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.

COMBA TELECOM SYSTEMS HOLDINGS LIMITED 京信通信系統控股有限公司

(Incorporated in the Cayman Islands with limited liability) (Stock Code : 2342)

Interim results announcement for the six months ended 30 June 2011

FINANCIAL HIGHLIGHTS

Revenue increased by 27.1% to HK$2,545 million
Gross profi t increased by 20.0% to HK$966 million
Profi t attributable to ordinary equity holders of the parent increased by 13.7% to HK$317 million
Basic earnings per share increased by 10.6% to HK21.62 cents
Interim dividend of HK5 cents per share (2010: HK6 cents per share)
Net asset value per share increased by 7.2% to HK$2.39, as compared to HK$2.23 (restated) as at 31 December 2010.

RESULTS

The board of directors (the “Board” or the “Directors”) of Comba Telecom Systems Holdings Limited (the “Company”) is pleased to announce the unaudited interim results of the Company and its subsidiaries (collectively referred to as the “Group”) for the six months ended 30 June 2011, together with the comparative fi gures for the same period in 2010. These condensed consolidated interim fi nancial statements have not been audited, but have been reviewed by the Company’s audit committee.

CONDENSED CONSOLIDATED INCOME STATEMENT

For the six months ended 30 June 2011

		For the six months	ended 30 June
		2011	2010
		(Unaudited)	(Unaudited)
	Notes	*HK$’000*	HK$’000
REVENUE	3	2,545,114	2,002,261
Cost of sales		(1,578,722)	(1,197,142)
Gross prof t		966,392	805,119
Other income and gains	3	81,874	8,807
Research and development costs		(115,951)	(78,041)
Selling and distribution costs		(168,094)	(121,140)
Administrative expenses		(364,334)	(258,634)
Other expenses		(660)	(1,211)
Finance costs	5	(12,222)	(8,134)
PROFIT BEFORE TAX	4	387,005	346,766
Income tax expense	6	(71,609)	(57,592)
PROFIT FOR THE PERIOD		315,396	289,174
Attributable to:
Owners of the parent		317,224	278,989
Non-controlling interests		(1,828)	10,185
		315,396	289,174
EARNINGS PER SHARE ATTRIBUTABLE
TO ORDINARY EQUITY HOLDERS OF
THE PARENT (HK cents)	8
Basic		21.62	19.55
			(restated)
Diluted		20.99	18.74
			(restated)

Details of the dividends payable and proposed for the period are disclosed in note 7 to this announcement.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2011

	For the six months	ended 30 June
	2011	2010
	(Unaudited)	(Unaudited)
	*HK$’000*	HK$’000
PROFIT FOR THE PERIOD	315,396	289,174
OTHER COMPREHENSIVE INCOME
Cash f ow hedges:
Effective portion of changes in fair value of
hedging instrument	1,180	—
Amounts transferred to the initial carrying
amount of hedged items	573	—
Income tax effect	(290)	—
	1,463	—
Exchange differences on translation of foreign operations	83,449	33,397
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD	400,308	322,571
Attributable to:
Owners of the parent	400,741	311,649
Non-controlling interests	(433)	10,922
	400,308	322,571

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION 30 June 2011

Notes NON-CURRENT ASSETS Property, plant and equipment Prepaid land lease payments Goodwill Deferred tax assets Intangible assets Restricted bank deposits Total non-current assets CURRENT ASSETS Inventories 9 Trade receivables 10 Notes receivable Prepayments, deposits and other receivables Restricted bank deposits Cash and cash equivalents Total current assets CURRENT LIABILITIES Trade and bills payables 11 Other payables and accruals Derivative f nancial instrument Interest-bearing bank borrowings Tax payable Provisions for product warranties Total current liabilities NET CURRENT ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES NON-CURRENT LIABILITIES Interest-bearing bank borrowings Deferred tax liabilities Total non-current liabilities Net assets	30 June 2011 (Unaudited) *HK$’000* 664,478 31,544 28,571 109,761 36,028 6,240 876,622 2,226,630 4,326,049 59,344 585,511 28,240 725,259 7,951,033 2,444,097 1,008,107 1,793 847,591 173,486 65,132 4,540,206 3,410,827 4,287,449 607,202 13,497 620,699 3,666,750	31 December 2010 (Audited) HK$’000 537,488 14,175 28,571 131,219 9,142 10,249 730,844 1,731,457 2,895,568 49,035 372,184 10,439 1,472,899 6,531,582 2,155,090 947,419 2,973 118,563 189,495 57,038 3,470,578 3,061,004 3,791,848 474,252 8,571 482,823 3,309,025

Net assets EQUITY Equity attributable to owners of the parent Issued capital Reserves Proposed dividends Non-controlling interests Total equity	30 June 2011 (Unaudited) *HK$’000* 3,666,750 150,605 3,371,417 75,303 3,597,325 69,425 3,666,750	31 December 2010 (Audited) HK$’000 3,309,025 132,305 2,948,453 158,766 3,239,524 69,501 3,309,025

Notes

1. ACCOUNTING POLICIES

The condensed consolidated interim fi nancial statements are prepared in accordance with Hong Kong Accounting Standard (“HKAS”) 34 “Interim Financial Reporting”. The accounting policies and basis of preparation adopted in the preparation of the interim fi nancial statements are the same as those used in the annual fi nancial statements for the year ended 31 December 2010. Except for the changes in relation to the following new and revised Hong Kong Financial Reporting Standards (“HKFRSs”, which also include HKASs and Interpretations) that affect the Group and are adopted for the fi rst time for the current period’s fi nancial statements. They have been prepared under the historical cost convention, except for the Group’s forward contracts, forward options and interest rate swap, which have been measured at fair value. These fi nancial statements are presented in Hong Kong dollars and all values are rounded to the nearest thousand except when otherwise indicated.

Impact of new and revised HKFRSs and HKASs

HKAS 24 (Revised) Related Party Disclosures HK (IFRIC) — Int 19 Extinguishing Financial Liabilities with Equity instruments

HKAS 24 (Revised) clarifi es and simplifi es the defi nition of related parties. It also provides for a partial exemption of related party disclosure to government-related entities for transactions with the same government or entities that are controlled, jointly controlled or signifi cantly infl uenced by the same government. While the adoption of the revised standard resulted in changes in the accounting policy, the revised standard does not have any impact on the related party disclosures as the Group currently does not have any signifi cant transactions with government-related entities.

