GBA Holdings Limited - Proxy Solicitation & Information Statement 2010

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your licensed securities dealer or registered institution in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in CCT Tech International Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser(s), the transferee(s) or to the bank, licensed securities dealer or registered institution in securities, or other agent through whom the sale or the transfer was effected for onward transmission to the purchaser(s) or the transferee(s).

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, 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 circular.

This circular appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities of the Company.

(Incorporated in Bermuda with limited liability) (Stock Code: 00261)

(1) PROPOSED CAPITAL REORGANISATION AND (2) MAJOR ACQUISITION ACQUISITION OF A MEDICAL DEVICE BUSINESS

Financial Adviser to the Company for the Transactions

SAMSUNG SECURITIES (ASIA) LIMITED

A letter from the Board is set out on pages 15 to 70 of this circular.

A notice convening the SGM to be held at 2208, 22/F., St. George’s Building, 2 Ice House Street, Central, Hong Kong on Friday, 24 December 2010 at 10:30 a.m. is set out on pages 168 to 176 of this circular. A form of proxy for use by the Shareholders at the SGM is enclosed with this circular. Whether or not you intend to attend and vote at the SGM in person, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return it to the branch share registrar and transfer office of the Company in Hong Kong, Tricor Tengis Limited at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as practicable but in any event, not later than 48 hours before the time appointed for holding the SGM or any adjournment thereof (as the case may be). Such form of proxy for use at the SGM is also published on the websites of the Stock Exchange (www.hkexnews.hk) and the Company (www.cct-tech.com.hk). Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjournment thereof (as the case may be) should you so wish.

30 November 2010

CONTENTS

			Page
Definitions . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
Letter from the	Board	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
Appendix I	–	Financial information of the Group . . . . . . . . . . . . . . . . . . . . . . . .	71
Appendix II	–	Accountants’ reports of the Target Group . . . . . . . . . . . . . . . . . . .	88
Appendix III	–	Unaudited pro forma financial information of the Enlarged Group .	128
Appendix IV	–	Valuation Report on the Target Group . . . . . . . . . . . . . . . . . . . . .	142
Appendix V	–	General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	156
Notice of the SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			168

– i –

DEFINITIONS

In this circular, the following expressions shall have the following meanings unless the context indicates otherwise:

“Announcement”

the joint announcement dated 28 October 2010 made by the Company and CCT Telecom in respect of the very substantial acquisition and very substantial disposal of CCT Telecom; and the proposed capital reorganisation, change of board lot size, major acquisition and proposed placing of new shares under general mandate of the Company;

“associates” has the meaning as given to it in the Listing Rules;
“Board” the board of the Directors;
“Business Day(s)”
a day on which commercial banks in Hong Kong and the PRC are open for business (excluding Saturdays, Sundays, public holidays and any weekday on which Typhoon Signal No. 8 or higher is hoisted or a black rain storm warning is given in Hong Kong at any time during 9:00 a.m. to 5:00 p.m.);
“BVI”
British Virgin Islands;

“Capital Increase” subject to and forthwith upon the Share Consolidation and the Capital Reduction becoming effective, the proposed increase in the authorised share capital of the Company from HK$120,000,000 divided into 12,000,000,000 shares of par value of HK$0.01 each to HK$300,000,000 divided into 30,000,000,000 shares of par value of HK$0.01 each;

“Capital Reduction” the proposed reduction of the par value of each issued Consolidated Share from HK$0.10 each to HK$0.01 each by cancelling HK$0.09 paid-up capital on each issued Consolidated Share upon the Share Consolidation becoming effective;

“Capital Reorganisation” the proposed share capital reorganisation of the Company which includes the Share Consolidation, the Capital Reduction, the Credit Transfer, the Capital Increase, Reclassification and Re-designation and creation of the Redeemable CPS as more fully set out under the section headed “The Proposed Capital Reorganisation” in the “Letter from the Board” of this circular;

– 1 –

DEFINITIONS

“Cash Option Consideration”

has the meaning set out in the term headed “Option Price” in the sub-section headed “The Put Option” under the section headed “The S&P Agreement and the Transactions” in the “Letter from the Board” of this circular;

“CCASS”

Central Clearing and Settlement System established and operated by HKSCC;

“CCT Assets” CCT Assets Management Limited, a company incorporated in the BVI with limited liability and an indirect wholly-owned subsidiary of CCT Telecom, which holds 1,350,000,000 CCT Tech Existing Shares, as at the Latest Practicable Date, representing approximately 2.06% of the existing entire issued share capital of the Company;

“CCT Resources”
CCT Resources Holdings Limited (which will be renamed as “Merdeka Resources Holdings Limited” upon completion of the filing procedures with the Companies Registry in Hong Kong, and whose Chinese name will be adopted from “中建資源集團有限公司” to “萬德資源集團有限公司” for identification purposes), a company incorporated in the Cayman Islands with limited liability and whose shares are listed on the Growth Enterprise Market of the Stock Exchange, and as at the Latest Practicable Date, CCT Telecom is its substantial shareholder;
“CCT Tech” or “Company”
CCT Tech International Limited, a company incorporated in Bermuda with limited liability and the shares of which are listed on the main board of the Stock Exchange;
“CCT Tech Existing Share(s)”
the existing issued share(s) of the Company and share(s) of the Company to be allotted and issued from time to time of par value of HK$0.01 each before the Capital Reorganisation becoming effective;
“CCT Tech Ordinary Share(s)”
the ordinary share(s) of HK$0.01 each in the capital of and to be allotted and issued by the Company from time to time upon the Capital Reorganisation becoming effective;
“CCT Telecom”
CCT Telecom Holdings Limited, a company incorporated in the Cayman Islands and continued in Bermuda with limited liability, the shares of which are listed on the main board of the Stock Exchange;

“CCT Telecom Director(s)” the director(s) (including the independent non-executive directors) of CCT Telecom, from time to time;

– 2 –

DEFINITIONS

“CCT Telecom Group”
CCT Telecom and its subsidiaries, from time to time;
“CCT Telecom Remaining Group”
the CCT Telecom Group, excluding the Group;
“CCT Telecom SGM”
the special general meeting of the CCT Telecom Shareholders to be convened to consider and, if thought fit, inter alia, approve (i) the S&P Agreement; (ii) the Transactions; (iii) the very substantial disposal arising from dilution of CCT Telecom’s shareholding interest in the Company as a result of the allotment and issue of the Placing Shares; and (iv) the possible very substantial disposal as a result of the possible maximum dilution of CCT Telecom’s shareholding interest in the Company arising from the future possible issue of the Conversion Shares as a result of the full conversion of the Redeemable CPS, and the other transactions contemplated thereunder;
“CCT Telecom Shareholder(s)” the holder(s) of the ordinary shares in the capital of CCT Telecom;
“CE Marking” a product certification mark that is placed on, constituting a manufacturer’s declaration that the product complies with the essential requirements of the relevant European health, safety and environmental protection directives, namely the European Directives;
“Charge” the charge over the Redeemable CPS given by the InnoMed Owner and the Vendor pursuant to the terms of the InnoMed Owner CPS Charge and the Vendor CPS Charge, respectively;
“Companies Act” the Companies Act 1981 of Bermuda (as amended from time to time);
“Completion” completion of the Transactions pursuant to the S&P Agreement, which will take place on the Completion Date;
“Completion Date”
10:00 a.m. (Hong Kong time) on the second Business Day next following the date on which all the conditions precedent (other than the conditions precedent set out in paragraphs (e) to (h) of the sub-section headed “Conditions precedent to the S&P Agreement” under the section headed “The S&P Agreement and the Transactions” in the “Letter from the Board” of this circular, which will be satisfied or waived on the Completion Date) set out in the S&P Agreement has been satisfied or waived in accordance with the S&P Agreement or such other time and date as the parties to the S&P Agreement may agree in writing, on which Completion will take place;

– 3 –

DEFINITIONS

“connected person(s)”
“Consideration”
“Consideration Shares”
“Consolidated Net Profit After Tax”
“Consolidated Share(s)”
“Consolidated Share Options”
“Conversion Period”
“Conversion Ratio”
“Conversion Shares”

has the meaning as given to it in the Listing Rules;

the aggregate price of US$100,000,000 (equivalent to approximately HK$780,000,000), representing the total of the Subscription Consideration and the Purchase Consideration;

has the meaning set out in the sub-section headed “Purchase Consideration” under the section headed “The S&P Agreement and the Transactions” in the “Letter from the Board” of this circular;

the consolidated net profit after tax of the Target Group, after deduction of all expenses, losses, provisions and charges but for the purpose of the S&P Agreement, after adding back the charge for depreciation and amortisation on the intangible assets and goodwill of the Target Group;

share(s) of HK$0.10 each in the issued share capital of the Company immediately upon the Share Consolidation becoming effective but prior to the Capital Reduction;

the adjustment of the Existing Share Options into 60,000,000 consolidated share options as a result of the Capital Reorganisation, which entitle the holders to exercise and subscribe for 60,000,000 CCT Tech Ordinary Shares at the adjusted exercise price of HK$0.10 per CCT Tech Ordinary Share;

the perpetual period commencing from date of issue of the Redeemable CPS in which holder(s) of the Redeemable CPS are eligible to convert, subject to the Lock-up Undertakings and the conversion restrictions as set out in the Resolution, the Redeemable CPS into the CCT Tech Ordinary Shares;

the ratio of conversion of the Redeemable CPS into the CCT Tech Ordinary Shares, at the initial ratio of one Redeemable CPS convertible into one CCT Tech Ordinary Share, subject to adjustment only in the event of an alteration to the nominal value of the CCT Tech Ordinary Shares as a result of consolidation or sub-division of the CCT Tech Ordinary Shares and not otherwise;

CCT Tech Ordinary Shares to be allotted and issued by the Company upon conversion of the Redeemable CPS, from time to time;

– 4 –

DEFINITIONS

“Credit Transfer”

has the meaning as referred to in the section headed “The Proposed Capital Reorganisation” in the “Letter from the Board” of this circular;

“Designated Account”

the bank account opened in the name of the Target Company and is designated by the Target Company to receive the Subscription Consideration (other than the Deposit), which account shall be operated by signatories nominated solely by the Company;

“Director(s)”

the director(s) (including the independent non-executive directors) of the Company, from time to time;

“Enlarged Group”

the Group as enlarged by the Placing and the Transactions;

“Executive”
the Executive Director of the Corporate Finance Division of the SFC and any delegate of the Executive Director;
“Exercise Period” has the meaning set out in the term headed “Exercise Period” in the sub-section headed “The Put Option” under the section headed “The S&P Agreement and the Transactions” in the “Letter from the Board” of this circular;
“Existing InnoMed Group” InnoMed and Shanghai Ying Zhong;
“Existing Share Options” the existing share options granted under the share option scheme of the Company, which entitle the holders to exercise and subscribe for 600,000,000 CCT Tech Existing Shares at the exercise price of HK$0.01 per CCT Tech Existing Share before the Capital Reorganisation becoming effective;
“Expert Success” Expert Success International Limited, a company incorporated in the BVI with limited liability and an indirect wholly-owned subsidiary of CCT Telecom which holds 2,350,000,000 CCT Tech Existing Shares, as at the Latest Practicable Date, representing approximately 3.59% of the existing total issued share capital of the Company;
“GE”
General Electric Company (NYSE: GE);
“Governmental Authority(ies)”
any government, court, governmental, regulatory or official authority, department, agency or body, whether in Hong Kong, the PRC or elsewhere, including but not limited to the Stock Exchange and the SFC;

– 5 –

DEFINITIONS

“Group”

“HK$”
“HKSCC”

“HK GAAP”

“Hong Kong”
“Independent Shareholders”

“InnoMed”

“InnoMed Cash Consideration”
“InnoMed Consideration”

the Company and its subsidiaries, from time to time;

Hong Kong dollar(s), the lawful currency of Hong Kong;

Hong Kong Securities Clearing Company Limited;

generally accepted accounting principles, standards and practices in Hong Kong, including but not limited to Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards and Interpretations issued by the Hong Kong Institute of Certified Public Accountants;

the Hong Kong Special Administrative Region of the PRC;

Shareholders other than the Vendor, the InnoMed Owner and their respective associates, who have no interest in the exercise of the Put Option and the transfer of the Sale Shares and the Subscription Shares back to the Vendor as a result of the exercise of the Put Option;

InnoMed Scientific Incorporation Limited, a company incorporated in Hong Kong with limited liability, the entire issued share capital in which is owned by the InnoMed Owner as at the Latest Practicable Date;

the price of US$5 million (or its equivalent in HK$), representing that part of the InnoMed Consideration payable in cash, which shall be paid by the Target Company in cash to the InnoMed Owner in accordance with the provisions set out in the InnoMed Share Purchase Agreement;

the aggregate price of US$20 million (or its equivalent in HK$), which comprises the InnoMed Cash Consideration and the InnoMed Non-Cash Consideration, being the total consideration for the purchase of the entire issued share capital and the InnoMed Shareholder’s Loan of InnoMed by the Target Company from the InnoMed Owner, in accordance with the InnoMed Share Purchase Agreement, and which shall form part of the Consideration;

– 6 –

DEFINITIONS

“InnoMed Non-Cash Consideration”
“InnoMed Group”
“InnoMed Owner”
“InnoMed Owner CPS Charge”
“InnoMed Share Purchase Agreement”
“InnoMed Shareholder’s Loan”
the price of US$15 million (or its equivalent in HK$), representing that part of the InnoMed Consideration to be satisfied by the allotment and issue of 650,000,000 Redeemable CPS by the Company to the InnoMed Owner in the manner set out in the sub-section headed “Purchase Consideration” under the section headed “The S&P Agreement and the Transactions” in the “Letter from the Board” of this circular;
InnoMed, the Shanghai Companies and the subsidiaries of InnoMed, from time to time;
InnoMed Scientific Limited, which holds and owns the entire issued capital of InnoMed as at the Latest Practicable Date;
the share charge in form and substance agreed by the Vendor and the Company to be executed by the InnoMed Owner in favour of the Company, pursuant to which such number of the Redeemable CPS to be issued to the InnoMed Owner pursuant to the terms of the S&P Agreement are charged in favour of the Company to secure the obligations of the Vendor and the Target Company under the S&P Agreement, including the Vendor’s obligations under the Put Option, as further elaborated in the sub-section headed “Lock-up Undertakings and the Charge on the Redeemable CPS” under the section headed “The S&P Agreement and the Transactions” in the “Letter from the Board” of this circular;
the share purchase agreement dated 12 October 2010 as amended and supplemented by a supplemental agreement dated as of 19 October 2010 entered into between the Target Company, the InnoMed Owner and Mr. Hu, pursuant to which the Target Company will purchase, the InnoMed Owner will sell, the entire issued capital of InnoMed and the InnoMed Owner will assign the InnoMed Shareholder’s Loan to the Target Company;
the outstanding interest-free loan due from InnoMed to the InnoMed Owner as at the Completion Date, which amounted to approximately HK$8 million as at the date of the S&P Agreement;

– 7 –

DEFINITIONS

“Jade Assets”
“Key Management”
“Last Trading Date”
“Latest Practicable Date”
“Listing Rules”
“Lock-up Undertakings”
“Long Stop Date”
“Medical Device Business”
“MIV Share Charge”
Jade Assets Company Limited, a company incorporated in the BVI with limited liability and an indirect wholly-owned subsidiary of CCT Telecom which holds 29,326,391,124 CCT Tech Existing Shares, as at the Latest Practicable Date, representing approximately 44.83% of the existing total issued share capital of the Company;
the key management of the Target Group, whose brief biographies have been set out in the section headed “Key Management” in the “Letter from the Board” of this circular;
13 October 2010, being the last trading day on which the CCT Tech Existing Shares and the shares of CCT Telecom were traded on the Stock Exchange prior to the issue of the Announcement;
24 November 2010, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information contained herein;
the Rules Governing the Listing of Securities on the Stock Exchange;
the lock-up undertakings to be given by the Vendor and the InnoMed Owner, applicable to the disposal, transfer, dealings and conversion of the Redeemable CPS as more particularly described in the sub-section headed “Lock-up Undertakings and the Charge on the Redeemable CPS” under the section headed “The S&P Agreement and the Transactions” in the “Letter from the Board” of this circular;
31 December 2010, or such other date as the parties to the S&P Agreement may from time to time agree in writing;
the business involving the manufacture and sale of vascular stent system and other medical devices to be engaged by the Target Group after Completion, as further elaborated in the section headed “Information on the Target Group” in the “Letter from the Board” of this circular;
the share charge executed by the Vendor in favour of the Company on 13 October 2010, pursuant to which the Vendor charges all the Sale Shares in favour of the Company and such share charge shall be released upon Completion;

– 8 –

DEFINITIONS

“Mr. Hu”	Mr. Ty Tiefeng Hu, the existing owner of the entire equity
	of Shanghai Ying Sheng, as at the Latest Practicable Date;
“Non-cash Option Consideration”	has the meaning set out in the term headed “Option Price”
	in the sub-section headed “The Put Option” under the
	section headed “The S&P Agreement and the Transactions”
	in the “Letter from the Board” of this circular;
“ODM”	original design manufacturing;
“Option Completion Date”	has the meaning set out in the term headed “Option
	Completion Date” in the sub-section headed “The Put
	Option” under the section headed “The S&P Agreement
	and the Transactions” in the “Letter from the Board” of this
	circular;
“Option Price”	the aggregate price of the Cash Option Consideration and
	the Non-cash Option Consideration, as further elaborated
	in the term headed “Option Price” in the sub-section
	headed “The Put Option” under the section headed “The
	S&P Agreement and the Transactions” in the “Letter from
	the Board” of this circular;
“Patents”	the patents owned by the Target Company, the particulars
	of which have been described in the section headed
	“Information on the Target Group” in the “Letter from the
	Board” of this circular;
“Placee(s)”	any independent individual, corporate and/or institutional
	investors procured by the Placing Agent to subscribe for
	any of the Placing Shares pursuant to the Placing Agent’s
	obligations under the Placing Agreement;
“Placing”	has the meaning set out in the section headed “The
	Proposed Placing” in the “Letter from the Board” of this
	circular;
“Placing Agent”	SBI E2-Capital (HK) Limited, a company incorporated in
	Hong Kong having its registered office address at Unit A2,
	32/F., United Centre, 95 Queensway, Hong Kong;
“Placing Agreement”	the placing agreement entered into between the Placing
	Agent and the Company on 19 October 2010 regarding the
	Placing, as further elaborated in the section headed “The
	Proposed Placing” in the “Letter from the Board” of this
	circular;

– 9 –

DEFINITIONS

“Placing Price”
has the meaning set out in the sub-section headed “Terms of the Placing Agreement” under the section headed “The Proposed Placing” in the “Letter from the Board” of this circular;
“Placing Shares” has the meaning set out in the section headed “The Proposed Placing” in the “Letter from the Board” of this circular;
“PRC” the People’s Republic of China, excluding Hong Kong for the purpose of this circular;
“Purchase Consideration”
the aggregate price of US$80,000,000 (equivalent to approximately HK$624,000,000) to be satisfied by the Company by way of allotment and issue of the Redeemable CPS to be issued to the InnoMed Owner and the Vendor for the purchase of the Sale Shares from the Vendor, pursuant to the terms and the conditions of the S&P Agreement;
“Put Option”
the put option granted to the Company by the Vendor under the S&P Agreement, which gives the right to the Company to require the Vendor to buy back the Sale Shares and the Subscription Shares at the Option Price, if certain event is not fulfilled, as further elaborated in the sub-section headed “The Put Option” under the section headed “The S&P Agreement and the Transactions” in the “Letter from the Board” of this circular;
“R&D”

research and development;

“Reclassification and Re-designation”

the reclassification and re-designation of the authorised share capital of the Company subject to and forthwith upon the Capital Increase becoming effective so that the authorised share capital of the Company shall become HK$300,000,000 divided into 30,000,000,000 shares of par value of HK$0.01 each, comprised of 3,466,700,000 Redeemable CPS of par value of HK$0.01 each and 26,533,300,000 CCT Tech Ordinary Shares of par value of HK$0.01 each and the proposed re-designation of the then issued shares of the Company into issued CCT Tech Ordinary Shares;

– 10 –

DEFINITIONS

“Redeemable CPS”
“Relevant Holding Companies”
“Resolution”
“RMB”
“Roma”
“S&P Agreement”
“Sale Shares”
the non-voting redeemable convertible preference shares of par value of HK$0.01 each created by the Capital Reorganisation to be issued by the Company after Completion at the issue price of HK$0.18 each pursuant to the terms of the S&P Agreement and having the rights and benefits and subject to the restrictions to be set out in the Resolution;
CCT Assets, Expert Success and Jade Assets, which together hold a total of 33,026,391,124 CCT Tech Existing Shares, representing approximately 50.49% of the existing total issued share capital of the Company as at the Latest Practicable Date;
the resolution to be proposed and approved by the Shareholders at the SGM in relation to, inter alia, the creation of the Redeemable CPS and the rights, benefits and restrictions attached to the Redeemable CPS;
Renminbi, the lawful currency of the PRC;
Roma Appraisals Limited, the valuer appointed to conduct the valuation on the Target Group;
the conditional agreement dated 13 October 2010 as amended and supplemented by the Supplemental Agreement and the Second Supplemental Agreement, each of which was entered into amongst the Company, the Vendor and the Target Company in respect of the Transactions, as more particularly disclosed and described in the section headed “The S&P Agreement and the Transactions” in the “Letter from the Board” of this circular;
80 shares of US$1.00 each in the Target Company, representing the entire issued share capital of the Target Company as at the Latest Practicable Date, to be sold by the Vendor to the Company (or its designated nominee(s)) at the Purchase Consideration, pursuant to the terms and conditions of the S&P Agreement;

– 11 –

DEFINITIONS

“Second Supplemental Agreement”	the second supplemental agreement dated 22 October 2010
	entered into amongst the Company, the Vendor and the
	Target Company to amend the original agreement dated 13
	October 2010 also entered into by the same parties in
	respect of the Transactions, mainly to exclude the
	condition precedent set out in the paragraph (c) in the
	sub-section headed “Conditions precedent to the S&P
	Agreement” under the section headed “The S&P
	Agreement and the Transactions” in the “Letter from the
	Board” of this circular from the right of waiver of the
	Company;
“SFC”	Hong Kong Securities and Futures Commission;
“SFO”	Securities and Futures Ordinance (Chapter 571 of the Laws
	of Hong Kong);
“SFDA”	The State Food and Drug Administration of the PRC;
“SGM”	the special general meeting of the Shareholders to be
	convened to consider and, if thought fit, inter alia, approve
	the Capital Reorganisation (including the Resolution), the
	S&P Agreement, the Transactions, and the other
	transactions contemplated thereunder;
“Shanghai Companies”	Shanghai Ying Zhong and Shanghai Ying Sheng;
“Shanghai Ying Sheng”	Shanghai InnoMed Technologies Incorporation Limited
	(上海贏生醫療科技有限公司), a company established in
	the PRC, the entire equity in which is owned by Mr. Hu as
	at the Latest Practicable Date;

“Shanghai Ying Sheng Equity Transfer the equity transfer agreement entered into between Agreement” InnoMed and Mr. Hu on 11 October 2010, pursuant to which InnoMed will purchase all the equity interest in Shanghai Ying Sheng;

“Shanghai Ying Zhong” InnoMed Scientific Incorporation (Shanghai) Ltd. (贏眾生物科技（上海）有限公司), a company established in the PRC, the entire equity in which is owned by InnoMed as at the Latest Practicable Date;

“Share Consolidation” the proposed consolidation of every 10 issued CCT Tech Existing Shares of HK$0.01 each in the share capital of the Company into one issued Consolidated Share of HK$0.10 each;

– 12 –

DEFINITIONS

“Shareholder(s)”
“Share Repurchase Code”
“Specified Product”
“Stock Exchange”
“Subscription Consideration”
“Subscription Shares”
“substantial shareholder(s)”
“Supplemental Agreement”
“Takeovers Code”
“Target Company”

the holder(s) of the CCT Tech Existing Share(s) before the Capital Reorganisation becoming effective or the holder(s) of the CCT Tech Ordinary Shares after the Capital Reorganisation becoming effective;

the Hong Kong Code on Repurchase;

has the meaning set out in the section headed “Information on the Target Group” in the “Letter from the Board” of this circular;

The Stock Exchange of Hong Kong Limited;

the aggregate price of US$20,000,000 (equivalent to approximately HK$156,000,000) payable by the Company in cash to the Target Company for the subscription of the Subscription Shares, pursuant to the terms and the conditions of the S&P Agreement;

20 new shares in the Target Company, to be subscribed for by the Company (or its designated nominee(s)) at the Subscription Consideration, pursuant to the terms and conditions of the S&P Agreement;
has the meaning as given to it in the Listing Rules;

the supplemental agreement dated 19 October 2010 entered into amongst the Company, the Vendor and the Target Company to amend certain terms mainly related to the changes of structure of the Placing from a top-up placing to a placing for new shares by means of the Placing Agreement and amendments to clarify certain indemnities, warranties and representations of the Vendor and the Target Company under the S&P Agreement, and amendments to the relevant terms of definitions as a result of those changes, of the original agreement dated 13 October 2010, also entered into amongst the Company, the Vendor and the Target Company, in respect of the Transactions;

the Hong Kong Code on Takeovers and Mergers;

MIV Scientific Holdings Ltd., a company incorporated in the BVI with limited liability, which is a wholly-owned subsidiary of the Vendor as at the Latest Practicable Date;

– 13 –

DEFINITIONS

“Target Group”
“Telecom Product Business”
“Transactions”
“USA”
“US$”
“Valuation Report”
“Vendor”
“Vendor CPS Charge”
“%”
the Target Company, InnoMed, Shanghai Ying Zhong, Shanghai Ying Sheng, and any other subsidiaries of the Target Company, from time to time;

has the meaning set out in the section headed “Information on CCT Tech and CCT Telecom” in the “Letter from the Board” of this circular;

the proposed acquisition of the Sale Shares by the Company from the Vendor and the proposed subscription of the Subscription Shares by the Company, pursuant to the terms and conditions of the S&P Agreement as more particularly described in the section headed the “The S&P Agreement and the Transactions” of the “Letter from the Board” of this circular;

United States of America;

US dollars, the lawful currency of the USA;

the valuation report issued by Roma, showing the appraised value of the Target Group, details of which are set out in Appendix IV of this circular;

MIV Therapeutics, Inc., a company incorporated in the USA, which holds the Sale Shares, representing the entire issued share capital of the Target Company as at the Latest Practicable Date;

the share charge in form and substance agreed by the Vendor and the Company to be executed by the Vendor in favour of the Company, pursuant to which such number of the Redeemable CPS to be issued to the Vendor pursuant to the terms of the S&P Agreement are charged in favour of the Company to secure the obligations of the Vendor and the Target Company under the S&P Agreement, including the Vendor’s obligations under the Put Option, as further elaborated in the sub-section headed “Lock-up Undertakings and the Charge on the Redeemable CPS” under the section headed “The S&P Agreement and the Transactions” in the “Letter from the Board” of this circular; and

per cent.

