CDCS Cdc Software Corp. ADS, Each Representing One Class A Ordinary Share (MM)

CDC Software Corporation (NASDAQ: CDCS), a hybrid enterprise software provider of on-premise and cloud deployments, today announced financial results for the quarter ended June 30, 2010. For the second quarter of 2010, Non-GAAP revenue(a) was $54.0 million and Non-GAAP net income(a) was $7.8 million, or $0.27 in Non-GAAP earnings per share(a), compared to Non-GAAP revenue of $50.6 million and Non-GAAP net income of $8.4 million, or $0.34 in Non-GAAP earnings per share in the second quarter of 2009. Second quarter 2010 Adjusted EBITDA(a) was $11.7 million, compared to $10.6 million in the first quarter of 2010 and $13.7 million in the second quarter of 2009.

Non-GAAP earnings per share was impacted by several factors, including the company’s transition to its hybrid software model that included increased upfront costs for sales and marketing and a higher tax rate than in previous quarters, as well as other expenses. In addition, CDC Software generated significant unrecognized revenue from Software as a Service (SaaS) sales, however, the full cost burden was recognized in the current quarter. Total contracted and unrecognized recurring revenue (TCURR), a measure of maintenance deferred revenue plus all remaining revenue value of SaaS contracts through the end of their respective terms, at the end of the second quarter 2010 was $67.5 million, an increase of 43 percent from $47.1 million in the second quarter of 2009, and a 29 percent increase from $52.5 million in the first quarter of 2010.

Second quarter 2010 application sales increased 73 percent to $13.5 million, from $7.8 million in the second quarter of 2009. Application sales are comprised of license revenue plus new secured total contract value of SaaS contracts. Secured Total Contract Value (STCV) is the contract dollar amount for the duration of the contracts for all SaaS contracts secured, including new logo contracts, upsell, rental, as well as all renewals received by the end of the quarter. The company’s estimates, announced in June 2010, provided that application sales during the second quarter of 2010 would increase by approximately 33-42 percent from the second quarter of 2009. The higher than expected results were due primarily to organic growth in the company’s core product lines.

License revenue from new logo sales in the second quarter of 2010 increased 131 percent to $3.0 million, compared to $1.3 million in the second quarter of 2009. New logo sales in the second quarter primarily came from the company’s Pivotal CRM, CDC Factory, CDC gomembers and China-based Human Resource Management products.

Second quarter 2010 license revenue increased by 13 percent to $8.8 million, compared to $7.8 million in the second quarter of 2009. Non-GAAP SaaS revenue(a) increased 53 percent to $2.6 million, compared to $1.7 million in the first quarter of 2010. STCV was $4.7 million, compared to $480,000 in the first quarter of 2010, due to organic growth, as well as recent acquisitions. Also, the number of enterprise deals (which includes on-premise and SaaS product lines, but excludes SaaS renewals) in the second quarter of 2010 totaled 344, compared to 249 in the second quarter of 2009 (which did not include SaaS). The number of new logo deals in the second quarter of 2010 increased to 120, compared to 108 in the second quarter of 2009.

Total Non-GAAP recurring revenue(a), which CDC Software defines as Non-GAAP maintenance(a) plus Non-GAAP SaaS revenue, increased by 10 percent to $27.3 million in the second quarter of 2010, from $24.8 million in the second quarter of 2009. CDC Software did not begin disclosing SaaS revenue until the fourth quarter of 2009. Second quarter 2010 Non-GAAP maintenance revenue declined slightly to $24.7 million, compared to $24.8 million in the second quarter of 2009, primarily due to the negative impact of currency exchange fluctuations. Second quarter 2010 services revenue was $16.8 million compared to $15.4 million in the first quarter of 2010. Second quarter 2010 gross margin for services increased to 27 percent, compared to 11 percent in the first quarter of 2010 because of increased utilization.

CDC Software’s cash and cash equivalents totaled $29.5 million at June 30, 2010. Second quarter 2010 Adjusted EBITDA margin(a) was 22 percent, compared to 27 percent in the second quarter of 2009 and 20 percent in the first quarter of 2010.

“We are very pleased with the strong growth in application sales that included a significant increase in new logo organic sales from our Front Office, Plant Floor, China-based HRM on-premise applications and CDC gomembers SaaS solutions,” said Bruce Cameron, president of CDC Software. “Notably, cross-selling was strong in the second quarter, compared to the first quarter of this year. Momentum has also been increasing for cross-selling our SaaS point solutions into our on-premise installed base, such as our on-premise CRM and supply chain solutions with our SaaS global trade management products. We are also very excited about closing a seven digit SaaS upsell deal to one of our largest financial services customers, who also is an on-premise CRM customer, during the second quarter.

“We have also been seeing our SaaS applications serve as mission critical solutions for our customers, as our SaaS renewal rates averaged approximately 95 percent in the second quarter of 2010. Based upon the increase in SaaS revenue we have seen, our preliminary estimates and projections, and our projected bookings so far this year, we expect to see double digit quarter-to-quarter growth in SaaS revenue for at least the next few quarters. With SaaS revenue continuing to grow at a greater rate than our other revenue streams, and assuming modest maintenance revenue growth, we continue to expect to reach our goal of achieving recurring revenue closer to 70 percent of total revenue in the next few years.”

Cameron added, “We are forecasting a lower EPS for the next few quarters due to our continued transition to the hybrid software model, where we recognized increased sales and marketing costs upfront while building our TCURR significantly, as we experienced this past quarter. However, we believe the hybrid enterprise software model and reporting strong TCURR will help make us an even stronger company with more predictable revenue stream and profitability.”

