Alltronics Holdings Limited — Call Transcript 2010

Aug 16, 2010

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited 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 the contents of this announcement.

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ALLTRONICS HOLDINGS LIMITED 華訊股份有限公司

(Incorporated in the Cayman Islands with limited liability) (Stock Code: 833)

VOLUNTARY ANNOUNCEMNT

This announcement is made by Alltronics Holdings Limited (the “Company”) on a voluntary basis. The purpose of this announcement is to keep the shareholders and potential investors of the Company informed of the latest business development of the Company and its subsidiaries (the “Group”).

The Chairman of the Company outlined the strategy and outlook for its biodiesel business during an interview with Corporate Focus (HK) Limited. A transcript of the interview is attached to this announcement.

By order of the Board Alltronics Holdings Limited Lam Yin Kee Chairman

Hong Kong, 16 August 2010

As at the date of this announcement, the Board of the Company comprises Mr Lam Yin Kee, Ms Yeung Po Wah and Mr So Kin Hung as executive directors; Mr Fan, William Chung Yue as nonexecutive director; and Ms Yeung Chi Ying, Mr Yau Ming Kim, Robert and Mr Leung Kam Wah as independent non-executive directors.

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ALLTRONICS HOLDINGS LIMITED 華訊股份有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 833)

Transcript of a recorded interview by Corporate Focus (HK) Limited with Chairman Lam Yin Kee of Alltronics Holdings Limited outlining the strategy and outlook of its biodiesel operations

Sustainability is a major requirement for businesses in the 21[st] century and the biodiesel sector is one of the industries advocating the importance of environmental protection. In the United States, the Federal Government provides subsidies and loans for biodiesel producers, but in Hong Kong there is a lack of such incentives either for biodiesel producers or users. This could change with the introduction of the Air Pollution Control (Motor Vehicle Fuel) (Amendment) Regulation 2009 which become effective from 1 July 2010.

Corporate Focus (HK) Limited ( ), talked to Chairman Lam Yin Kee of Alltronics Holdings Limited (“Alltronics”), a pioneer of the biodiesel industry and the first licensed biodiesel producer in Hong Kong, about the direction of the industry and the impact of the new regulation to Alltronics.

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Does Alltronics believe that the new regulation would open doors for biodiesel producers in Hong Kong?

• A. The implementation of the Air Pollution Control (Motor Vehicle Fuel) (Amendment) Regulation 2009 on 1 July 2010 will certainly benefit the development of biodiesel industry. Alltronics is well placed as one of the pioneers in the industry, and being the first licensed biodiesel producer in Hong Kong. The new regulation will definitely benefit the development of biodiesel industry and of course Alltronics.

However, we believe the Government could be even more active in developing this sector by providing subsidies, loans and other benefits. Public education about biodiesel is also crucial. Alltronics hopes the Government will progressively roll out more policies for educating the general public in understanding the advantages of using biodiesel and how to use it.

We fully support any initiative by the Government to adopt international standards on biodiesel.

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What then are the appropriate standards the Government can adopt and what is the practice around the world?

• A. The Government has not yet rolled out any compulsory requirements regarding the blending of biodiesel with fossil fuel diesel. To boost consumer confidence in the fuel and prevent excessive exhaust emissions due to poor biodiesel quality, it is a common practice to require motor vehicle biodiesel manufacturers to follow certain international standards.

Alltronics has already met the international standard EN14214 with our outstanding technology which allows us to produce B5 biodiesel for diesel-using vehicles. We would certainly encourage the government to introduce standards to safeguard the sector. The Group will keep itself updated constantly in the development of the biodiesel industry worldwide and align our strategies and investment plan accordingly with the introduction of any new global standards

In Europe and the United States, government support has resulted in a vibrant biodiesel industry, with most of the feedstock coming from plant oil, waste cooking oil and animal fat. Germany requires diesel sold in the country to contain at least 4.4 per cent biodiesel. In Spain, the proportion is 3.9 per cent and 7 per cent in France. The mandatory blending of bio-diesel with fossil fuel diesel has already been adopted in Malaysia, the Philippines, Taiwan and Thailand. We have yet to move in Hong Kong. The Group would strongly encourage the Government to take the initiative by using environmentally friendly biodiesel in their own vehicles.

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• Given that Hong Kong’s vehicle fuel market is dominated by four big oil companies, and there is a lack of mandatory biodiesel blending, there is little incentive for people to buy biodiesel. While sales to large transportation companies with big fleets of vehicles are possible, since they buy diesel in bulk over long term contracts at hefty discounts from oil firms, it is difficult for small biodiesel producers to compete on price. How does Alltronics attract the attention of potential clients? And who are your clients at the moment?