– 14 –

LETTER FROM THE BOARD

(Incorporated in Bermuda with limited liability) (Stock Code: 00261)

Executive Directors: Mak Shiu Tong, Clement Cheng Yuk Ching, Flora Tam Ngai Hung, Terry William Donald Putt

Registered office: Canon’s Court 22 Victoria Street Hamilton HM 12 Bermuda

Independent non-executive Directors: Chow Siu Ngor Lau Ho Kit, Ivan Chen Li

Head office and principal place of business in Hong Kong: 2208, 22/F. St. George’s Building Central, 2 Ice House Street Hong Kong

30 November 2010

To the Shareholders and, for information only, the holders of the Existing Share Options

Dear Sir or Madam,

(1) PROPOSED CAPITAL REORGANISATION AND (2) MAJOR ACQUISITION ACQUISITION OF A MEDICAL DEVICE BUSINESS

INTRODUCTION

On 28 October 2010, by means of the Announcement, the Board proposes to put forward the proposal to the Shareholders to effect the Capital Reorganisation which involves:

(i) the Share Consolidation;
(ii) the Capital Reduction;
(iii) the Credit Transfer; and
(iv) the Capital Increase, Reclassification and Re-designation.

The proposed Capital Reorganisation is conditional upon, among others, the Shareholders’ approval of the proposed Capital Reorganisation (including the Resolution), the S&P Agreement and the Transactions at the SGM, and the CCT Telecom Shareholders’ approval of the S&P Agreement and all transactions contemplated thereunder at the CCT Telecom SGM.

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LETTER FROM THE BOARD

On 28 October 2010, also by means of the Announcement, the Board and the board of the CCT Telecom Directors jointly announced that the Company entered into the S&P Agreement with the Vendor and the Target Company in respect of the Transactions at the Consideration of US$100 million (equivalent to approximately HK$780,000,000), which involve the acquisition by the Company of the Sale Shares from the Vendor and the subscription of the Subscription Shares. Completion of the S&P Agreement is conditional upon, among others, completion of the Placing, and the Shareholders’ approval of the Capital Reorganisation, the S&P Agreement and the Transactions. Following Completion, the Company (or its designated nominee(s)) will beneficially own the then entire issued share capital of the Target Company as enlarged by the Subscription Shares. The Target Company owns the Patents and together with its subsidiaries will engage in the Medical Device Business.

As at the Latest Practicable Date, no Shareholder is required to abstain from voting on the resolution(s) to approve the Capital Reorganisation (including the Resolution) at the SGM. In addition, as at the Latest Practicable Date, as no Shareholder has a material interest in the Transactions, no Shareholder is also required to abstain from voting on the resolution(s) to approve, amongst others, the S&P Agreement, the Transactions and the other transactions contemplated thereunder at the SGM.

The purpose of this circular is to provide you with, among other things, (i) further details of the Capital Reorganisation (including the Resolution); (ii) further details of the Placing Agreement and the Placing; (iii) further details of the S&P Agreement and the Transactions; (iv) the Valuation Report on the Target Group; and (v) the notice of the SGM.

THE PROPOSED CAPITAL REORGANISATION

The Board proposes to put forward a proposal to the Shareholders to effect the Capital Reorganisation which involves:

(1) the Share Consolidation under which every 10 CCT Tech Existing Shares of HK$0.01 each will be consolidated into one Consolidated Share of HK$0.10 each;
(2) the Capital Reduction under which the par value of each issued Consolidated Share will be reduced from HK$0.10 to HK$0.01 by cancelling HK$0.09 paid-up capital on each issued Consolidated Share;
(3) transferring the credit in the amount equal to the multiple of (i) the total number of the then issued shares of the Company upon the Share Consolidation becoming effective; and (ii) HK$0.09, arising from the Capital Reduction of the issued share capital of the Company to the contributed surplus account of the Company to offset against the accumulated losses of the Company on the date the Capital Reduction becoming effective (the “ Credit Transfer ”); and
(4) subject to and forthwith upon the Share Consolidation and Capital Reduction becoming effective, the Capital Increase, under which the authorised share capital of the Company will be increased from HK$120,000,000 divided into 12,000,000,000 shares of par value of HK$0.01 each in the capital of the Company to HK$300,000,000 divided into 30,000,000,000 shares of par value of HK$0.01 each and the Reclassification and Re-designation of the increased authorised share capital and the creation and approval of the Redeemable CPS on the terms and conditions as specified in the Resolution so that the

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LETTER FROM THE BOARD

authorised share capital of the Company will become HK$300,000,000 divided into 30,000,000,000 shares of par value of HK$0.01 each comprised of 3,466,700,000 Redeemable CPS of par value of HK$0.01 each and 26,533,300,000 CCT Tech Ordinary Shares of par value of HK$0.01 each and the re-designation of all of the then issued shares of the Company into issued CCT Tech Ordinary Shares of par value of HK$0.01 each.

The Directors have no present intention of issuing any part of the increased authorised share capital of the Company other than for the purpose of allotment and issue of the Placing Shares, the Redeemable CPS and the Conversion Shares upon exercise of the right attaching to the Redeemable CPS.

Effects of the Capital Reorganisation

As at the Latest Practicable Date, the authorised share capital of the Company is HK$1,200,000,000 divided into 120,000,000,000 CCT Tech Existing Shares. The existing issued share capital of the Company is HK$654,139,939.90 divided into 65,413,993,990 CCT Tech Existing Shares. Subject to the approval by the Shareholders of the Capital Reorganisation, the S&P Agreement and the Transactions and on the assumption that no further shares of the Company will be issued from the Latest Practicable Date up to and including the date when the Capital Reorganisation becoming effective, the authorised share capital of the Company immediately upon the Capital Reorganisation becoming effective will be HK$300,000,000 divided into 30,000,000,000 new shares of HK$0.01 each, comprised of 3,466,700,000 Redeemable CPS and 26,533,300,000 CCT Tech Ordinary Shares, of which approximately 6,541,399,399 CCT Tech Ordinary Shares will be in issue. Fractional CCT Tech Ordinary Shares will not be issued to the Shareholders but will be aggregated and, if possible, sold for the benefit of the Company.

Based on the approximately 6,541,399,399 Consolidated Shares which is in issue and will be in issue immediately after completion of the Share Consolidation but before completion of the Capital Reduction and assuming (i) the Placing will be undertaken after the Capital Reorganisation becoming effective; and (ii) no other CCT Tech Existing Shares will be issued between the Latest Practicable Date and the effective date of the Capital Reorganisation, a credit of approximately HK$588,725,946 will arise as a result of the Capital Reduction and will be transferred to the contributed surplus account of the Company and applied to set-off against the accumulated losses of the Company on the date the Capital Reduction becoming effective.

As at the Latest Practicable Date, the Company has outstanding 600,000,000 Existing Share Options which entitle their holders to subscribe for 600,000,000 unissued CCT Tech Existing Shares at the exercise price of HK$0.01 per CCT Tech Existing Share. Upon the Capital Reorganisation becoming effective, the Existing Share Options will be consolidated into 60,000,000 Consolidated Share Options which will entitle their holders to subscribe for 60,000,000 CCT Tech Ordinary Shares at the revised exercise price of HK$0.10 per CCT Tech Ordinary Share. Other than the Existing Share Options, the Company has no outstanding options, warrants, conversion rights or other similar rights to subscribe for the unissued existing shares of the Company.

Implementation of the Capital Reorganisation will not, of itself, alter the underlying assets, business operations, management or financial position of the Group or the proportionate interests of the Shareholders in the Company, except for the payment of related expenses (which are expected to be insignificant) and the Credit Transfer. The Board believes that the Capital Reorganisation will not have any adverse effect on the financial position of the Group and that on the date the Capital Reorganisation

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LETTER FROM THE BOARD

becoming effective, there are no reasonable grounds for believing that the Company is, or after the Capital Reorganisation will be, unable to pay its liabilities as they fall due. The Capital Reorganisation does not involve any diminution of any liability in respect of any unpaid capital of the Company or the repayment to the Shareholders of any paid-up capital of the Company. Upon completion of the Capital Reorganisation, the CCT Tech Ordinary Shares will rank pari passu in all respects with each other and the Capital Reorganisation will not result in any change in the relative rights of the Shareholders.

Conditions of the Capital Reorganisation

The Capital Reorganisation (which will be effected in accordance with the bye-laws of the Company and the Companies Act) is conditional upon:

(a) the passing of the necessary resolution(s) by the Shareholders to approve the Capital Reorganisation (including the Resolution) at the SGM;
(b) the passing of the necessary resolution(s) by the Shareholders to approve the S&P Agreement and all transactions contemplated thereunder at the SGM;
(c) the passing of the necessary resolution(s) by the CCT Telecom Shareholders to approve the S&P Agreement and all transactions contemplated thereunder at the CCT Telecom SGM;
(d) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, the CCT Tech Ordinary Shares in issue following completion of the Capital Reorganisation; and
(e) (i) publication of a notice in relation to the Capital Reduction in Bermuda in accordance with section 46(2)(a) of the Companies Act; and (ii) that as at the date on which the Capital Reduction is to take effect, there will be no reasonable grounds for believing that CCT Tech will, immediately before or after completion of the Capital Reduction be, unable to pay its liabilities as they fall due.

Assuming that the above conditions are fulfilled, it is expected that the Capital Reorganisation will become effective at 9:30 a.m. on the Business Day next following the day which the relevant resolution(s) to approve the Capital Reorganisation is passed. Subject to the passing of the relevant resolution(s) at the SGM approving the Capital Reorganisation, the Capital Reorganisation will be implemented in compliance with the laws of Bermuda, including the applicable requirements under the Companies Act.

Reasons for the Capital Reorganisation

The purpose of the Capital Reorganisation is to cater for the issue of the Redeemable CPS and the Conversion Shares pursuant to the terms of the S&P Agreement and to meet the requirements under Rule 13.64 of the Listing Rules. The Company will not proceed with the proposed Capital Reorganisation if the Shareholders and/or the CCT Telecom Shareholders do not approve the S&P Agreement, and all transactions contemplated thereunder at the SGM and the CCT Telecom SGM respectively.

Listing and dealings

Application has been made to the Listing Committee of the Stock Exchange for the granting of the listing of, and permission to deal in, the CCT Tech Ordinary Shares in issue following completion of the Capital Reorganisation.

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LETTER FROM THE BOARD

The CCT Tech Ordinary Shares will be identical in all respects and will rank pari passu in all respects with each other as to all future dividends and distributions which are declared, made or paid. Subject to the granting of the listing of, and permission to deal in, the CCT Tech Ordinary Shares on the Stock Exchange, the CCT Tech Ordinary Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement date of dealings in the CCT Tech Ordinary Shares on the Stock Exchange, or such other date as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second trading day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

Arrangement for odd lot trading

In order to facilitate the trading of odd lots (if any) of the CCT Tech Ordinary Shares arising from the Capital Reorganisation, the Company has appointed Cinda International Securities Limited, whose address is at 45/F., COSCO Tower, 183 Queen’s Road Central, Hong Kong to match the purchase and sale of odd lots of the CCT Tech Ordinary Shares at the relevant market price per CCT Tech Ordinary Share for the period from Tuesday, 11 January 2011 to Monday, 31 January 2011 (both dates inclusive). Holders of odd lots of the CCT Tech Ordinary Shares may contact Mr. S.W. Leung of Cinda International Securities Limited at telephone number: (852) 2235 7801 and should note that the above matching service is on a best-effort basis and successful matching of the sale and purchase of odd lots of the CCT Tech Ordinary Shares is not guaranteed. Any Shareholder, who is in any doubt about the odd lot facility, is recommended to consult his/her/its own professional advisers.

Free exchange of share certificates for the CCT Tech Ordinary Shares

Subject to the Capital Reorganisation becoming effective, the Shareholders may submit certificates for their CCT Tech Existing Shares, to Tricor Tengis Limited, the branch share registrar and transfer office of the Company in Hong Kong, at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong for exchange from Tuesday, 28 December 2010 to Wednesday, 2 February 2011 (both dates inclusive), at the expense of the Company for share certificates of the CCT Tech Ordinary Shares. Thereafter, share certificates for the CCT Tech Existing Shares will be accepted for exchange only on payment of a fee of HK$2.50 (or such higher amount as may, from time to time, be allowed by the Stock Exchange) for each share certificate of the CCT Tech Existing Shares cancelled or each new share certificate issued for the CCT Tech Ordinary Shares, whichever number of certificates cancelled or issued is higher. The existing share certificates will be valid for trading and settlement up to 4:00 p.m. on Monday, 31 January 2011, being the latest time for trading in board lots of 8,000 CCT Tech Ordinary Shares in the form of existing share certificates (or such other date as may be announced by the Company) and will continue to be good evidence of legal title after the Capital Reorganisation has become effective, and may be exchanged for share certificates of the CCT Tech Ordinary Shares at any time in accordance with the foregoing.

PROPOSED CHANGE IN BOARD LOT SIZE

The CCT Tech Existing Shares are presently traded in board lots of 80,000 CCT Tech Existing Shares each. The Board proposes that upon the Capital Reorganisation becoming effective, the board lot size of the CCT Tech Ordinary Shares for trading on the Stock Exchange will be changed from 80,000 CCT Tech Existing Shares to 20,000 CCT Tech Ordinary Shares. Accordingly, the market value of each board lot upon the Capital Reorganisation becoming effective will be approximately two and half times the market value of the existing board lot. The transaction cost per dollar value of each CCT Tech Ordinary Share will therefore be lower.

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LETTER FROM THE BOARD

EXPECTED TIMETABLE

The expected timetable in respect of the proposed Capital Reorganisation and the change of board lot size is set out as follows:

Latest time for lodging forms of proxy for the SGM . . . . . . . .	. . . . .	. . . . . . . 10:30 a.m., Wednesday,
		22 December 2010
Date and time of the SGM . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . 10:30 a.m., Friday,
		24 December 2010
Publication of announcement of results of the SGM . . . . . . . . . . . . .		. . . . . Friday, 24 December 2010
Effective date of the Capital Reorganisation . . . . . . . . . . . . . . . . . .		. . . . Tuesday, 28 December 2010
First day of free exchange of share certificates for the
CCT Tech Existing Shares into new share certificates
for the CCT Tech Ordinary Shares . . . . . . . . . . . . . . . . . . . . . . .		. . . . Tuesday, 28 December 2010
Commencement in dealings in the CCT Tech Ordinary Shares	. . . . . . . . . . . . . . . 9:30 a.m., Tuesday,
		28 December 2010
Original counter for trading in the CCT Tech Existing Shares
in existing share certificates in board lots of 80,000 CCT Tech
Existing Shares temporarily closes . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . 9:30 a.m., Tuesday,
		28 December 2010
Temporary counter for trading in the CCT Tech Ordinary Shares
in board lots of 8,000 CCT Tech Ordinary Shares
(in the form of existing share certificates in
board lot of 80,000 CCT Tech Existing Shares) opens . . . . .	. . . . . . . . . . . . . . . 9:30 a.m., Tuesday,
		28 December 2010
Original counter for trading in the CCT Tech Ordinary
Shares in board lots of 20,000 CCT Tech Ordinary Shares
(in the form of new share certificates in board lots of 20,000
for the CCT Tech Ordinary Shares) re-opens . . . . . . . . . . . .	. . . . . . . . . . Tuesday, 11 January 2011
Parallel trading commences on . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . Tuesday, 11 January 2011
Designated broker starts to stand in the market
to provide matching service . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . Tuesday, 11 January 2011
		to Monday, 31 January 2011

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LETTER FROM THE BOARD

Temporary counter for trading in the CCT Tech Ordinary Shares in board lots of 8,000 CCT Tech Ordinary Shares (in the form of existing share certificates in board lot of 80,000 CCT Tech Existing Shares) closes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m., Monday, 31 January 2011

Parallel trading ends on . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 31 January 2011 Last day for free exchange of share certificates . . . . . . . . . . . . . . . . . . . Wednesday, 2 February 2011

Further announcement(s) will be made by the Company if there is any change to the above expected timetable.

THE S&P AGREEMENT AND THE TRANSACTIONS

The sale and purchase agreement dated 13 October 2010 as amended and revised by the Supplemental Agreement (which amended certain terms mainly related to the changes of structure of the Placing from a top-up placing to a placing for new shares and to clarify certain indemnities, warranties and representations of the Vendor and the Target Company under the S&P Agreement) and the Second Supplemental Agreement (which excluded the right of the Company to waive the condition precedent in relation to the completion and implementation of the Shanghai Ying Sheng Equity Transfer Agreement) was entered into amongst the Company, the Vendor and the Target Company, and the key terms of which are as follows:

Date: the original agreement was entered into on 13 October 2010, the Supplemental Agreement was entered into on 19 October 2010 and the Second Supplemental Agreement was entered into on 22 October 2010

Parties: (i) Purchaser : CCT Tech International Limited (ii) Vendor : MIV Therapeutics, Inc. (iii) Target Company : MIV Scientific Holdings Ltd.

Assets to be acquired

The Company will acquire the Sale Shares from the Vendor, pursuant to the terms and conditions of the S&P Agreement. The Sale Shares represent the entire issued share capital of the Target Company as at the Latest Practicable Date. The Company will also subscribe for the Subscription Shares pursuant to the terms and conditions of the S&P Agreement. Immediately after Completion, the Company (or its designated nominee(s)) will beneficially own 100% of the then total issued capital of the Target Company as enlarged by the Subscription Shares. The Target Company is an investment holding company and as at the Latest Practicable Date, owns the Patents and the technology in relation to cardiovascular medical devices and coronary stent. The Target Company has executed the InnoMed Share Purchase Agreement with the InnoMed Owner and Mr. Hu to acquire the entire issued share capital and the InnoMed Shareholders’ Loan of InnoMed, which in turn owns 100% equity interest in Shanghai Ying Zhong. InnoMed has also executed the Shanghai Ying Sheng Equity Transfer Agreement with Mr. Hu to acquire 100% of the equity of Shanghai Ying Sheng, the consideration of which will be satisfied by setting off the amount owed by Mr. Hu to InnoMed. Shanghai Ying Zhong will engage in marketing and sale of medical devices whilst Shanghai Ying Sheng owns a medical device factory in Shanghai capable of manufacturing

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LETTER FROM THE BOARD

vascular devices and other medical devices. As at the Latest Practicable Date, none of the members of the Target Group has commenced business activities and has not generated any revenue. For further details of Target Group, please refer to the section headed “Information on the Target Group” below.

The shareholding structure of the Target Group before and immediately after completion of the InnoMed Share Purchase Agreement and the Shanghai Ying Sheng Equity Transfer Agreement, but before Completion is as follows:

The existing structure of the Target Group before completion of the InnoMed Share Purchase Agreement and the Shanghai Ying Sheng Equity Transfer Agreement

==> picture [348 x 274] intentionally omitted <==

----- Start of picture text -----

Vendor InnoMed
Mr. Hu
(USA) Owner
100% 100% 100%
Shanghai
Target Company InnoMed
Ying Sheng
(BVI) (HK)
(PRC)
100%
Shanghai
Medical
Patents Ying Zhong
device factory
(PRC)
----- End of picture text -----

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LETTER FROM THE BOARD

The structure of the Target Group immediately after completion of the InnoMed Share Purchase Agreement and the Shanghai Ying Sheng Equity Transfer Agreement, but before Completion

==> picture [390 x 309] intentionally omitted <==

----- Start of picture text -----

Vendor
(USA)
100%
Target Company
(BVI)
100%
InnoMed
(HK)
100%
Shanghai
Ying Sheng
100% (PRC)
Patents
Shanghai
Ying Zhong
(PRC)
Medical
device factory
----- End of picture text -----

The Vendor is an investment holding company incorporated in the USA. To the best of the Directors’ and the CCT Telecom Directors’ knowledge, information and belief having made all reasonable enquiries, the Vendor and its ultimate beneficial owners and their respective associates are third parties independent of the Company, CCT Telecom and any of their respective connected persons.

To the best of the Directors’ and the CCT Telecom Directors’ knowledge, information and belief having made all reasonable enquiries, each of Mr. Hu, the InnoMed Owner, their respective ultimate beneficial owners and their respective associates are third parties independent of the Company, CCT Telecom and any of their respective connected persons.

The Consideration for the Transactions

The Consideration

The Consideration is US$100,000,000 (equivalent to approximately HK$780,000,000) which comprises (i) the Subscription Consideration in the amount of US$20,000,000 (equivalent to approximately HK$156,000,000), payable by the Company to the Target Company in cash for the subscription of the Subscription Shares; and (ii) the Purchase Consideration in the amount of US$80,000,000 (equivalent to approximately HK$624,000,000), to be satisfied by the Company by the allotment and issue of the Redeemable CPS for the purchase of the Sale Shares from the Vendor.

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LETTER FROM THE BOARD

Subscription Consideration

Subject to Completion, the Subscription Consideration of US$20,000,000 (equivalent to approximately HK$156,000,000) is payable by the Company to the Target Company in cash in the following manner:

(1) upon the execution and delivery to the Company of the MIV Share Charge by the Vendor in favour of the Company, a refundable deposit of US$1,000,000 (equivalent to approximately HK$7,800,000) (the “ Deposit ”) was paid by the Company into the designated bank account of the Target Company or the Vendor within 2 Business Days from the date of the S&P Agreement, and the Vendor and the Target Company provided to the Company an official receipt of US$1,000,000 (equivalent to approximately HK$7,800,000) as payment of the deposit for the InnoMed Cash Consideration from the InnoMed Owner within 1 Business Day from the date of payment of the Deposit;
(2) subject to the persons designated by the Company having been appointed to be all of the authorised signatories to operate the Designated Account, a further payment of US$11,000,000 (equivalent to approximately HK$85,800,000) (the “ Second Payment ”) will be payable by the Company into the Designated Account within 3 Business Days of the Completion Date; and
(3) the balance of US$8,000,000 (equivalent to approximately HK$62,400,000) (the “ Third Payment ”) will be paid by the Company into the Designated Account within one year of the Completion Date.

If, for whatever reasons, the S&P Agreement lapses or is otherwise terminated before Completion, the Vendor will pay or cause to be paid to the Company within 3 Business Days of the lapse or termination of the S&P Agreement, an amount equal to the Deposit into the bank account of the Company as designated in writing by the Company.

If the S&P Agreement is terminated or lapsed, appropriate announcement will be made by the Company and CCT Telecom on the date of termination.

Use of the Subscription Consideration

The Vendor and the Target Company jointly and severally undertake to the Company and (in the cases of the Second Payment and the Third Payment) the Company undertakes to the Vendor and the Target Company that the Company will, after Completion, use its reasonable endeavours to procure the Target Company to:

(1) apply the Deposit as payment of the deposit for the InnoMed Cash Consideration to the InnoMed Owner in accordance with the InnoMed Share Purchase Agreement;
(2) apply the Second Payment as follows:
(a) as to US$4 million (equivalent to approximately HK$31,200,000) for satisfying the balance of the InnoMed Cash Consideration payable by the Target Company to the InnoMed Owner in accordance with the InnoMed Share Purchase Agreement;

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(b) up to US$3 million (equivalent to approximately HK$23,400,000) to be remitted by the Target Company to the Vendor within a period of 5 Business Days following the day on which the Vendor provides evidence reasonably satisfactory to the Company that CE Marking for the Specified Product for the European Union has been obtained by the Target Company as reimbursement of costs and expenses incurred and paid by the Vendor for obtaining the aforesaid CE Marking, subject to production of invoices to evidence the costs and expenses incurred and receipt, where available, for payment thereof; and
(c) as to the balance of the Second Payment as working capital of the Shanghai Companies by way of either increasing and contributing to the registered capital of the Shanghai Companies or shareholder’s loans; and
(3) apply the Third Payment as follows:
(a) as to US$5 million (equivalent to approximately HK$39,000,000) for the purpose of obtaining approvals of the SFDA and the other relevant Governmental Authorities in the PRC and human trial of the Specified Product in the PRC; and
(b) as to the balance as working capital of the Target Group or to be used in such other manner as the Company and the Key Management may agree.