HK (IFRIC) — Int 19 addresses the accounting by an entity when the terms of a fi nancial liability are renegotiated and result in the entity issuing equity instruments to a creditor of the entity to extinguish all or part of the fi nancial liability. The interpretation clarifi es that equity instruments issued to a creditor to extinguish a fi nancial liability are a consideration paid in accordance with HKAS 39 Financial Instruments: Recognition and Measurement and the difference between the carrying amount of the fi nancial liability extinguished, and the consideration paid, shall be recognised in profi t or loss. The consideration paid should be measured based on the fair value of the equity instrument issued or, if the fair value of the equity instrument cannot be reliably measured, the fair value of the fi nancial liability extinguished. While the adoption of the revised standard resulted in changes in the accounting policy, the revised standard did not have any fi nancial impact on the Group.

Improvement to HKFRSs

Improvements to HKFRSs 2010 issued in May 2010 sets out amendments to a number of HKFRSs. The Group has adopted the amendments from 1 January 2011. There are separate transitional provisions for each standard. While the adoption of some of the amendments may result in changes in accounting policies, none of these amendments has a signifi cant fi nancial impact on the Group. Those amendments that have a signifi cant impact on the Group’s policies are as follows:

(a) HKFRS 3 Business Combinations: Clarifi es that the amendments to HKFRS 7, HKAS 32 and HKAS 39 that eliminate the exemption for contingent consideration do not apply to contingent consideration that arose from business combinations which acquisition dates precede the application of HKFRS 3 (as revised in 2008).

In addition, the amendments limit the measurement choice of non-controlling interests at fair value or at the proportionate share of the acquiree’s identifi able net assets to components of non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation. Other components of non-controlling interests are measured at their fair value on acquisition date, unless another measurement basis is required by another HKFRS.

The amendments also added explicit guidance to clarify the accounting treatment for non-replaced and voluntarily replaced share-based payment awards.

(b) HKAS 1 Presentation of Financial Statements: Clarifi es that an analysis of other comprehensive income for each component of equity can be presented either in the statement of changes in equity or in the notes to the fi nancial statements.
(c) HKAS 27 Consolidated and Separate Financial Statements: Clarifi es that the consequential amendments from HKAS 27 (as revised in 2008) made to HKAS 21, HKAS 28 and HKAS 31 shall be applied prospectively for annual periods beginning on or after 1 July 2009 or earlier if HKAS 27 is applied earlier.

The amendments to the following standards below did not have any impact on the accounting policies, fi nancial position or performance of the Group:

HKFRS 1 Amendment	Amendment to HKFRS 1_First-time Adoption of_
	Hong Kong Financial Reporting Standards —
	Limited Exemption from Comparative HKFRS 7
	Disclosures For First-time Adopters
HK (IFRIC) — Int 14	Amendments to HK (IFRIC) — Int 14
Amendments	Prepayments of a Minimum Funding Requirement
HKAS 32 Amendment	Amendments to HKAS 32_Financial Instruments:_
	Presentation – Classif cation of Rights Issues

2. OPERATING SEGMENT INFORMATION

The management considers the performance of the business in the PRC and non-PRC segments. The reportable operating segments derive their revenue from manufacturing and sale of wireless telecommunication network enhancement system equipment and the provision of related engineering services. All of the Group’s products are of the similar nature.

No operating segments have been aggregated to form the above reportable operating segments.

Management monitors the operating results of its business units separately for the purpose of making decision about resource allocation and performance assessment. Segment performance is evaluated based on operating profi t or loss which in certain respects, as explained in the table below, is measured differently from operating profi t or loss in the consolidated fi nancial statements. Group research and development costs, income taxes and corporate expenses are managed on a group basis and are not allocated to operating segments.

Period ended 30 June 2011

Segment revenue External customers Intersegment sales Reconciliation: Elimination of intersegment sales Revenue from operations Results Depreciation and amortisation Segment prof t/(loss) Assets 4Capital expenditure Operating assets Operating liabilities	PRC *HK$’000* 2,278,137 138,557 2,416,694 32,712 485,035 184,540 8,197,245 3,665,609	Non-PRC *HK$’000* 266,977 — 266,977 1,667 20,109 6,325 623,541 32,406	Others *HK$’000* — — — 9,043 1(118,139) — 26,869 31,462,890	Total *HK$’000* 2,545,114 138,557 2,683,671 (138,557) 2,545,114 43,422 387,005 190,865 8,827,655 5,160,905

1 Segment operating profi t does not include research and development costs HK$115,951,000 and unallocated corporate expenses HK$2,188,000.
2 Segment assets do not include unallocated corporate assets HK$6,869,000.

3 Segment liabilities do not include interest-bearing bank borrowings HK$1,454,793,000 and other unallocated corporate liabilities HK$8,097,000

4 Capital expenditure consists of additional of property, plant and equipment and intangible assets and acquisition of subsidiaries.

Period ended 30 June 2010

Revenue External customers Intersegment sales Reconciliation: Elimination of intersegment sales Revenue from operations Results Depreciation and amortisation Segment prof t/(loss) Assets 4Capital expenditure Operating assets Operating liabilities	PRC HK$’000 1,884,358 77,864 1,962,222 24,489 456,170 54,825 5,844,374 2,593,196	Non-PRC HK$’000 117,903 — 117,903 1,326 (31,405) 1,322 187,127 22,357	Others HK$’000 — — — 9,842 1(77,999) — 22,514 3613,280	Total HK$’000 2,002,261 77,864 2,080,125 (77,864) 2,002,261 35,657 346,766 56,147 6,034,015 3,228,833

1 Segment operating profi t does not include research and development costs HK$78,041,000 and unallocated corporate income HK$42,000.

2 Segment assets do not include unallocated corporate assets HK$2,514,000.

3 Segment liabilities do not include interest-bearing bank borrowings HK$612,458,000 and other unallocated corporate liabilities HK$822,000.

4 Capital expenditure consists of additional of property, plant and equipment and intangible assets.

3. REVENUE, OTHER INCOME AND GAINS

Revenue, which is also the Group’s turnover, represents the net invoiced value of goods sold and services rendered during the period, net of value-added tax, and after allowances for returns and trade discounts. All signifi cant intra-group transactions have been eliminated on consolidation.

