development base in the PRC Properties to further strengthen the existing IT business of the Company. In addition, the Company intends to provide comprehensive one-stop IT consultation services to those enterprises which are interested in entering into the IT field in the PRC. The Company can provide shared workspace inside the PRC Properties for these clients to start up their IT businesses. With the knowledge and technology that the Company possesses, the Company will also provide IT consultation and development support services to the clients when they request so. The Directors consider that the Acquisition will provide the Group with accommodation and premises to better integrate its different types of IT-related investment projects as well as its other existing businesses. The Acquisition would also allow the Group to set up its future headquarters in Guangzhou, the PRC.

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LETTER FROM THE BOARD

The Placing improves the flexibility for the Group to allocate resources to the postcompletion work of the Acquisition, the continuing development of the abovementioned IT-related projects and the future development of the Group without affecting its current cash flow position. For details of the allocation of funds, please refer to the paragraph headed “Use of Proceeds” below. The Directors are of the view that the Placing represents a good opportunity to raise additional funds for the Group to finance the abovementioned business opportunities in a timely manner without increasing the interest burden of the Group and the allocation of the net proceeds raised from the Placing match with the existing plan of the Company.

It is also the intention of the Group to source additional funding to strengthen and improve its capital base in the long run and to capture any business and/or investment opportunities which may arise in the future upon its review and adjustment (if any) to the Group’s future plan in light of the changing business environment.

In considering rights issue and open offer, the Directors had approached four underwriters and they did not indicate interest in underwriting the Placing Shares. At the same time, they were either unwilling to place the Placing Shares or they offered an offer price that is lower than the Placing Price offered by the Placing Agent. After considering the financial situation of the Company and the constrains of right issue and open offer as stated below, the Company consider that the terms of the Placing offered by the Placing Agent are the best available terms that the Company could obtain. Further, as a matter of fact that as at the Latest Practicable Date, there is no dominant shareholder of the Company and the shareholdings of the Company are by no means concentrated (approximately 90% of the shareholdings are in the hands of public Shareholders). Also, provided that there is no dominant shareholders of the Company, the amount of fund raised with right issue could be uncertain.

Furthermore, as the Company does not have dominant shareholders, it is difficult that rights issue and open offer are widely accepted by Shareholders in general. Besides, rights issue and open offer are relatively time consuming and costly, as it requires approval from relevant authorities and involves, among other things, the preparation and the issue of a prospectus, a longer acceptance process by potential investors and the handling of application forms, and, for rights issue, the opening of nil-paid trading window.

In considering debt financing, the Board considers it is difficult for the Company to obtain bank borrowings as the Company had recorded a net loss of approximately HK$57,000,000 for the nine months ended 30 September 2015. In addition, the Board considers bank borrowing will have additional financial cost to the Company and that interest burden from bank borrowings is not beneficial to the Group. Moreover, with such financial records of the Company, it would be difficult for the Company to obtain bank borrowings of the amount as the Company could obtain in the Placing.

– 13 –

LETTER FROM THE BOARD

In general, the Board considers that the Placing is an appropriate fund raising exercise as in comparison with debt financing exercises, the Placing will not increase the gearing ratio of the Company. The Board believes that the Placing represents an opportunity to raise capital for the Group while broadening its shareholder and capital base.

Upon completion of the Placing, the shareholding interest of the existing Shareholders will be diluted by approximately 32.05% and the shareholding interest of Discover Wide Investments Limited will be diluted from approximately 10% to approximately 6.79%; and the shareholding interest of public shareholders will be diluted from approximately 90% to approximately 61.16%.

Although the existing shareholding percentage would be diluted after the Placing, the net assets per Share would not be diluted as the net assets of the Group will be increased by the net proceeds of the Placing of approximately HK$230 million from approximately HK$408 million million as at 30 September 2015 to approximately HK$638 million million and the net assets per Share will be increased from approximately HK$0.105 to approximately HK$0.112.

As the Placees will be no less than six independent professional, institutional or other investor(s) and considering the difficulties to raise funds by other means as stated in paragraph (iii) below, the Placing represents an opportunity to raise additional long term funds for the Company for the new businesses while broadening the shareholder and capital base and revenue base of the Company. The Board is of the view that with the support of the long term fund raised by the Placing, the Company will be able to flexibly and more effectively inject necessary capital and resources to the new businesses which will further generate long term revenues and benefits to the Shareholders and the Company as a whole and increase the value of the Shares in the long run.