Purchase Consideration

Subject to Completion, the Purchase Consideration will be satisfied by the Company by the allotment and issue of 3,466,700,000 Redeemable CPS (the “ Consideration Shares ”) credited as fully paid upon issue, at the subscription price of HK$0.18 each as follows:

(1) 650,000,000 Redeemable CPS will, subject to the Lock-Up Undertakings and the InnoMed Owner CPS Charge described in the section headed “Lock-up Undertakings and the Charge on the Redeemable CPS” below, be allotted and issued to the InnoMed Owner and on such day as provided in the InnoMed Share Purchase Agreement to satisfy the InnoMed Non-Cash Consideration;
(2) 390,010,000 Redeemable CPS will, subject to the Lock-up Undertakings and the Vendor CPS Charge described in the section headed “Lock-up Undertakings and the Charge on the Redeemable CPS” below, be allotted and issued to the Vendor on the fifth Business Day following the day on which the Vendor provides evidence reasonably satisfactory to the Company that CE Marking for the Specified Product for the European Union has been obtained by the Target Company, which is expected to happen within 12 months of Completion;
(3) 1,040,010,000 Redeemable CPS will, subject to the Lock-up Undertakings and the Vendor CPS Charge, be allotted and issued to the Vendor on the fifth Business Day following the day on which the Vendor provides evidence reasonably satisfactory to the Company that the SFDA has granted approval to Shanghai Ying Sheng for the Specified Product in the PRC, which is expected to happen within 24 months of Completion;

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LETTER FROM THE BOARD

(4) 1,386,680,000 Redeemable CPS will, subject to the Lock-up Undertakings and the Vendor CPS Charge, be allotted and issued to the Vendor on the fifth Business Day following the day on which the audited annual consolidated financial statements of the Target Group prepared in accordance with HK GAAP and audited by the auditors of the Company, for any financial year ending on or before 31 December 2012 are delivered to the Company and such accounts show that the audited annual Consolidated Net Profit After Tax of the Target Group is at least HK$70 million;
(5) notwithstanding paragraphs (2), (3) and (4) above, if (a) the events set forth in both paragraphs (2) and (4) occur as provided therein but the event set forth in paragraph (3) fails to occur; or (b) the events set forth in both paragraphs (3) and (4) occur as provided therein but the event set forth in paragraph (2) fails to occur, the batch of the Redeemable CPS not yet issued because the event attributable to that batch of Redeemable CPS in either paragraph (2) or paragraph (3) has not occurred, will become issuable to the Vendor on or before fifth Business Days following the date on which the two events specified in (a) or (b) above have been satisfied, notwithstanding that one but only one out of the two events set out in either paragraph (2) or paragraph (3) fails to occur as described therein; and
(6) if the event set out in paragraph (4) above fails to occur as described therein by 1 April 2013, all those Redeemable CPS not yet issued under any one, two or all of paragraphs (2) to (4) above due to the event(s) set out in that paragraph or those paragraphs above failing to occur, the Vendor agrees that those Redeemable CPS attributable to the event or events set out in any one, two or all of the paragraphs (2) to (4) above that has or have not occurred, will not be issuable to the Vendor and the obligation of the Company under the S&P Agreement to issue such Redeemable CPS shall cease and neither the Vendor nor other interested party shall have any claim against the Company in respect thereof.

The Redeemable CPS carry the right to convert into the CCT Tech Ordinary Shares at the Conversion Ratio on a one to one basis (subject to adjustment in the future event of a consolidation or sub-division of the CCT Tech Ordinary Shares but not otherwise) and with the rights and benefits and subject to restrictions set out in the sub-section headed “Rights, benefits and restrictions on conversion of the Redeemable CPS” below.

The issue price of the Redeemable CPS at HK$0.18 each represents:

(a) a premium of approximately 28.57% to the adjusted closing price of HK$0.14 per CCT Tech Ordinary Share, based on the closing price of HK$0.014 per CCT Tech Existing Share as quoted on the Stock Exchange immediately before the suspension of trading on the Last Trading Date and adjusted for the effect of the Capital Reorganisation;
(b) a premium of approximately 28.57% to the adjusted average closing price of approximately HK$0.14 per CCT Tech Ordinary Share, based on the average closing price of approximately HK$0.014 per CCT Tech Existing Share as quoted on the Stock Exchange immediately for the five consecutive trading days up to and including the Last Trading Date and adjusted for the effect of the Capital Reorganisation;

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LETTER FROM THE BOARD

(c) a premium of approximately 28.57% to the adjusted average closing price of approximately HK$0.14 per CCT Tech Ordinary Share, based on the average closing price of approximately HK$0.014 per CCT Tech Existing Share as quoted on the Stock Exchange immediately for the 10 consecutive trading days up to and including the Last Trading Date and adjusted for the effect of the Capital Reorganisation;
(d) a premium of approximately 28.57% to the adjusted average closing price of approximately HK$0.14 per CCT Tech Ordinary Share, based on the average closing price of approximately HK$0.014 per CCT Tech Existing Share as quoted on the Stock Exchange immediately for the 30 consecutive trading days up to and including the Last Trading Date and adjusted for the effect of the Capital Reorganisation;
(e) a premium of approximately 38.46% to the adjusted average closing price of approximately HK$0.13 per CCT Tech Ordinary Share, based on the average closing price of approximately HK$0.013 per CCT Tech Existing Share as quoted on the Stock Exchange immediately for the 60 consecutive trading days up to and including the Last Trading Date and adjusted for the effect of the Capital Reorganisation;
(f) a premium of approximately 28.57% to the adjusted closing price of HK$0.14 per CCT Tech Ordinary Share, based on the closing price of HK$0.014 per CCT Tech Existing Share as quoted on the Stock Exchange on the Latest Practicable Date and adjusted for the effect of the Capital Reorganisation; and
(g) a premium of approximately 63.64% to the unaudited adjusted consolidated net asset value of approximately HK$0.11 per CCT Tech Ordinary Share as at 30 June 2010, as adjusted for the effect of the Capital Reorganisation.

The issue price of the Redeemable CPS was arrived at arm’s length negotiation between the Company and the Vendor with reference to the market price of the CCT Tech Existing Shares and adjusted for the effect of the Capital Reorganisation. In view of the potential benefits of the Transactions to the Group (as more particularly described in the section headed “Reasons for the Transactions” below), the Directors consider that the issue price of the Redeemable CPS of HK$0.18 each, which represents a premium of approximately 28.57% to the adjusted closing price of the CCT Tech Ordinary Shares as at the Last Trading Date is fair and reasonable and in the interests of the Company and the Shareholders as a whole. The issue price per share for the Redeemable CPS represent a premium of approximately 63.64% to the adjusted unaudited consolidated net asset value of the Company per share. Such premium is considered to be significant and is beneficial to the Shareholders.

Basis of determination of the Consideration

The Consideration was arrived at after arm’s length negotiations amongst the Vendor, the Target Company and the Company on normal commercial terms with reference to the following (a) the future prospects and growth of the Medical Device Business; (b) the potential growth of the worldwide medical device market, especially in the PRC fueled by the recent PRC government’s new healthcare reform initiative and concurrent significant expansion of government financial support for the healthcare system; (c) as a condition precedent to the S&P Agreement, the valuation of the Target Group will not be less than US$150 million, which shows that the Consideration is at a discount of approximately 33.33% to the

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LETTER FROM THE BOARD

valuation; and (d) pursuant to the terms of the S&P Agreement, the protection of the interests of the Company, CCT Telecom, the Shareholders and the CCT Telecom Shareholders by: (i) payment of the Subscription Consideration by installments over a period of one year from Completion; (ii) allotment and issue of the Redeemable CPS in batches upon occurrences of certain milestones to be achieved by the Target Group; (iii) the Lock-up Undertakings and the Charge on the Redeemable CPS; and (iv) the Put Option.

Information on the Target Group and the Specified Product has been set out in the section headed “Information on the Target Group” below. If the SFDA approval is not granted on the Specified Product, the Target Group will not be able to sell the Specified Product in the PRC and its business may then be adversely affected. However, the Target Group may still manufacture the Specified Product in the PRC (after obtaining by the Target Group of the applicable medical device manufacturing and operation permits and export certificate in the PRC) for export sale to overseas countries such as Europe after the CE Marking is obtained. Irrespective of whether the SFDA approval on the Specified Product is obtained or not, the Target Group may manufacture and sell other medical device products such as coronary and peripheral vascular dilatation balloon and catheter in the PRC, subject to obtaining SFDA approval on such products. The application for the SFDA approval in respect of the Specified Product is a lengthy process and it is expected that the SFDA approval in respect of the Specified Product may be granted within 24 months from the Completion Date under normal circumstances. As such, the SFDA approval in respect of the Specified Product is not a condition precedent to the Completion.

As disclosed in the sub-section headed “Purchase Consideration” in this section, the Purchase Consideration will be satisfied by the allotment and issue of the 3,466,700,000 Redeemable CPS, in batches upon achievement of various milestones by the Target Group, which includes obtaining the CE Marking in respect of the Specified Product, the SFDA approval in respect of the Specified Product and the profit guarantee, as specified in paragraphs (2), (3) and paragraph (4) respectively in the sub-section headed “Purchase Consideration” above. As such, the amount of the Purchase Consideration will be reduced if the respective events specified in paragraphs (2), (3) and (4) do not occur, unless the circumstances as specified in paragraph (5) in the sub-section headed “Purchase Consideration” above occur. Furthermore, in the event that the profit guarantee as described in the above-mentioned paragraph (4) is not achieved, the Put Option will become exercisable which entitles the Company to require the Vendor to acquire all but not part of the interest in the Target Group at the Option Price, which is equivalent to that part of the Consideration already paid or satisfied by the Company as at the date of the Option Completion Date. In addition, the Redeemable CPS to be issued to the Vendor and the InnoMed Owner will be subject to the Lock-up Undertakings and the Charge in order to secure the obligations of the Vendor and the Target Company, including those obligations under the Put Option, pursuant to the terms of the S&P Agreement.

In light of the above, the Directors consider that the Transactions represent a good opportunity for the Group which forms part of the CCT Telecom Group to enter into the medical and healthcare business with huge potential and good future prospect. The Directors and the CCT Telecom Directors consider that the terms of the S&P Agreement provide sufficient protection of the interests of both the Shareholders and the CCT Telecom Shareholders. The Directors and the CCT Telecom Directors are therefore of the opinion that the Consideration and the terms of the S&P Agreement are fair and reasonable and on normal commercial terms and in the interests of the Company and CCT Telecom and their respective shareholders as a whole.

Vendor’s guarantee

The Vendor has guaranteed all the obligations of the Target Company under the S&P Agreement.

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LETTER FROM THE BOARD

Lock-up Undertakings and the Charge on the Redeemable CPS

(1) Each of the Vendor and the Target Company jointly and severally agrees and undertakes to the Company that it will:
(a) procure that the InnoMed Owner will not convert or exercise the conversion rights attaching to such number of the Redeemable CPS issued to them pursuant to S&P Agreement set out in the first column of the table below or offer, pledge, charge, whether fixed or floating, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant or agree to grant any option, right or warrant to purchase or subscribe for, lend, make any short sale or otherwise transfer or dispose of (nor enter into any agreement to transfer or dispose of or otherwise create any options, rights, interests or encumbrances in respect of), either directly or indirectly, conditionally or unconditionally, all or any of such number of the Redeemable CPS or any rights attaching thereto and will charge in favour of the Company such number of the Redeemable CPS under the InnoMed Owner CPS Charge during the lock-up period commencing from the date of issue of such Redeemable CPS up to the date set out against such number of the Redeemable CPS in the second column of the table below (both dates inclusive):

(1) Number of Redeemable CPS

(2) Date

162,500,000	31	December 2011
162,500,000	31	December 2012
325,000,000	31	August 2013

(b) subject to paragraph (2) below, not convert or exercise the conversion rights attaching to the Redeemable CPS issued to the Vendor pursuant to the S&P Agreement or offer, pledge, charge, whether fixed or floating, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant or agree to grant any option, right or warrant to purchase or subscribe for, lend, make any short sale or otherwise transfer or dispose of (nor enter into any agreement to transfer or dispose of or otherwise create any options, rights, interests or encumbrances in respect of), either directly or indirectly, conditionally or unconditionally, all or any of such Redeemable CPS or any rights attaching thereto and charge such Redeemable CPS in favour of the Company under the Vendor CPS Charge during the lock-up period commencing from the date of issue of such Redeemable CPS up to 31 August 2013 provided that such number of the Redeemable CPS as equal to 4% of each batch of the Redeemable CPS issued to the Vendor as a result of the occurrence of the event described under each of paragraphs (2), (3) and (4) under the sub-section headed “Purchase Consideration” above will not be subject to the restriction in this paragraph unless the Redeemable CPS are issued to the Vendor pursuant to paragraph (5) set out in the sub-section headed “Purchase Consideration” in which event, all the Redeemable CPS attributable to the event described in either paragraph (2) or paragraph (3) under the sub-section headed “Purchase Consideration” which has not occurred will be subject to the Lock-up Undertakings and the Charge in this paragraph.

The charge of the Redeemable CPS as set out above is to secure the obligations of the Vendor and the Target Company, including the Put Option, pursuant to the terms of the S&P Agreement.

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LETTER FROM THE BOARD

(2) Releases

Notwithstanding anything to the contrary in paragraph (1)(a) and (b) of this sub-section, all the Redeemable CPS issued to the Vendor and the InnoMed Owner respectively under paragraphs (1), (2), (3) and (4) of the sub-section headed “Purchase Consideration” will forthwith be released from the Vendor CPS Charge and the InnoMed Owner CPS Charge and not be subject to the Lock-up Undertakings in paragraph (1)(a) and (b) of this sub-section if all the events set forth in paragraphs (2), (3) and (4) of the sub-section headed “Purchase Consideration” have occurred on or before 31 March 2013.

Rights, benefits and restrictions on conversion of the Redeemable CPS

On Completion, the share capital of the Company will comprise the CCT Tech Ordinary Shares and the Redeemable CPS. The Redeemable CPS can be converted into CCT Tech Ordinary Shares at the Conversion Ratio on a one to one basis upon exercise of the conversion right attaching to the Redeemable CPS. The Conversion Ratio will only be adjusted where there is an alteration to the nominal value of a CCT Tech Ordinary Share as a result of consolidation or sub-division of the CCT Tech Ordinary Shares. Save for the foregoing, the Conversion Ratio will not be subject to any other adjustment event.

The rights, benefits and restrictions of the Redeemable CPS will be set out in the Resolution and a summary of which is set out below:

Issuer : CCT Tech Issue price : HK$0.18 per Redeemable CPS Conversion Ratio : Each Redeemable CPS carries the right to convert into one CCT Tech Ordinary Share (subject to adjustment only in the event of an alteration to the nominal value of the CCT Tech Ordinary Shares as a result of consolidation or sub-division of the CCT Tech Ordinary Shares and not otherwise). Dividend : Holders of the Redeemable CPS are not entitled to any dividend payment or any distribution (including bonus issue) of the Company. Lock-up Undertakings : Pursuant to the S&P Agreement, conversion of the and conversion Redeemable CPS into CCT Tech Ordinary Shares are subject to the Lock-up Undertakings as elaborated in the sub-section headed “Lock-up Undertakings and the Charge on the Redeemable CPS” above.

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LETTER FROM THE BOARD

Subject to the Lock-up Undertakings, a holder shall have the right (“ Conversion Right ”) to convert the Redeemable CPS, in whole or in part, during the Conversion Period, each Redeemable CPS into one CCT Tech Ordinary Share at the Conversion Ratio. If the exercise of the Conversion Right by a holder of the Redeemable CPS would result in (a) a holder of the Redeemable CPS and parties acting in concert with it, taken together, directly or indirectly, controlling or being interested in 30% or more of the entire issued voting share capital of the Company (or such other percentage as may from time to time be specified in the Takeovers Code as being the level for triggering a mandatory general offer) as at the date of conversion unless either (i) the holder and parties acting in concert with it comply with the Takeovers Code and make a general offer to acquire for all the CCT Tech Ordinary Shares not already owned by them; or (ii) a whitewash waiver to waive the requirement for the holder and parties acting in concert with it to make the mandatory general offer is approved by the Independent Shareholders and is granted by the Executive pursuant to the Takeovers Code before the date of completion of the conversion; or (b) the Company not meeting requirements under the Listing Rules that not less than 25% or the minimum percentage as set out in the Listing Rules from time to time shall be held by the public (the “ Public Float Requirement ”) immediately after the conversion, then the number of CCT Tech Ordinary Shares to be issued pursuant to conversion will be limited to the maximum number of CCT Tech Ordinary Shares issuable by the Company which would not result in a breach of the Public Float Requirement or a mandatory general offer being triggered under the Takeovers Code (as the case may be). The balance of the Conversion Right attached to the Redeemable CPS which the holder of the Redeemable CPS sought to convert will be suspended until such time when the Company is able to issue new CCT Tech Ordinary Shares in satisfaction of the exercise of the said balance of the Conversion Right in compliance with the Public Float Requirement or without triggering a mandatory general offer under the Takeovers Code or the general offer is made by the holder and parties acting in concert with it or a whitewash waiver is approved and granted as set out above.

Save as disclosed above and the Lock-up Undertakings, the Redeemable CPS is not subject to other conversion restrictions.

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LETTER FROM THE BOARD

Conversion period : Perpetual as from the date of issue. Transferability : Subject to the Lock-up Undertakings elaborated in the sub-section headed “Lock-up Undertakings and the Charge on the Redeemable CPS”, the Redeemable CPS are freely transferable from the date of issue.
Voting right : Holders of the Redeemable CPS will be entitled to receive notices of and attend any shareholders’ meeting of the Company but will not be entitled to vote at any shareholders’ meeting of the Company by reason only of being holders of the Redeemable CPS save where the resolutions in question relate to the dissolution or winding up of the Company or variation or abrogation of the rights attaching to the Redeemable CPS in which cases the holders of the Redeemable CPS will have the same voting rights as those attaching to the CCT Tech Ordinary Shares on an as-converted basis.
Ranking : Rank in priority to the CCT Tech Ordinary Shares as to a return of capital on a winding up or otherwise up to the aggregate of the amounts paid up or credited as paid up on all outstanding Redeemable CPS. The Conversion Shares will, upon issue, rank pari passu in all respects with all other CCT Tech Ordinary Shares in issue.
Redemption : (a) Without prejudice to the power of the Company to repurchase the Redeemable CPS in accordance with the bye-laws of the Company, the Redeemable CPS are not redeemable except by the Company at its sole and absolute discretion in accordance with the provisions of the Resolution or in accordance with the provisions of the S&P Agreement.
(b) The Company may redeem, from any source of funds legally available therefore, the Redeemable CPS at any time by paying in cash or in kind in exchange for the Redeemable CPS to be redeemed a sum equal to its issue price of HK$0.18 each (subject to adjustment only in the event of an alteration to the nominal value of the CCT Tech Ordinary Shares as a result of consolidation or sub-division of the CCT Tech Ordinary Shares and not otherwise). Without prejudice to the foregoing, the Redeemable CPS may be redeemed by the Company upon exercise of the Put Option in accordance with the provisions of the S&P Agreement.
(c) A holder of the Redeemable CPS has no right to demand repayment or redemption of any part or whole of the Redeemable CPS.

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LETTER FROM THE BOARD

Listing

: No listing of the Redeemable CPS will be sought on the Stock Exchange or on any other stock exchanges. Application has been made to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Conversion Shares which may fall to be issued upon the exercise of the conversion rights attaching to the Redeemable CPS.

The Conversion Shares to be issued upon conversion of the Redeemable CPS will be issued under a specific mandate of the Company.

As illustrated in the chart of the Company’s shareholding immediately after completion of the Capital Reorganisation, Placing, Completion and full conversion of all the 3,466,700,000 Redeemable CPS under the section headed “Shareholding Chart of the Company” of this letter, CCT Telecom will continue to be the single largest shareholder of the Company after full conversion of all the 3,466,700,000 Redeemable CPS. The InnoMed Owner, the Vendor and their respective ultimate beneficial owners are independent of each other. Furthermore, neither the InnoMed Owner nor the Vendor will appoint any person to be a Director upon Completion. As such, neither issue nor conversion of the Redeemable CPS will result in any change of control of the Company.

Conditions precedent to the S&P Agreement

Completion of the S&P Agreement is conditional upon the fulfillment (or the waiver as the case may be) of the following conditions on or before the Long Stop Date:

(a) the Company having been satisfied with the results of due diligence conducted on the Target Group;
(b) the Company having received a valuation report addressed to the respective board of directors of the Company and CCT Telecom and prepared and issued by a competent valuer showing the valuation of the Target Group of not less than US$150 million;
(c) implementation and completion of the Shanghai Ying Sheng Equity Transfer Agreement;
(d) the Company having received legal opinions in the form and substance satisfactory to it from the Vendor’s legal counsel covering, among others, the following matters:
(i) the due incorporation and valid subsistence of each of the group companies under the Target Group under the laws of its incorporation or establishment;
(ii) each of the Shanghai Companies is a wholly-owned subsidiary of InnoMed and the entire registered capital of each of the Shanghai Companies is registered in the name of InnoMed;
(iii) upon Completion, InnoMed will be a wholly-owned subsidiary of the Target Company and the entire issued capital of InnoMed is legally and beneficially owned by and registered in the name of the Target Company;

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LETTER FROM THE BOARD

(iv) upon Completion, the Target Company will be a wholly-owned subsidiary of the Company or its designated nominee(s) and all the outstanding shares of the Target Company will be owned by and registered in the name of the Company or its designated nominee(s);
(v) all the Patents are valid and subsisting and registered in the name of the Target Company; and
(vi) each of the InnoMed Share Purchase Agreement and the Shanghai Ying Sheng Equity Transfer Agreement is legal, valid and binding and enforceable in accordance with its terms against the parties thereto and the Shanghai Ying Sheng Equity Transfer Agreement having been duly completed in accordance with the terms of the agreement and the relevant PRC laws and approved by the relevant Governmental Authorities in the PRC;
(e) the warranties provided by the Vendor and the Target Company in the S&P Agreement remaining true and accurate in all respects and not misleading in any respect as of the Completion Date by reference to the facts and circumstances subsisting as at the Completion Date;
(f) the Company being satisfied that, from the date of the S&P Agreement to the Completion Date, there has not occurred any event or there has not been any change of circumstances which have a material adverse effect on any member of the Target Group and the Patents;
(g) no notice, order, judgment, action or proceeding of any court, arbitrator, Governmental Authorities, statutory or regulatory body having been served, issued or made which restrains, prohibits or makes unlawful any transactions contemplated by the S&P Agreement or which is reasonably likely to materially and adversely affect the right of the Company to own the legal and beneficial title to the Sale Shares and the Subscription Shares, free from encumbrances, following the Completion Date;
(h) other than the approvals in paragraphs (j) to (m) below, all necessary approvals and consents required to be obtained by any respective member of the Target Group and/or the Group from any Governmental Authority or other third party in respect of the S&P Agreement and/or the transactions contemplated thereunder being obtained unconditionally or irrevocably, or where such approval or consent is given subject to conditions, on such conditions as are acceptable to the Company acting reasonably;
(i) the successful raising of funds by the Company of not less than US$30 million (or its HK$ equivalent) by way of the Placing;
(j) the approval by the Shareholders at the SGM of the Capital Reorganisation and the Resolution;
(k) the approval by the Shareholders at the SGM of (i) the S&P Agreement, the Transactions and any other transactions contemplated under the S&P Agreement; (ii) the allotment and issue of the Redeemable CPS; and (iii) the allotment and issue of the CCT Tech Ordinary Shares upon exercise of the conversion right attaching to the Redeemable CPS, all in accordance and compliance with the Listing Rules;

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LETTER FROM THE BOARD

(l) the approval by the CCT Telecom Shareholders at the CCT Telecom SGM of (a) the S&P Agreement, the Transactions and any other transactions contemplated under the S&P Agreement; and (b) the disposal and deemed disposal arising from the allotment and issue of the CCT Tech Existing Shares or the CCT Tech Ordinary Shares upon completion of the Placing and the allotment and issue of the CCT Tech Ordinary Shares upon the exercise of the conversion right attaching to the Redeemable CPS respectively, which constitutes a very substantial disposal or a possible very substantial disposal respectively for CCT Telecom under the Listing Rules, all in accordance and compliance with the Listing Rules; and
(m) the Listing Committee of the Stock Exchange having granted the listing of and permission to deal in on the Stock Exchange, (i) the new CCT Tech Existing Shares or new CCT Tech Ordinary Shares to be placed under the Placing; (ii) the CCT Tech Ordinary Shares in issue arising from the Capital Reorganisation; and (iii) the allotment and issue of the CCT Tech Ordinary Shares upon exercise of the conversion right attaching to the Redeemable CPS.

As at the Latest Practicable Date, the condition precedent set out in paragraph (b) has been satisfied. The Company may, in its absolute discretion, waive in whole or in part and conditionally or unconditionally any of the conditions precedent set out in paragraphs (a) to (b) and paragraphs (d) to (h) at any time by specific notice in writing to such effect to the Vendor and the Target Company. In exercising the right of waiver, the Board will act in the interest of the Company and its shareholders as a whole and will only waive any conditions precedent on minor issues or on issues that will not affect the substance of the Transactions. As at the Latest Practicable Date, the Company has no present intention to waive any conditions precedent of the S&P Agreement. In the event that any of the conditions precedent shall not have been fulfilled or waived on or before the Long Stop Date, the S&P Agreement shall cease to be of any effect save in respect of claims arising out of any antecedent breach of the S&P Agreement.