An analysis of revenue, other income and gains is as follows:

Revenue Manufacture and sale of wireless telecommunications network enhancement system equipment and provision of related engineering services Warranty services Other income and gains Bank interest income Government subsidy Exchange gain, net Negative goodwill Others	For the six months ended 30 June 2011 2010 (Unaudited) (Unaudited) *HK$’000* HK$’000 2,469,984 1,933,949 75,130 68,312 2,545,114 2,002,261 1,123 2,985 3,552 2,706 24,201 — 48,426 — 4,572 3,116 81,874 8,807

4. PROFIT BEFORE TAX

The Group’s profi t before tax is arrived at after charging/(crediting):

Cost of inventories sold and services provided
Depreciation
Recognition of prepaid land lease payments
Amortisation of intangible assets
Minimum lease payments under operating leases
in respect of land and buildings
Employee benef t expense (including directors’ emoluments):
Salaries and wages
Awarded share expense
Equity-settled share expense
Staff welfare expenses
Equity-settled share option expense
Pension scheme contributions
#
Exchange (gain)/loss, net
Write-off of inventories
Cash f ow hedges (transferred from equity)
Provisions for product warranties
Negative goodwill
Loss on disposal of items of property, plant and equipment
Bank interest income

For the six months ended 30 June
2011
2010
(Unaudited)
(Unaudited)
HK$’000
HK$’000
1,542,551
1,164,983
42,077
34,549
186
173
1,159
935
41,596
32,678
315,614
275,764
87,375
—
437
437
31,605
26,586
11,595
3,006
27,958
20,339
474,584
326,132
(24,201)
43
430
—
573
—
20,259
21,376
(48,426)
—
452
1,020
(1,123)
(2,985)

At 30 June 2011, the Group had no forfeited contributions available to reduce its contributions to the pension schemes in future years (30 June 2010: Nil).

5. FINANCE COSTS

Interest on bank loans wholly repayable within f ve years Interest on discounted bills Interest on added conf rmation of documentary credits	For the six months ended 30 June 2011 2010 (Unaudited) (Unaudited) *HK$’000* HK$’000 12,222 7,965 — 89 — 80 12,222 8,134

6. INCOME TAX

No provision for Hong Kong profi ts tax has been made as the Group did not have any assessable profi ts arising in Hong Kong during the period (six months ended 30 June 2010: Nil). Taxes on profi ts assessable elsewhere have been calculated at the rates of tax prevailing in the jurisdictions in which the Group operates, based on existing legislation, interpretations and practices in respect thereof.

Current period provision: Mainland China Overseas Deferred tax charge Total tax charge for the period	For the six months ended 30 June 2011 2010 (Unaudited) (Unaudited) *HK$’000* HK$’000 46,261 51,193 1,489 225 23,859 6,174 71,609 57,592

During the 5th Session of the 10th National People’s Congress, which was concluded on 16 March 2007, the PRC Corporate Income Tax Law (“the New Corporate Income Tax Law”) was approved and has become effective on 1 January 2008. The New Corporate Income Tax Law introduces a wide range of changes which include, but are not limited to, the unifi cation of the income tax rates for domestic-invested and foreign-invested enterprises which results in an adjustment of income tax rate to 25%. Comba Telecom Systems (Guangzhou) Limited (“Comba Guangzhou”) and Comba Telecom Technology (Guangzhou) Limited (“Comba Technology”), being the manufacturing foreign invested enterprises located in Guangzhou, the PRC, are eligible to enjoy the transitional arrangement under the New Corporate Income Tax Law. In addition, Comba Guangzhou and Comba Technology were designated as a High-New Technology Enterprise by Guangdong Science and Technology Department on 14 December 2009 and 16 December 2008 respectively. Being the High-New Technology Enterprises, Comba Guangzhou and Comba Technology are entitled to the preferential tax rate of 15% for the year of 2011.

7. DIVIDENDS

Proposed interim — HK5 cents (2010: HK6 cents) per ordinary share	For the six months ended 30 June 2011 2010 (Unaudited) (Unaudited) *HK$’000* HK$’000 75,303 71,100

At the board meeting held on 24 August 2011, the directors resolved to declare an interim dividend of HK5 cents per ordinary share for the six months ended 30 June 2011.

No deduction or withholding tax will be imposed on the payment of dividends by the Company to its shareholders.

8. EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT

The calculation of basic earnings per share for the period is based on the profi t attributable to ordinary equity holders of the parent of HK$317,224,000 (six months ended 30 June 2010: HK$278,989,000), and the weighted average number of 1,467,565,000 (six months ended 30 June 2010 (restated): 1,426,932,000) ordinary shares in issue as adjusted by the bonus issues during the period from 1 July 2009 to 30 June 2010.

The calculation of diluted earnings per share is based on the profi t attributable to ordinary equity holders of the parent of HK$317,224,000 (six months ended 30 June 2010: HK$278,989,000). The weighted average number of ordinary shares used in the calculation is the 1,467,565,000 (six months ended 30 June 2010 (restated): 1,426,932,000) ordinary shares in issue during the period, as used in the basic earnings per share calculation, and the weighted average of 43,729,000 (six months ended 30 June 2010 (restated): 61,672,000) ordinary shares assumed to have been issued at no consideration on the deemed exercise of all share options and awarded shares during the period.

9. INVENTORIES

Raw materials Project materials Work in progress Finished goods Inventories on site	30 June 2011 (Unaudited) *HK$’000* 263,730 159,773 201,970 484,789 1,116,368 2,226,630	31 December 2010 (Audited) HK$’000 155,964 118,884 148,052 305,413 1,003,144 1,731,457

10. TRADE RECEIVABLES

The Group’s trading terms with its customers are mainly on credit. The credit period is generally for a period of three months and is extendable up to two years depending on the customer’s credit worthiness. The balances also include retention money of approximately 10% to 20% of the total contract sum of each project, and are generally receivable after fi nal certifi cation of products by customers, which would be performed six to twelve months after sale, or upon completion of the one to two years warranty periods granted to customers. The credit terms for major customers are reviewed regularly by senior management. The Group seeks to maintain strict control over its outstanding receivables and has a credit control department to minimise the credit risk. Overdue balances are reviewed regularly by senior management.

An aged analysis of the trade receivables as at the end of the reporting period, based on the invoice date, is as follows:

Within 3 months 4 to 6 months 7 to 12 months More than 1 year Provision for impairment	30 June 2011 (Unaudited) *HK$’000* 1,701,395 463,767 1,445,839 732,103 4,343,104 (17,055) 4,326,049	31 December 2010 (Audited) HK$’000 1,696,941 358,029 409,904 447,387 2,912,261 (16,693) 2,895,568

The aged analysis of the trade receivables that are not considered to be impaired is as follows:

Neither past due nor impaired Less than 1 year past due	30 June 2011 (Unaudited) *HK$’000* 4,159,677 166,372 4,326,049	31 December 2010 (Audited) HK$’000 2,822,207 73,361 2,895,568

Receivables that were neither past due nor impaired relate to a large number of diversifi ed customers for whom there was no recent history of default.