The information of the Placing including the dilution impact and opinion of the Board have been included in this circular for the Shareholders’ consideration, taken into account the inherent dilutive nature of the Placing and the fact that the Placing will be subject to the approval by the existing Shareholders where their approval would represent their concurrence with the view of the Board that the Placing would be reasonable and fair to the existing Shareholders.

The Directors also consider that the Placing Agreement was entered into on normal commercial terms after arm’s length negotiations between the Company and the Placing Agent and that the terms of the Placing Agreement (including the Placing Price) are fair and reasonable so far as the interests of the Company and its Shareholders as a whole are concerned.

– 14 –

LETTER FROM THE BOARD

USE OF PROCEEDS

Assuming all the Placing Shares were allotted and issued, the gross proceeds from the Placing will amount to approximately HK$238 million and the net proceeds from the Placing after deducting the placing fee and other related expenses payable by the Company will amount to approximately HK$230 million. The net price raised per Placing Share is approximately HK$0.126.

It is expected that:–

• (i) approximately HK$73 million, representing approximately 31.7% of the net proceeds from the Placing would be used for the refurbishment of and operation of the business in the PRC Properties such as for the refurbishment of the PRC Properties, purchase of office furniture for the PRC Properties, repayment of bank loan and interest, and payment of operating expenses incurred in the PRC Properties in the coming 12 months;

• (ii) approximately HK$69 million, representing approximately 30% of the net proceeds from the Placing would be reserved for the ACM and MRS projects which are both IT-related projects as disclosed in the prospectus of the Company dated 13 February 2014;

• (iii) approximately HK$19 million, representing approximately 8.3% of the net proceeds from the Placing would be reserved for developing the future business of the Group, including but not limited to, the joint venture with Nihon Unisys, Ltd. as disclosed in the announcement of the Company dated 13 November 2015; and

• (iv) approximately HK$69 million, representing approximately 30% of the net proceeds from the Placing would be applied as general working capital of the Group to support the annual expenditure scale of the Group.

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LETTER FROM THE BOARD

Further details of the use of net proceeds were summarised below:

Usage of the net proceeds raised

• Upon completion of the Acquisition as disclosed in the circular of the Company dated 23 February 2016, the Company intends to refurbish the PRC Properties as its future headquarters in Guangzhou, the PRC.

Amount of net proceeds intended to be used Percentage (approximate (approximate figure) figure) HK$73 million 31.7%

• The Company plans to allocate part of the net proceeds from the Placing for refurbishment of the PRC Properties (approximately HK$35 million), purchase of office furniture for the PRC Properties (approximately HK$4 million), repayment of bank loan and interest (approximately HK$15 million) and payment of operating expenses expected to be incurred in the PRC Properties (approximately HK$19 million).

• Regarding the operating expenses expected to be incurred in the PRC Properties, the Company intends to employ about 25 employees in the PRC with total staff cost of approximately HK$1.4 million per month from March 2016 onwards. Besides, there would be approximately HK$0.4 million per month for other operating expenses such as travelling, entertainment, office supplies and utilities and approximately HK$1 million double pay for the employees.

– 16 –

LETTER FROM THE BOARD

Usage of the net proceeds raised

• Regarding the open offer conducted by the Company in February 2014 as disclosed in the prospectus of the Company dated 13 February 2014, the Company intended to invest an aggregate of approximately HK$69 million on certain IT projects where a total of approximately HK$37 million would be invested in ACM and approximately HK$32 million would be invested in MRS. For details of the ACM and MRS projects, please refer to the prospectus of the Company dated 13 February 2014.

Amount of net proceeds intended to be used Percentage (approximate (approximate figure) figure) HK$69 million 30%

• The Company has commenced the due diligence work on the ACM and MRS projects and is still in the course of monitoring the progress of ACM and MRS projects. In view of the importance of the Acquisition, funds for the ACM and MRS projects were reallocated to pay for the consideration of the Acquisition.

• The Company plans to reserve part of the net proceeds raised from the Placing for the ACM and MRS projects and will move forward with the investments when those projects are proven to be commercially viable.

– 17 –

LETTER FROM THE BOARD

Usage of the net proceeds raised

• As announced by the Company on 13 November 2015, the Company has formed a joint venture with Nihon Unisys, Ltd. with a business objective to promoting and selling the Japanese products (such as groceries, cosmetics and electronic products) and its related business (such as advertising and consulting services and investments) in the PRC, Hong Kong and the ASEAN Countries.

Amount of net proceeds intended to be used Percentage (approximate (approximate figure) figure) HK$19 million 8.3%

• Electronic products will include but not limited to software, hardware, information system and applications and IT-related consulting services. Therefore, the Company intends to allocate part of the net proceeds raised to develop the joint venture and strengthen the existing business of the Company.