Completion of the S&P Agreement

The InnoMed Share Purchase Agreement and the S&P Agreement will be completed simultaneously at Completion, on the Completion Date. The S&P Agreement will lapse if the conditions precedent are not fulfilled or waived (as the case may be) by the Long Stop Date. In the event that the Completion of the S&P Agreement has not taken place by the Long Stop Date, further announcement will be made by the Company and CCT Telecom.

The Put Option

In consideration of the sum of HK$1.00 paid by the Company to the Vendor, subject to Completion, the Vendor has agreed to grant to the Company the right (the “ Put Option ”) to require the Vendor to acquire all but not part of the Sale Shares and the Subscription Shares (together with the Target Company’s interest in its subsidiaries engaged in the Medical Device Business) from the Company at the Option Price. Principal terms of the Put Option are described below:

Term : From the Completion Date to 31 August 2013 (both dates inclusive). Exercise Period : From 1 April 2013 to 25 July 2013 (both dates inclusive).

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Exercise of the Put Option
: The Put Option will become exercisable by the Company in the event that the audited annual Consolidated Net Profit After Tax of the Target Group as shown in the consolidated financial statements of the Target Group prepared under the HK GAAP audited by the auditors of the Company does not exceed HK$70 million for any financial year ended on or before 31 December 2012.
Option Completion Date : 10:00 a.m. (Hong Kong time) on the second Business Day next following the date on which all the conditions set out below are satisfied or waived in accordance with the S&P Agreement or such other time and date as may be agreed between the Company and the Vendor in writing, on which completion of the exercise of the Put Option will take place.
Conditions for completion of the exercise of the Put Option
: Completion of the exercise of the Put Option is conditional upon, amongst others, (a) compliance with the Listing Rules, the bye-laws of the Company and the Companies Act and the approval of the Independent Shareholders at a special general meeting of the Company of (i) the transfer of the Sale Shares and the Subscription Shares to the Vendor; and (ii) (where required) the redemption of those Redeemable CPS at the price of HK$0.18 per each Redeemable CPS in accordance with paragraph (a)(i) of the term headed “Settlement of Option Price” below; and (b) any other conditions as required by the relevant laws and regulations.

The Company will comply with the announcement, reporting and independent shareholders’ approval requirements under Chapters 14 and 14A of the Listing Rules at the time when the Put Option is exercised.

In the event that any of the above conditions is not fulfilled or waived, as the case may be, completion of the redemption of the Redeemable CPS and the transfer of the Sale Shares and the Subscription Shares pursuant to the exercise of the Put Option will not be proceeded. In such case, the Company may, subject to compliance with the Companies Act, sell, transfer or dispose of or otherwise deal with the whole or any part of the outstanding Redeemable CPS in accordance with the terms of the Vendor CPS Charge and/or the InnoMed Owner CPS Charge (as the case may be) and the Vendor will assist and will execute and will procure the InnoMed Owner (as the case may be) to execute any transfer instruments as required to enable the Company to sell, transfer, or dispose of or otherwise deal with the whole or any part of the Redeemable CPS.

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LETTER FROM THE BOARD

Option Price	:	The	Option	Price will comprise the following:
		(a)	HK$156 million in cash (the “Cash Option
			Consideration”); and
		(b)	an amount (the “Non-cash Option Consideration”)
			equal	to the multiple of:
			(i)	the aggregate number of the Consideration
				Shares issued by the Company during the period
				from the date of the S&P Agreement to the
				Option Completion Date, regardless of whether
				the Redeemable CPS remain subject to the
				Lock-up Undertakings, the InnoMed Owner CPS
				Charge or the Vendor CPS Charge, or have
				already been converted into CCT Tech Ordinary
				Shares; and
			(ii)	HK$0.18.
Settlement of Option	:	(a)	The Non-cash Option Consideration will be satisfied
Price			by:
			(i)	the Vendor delivering to the Company on or
				before the Option Completion Date all
				outstanding Redeemable CPS which, as at the
				Option Completion Date, remain subject to the
				Lock-up Undertakings and/or the InnoMed
				Owner CPS Charge and the Vendor CPS Charge,
				for redemption at the price of HK$0.18 per each
				Redeemable CPS to be redeemed, which will be
				off-set against part of the Non-cash Option
				Consideration; and
			(ii)	the Vendor paying the Company in cash within 3
				months from the Option Completion Date an
				amount equal to the Non-cash Option
				Consideration after deducting an amount equal to
				the multiple of the number of Redeemable CPS
				delivered to the Company for redemption and
				cancellation above and HK$0.18. The Vendor
				will pay the funds to the bank account of the
				Company designated in writing by the Company.

(b) The Cash Option Consideration will be payable by the Vendor to the Company in cash within 3 months from the Option Completion Date and the funds will be remitted to the bank account of the Company designated in writing by the Company.

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LETTER FROM THE BOARD

Completion of the : (a) Completion of the redemption of the Redeemable CPS exercise of the Put pursuant to the exercise of the Put Option will take Option place on the Option Completion Date. At completion of the redemption of the Redeemable CPS, the certificates and transfer instrument(s) duly executed by the Vendor and the InnoMed Owner in respect of the transfer of the redeemed Redeemable CPS to the Company will be delivered to the Company for cancellation.
(b) The Vendor will settle those parts of the Option Price set out in paragraphs (a)(ii) and (b) under the term headed “Settlement of Option Price” above in cash to the Company in accordance with the provisions set out under the term headed “Settlement of Option Price” above.
(c) On the Option Completion Date, the Company may cause, and the Vendor will procure, that such directors, officers and managers be removed from the offices at the Target Group and the bank mandates of the Target Group be altered as the Company may in its absolute discretion direct.
(d) Upon compliance by the Vendor of its obligations under paragraphs (a) and (b) above and subject to all the conditions set forth in the term headed “Conditions for completion of the exercise of the Put Option” above having been fulfilled or waived, as the case may be, the Company will transfer the title of the Sale Shares and the Subscription Shares and will deliver to the Vendor, in respect of the Sale Shares and the Subscription Shares, (i) the existing share certificate(s) issued in the name of the Company or its nominee(s); and (ii) transfer instrument(s) duly executed by the Company or its nominee(s) in respect of the transfer of the Sale Shares and the Subscription Shares to the Vendor.

Listing

: No application will be made for the listing of the Put Option on the Stock Exchange or any other stock exchanges.

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LETTER FROM THE BOARD

INFORMATION ON THE TARGET GROUP

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, the following set out the information relating to the Target Group:

The Target Company was incorporated in the BVI on 15 September 2010 and its principal business is investment holding. The Target Company owns the Patents indicated below, which relate to cardiovascular medical devices and coronary stents. A summary of the Patents (none of which have issued or granted yet) is set out below:

Title

Countries in which patent applications have been filed and in which patent applications have been transferred to the Target Company

Compositions Formulated for Solvent-Regulated Drug Release

Canada

Electrolyte Solution and Method for Electrolytic Co-Deposition of Thin Film Calcium Phosphate and Drug Composites

Canada

Coatings for Implantable Medical Devices for Liposome Delivery

USA, Canada, and Europe

Lipid Coatings for Implantable Medical Devices

USA, Canada, Europe, China, India, and Japan

Calcium Phosphate Coated Stents Comprising Cobalt Chromium Alloy

USA, Canada, Europe, China, India, and Japan

Method of Coating Medical Devices

USA, Canada, Europe, China, India, and Japan

Products developed by the Target Company

The stent system developed by the Target Company is hydroxyapatite and nonpolymer-based drug-eluting cobalt-chromium stent system (the “ Specified Product ”). Based on articles and research reports in scientific journals, the stent system developed by the Target Group is considered to be an advanced technology for the drug-eluting coronary delivery system, and based on four years of human clinical trial results, has been proved to be feasible and safe. The Target Company has conducted animal and human tests of the Specified Product in the USA, Brazil and European Union and such tests show satisfactory results. The Target Company is in the process of applying for CE Marking for the Specified Product, which is expected to be granted to the Target Company within one year from the Completion Date. Once the CE Marking is obtained and once the applicable medical device manufacturing and operation permits and export certificate from SFDA are obtained by the Target Group, the Target Group can manufacture the Specified Product in the PRC for export sale to those countries which accept the CE Marking certification, including the European Union. The Target Company has executed the InnoMed Share Purchase Agreement with the InnoMed Owner and Mr. Hu to acquire 100% equity interest in InnoMed at the InnoMed Consideration, which will be satisfied out of the Consideration. The InnoMed Share Purchase Agreement will be completed simultaneously with the S&P Agreement on the Completion Date.

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InnoMed was incorporated in Hong Kong on 10 March 2005. InnoMed holds 100% equity interest in Shanghai Ying Zhong and has also executed the Shanghai Ying Sheng Equity Transfer Agreement with Mr. Hu to acquire 100% equity interest in Shanghai Ying Sheng from Mr. Hu.

Shanghai Ying Zhong was established in the PRC on 27 November 2008, the entire equity interest in which is owned by InnoMed as at the date of the S&P Agreement. Shanghai Ying Zhong’s current business license (營業執照) is valid from 14 May 2009 to 26 November 2010 and the company is currently in the process of applying for the renewal of the business license with the relevant Governmental Authority in the PRC. Shanghai Ying Zhong does not anticipate any legal impediment in getting the business license renewed. Shanghai Ying Zhong has not commenced business since incorporation and has no revenue. Shanghai Ying Zhong will be engaged in the marketing and sale of medical devices, including the Specified Product.

Shanghai Ying Sheng was established in the PRC on 26 December 2005, the entire equity interest in which is owned by Mr. Hu as at the Latest Practicable Date. Shanghai Ying Sheng’s current business license is valid from 26 December 2005 to 25 December 2035. Mr. Hu has entered into the Shanghai Ying Sheng Equity Transfer Agreement with InnoMed, pursuant to which, Mr. Hu will transfer the entire equity interest in Shanghai Ying Sheng to InnoMed. The Shanghai Ying Sheng Equity Transfer Agreement will be completed before Completion. Shanghai Ying Sheng owns a medical device factory in Shanghai capable of manufacturing vascular devices and other medical devices. The PRC has strictly stipulated the entrance system of medical device and pharmaceutical products. The Transactions enable the Group to enter into the medical and healthcare market smoothly and obtain qualification of production and sale for cardiovascular medical device. After Completion, Shanghai Ying Sheng will apply for the medical device manufacturing and operation permits from SFDA. Once the medical device manufacturing and operation permits from the SFDA is obtained, the Target Group will be permitted to manufacture medical device products in the PRC.

After Completion, and after obtaining the applicable human test registration from the SFDA, Shanghai Ying Sheng will conduct animal and human tests on the Specified Product in the PRC for the purpose of applying for the registration and approval from the SFDA in respect of the Specified Product, which approval is expected to be granted to Shanghai Ying Sheng within 24 months from the Completion Date. Once the registration and approval in respect of the Specified Product is obtained from the SFDA and after the medical device manufacturing and operation permits from SFDA is obtained, the Target Group will be permitted to manufacture and sell the Specified Product in the PRC. Before the SFDA approval on the Specified Product is obtained, the Target Group will manufacture and sell other medical device products such as coronary and peripheral vascular dilatation balloon and catheter in the PRC, subject to obtaining the SFDA approval on such products.

The unaudited book value of the total combined net assets of the Target Group as shown in the unaudited combined accounts of the Target Group as at 12 October 2010 is approximately HK$618 million, which has taken into account of the fair value of the Patents of approximately HK$624 million transferred from the Vendor to the Target Company on 6 October 2010.

The unaudited combined net loss before taxation and extraordinary items of the Target Group for each of the two financial years ended 31 December 2008 and 2009 is approximately HK$1 million and approximately HK$3 million respectively. The unaudited combined net loss after taxation and extraordinary items of the Target Group for each of the two financial years ended 31 December 2008 and 2009 is approximately HK$1 million and approximately HK$3 million respectively.

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KEY MANAGEMENT

Particulars of the Key Management

The Target Group will employ the Key Management at the employment terms to be agreed by the Company. The Key Management are existing management of the Target Group and they will be appointed to continue to manage the Medical Device Business. The directors to be appointed to the board of directors of each member of the Target Group will comprise of members of which one-third are the Key Management and remaining members will be persons nominated by the Company. The Key Management are persons with high calibre and possess extensive knowledge and experience in vascular stent products and other medical devices. The brief biographies of the Key Management are as follows:

Mr. Chris Chen , is and will continue to be the chief executive officer of the Target Group after Completion. He joined the Target Group in 2005 as an industry veteran and has been navigating the Target Company and is involved in its strategic planning, financing, marketing, product development, establishing network with R&D strategic partners, as well as building a strong intellectual property portfolio worldwide. Mr. Chen was also a director of LeoFibo Holdings Inc., a specialised consulting firm offering financial advisory services, and has extensive experience in investing in companies in different sectors from pre-revenue to sizable public companies. Mr. Chen also has 15 years experience in capital markets as directors and president of public companies (including listed companies) in different jurisdictions including Canada, USA and the United Kingdom.

Mr. Ty Tiefeng Hu , is the founder of InnoMed and its Chinese subsidiaries, Shanghai Ying Zhong and Shanghai Ying Sheng. Mr. Hu is currently and will continue to be the chief executive officer of the InnoMed Group after Completion. Mr. Hu has broad academic and industrial experience in the Medical Device Business. He has been the President and General Manger of Vascore Medical (Suzhou) Co., Ltd., the Research & Development Director of Cordis Corporation, a Johnson & Johnson company, and the Coronary Drug-Eluting Stent Program Manager at Guidant Corporation (now Abbott Vascular). He has managed numerous technology and product development programs, and has also been a staff of the Standing Committee of the National People’s Congress of the PRC. Mr. Hu received his medical education from China Medical University and graduated in 1986. He also obtained a master’s degree in health management at Yale University in 1992. Mr. Hu further completed a postdoctoral training on medical oncology at Yale Medical School and worked at the Cancer Institute of New Jersey before joining the medical device industry in 1996.

Mr. Charley Chen , is currently holding and will continue to hold the position of Director of Operations in the InnoMed Group after Completion. Mr. Chen graduated from Kunming University of Science and Technology and obtained a bachelor’s degree in Mechanical Engineering. He has worked with Baiyin Corporation (白銀集團), a state-owned enterprise and Vascore Medical (Suzhou) Co., Ltd., a foreign-owned medical device company, and was mainly responsible for product research and development and production. Mr. Chen is the first batch of engineer in the PRC working on minimally-invasive endovascular therapy. He has extensive experience in research and development, production and equipment maintenance.

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Dr. Tang Yee , is currently holding and will continue to hold the position of Director of Research and Development in the InnoMed Group after Completion. Dr. Tang has obtained doctorate in macromolecule materials and biological materials from the University of Toronto, Canada and post-doctoral training in molecule materials from the Massachusetts Institute of Technology. She has participated in the R&D of the drug stent and absorbable stent at Guidant Corporation (now Abbott Vascular). She has also worked in the development of drug balloon and peripheral absorbable stent.

Dr. Adam Gu , is currently and will continue to be a part-time employee in the Shanghai Companies after Completion. Dr. Gu is responsible for the design and structural mechanics and dynamics analysis of stent. Dr. Gu graduated from the Nanjing Southeast University with a doctorate in Mechanical Engineering. Dr. Gu has also worked with the Vascore Medical (Suzhou) Co., Ltd.

Ms. Jin Gu , is currently holding and will continue to hold the position of Manager of Accounting in the InnoMed Group after Completion. Ms. Gu has extensive experience in Chinese accounting laws and regulations. Prior to joining the Target Group, she has served as accountant in both state-owned enterprises and private sector corporations and has also worked at pharmaceutical companies.

Mr. Huo Aike , is currently holding and will continue to hold the position of Director of Quality Assurance in the InnoMed Group after Completion. Mr. Aike is an analytical chemist. He has worked at major pharmaceutical and medical device companies in the USA and has taken part in the drug eluting stent program with leading device makers in the USA. Mr. Aike has extensive experience in analytical methods and quality assurance on drug eluting stent. He is also familiar with the regulations of the Food and Drug Administration, USA.

Prof. Randy Lee , is currently holding and will continue to hold the position of Scientific Advisor in the InnoMed Group after Completion. Prof. Lee is a professor in Cardiology in the University of California, San Francisco, USA and he is an expert in the research of cardio disease and tissue engineering. He is also a clinical doctor and providing medical service. Prof. Lee has been the person in charge of the research group in Bioengnieering in the University of California, San Francisco and Berkeley, USA, and has developed several commercial products from research and development. Prof. Lee is also a director of certain enterprises. He is the founder and an executive director of LyChron, a medical device company in the USA.

Dr. Farrell Mendelsohn , is currently holding and will continue to hold the position of Medical Advisor in the InnoMed Group after Completion. Dr. Mendelsohn graduated from Johns Hopkins University in the USA with a doctorate in Medicine. He has also received clinical residency training at the Harvard University and cardiology Fellowship at Duke University specialised in interventional therapy. Dr. Mendelsohn is currently working as the head of the medical centre for cardiovascular regeneration therapy at the University Medical Centre at Princeton Baptist Medical Centre, in Brimingham, Alabama, USA. Dr. Mendelsohn is one of the leading interventional cardiologists, specialising in interventional therapy for vascular diseases.

Dr. Brad Hubbard , is currently holding and will continue to hold the position of Preclinical Advisor in the InnoMed Group after Completion. Dr. Hubbard graduated from the University of Missouri with a doctorate in veterinary medicine. He has held senior positions in various renowned medical device companies, including Johnson & Johnson, Guidant and LyChron. Dr. Hubbard is internationally respected preclinical expert with extensive experience in the field of cardiovascular devices.

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Incentive to the Key Management

If the annual audited Consolidated Net Profit After Tax of the Target Group prepared under the HK GAAP and audited by the auditors of the Company exceeds RMB100 million (or the equivalent in HK$) for any financial year after Completion, the Company has agreed that it will initiate and undertake discussions in good faith with the Key Management and resolve on the best possible way to realise the most potential from the Medical Device Business, (i) by way of free stock options to the Key Management up to, in aggregate, 10% of the entire issued share capital of the holding company of the Target Group subject to the capital market activities referred to in (ii) below and the free stock options to the Key Management in the holding company of the Target Group subject to the capital market activities referred to in (ii) below will be increased, in aggregate, to 12% if the annual audited Consolidated Net Profit After Tax of the Target Group prepared under the HK GAAP and audited by the auditors of the Company exceeds RMB150 million (or the equivalent in HK$) for any financial year after Completion and for the avoidance of doubt, the free stock option in such holding company as aforesaid to be granted to the Key Management will only be granted once and will not be granted on an annual basis; and (ii) the Company agrees to consider capital market activities including a spin-off or a trade sale of the Target Group, whichever is most appropriate given the market conditions at the relevant time. The grant of the free stock options in such holding company as aforesaid and/or the capital market activities are subject to compliance with the Listing Rules and other applicable regulatory requirements and where applicable, the approval of the Shareholders at a special general meeting. The Company will comply with Chapter 17 of the Listing Rules at the time when the free stock options as specified above are granted to the Key Management.

INDUSTRY REVIEW OF MEDICAL DEVICE INDUSTRY

Certain information and statistics set out in this section have been extracted from the Valuation Report as disclosed in Appendix IV of this circular.

Overview of global pharmaceutical industry

The United States of America, Europe and Japan are the leaders in the global pharmaceutical industry. According to an analysis conducted by Zero Power Intelligence Co., Ltd., an independent third party (“ ZPI Report ”), in the year of 2008, the above three countries have reached a total market share of almost 78% globally. In the year of 2008, the global medical device market earned a total output value of more than US$200 billion.

According to the ZPI Report, global pharmaceutical industry has a sustained average annual growth rate of 8% since the early 80s in the twentieth century. The growth rate of pharmaceutical industry in most countries is higher than that of their own gross domestic product (“ GDP ”). As a result, pharmaceutical industry is one of the most competitive fields in research and development.

In most developed countries, the pharmaceutical market has an inelastic demand, hence influences from the economic crisis is slighter and can still maintain a high growth rate.

In the health care systems of the major countries in Europe, the government bears the health care expenses as well as the pharmaceutical expenses. When there is an increase in other health care expenses and medical insurance, to ensure that there is no deficit, the countries’ pharmaceutical expenditures will be compressed. Consequently, there has been a lower growth rate in pharmaceutical industry in the European countries.

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In Japan, it is facing more serious aging problems than other developed countries. Mandatory price cut on the pharmaceutical products in Japan leads to a decline in the market share of Japan’s industries globally.

With the active pharmaceutical industrial policy implemented by both the PRC and India, they have become the worldwide pharmaceutical products processing centres. According to the pharmaceutical market research firm, IMS Health, the PRC could become the world’s third-largest prescription drug market by 2011.

Overview of pharmaceutical industry in the PRC

After the reorganisation in the year of 2006, the pharmaceutical industry in the PRC continues to boom constantly. According to the ZPI Report, the number of enterprises in the pharmaceutical industry accounted for loss decreased from nearly 30% in 2006 down to 17% in 2010. Up to the month of May in 2010, the pharmaceutical industry’s sales and profits increased by 27.8% and 39.0% respectively, the growth rate was faster than the PRC’s GDP. For the pharmaceutical industry, due to rigid medical needs benefiting from aging population, urbanisation, new medical reform and other favorable factors, it would remain a steady and rapid growth for the next 10 years.

Meanwhile, there are a large amount of pharmaceutical companies in the PRC and the industry concentration is low. With the advance medical reformation, the industry is expected to increase the concentration in the future, which brings opportunity to significant listed companies to increase the market shares.

Up to the year 2010, there are up to 4,700 domestic pharmaceutical enterprises, small and medium scale enterprises account for about 70%, that is, more than 3,200. Among them, the best annual sales was accounted for approximately RMB100 million, while nearly 70% of small and medium scale enterprises had annual sales with around RMB50 million, net profit was about RMB10 million to RMB20 million.

Overview of medical device industry in the PRC

The three countries in Far East, the PRC, Japan and India are the “Far East industrial economic power” in the eyes of Western economists. The three countries account for around 70% of total market sales in Asian market, other Asian countries and regions have remaining 30% of total sales share.

Despite from other markets, the medical device market is one of the markets which have less affection from the world economic crisis, as a result of a slighter impact to the industry, the market still conducts a growth rate of over 10%.

The PRC is the world’s largest manufacturer in medical devices. It is also one of the world’s top ten emerging medical device markets. According to statistics collected by China’s Electromechanical Data Online (中國機電資料網 http://www.86mdo.com) and China-consulting.cn (中國行業諮詢網 http://www.china-consulting.cn), the total industry output value of the PRC’s medical device industry was about RMB61 billion in the year 2007, RMB73 billion in the year 2008 and over RMB90 billion in the year 2009.

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With the accelerated economic development, upgrade drive demand for medical services, the PRC government gradually opens up the medical service market, and as a result, the domestic and foreign capital investment in the PRC speed up the rate of medical services industry, which directly led to increased demand for medical equipment market.

In developed countries, medical equipment industry and pharmaceutical industry roughly have the same value. In the PRC, the previous latter value was only one-fifth. This proportion of serious disorders indicates that the medical device industry in the PRC has huge room for development.

According to the ZPI Report, in the next three years, the PRC’s rural health services will leaps, thanks to the government’s investments, which are more than RMB20 billion, on supporting rural health service system in 2010. The investments are mainly used to support the poor central and western regions, and eastern areas in primary health care institutions. Basic hospital equipment standards and related policies will also be launched soon.

The country will initially establish a basic framework for health system efforts to alleviate the urban and rural areas and setting urban and rural residents basic medical health system in the future. To this end, the government will need to increase RMB10 billion of investments. It is foreseeable that there will be a continuous expansion of the medical device market and demand for medical device product.

Factors driving the growth in the worldwide healthcare industry

Cardiovascular disease remains to be the world most serious illness, hence cardiovascular drugs naturally become the world’s number one pharmaceutical drugs on the market categories. Therefore, the world’s major pharmaceutical companies’ R&D departments are mainly focusing on developments in cardiovascular drugs.

Cardiovascular disease is the world’s highest rank human death caused disease. World Health Organization estimated that there are 17.5 million people died of cardiovascular disease and stroke every year, one third of all death reasons. In 2030, this figure will rise to 24.2 million, thus 32.5% of deaths caused by cardiovascular disease.

According to the ZPI Report, there are nearly 3 million people died of cardiovascular disease in the PRC each year. Billions of people are suffering from various types of cardiovascular disease symptoms. Hence, there is a large consumer group of cardiovascular drugs in the PRC.

Macroeconomic and demographic trends are also driving the growth in the PRC’s healthcare industry. The rapid economic growth has improved significantly the standard of living in the PRC, and households in both urban and rural areas of the PRC have been spending an increasing proportion of their household expenditure on healthcare and medical services. In addition, the rise in the living standard has led to changes in lifestyle in the PRC, resulting in over-nutrition, less healthy diets, smoking habit and obesity. Furthermore, the large and aging population in the PRC will increase the demand for medical devices used in treating cardiovascular disease.