DSO (days sales outstanding) in the second quarter of 2010 was 79 days, compared to 89 days for the second quarter of 2009. Accounts receivable as of June 30, 2010 was $48.2 million, compared to $44.7 million as of December 31, 2009. During the second quarter of 2010, about 53 percent of CDC Software’s total revenue was derived from North America, 33 percent from EMEA, and 14 percent from Asia/Pacific. Non-GAAP gross margin(a) improved to 63 percent during the second quarter of 2010, compared to 60 percent the same quarter of 2009.

CDC Software has also been executing on a series of strategies, outlined below, to expand its hybrid software model.

Acquire

In May 2010, CDC Software completed its largest SaaS acquisition to date, TradeBeam, a SaaS supply chain visibility and global trade management software company. In June 2010, CDC Software also acquired iDC, an enterprise resource planning (ERP) software solution provider for the state and local government and not-for-profit (NFP) markets that helps CDC Software expand its NFP and Public Sector solutions into the local and state government markets. As a result, CDC Software now has completed five cloud acquisitions since the latter part of the fourth quarter of 2009, and plans to continue to evaluate other acquisition opportunities.

Strategic Cloud Investment Partner Program (SCIPP)

As part of its acquisition strategy, CDC Software formed SCIPP under which it has made, and plans to continue making, minority investments in, and forming strategic reselling partnerships with, companies offering cloud-based or point solutions which complement its enterprise solutions portfolio. In the second quarter of 2010, under the SCIPP Program, CDC Software invested in Marketbright, a SaaS marketing automation solutions provider, and eBizNET, a provider of SaaS supply chain execution solutions. CDC Software has already developed a significant pipeline of deal opportunities with Marketbright and eBizNET.

Integrate

Much of CDC Software’s success with integrating its acquisitions can be attributed to its global technology and business infrastructure that offers compelling economies of scale. For example, the CDC gomembers business, which was acquired late in the fourth quarter of 2009, has already seen its EBITDA as a percentage of revenue increase to 30 percent in the second quarter of 2010, compared to an average of 16 percent in 2009, prior to the company being acquired by CDC Software. This improvement was achieved by utilizing CDC Software’s global sales and back office shared services center.

Many of CDC Software’s acquired SaaS companies and its SCIPP partnerships utilize a web services framework for integration. To leverage this integration capability, CDC Software uses CDC Software Connector, its middleware tool that is available on the cloud utilizing standards-based messaging and transport mechanisms, and application-to-application adaptors. Already, integration between Marketbright and Pivotal CRM; and Ross ERP and eBizNET are underway. Development of integration between TradeBeam and CDC Supply Chain is scheduled to begin in the third quarter of 2010.

Innovate

A key part of expanding CDC Software’s hybrid software model is its plan to develop SaaS applications that extend its current product offerings. As previously announced in May 2010 at a Microsoft press conference in India, CDC Software’s CDC Respond complaint management system will be its first cloud SaaS application developed with the Windows Azure platform. CDC Software has already piloted CDC Respond on the Azure platform and plans to deliver the product by the end of the year. The Windows Azure platform is a set of cloud computing services that can be used together or independently that enable developers to develop cloud applications.

By the end of 2010, CDC Software also plans to roll-out its on-premise discrete ERP solution, e-M-POWER, as a SaaS solution for the China market. e-M-POWER is designed to address the needs of small and medium-sized discrete manufacturers that include electronics, toy, watch, furniture and other industries in China.

During the second quarter of 2010, CDC Software also introduced several new products and version upgrades for its core on-premise ERP, supply chain management and customer relationship management (CRM) applications. One of its major new products included Pivotal Social CRM, a new module that integrates with Facebook, Google BlogSearch, InsideView, LinkedIn, and Twitter. The company also launched Pivotal CRM for Small and Mid-size Business (SMB), its CRM solution specifically tailored for organizations with fewer than 40 users. CDC Software also introduced several version upgrades for its on-premise ERP, supply chain management, complaint management, manufacturing operations management and enterprise performance management solutions.

Grow

Another key part of CDC Software’s growth strategy is its Strategic Alliance Program. During the second quarter of 2010, CDC Software signed five new original equipment manufacturers (OEM), including Servicepower Business Solutions Ltd., an outsourced service and field management solutions provider. CDC Software’s OEM sales pipeline has grown from $150,000 in the fourth quarter of 2009 to $1.5 million in the second quarter of 2010. In addition, partner revenue increased 28 percent to $3.7 million in the first half of 2010 compared to $2.9 million in the first half of 2009.

CDC Software’s Franchise Partner Program has been a key growth driver, especially in high growth regions such as in Latin America, India and China. In the second quarter of 2010, CDC Software also announced its plans to add Beijing Hinge Xin Yuan Software Co., Ltd. as its latest franchise partner and the second in China. CDC Software expects that Beijing Hinge Xin Yuan Software will help expand its CDC Platinum HRM solutions into the large state-owned enterprise (SOE) market in China.

Through the Franchise Partner Program, CDC Software funds investments, through the acquisition of majority control or minority stakes, in strategic partners located in high growth geographies. CDC Software believes that leveraging partners in emerging markets such as these can accelerate the company’s organic revenue growth rate.

In addition, CDC Software has seen strong growth potential for sales of its products in India. In the second quarter of 2010, CDC Software added six resellers from India and surrounding countries as part of its plans to expand its geographic footprint in India, Sri Lanka, Bhutan and Nepal. CDC Software’s Pivotal CRM solutions are already used by some of the leading brands in India including, Bharti AXA, CIBIL, and TTK Services. Also in the second quarter, one of India's largest financial services entities, ICICI Group, selected Pivotal CRM for its various vertical groups that include banking, capital markets and other businesses.