• As the joint venture has just been set up, the Company is still in the discussion and preliminary planning as to how to actualise the business plan subject to the market condition.

– 18 –

LETTER FROM THE BOARD

Usage of the net proceeds raised

• As disclosed in the annual report of the Group for the year ended 31 December 2014, the administrative expenses and other expenses incurred by the Group amounted to approximately HK$19.4 million and approximately HK$25.0 million for the years ended 31 December 2014 and 31 December 2013 respectively. Upon completion of the Acquisition but before completion of the Placing, the cash and cash equivalent balance of approximately HK$15 million would be at a relatively low level. Therefore, the Group intends to apply approximately HK$69 million raised from the Placing as general working capital of the Group. It is expected that the said HK$69 million would be able to cover the annual administrative expenses and other expenses incurred by the Group for two to three years.

Amount of net proceeds intended to be used Percentage (approximate (approximate figure) figure) HK$69 million 30%

Out of the net proceeds of approximately HK$230 million from the Placing, and after deducting the cost of approximately 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. Thus, the Board considers that the Company can meet the expected funding needs for the next 12 months provided with no drastic change of market and business conditions.

– 19 –

LETTER FROM THE BOARD

SHAREHOLDING STRUCTURE

As at the Latest Practicable Date, the Company has 3,881,359,908 Shares in issued.

For illustration purpose, the table below set out the shareholding structure of the Company (i) as at the Latest Practicable Date; and (ii) immediately upon completion of the Placing:

Shareholders Discover Wide Investments Limited (Note 1) Public Shareholders Placee(s) (Note 2) Other public shareholders Total	As at the Latest Practicable Date Number of Shares Approximate % 388,131,449 10.00 – – 3,493,228,459 90.00 3,881,359,908 100	Immediately upon completion of the Placing assuming all the Placing Shares have been placed out Number of Shares Approximate % 388,131,449 6.79 1,830,792,000 32.05 3,493,228,459 61.16 5,712,151,908 100	Immediately upon completion of the Placing assuming all the Placing Shares have been placed out Number of Shares Approximate % 388,131,449 6.79 1,830,792,000 32.05 3,493,228,459 61.16 5,712,151,908 100
			100

Notes:

1. Discover Wide Investments Limited is a company incorporated in the British Virgin Islands and is wholly owned by Mr. Wong Kui Shing, Danny, who is the Chairman and Chief Executive Officer and an executive Director.

2. The Placing Shares shall be offered by the Placing Agent to not less than six Placee(s), who, and its (their) ultimate beneficial owner(s), will be Independent Third Party(ies). It is expected that none of the Placee(s) (together with parties acting in concert with him/her/it) will become a substantial Shareholder (as defined in the GEM Listing Rules) immediately after completion of the Placing.

– 20 –

LETTER FROM THE BOARD

FUND RAISING ACTIVITIES IN THE PAST TWELVE MONTHS

Save for the following fund raising activity, the Company had not carried out any other fund raising activities on any issue of equity securities in the past twelve months prior to the Latest Practicable Date:

	Fund raising			Actual use of proceeds
Date of	activity and	Net proceeds	Intended use	as at the Latest
announcement	total funds raised	raised	of net proceeds	Practicable Date
23 September 2015	A placing of new shares	Approximately	For developing potential	Reserved to pay the remaining
	under general mandate	HK$62.8 million	new business should such	balance of the consideration
			opportunities arise and	for the Acquisition
			for the general working
			capital of the Group
13 May 2015	A placing of new shares	Approximately	For developing potential	As to approximately
	under general mandate	HK$98.0 million	new business should	HK$36 million for deposits
			such opportunities arise	for the Acquisition and the
			and for general working	remaining HK$62 million
			capital of the Group	for general working capital
				of the Group and reserved to
				pay the remaining balance
				of the consideration for the
				Acquisition

EGM

The EGM will be convened and held at Suite No. 5A, 9/F., Sino Plaza, 255-257 Gloucester Road, Hong Kong on Thursday, 7 April 2016 at 3:00 p.m. for the Shareholders to approve the Placing contemplated under the Placing Agreement and the proposed grant of the Specific Mandate. A notice convening the EGM is set out on pages EGM-1 to EGM-2 of this circular. Whether or not you are able to attend the EGM, you are requested to complete the form of proxy in accordance with the instructions printed thereon and return the same to the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17 Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for the holding of the EGM or any adjournment thereof. Completion and return of the form of proxy shall not preclude you from attending and voting at the EGM if you so wish.