Receivables that were past due but not impaired relate to a number of independent customers that have a good track record with the Group. Based on past experience, the directors of the Company are of the opinion that no provision for impairment is necessary in respect of these balances as there has not been a signifi cant change in credit quality and the balances are still considered fully recoverable. The Group does not hold any collateral or other credit enhancements over these balances.

11. TRADE AND BILLS PAYABLES

An aged analysis of the trade and bills payables as at the end of the reporting period, based on the invoice date, is as follows:

Within 3 months 4 to 6 months 7 to 12 months More than 1 year	30 June 2011 (Unaudited) *HK$’000* 1,547,550 274,545 470,019 151,983 2,444,097	31 December 2010 (Audited) HK$’000 1,243,947 445,204 374,671 91,268 2,155,090

The trade payables are non-interest bearing and are mainly settled for a period of three months and are extendable up to two years.

12. EVENTS AFTER THE REPORTING PERIOD

Repurchase of Shares for Share Award Scheme

On 21 July 2011, the Board has resolved that a sum of HK$20 million (the “Budgeted Sum”) will be provided for the purchase of shares of HK$0.10 each in the share capital of the Company to be awarded under the share award scheme adopted on 25 March 2011. The Budgeted Sum has been paid to the trustee. The trustee has applied approximately HK$7,690,000 out of the Budgeted Sum to purchase an aggregate of 1,062,500 shares at the prevailing market price during the period from 21 July 2011 to 22 July 2011 in accordance with the terms of the share award scheme. The average purchase price of the Shares is approximately HK$7.24 per share.

13. COMPARATIVE AMOUNTS

During the period, certain comparative amounts have been adjusted to conform with the current period’s presentation.

RECORD DATE FOR INTERIM DIVIDEND

The record date for determination of entitlements under the interim dividend will be on Thursday, 8 September 2011. Shareholders whose names appear on the register of members of the Company as at the close of business on Thursday, 8 September 2011 will be entitled to receive the interim dividend. In order to qualify for the interim dividend, all transfers accompanied by the relevant share certifi cates must be lodged with the Company’s Hong Kong branch share registrar and transfer offi ce, Computershare Hong Kong Investor Services Limited at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong no later than 4:30 pm on Thursday, 8 September 2011. Dividend warrants will be despatched on Monday, 19 September 2011.

Management Discussion and Analysis

BUSINESS AND FINANCIAL REVIEW

During the fi rst half of 2011, the global economy was clouded with many uncertainties and faced strong headwinds from Japan’s nuclear disaster, the US economic stagnation and looming debt issue as well as the escalating sovereign debt crisis in the European countries. Despite such a bearish market sentiment, China, on the other hand, continued to maintain a steady economic growth. Meanwhile, the Chinese Telecom regulator, the Ministry of Industry and Information Technology (“MIIT”) reported that the industry capital expenditure (“capex”) was RMB143.1 billion in the fi rst half of 2011, representing an increase of 56.5% compared to the corresponding period of last year, and the mobile subscribers reached more than 900 million. Hence, the Group continued to deliver solid fi nancial results for the six months ended 30 June 2011 (the “Current Period”) with a desirable growth in revenue and profi t, thanks to the solid and continuous demand for wireless network enhancement.

Revenue

The Group’s revenue for the Current Period was HK$2,545,114,000 (2010: HK$2,002,261,000), representing an increase of 27.1% over the revenue for the six months ended 30 June 2010 (the “Prior Period”). The increase was mainly driven by the growing demand from the global mobile operators for network optimization. As a result of continuous efforts in overseas expansion, sales from the international markets (including core equipment customers) jumped 47.2% from the Prior Period to HK$349,648,000 (2010: HK$237,490,000) and accounted for 13.7% of the Group’s total revenue.

During the fi rst half of 2011, network enhancement for second generation (“2G”) mobile communications continued uninterruptedly with the aim to further enhance the penetration rate throughout China and, in particular, within rural areas. On the other hand, sales from third generation (“3G”) mobile network projects reported a 91.7% increase year-on-year to HK$666,418,000 and accounted for 26.2% of the Group’s total revenue, resulting from stronger demand for 3G network deployment and optimization as a consequence of the escalating number of 3G subscribers and the data usage by the subscribers.

By customers

Revenue generated from the China Mobile Communications Corporation and its subsidiaries (“China Mobile Group”) rose signifi cantly by 39.4% to HK$1,450,406,000 (2010: HK$1,040,710,000) and accounted for 57.0% of the Group’s revenue in the Current Period compared to 52.0% in the Prior Period. The raise in revenue from China Mobile Group was primarily due to the continuous network enhancement in the 2G mobile network and replacement of base transceiver station antennas to improve the network quality.

During the Current Period, revenue generated from the China United Telecommunications Corporation and its subsidiaries (“China Unicom Group”) increased slightly by 3.8% to HK$528,900,000 (2010: HK$509,728,000) and accounted for 20.8% of the Group’s revenue in the Current Period compared to 25.5% in the Prior Period.

Revenue generated from the China Telecommunications Corporation and its subsidiaries (“China Telecom Group”) decreased by 12.7% to HK$159,101,000 (2010: HK$182,218,000) and accounted for 6.3% of the Group’s revenue in the Current Period compared to 9.1% in the Prior Period. The decrease in revenue from China Telecom Group was primarily due to the delay of some network enhancement projects. However, the management expects the projects will be expedited in the second half of the year.

During the Current Period, revenue generated from international customers and core equipment manufacturers increased remarkably by 47.2% to HK$349,648,000 (2010: HK$237,490,000) and accounted for 13.7% of the Group’s revenue in the Current Period compared to 11.9% in the Prior Period. The increase in revenue was primarily due to the strong demand for total solutions for network deployment and upgrade in some emerging markets and further diversifi cation of Group’s international customer portfolios. Notwithstanding the slower-than-expected recovery of the Indian market, the overall growth of the international market has not been affected.

By businesses

Revenue generated from wireless enhancement business in the Current Period increased moderately by 26.9% to HK$879,429,000 (2010: HK$693,173,000) and accounted for 34.6% of the Group’s revenue in the Current Period. The increase in revenue was mainly contributed by the continuous 2G mobile network enhancement and also increasing 3G mobile network enhancement which substantially drove the sales of remote radio units.

Revenue generated from the antennas and subsystems business in the Current Period increased notably by 17.7% to HK$816,493,000 (2010: HK$693,519,000) and accounted for 32.1% of the Group’s revenue in the Current Period compared to 34.6% in the Prior Period. The growth in revenue was mainly driven by strong demand for the replacement of base transceiver station antennas.