Guidance:

CDC Software is revising its guidance for 2010 and 2011, which was previously provided on June 1, 2010. The revised guidance reflects organic growth and no future acquisitions, a higher tax rate impact and SaaS accounting requirements that cause full sales and marketing costs to be incurred upfront. Based upon preliminary financial projections and estimates, CDC Software now expects 2010 Non-GAAP earnings per share to be in a range of $1.02 to $1.08 per share, and 2010 Non-GAAP revenue to be in the range of $215 million to $225 million. CDC Software is also revising its estimates of 2011 Non-GAAP earnings per share to be in the range of $1.20 to $1.28 per share, and 2011 Non-GAAP revenue to be in the range of $240 million to $250 million.

Share Buyback

To date, CDC Software, management and certain affiliates of the company, have purchased an aggregate of approximately 788,018 shares at an average price of $9.34 per share.

Peter Yip, CEO of CDC Software, said, “Overall, we are very pleased with our performance in both our on-premise and SaaS businesses. We have been making remarkable progress in expanding the company’s hybrid business. We expect to continue to expand our hybrid business model through organic growth, expanded cross selling, strategic investments and acquisitions. We are also making increased investments in R&D and marketing to help fuel our hybrid software expansion, and are focusing on emerging economies such as India, China, Russia and in the near future, Brazil. As part of that strategy, our Wells Fargo credit facility has provided us a with a low cost of capital, which helps to increase our options and flexibility to pursue faster organic growth and strategic acquisitions that can help to expand the company’s product offerings and scalability, especially in targeted emerging growth markets.”

Yip concluded, “We have solid business fundamentals, a strong financial foundation and a proven track record of successfully integrating acquisitions. Despite our EPS temporarily slowing down due to a higher tax rate, and the transition to a hybrid software model, increased sales/marketing costs and the build-up of TCURR, our Adjusted EBITDA has improved and remains strong. However, we expect to resume EPS growth in 2011 once our TCURR reaches approximately $100 million. We also believe our EPS is still among the highest in our selected software peer group. As we have stated previously, we feel our hybrid software strategy will promote long-term growth and, potentially, greater levels of shareholder value. The repurchase of shares, both at the corporate level as well as through my family’s purchases, demonstrates our ongoing confidence in our long-term strategy and we plan to continue repurchasing our shares since we feel they are a good investment.”

Conference Call

The Company's senior management will host a conference call for financial analysts and investors, Thursday, July 29, 2010 at 8:30 AM EDT.

USA-based Toll Free Number:       +1 (888) 603-6873 International: +1 (973) 582-2706 Pass code: #88007864 Call Leader: Monish Bahl

This call is being webcast by Thomson Reuters and can be accessed at the following link: http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=215971&eventID=3018326

Individual investors also can listen to the call through at the following link: www.fulldisclosure.com or by visiting any of the investor sites in CCBN's Individual Investor Network. Institutional investors can access the call via Thomsonone's password-protected event management site, StreetEvents (www.streetevents.com).

Instant Replay

For those unable to call in, a digital instant replay will be available after the call until August 12, 2010. U.S. based Toll Free Number: +1800-642-1687, U.S.-based Toll Number: +1 706-645-9291. Conference ID number: #. 88007864

Footnotes:

a) Adjusted Financial Measures

This press release includes Non-GAAP revenue, Non-GAAP recurring revenue, Non-GAAP SaaS revenue, Non-GAAP maintenance, Non-GAAP gross margin, Non-GAAP net income, Non-GAAP earnings per share, Adjusted EBITDA and Adjusted EBITDA margin, which are not prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) (collectively, the "Non-GAAP Financial Measures"). We believe that these Non-GAAP Financial Measures are helpful in understanding our past financial performance and our future results. Non-GAAP Financial Measures are not alternatives for measures such as revenue, gross margin, net income, net income margin, EBITDA and earnings per share prepared under GAAP. These Non-GAAP Financial Measures may also be different from non-GAAP measures used by other companies. Non-GAAP Financial Measures should not be used as a substitute for, or considered superior to, measures of financial performance prepared in accordance with GAAP.

Investors should be aware that these Non-GAAP Financial Measures have inherent limitations, including their variance from certain of the financial measurement principals underlying GAAP, should not be considered as a replacement for GAAP performance measures, and should be read in conjunction with our consolidated financial statements prepared in accordance with GAAP. These supplemental Non-GAAP Financial Measures should not be construed as an inference that the Company's future results will be unaffected by similar adjustments determined in accordance with GAAP. Reconciliations of Non-GAAP Financial Measures to GAAP are provided herein immediately following the financial statements included in this press release.

(b) Revised 2009 Information

Results provided herein for 2009 may be different than those previously reported in our press releases due to certain year-end adjustments required to be made in connection with the audit of our financial statements for the year ended December 31, 2009.

All dollar amounts are in U.S. dollars

Special Note Regarding CDC Software Financial Results, Estimates and Guidance

The financial results, estimates and guidance provided herein apply only to CDC Software Corporation, a subsidiary of CDC Corporation. These financial results, estimates and guidance do not apply to, and are not indicative of, the consolidated financial results of CDC Corporation, or the financial results of CDC Games Corporation, China.com, Inc. or any of their respective subsidiaries. Investors are cautioned not to place reliance on the financial results, estimates and guidance set forth herein for purposes of any investment decision with respect to the shares of CDC Corporation or China.com, Inc., and should read the foregoing in conjunction with the reports and other materials filed with the United States Securities and Exchange Commission by CDC Corporation and CDC Software Corporation, from time to time.