Ongoing healthcare reform in the PRC

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PRC. In March 2009, the government published a healthcare reform plan for 2009 to 2011, which calls for, among other things, additional government spending on healthcare of RMB850 billion for 2009 to 2011 to improve accessibility and affordability of healthcare. The healthcare reform is designed to develop the healthcare infrastructure, expand basic medical insurance programs, establish a national essential drug system to meet basic needs for treatment and prevention of diseases, and improve basic public health services.

Medical device manufacturers are one of the beneficiaries of the healthcare reform initiative. The major portion of the government spending will be spent on developing the basic healthcare services. As a result, a large number of additional county hospitals and township hospitals will be built in towns and rural areas. Meanwhile, the number of the highest tier and second tier of hospitals in the PRC will increase. Coupled with the expansion of healthcare insurance programs, it is expected that the massive development of healthcare infrastructure across the PRC will boost patents’ accessibility and affordability of medical care.

REGULATIONS IN RELATION TO THE MEDICAL DEVICE BUSINESS

General

The medical device industry is highly regulated in the PRC. SFDA is the principal Governmental Authority that regulates and supervises on the safety and manufacturing of drugs, medical devices and cosmetic products in the PRC.

Manufacturers of medical devices are subject to regulations and oversight by different levels of SFDA. The principal regulations that apply to medical device manufacturers include, among others, the Regulations for the Supervisions and Administration of Medical Devices 《醫療器械監督管理條例》( ), the Rules for the Supervision and Administration of the Production of Medical Devices 《醫療器械生產( 監督管理辦法》), the Rules for the Registration of Medical Devices 《醫療器械註冊管理辦法》( ) and the Rules for the Administration of Medical Device Operation Enterprise Permits 《醫療器械經營企業許可( 證管理辦法》).

According to the Regulations for the Supervisions and Administration of Medical Devices 《醫療( 器械監督管理條例》), medical devices refer to any instrument, apparatus, appliance, material, or other article whether to be used alone or in combination, in human body, including the software necessary for its proper application.

SFDA has classified the medical devices into the following three categories with each successive class requiring progressive controls:

Class I: are those medical devices with low risks to human body and are subject to general regulatory control;

Class II: are those medical devices with medium risks to human body and are subject to special regulatory control; and

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Class III: are those medical devices with high risks to human body, which are either implanted into human body, or used to support or sustain life, and are subject to strict regulatory control.

The medical devices including the Specified Product that the Target Group will be manufacturing are classified as Class III devices and therefore are subject to regulatory controls governing Class III devices.

Manufacturing and operation permits

A manufacturer of medical devices must obtain a medical device manufacturing permit (醫療器械生產企業許可證) from the provincial level of SFDA before commencing the manufacture of Class III devices. A manufacturing permit is valid for five years and is renewable upon expiration. Shanghai Ying Sheng has submitted application for the manufacturing permit. As at the Latest Practicable Date, Shanghai Ying Sheng has not yet obtained the manufacturing permit.

An enterprise engaging in sale of medical devices must obtain a medical device operation enterprise permit (醫療器械經營企業許可證) from the provincial level of SFDA before commencing sale of Class III devices. An operation permit is valid for five years and is renewable upon expiration. Shanghai Ying Zhong has submitted application for the operation permit. As at the Latest Practicable Date, Shanghai Ying Zhong has not yet obtained the operation permit.

Registration and clinical trials of medical devices

Before a medical device can be manufactured for commercial distribution, a manufacturer must complete medical device registration by proving that the safety and efficacy of the medical device meet the standards set by SFDA. SFDA requires manufacturers to apply for and to obtain in advance a favorable test result for the device from a test centre recognised by SFDA. The test centre conducts animal and laboratory testing by following the applicable product registration standards. If the test results for the device are acceptable according to the applicable registration standards, the manufacturer may then begin the clinical trial. After the clinical trial of a Class III device, the manufacturer may apply for registration of the device with the SFDA. SFDA, within 90 working days of receiving an application for registration of a Class III device, will notify the applicant whether the application for registration is approved. If approved, a registration certificate will be issued within ten working days of the notification. A registration is valid for four years and is renewable upon expiration. As at the Latest Practicable Date, Shanghai Ying Sheng has not yet applied for registration with the SFDA in respect of the Specified Product.

After successful completion of the above registration procedure, an enterprise that possesses a medical device manufacturing permit (醫療器械生產企業許可證) or a medical device operation enterprise permit (醫療器械經營企業許可證) may manufacture or sell Class III devices in the PRC.

Export registration certificate

Manufacturers of medical devices must obtain an export registration certificate from SFDA prior to exporting medical devices. An export registration certificate is valid for two years.

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Advertisement and promotion

Prior to advertising and promotion of medical devices, a manufacturer must submit an application to SFDA or the provincial level of SFDA to obtain an advertising permit for medical devices. The content of advertisements for medical devices is also subject to certain guidelines approved by SFDA or the provincial level of SFDA.

Continuing regulations

The Medical Device Business is subject to SFDA’s continuing supervision. SFDA may conduct on-site inspection and make random testing on the manufacturing of medical devices. The Target Group’s products are also subject to, among others, (i) SFDA’s quality system regulations which require manufacturers to create, implement and follow certain design, testing, control, documentation and other quality assurance procedures; (ii) reporting regulations, which require manufacturers to report to SFDA certain types of adverse event and other incidents involving the products manufactured by the Target Group; and (iii) SFDA’s general prohibition against promoting products for unapproved uses.

Regulation in relation to CE Marking

CE Marking is a key indicator of a product’s compliance with European Union legislation which enables the free movement of products within the European market. By affixing the CE Marking on a product, a manufacturer is declaring, on its sole responsibility, conformity with all of the legal requirements to achieve CE Marking and therefore ensuring validity for that product to be sold throughout the European Economic Area (“ EEA ”), as well as Turkey. This also applies to products made in third countries which are sold in the EEA and Turkey. In obtaining CE Marking, a manufacturer has to take certain obligatory steps which include, among others, carrying out of a conformity assessment, setting up of a technical file and signing of an European Commission declaration of conformity.

The application for CE Marking for the Specified Product is subject to a specific category of CE Marking directives, i.e. the Medical Device Directive (93/42/EEC) (“ MDD ”). MDD has also classified medical devices into different classes and the Specified Product falls within Class III medical devices under the MDD.

In accordance with the MDD, confirmation of conformity with the requirements concerning the characteristics and performance under normal conditions of use of the device and evaluation of side-effects and of the acceptability of the benefit/risk profile must be based on an evaluation of clinical data which should be carried out in line with the methodology laid out in the MDD and the relevant guidance. In addition, the clinical evaluation must consist of either a critical evaluation of the relevant scientific literature currently available supporting the safety, performance, design characteristics and intended purpose of the device or a critical evaluation of the results of all clinical investigations made or a combination of both. The objectives of a clinical investigation must be to verify a positive benefit/risk profile of the device for the indications and limitations of use as specified by the manufacturer.

The Target Company has conducted animal and human tests of the Specified Product for the purpose of obtaining CE Marking and is currently in the process of applying for the CE Marking for the Specified Product, which is expected to be granted to the Target Company within one year from the Completion Date.

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RISK FACTORS OF THE TRANSACTIONS

Possible risk factors which may be faced by the Group in connection with the acquisition of the Medical Device Business are as follows:

Relating to the Group

New business segment of the Group

The Transactions constitute an investment in a new business segment for the Group. Such new business, coupled with the regulatory environment, may pose significant challenges to the Group’s administrative, financial and operational resources. As the Group does not have significant experience in the new business, it is difficult to ascertain the timing and amount of any return or benefits that may be received from the new business. If the proposed business plan in which the new Medical Device Business does not progress as planned, the Target Group may not recover the funds and resources it has spent, and this may adversely affect the Target Group’s financials. In such respect, as a risk migrating measure and an integral part of the Transactions, the Medical Device Business will continue to be managed by the Key Management who together have extensive knowledge and experience in the cardiovascular stent and other medical device products, production and sales and the stent and medical device market in the PRC and the overseas market in which the Target Group will be entering. Furthermore, the Company has been granted with the Put Option by the Vendor, which entitles the Company to sell all but not part of its interest in the Target Group to the Vendor at the Option Price, should the Target Group fail to achieve certain performance targets during the designated result tracking period as further detailed in the sub-section headed “The Put Option” of this letter.

Relating to the Target Group

Uncertainty of demand for the Specified Product

The Specified Product is new to the market. The operation of the Target Group will depend substantially on the market’s acceptance of the Specified Product. The Specified Product has yet to be marketed and it is difficult to predict the actual demand. Recommendation of physicians plays an important role in boosting market’s demand over the Specified Product. Physicians’ acceptance of the Specified Product depends on educating the medical community as to the distinctive characteristics, perceived benefit, safety, clinical efficacy and cost-effectiveness of the Specified Product compared with products of the competitors of the Target Group. Without physicians’ recommendations, sales of the Target Group will not perform well and the Target Group’s financial condition and results of operation may be materially and adversely affected.

Regulatory control

The Target Group must obtain a medical device manufacturing permit or a medical device operation enterprise permit before it may manufacture or sell medical devices in the PRC. As at the Latest Practicable Date, Shanghai Ying Sheng has not yet obtained the manufacturing permit, and Shanghai Ying Zhong has not yet obtained the operation permit. The Target Group may not be able to obtain those permits and in such case, the Target Group will not able to produce or sell medical devices in the PRC and this may seriously affect the business, financial position and operation result of the Target Group.

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The Specified Product and other medical device products are subject to extensive regulation, which may subject the Target Group to high compliance costs and may expose the Target Group to penalties for non-compliance. As at the Latest Practicable Date, Shanghai Ying Sheng has not yet applied for registration with the SFDA in respect of the Specified Product. The Specified Product may not meet the product registration standards in the PRC and the Target Group may not be able to obtain required regulatory registration approvals for the Specified Product and other medical device products in the PRC in a cost-effective manner or at all.

The production and marketing of the Specified Product and other medical device products and the Target Group’s ongoing R&D, preclinical testing and clinical trial activities are subject to extensive regulation and review by Governmental Authorities in the PRC. The PRC regulations applicable to medical devices are wide-ranging and govern, among other things, the testing, pre-market review, packaging, advertising, exporting and labeling of new medical devices. They also regulate the manufacturing processes, tendering, reporting, and record keeping procedures of medical device manufacturers.

The Target Group is required to obtain SFDA approval before it can produce and market the Specified Product and other medical device products in the PRC. Significant time, effort and expense are required to bring the Specified Product and other medical device products to market in compliance with the regulatory process.

In addition, before selling the Specified Product in international markets, the Target Group is required to obtain various governmental approvals in the relevant jurisdictions. Foreign regulations may vary from jurisdiction to jurisdiction and may be different from PRC regulations and SFDA requirements. In particular, the Target Group is in the process of applying for CE Marking on the Specified Product. The Target Group will not be able to export the Specified Product to the European Union or other countries which accept CE Marking, if the CE Marking on the Specified Product is not granted. In such case, the Target Group’s financial condition and results of operation may be materially and adversely affected.

The Target Group may be subject to fines and penalty or civil liabilities if the Target Group fails to comply with applicable regulatory requirements.

Protection of patents and other intellectual property right

The success of the Target Group depends, in part, on its ability to protect its proprietary technologies, including the Patents. In respect of the Patents assigned to the Target Group, only patent applications have been filed and none of which has been issued or granted yet. Due to the different regulatory bodies and varying requirements in these jurisdictions, the Company cannot assure that the Target Group will be able to obtain patent protection for all or any aspects of the medical device products (including the Specified Product) that it will be engaging in all or any of these jurisdictions. The process of seeking patent protection can be lengthy and expensive, and the Company cannot assure that the Target Group’s patent applications will result in patents being issued or granted, or that any future issued patents will be sufficient to provide the Target Group with meaningful protection or commercial advantage. The Company cannot assure that the current or potential competitors of the Target Group, many of which have substantial resources and have made substantial investments in competing technologies, do not have, and will not obtain, patents that will prevent, limit or interfere with the Target Group’s ability to make, use or sell the Specified Product and other medical device products in either the PRC or other countries, including the USA, the European Union and other countries in Asia.

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The Target Group cannot assure that any of the Patents, non-patentable technologies, trade secrets, proprietary know-how or other intellectual property used by the Target Group have not infringed or will not infringe third parties’ intellectual property or patent right in the countries where the Target Group operates or where its products are sold. The Target Group may face the risk of claims for infringement of third parties’ intellectual property rights and any such claims, even those without merit, could:

be expensive and time consuming to defend;
result in the Target Group being required to pay significant damages to third parties;
cause the Target Group to cease making or selling products that incorporate the challenged intellectual property;
require the Target Group to enter into royalty or licensing agreements in order to obtain the right to use a third party’s intellectual property, which agreements may not be available on terms acceptable to the Target Group or at all;
result in hospitals and physicians terminating, deferring or limiting their purchase of the affected product until resolution of the litigation.

Any of the above consequences may have a material adverse impact on the Target Group’s reputation, business, financial condition and results of operation.

Potential liability claims

The manufacture and sale of medical devices exposes the Target Group to potential risks of product liability claims, which are time consuming and expensive to defend and may have a material adverse impact on Target Group’s business, financial condition and results of operation.

Further, the Target Group cannot ensure that physicians will follow its instructions on the proper usage of the Specified Product and other medical device products accurately. If the Specified Product and other medical device products are used incorrectly by physicians, injury may result, which could give rise to product liability claims against the Target Group. Any losses that the Target Group may suffer from any liability claims, and the effect that any product liability litigation may have upon the reputation and marketability of the Specified Product and other medical device products, may divert management’s attention from normal business operations and may have a material adverse impact on the Target Group’s reputation, business, financial condition and results of operation.

Product recall

The Specified Product are complex medical devices, which sometimes may experience performance problems resulting from inappropriate manufacturing process or misusage of the physicians. Should there be circumstances that require major or frequent review and recall of the Specified Product for any corrective actions, reputation of the Target Group as well as the market acceptance of the Specified Product may be materially and adversely affected, which may in turn jeopardise the Target Group’s financial condition and results of operation.

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LETTER FROM THE BOARD

Insurance coverage for treatment with the use of the Specified Product

Good sales performance of the Target Group in the PRC depends largely on availability of health insurance coverage for treatments with the use of the Specified Product. In the absence of sufficient medical insurance coverage, patients may adopt alternative medical treatments. This may trim down demand of the Specified Product and could materially and adversely affect the Target Group’s business, financial condition and results of operation.

Non-fulfillment of the profit guarantee

If the Target Group’s business and results of operation is adversely affected by any of the risk factors mentioned above, there is a risk the Target Group may not be able to meet the profit guarantee as specified in the sub-section headed “The Put Option” under the section headed “The S&P Agreement and the Transactions” above. In such case, the right to exercise the Put Option will be triggered, which will entitle the Company to require the Vendor to buy back all but not part of the Sale Shares and the Subscription Shares at Option Price. If the Put Option is exercised and completed, the Target Group will cease to be owned by the Company with effect from the Option Completion Date. In such event, the Group will not be engaged in any medical device business, which the Directors believe to have growth potential and good prospect and the Group will only continue to be engaged in the Telecom Product Business.

INFORMATION ON CCT TECH AND CCT TELECOM

The Company is the holding company of the Group which is currently engaged in the design, development, manufacture and sale of telecom and electronic products (the “ Telecom Product Business ”).

CCT Telecom is the holding company of the CCT Telecom Group which is principally engaged in (i) the Telecom Product Business through the Group; (ii) the manufacture of power supply and plastic components; (iii) the manufacture and sale of infant and child products, wise games and toys and home-use healthcare products; (iv) the securities business; and (v) properties development and holding.

REASONS FOR THE TRANSACTIONS

The Group is principally engaged in the Telecom Product Business.

According to the annual reports and the interim report of the Group for the two financial years ended 31 December 2008 and 2009 and for the six months ended 30 June 2010 respectively, the Company reported significant audited consolidated losses after taxation of approximately HK$317 million and HK$19 million for the year 2008 and 2009 respectively and unaudited consolidated loss after taxation of HK$4 million for the interim period of 2010. The losses incurred by the Group for the past two and half years were mainly caused by the global financial turmoil, the exit of its previous largest customer, keen competition and other operational issues which affected its Telecom Product Business. The Directors expect that the business environment of the Telecom Product Business would remain uncertain going forward. The Directors anticipate that the acute shortage of labour in the Guangdong Province, the rising price of commodity, materials and wages and the potential appreciation of RMB against US dollar are the major uncertain factors that may increase the production costs and affect the profit margin and the performance of the Group in the coming years. Competition is expected to remain keen. The recent debt crisis in Europe may become another global financial turmoil that may adversely affect the major markets of the Telecom Product Business. Furthermore, the Directors expect that certain working capital funding will be required to diversify its existing ODM business into the branded distribution business using the GE trademark.

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LETTER FROM THE BOARD

In view of the above, the Company therefore takes initiative to identify business opportunities in the other business sectors in order to diversify and broaden its revenue sources and improve its profitability. The Directors have identified the investment opportunity in the Target Group which owns advanced technology for coronary stent system and will be engaged in the strong growth Medical Device Business.

Coronary artery disease is a progressive condition that leads to the obstruction of the blood vessels providing blood flow to the heart muscle. Due to overall global aging population, unhealthy habits (such as over-nutrition, eating junk food and smoking (especially for the Chinese people)) and inheritance factors (such as diabetes and hypertension), heart disease has become one of the leading causes of death in the world. The global coronary stent market is huge and its growth prospects are good, especially in the PRC. There are a number of factors contributing to the rapid growth in the medical and healthcare industry in the PRC. In recent years, the PRC’s healthcare system has been undergoing fundamental changes as a result of the PRC government’s new healthcare reform initiative and concurrent significant expansion of financial support for the healthcare system. Under this initiative, the PRC government plans to inject enormous amount of government spending to improve accessibility and affordability of healthcare. The Directors believe that the Medical Device Business that the Target Group will be engaged will be operating at favorable business environment and is considered to be a high-growth business. The Transactions will enable the Group to enter into the medical and healthcare industry which the Directors believe has huge potential and good future prospect. The Directors consider that the Transactions will substantially enhance the assets, revenue and profitability of the Group.

The Transactions will be financed by the Placing which will raise at least US$30 million (equivalent to approximately HK$234 million) to the Company, which funds will be used to (i) finance the expense related to the Transactions of approximately HK$10 million (including Placing fees); (ii) fund the Subscription Consideration of US$20 million (equivalent to approximately HK$156 million) which will be payable by the Company to the Target Group pursuant to the S&P Agreement (details of the use of the Subscription Consideration has been described in the sub-section headed “Use of the Subscription Consideration” under the section headed “The S&P Agreement and the Transactions” above); and (iii) fund working capital and general corporate expenditure of the Group and the Telecom Product Business in the approximate amount of HK$68 million. As such, the Company will raise sufficient funds through the Placing not only to finance the Transactions but also to have additional funding of approximately HK$68 million to finance the working capital and general corporate expenditure of the Group and the Telecom Product Business. Hence, the Placing and the Transactions will further strengthen the financial position of the Group.

The Directors intend to continue the Telecom Product Business after Completion. Therefore, after Completion, the Group will continue to be engaged in the Telecom Product Business and will diversify into the medical and healthcare business that has better potential. For each of the Company and CCT Telecom, it is the intention of the Directors and CCT Telecom Directors respectively that each of the Group and the CCT Telecom Remaining Group will continue to engage in their respective existing businesses. The respective board of directors of the Company and CCT Telecom confirms that, save for the deemed disposal of the Company by CCT Telecom as a result of the dilution of CCT Telecom’s shareholdings in the Company arising from the Placing Agreement, the Company, CCT Telecom or their respective board of directors has no other agreement, arrangement, understanding, intention, negotiation (concluded or otherwise) about any disposal/termination/scaling-down of the respective existing businesses of the Group or the CCT Telecom Remaining Group.

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LETTER FROM THE BOARD

THE PROPOSED PLACING

(1) General

The Board proposes to raise funds for the Company of at least US$30 million (or its HK$ equivalent) by means of placing (the “ Placing ”) up to 13,000,000,000 new CCT Tech Existing Shares, representing approximately 19.87% of the existing issued share capital of the Company as at the Latest Practicable Date and approximately 16.58% of the entire issued share capital of the Company as enlarged by the issue of the maximum number of CCT Tech Existing Shares to be placed under the Placing, at the minimum Placing Price of HK$0.018 per CCT Tech Existing Share if the Placing is undertaken before the Capital Reorganisation becoming effective. If the Placing is undertaken after the Capital Reorganisation becoming effective, the minimum funding of at least US$30 million (or its HK$ equivalent) will be raised by the Placing of up to 1,300,000,000 new CCT Tech Ordinary Shares, representing approximately 19.87% of the total issued CCT Tech Ordinary Shares and approximately 16.58% of the total issued CCT Tech Ordinary Shares as enlarged by the issue of the maximum number of CCT Tech Ordinary Shares to be placed under the Placing, at the minimum Placing Price of HK$0.18 per CCT Tech Ordinary Share. The maximum number of either 13,000,000,000 issued new CCT Tech Existing Shares or 1,300,000,000 issued new CCT Tech Ordinary Shares to be placed under the Placing, as the case may be, are herein referred to as the “ Placing Shares ”.

(2) Mandate to allot and issue new shares in the Company

The new Placing Shares will be allotted and issued pursuant to the general mandate granted to the Directors by a resolution of the Shareholders passed at the annual general meeting of the Company held on 31 May 2010. The Company is authorised to issue up to 13,082,798,798 CCT Tech Existing Shares or equivalent to 1,308,279,879 CCT Tech Ordinary Shares upon the Capital Reorganisation becoming effective, under such mandate and the Company has not exercised the power to allot and issue any new CCT Tech Existing Shares pursuant to such mandate prior to the date of the Placing Agreement.

(3) Rationale behind and reasons for the Placing

The primary purpose of the Placing is to allow the Company to raise sufficient capital (i) to finance the expense related to the Transactions of approximately HK$10 million (including Placing fees); (ii) to fund the Subscription Consideration of US$20 million (equivalent to approximately HK$156 million) which will be payable by the Company to the Target Group pursuant to the S&P Agreement (details of the use of the Subscription Consideration has been described in the sub-section headed “Use of the Subscription Consideration” under the section headed “The S&P Agreement and the Transactions” above); and (iii) to fund working capital and general corporate expenditure of the Group and the Telecom Product Business in the approximate amount of HK$68 million.

The raising of finance by means of the Placing will provide funding to the Company to enter into and diversify its business into medical and healthcare business sector which it considers to have better prospect than its existing Telecom Product Business.

The Board considers that the Placing is an appropriate and preferred means of funding the Transactions for the following reasons:

(i) it would be difficult to raise funds for the Transactions through bank borrowings as the Target Group has not yet generated any revenue or earnings;

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LETTER FROM THE BOARD

(ii) funding by bank or other borrowings would adversely affect the gearing ratio of the Group which is not in the interests of the Group or the Shareholders as a whole;
(iii) it would not be beneficial to the Shareholders to raise funds by rights issue as some Shareholders may not be willing to invest more money into the Company and it would be difficult to find someone to underwrite the rights issue;
(iv) proceeds from the Placing will provide the Company with immediate funds; and
(v) the Placing will increase the capital and broaden the shareholder base and enhance the profile of the Company given that the Placees are individuals, institutional and/or professional investors (as the case may be).

The Directors consider that the Placing is fair and reasonable to the Company and the Shareholders as a whole on the basis that the Placing represents an opportunity to raise new capital for the Company to invest into the Target Group with readily available funds.

(4) Terms of the Placing Agreement

With a view towards ensuring the success of the Placing, the Company has entered into the Placing Agreement with the Placing Agent, the key terms of which are as follows:

Date of the Placing Agreement:

19 October 2010

Parties to the Placing Agreement:

(i) Issuer : CCT Tech (ii) Placing Agent : SBI E2-Capital (HK) Limited

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, the Placing Agent (and its ultimate beneficial owner and their respective associates) is an independent third party of the Company and its connected persons.

(a) Placing

The Placing Agent has agreed, subject to satisfaction of the conditions precedent set out below and the other terms of the Placing Agreement, to procure, on a best-effort basis, independent placees to subscribe for the Placing Shares at the Placing Price (payable in full on the Completion Date), and the Company has agreed to issue and allot the Placing Shares to the Placees or their nominee(s), credited as fully paid at the Placing Price, subject to the constitutional documents of the Company, and on the terms and subject to the conditions set out in the Placing Agreement.

In respect of the Placing, the Placing Agent will receive a placing commission of 3% on the gross proceeds of the Placing upon completion of the Placing.

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LETTER FROM THE BOARD

(b) Placing Price

Not less than HK$0.018 per each new CCT Tech Existing Share if the Placing is completed before the Capital Reorganisation becoming effective and not less than HK$0.18 per each new CCT Tech Ordinary Share if the Placing is completed after the Capital Reorganisation becoming effective (the “ Placing Price ”). This minimum Placing Price was agreed after arm’s length negotiation between the Company and the Placing Agent with reference to recent market prices of the CCT Tech Existing Shares. The comparison of the minimum Placing Price and the market prices or adjusted market prices of the shares in the Company presents the same results as the comparison of the issue price of the Redeemable CPS as elaborated in the sub-section headed “Purchase Consideration” under the section headed “The S&P Agreement and the Transactions” above. Based on the analysis in the sub-section headed “Purchase Consideration”, the Directors consider the minimum Placing Price to be fair and reasonable in the interest of the Company and the Shareholders as a whole.

