Kingdee International Software Group Company Limited (‘Kingdee International’ and its subsidiaries, the ‘Group’, stock code: 268) is pleased to announce its annual results for the year ended 31 December, 2006. For the year ended 31 December, 2006, the Group’s business continued to grow steadily. Turnover and profit attributable to equity holders of the company amounted to RMB611,443,000 and RMB97,377,000 respectively, representing a respective increase of 16% and 35% over 2005. Net profit margin increased by 2 percentage points to 16%. Basic earnings per share is approximate to RMB0.22, up 38% from the corresponding period of year before. The Board of Directors recommended a final dividend of HKD 0.065 per share (2005: HKD 0.045).

During the reporting period, the Group launched its future five-year plan —the “Personalized ERP Plan”. With the application server middleware, ERP business foundation software platform technology and over 400,000 customer implementations of ERP, the Groups’ “Middleware + ERP” model applying on products and services can further satisfy the enterprises’ needs of fundamental management, industry-specific management and personalized management. Information from the annual report reveals that the Group not only maintained the leading position and grew steadily among the small and medium sized enterprise markets, but also achieved a breakthrough in high-end market of large-scale enterprises’. In 2006, the Group was ranked by “Forbes Asia” as one of the 200 best enterprises with an annual income below US$1 billion in the Asia-Pacific region. “Kingdee” was also recognized as China’s well known trademark by State Administration for Industry & Commerce.

In view of the core technology in 2006, the application server middlewar, Kingdee Apusic 5.0 and the business foundation software platform technology Kingdee BOS, achieved a breakthrough and reached the world’s leading standard. Apusic 5.0 was the fourth in the world and the first in China to have passed Java EE 5.0 certification, which is the next generation enterprise development standard. According to the 2006 CCW Research, the Group captured the largest share in application server middleware market in China among all the domestic manufacturers. Kingdee BOS also became the world leading and mature ERP technical platform. It ranked first in maturity among business foundation platform products according to the 2006 CCW Research. The product development of the Group’s “Middleware + ERP” not only set a breakthrough for the Chinese software intellectual property development, but also became a model for the Chinese management software in this personalization era. Moreover, it helped to consolidate the leading position of the differentiated competitive strengths and personalized management software.

In 2006, the Group achieved a breakthrough in the high-end market, especially in models of budget management and strategic human resource management. EAS products achieved a breakthrough in growth due to recognition by a number of large-scale group enterprises regarding the management philosophy and technical architecture. The contracts with these large-scale group enterprises further enhanced the branding of Kingdee and acted as a model for the small and medium sized enterprise market. Meanwhile, Kingdee EAS outperformed the peers in the market and became a desirable management informatization platform for the large-scale enterprises and a new shining star in the EPR market. The Group has also invested more resources into the exploration of Chinese management models in order to enhance the advancement of the ERP software’s applicable management philosophy and model.?

During the reporting period, Kingdee K/3 continued to grow steadily. The Group launched a more comprehensive and advanced version of the K/3 solution, V10.3. It further satisfied the personalized needs of customers with low maintenance costs and consolidated its leading position in the small and medium sized enterprise market. Kingdee’s KIS have been distributed solely through distribution channels to further increase its coverage in the low-end market. The number of distribution channels increased to 1,200 partners. With the increasing proportion of distribution, the selling and marketing expenses were controlled effectively. In order to explore to the new business with the small and medium sized enterprises, the Group has tapped into the mobile commerce and Internet business and launched mobile ERP products.

During the year, the Group focused on promoting sales to existing customers by setting up a Kingdee online customer service center and a call center with the aim of providing personalized services for a wider range of customers at a lower cost and higher speed, and succeeded in raising the satisfaction level of its customers. With the customers’ recognition of the service value and the Group’s extensive customer base, the client service business grew rapidly and became an important source of the turnover growth.

Furthermore, the Group continued to maintain a rapid growth for its international business. Relying on the distribution model, the Group has successfully tapped into the markets of Association of Southeast Asian Nations (“ASEAN”). Leveraging on the cooperative partner relationships with numerous local IT companies, the Group successfully entered into contracts with a number of local customers, speeding up the globalization progress of China’s ERP.

Chairman of Kingdee International, Mr. Xu Shao Chun said, “The enterprise’s management philosophy becomes the core competence of an enterprise. Only the enterprise management software which can satisfy a personalized management philosophy will bring a greater value to the enterprise. “Middleware + ERP” model will provide better products and services for the application of enterprise personalization. The Group will further increase its investment in the research and development of enterprise management software and middleware products, construct a value-added development partner eco-chain, tap into the mobile commerce and the Internet application markets and provide personalized products and services to a wider range of customers, with an aim to become the leader of the SME ERP market in the Asia-Pacific region by 2010.”