About CDC Software

CDC Software (NASDAQ: CDCS), The Customer-Driven Company™, is a hybrid enterprise software provider of on-premise and cloud deployments. Leveraging a service-oriented architecture (SOA), CDC Software offers multiple delivery options for their solutions including on-premise, hosted, cloud-based SaaS or blended-hybrid deployment offerings. CDC Software’s solutions include enterprise requirements planning (ERP), manufacturing operations management, enterprise manufacturing intelligence, supply chain management (demand management, order management and warehouse and transportation management), e-Commerce, human capital management, customer relationship management (CRM), complaint management and aged care solutions.

CDC Software’s recent acquisitions are part of its “acquire, integrate, innovate and grow” strategy. Fueling the success of this strategy is the company’s global scalable business and technology infrastructure featuring multiple complementary applications and services, domain expertise in vertical markets, cost effective product engineering centers in India and China, a highly collaborative and fast product development process utilizing Agile methodologies, and a worldwide network of direct sales and channel operations. This strategy has helped CDC Software deliver innovative and industry-specific solutions to more than 8,000 customers worldwide within the manufacturing, distribution, transportation, retail, government, real estate, financial services, health care, and not-for-profit industries. For more information, please visit www.cdcsoftware.com.

About CDC Corporation

The CDC family of companies includes CDC Software (NASDAQ: CDCS) focused on hybrid enterprise software applications and services, CDC Global Services focused on IT consulting services, and outsourced R&D and application development, CDC Games focused on online games, and China.com, Inc. (HKGEM:8006) focused on portals for the greater China markets. For more information about CDC Corporation (NASDAQ: CHINA), please visit www.cdccorporation.net.

Cautionary Note Regarding Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding our beliefs and expectations about any trends or momentum we may see in our sales and operations, our expectations regarding future levels of and performance in revenues, earnings per share, cross-selling, renewal rates and other metrics, and the continuation thereof, our expectations relating to our business model, as well as our goals and strategies and the achievement thereof, our beliefs regarding possible future acquisitions and investments, our plans and goals with respect to research and development and product development, our plans for future product launches and the value thereof, our plans and expectations relating to our Strategic Alliance Program, our Franchise Partner Program and SCIPP, and the potential benefits thereof, our expectations regarding future growth and expansion, our beliefs regarding our financial performance and its comparison to our selected peer group, our expectations regarding SaaS revenue, including momentum and expectations for revenue performance, our beliefs regarding the factors behind our success with integrations, our beliefs and expectations regarding our pipelines, including on-premise, cross-selling and SaaS, our beliefs regarding strategic partnerships, our beliefs regarding our credit facility with Wells Fargo Capital Finance and our access to, and uses thereof, our beliefs regarding our “acquire, integrate, innovate and grow” strategy and its effect on our positioning for long-term growth and profitability, our plans and expectations for future partnerships with third parties, our expectations regarding future revenues and the proportion of which may come from recurring sources, our beliefs regarding our scalable infrastructure, and other statements that are not historical fact, the achievement of which involve risks, uncertainties and assumptions. These statements are based on management's current expectations and are subject to risks and uncertainties and changes in circumstances. There are important factors that could cause actual results to differ materially from those anticipated in the forward looking statements, including the following: (a) the ability to realize strategic objectives by taking advantage of market opportunities in targeted geographic markets; (b) the ability to make changes in business strategy, development plans and product offerings to respond to the needs of current, new and potential customers, suppliers and strategic partners; (c) the effects of restructurings and rationalization of operations in our companies; (d) the ability to address technological changes and developments including the development and enhancement of products; (e) the ability to develop and market successful products and services; (f) the entry of new competitors and their technological advances; (g) the need to develop, integrate and deploy enterprise software applications to meet customer's requirements; (h) the possibility of development or deployment difficulties or delays; (i) the dependence on customer satisfaction with the company's games, software products and services; (j) continued commitment to the deployment of the products, including enterprise software solutions; (k) risks involved in developing software solutions and integrating them with third-party software and services; (l) the continued ability of the company's products and services to address client-specific requirements; (m) demand for and market acceptance of new and existing enterprise software and services and the positioning of the company's solutions; and (n) the ability of staff to operate the enterprise software and extract and utilize information from the company's products and services. If any such risks or uncertainties materialize or if any of the assumptions proves incorrect, our results could differ materially from the results expressed or implied by the forward-looking statements we make. Also, the results and benefits experienced by customers and users set forth in this press release may differ from those of other users and customers. Further information on risks or other factors that could cause results to differ is detailed in our filings or submissions with the United States Securities and Exchange Commission, including our Annual Report on form 20-F for the year ended December 31, 2009, filed with the SEC on June 1, 2010, and those of our ultimate parent company, CDC Corporation. All forward-looking statements included in this press release are based upon information available to management as of the date of the press release, and you are cautioned not to place undue reliance on any forward looking statements which speak only as of the date of this press release. The company assumes no obligation to update or alter the forward looking statements whether as a result of new information, future events or otherwise. Historical results are not indicative of future performance.

