hmvod Limited — Earnings Release 2003

Jun 30, 2003

GEM

SYSTEK INFOTECH<08103> - Results Announcement

Systek Information Technology (Holdings) Limited announced on 28/06/2003:
(stock code: 08103 )
Year end date: 31/03/2003
Currency: HKD
Auditors' Report: Unqualified

Important Note:

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

                                                    (Audited   )
                                 (Audited   )       Last
                                 Current            Corresponding
                                 Period             Period
                                 from 01/04/2002    from 01/04/2001
                                 to 31/03/2003      to 31/03/2002 
                           Note  ('000      )       ('000      )

Turnover 2 : 37,698 35,292
Profit/(Loss) from Operations 3 : (56,854) (54,130)
Finance cost 3 : (50) (23)
Share of Profit/(Loss) of
Associates : 0 0
Share of Profit/(Loss) of
Jointly Controlled Entities : 0 0
Profit/(Loss) after Tax & MI : (56,829) (54,153)
% Change over Last Period : N/A %
EPS/(LPS)-Basic (in dollars) : (0.0548) (0.0523)
-Diluted (in dollars) : N/A N/A
Extraordinary (ETD) Gain/(Loss) : N/A N/A
Profit/(Loss) after ETD Items : (56,829) (54,153)
Final Dividend : 0 0
per Share
(Specify if with other : N/A N/A
options)

B/C Dates for
Final Dividend : N/A
Payable Date : N/A
B/C Dates for (-)
General Meeting : N/A
Other Distribution for : N/A
Current Period

B/C Dates for Other
Distribution : N/A

For and on behalf of 
Systek Information Technology (Holdings) Limited

Name : Wu Man Hong Francis
Title : Executive Director

Responsibility statement

The directors of the Company (the "Directors") as at the date hereof
hereby collectively and individually accept full responsibility for
the accuracy of the information contained in this results announcement
form (the "Information") and confirm, having made all reasonable
inquiries, that to the best of their knowledge and belief the
Information are accurate and complete in all material respects and
not misleading and that there are no other matters the omission of
which would make the Information herein inaccurate or misleading. The
Directors acknowledge that the Stock Exchange has no responsibility
whatsever 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 Significant accounting policies

(a) Statement of compliance

These financial results have been prepared in accordance with all
applicable Statements of Standard Accounting Practice and
Interpretations issued by the Hong Kong Society of Accountants,
accounting principles generally accepted in Hong Kong and the disclosure
requirements of the Hong Kong Companies Ordinance.

These financial results also comply with the applicable disclosure
provisions of the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited (the "Stock Exchange"). A summary of the
significant accounting policies adopted by the Group is set out below.

(b) Basis of preparation of the financial results

The Group continued to make significant losses in the current financial
year and its cash position was reduced to $2.1 million as at 31 March
2003. The sustainability of the Group is dependent on its ability to
generate sufficient cash flows from its operations, which are dependent
on, among other things, its ability to successfully implement its
business development plans. Upon the completion of a sale and purchase
agreement in relation to the sale of the Company's shares on 14 May
2003, Wide Source Group Limited ("Wide Source") becomes the largest
single shareholder of the Company. The Directors and Wide Source's
directors do not expect that there will have any material impact on the
business operation of the Group after the completion of the sale and
purchase agreement. The Directors have evaluated all the relevant facts
available to them and are of the opinion that there do not exist any
material adverse conditions precluding the Group from generating
sufficient cash flows from its operations or implementing its business
development plans. Accordingly, the financial results have been
prepared on a going concern basis.

The financial results do not include any adjustments relating to the
recoverability and classification of recorded assets amounts or to
amounts and classification of liabilities that might be necessary should
the going concern basis not be applicable.

The measurement basis used in the preparation of the financial results
is historical costs.

2 TURNOVER

The principal activities of the Group are the provision of systems
development, sale of software and hardware products, training and
technical support services. Turnover represents income arising from the
provision of systems development and consultancy services, provision of
IT engineering and technical support services, provision of training
courses and the sale of software and hardware products.

The amount of each significant category of revenue recognised in
turnover during the year is as follows:

                                           2003      2002  
                                          $'000     $'000

Systems development 20,039 18,933
Software and hardware products 3,984 4,583
Professional service fees 11,351 9,382
Training fees 2,324 2,394

                                         37,698    35,292

3 Loss from ordinary activities before taxation

Loss from ordinary activities before taxation is arrived at after
charging:

                                           2003      2002  
                                          $'000     $'000

(a) Finance costs:
Interest on bank overdrafts and
other borrowings repayable within
five years 50 23

(b) Staff costs: #
Salaries, wages and other benefits 38,945 62,551
Less: Amount capitalised as intangible
assets (3,537) (14,286)

                                         35,408    48,265  
Retirement costs                          1,389     1,980


                                         36,797    50,245

(c) Other items:
Cost of services and
merchandise sold # 25,490 21,724

  Research and development costs #        6,282    25,167  
  Less: Amount capitalised as 
        intangible assets                (3,872)  (16,676)  
  Add: Amortisation of research and 
       development costs                  8,391      6,875  
  Add: Amount impaired                   25,542          -


                                         36,343     15,366


  Operating lease rentals - properties    5,008      9,602  
  Less: Amount capitalised as 
        intangible assets                  (335)    (1,832)

                                          4,673      7,770


                                            2003      2002  
                                           $'000     $'000

Pre-operating costs written off - 67
Amortisation of deferred assets # 48 96
Auditors' remuneration 600 750
Impairment loss on fixed assets 391 -
Depreciation 2,527 2,617
Loss on disposal of fixed assets 1,293 828
Provision for bad and doubtful debts 242 1,266
Provision for receivable from minority
shareholder - 985
Provision for diminution in value against
investment securities 700 5,095
Settlement to a labour dispute @ 1,850 -

Cost of services and merchandise sold, research and development

costs, and amortisation of deferred assets include $23,311,000 (2002:
$27,243,000) staff costs.

@ For the year ended 31 March 2002, a claim was made against one of
the Company's wholly-owned subsidiaries in relation to a labour dispute
instigated by a former employee, claiming $9,522,400 (inclusive of
interest and cost). The Group had sought legal advice on the claim that
it was not possible to determine the outcome of this matter with
reasonable uncertainty as at 31 March 2002. However, based on additional
information available to the Group as at 31 March 2002, the Directors
had considered that the claim was unlikely to be successful, therefore
no provision was made in respect of the alleged claims in the financial
statements for the year ended 31 March 2002. On 26 August 2002, the
claim was transferred from the Labour Tribunal to the High Court. On 27
February 2003, a consent order was filed by the Group and the former
employee with the High Court. According to the consent order, the Group
paid a sum of $650,000 and caused 20,000,000 shares of the Company at
market value of $1,200,000 to be transferred from the substantial
shareholder of the Company to the former employee. The aforesaid
$1,200,000 due to the substantial shareholder was waived during the
year. The waived amount is in substance equivalent to a capital
contribution to the Group. As such the Group records an increase in
capital reserve (note 8).