Revenue generated from wireless access business increased signifi cantly by 124.3% to HK$206,775,000 (2010: HK$92,183,000) and accounted for 8.1% of the Group’s revenue in the Current Period compared to 4.6% in the Prior Period. The increase was mainly due to the strong growth of WLAN equipment sales attributable to the accelerated expenditure by PRC mobile operators for WLAN build-out to offl oad the heavy traffi c of 2G and 3G mobile networks.

Revenue from services, including installation, network optimization, network upgrade, and aftersales maintenance services, increased by 22.7% to HK$642,417,000 (2010: HK$523,386,000) and accounted for 25.2% of the Group’s revenue in the Current Period compared to 26.2% in the Prior Period. The management expects services will have greater sales contribution in the second half of 2011 as most of projects in the pipeline will be completed by the end of this year. More importantly, the Group has been working to strengthen its position as a turnkey solution provider by offering more professional and value-added services to its customers.

During the Current Period, the Group introduced some new solutions and new products, such as the multiple distributed antenna system (“MDAS”) and the multi-mode remote radio unit (“MRRU”), to accommodate increasing complexity of the projects and different needs from the customers. The Group believes its capability to offer such professional services will differentiate itself from its peers, and further solidify its leading position in the market.

Gross profi t

To alleviate the continued pricing pressure on the traditional product categories, the Group has been striving to optimize the product mix by launching new products and solutions into the markets, as well as to offer more services to the customers leveraging its strong research and development (“R&D”) and engineering capability. During the Current Period, the gross profi t increased by 20.0% to HK$966,392,000 (2010: HK$805,119,000) as compared with the Prior Period. In addition, the Group’s gross profi t margin decreased mildly by 2.2% points to 38.0% in the Current Period, compared to 40.2% in the Prior Period. For the year ended 31 December 2010, the gross profi t margin was 37.4%.

In addition, the Group continued to adopt stringent cost control initiatives including optimizing the product design through advanced R&D technology, streamlining the manufacturing process, improving the logistics management, and negotiating with suppliers for better pricing and payment terms in order to reduce the impact of raising labour and material costs. Moreover, the Group continued to expand its market coverage and broaden its revenue sources to achieve economies of scale. The Group also provided installation, network optimization, network enhancement and after-sales maintenance services to customers in order to achieve higher product sales. In order to maintain a reasonable gross profi t margin, the Group continued to focus on developing advanced and high value-added products for customers.

Negative goodwill

On 20 June 2011, the Group entered into an agreement to acquire 100% interest in the subsidiaries, which are engaged in the research and development, manufacturing and sales of telecommunications products with a view to expanding the Group’s market share in the telecommunications equipment industry. The Group paid a cash consideration of approximately HK$84 million, which resulted in a negative goodwill of approximately HK$48 million, mainly arising from an appreciation of the land and buildings.

Research and development costs

The Group has always attached great importance to R&D, and is strongly committed to product innovation which enables the Group to stay at the forefront of the telecommunications industry riding on its strong R&D capability.

During the Current Period, R&D costs increased by 48.6% to HK$115,951,000, representing 4.6% of the Group’s revenue (2010: HK$78,041,000, representing 3.9% of the Group’s revenue). The increase in R&D costs was mainly attributable to 1) expansion of the R&D teams; 2) continuous investment in the development and expansion of product portfolio for all 2G, 3G, WLAN and longterm evolution (“LTE”) mobile networks in both domestic and overseas markets; and 3) investment in improvement of product quality for higher operational effi ciency and greater cost effectiveness.

With its continuous investment in R&D, the Group achieved signifi cant accomplishments in creating solutions with intellectual property rights and has applied for more than 770 patents (As at 31 December 2010: more than 680 patents) as at the end of the Current Period.

Selling and distribution costs

During the Current period, selling and distribution costs increased by 38.8% to HK$168,094,000, representing 6.6% of the Group’s revenue (2010: HK$121,140,000, representing 6.1% of the Group’s revenue). The increase in selling and distribution costs was mainly due to the increase in sales staff salaries and their related awarded share expenses, and consultancy fees as a result of the increased consolidated revenue and global expansion of the sales and service networks for the Group.

Administrative expenses

During the Current Period, administrative expenses increased by 40.9% to HK$364,334,000 representing 14.3% of the Group’s revenue (2010: HK$258,634,000, representing 12.9% of the Group’s revenue). The increase in administrative expenses was mainly due to increases in administration staff salaries and their related awarded share expenses, and offi ce expenses as a result of the enlarged support teams for the global operations.

Awarded shares expenses

On 12 April 2011, the Board resolved to award 26,000,000 shares to 365 selected persons under the share award scheme adopted on 25 March 2011, by way of issue and allotment of new shares pursuant to the general mandate granted by the shareholders of the Company at the annual general meeting of the Company held on 24 May 2010. These awarded shares will be held in trust for the selected persons by the trustee appointed by the Company until the end of each vesting period. For these awarded shares, there were 4 vesting dates, which are 12 July 2011, 12 April 2012, 12 April 2013, and 12 April 2014. Upon each vesting date, those awarded shares will be transferred at no cost to the selected persons.

The fair value of the 26,000,000 awarded shares was approximately HK$226 million, measured at the closing market price of HK$9.32 per share at the date of grant and amortized over each of the vesting period up to 12 April 2014. During the Current Period, the awarded shares expenses amounted to approximately HK$87 million. For the second half of 2011, the full years of 2012, 2013 and 2014, the awarded shares expenses are estimated at approximately HK$58 million, HK$54 million, HK$23 million and HK$4 million, respectively.

Finance costs

During the Current Period, fi nance costs rose 50.3% to HK$12,222,000, representing 0.5% (2010: HK$8,134,000, representing 0.4% of the Group’s revenue) of the Group’s revenue. The raise in fi nance costs was mainly due to the increase in bank borrowing as a consequence of more business activities.

The management has always been prudent on managing the credit risk and improving the cash fl ow in order to lower the bank borrowing level. To cope with the growth of the business, the management has closely monitored the latest developments of the fi nancing market and arranged the most appropriate fi nancing for the Group. The management also utilized the advantages of interest and foreign exchange rates differentiation among different countries in order to minimize the fi nance costs. As of 30 June 2011, the gearing ratio of the Group stood at a healthy level of 16.5% compared to 10.2% as of 30 June 2010. The gearing ratio of the Group was 8.2% as of 31 December 2010.