CDC Software Unaudited Consolidated Balance Sheets (Amounts in thousands of U.S. dollars except share and per share data)    

December 31,

June 30, 2009 (b) 2010 Audited ASSETS Current assets: Cash and cash equivalents $ 40,349 $ 29,491 Restricted cash 113 93

Accounts receivable (net of allowance of $5,090 and $4,209 at December 31, 2009 and June 30, 2010, respectively)

44,660 48,195 Marketable securities 1,084 420 Prepayments and other current assets 7,970 11,389 Deferred tax assets   3,215     3,271   Total current assets 97,391 92,859   Property and equipment, net 5,288 5,713 Goodwill 155,617 170,658 Intangible assets 72,032 71,480 Deferred tax assets 32,051 31,967 Receivable from Parent 34,166 30,279 Note receivable due from related parties 680 1,666 Investment in cost method investees 604 1,457 Other assets   1,589     3,029   Total assets $ 399,418   $ 409,108     LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 12,185 $ 9,317 Purchase consideration payables 2,184 2,899 Income tax payable 3,853 5,160 Short-term bank loans 4,364 11,034 Accrued liabilities 23,048 20,523 Restructuring accruals, current portion 2,015 1,627 Deferred revenue 53,152 53,237 Deferred tax liabilities   1,151     1,078  

Total current liabilities

101,952 104,875   Long-term debt - 8,286 Deferred tax liabilities 21,875 21,784 Purchase consideration payables, net of current portion 810 2,718 Other liabilities   9,628     10,954   Total liabilities 134,265 148,617   Contingencies and commitments   Shareholders' equity:

Class A ordinary shares, $0.001 par value; 50,000,000 shares authorized; 4,800,000 and 4,800,000 shares issued as of December 31, 2009 and June 30, 2010, respectively; 4,679,037 and 4,383,201 shares outstanding as of December 31, 2009 and June 30, 2010, respectively

5 5

Class B ordinary shares, $0.001 par value; 27,000,000 shares authorized; 24,200,000 shares issued as of December 31, 2009 and June 30, 2010; respectively 24,200,000 and 23,923,457 shares outstanding as of December 31, 2009 and June 30, 2010, respectively

24 24 Additional paid-in capital 249,219 250,526

Common stock held in treasury; 120,963 and 693,342 shares as of December 31, 2009 and June 30, 2010, respectively

(1,118 ) (6,618 ) Retained earnings 16,843 21,494 Accumulated other comprehensive income (loss)   10     (5,339 ) Total shareholders' equity 264,983 260,092   Noncontrolling interest   170     399   Total equity   265,153     260,491   Total liabilities and shareholders' equity $ 399,418   $ 409,108     CDC Software Unaudited Combined Statement of Operations (Amounts in thousands of U.S. dollars except share and per share data)     Three months ended March 31, June 30, 2010 2010 REVENUE: Licenses (including royalties from related parties of $466 and $530, respectively) $ 7,923 $ 8,817 Maintenance (including royalties from related parties of $69 and $111, respectively) 24,870 23,866 Professional services (including royalties from related parties of Nil and $114, respectively) 15,298 16,624 Hardware 907 1,141 SaaS   1,530     2,143   Total revenue 50,528 52,591   COST OF REVENUE: Licenses 4,749 5,047 Maintenance 4,164 4,137 Professional services 13,743 12,302 Hardware 774 853 SaaS   538     1,273   Total cost of revenue   23,968     23,612     Gross profit 26,560 28,979 Gross margin % 53 % 55 %   OPERATING EXPENSES: Sales and marketing expenses 9,569 9,670 Research and development expenses 6,686 7,062 General and administrative expenses 8,267 8,857 Operating expenses allocated to Parent (2,342 ) (1,947 ) Exchange (gain) loss 623 (1,155 ) Amortization expenses 1,280 1,296 Restructuring and other charges   573     602   Total operating expenses   24,656     24,385     Operating income 1,904 4,594 Operating margin % 4 % 9 %   Other income (loss), net   730     (10 )   Income before income taxes 2,634 4,584 Income tax benefit (expense)   (580 )   (1,452 )   Net income 2,054 3,132 Net income attributable to noncontrolling interest   (88 )   (141 )   Net income attributable to controlling interest $ 1,966   $ 2,991        

Net income attributable to controlling interest per class A ordinary share - basic and diluted

$ 0.07   $ 0.11   Net income attributable to controlling interest per class B ordinary share - basic and diluted $ 0.07   $ 0.11   Weighted average shares of class A outstanding - basic and diluted   4,596,329     4,509,011   Weighted average shares of class B outstanding - basic and diluted   24,196,927     23,923,457   Total weighted average shares - basic and diluted   28,793,256     28,432,468     CDC Software Unaudited Combined Statement of Operations (Amounts in thousands of U.S. dollars except share and per share data)      