The net placing price under the Placing is approximately HK$0.0175 per Placing Share (if the Placing is undertaken before the Capital Reorganisation becoming effective), or approximately HK$0.175 per Placing Share (if the Placing is undertaken after the Capital Reorganisation becoming effective).

(c) Placees

The Placing Agent will place the Placing Shares to not less than six (6) independent Placees, each of whom or its respective ultimate beneficial owner(s) will be third party independent of the Company and its connected persons. The Placees will include individual, corporate and institutional investors. The Placing Agent confirms to the best of its knowledge and belief, none of the Placees will become a substantial shareholder of the Company immediately after the Placing.

(d) Rights of the Placing Shares

The Placing Shares, when allotted and issued by the Company, will be free and clear from all encumbrances and with all rights attaching thereto as at the date of completion of the Placing, including the right to receive all dividends and other distributions which may be declared, made or paid in respect of the Placing Shares.

(e) Use of proceeds from the Placing

The Placing will raise funds of at least approximately HK$234 million (equivalent to US$30 million) for the Company. The funds raised will be used to finance the Subscription Consideration of US$20 million (equivalent to approximately HK$156 million), the expenses related to the Transactions of approximately HK$10 million (including Placing fees), the working capital and for general corporate purposes in respect of the Group and the Telecom Product Business, in the amount of approximately HK$68 million.

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LETTER FROM THE BOARD

(f) Conditions to the Placing

Completion of the Placing is conditional upon:

(i) the Listing Committee of the Stock Exchange agreeing to grant the listing of, and permission to deal in, the Placing Shares; and
(ii) the obtaining by the Company of all other necessary consents, approvals, authorisation and/or waivers (if any) to effect the execution, completion and performance of the obligations and other terms of the Placing Agreement (including but not limited to the issue and allotment of the Placing Shares).

In the event of the above conditions are not fulfilled on or before 28 December 2010 (or such later date as may be agreed by the Company) all rights, obligations and liabilities of the parties to the Placing Agreement shall cease and determine and none of the parties shall have any claim against any other in respect of the Placing.

(g) Ranking

The Placing Shares will, upon issue, rank equally in all respects among themselves and with all other CCT Tech Existing Shares in issue (if the Placing is undertaken before the Capital Reorganisation becoming effective), or the CCT Tech Ordinary Shares in issue (if the Placing is undertaken after the Capital Reorganisation becoming effective) as at the date of completion of the Placing. Application has been made to the Stock Exchange for the listing of, and permission to deal in, the Placing Shares.

(h) Completion of the Placing

Completion of the Placing will take place at such time and date as determined by the Placing Agent before the Completion, after the satisfaction of the conditions set out above.

(i) Termination of the Placing Agreement

Pursuant to the Placing Agreement, the Placing Agent may after consultation with the Company terminate the Placing Agreement without any liability to the Company by giving notice in writing to the Company, provided that such notice is received prior to the completion of the Placing, upon the occurrence of any of the following:

(i) the occurrence of any event, development or change (whether or not local, national or international or forming part of a series of events, developments or changes occurring or continuing before, on and/or after the date of the Placing Agreement) and including an event or change in relation to or a development of an existing state of affairs of a political, military, industrial, financial, economic, fiscal, regulatory or other nature, resulting in a change in, or which may result in a change in, political, economic, fiscal, financial, regulatory or stock market conditions; or
(ii) the imposition of any moratorium, suspension or restriction on trading in securities generally on the Stock Exchange occurring due to exceptional financial circumstances or otherwise; or

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LETTER FROM THE BOARD

(iii) any material change in conditions of local, national or international securities markets occurs; or
(iv) any new law or regulation or change in existing laws or regulations or any change in the interpretation or application thereof by any court or other competent authority in Hong Kong or any other jurisdiction relevant to the Group; or
(v) a change or development occurs involving a prospective change of taxation or exchange control (or the implementation of exchange control) in Hong Kong or elsewhere; or
(vi) any litigation or claim of a material nature being instigated against any member of the Group; or
(vii) any material breach of any of the representations and warranties set out in the Placing Agreement comes to the knowledge of the Placing Agent or any event occurs or any matter arises on or after the date of the Placing Agreement and prior to the completion the Placing which if it had occurred or arisen before the date of the Placing Agreement would have rendered any of such representations and warranties untrue or incorrect in any material respect or there has been a material breach by the Company of any other provision of the Placing Agreement; or
(viii) there is any material adverse change in the financial or business or trading position of the Company; or
(ix) market condition which in the view of the Placing Agent renders it inappropriate, inadvisable or inexpedient to proceed with the Placing.

If the Placing Agreement is terminated or lapsed without completion, appropriate announcement will be made by the Company and CCT Telecom on the date of termination.

(5) Fund Raising Activities in the Past 12 Months

The Company has not conducted any equity capital fund raising activities in the past twelve months before the Latest Practicable Date.

SHAREHOLDING STRUCTURE OF THE COMPANY

The table below shows the shareholding structure of the Company (a) as at the Latest Practicable Date before the Capital Reorganisation; (b) immediately after the Capital Reorganisation and after issue of the Placing Shares (assuming that the Placing is undertaken after the Capital Reorganisation becoming effective and assuming that the maximum number of the Placing Shares have been allotted and issued); (c) immediately after the Capital Reorganisation, the issue of the Placing Shares and the Completion but before any conversion of the Redeemable CPS; and (d) after the Capital Reorganisation, issue of the Placing Shares, the Completion and full conversion of all the 3,466,700,000 Redeemable CPS, assuming that in all cases, (i) there is no change in the issued share capital and shareholding structure of the Company from the Latest Practicable Date to the time immediately before the Placing and Completion;

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LETTER FROM THE BOARD

and (ii) the Lock-up Undertakings on conversion as set out in sub-section headed “Lock-up Undertakings and Charge on the Redeemable CPS” under the section headed “The S&P Agreement and the Transactions” above does not apply.

As at the Latest Practicable Date No. of CCT Tech Existing Shares (%) 29,326,391,124 44.83 2,350,000,000 3.59 1,350,000,000 2.07	As at the Latest Practicable Date No. of CCT Tech Existing Shares (%) 29,326,391,124 44.83 2,350,000,000 3.59 1,350,000,000 2.07	Immediately after the Capital Reorganisation becoming effective but before the Placing and the Completion No. of CCT Tech Ordinary Shares (%) 2,932,639,112 44.83 235,000,000 3.59 135,000,000 2.07	Immediately after the Capital Reorganisation becoming effective but before the Placing and the Completion No. of CCT Tech Ordinary Shares (%) 2,932,639,112 44.83 235,000,000 3.59 135,000,000 2.07
33,026,391,124 120,000,000 20,000,000 18,000,000 10,000,000 168,000,000 0 0 0 33,194,391,124 0 32,219,602,866 32,219,602,866	50.49 0.18 0.03 0.03 0.02 0.26 0.00 0.00 0.00 50.75 0.00 49.25 49.25	3,302,639,112 12,000,000 2,000,000 1,800,000 1,000,000 16,800,000 0 0 0 3,319,439,112 0 3,221,960,286 3,221,960,286	50.49
			0.18 0.03 0.03 0.02
			0.26
			0.00 0.00
			0.00
			50.75
			0.00 49.25
			49.25
65,413,993,990	100.00	6,541,399,398	100.00

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LETTER FROM THE BOARD

Immediately after the Capital Reorganisation becoming effective but before the Placing and the Completion No. of CCT Tech Ordinary Shares (%) 2,932,639,112 44.83 235,000,000 3.59 135,000,000 2.07	Immediately after the Capital Reorganisation becoming effective but before the Placing and the Completion No. of CCT Tech Ordinary Shares (%) 2,932,639,112 44.83 235,000,000 3.59 135,000,000 2.07	Placing of the Placing Shares No. of CCT Tech Ordinary Shares 0 0 0	Immediately after the Capital Reorganisation becoming effective, the Placing and the Completion but before any conversion of the Redeemable CPS No. of CCT Tech Ordinary Shares (%) 2,932,639,112 37.40 235,000,000 3.00 135,000,000 1.72	Immediately after the Capital Reorganisation becoming effective, the Placing and the Completion but before any conversion of the Redeemable CPS No. of CCT Tech Ordinary Shares (%) 2,932,639,112 37.40 235,000,000 3.00 135,000,000 1.72
3,302,639,112 12,000,000 2,000,000 1,800,000 1,000,000 16,800,000 0 0 0 3,319,439,112 0 3,221,960,286 3,221,960,286	50.49 0.18 0.03 0.03 0.02 0.26 0.00 0.00 0.00 50.75 0 49.25 49.25	0 0 0 0 0 0 0 0 0 0 1,300,000,000 0 1,300,000,000	3,302,639,112 12,000,000 2,000,000 1,800,000 1,000,000 16,800,000 0 0 0 3,319,439,112 1,300,000,000 3,221,960,286 4,521,960,286	42.12
				0.15 0.03 0.02 0.01
				0.21
				0.00 0.00
				0.00
				42.33
				16.58 41.09
				57.67

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LETTER FROM THE BOARD

	Immediately after the Capital	Immediately after the Capital
	Reorganisation, the Placing,		Immediately after
	and the Completion but		full conversion of
	before any conversion of		all the 3,466,700,000
	the Redeemable CPS		Redeemable CPS
	No. of CCT Tech		No. of CCT Tech
	Ordinary Shares	(%)	Ordinary Shares	(%)
Name of the controlling Shareholders:
Jade Assets	2,932,639,112	37.40	2,932,639,112	25.93
Expert Success	235,000,000	3.00	235,000,000	2.08
CCT Assets	135,000,000	1.72	135,000,000	1.20
CCT Telecom Total	3,302,639,112	42.12	3,302,639,112	29.21
Name of the Directors:
Mak Shiu Tong, Clement	12,000,000	0.15	12,000,000	0.10
Tam Ngai Hung, Terry	2,000,000	0.03	2,000,000	0.02
Cheng Yuk Ching, Flora	1,800,000	0.02	1,800,000	0.02
Chen Li	1,000,000	0.01	1,000,000	0.01
Sub-total for the Directors (Note)	16,800,000	0.21	16,800,000	0.15
InnoMed Owner and the Vendor:
InnoMed Owner	0	0.00	650,000,000	5.75
Vendor	0	0.00	2,816,700,000	24.91
Sub-total for the InnoMed Owner
and the Vendor	0	0.00	3,466,700,000	30.66
Total non-public Shareholders	3,319,439,112	42.33	6,786,139,112	60.02
Public Shareholders:
Placees	1,300,000,000	16.58	1,300,000,000	11.50
Other public Shareholders	3,221,960,286	41.09	3,221,960,286	28.48
Sub-total for public Shareholders	4,521,960,286	57.67	4,521,960,286	39.98
Total	7,841,399,398	100.00	11,308,099,398	100.00

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LETTER FROM THE BOARD

Note: The interest of the Directors in the shares of CCT Telecom as at the Latest Practicable Date is as follows:

				Approximate
	Number of the shares beneficially		held	percentage of
		Interests		the total issued
		through		share capital
	Personal	controlled		of CCT
Name of the Directors	interest	corporations	Total	Telecom
				(%)
Mak Shiu Tong, Clement	8,475,652	294,775,079	303,250,731	50.03
Tam Ngai Hung, Terry	500,000	–	500,000	0.08
William Donald Putt	591,500	–	591,500	0.10

The Placing Shares of 1,300,000,000 CCT Tech Ordinary Shares represents approximately 19.87% of the total issued CCT Tech Ordinary Shares immediately after the Capital Reorganisation becoming effective but before issue of the Placing Shares and the Completion, approximately 16.58% of the total issued CCT Tech Ordinary Shares as enlarged by the Placing Shares but before issue of the Conversion Shares and approximately 11.50% of the total issued CCT Tech Ordinary Shares as enlarged by the Placing Shares and the Conversion Shares to be issued upon full conversion of the Redeemable CPS.

The Conversion Shares of 3,466,700,000 CCT Tech Ordinary Shares, subject to adjustment of the Conversion Ratio, arising from the full conversion of the Redeemable CPS represents approximately 53.00% of the total issued CCT Tech Ordinary Shares immediately after the Capital Reorganisation becoming effective but before issue of the Placing Shares and the Completion, approximately 44.21% of the total issued CCT Tech Ordinary Shares as enlarged by the Placing Shares but before issue of the Conversion Shares, and approximately 30.66% of the total CCT Tech Ordinary Shares as enlarged by the Placing Shares and the Conversion Shares.

Applications have been made to the Stock Exchange for the listing of, and the permission to deal in the CCT Tech Ordinary Shares in issue following completion of the Capital Reorganisation, the Placing Shares, and the Conversion Shares to be issued upon the conversion of the Redeemable CPS.

This circular is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for the shares of the Company.

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LETTER FROM THE BOARD

SHAREHOLDING CHART OF THE COMPANY

(a) As at the Latest Practicable Date

==> picture [356 x 234] intentionally omitted <==

----- Start of picture text -----

Public
CCT Telecom Directors
Shareholders
50.49% 0.26% 49.25%
CCT Tech
100%
Telecom
Product
Business
----- End of picture text -----

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LETTER FROM THE BOARD

(b) Immediately after the Capital Reorganisation, Placing and Completion but before conversion of any of the Redeemable CPS

==> picture [382 x 468] intentionally omitted <==

----- Start of picture text -----

Other public
CCT Telecom Directors Placees
Shareholders
42.12% 0.21% 16.58% 41.09%
CCT Tech
100%
Target Company
(BVI)
100%
InnoMed
(HK)
100%
Shanghai Shanghai
Ying Zhong Ying Sheng
(PRC) (PRC)
Telecom Medical
Product Patents device
Business factory
----- End of picture text -----

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LETTER FROM THE BOARD

(c) Immediately after completion of the Capital Reorganisation, Placing, Completion and full conversion of all the 3,466,700,000 Redeemable CPS

==> picture [444 x 442] intentionally omitted <==

----- Start of picture text -----

Other
CCT InnoMed
Directors Vendor Placees public
Telecom Owner
Shareholders
29.21% 0.15% 5.75% 24.91% 11.50% 28.48%
CCT Tech
100%
Target Company
(BVI)
100%
InnoMed
(HK)
100%
Shanghai Shanghai
Ying Zhong Ying Sheng
(PRC) (PRC)
Telecom Medical
Product Patents device
Business factory
----- End of picture text -----

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LETTER FROM THE BOARD

Financial effect of the Placing and the Transactions on the Group

Upon completion of the Placing, the Company will raise gross proceeds of at least approximately HK$234 million from the Placing. The funds raised will increase the share capital and cash of the Group, which will be used to finance the Subscription Consideration and to finance the working capital and/or general corporate purpose of the Group and the Telecom Product Business. Upon Completion, each member of the Target Group will become subsidiary of the Company and their assets and liabilities, profit or loss will be consolidated into the Company. The Target Group has not yet commenced business and has no revenue for the time being. Although it will not contribute to the revenue and earnings to the Group immediately after Completion, it is expected that the Target Group and its Medical Device Business will contribute significant revenue and earnings to the Group when it commences business and starting generating revenue.

(a) Net assets value

Based on the unaudited pro forma consolidated statement of financial position of the Enlarged Group as set out in Appendix III (1) to this circular which illustrates the effect of the Placing and the Transactions on the financial position of the Enlarged Group, on the basis of the assumptions as stated in Appendix III, the total assets of the Enlarged Group as at 30 June 2010 would have been increased by approximately HK$989 million, the total liabilities of the Enlarged Group would have been increased by approximately HK$159 million and the pro forma net assets value of the Enlarged Group would have been increased by approximately HK$830 million to approximately HK$1,544 million. The increase in the net assets value is due to the net effect of: (i) the increase in intangible assets by inclusion of fair value of Patents of approximately HK$624 million; (ii) the net cash inflow to the Group of approximately HK$185 million, calculating by the net cash proceeds from the Placing net of the Placing fee after deducting the InnoMed Cash Consideration and the expenses and legal and professional fees relating to the Transactions, (iii) the inclusion of the goodwill of HK$170 million, arising from the acquisition of the Target Group; (iv) the inclusion of fair value of the Put Option of HK$5 million; (v) the net assets of the Target Group (net of the InnoMed Shareholder’s Loan) of approximately HK$2 million; and (vi) the deduction of the deferred tax liabilities on the fair value of the Patents of HK$156 million.

(b) Loss

The audited consolidated loss of the Group for the year ended 31 December 2009 amounted to approximately HK$19 million. Based on the unaudited pro forma consolidated income statement of the Enlarged Group as set out in the Appendix III (2) to this circular which illustrates the effect of the Placing and the Transactions on the result of the Enlarged Group, on the basis of the assumptions as stated in Appendix III, the unaudited consolidated loss of the Enlarged Group for the year ended 31 December 2009 would have been increased by approximately HK$22 million to approximately HK$41 million, which increase is calculated by: (i) crediting the release of the deferred tax liabilities of approximately HK$5 million per annum attributable to the amortisation charge of the Patents; (ii) debiting the net loss of the Target Group for the year ended 31 December 2009 of approximately HK$3 million; and (iii) debiting the charge of amortisation of the Patents of approximately HK$21 million per annum and the estimated amount of expenses and legal and professional fees relating to the Transactions of approximately HK$3 million.

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LETTER FROM THE BOARD

BUSINESS PROSPECTS OF THE ENLARGED GROUP

Trend of business of the Enlarged Group

The Enlarged Group is principally engaged in the Telecom Product Business, and upon Completion, will also be engaged in the Medical Device Business.

The Target Group has conducted scientific and medical R&D activities but has not commenced any commercial operations or generated any revenue up to the Latest Practicable Date. The Target Group will be engaged in the Medical Device Business, which will involve production and sale of cardiovascular medical devices. As disclosed in the sections headed “Reasons for the Transactions” and “Industry overview of medical device industry” above, the global market of the medical device industry is huge and is growing rapidly in the PRC. The Specified Product is the next generation of cardiovascular stent, developed based on advanced technology and has proved to be feasible and safe based on animal and human tests. It is expected the Specified Product is likely to be accepted by the market, and sales orders will start to increase when the Target Group commences business.

As disclosed in the Company’s interim report for the six months ended 30 June 2010, turnover for the first half increased by 12.6% as compared with that for the corresponding period last year. It is expected that the market environment in the second half of 2010 and going forward will continue to be uncertain as the global economy, especially in the USA and Europe has grown in a sluggish manner. It is expected that the business of the Telecom Product Business in the second half of the year is steady and there will not be any material adverse change from that of last year.

Trading and financial prospects of the Enlarged Group

The management of the Telecom Product Business anticipates that market competition, the labour shortage in the Guangdong Province, rise in operating costs and the probable further appreciation of Renminbi will remain key challenges and affect the profitability of the Telecom Product Business of the Enlarged Group. However, the Enlarged Group will continue to take various initiatives including cost control, development and launch of hi-tech advance products in order to remain competitive. The license of the GE trademark in early 2010 has also opened a new avenue for the future business growth of the Enlarged Group and is expected to deliver potential benefits to the Group.

The financial position of the Enlarged Group remains strong. The gearing ratio of the Enlarged Group remains at a low level and after taking into account the cash on hand, the Enlarged Group did not have any net borrowings.

The Directors consider that the Medical Device Business has huge potential, especially for the PRC market. With the PRC government’s new healthcare reform which improves the accessibility and affordability of healthcare to general public in the PRC as well as the concurrent expansion of the medical insurance program, the demand for medical devices in the PRC is expected to escalate. The margin of medical device industry is generally high and much better than the Telecom Product Business. As such, the Directors take the view that the Medical Device Business will likely be operating in a favorable business environment and is expected to generate substantial revenue when it commences business. The development and working capital of the Medical Device Business will be financed by funds from the Placing. It is not expected that Medical Device Business will require any substantial external borrowings. Its financial position is expected to be healthy. Once it commences business and generates revenue, its financial position will be further strengthened.

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LETTER FROM THE BOARD

LISTING RULES IMPLICATIONS

Major transaction of CCT Tech

The Capital Reorganisation (including the Resolution) is subject to approval by the Shareholders at the SGM. As no Shareholder has a material interest in the Capital Reorganisation, no Shareholder is required to abstain from voting on the resolution(s) to approve the Capital Reorganisation (including the Resolution) at the SGM.

The Transactions constitute a major transaction for the Company under the Listing Rules. The entering into of the S&P Agreement, the Transactions, the allotment and the issue of the Redeemable CPS and the allotment and issue of the Conversion Shares upon conversion of the Redeemable CPS and the other transactions contemplated thereunder are subject to the approval by the Shareholders at the SGM. Neither the Vendor nor the Target Company will nominate any person to become a Director or a CCT Telecom Director upon Completion. As such, the Transactions will not constitute a connected transaction for the Company under Rule 14A.13(1)(b)(i) of the Listing Rules. To the best of the Directors’ knowledge, information and belief, having made all reasonable enquires, the Vendor, the Target Company, and their respective associates do not hold any CCT Tech Existing Shares as at the Latest Practicable Date.

Although Mr. Mak Shiu Tong, Clement is a controlling shareholder of CCT Telecom, and through which he is also a controlling shareholder of the Company, he has no material interest in the Transactions. Mr. Mak’s interest in the Transactions is no different from that of other shareholders of the Company. As such, the Directors are of the view that Mr. Mak is not required to abstain from voting at the SGM to approve the Transactions. The interest of the Directors in the CCT Tech Existing Shares and the interest of the Directors in shares of CCT Telecom as at the Latest Practicable Date has been disclosed in the table and note to such table respectively set out in the section headed “Shareholding Structure of the Company” above. Except for the above, neither the Directors nor the CCT Telecom Directors have information about the interest of the public shareholders which are common shareholders of both the Company and CCT Telecom. However, based on the declarations of directors’ interest and substantial shareholders’ interest under Part XV of the SFO, the Directors and the CCT Telecom Directors confirm that other than Mr. Mak and the corporations controlled by him, there is no substantial shareholder of the Company which is also a substantial shareholder of CCT Telecom. As no Shareholder has a material interest in the Transactions, no Shareholder is required to abstain from voting at the resolution(s) to approve the S&P Agreement, the Transactions, the allotment and issue of the Redeemable CPS, the allotment and issue of the Conversion Shares upon conversion of the Redeemable CPS and the other transactions contemplated thereunder at the SGM.

In respect of the Transactions, Samsung Securities (Asia) Limited has been appointed as the financial adviser of CCT Telecom and the Company.

As the completion of each of the Placing Agreement and the S&P Agreement is subject to fulfillment of a number of conditions precedent, each of the Placing and the Transactions may or may not proceed. The Shareholders and the CCT Telecom Shareholders and potential investors of the Company and CCT Telecom should exercise caution in dealing in the securities of the Company and CCT Telecom respectively.

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LETTER FROM THE BOARD

SGM

A notice convening the SGM to be held at 2208, 22/F., St. George’s Building, 2 Ice House Street, Central, Hong Kong on Friday, 24 December 2010 at 10:30 a.m. is set out on pages 168 to 176 of this circular. At the SGM, a special resolution and an ordinary resolution will be proposed and, if thought fit, passed to approve the proposed Capital Reorganisation including the creation of a new class of the Redeemable CPS of the Company, the S&P Agreement, the Transactions, the allotment and issue of the Redeemable CPS and the allotment and issue of the Conversion Shares arising from the conversion of the Redeemable CPS.

A form of proxy for use by the Shareholders at the SGM is enclosed herein. Whether or not you intend to attend and vote at the SGM in person, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return it to the branch share registrar and transfer office of the Company in Hong Kong, Tricor Tengis Limited at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as practicable but in any event, not later than 48 hours before the time appointed for holding the SGM or any adjournment thereof (as the case may be). Such form of proxy for use at the SGM is also published on the websites of the Stock Exchange (www.hkexnews.hk) and the Company (www.cct-tech.com.hk). Completion and return of the form of proxy will not preclude you from attending and voting at the SGM or any adjournment thereof (as the case may be) in person should you so wish.

Pursuant to Rule 13.39(4) of the Listing Rules, voting at the SGM will be conducted by way of poll. The chairman of the SGM will therefore demand a poll on each of the resolutions put forward at the SGM pursuant to bye-law 70 of the bye-laws of the Company. As no Shareholder has a material interest in the Capital Reorganisation, no Shareholder is required to abstain from voting in respect of the special resolution to approve the Capital Reorganisation at the SGM. In addition, as at the Latest Practicable Date, as no Shareholder has a material interest in the Transactions, no Shareholder is also required to abstain from voting on the resolution(s) to approve, amongst others, the S&P Agreement, the Transactions and the other transactions contemplated thereunder at the SGM. An announcement on the poll voting results of the SGM will be published on the websites of the Stock Exchange (www.hkexnews.hk) and the Company (www.cct-tech.com.hk) after the SGM.

RECOMMENDATION

The Directors are of the view that the terms of the S&P Agreement and the Transactions are on normal commercial terms, and are fair and reasonable so far as the Shareholders are concerned, and are in the interest of the Shareholders as a whole. As the Capital Reorganisation is proposed to facilitate the issue of the Redeemable CPS and the Conversion Shares pursuant to the S&P Agreement, the Board is also of the view that the proposed Capital Reorganisation is fair and reasonable and is in the interest of the Shareholders as a whole. Accordingly, the Directors recommend the Shareholders to vote in favour of the special resolution proposed at the SGM to approve the Capital Reorganisation and also recommend the Shareholders to vote in favour of the ordinary resolution proposed at the SGM to approve the S&P Agreement, the Transactions, the allotment and issue of the Redeemable CPS and the allotment and issue of the Conversion Shares arising from the conversion of the Redeemable CPS.

