Crypto Flow Technology Limited — Earnings Release 2005

May 12, 2005

GEM

WAFER SYSTEMS<08198> - Results Announcement (Q1, 2005, Summary)

Wafer Systems Limited announced on 12/5/2005:
(stock code: 08198 )

Year end date :31/12/2005
Currency :HKD
Auditors' report :N/A
1st Quarterly Report Reviewed by :Audit Committee

Important Note :

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

                                       (Unaudited)       (Unaudited)
                                          Current Last Corresponding
                                           Period            Period
                                   from 01/01/2005   from 01/01/2004
                                     to 31/03/2005     to 31/03/2004
                                             $'000             $'000

Turnover : 152,048 40,493
Profit/(Loss) from Operations : 1,640 (596)
Finance cost : (803) (382)
Share of Profit/(Loss) of Associates : N/A N/A
Share of Profit/(Loss) of Jointly
Controlled Entites : N/A N/A
Profit/(Loss) after Taxation & MI : 778 (987)
% Change Over the Last Period : N/A
EPS / (LPS)
Basic (in dollar) : HKD 0.0027 (HKD 0.0034)
Diluted (in dollar) : HKD 0.0027 N/A
Extraordinary (ETD) Gain/(Loss) : N/A N/A
Profit (Loss) after ETD Items : 778 (987)
1st Quarter Dividends per Share : NIL NIL
(specify if with other options) : N/A N/A
B/C Dates for 1st Quarter Dividends : N/A
Payable Date : N/A
B/C Dates for (-) General Meeting : N/A
Other Distribution for Current Period : NIL
B/C Dates for Other Distribution : N/A
(bdi: both days inclusive)

For and on behalf of
Wafer Systems Limited

Signature :
Name : Pang Kin Man, Edmond
Title : Company Secretary

Responsibility statement

The directors of the Company (the "Directors") as at the date hereof
hereby collectively and individually accept full responsibility for the
accuracy of the information contained in this results announcement form
(the "Information") and confirm, having made all reasonable inquiries,
that to the best of their knowledge and belief the Information are
accurate and complete in all material respects and not misleading and
that there are no other matters the omission of which would make the
Information herein inaccurate or misleading.The Directors acknowledge
that the Stock Exchange has no responsibility whatsoever with regard to
the Information and undertake to indemnify the Exchange against all
liability incurred and all losses suffered by the Exchange in connection
with or relating to the Information.

Remarks:
1. Basis of Presentation

The unaudited consolidated results have been prepared in accordance with
accounting principles generally accepted in Hong Kong and comply with
Hong Kong Financial Reporting Standard (HKFRSs) issued by the Hong
Kong Institute of Certified Public Accountants.

In 2005, the Group has adopted, for the first time, the following HKFRSs
which are effective for accounting periods beginning on or after
1 January 2005:

HKAS 1 Presentation of Financial Statements
HKAS 2 Inventories
HKAS 7 Cash Flow Statements
HKAS 8 Accounting Policies, Changes in Accounting Estimates
and Errors
HKAS 10 Events after Balance Sheet Date
HKAS 12 Income Taxes
HKAS 14 Segment Reporting
HKAS 16 Property, Plant and Equipment
HKAS 17 Leases
HKAS 18 Revenue
HKAS 19 Employee Benefits
HKAS 21 The Effects of Changes in Foreign Exchange Rates
HKAS 24 Related Parties Disclosures
HKAS 27 Consolidated and Separate Financial Statements
HKAS 32 Financial Instrument: Disclosure and Presentation
HKAS 33 Earnings Per Share
HKAS 36 Impairment of Assets
HKAS 37 Provisions, Contingent Liabilities and Contingent Assets
HKAS 38 Intangible Assets
HKAS 39 Financial Instruments: Recognition and Measurement
HKFRS 2 Share-based Payments
HKFRS 3 Business Combinations

The adoption of these HKFRSs has not had any material effects on the
results for the current and prior period, and no prior year adjustment
was required.

Except for the above, the principal accounting policies and basis of
preparation adopted for the preparation of the unaudited consolidated
results are consistent with those adopted by the Group in its annual
financial statements for the year ended 31 December 2004.

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

The unaudited consolidated results have been reviewed by the Audit
Committee.

1. Turnover

Turnover represents the aggregate of the net amounts received and
receivable from third parties in connection with the provision of
network infrastructure solutions, network professional services and
network software.

1. All of the Group's operations are classed as continuing.

2. Taxation

The charges represents PRC income tax which is calculated at rates
applicable to the respective PRC subsidiaries.

No provision for Hong Kong profits tax has been made as the Group
had no assessable profit for the three months ended 31 March 2005
and its corresponding period in 2004.

Pursuant to the relevant laws and regulations in the PRC, the
Company's PRC subsidiaries are entitled to exemption from
PRC income tax for two or three years commencing from their first
profit-making year of operation and thereafter, these PRC subsidiaries
will be entitled to a 50% relief from PRC income tax for the following
three years. During the Review Period, the Company has one PRC
subsidiary within its tax exemption period and one PRC subsidiary
within its 50% tax relief period.

No deferred tax asset has been recognized in respect of the unutilized
tax losses due to the unpredictability of future profit streams.

1. Earnings (loss) per share

The calculation of basic earnings (loss) per share for the three months
ended 31 March 2005 is based on the unaudited net profit attributable
to equity holders of the Company of approximately HK$778,000 (2004:
net loss of approximately HK$987,000) and on the weighted average
number of approximately 289,945,000 ordinary shares (2004:
approximately 289,945,000) in issue during the period.

The calculation of the diluted earnings per share for the three months
ended 31 March 2005 is based on the net profit attributable to equity
holders of the Company of approximately HK$778,000 and on the weighted
average number of approximately 289,946,000 ordinary shares.

Diluted loss per share has not been presented for the three months ended
31 March 2004 since the effect is anti-dilutive.