Three months ended June 30,

2009 2010 REVENUE: Licenses (including royalties from related parties of $145 and $530, respectively) $ 7,826 $ 8,817 Maintenance (including royalties from related parties of $54 and $111, respectively) 24,820 23,866 Professional services (including royalties from related parties of Nil and $114, respectively) 17,304 16,624 Hardware 659 1,141 SaaS   -     2,143   Total revenue 50,609 52,591   COST OF REVENUE: Licenses 4,935 5,047 Maintenance 3,678 4,137 Professional services 14,455 12,302 Hardware 637 853 SaaS   -     1,273   Total cost of revenue   23,705     23,612     Gross profit 26,904 28,979 Gross margin % 53 % 55 %   OPERATING EXPENSES: Sales and marketing expenses 8,420 9,670 Research and development expenses 4,176 7,062 General and administrative expenses 7,854 8,857 Operating expenses allocated to Parent (2,723 ) (1,947 ) Exchange gain (1,417 ) (1,155 ) Amortization expenses 1,029 1,296 Restructuring and other charges   844     602   Total operating expenses   18,183     24,385     Operating income 8,721 4,594 Operating margin % 17 % 9 %   Other loss, net   (269 )   (10 )   Income before income taxes 8,452 4,584 Income tax expense   (2,553 )   (1,452 )   Net income 5,899 3,132 Net loss (income) attributable to noncontrolling interest   1     (141 )   Net income attributable to controlling interest $ 5,900   $ 2,991       Unaudited pro forma information (1): Net income attributable to controlling interest per class A ordinary share - basic and diluted $ 0.24   $ 0.11   Net income attributable to controlling interest per class B ordinary share - basic and diluted $ 0.24   $ 0.11   Weighted average shares of class A outstanding - basic and diluted   800,000     4,509,011   Weighted average shares of class B outstanding - basic and diluted   24,200,000     23,923,457   Total weighted average shares - basic and diluted   25,000,000     28,432,468     (1) The Company originally used 4,800,000 and 24,200,000 class A and Class B ordinary shares, respectively, to calculate basic and dilutive earnings per share for periods presented prior to the completion of the initial public offering on NASDAQ. In connection with the audit of our financial statements for the year ended December 31, 2009, these amounts have been revised and the Company is now utilizing 800,000 and 24,200,000 class A and Class B ordinary shares, respectively.   CDC Software Unaudited Combined Statement of Operations (Amounts in thousands of U.S. dollars except share and per share data)       Six months ended June 30, 2009 2010 REVENUE: Licenses (including royalties from related parties of $387 and $986, respectively) $ 14,956 $ 16,740 Maintenance (including royalties from related parties of $141 and $180, respectively) 49,018 48,736 Professional services (including royalties from related parties of $Nil and $114, respectively) 35,984 31,922 Hardware 1,004 2,048 SaaS   -     3,673   Total revenue 100,962 103,119   COST OF REVENUE: Licenses 9,513 9,796 Maintenance 7,220 8,301 Professional services 30,273 26,045 Hardware 876 1,627 SaaS   -     1,811   Total cost of revenue   47,882     47,580     Gross profit 53,080 55,539 Gross margin % 53 % 54 %   OPERATING EXPENSES: Sales and marketing expenses 16,073 19,239 Research and development expenses 8,707 13,748 General and administrative expenses 16,931 17,124 Operating expenses allocated to Parent (5,584 ) (4,289 ) Exchange gain (1,189 ) (532 ) Amortization expenses 2,288 2,576 Restructuring and other charges   1,275     1,175   Total operating expenses   38,501     49,041     Operating income 14,579 6,498 Operating margin % 14 % 6 %   Other income (loss), net   (125 )   720     Income before income taxes 14,454 7,218 Income tax expense   (4,556 )   (2,032 )   Net income 9,898 5,186 Net loss (income) attributable to noncontrolling interest   50     (229 )   Net income attributable to controlling interest $ 9,948   $ 4,957       Unaudited pro forma information (1): Net income attributable to controlling interest per class A ordinary share - basic and diluted $ 0.40   $ 0.17   Net income attributable to controlling interest per class B ordinary share - basic and diluted $ 0.40   $ 0.17   Weighted average shares of class A outstanding - basic and diluted   800,000     4,509,011   Weighted average shares of class B outstanding - basic and diluted   24,200,000     23,923,457   Total weighted average shares - basic and diluted   25,000,000     28,432,468     CDC Software Unaudited Combined Statement of Cash Flow (Amounts in thousands of U.S. dollars except share and per share data)     Three months ended March 31, June 30, 2010 2010 OPERATING ACTIVITIES: Net income $ 2,054 $ 3,132 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense 699 952 Amortization expense 5,105 4,753 Provision for bad debt (109 ) 301 Stock compensation expenses 444 552 Exchange (gain) loss 623 (1,155 ) Loss (gain) on disposal of available-for-sale securities (319 ) - Accrued interest income from Parent (358 ) (277 ) Accrued interest income - (42 ) Changes in operating assets and liabilities: Accounts receivable (584 ) (1,042 ) Deposits, prepayments and other receivables (2,611 ) 623 Other assets (193 ) (843 ) Accounts payable (107 ) (3,342 ) Income tax payable 203 1,077 Accrued liabilities (1,305 ) (2,435 ) Deferred revenue 1,665 (2,062 ) Other liabilities   265     (625 ) Net cash provided by operating activities   5,472     (433 )   INVESTING ACTIVITIES: Acquisitions, net of cash acquired (2,246 ) (21,075 ) Payment for prior year acquisitions - (2,100 ) Purchases of property and equipment (306 ) 85 Disposal (purchase) of marketable securities 1,121 (390 ) Investment in cost method investees - (1,920 ) Decrease (increase) in restricted cash   -     18   Net cash used in investing activities   (1,431 )   (25,382 )   FINANCING ACTIVITIES: Borrowings from (advances to) Parent, net 1,739 (17 ) Short-term borrowings (payments), net 737 13,535 Purchases of treasury stock (1,343 ) (1,506 ) Payments for capital lease obligations   (118 )   (270 ) Net cash provided by (used) in financing activities   1,015     11,742     Effect of exchange differences on cash   (903 )   (938 )   Net increase (decrease) in cash and cash equivalents 4,153 (15,011 ) Cash at beginning of period   40,349     44,502     Cash at end of