Operating profi t

During the Current Period, the operating profi t increased by 12.5% to HK$399,227,000 (2010: HK$354,900,000) as compared with the Prior Period. During the Current Period, as a consequence of a product mix and the expense incurred due to the share award scheme, the operating profi t margin decreased by 2.0% points to 15.7% in the Current Period, as compared with 17.7% in the Prior Period.

Tax

During the Current Period, excluding those major non-taxable items of negative goodwill and awarded share expenses, the effective tax rate was slightly increased to 16.8% (2010: 16.6%). The overall taxation charge of HK$71,609,000 (2010: HK$57,592,000) was composed of profi ts tax charge of HK$47,750,000 (2010: HK$51,418,000) and deferred tax charge of HK$23,859,000 (2010: HK$6,174,000). The increase in overall taxation charge was mainly due to the reversal of deferred tax credit arising from a reduced unrealized profi t on intra-group transactions during the Current Period as compared with the Prior Period.

Net profi t

During the Current Period, profi t attributable to shareholders (“Net Profi t”) increased by 13.7% to HK$317,224,000 (2010: HK$278,989,000). The raise in Net Profi t was mainly due to the increase of revenue which was offset by the decrease in gross profi t margin and additional expenses incurred due to the share award scheme amounted to HK$87 million. Hence, the Group’s net margin was lowered by 1.4% points to 12.5% (2010:13.9%). However, excluding the extraordinary items of awarded shares and negative goodwill arising from acquisition, the Group’s net margin would be 14.0% (2010: 13.9%).

Dividend

The Group has put much emphasis on the returns to and interests of shareholders, in particular the interests of minority shareholders. To balance the shareholders’ returns and the Group’s future longterm development, the Board proposed an interim dividend of HK5 cents (2010: HK6 cents) per share. The payout ratio, on the basis of basic EPS, is 23.1% (2010: 25.4% based on the number of shares issued as at 30 June 2010).

AWARDS AND RECOGNITION

The Group is committed to maintaining proactive, consistent and timely communications with the investment community. To enhance our communications between shareholders and investors, the Group organized regular meetings to maintain on-going dialogue with them.

In April 2011, the Group has been honored for its excellence in FinanceAsia’s 11th annual Asia’s Top Companies poll. It was the second consecutive year for the Group to receive this honour, and for the fi rst time the Group was rated as the No. 1 “Best Mid-Cap” company along with top ten rankings in four other categories including “Most Committed to a Strong Dividend Policy”, “Best in Corporate Social Responsibility”, “Best Corporate Governance”, and “Best Managed Company” in FinanceAsia’s poll.

Furthermore, the Group has been dedicated to developing innovative products in line with the everchanging market and customer needs, and has offered unparalleled quality services to the customers over the years. During the Current Period, the Group was selected for inclusion in the “2011 Info Tech 100 China” ranking 33rd by Business Next in Taiwan and Ceocio China in Mainland China. These top 100 IT companies were selected according to fi ve statistical indicators: turnover, turnover growth rate, return on shareholders’ equity, yield rate and rate of return.

PROSPECT

The economies of the US and Europe continue to be sluggish and are undeniably affecting the global economy, nonetheless, China’s economy, increasingly supported by strong domestic demand, is less vulnerable to this turmoil and continues to play a vital role in global economic growth.

The fundamental strength of the China’s economy is conducive to the sustainable growth for China telecommunications industry. China’s telecommunications sector revenue grew 10.1% in the fi rst half of 2011. Meanwhile, the number of mobile phone users increased by over 6 million with the penetration rate rising from 64% at the end of 2010 to 69% at the end of June 2011, which is still relatively low compared to the rate of mobile cellular penetration in the developed countries at over 100%. In other words, there are still enormous rooms for increased penetration within the telecommunications market in the PRC.

The PRC market remains as the Group’s major focus in the years to come, and the management is confi dent that the Group’s revenue will continue to grow against the backdrop of the current diffi cult economic climate in the US and Europe. At present, the number of mobile users in the PRC surpassed 900 million in the fi rst half of 2011 with the majority of 91% being 2G users. On the other hand, 3G users jumped rapidly by 71.1% to more than 80 million in the fi rst six months of 2011, and about 55% of the new mobile users are 3G users. Although 2G will remain dominant, 3G and wireless broadband users are growing rapidly as a result of the popularity and the enhancement of smartphones.

The Group has increased its penetration into the international markets and has deepened its business with the international operators and core equipment vendors which have driven sales in the fi rst half of 2011. The Group’s strategy of securing major long term projects, diversifi cation of customer base, and expansion of existing customer relationships will continue to drive solution sales and

expansion into the international markets. Notwithstanding the international market is affected by the uncertainties surrounding the global economy, the management is still optimistic towards the expansion of the international market and the business growth.

It is expected that the subscriber number growth will continue unabatedly with robust 3G growth leading the way. Globally, the telecommunications industry is healthy and the number of mobile users will continue to grow considerably. With the proliferation of cheaper and better smartphones, the rapidly growing popularity of social media, and the development of mobile data services boosted by the smartphone phenomenon, mobile operators need to handle the data traffi c surge as well as provide an optimum quality of experience for high-value mobile applications. It is, therefore, inevitable for the mobile operators to continue the optimization of 2G networks, and at the same time to expedite 3G network upgrade.

While maintaining a leadership position in the PRC market, the Group is proactively expanding its presence in developing countries where its major markets are located. The Group is also looking for added opportunities in the new markets such as Mexico where a new offi ce has recently been established.

Wireless Enhancement

Wireless network upgrade is a long term and ongoing business, and the management expects this business will continue to be the largest revenue contributor to the Group, and demand for wireless network upgrade in both the PRC and emerging markets will remain strong in coming years.

It is noted that the capex of PRC mobile operators peaked a few years ago, but the management has observed the trend that spending from the mobile operators has been gradually transferred to network optimization from network build-out. As such, the Group will benefi t from persistent expansion of capacity and optimization of wireless networks.

With strong expertise in wireless enhancement implementation and a proven track record in providing quality large-scale turnkey solutions, Comba has become a preferred partner of the mobile operators for wireless network enhancement solutions. Recently, the Group has completed the 2G/3G wireless enhancement projects for the world’s longest cross-sea Qingdao Bay Bridge and the Universiades Shenzhen 2011 for the PRC mobile operators. These projects have achieved a high customer satisfaction which blended innovative technology with practical know-how that enables operators to improve network performance without increased costs.

Globally, operators are facing spectrum allocation issues and time to market for new 3G network rollouts. Previously, the Group launched a portfolio of spectrum refarming solutions that is now gaining deeper market penetration in the international markets.