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LETTER FROM THE BOARD

ADDITIONAL INFORMATION

Your attention is drawn to further information contained in the appendices and the notice of the SGM, which form part of this circular.

Yours faithfully,

For and on behalf of the Board of CCT TECH INTERNATIONAL LIMITED Mak Shiu Tong, Clement Chairman

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. FINANCIAL INFORMATION OF THE GROUP

The financial information of the Group (i) for the six months ended 30 June 2010 is disclosed on pages 10 to 23 of the interim report of the Company for the six months ended 30 June 2010 published on 24 August 2010; (ii) for the year ended 31 December 2009 is disclosed on pages 38 to 93 of the annual report of the Company for the year ended 31 December 2009 published on 20 April 2010; (iii) for the year ended 31 December 2008 is disclosed on pages 38 to 97 of the annual report of the Company for the year ended 31 December 2008 published on 21 April 2009; and (iv) for the year ended 31 December 2007 is disclosed on pages 49 to 113 of the annual report of the Company for the year ended 31 December 2007 published on 14 April 2008.

All these financial statements have been published on the website of the Stock Exchange (www.hkexnews.hk) and the website of the Company (www.cct-tech.com.hk).

2. MANAGEMENT DISCUSSION AND ANALYSIS OF THE GROUP

(a) Management discussion and analysis of the Group for the year ended 31 December 2007

During 2007, the Group was principally engaged in the manufacturing and sale of telecom and electronic products which accounted for 100% of the turnover of the Group.

Turnover of the Group in 2007 amounted to HK$3,343 million which represented a decrease of approximately 13.3% as compared to the corresponding financial year of 2006. The decrease in turnover was caused mainly by slowdown of the US economy, reduction of average selling prices of products and delay of certain shipments due to shortage of labour in the Group’s Guangdong factories.

The Group reported a loss of HK$201 million in 2007, as compared to a profit of HK$100 million in 2006. The loss for year 2007 was mainly due to the decrease of turnover and gross margin attributable to a combination of factors including the weakening of the US economy, reduction of average selling prices, high material prices, shortage of labour and rise in wages for workers in the Group’s Guangdong factories, and appreciation of Renminbi.

Capital structure and gearing ratio

The Group’s gearing ratio, calculated on the basis of the Group’s total borrowings over total capital employed (equity plus total borrowings), increased from 14.5% as at 31 December 2006 to approximately 17.3% as at 31 December 2007 as a result of additional bank loans raised to finance capital expenditure and working capital of the Group’s manufacturing operations. After taking into account the cash on hand, the Group did not have any net borrowings and in fact had a positive net cash balance (net of borrowings) of approximately HK$341 million.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The Group’s outstanding bank borrowings amounted to approximately HK$220 million as at 31 December 2007 (31 December 2006: HK$200 million), of which HK$31 million was repayable within the second year. The balance of HK$189 million was arranged on a short-term basis for ordinary business operations and was repayable within one year. As at 31 December 2007, there was no finance lease payable as the finance lease payable brought forward from 2006 had been repaid.

As at 31 December 2007, the maturity profile of the bank and other borrowings of the Group falling due within one year and in the second to the fifth year amounted to HK$189 million and HK$31 million, respectively (31 December 2006: HK$172 million and HK$29 million, respectively). There was no material effect of seasonality on the Group’s borrowing requirements.

Liquidity and financial resources

The current ratio of the Group as at 31 December 2007 was maintained at a healthy level of 119.6% (31 December 2006: 130.4%). Although the Group incurred a loss in 2007, the Group’s cash balance increased from HK$553 million as at 31 December 2006 to HK$561 million as at 31 December 2007, of which HK$85 million (31 December 2006: HK$83 million) was pledged for general banking facilities. Almost all of the Group’s cash was placed on deposits with licensed banks in Hong Kong. The strong cash balance plus the strong cash flow generated from the Group’s operations and funds available from the bank facilities provided sufficient cash resources to the Group to cover all its cash requirements, including working capital and capital expenditure needs.

Capital commitments

As at 31 December 2007, the outstanding capital commitment contracted by the Group but not yet provided for in the accounts amounted to approximately HK$16 million (31 December 2006: HK$33 million), which was mainly related to the capital expenditure in relation to the Group’s production facilities in the PRC. The capital commitment would be funded partly by internal resources and partly by bank borrowings.

Treasury management

The Group employs a conservative approach to cash management and risk control. To achieve better risk control and efficient fund management, the Group’s treasury activities are centralised.

During 2007, the Group’s receipts were mainly denominated in US dollar, with some in Hong Kong dollar and the Euro. Payments were mainly made in Hong Kong dollar, US dollar and Renminbi and some made in Euro. Cash was generally placed in short-term deposits denominated in Hong Kong dollar and US dollar. The Group’s borrowings were principally made on a floating rate basis.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

interest rates remained at low level. In terms of foreign exchange exposures, the Group is principally exposed to two major currencies, namely the US dollar in terms of receipts and the Renminbi in terms of the production costs (including mainly wages and overheads) in the PRC. For US dollar exposure, since the Hong Kong dollar remains pegged to the US dollar, the exchange fluctuation is not expected to be significant. In addition, as most of the Group’s purchases are also made in US dollars, which are to be paid out of the Group’s sales receipts in US dollars, the management considers that the foreign exchange exposure risk for the US dollar is not material.

For Renminbi exposure, as the wages and overheads of the Group’s factories in the PRC are paid in Renminbi, the Group’s production costs in the PRC will rise due to appreciation of Renminbi. The Group will continue to explore ways and methods to hedge further appreciation of Renminbi but the Group could not find any effective way to hedge RMB appreciation in 2007.

Acquisitions and disposals of material subsidiaries and associates

The Group did not acquire or dispose of any material subsidiaries and associates during 2007.

Significant investment

The Group did not hold any significant investment as at 31 December 2007 (31 December 2006: Nil).

Pledge of assets

As at 31 December 2007, certain of the Group’s assets with net book value of HK$497 million (31 December 2006: HK$516 million) and time deposits of approximately HK$85 million (31 December 2006: HK$83 million) were pledged to secure general banking facilities granted to the Group.

Contingent liabilities

As at 31 December 2007, corporate guarantees of HK$892 million (31 December 2006: HK$754 million) were given by the Company to banks in connection with facilities granted to subsidiaries of the Company, of which approximately HK$322 million (31 December 2006: HK$327 million) were utilised.

Employees and remuneration policy

The total number of employees of the Group as at 31 December 2007 was 12,919 (31 December 2006: 14,380). Remuneration packages are normally reviewed on an annual basis. Apart from salary payments, there are other staff benefits including provident fund, medical insurance and performance related bonus. Share options may also be granted to eligible employees and persons of the Group. At 31 December 2007, there were no outstanding share options (31 December 2006: Nil) granted by the Company.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(b) Management discussion and analysis of the Group for the year ended 31 December 2008

During 2008, the Group continued to focus on the manufacturing and sale of telecom and electronic products as its core business which accounted for 100% of the turnover of the Group.

Turnover of the Group in 2008 amounted to HK$2,758 million which represented a decrease of approximately 17.5% as compared to the corresponding period in 2007. The drop in the turnover of the Group was primarily due to the contraction of global consumption as affected by the financial tsunami.

During 2008, the Group’s largest single customer in the U.S. had discontinued its retail telephony activities in North America (the “ Discontinuation ”). As a result of the Discontinuation, the loss of the Group in 2008, including the exceptional costs and charges of HK$126 million associated with the Discontinuation, was approximately HK$317 million, represented an increase of 57.7% as compared to a loss of HK$201 million in the previous financial year of 2007. The exceptional costs and charges mainly represented impairment loss on certain under-utilized fixed assets and intangible assets due to the Discontinuation and the restructuring costs relating to the business with the US Customer. Excluding the exceptional costs and charges associated with the Discontinuation, the Group reported an operation loss before taxation of approximately HK$189 million in 2008, same as 2007. The operating loss (excluding the exceptional costs and charges) of the Group’s business was due to the decrease in sales volume and high production costs especially in the first half of 2008.

The loss of the Group before the exceptional costs and charges in the second half of 2008 was approximately HK$68 million, representing a decrease in loss of approximately HK$55 million or 44.7% as compared to the loss of HK$123 million in the first half of 2008. The significant improvement in the operating result in the second half signaled a positive sign of the Group’s efforts in reviving its manufacturing business.

Capital structure and gearing ratio

The Group’s gearing ratio, calculated on the basis of the Group’s total borrowings over total capital employed (equity plus total borrowings), increased from 17.3% as at 31 December 2007 to approximately 26.5% as at 31 December 2008 as a result of new bank loans raised by the Group and the decreased in equity due to the loss of 2008. Although the gearing ratio increased, it was still maintained at a low level. After taking into account the cash on hand, the Group did not have any net borrowings and in fact had a positive net cash balance (net of borrowings) of approximately HK$276 million.

As at 31 December 2008, the maturity profile of the bank and other borrowings of the Group falling due within one year amounted to HK$265 million (31 December 2007: HK$189 million and HK$31 million respectively). All the Group’s bank borrowings were borrowed to finance the ordinary business of the Group. There was no material effect of seasonality on the Group’s borrowing requirements.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Liquidity and financial resources

The current ratio of the Group changed from 119.6% as at 31 December 2007 to 103.9% as at 31 December 2008, reflecting a healthy liquidity position during the financial turmoil. The slight decreased in the current ratio was partly due to the re-classification of certain bank borrowings to current liability.

Although the Group incurred substantial loss in 2008 (most of which was attributable to non-cash loss), the Group’s cash balance was only slightly reduced from HK$561 million as at 31 December 2007 to HK$541 million as at 31 December 2008, of which HK$86 million (31 December 2007: HK$85 million) was pledged for general banking facilities. Almost all of the Group’s cash was placed on deposits with licensed banks in Hong Kong.

In view of the Group’s level of cash and bank balances, fund generated internally from operations and the unutilized banking facilities available, the Group had sufficient resources to meet its debt repayment and finance its operations during the financial turmoil.

Capital commitments

As at 31 December 2008, the capital commitment of the Group was approximately HK$2 million (31 December 2007: HK$16 million). The capital commitment would be funded partly by internal resources and partly by bank borrowings.

Treasury management

The Group employs a conservative approach to cash management and risk control. To achieve better risk control and efficient fund management, the Group’s treasury activities are centralised.

During 2008, the Group’s receipts were denominated mainly in US dollar, with some in Hong Kong dollar and the Euro. Payments were made mainly in Hong Kong dollar, US dollar and Renminbi and some made in Euro. Cash was generally placed in short-term deposits denominated in Hong Kong dollar and US dollar. The Group’s borrowings were principally made on a floating rate basis.

The objective of the Group’s treasury policies is to minimize risks and exposures due to the fluctuations in foreign currency exchange rates and interest rates. The Group did not have any significant interest rate risk in 2008 as both the borrowings of the Group and the interest rates remained at low levels. In terms of foreign exchange exposures, the Group is principally exposed to two major currencies, namely the US dollar in terms of receipts and the Renminbi in terms of the production costs (including mainly wages and overheads) in the PRC. For US dollar exposure, since the Hong Kong dollar remains pegged to the US dollar, the exchange fluctuation is not expected to be significant. In addition, as most of the Group’s purchases are also made in US dollars, which are to be paid out of the Group’s sales receipts in US dollars, the management considers that the foreign exchange exposure risk for the US dollar is not material.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

For Renminbi exposure, as the wages and overheads of the Group’s factories in the PRC are paid in Renminbi, the Group’s production costs will rise due to appreciation of Renminbi. The Group will continue to explore ways and methods to hedge future appreciation of Renminbi and will only consider entering into any forward contracts at appropriate costs and pricing.

Acquisition and disposals of material subsidiaries and associates

The Group did not acquire or dispose of any material subsidiaries and associates during 2008.

Significant investment

The Group did not hold any significant investment as at 31 December 2008 (31 December 2007: Nil).

Pledge of assets

As at 31 December 2008, certain of the Group’s assets with net book value of HK$475 million (31 December 2007: HK$497 million) and time deposits of approximately HK$86 million (31 December 2007: HK$85 million) were pledged to secure general banking facilities granted to the Group.

Contingent liabilities

As at 31 December 2008, corporate guarantees of HK$960 million (31 December 2007: HK$892 million) were given by the Company to banks in connection with facilities granted to subsidiaries of the Company, of which approximately HK$305 million (31 December 2007: HK$322 million) were utilised.

Employees and remuneration policy

The total number of employees of the Group as at 31 December 2008 was 7,892 (31 December 2007: 12,919). Remuneration packages are normally reviewed on an annual basis. Apart from salary payments, there are other staff benefits including provident fund, medical insurance and performance related bonus. Share options may also be granted to eligible employees and persons of the Group. At 31 December 2008, there were no outstanding share options (31 December 2007: Nil) issued by the Company.

(c) Management discussion and analysis of the Group for the year ended 31 December 2009

During 2009, the Group was principally engaged in the manufacturing and sale of telecom and electronic products as its core business which accounted for 100% of the turnover of the Group.

Turnover in 2009 amounted to HK$1,446 million which represented a decrease of approximately 47.6% as compared to the corresponding period in 2008. The drop in turnover of the Group was primarily caused by the Discontinuation and the weak global consumer market.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Despite the fall in revenue, the loss of the Group in 2009 was narrowed to HK$19 million which represented a decrease of 94.0% as compared to a loss of HK$317 million in the previous financial year of 2008.

Capital structure and gearing ratio

The Group’s gearing ratio slightly decreased to approximately 25.3% as at 31 December 2009 (31 December 2008: 26.5%) as a result of net repayments of the bank borrowings during 2009. After taking into account the cash on hand, the Group did not have any net borrowings.

The Group’s outstanding bank borrowings decreased by 8.3% to approximately HK$243 million as at 31 December 2009. The maturity profile of the Group’s borrowings falling due within one year and in the second to the fifth year amounted to HK$214 million and HK$29 million respectively (31 December 2008: HK$265 million that all falling due within one year). All the Group’s bank borrowings were borrowed to finance the ordinary business of the Group. There was no material effect of seasonality on the Group’s borrowing requirements.

Liquidity and financial resources

The Group financial position remained healthy and strong. The current ratio of the Group improved to 114.4% as at 31 December 2009 from 103.9% as at 31 December 2008. The Group’s cash balance was HK$411 million as at 31 December 2009, decreased by HK$130 million, due mainly to net cash outflow to finance operations during 2009. Out of the cash balance, approximately HK$62 million (31 December 2008: HK$86 million) was pledged for general banking facilities. Almost all the Group’s cash was placed on deposits with licensed banks in Hong Kong.

In view of the Group’s cash position, funds generated from the operations and the unutilized banking facilities available, the Group maintained in a sound financial position and had sufficient resources to finance its operations even under the uncertain business environment.

Capital commitments

As at 31 December 2009, capital commitment of the Group amounted to approximately HK$4 million (31 December 2008: HK$2 million). The capital commitment would be funded partly by internal resources and partly by bank borrowings.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Treasury management

The Group employs a conservative approach to cash management and risk control. To achieve better risk control and efficient fund management, the Group’s treasury activities are centralised.

During 2009, the Group’s receipts were mainly denominated in US dollar, with some in Hong Kong dollar and the Euro. Payments were mainly made in Hong Kong dollar, US dollar and Renminbi and some made in Euro. Cash was generally placed in short-term deposits denominated in Hong Kong dollar and US dollar. The Group’s borrowings were principally made on floating rate basis.

In terms of foreign exchange exposures, the Group is principally exposed to two major currencies, namely the US dollar in terms of receipts and the Renminbi in terms of the production costs (including workers’ wages and overheads) in the PRC. For US dollar exposure, since the Hong Kong dollar remains pegged to the US dollar, the exchange fluctuation is not expected to be significant. In addition, as a large portion of the Group’s purchases are also made in US dollars, which are to be paid out of the Group’s sales receipts in US dollars, the management considers that the foreign exchange exposure risk for the US dollar is not material.

For Renminbi exposure, as wages and overheads in the Group’s factories in the PRC are paid in Renminbi, the Group’s production costs will rise due to the possible further appreciation of Renminbi. Despite call from the US for faster appreciation of Renminbi against the US dollar, the Group believes that the PRC government will only allow Renminbi to appreciate against the US dollar modestly in 2010 and in the future years in order not to cause too much damage to the Chinese economy.

Acquisition and disposals of material subsidiaries and associates

The Group did not acquire or dispose of any material subsidiaries and associates during 2009.

Significant investment

The Group did not hold any significant investment as at 31 December 2009 (31 December 2008: Nil).

Pledge of assets

As at 31 December 2009, certain of the Group’s assets with net book value of HK$461 million (31 December 2008: HK$475 million) and time deposits of approximately HK$62 million (31 December 2008: HK$86 million) were pledged to secure general banking facilities granted to the Group.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Contingent liabilities

The Group did not have any significant contingent liabilities as at 31 December 2009.

Employees and remuneration policy

The total number of employees of the Group as at 31 December 2009 was 5,108 (31 December 2008: 7,892). The Group’s remuneration policy is built on the principle of equitable, motivating, performance-oriented and market-competitive remuneration package to employees. Remuneration packages are normally reviewed on an annual basis. Apart from salary payments, other staff benefits include provident fund contributions, medical insurance coverage and performance based bonuses. Share options may also be granted to eligible employees and persons of the Group. At 31 December 2009, there were outstanding share options of approximately 600,000,000 (31 December 2008: Nil).

(d) Management discussion and analysis of the Group for the half year ended 30 June 2010

During the first half year of 2010, the Group was principally engaged in the manufacturing and sale of telecom and electronic products mainly on ODM basis as its core business which accounted for 100% of the turnover of the Group.

Turnover in the first half year of 2010 amounted to HK$698 million which represented a increase of approximately 12.6% as compared to the corresponding period in 2009. The increase in turnover of the Group was primarily due to the growth of the Group’s ODM business in European market.

The loss of the Group in the first half year of 2010 was narrowed to HK$4 million which represented a decrease of 84.6% as compared to a loss of HK$26 million in the previous corresponding period of 2009.

Capital structure and gearing ratio

The Group’s gearing ratio increased to approximately 32.5% as at 30 June 2010 (31 December 2009: 25.3%) as a result of net increased of the bank borrowings during the first half of 2010. After taking into account the cash on hand, the Group did not have any net borrowings.

The Group’s outstanding bank borrowings increased by 41.2% to approximately HK$343 million as at 30 June 2010 (31 December 2009: HK$243 million). As at 30 June 2010, the maturity profile of the Group’s borrowings falling due within one year, in the second to the fifth year and in the sixth to the tenth year amounted to HK$192 million, HK$96 million and HK$55 million respectively (31 December 2009: HK$214 million, HK$29 million and nil respectively). All the Group’s bank borrowings were borrowed to finance the ordinary business of the Group. There was no material effect of seasonality on the Group’s borrowing requirements.

– 79 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Liquidity and financial resources

The Group financial position remained healthy and strong. The current ratio of the Group improved to 133.2% as at 30 June 2010 from 114.4% as at 31 December 2009. Among the total cash balance of HK$509 million, approximately HK$82 million (31 December 2009: HK$62 million) was pledged for general banking facilities.

Capital commitments

As at 30 June 2010, capital commitment of the Group amounted to approximately HK$2 million (31 December 2009: HK$4 million). The capital commitment would be funded partly by internal resources and partly by bank borrowings.

Treasury management

The Group employs a conservative approach to cash management and risk control. To achieve better risk control and efficient fund management, the Group’s treasury activities are centralised.

During the first half year of 2010, the Group’s receipts were mainly denominated in US dollar, with some in Hong Kong dollar and the Euro. Payments were mainly made in Hong Kong dollar, US dollar and Renminbi and some made in Euro. Cash was generally placed in short-term deposits and medium-term deposits denominated in Hong Kong dollar and US dollar. As at 30 June 2010, the Group’s borrowings were mainly denominated in Hong Kong dollar and US dollar. As at 30 June 2010, the Group’s borrowings were principally made on a floating rate basis.

The objective of the Group’s treasury policies is to minimise risks and exposures due to the fluctuations in foreign currency exchange rates and interest rates. The Group did not have any significant interest rate risk in the first half of 2010 as the interest rates remained at extremely low level. In terms of foreign exchange exposures, the Group is principally exposed to two major currencies, namely the US dollar in terms of receipts and the Renminbi in terms of the production costs (including workers’ wages and overhead) in the PRC. For US dollar exposure, since the Hong Kong dollar remains pegged to the US dollar, the exchange fluctuation is not expected to be significant. In addition, as a large portion of the Group’s purchases are also made in US dollar, which are to be paid out of the Group’s sales receipts in US dollar, the management considers that the foreign exchange exposure risk for the US dollar is not material.

For Renminbi exposure, as wages and overhead in the Group’s factories in the PRC are paid in Renminbi, the Group’s production costs will rise due to the possible further appreciation of Renminbi. Despite call from the US for faster appreciation of Renminbi against the US dollar, the Group believes that the PRC government will only allow Renminbi to appreciate against the US dollar modestly in 2010 and in the future years in order not to cause too much damage to the Chinese economy.

– 80 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Acquisition and disposals of material subsidiaries and associates

The Group did not acquire or dispose of any material subsidiaries and associates during the first half year of 2010.

Significant investment

The Group did not hold any significant investment as at 30 June 2010 (31 December 2009: Nil).

Pledge of assets

As at 30 June 2010, certain of the Group’s assets with net book value of HK$456 million (31 December 2009: HK$461 million) and time deposits of approximately HK$82 million (31 December 2009: HK$62 million) were pledged to secure general banking facilities granted to the Group.

Contingent liabilities

As at 30 June 2010, the Group did not have any significant contingent liabilities.

Employees and remuneration policy

The total number of employees of the Group as at 30 June 2010 was 5,281 (31 December 2009: 5,108). The Group’s remuneration policy is built on principle of equality, motivating, performance oriented and market-competitive remuneration package to employees. Remuneration packages are normally reviewed on an annual basis. Apart from salary payments, other staff benefits include provident fund contributions, medical insurance coverage and performance related bonuses. Share options may also be granted to eligible employees and persons of the Group. As at 30 June 2010, there were outstanding share options of approximately 600,000,000 (31 December 2009: 600,000,000).

– 81 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

3. MANAGEMENT DISCUSSION AND ANALYSIS OF THE TARGET GROUP

(a) Management discussion and analysis of the Target Group for the year ended 31 December 2007

During 2007, the principal activity of InnoMed was investment holding and that of Shanghai Ying Sheng was scientific and medical research and development. Each member of the Target Group has not conducted any commercial business activities during 2007. The Target Group did not have revenue and its expenses were not material. The assets and liabilities of the Target Group were not material.

Revenue

Each member of the Target Group has not commenced commercial business activities during 2007. Therefore, the Target Group did not have any revenue in 2007.

Operating expenses

The Target Group incurred HK$603,000 expenses representing administrative expenses during 2007. The Target Group did not have any cost of sales and selling expenses in 2007.

Capital structure and gearing ratio

There were no other changes in capital structure of the Target Group as at 31 December 2007. Other than the amount due to a shareholder, the Target Group did not have any borrowings as at 31 December 2007.

Liquidity and financial resources

As at 31 December 2007, the Target Group’s net current liabilities were HK$1,758,000. The Target Group had cash and bank balance of HK$965,000 as at 31 December 2007.

Capital commitments

The Target Group did not have significant capital commitment as at 31 December 2007.

Treasury management

During 2007, each member of the Target Group has not conducted any business activities and the Target Group did not have significant foreign currency receipts or payments. The Target Group did not have significant foreign exchange exposure. In 2007, the Target Group did not have any interest bearing borrowings and therefore there was no interest rates exposure to the Target Group.

– 82 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Acquisition and disposals of material subsidiaries and associates

The Target Group did not acquire or dispose of any material subsidiaries and associates during 2007.

Significant investment

The Target Group did not hold any significant investment of the Target Group as at 31 December 2007.

Pledge of assets

As at 31 December 2007, the Target Group did not have any assets pledged for any banking facilities.

Contingent liabilities

As at 31 December 2007, the Target Group did not have any contingent liabilities.

(b) Management discussion and analysis of the Target Group for the year ended 31 December 2008

During 2008, the principal activity of InnoMed was investment holding and that of Shanghai Ying Sheng and Shanghai Ying Zhong was scientific and medical research and development. Each member of the Target Group has not conducted any commercial business activities during 2008. The Target Group did not have revenue and its expenses were not material. The assets and liabilities of the Target Group were not material.

Revenue

Each member of the Target Group has not commenced commercial business activities during 2008. Therefore, the Target Group did not have any revenue in 2008.

Operating expenses

The Target Group incurred HK$697,000 (2007: HK$603,000) expenses representing administrative expenses and other expenses during 2008. The Target Group did not have any cost of sales and selling expenses in 2008.

Capital structure and gearing ratio

There were no other changes in capital structure of the Target Group as at 31 December 2008. Other than the amount due to a shareholder, the Target Group did not have any borrowings as at 31 December 2008.

– 83 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Liquidity and financial resources

As at 31 December 2008, the Target Group’s net current liabilities were HK$2,262,000 (31 December 2007: HK$1,758,000). The Target Group had cash and bank balance of HK$876,000 as at 31 December 2008 (31 December 2007: HK$965,000).

Capital commitments

The Target Group did not have significant capital commitment as at 31 December 2008.