period $ 44,502   $ 29,491     CDC Software Unaudited Combined Statement of Cash Flow (Amounts in thousands of U.S. dollars except share and per share data)           Three months ended June 30, Six months ended June 30, 2009 2010 2009 2010 OPERATING ACTIVITIES: Net income $ 5,899 $ 3,132 $ 9,898 $ 5,186 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense 783 952 1,606 1,651 Amortization expense 4,572 4,753 9,723 9,858 Provision for bad debt 338 301 574 192 Stock compensation expenses 201 552 382 996 Deferred income tax provision (7 ) - (7 ) - Exchange gain (1,417 ) (1,155 ) (1,189 ) (532 ) Loss (gain) on disposal of property and equipment 92 - 92 - Gain on disposal of marketable securities - - - (319 ) Accrued interest income from Parent 188 (277 ) 116 (635 ) Interest income on restricted cash (31 ) - (59 ) - Accrued interest income - (42 ) - (42 ) Changes in operating assets and liabilities: Accounts receivable 9,005 (1,042 ) 11,140 (1,626 ) Deposits, prepayments and other receivables (2,077 ) 623 (2,517 ) (1,988 ) Other assets (141 ) (843 ) (266 ) (1,036 ) Accounts payable 369 (3,342 ) 769 (3,449 ) Income tax payable 2,281 1,077 3,768 1,280 Accrued liabilities (3,234 ) (2,435 ) (4,359 ) (3,740 ) Deferred revenue (1,329 ) (2,062 ) (1,902 ) (397 ) Other liabilities   (279 )   (625 )   (21 )   (360 ) Net cash provided by operating activities   15,213     (433 )   27,748     5,039     INVESTING ACTIVITIES: Acquisitions, net of cash acquired - (21,075 ) - (23,321 ) Payment for prior year acquisitions - (2,100 ) - (2,100 ) Purchases of property and equipment (289 ) 85 (687 ) (221 ) Capitalized software (1,203 ) - (2,095 ) - Disposal (purchase) of marketable securities - (390 ) - 731 Investment in cost method investees - (1,920 ) (38 ) (1,920 ) Decrease in restricted cash   3,220     18     3,220     18   Net cash used in investing activities   1,728     (25,382 )   400     (26,813 )   FINANCING ACTIVITIES: Borrowings from (advances to) Parent, net (14,447 ) (17 ) (34,995 ) 1,722 Short-term borrowings (payments), net 309 13,535 121 14,272 Purchases of treasury stock - (1,506 ) - (2,849 ) Payments for capital lease obligations   (280 )   (270 )   (365 )   (388 ) Net cash provided by (used) in financing activities   (14,418 )   11,742     (35,239 )   12,757     Effect of exchange differences on cash   620     (938 )   339     (1,841 )   Net increase (decrease) in cash and cash equivalents 3,143 (15,011 ) (6,752 ) (10,858 ) Cash at beginning of period   17,446     44,502     27,341     40,349     Cash at end of period $ 20,589   $ 29,491   $ 20,589   $ 29,491     CDC Software Unaudited Reconciliation From GAAP Results to Adjusted EBITDA and Non-GAAP Net Income (Amounts in thousands of U.S. dollars except share and per share data)     Three months ended March 31, June 30, 2010 2010 (a) Reconciliation from GAAP results to Adjusted EBITDA Operating income $ 1,904 $ 4,594 Add back restructuring and other charges 573 602 Add back depreciation expense 699 952 Add back amortization expense 1,280 1,296 Add back amortization expense included in cost of revenue 3,825 3,457 Add back stock compensation expense 444 552 Add back exchange (gain) loss 623 (1,155 ) Add back deferred revenue grind   1,203     1,444   Adjusted EBITDA $ 10,551   $ 11,742   Adjusted EBITDA margin % 20 % 22 %     Three months ended March 31, June 30, 2010 2010 (a) Reconciliation from GAAP net income attributable to controlling interest to Non-GAAP net income and Non-GAAP net income per share Net income attributable to controlling interest $ 1,966 $ 2,991 Add back amortization expense 1,280 1,296 Add back amortization expense included in cost of revenue 3,825 3,457 Add back stock based compensation 444 552 Add back restructuring and other charges 573 602 Add back deferred revenue grind 1,203 1,444 Add back exchange (gain) loss 623 (1,155 ) Add back non cash tax expense 348 871 Tax affect on all reconciling items @ 31%   (2,271 )   (2,279 ) Non-GAAP net income $ 7,991   $ 7,779   Non-GAAP net income as % of revenue 15 % 14 % Total weighted average shares outstanding (basic and dilutive) 28,793,256 28,432,468 Non-GAAP net income per share (basic and dilutive) $ 0.28 $ 0.27   CDC Software Unaudited Reconciliation From GAAP Results to Adjusted EBITDA and Non-GAAP Net Income (Amounts in thousands of U.S. dollars except share and per share data)         Three Months Ended June 30, Six Months Ended June 30, 2009 2010 2009 2010 (a) Reconciliation from GAAP results to Adjusted EBITDA Operating income $ 8,721 $ 4,594 $ 14,579 $ 6,498 Add back restructuring and other charges 844 602 1,275 1,175 Add back depreciation expense 783 952 1,606 1,651 Add back amortization expense 1,029 1,296 2,287 2,576 Add back amortization expense included in cost of revenue 3,544 3,457 7,436 7,282 Add back stock compensation expenses 201 552 382 996 Add back exchange gain (1,418 ) (1,155 ) (1,189 ) (532 ) Add back deferred revenue grind   -     1,444     -     2,647   Adjusted EBITDA $ 13,704   $ 11,742   $ 26,376   $ 22,293   Adjusted EBITDA margin % 27 % 22 % 26 % 22 %   (1) Adjusted EBITDA does not include the adjustment related to capitalized software costs which are credited against research and development expenses in our consolidated statement of operations. Below is a summary of capitalized software credits for the three months ended June 30, 2009 and 2010:   Three Months Ended June 30, Six Months Ended June 30, 2009 2010 2009 2010   Capitalized software credits $ (1,203 ) $ -   $ (2,095 ) $ -           Three Months Ended June 30, Six Months Ended June 30, 2009 2010 2009 2010 (a) Reconciliation from GAAP net income attributable to controlling interest to Non-GAAP net income and Non-GAAP net income per share Net income attributable to controlling interest $ 5,900 $ 2,991 $ 9,948 $ 4,957 Add back amortization expense 1,029 1,296 2,287 2,576 Add back amortization expense included in cost of revenue 3,544 3,457 7,436 7,282 Subtract capitalized software credits (1,203 ) - (2,095 ) - Add back stock based compensation 201 552 382 996 Add back restructuring and other charges 844 602 1,275 1,175 Add back deferred revenue grind - 1,444 - 2,647 Add back exchange gain (1,418 ) (1,155 ) (1,189 ) (532 ) Add back non cash tax expense 894 871 1,595 1,219 Tax affect on all reconciling items @ 31%  

