ITE : Interim Results Announcement for the Six Months Ended 30 September 2016

ITE (HOLDINGS) LIMITED

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8092)

INTERIM RESULTS ANNOUNCEMENT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2016 CHARACTERISTICS OF THE GROWTH ENTERPRISE MARKET ("GEM") OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE "STOCK EXCHANGE") GEM has been positioned as a market designed to accommodate companies to which a high investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors. Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board and no assurance is given that there will be a liquid market in the securities traded on GEM.

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

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

HIGHLIGHTS

Turnover of the group for the six months ended 30 September 2016 was approximately HK$9,851,000 representing a decrease of approximately 15% over the turnover of approximately HK$11,582,000 for the same period in 2015.

Loss attributable to owners of the company for the six months ended 30 September 2016 amounted to approximately HK$682,000 compared to that of profit attributable to owners of the company approximately HK$240,000 for the same period in 2015.

The directors do not recommend the payment of an interim dividend for the six months ended 30 September 2016 (six months ended 30 September 2015: HK$nil).

CHAIRMAN'S STATEMENT

Dear Shareholders,

On behalf of the board (the "board") of directors (the "directors"), I hereby present the unaudited consolidated interim results of ITE (Holdings) Limited (the "company") and its subsidiaries (together, "ITE" or the "group") for the six months ended 30 September 2016 (the "period").

Mission

The mission of the group is to become the leading provider of smartcard, radio frequency identification ("RFID"), biometrics product and solution and professional services in the world. ITE has been pioneering and has achieved outstanding performance in the areas of smartcard system solutions and integration services in the Hong Kong Special Administrative Region ("Hong Kong" or "HKSAR"), the Macao Special Administrative Region ("Macao") and the People's Republic of China ("PRC"). With profound expertise, strong research and development ("R&D") capability, proven track record and excellent reputation, the group has established a leading profile in our industry and has adopted a proactive approach to introduce innovative and customized smartcard, RFID and biometrics applications to our clients. Leveraging on our extensive industry experience and intellectual assets, ITE will continue to develop innovative products and multi-applications solutions for clients coming from different industries and to expand our businesses to more overseas countries.

Appreciation

I would like to take this opportunity to express my deepest thanks to my directors, management and staff for their dedication and hard work, and shareholders, financiers and business partners for their continued support.

Hong Kong, 7 November 2016

By order of the Board ITE (Holdings) Limited Lau Hon Kwong, Vincent Chairman

BUSINESS REVIEW

The Management of the Group has continued to utilize our professional and committed workforce and financial resources to achieve maximum return to our shareholders.

During the period, we were awarded with a new contract by the Leisure and Cultural Services Department ("LCSD") of HKSAR for the Supply of Book Dispensers for the Hong Kong Public Libraries ("HKPL"). Under the scope of contract, ITE shall provide all hardware, related software, project management and system integration services for the all-new 24-hours self-service book dispensing system of HKPL. Three units of fully automatic book dispensers will be installed in Kowloon, the Hong Kong Island and New Territories to serve the general public. The introduction of this system is an important milestone of the LCSD and HKSAR Government towards the Smart City Initiatives. Latest Smart ID card, electronic payment, RFID and Internet of Things technologies are incorporated into the system which will be integrated with the library circulation system of the HKPL. ITE is very glad to have the opportunity to pioneer this application and serve the people of Hong Kong.

We were also very pleased to be awarded with a new contract by The Education University of Hong Kong ("EdUHK") for the Supply and Installation of Hostel Octopus Payment Air Conditioner System of EdUHK. Under the scope of contract, ITE shall provide all hardware, software and implementation services for Octopus payment application of seven hundred fifty units of air conditioners across three hostels of the campus. This new payment system is a networked online system as compared with the old Mifare smartmeter system which was offline nature. ITE is very proud to pioneer our Mifare smartmeter application back in 1999 when we designed and delivered for the Hong Kong Institute of Education the first installation of that kind in Hong Kong. Our award winning product, MF-25SM, has been operating and serving the students and client for 16 years. It is a testimonial for ITE : Innovation, Technology and Excellence.

It is ITE's core value that we never compromise on safety or quality and have dedicated ourselves to a zero-harm and fault mind-set. We were pleased to announce that on July 25, 2016, our subsidiaries, ITE Smartcard Solutions Limited and ITE Engineering Limited, successfully completed and passed the ISO 9001:2008 Quality Assurance System audit carried out by British Standards Institution ("BSI"). Both companies will be recommended by BSI for the continual accreditation of ISO 9001:2008 Certificates which were first accredited in 2002.

Financial Performance

For the period, the group had recorded a total revenue of approximately HK$10 million, representing a decrease of 15% over the same period of 2015. Loss attributable to owners of the company for the six months ended 30 September 2016 was approximately HK$0.7 million as compared to that of profit attributable to owners of the company approximately HK$0.2 million for the corresponding period of 2015.

Segmental information

For the six months ended 30 September 2016, the group had recorded a decrease in turnover of about 15% when compared with the same period of last year. Besides, the group's gross profit margin had also dropped from 44% in corresponding period in last year to 30% in the current period.

During the period, the service revenue generated from the provision of smartcard systems, RFID and information technology ("IT") services had decreased by 21% to approximately HK$3,802,000 (six months ended 30 September 2015: approximately HK$4,832,000). Under the same segment, the maintenance income had also decreased by 5% to approximately HK$5,686,000 (six months ended 30 September 2015: HK$5,968,000).

The group's administrative expenses had decreased by approximately 14% when compared with the same period of last year. The main reason of such decrease because was share options had been granted and the related share-based payment expense amounted to approximately HK$470,000 was recognized in corresponding period in last year.

During the period, the group maintained a healthy liquidity position and therefore the finance costs was HK$Nil (six months ended 30 September 2015: HK$Nil).

Liquidity, financial resources and treasury policies

The group generally financed its operations with its internally generated cash flows. As at 30 September 2016, the group did not have any outstanding borrowings. As at 30 September 2016, the current ratio of the group was 2.90 (31 March 2016: 3.29) while the liquidity ratio was 2.63 (31 March 2016: 3.08).

The group continues to adopt a conservative approach in its treasury policy. The group strives to reduce exposure to credit risk by performing ongoing credit evaluations of the financial condition of its customers. Besides, the group's liquidity and financing arrangements are also reviewed regularly.

Taking into consideration the stringent cost control and the existing financial resources available to the group, it is believed that the group should have adequate financial resources to meet its operation, development and investment requirements in the future.

Gearing Ratio

At 30 September 2016, the gearing ratio of the group, which is calculated as the ratio of total borrowings to total equity, was nil (31 March 2016: nil).

Treasury Policy

The group has adopted a prudent financial management approach towards its treasury policies and thus maintained a healthy liquidity position throughout the period under review. The group strives to reduce exposure to credit risk by performing ongoing credit assessments and evaluations of the financial status of its customers. To manage liquidity risk, the board closely monitors the group's liquidity position to ensure that the liquidity structure of the group's assets, liabilities and other commitments can meet its funding requirements from time to time.

Significant investments

The group had no significant investments during the period.

Material acquisitions or disposals of subsidiaries and affiliated companies

During the period, the group had no acquisitions and disposals of subsidiaries and affiliated companies.