On the other hand, mobile data traffi c is skyrocketing as more people gain access to mobile data networks. The anticipated strong data uptake may led to network congestion and deteriorating network quality, thus driving greater demand for wireless enhancement solutions.

The network trial of China’s homegrown TD-LTE (“Time Division-Long Term Evolution”) 4G telecommunication technology is underway in major cities. The TD-LTE is expected to go global and many overseas mobile operators have already expressed interests in deploying TD-LTE. Comba is proud to be one of the major equipment providers for indoor network coverage and distribution system for the network trial in China.

Comba is LTE ready for not only TD-LTE, but also FDD-LTE (“Frequency Division DuplexingLong Term Evolution”) technologies in the way that the Group has taken proactive measures in promoting their applications in various regions. The Group has been successful in deploying these solutions in network trials and rollouts throughout the world. The management is confi dent that Comba will participate in the larger scale of LTE network testing in the later stages, and is wellpoised to seize the huge opportunities when LTE is commercialized in China.

Antennas and Subsystems

The Group saw a satisfactory sales growth for antennas and subsystems business during the period under review. As a market leader in the PRC and worldwide major supplier in both base station antennas and tower-mounted solutions to many of the major multinational operators, the Group, by leveraging on the its persistent efforts in innovation and quality enhancement, is determined to provide strong support to clients’ network optimization and product upgrade, and the demand attributable to 3G network build-out and network upgrade will also contribute partly to growth this year.

For future growth, the Group has developed a portfolio of LTE antennas and subsystems which has been deployed successfully in a number of LTE trials and actual LTE network rollout around the globe. The management is optimistic that such solutions will be a driver for future growth.

Wireless Access

Demand for WLAN equipment surged vigorously following the aggressive WLAN deployment plans by the three PRC mobile operators launched early this year in the hope that WLAN will provide support for their insuffi cient 3G coverage or offl oad busy 3G traffi c at hot spot areas. The initial stage of network deployment comprising millions of hotspots are planned to be built in different PRC cities during the coming years. Mobile data traffi c is expected to grow rapidly with more people using laptops, tablet computers and smartphones to access the internet through WLAN services, and WLAN coverage will be further expanded. As the leading WLAN product vendor in the PRC, the management anticipates the current strong demand for WLAN equipment to be sustained and the contribution from WLAN business will further increase in the near future.

After the negative effect of the telecommunications policy in the Indian market in 2010, the Group actively explored business opportunities in other countries in order to decentralize the geographical customers and maximize the returns. Based on this strategy, the management is pleased to see a very positive return in this business and is optimistic that the foundations have been set for continuing growth.

Services

The Group expects the contribution from the services business segment will continue to grow given tremendous demand from both the PRC and international markets.

Capitalizing on the professional and reliable service team of over 5,600 technical sales and service engineers globally, and its experience with self-developed, top-notch and comprehensive product lines, the Group is capable of offering value creation and customized turnkey solutions to customers. Over the years, the Group has undertaken numerous projects to provide a broad range of services. These services include network design, consulting, assessment, network optimization, network modifi cation and upgrade, system installation and after-sales service to customers. Moreover, most of the customers commissioned Comba to provide on-going maintenance services upon completion of the projects. Thus, the more projects the Group has undertaken, the more recurring income will be generated. More importantly, this business model will help create more cross selling opportunities for products and achieve multiple benefi cial effects to the Group.

With the relentless efforts made over the years, the Group has become a global leading wireless enhancement solutions provider, and has successfully established a long term partnership with customers. Furthermore, the Group believes that services will continue to be an important business segment globally and is actively expanding its service capabilities with local resources in its various

Conclusion

Despite the challenging global economic environment, the management is optimistic about the future of the global telecommunications industry.

The Group believes that China will continue to accelerate the rapid development of its telecommunications industry and construct key network infrastructure, while the telecommunications industry in emerging markets is also to some extent following the pattern of China’s development and their potential cannot be underestimated.

Over the years, the Group has built up a very solid foundation and achieved a sound fi nancial position that enables consistent growth, effectively capturing expansion opportunities, and addressing various challenges and uncertain situations. The Group intends to remain focused on sustaining our leading position in the PRC market and plans to continue relentless efforts to propel the growth in overseas market via product and project innovation as well as professional end-to-end services coupled with an extensive business network, and effective marketing strategies.

The Group will continue to adhere to the strategy to sharpen our competitive edge via innovative technology and solutions. Towards this end, the Group will continue to devote resources to R&D, and launch new products and solutions to address the growing needs of customers and end users. The new products and solutions will not only meet the needs of the customers, but also optimize the portfolio mix of the Group which enables the maintenance of desirable margins and profi tability.

On the other hand, the management continues to be on the lookout for lucrative opportunities that befi t the Group’s growth strategy, with a view to generating maximum returns for shareholders.

The Board of Directors would like to thank all of our staff for their dedicated commitment and contribution, and our customers, suppliers, shareholders, and business associates for their support. The Group will strive unremittingly to achieve better performance.

LIQUIDITY, FINANCIAL RESOURCES & CAPITAL STRUCTURE

The Group generally fi nances for its operations from cashfl ow generated internally and bank borrowings. As at 30 June 2011, the Group had net current assets of HK$3,410,827,000. Current assets comprised inventories of HK$2,226,630,000, trade receivables of HK$4,326,049,000, notes receivable of HK$59,344,000, prepayments, deposits and other receivables of HK$585,511,000, restricted bank deposits of HK$28,240,000 and cash and cash equivalents of HK$725,259,000. Current liabilities comprised trade and bills payables of HK$2,444,097,000, other payables and accruals of HK$1,008,107,000, derivative fi nancial instrument of HK$1,793,000, interest-bearing bank borrowings of HK$847,591,000, tax payable of HK$173,486,000 and provisions for product warranties of HK$65,132,000.

The average receivable turnover for the Current Period was 259 days compared to 222 days for the Prior Period. The Group’s trading terms with its customers are mainly on credit. The credit period is generally for a period of three months and is extendable up to two years depending on the customer’s credit worthiness, except for those retention money generally receivable after fi nal certifi cation of products by customers, which would be performed six to twelve months after sale, or upon completion of the one to two years warranty periods granted to customers. The average payable turnover for the Current Period was 266 days compared to 262 days for the Prior Period. The average inventory turnover for the Current Period was 229 days compared to 251 days for the Prior Period.