(1,369

)

  (2,279 )   (2,879 )   (4,550 ) Non-GAAP net income $ 8,422   $ 7,779   $ 16,760   $ 15,770   Non-GAAP net income as % of revenue 17 % 14 % 17 % 15 % Total weighted average shares outstanding (basic and dilutive) (1) 25,000,000 28,432,468 25,000,000 28,432,468 Non-GAAP net income per share (basic and dilutive) $ 0.34 $ 0.27 $ 0.67 $ 0.55   CDC Software Unaudited Reconciliation From GAAP Results to Non-GAAP Net Income (Amounts in thousands of U.S. dollars)                   Three Months Ended June 30, 2009 Three Months Ended March 31, 2010 Three Months Ended June 30, 2010 GAAP

Results

Non-GAAP Adjustments Non-GAAP Results GAAP

Results

Non-GAAP Adjustments Non-GAAP Results GAAP

Results

Non-GAAP Adjustments Non-GAAP Results REVENUE: Licenses $ 7,826 $ - $ 7,826 $ 7,923 $ - $ 7,923 $ 8,817 $ - $ 8,817 Maintenance 24,820 - 24,820 24,870 932 25,802 23,866 793 24,659 Professional services 17,304 - 17,304 15,298 137 15,435 16,624 179 16,803 Hardware 659 - 659 907 - 907 1,141 - 1,141 SaaS   -     -     -     1,530     134     1,664     2,143     472     2,615   Total revenue 50,609 - 50,609 50,528 1,203 51,731 52,591 1,444 54,035   COST OF REVENUE: Licenses 4,935 (3,544 ) 1,391 4,749 (3,825 ) 924 5,047 (3,457 ) 1,590 Maintenance 3,678 - 3,678 4,164 - 4,164 4,137 - 4,137 Professional services 14,455 - 14,455 13,743 - 13,743 12,302 - 12,302 Hardware 637 - 637 774 - 774 853 - 853 SaaS   -     -     -     538     -     538     1,273     -     1,273   Total cost of revenue   23,705     (3,544 )   20,161     23,968     (3,825 )   20,143     23,612     (3,457 )   20,155     Gross profit 26,904 3,544 30,448 26,560 5,028 31,588 28,979 4,901 33,880 Gross margin % 53 % 60 % 53 % 61 % 55 % 63 %   OPERATING EXPENSES: Sales and marketing expenses 8,420 - 8,420 9,569 - 9,569 9,670 - 9,670 Research and development expenses 4,176 1,203 5,379 6,686 - 6,686 7,062 - 7,062 General and administrative expenses 7,854 (201 ) 7,653 8,267 (444 ) 7,823 8,857 (552 ) 8,305 Operating expenses allocated to Parent (2,723 ) - (2,723 ) (2,342 ) - (2,342 ) (1,947 ) - (1,947 ) Exchange (gain) loss (1,417 ) 1,417 - 623 (623 ) - (1,155 ) 1,155 - Amortization expenses 1,029 (1,029 ) - 1,280 (1,280 ) - 1,296 (1,296 ) - Restructuring and other charges   844     (844 )   -     573     (573 )   -     602     (602 )   -   Total operating expenses   18,183     546     18,729     24,656     (2,920 )   21,736     24,385     (1,295 )   23,090     Operating income (loss) 8,721 2,998 11,719 1,904 7,948 9,852 4,594 6,196 10,790 Operating margin % 17 % 23 % 4 % 19 % 9 % 20 %   Other income (loss), net   (269 )   (1 )   (270 )   730     -     730     (10 )   -     (10 )   Income (loss) before income taxes 8,452 2,997 11,449 2,634 7,948 10,582 4,584 6,196 10,780 Income tax expense   (2,553 )   (475 )   (3,028 )   (580 )   (1,923 )   (2,503 )   (1,452 )   (1,408 )   (2,860 )   Net income (loss) 5,899 2,522 8,421 2,054 6,025 8,079 3,132 4,788 7,920 Net loss (income) attributable to noncontrolling interest   1     -     1     (88 )   -     (88 )   (141 )   -     (141 )   Net income (loss) attributable to controlling interest $ 5,900   $ 2,522   $ 8,422   $ 1,966   $ 6,025   $ 7,991   $ 2,991   $ 4,788   $ 7,779   Net income as a % of revenue 12 % 17 % 4 % 15 % 6 % 14 %