To the best of the knowledge, information and belief of the Directors having made all reasonable enquiries and as at the Latest Practicable Date, no Shareholder has a material interest in the transactions contemplated under the Placing Agreement. As such, no Shareholder is required to abstain from voting under the GEM Listing Rules at the EGM on the resolution(s) to approve the Placing Agreement and the transactions contemplated thereunder and the proposed grant of the Specific Mandate.

– 21 –

LETTER FROM THE BOARD

Completion of the Placing is subject to the satisfaction of the conditions precedent in the Placing Agreement. As the Placing may or may not proceed, Shareholders and potential investors are advised to exercise caution when dealing in the Shares.

RECOMMENDATION

The Board (including the independent non-executive Directors) is of the view that the Placing Agreement is on normal commercial terms and are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, the Board recommends the Shareholders to vote in favour of the resolution to be proposed at the EGM to approve the Placing Agreement and the transactions contemplated thereunder and the proposed grant of the Specific Mandate.

RESPONSIBILITY STATEMENT

This circular, 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 Group. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular 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 circular misleading.

By order of the Board China Information Technology Development Limited Tse Chi Wai

Executive Director and Company Secretary

– 22 –

NOTICE OF EGM

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

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “ Meeting ”) of China Information Technology Development Limited (the “ Company ”) will be held at Suite No. 5A, 9/F., Sino Plaza, 255-257 Gloucester Road, Hong Kong on Thursday, 7 April 2016 at 3:00 p.m. for the purpose of considering and, if thought fit, passing with or without amendments, the following resolution of the Company:

ORDINARY RESOLUTION

“ THAT

• (a) the conditional placing agreement (the “ Placing Agreement ”) entered into between the Company and Kingston Securities Limited as placing agent dated 8 December 2015 in relation to the placing of up to 1,830,792,000 new shares of the Company (the “ Placing Shares ”) at a price of HK$0.13 each on a best effort basis (a copy of the Placing Agreement has been produced to the EGM marked “A” and signed by the chairman of the EGM for the purpose of identification) and all the transactions contemplated thereunder (including the allotment and issue of the Placing Shares pursuant thereto) be and are hereby approved, confirmed and ratified;

• (b) the directors of the Company (the “ Director ”) be and are hereby specifically authorised to allot and issue the Placing Shares in accordance with the terms of the Placing Agreement; and

• (c) any of the Director be and is hereby authorised to do all such further acts and things, negotiate, approve, agree, sign, initial, ratify and/or execute such further documents, instruments and agreements (whether under common seal or not) and to take all steps and to do all such acts or things deemed by him/her to be incidental to, ancillary to or in connection with the matters contemplated in the Placing Agreement and the transactions contemplated thereunder (including the allotment and issue of the Placing Shares pursuant thereto) as he/she may in his/her absolute discretion consider

– EGM 1 –

NOTICE OF EGM

necessary, desirable or expedient to give effect to the Placing Agreement and the implementation of all transactions contemplated thereunder (including the allotment and issue of the Placing Shares pursuant thereto) and to agree with such variation, amendment or waiver as, in the opinion of the Directors, in the interest of the Company and its shareholders as a whole.”

By order of the Board China Information Technology Development Limited Tse Chi Wai

Executive Director and Company Secretary

Hong Kong, 18 March 2016

Registered office: Principal place of Cricket Square business in Hong Kong: Hutchins Drive Suite No. 5A, 9/F., P.O. Box 2681 Sino Plaza Grand Cayman KY1-1111 255-257 Gloucester Road Cayman Islands Hong Kong

Notes:

1. Any member entitled to attend and vote at the meeting convened by the above notice is entitled to appoint one or more proxies to attend and, in the event of a poll, vote in his/her stead. A proxy needs not be a member of the Company.

2. In order to be valid, the form of proxy must be duly lodged at the Company’s branch registrar in Hong Kong, Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong together with a power of attorney or other authority, if any, under which it is duly signed or a certified copy of that power of attorney or authority, not less than 48 hours before the time for holding the meeting or any adjourned meeting.

3. Completion and return of a form of proxy will not preclude a member from attending in person and voting at the above meeting or any adjournment thereof, should he so wish, and in such event, the form of proxy shall be deemed to be revoked.

4. As of the Latest Practicable Date, the Board comprises (i) five executive Directors, namely Mr. Wong Kui Shing, Danny, Mr. Tse Chi Wai, Ms. Wu Jingjing, Mr. Takashi Togo and Mr. Wong Chi Yung; and (ii) three independent non-executive Directors, namely Mr. Hung Hing Man, Mr. May Tai Keung, Nicholas and Dr. Chen Shengrong.

– EGM 2 –