As at 30 June 2011, the Group’s cash and bank balances were mainly denominated in Renminbi (“RMB”), Hong Kong dollars (“HK$”) and United States dollars (“US$”) while the Group’s bank borrowings were mainly denominated in US$ and HK$. The interest rates on the Group’s bank borrowings are principally on a fl oating basis at prevailing market rates.

During the Current Period, in addition to those short-term interest-bearing facilities, the Group had a three-year term loan facility agreement (the “Facility Agreement”), amounted to US$130,000,000, with a group of fi nancial institutions. The facility was granted for the purpose of fi nancing the Group’s capital expenditure, research and development initiatives, additional working capital as well as for the purpose of refi nancing the outstanding loan drawn under the old three-year term loan facility agreement dated 3 July 2009. Under the Facility Agreement, there is a specifi c performance obligation that Mr. Fok Tung Ling who is a controlling shareholder and Mr. Zhang Yue Jun who is a substantial shareholder of the Company, shall maintain benefi cial ownership in aggregate, directly or indirectly, of at least 35% of the entire issued shares (of each class) of and equity interests in the Company free from any security. As at 30 June 2011, the Group utilized the facility of US$130,000,000.

As at 30 June 2011, the Group held an interest rate swap contract designated as hedges in respect of expected interest payments for the above-mentioned US$ fl oating rate loan under the Facility Agreement.

The Group’s revenue and expenses, assets and liabilities are mainly denominated in RMB, HK$ and US$. As the Group’s revenue is substantially denominated in RMB, the Board currently considers that the appreciation of RMB should have a mildly favourable impact on the Group’s business.

The Group’s gross gearing ratio, calculated as total interest-bearing debts (including bank borrowings and advances) over total assets, was 16.5% as at 30 June 2011 (31 December 2010: 8.2%).

MATERIAL ACQUISITIONS AND DISPOSALS

Save as disclosed in the “Business and Financial Review” under the heading “Negative goodwill”, the Group has not conducted any material acquisitions and disposals of subsidiaries and associated companies during the Current Period.

CHARGE ON ASSETS

Refer to the acquisition as disclosed in the “Business and Financial Review” under the heading “Negative goodwill”, the newly acquired subsidiary has pledged its own property for a bank facility up to approximately HK$97,500,000 prior to the completion of the acquisition. As at 30 June 2011, the aforesaid charge has not been discharged yet. The Group plans to negotiate with the relevant bank in relation to the release of the aforesaid charge. Save as disclosed herein, there was no other charge on the Group’s assets (31 December 2010: Nil).

CONTINGENT LIABILITIES

As at 30 June 2011, the Group had contingent liabilities of HK$39,823,000 (31 December 2010: HK$39,225,000), which mainly included guarantees given to banks in respect of performance bonds.

EMPLOYEES AND REMUNERATION POLICIES

As at 30 June 2011, the Group had approximately 10,400 staff. The total staff costs for the Current Period were HK$474,584,000. The Group offers competitive remuneration schemes to its employees based on industry practices, legal requirements, as well as the employees’ and the Group’s performance. In addition, share options, awarded shares and discretionary bonuses are granted to eligible staff based on the performance of such employees as well as the Group. Mandatory provident fund, or staff pension schemes are also provided to relevant staff in Hong Kong, PRC or elsewhere in accordance with relevant legal requirements. The Group also provides training to the staff to improve their skills and develop their respective expertise.

PURCHASE, REDEMPTION OR SALE OF LISTED SECURITIES OF THE COMPANY

Neither the Company, nor any of its subsidiaries purchased, redeemed or sold on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) or otherwise any of the Company’s listed securities during the Current Period.

CODE ON CORPORATE GOVERNANCE PRACTICES

During the Current Period, the Board reviewed daily governance of the Group in accordance with the code provisions (the “Code Provision(s)”) of the Code on Corporate Governance Practices as set out in Appendix 14 to the Rules Governing the Listing of Securities on the Stock Exchange (the ”Listing Rules”) and considered that, from 1 January 2011 to the date of this interim results announcement, the Company regulated its operation and carried out appropriate governance in accordance with the Code Provisions. The Company has complied with the Code Provisions, except for the deviation from Code Provision A.2.1 which stipulates that the roles of chairman and chief executive offi cer should be separate and should not be performed by the same individual and that their divisions of responsibility should be clearly established and set out in writing. Mr. Fok Tung Ling, chairman of the Board of the Company is currently holding the offi ce of chief executive offi cer during the Current Period. Accordingly, the Company currently has not complied with Code Provision A.2.1 as the Company considers that through the supervision of the Board, a balancing mechanism exists so that the interests of the shareholders are fairly represented. Nevertheless, the Company will be reviewing its situation regularly and will comply with this code at an appropriate time in the future should it consider appropriate and necessary.

DIRECTORS’ SECURITIES TRANSACTIONS

The Company has adopted the Model Code for Securities Transactions by Directors of the Listed Issuers (the “Model Code”) as set out in Appendix 10 to the Listing Rules as its own code of conduct regarding Director’s securities transactions. Specifi c enquiry has been made to all Directors, and the Directors have confi rmed that they have complied with all relevant requirements as set out in the Model Code during the Current Period.

AUDIT COMMITTEE

The Company has established the audit committee in accordance with the Listing Rules. The Audit Committee, together with the management, has reviewed the accounting principles, standards and methods adopted by the Company, and studied matters relating to auditing, internal controls and fi nancial reporting, including reviewed the unaudited accounts for the Current Period. The Audit Committee has given its consent to the fi nancial accounting principles, standards and methods adopted by the Company for the unaudited condensed consolidated interim fi nancial statements for the Current Period.

PUBLICATION OF INTERIM REPORT ON THE WEBSITES OF THE STOCK EXCHANGE AND THE COMPANY

A copy of interim report containing all information required by relevant paragraphs of Appendix 16 of the Listing Rules will be despatched to shareholders and published on the Stock Exchange’s website (http://www.hkex.com.hk) and the Company’s website (http://www.comba-telecom.com) in due course.

By order of the Board Comba Telecom Systems Holdings Limited Fok Tung Ling Chairman and President

Hong Kong, 24 August 2011

As at the date of this announcement, the Board comprises the following executive Directors: Mr. FOK Tung Ling, Mr. ZHANG Yue Jun, Mr. TONG Chak Wai, Wilson, Mr. WU Jiang Cheng, Mr. YAN Ji Ci, Mr. ZHENG Guo Bao and Mr. YEUNG Pui Sang, Simon; and the following independent non-executive Directors: Mr. YAO Yan, Mr. LAU Siu Ki, Kevin and Mr. LIU Cai.