• A. Currently, our clients include highly recognized and large corporations and public companies in Hong Kong. We keep close communication with our current and potential clients, and we always update ourselves on the latest market development. We aim to get support from the public sector, and we want to let the general public and our potential clients know the advantages of using biodiesel.

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• What is the overall size of the global bio-fuel market and what about the market size in

• Hong Kong?

• A. According to a market report, the market of ethanol and biodiesel reached US$44.9 billion in 2009 and are projected to grow to US$112.5 billion by 2019. In 2009 the volume of ethanol and biodiesel production worldwide reached 23.6 billion gallons. There is clearly massive growth projected for the industry. In Hong Kong, as biodiesel is still a new product to customers and market acceptance is yet to be proven, it is difficult to estimate the potential market size.

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How many players are there in Hong Kong and how is Alltronics positioned?

• A. At present, there are three biodiesel production plants in Hong Kong. Two are now in operation and one is expected to commence production in 2011. While the entry barrier of biodiesel operation is not high, the investment period is long. To operate a biodiesel business and build a plant in Hong Kong requires the recognition, licenses and regulation by various government departments such as Fire Services Department and Environmental Protection Department and will take at least 2 to 3 years

With increasing recognition and demand for biodiesel in the international market, the Group believes that there should be a huge potential for biodiesel business in Hong Kong in the future. Therefore, we started investing in the biodiesel business in June 2008. The contribution to the improvement of air pollution in Hong Kong is well recognized. We hope we can contribute more to the environmental protection in Hong Kong.

The Group is the first fully licensed biodiesel producer in Hong Kong. First mover advantage is important.

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… and how is Alltronics’ operation set up to leverage on this growth?

• A. We operate through our subsidiary, Dynamic Progress. Its focus is on alternative fuels and biodiesel business through waste/used cooking oil recycling. Our plant is located in Tuen Mun in the New Territories. Our current production capacity is 20,000 tons biodiesel per annum and is expandable to approximately 60,000 tons per annum. We are currently manufacturing both B100 biodiesel for industrial use, as well as B5 which has proven to be fit for use in diesel powered on road and off road vehicles. Our strategy is to run the biodiesel trail program in transportation teams for the public sector. We are well positioned to take advantage of any growth that we expect to emerge. Currently, several public organizations and governmental departments have expressed interest in having biodiesel trials in their transportation teams.

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• What is the potential revenue opportunity for Alltronics given your current production capacity and future capacity?

• A. Based on an annual production capacity of 20,000 tons biodiesel and if assuming all of which are blended with fossil fuel diesel for selling to customers as B5, this would mean an annual saleable volume of approximately 400,000 tons B5 capable of generating a better contribution to the Group.

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• The biodiesel industry is undoubtedly a huge focus for fund managers or in today’s commercial world and potentially a vast market, but Alltronics has still maintained a stronghold on its core business of manufacturing and trading of electronic products, plastic moulds, plastic and other components for electronic products. Is there a synergy between your well-established manufacturing arm and the newly developed green-related business?

• A. The Group is looking at every opportunity to diversify its business and Dynamic Progress commenced developing its biodiesel business since June 2005. The Group is principally engaged in research and development, manufacturing and trading of electronic products. With extensive experience in production and quality control, it helps in the application of biodiesel business.

With global environmental and energy conservation issues and the huge market potential of biodiesel, Alltronics is confident in bringing a remarkable contribution to our shareholders.

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• Is Alltronics pursuing any opportunities in expanding its green-related business arm, such as potential merger and acquisition deals? Is re-financing needed?

• A. The Group will continue to devote more efforts to look for investment opportunities to diversify the Group’s business so as to contribute to all shareholders.

The Group has sufficient funds to finance its operations and does not have any need for refinancing at the moment.

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• The financial tsunami swept across the region and not a single economy was spared. Most of the factories owned by Hong Kong companies survived by cutting down on production and some even closed production lines to save money. There are some indicators signalling a positive return of the economy in the fourth quarter of 2009. Using customer orders as a reference, can you tell whether there is a gain in momentum from the manufacturing industry?

• A. The Consumer Price Index of the United States and also Pending Home Sales Index in May have dropped recently indicating that the level of economic recovery in the United States is lacking behind market expectation. The Group will update itself on global information, and continue to pursue a more cost effective operational structure. We will tighten our controls over production costs and overheads and improve production efficiency to maximize profit.

The Group is confident in meeting all challenges with our well balanced worldwide customer base, consistently high quality products, timely delivery, strong engineering and development support by experienced and dedicated management team and workforce.

This interview has been recorded and transcribed by Corporate Focus (HK) Limited.

For further information, please contact Corporate Focus (HK) Limited on 25330946, info@corporatefocus.org.