Treasury management

During 2008, each member of the Target Group has not conducted any business activities and the Target Group did not have significant foreign currency receipts or payments. The Target Group did not have significant foreign exchange exposure. In 2008, the Target Group did not have any interest bearing borrowings and therefore there was no interest rates exposure to the Target Group.

Acquisition and disposals of material subsidiaries and associates

The Target Group did not acquire or dispose of any material subsidiaries and associates during 2008.

Significant investment

The Target Group did not hold any significant investment as at 31 December 2008.

Pledge of assets

As at 31 December 2008, the Target Group did not have any assets pledged for any banking facilities.

Contingent liabilities

As at 31 December 2008, the Target Group did not have any contingent liabilities.

(c) Management discussion and analysis of the Target Group for the year ended 31 December 2009

During 2009, the principal activity of InnoMed was investment holding and that of Shanghai Ying Sheng and Shanghai Ying Zhong was scientific and medical research and development. Each member of the Target Group has not conducted any commercial business activities during 2009. The Target Group did not have revenue and its expenses were not material. The assets and liabilities of the Target Group were not material.

– 84 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Revenue

Each member of the Target Group has not commenced commercial business activities during 2009. Therefore, the Target Group did not have any revenue in 2009.

Operating expenses

The Target Group incurred HK$4,040,000 (2008: HK$697,000) expenses representing administrative expenses and other expenses during 2009. The Target Group did not have any cost of sales and selling expenses in 2009.

Capital structure and gearing ratio

There were no other changes in capital structure of the Target Group as at 31 December 2009. Other than the amount due to a shareholder, the Target Group did not have any borrowings as at 31 December 2009.

Liquidity and financial resources

As at 31 December 2009, the Target Group’s net current liabilities were HK$7,047,000 (31 December 2008: HK$2,262,000). The Target Group had cash and bank balance of HK$4,368,000 as at 31 December 2009 (31 December 2008: HK$876,000).

Capital commitments

The Target Group did not have significant capital commitment as at 31 December 2009.

Treasury management

During 2009, each member of the Target Group has not conducted any business activities and the Target Group did not have significant foreign currency receipts or payments. The Target Group did not have significant foreign exchange exposure. In 2009, the Target Group did not have any interest bearing borrowings and therefore there was no interest rates exposure to the Target Group.

Acquisition and disposal of material subsidiaries and associates

The Target Group did not acquire or dispose of any material subsidiaries and associates during 2009.

Significant investment

The Target Group did not hold any significant investment as at 31 December 2009.

Pledge of assets

As at 31 December 2009, the Target Group did not have any assets pledged for any banking facilities.

– 85 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Contingent liabilities

As at 31 December 2009, the Target Group did not have any contingent liabilities.

(d) Management discussion and analysis of the Target Group for the half year ended 30 June 2010

During the first half of 2010, the principal activity of InnoMed was investment holding and that of Shanghai Ying Sheng and Shanghai Ying Zhong was scientific and medical research and development. Each member of the Target Group has not conducted any commercial business activities during the six months ended 30 June 2010. The Target Group did not have revenue and its expenses were not material. The assets and liabilities of the Target Group were not material.

Revenue

Each member of the Target Group has not commenced commercial business activities during the six months ended 30 June 2010. Therefore, the Target Group did not have any revenue in the first half year of 2010.

Operating expenses

The Target Group incurred HK$1,113,000 (2009: HK$4,040,000) expenses representing administrative expenses and other expenses during the first half year of 2010. The Target Group did not have any cost of sales and selling expenses in the first half year of 2010.

Capital structure and gearing ratio

There were no other changes in capital structure of the Target Group as at 30 June 2010. Other than the amount due to a shareholder, the Target Group did not have any borrowings as at 30 June 2010.

Liquidity and financial resources

As at 30 June 2010, the Target Group’s net current liabilities were HK$7,625,000 (31 December 2009: HK$7,047,000). The Target Group had cash and bank balance of HK$2,896,000 as at 30 June 2010 (31 December 2009: HK$4,368,000).

Capital commitments

The Target Group did not have significant capital commitment as at 30 June 2010.

Treasury management

During the first half year of 2010, each member of the Target Group has not conducted any material business activities and the Target Group did not have significant foreign currency receipts or payments. The Target Group did not have significant foreign exchange exposure. In the first half year of 2010, the Target Group did not have any interest bearing borrowings and therefore there was no interest rates exposure to the Target Group.

– 86 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Acquisition and disposal of material subsidiaries and associates

The Target Group did not acquire or dispose of any material subsidiaries and associates during the first half year of 2010.

Significant investment

The Target Group did not hold any significant investment as at 30 June 2010.

Pledge of assets

As at 30 June 2010, the Target Group did not have any assets pledged for any banking facilities.

Contingent liabilities

As at 30 June 2010, the Target Group did not have any contingent liabilities.

4. STATEMENT OF INDEBTEDNESS

As at the close of business on 31 October 2010 (being the latest practicable date for ascertaining information regarding this indebtedness statement), the Enlarged Group had outstanding borrowings of approximately HK$412 million. The borrowings comprised secured bank loans of approximately HK$294 million, unsecured bank loans of approximately HK$117 million and obligations under finance lease contracts of approximately HK$1 million. The Enlarged Group’s borrowings were secured by (i) the fixed charges over certain leasehold land and buildings and investment properties held by the Enlarged Group with aggregate net book values of approximately HK$454 million as at 31 October 2010; and (ii) certain fixed deposits of the Enlarged Group of approximately HK$82 million as at 31 October 2010.

Save as aforesaid, and apart from intra-group liabilities, the Enlarged Group did not have any bank loans, bank overdrafts and liabilities under acceptances (other than normal trade bills) or other similar indebtedness, debentures or other loan capital, mortgages, charges, finance leases or hire purchase commitments, guarantees or other material contingent liabilities outstanding at the close of business on 31 October 2010.

For the purpose of the above indebtedness statement, foreign currency amounts have been translated into Hong Kong dollars at the rates of the exchange prevailing at the close of business on 31 October 2010.

5. WORKING CAPITAL

The Directors, after due and careful enquiry and consideration, are of the opinion that the Enlarged Group will, after taking into account the effect of the Placing and the Transactions, and the present internal financial resources available to the Enlarged Group including proceeds from the Placing, internally generated cash flows and the existing banking and credit facilities available, have sufficient working capital for its present requirements in next 12 months from the date of this circular in the absence of unforeseen material circumstances.

– 87 –

ACCOUNTANTS’ REPORTS OF THE TARGET GROUP

APPENDIX II

A. ACCOUNTANTS’ REPORT OF THE TARGET COMPANY

The following is the text of an accountants’ report on MIV Scientific Holdings Ltd., prepared for the sole purpose of inclusion in this circular, received from the independent reporting accountants, T. O. Yip & Co. Limited, Certified Public Accountants, Hong Kong.

T. O. Yip & Co. Limited Certified Public Accountants 5/F., Effectual Building, 16 Hennessy Road, Wanchai, Hong Kong

30 November 2010

The Directors of CCT Telecom Holdings Limited and

The Directors of CCT Tech International Limited

Dear Sirs,

We set below our report on the financial information (“ Financial Information ”) relating to MIV Scientific Holdings Ltd. (the “ Target Company ”) for the three years ended 31 December 2007, 2008 and 2009 as well as the six months period from 1 January 2010 to 30 June 2010 (the “ Relevant Periods ”) for inclusion in the circular of CCT Telecom Holdings Limited (“ CCT Telecom ”) and CCT Tech International Limited (“ CCT Tech ”) dated 30 November 2010 (the “ Circular ”) in connection with the proposed conditional acquisition of the entire issued capital in the Target Company and the subscription of the new shares in the Target Company (the “ Transactions ”), pursuant to the conditional sale, purchase and subscription agreement dated 13 October 2010, as amended and supplemented by the supplemental agreement dated 19 October 2010 and the second supplemental agreement dated 22 October 2010 (together as the “ S&P Agreement ”), entered into amongst the Target Company, MIV Therapeutics, Inc (the “ Vendor ”) and CCT Tech. Upon completion of the S&P Agreement, CCT Tech will own the then entire issued capital of the Target Company.

The Target Company was incorporated as a limited liability company under the International Business Companies Act of the Territory of British Virgin Islands on 15 September 2010 and was authorised to issue a maximum of 50,000 shares of no par value each and 1 ordinary share was issued on the date of its incorporation. The principal business of the Target Company is investment holding and it has not yet commenced any business activity.

On 6 October 2010, the Vendor transferred its intellectual property (the “ Patents ”) which relates to cardiovascular medical devices and coronary stents to the Target Company in exchange of the issue of 79 new ordinary shares by the Target Company to the Vendor. Patent applications have been filed in various countries for these Patents but none of which have been issued or granted yet. The fair market value of the Patents is approximately US$80 million (equivalent to HK$624 million) and has been accounted for in the books of the Target Company in October 2010.

– 88 –

ACCOUNTANTS’ REPORTS OF THE TARGET GROUP

APPENDIX II

The Target Company entered into the conditional share purchase agreement dated 12 October 2010 and the supplemental agreement dated 19 October 2010 (together as the “ InnoMed Share Purchase Agreement ”), with InnoMed Scientific Limited (the “ InnoMed Owner ”) to purchase the entire issued capital of InnoMed Scientific Incorporation Limited (“ InnoMed ”), which in turn owns 100% equity interest in InnoMed Scientific Incorporation (Shanghai) Ltd. (“ Shanghai Ying Zhong ”). On 11 October 2010, InnoMed entered into the equity transfer agreement (the “ Shanghai Ying Sheng Equity Transfer Agreement ”) with Mr. Tiefeng Hu (“ Mr. Hu ”) to purchase all the equity interest in Shanghai InnoMed Technologies Incorporation Limited (“ Shanghai Ying Sheng ”). Upon completion of the InnoMed Share Purchase Agreement and the Shanghai Ying Sheng Equity Transfer Agreement, the Target Company will beneficially own the then total issued capital of InnoMed, which in turn owns or will own the entire equity interest in Shanghai Ying Zhong and Shanghai Ying Sheng. The Shanghai Ying Sheng Equity Transfer Agreement will be completed before the Completion and the InnoMed Share Purchase Agreement will be completed simultaneously with the Completion.

As the Target Company was incorporated after the Relevant Periods and hence the Financial Information of the Target Company for the Relevant Periods is equal to zero and thus has not been shown on this report.

Yours faithfully, T.O. Yip & Co. Limited Certified Public Accountants Hong Kong

– 89 –

ACCOUNTANTS’ REPORTS OF THE TARGET GROUP

APPENDIX II

B. ACCOUNTANTS’ REPORT OF THE EXISTING INNOMED GROUP

The following is the text of an accountants’ report on InnoMed Scientific Incorporation Limited, prepared for the sole purpose of inclusion in this circular, received from the independent reporting accountants, T. O. Yip & Co. Limited, Certified Public Accountants, Hong Kong.

T. O. Yip & Co. Limited Certified Public Accountants 5/F., Effectual Building, 16 Hennessy Road, Wanchai, Hong Kong 30 November 2010

The Directors of CCT Telecom Holdings Limited and

The Directors of CCT Tech International Limited

Dear Sirs,

We set below our report on the consolidated financial information (“ Financial Information ”) relating to InnoMed Scientific Incorporation Limited (“ InnoMed ”) and its subsidiary (hereinafter collectively referred to the “ Existing InnoMed Group ”) for the three years ended 31 December 2007, 2008 and 2009 as well as the six months period from 1 January 2010 to 30 June 2010 (the “ Relevant Periods ”) for inclusion in the circular of CCT Telecom Holdings Limited (“ CCT Telecom ”) and CCT Tech International Limited (“ CCT Tech ”) dated 30 November 2010 (the “ Circular ”) in connection with the proposed conditional acquisition of the entire issued capital in MIV Scientific Holdings Ltd. (the “ Target Company ”) and the subscription of the new shares in the Target Company (the “ Transactions ”), pursuant to the conditional sale, purchase and subscription agreement dated 13 October 2010, as amended and supplemented by the supplemental agreement dated 19 October 2010 and the second supplemental agreement dated 22 October 2010 (together as the “ S&P Agreement ”), entered into amongst the Target Company, MIV Therapeutics, Inc and CCT Tech. Upon completion of the S&P Agreement, CCT Tech will own the then entire issued capital of the Target Company.

InnoMed was incorporated in Hong Kong on 10 March 2005, the entire issued share capital in which is owned by InnoMed Scientific Limited (the “ InnoMed Owner ”) as at the date of this accountants’ report. As at the date of this accountants’ report, the Existing InnoMed Group has conducted scientific and medical research and development activities but has not commenced any commercial operations or generated any revenue. The Existing InnoMed Group will be engaged a medical devices business, which will involve sale of cardiovascular medical devices.

The Target Company entered into the conditional share purchase agreement dated 12 October 2010 and the supplemental agreement 19 October 2010 (together as the “ InnoMed Share Purchase Agreement ”), with the InnoMed Owner to purchase the entire issued capital of InnoMed, which in turn owns 100% equity interest in InnoMed Scientific Incorporation (Shanghai) Ltd. (“ Shanghai Ying Zhong ”). On 11 October 2010, InnoMed entered into the equity transfer agreement (the “ Shanghai Ying

– 90 –

ACCOUNTANTS’ REPORTS OF THE TARGET GROUP

APPENDIX II

Sheng Equity Transfer Agreement ”) with Mr. Tiefeng Hu (“ Mr. Hu ”) to purchase all the equity interest in Shanghai InnoMed Technologies Incorporation Limited (“ Shanghai Ying Sheng ”). Upon completion of the InnoMed Share Purchase Agreement and the Shanghai Ying Sheng Equity Transfer Agreement, the Target Company will beneficially own the then total issued capital of InnoMed, which in turn owns or will own the entire equity interest in Shanghai Ying Zhong and Shanghai Ying Sheng. The Shanghai Ying Sheng Equity Transfer Agreement will be completed before the Completion and the InnoMed Share Purchase Agreement will be completed simultaneously with the Completion.

InnoMed has the following subsidiary:

	Place of
	incorporation/
	registration and	Date of	Registered	Principal
Name	operation	incorporation	capital	activities
Shanghai Ying	PRC	27 November	Registered	Scientific and
Zhong#*		2008	Capital of	medical
			US$4,000,000	research and
				development

Directly held by InnoMed
The financial statements of Shanghai Ying Zhong for the period ended 31 December 2009 was audited by Shanghai Jing Long Certified Public Accountants Co., Ltd. (上海經隆會計師事務所有限公司), Certified Public Accountants registered in PRC.

For the purpose of this report, we have undertaken an independent audit of the financial statements of the respective companies in the Existing InnoMed Group for the Relevant Periods in accordance with Hong Kong Standards on Auditing issued by Hong Kong Institute of Certified Public Accountants (“ HKICPA ”).

For the purposes of this report, the directors of InnoMed have prepared consolidated financial statements of the Existing InnoMed Group and financial statements of InnoMed (the “ Underlying Financial Statements ”) for the Relevant Periods in accordance with the Hong Kong Financial Reporting Standards issued by HKICPA. We have examined the Underlying Financial Statements for the Relevant Periods in accordance with the Auditing Guideline 3.340 “Prospectuses and the Reporting Accountant” promulgated by HKICPA.

The Underlying Financial Statements are the responsibility of the directors of InnoMed who approved their issue. It is also the responsibility of the directors of InnoMed to compile the Financial Information set out in this report from the Underlying Financial Statements. The directors of InnoMed are responsible for the contents of the Financial Information, based on our examination, and to report our opinion to you.

In our opinion, the Financial Information gives, for the purpose of this report, a true and fair view of the state of the affairs of InnoMed and of the Existing InnoMed Group as at 31 December 2007, 2008 and 2009 as well as 30 June 2010 and the Existing InnoMed Group’s results and cash flows for the Relevant Periods.

– 91 –

ACCOUNTANTS’ REPORTS OF THE TARGET GROUP

APPENDIX II

The comparative consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows of the Existing InnoMed Group for the six months ended 30 June 2009 together with the notes thereon which was prepared by the directors of InnoMed solely for the purpose of this report. We have reviewed the 30 June 2009 financial information in accordance with Hong Kong Standard on Review Engagements 2400 “Engagements to Review Financial Statements” issued by the HKICPA. Our review of the 30 June 2009 financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and apply analytical and other review procedures. A Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly we do not express an audit opinion on the 30 June 2009 financial information. Based on our review, nothing has come to our attention that causes us to believe that the 30 June 2009 financial information is not prepared, in all materials respects, in accordance with the accounting policies consistent with those used in the preparation of the financial information which conform with Hong Kong Financial Reporting Standards.

I. FINANCIAL INFORMATION

Consolidated Income Statements

		Year	Year	Year	6 months	6 months
		ended	ended	ended	ended	ended
		31/12/2007	31/12/2008	31/12/2009	30/6/2009	30/6/2010
	Notes	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
					(Unaudited)
REVENUE		–	–	–	–	–
Other income and gains		53	1	3	1	2
Administrative expenses		(7)	(1)	(166)	(43)	(90)
Other expenses		–	–	(76)	(70)	(2)
PROFIT/(LOSS) BEFORE TAX	4	46	–	(239)	(112)	(90)
Income tax expense	6	–	–	–	–	–
PROFIT/(LOSS) FOR THE
YEAR/PERIOD
ATTRIBUTABLE TO
OWNERS OF THE PARENT		46	–	(239)	(112)	(90)

– 92 –

ACCOUNTANTS’ REPORTS OF THE TARGET GROUP

APPENDIX II

Consolidated Statements of Comprehensive Income

	Year	Year	Year	6 months	6 months
	ended	ended	ended	ended	ended
	31/12/2007	31/12/2008	31/12/2009	30/6/2009	30/6/2010
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
				(Unaudited)
PROFIT/(LOSS) FOR THE
YEAR/PERIOD	46	–	(239)	(112)	(90)
Other comprehensive (loss)/income,
net of tax
Exchange differences on translation of
foreign operations	–	–	(1)	–	26
TOTAL COMPREHENSIVE
INCOME/(LOSS) FOR THE
YEAR/PERIOD ATTRIBUTABLE TO
OWNERS OF THE PARENT	46	–	(240)	(112)	(64)

– 93 –

ACCOUNTANTS’ REPORTS OF THE TARGET GROUP

APPENDIX II

Consolidated Statements of Financial Position

		31/12/2007	31/12/2008	31/12/2009	30/6/2010
	Notes	HK$’000	HK$’000	HK$’000	HK$’000
ASSETS
CURRENT ASSETS
Other receivables	8	869	869	5,131	5,724
Cash and cash equivalents	9	803	839	3,870	2,523
Total current assets		1,672	1,708	9,001	8,247
TOTAL ASSETS		1,672	1,708	9,001	8,247
EQUITY AND LIABILITIES
EQUITY ATTRIBUTABLE TO OWNERS
OF THE PARENT
Issued capital	12	–	–	–	–
Reserves	13(a)	46	46	(194)	(258)
Total equity		46	46	(194)	(258)
CURRENT LIABILITIES
Other payables	10	–	–	563	558
Amount due to a shareholder	11	1,626	1,662	8,632	7,947
Total current liabilities		1,626	1,662	9,195	8,505
TOTAL LIABILITIES		1,626	1,662	9,195	8,505
TOTAL EQUITY AND LIABILITIES		1,672	1,708	9,001	8,247
NET CURRENT ASSETS/(LIABILITIES)		46	46	(194)	(258)
TOTAL ASSETS LESS CURRENT
LIABILITIES		46	46	(194)	(258)

– 94 –

ACCOUNTANTS’ REPORTS OF THE TARGET GROUP

APPENDIX II

Consolidated Statements of Cash Flows

Year ended 31/12/2007 HK$’000 46 (53)	Year ended 31/12/2008 HK$’000 – (1)	Year ended 31/12/2009 6 months ended 30/6/2009 HK$’000 HK$’000 (Unaudited) (239) (112) (3) (1)	Year ended 31/12/2009 6 months ended 30/6/2009 HK$’000 HK$’000 (Unaudited) (239) (112) (3) (1)	6 months ended 30/6/2010 HK$’000 (90) (2) (92) (593) (5) (685) (1,375) 2 (1,373) (1,373) 3,870 26 2,523 2,523 – 2,523
(7) (869) – 1,626 750 53 803 803 – –	(1) – – 36 35 1 36 36 803 –	(242) (4,262) 563 6,970 3,029 3 3,032 3,032 839 (1)	(113) (1,293) 554 5,915 5,063 1 5,064 5,064 839 –	(92 (593 (5 (685
				(1,375 2
				(1,373
				(1,373 3,870 26
803	839	3,870	5,903
803 –	839 –	3,870 –	5,903 –	2,523 –
803	839	3,870	5,903

– 95 –

ACCOUNTANTS’ REPORTS OF THE TARGET GROUP

APPENDIX II

Consolidated Statements of Changes in Equity

For the three years ended 31 December 2007, 2008 and 2009 and the six months ended 30 June 2009 and 2010.

Attributable to owners of the parent Issued capital Exchange fluctuation reserve Retained profits/ (accumulated) losses Total HK$’000 HK$’000 HK$’000 HK$’000 – – – – – – 46 46 – – 46 46 – – – – – – 46 46 – (1) (239) (240) – (1) (193) (194) – 26 (90) (64) – 25 (283) (258) – – 46 46 – – (112) (112) – – (66) (66)	Attributable to owners of the parent Issued capital Exchange fluctuation reserve Retained profits/ (accumulated) losses Total HK$’000 HK$’000 HK$’000 HK$’000 – – – – – – 46 46 – – 46 46 – – – – – – 46 46 – (1) (239) (240) – (1) (193) (194) – 26 (90) (64) – 25 (283) (258) – – 46 46 – – (112) (112) – – (66) (66)	Attributable to owners of the parent Issued capital Exchange fluctuation reserve Retained profits/ (accumulated) losses Total HK$’000 HK$’000 HK$’000 HK$’000 – – – – – – 46 46 – – 46 46 – – – – – – 46 46 – (1) (239) (240) – (1) (193) (194) – 26 (90) (64) – 25 (283) (258) – – 46 46 – – (112) (112) – – (66) (66)	Attributable to owners of the parent Issued capital Exchange fluctuation reserve Retained profits/ (accumulated) losses Total HK$’000 HK$’000 HK$’000 HK$’000 – – – – – – 46 46 – – 46 46 – – – – – – 46 46 – (1) (239) (240) – (1) (193) (194) – 26 (90) (64) – 25 (283) (258) – – 46 46 – – (112) (112) – – (66) (66)
– – – – – –	– – – (1) (1) 26	46 – 46 (239) (193) (90)	46 –
			46 (240
			(194 (64
–	25	(283)
– –	– –	46 (112)	46 (112
–	–	(66)

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INNOMED SCIENTIFIC INCORPORATION LIMITED Statements of Financial Position

31/12/2007 31/12/2008 31/12/2009 30/6/2010 Notes HK$000 HK$000 HK$000 HK$000

ASSETS

–	–	6,278	6,278 6,278 869 865 1,734 8,012 – 40 40 7,972 7,972 7,972 8,012 (6,238) 40
– 869 803 1,672	– 869 839 1,708	6,278 869 1,556 2,425	6,278
			869 865
			1,734
1,672	1,708	8,703
– 46 46 1,626 1,626	– 46 46 1,662 1,662	– 46 46 8,657 8,657	– 40
			40
			7,972
			7,972
1,626 1,672 46 46	1,662 1,708 46 46	8,657 8,703 (6,232) 46

– 97 –

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II. NOTES TO FINANCIAL INFORMATION

1. CORPORATE INFORMATION

InnoMed was incorporated in the Hong Kong with limited liability on 10 March 2005. Its principal activity is investment holding.

During the Relevant Periods, the InnoMed and its subsidiary (collectively referred to as the “ Existing InnoMed Group ”) have commenced scientific and medical research and development and will be engaged in medical devices business.

2.1 BASIS OF PREPARATION

These financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards (“ HKFRSs ”) (which include all Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (“ HKASs ”) and Interpretations) issued by the Hong Kong Institute of Certified Public Accountants, accounting principles generally accepted in Hong Kong and the disclosure requirements of the Hong Kong Companies Ordinance. They have been prepared under the historical cost convention. These financial statements are presented in Hong Kong dollars (“ HK$ ”) and all values are rounded to the nearest thousand except when otherwise indicated.

For the purposes of preparing and presenting the Financial Information for the Relevant Periods, the Existing InnoMed Group has consistently applied all of the new and revised HKASs, HKFRSs, amendments and the related interpretations (“ HK (IFRIC”) – Int ”) (hereinafter collectively referred to as the “ new HKFRSs ”) which are effective for the Relevant Periods.

Basis of consolidation

The Financial Information incorporates the financial statements of InnoMed and its subsidiary. Control is achieved where InnoMed has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The acquisition of subsidiary during the Relevant Periods has been accounted for using the purchase method of accounting. This method involves allocating the cost of the business combinations to the fair value of the identifiable assets acquired, and liabilities and contingent liabilities assumed at the date of acquisition. The cost of the acquisition is measured at the aggregate of the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition.

Where necessary, adjustments are made to the financial statements of subsidiary to bring their accounting policies into line with those used by other members of the Existing InnoMed Group. All income, expenses and unrealised gains and losses resulting from intercompany transactions and intercompany balances within the Existing InnoMed Group are eliminated on consolidation in full.

Non-controlling interests in a subsidiary represents the interests of outside shareholders not held by the Existing InnoMed Group in the results and net assets of InnoMed’s subsidiary.

2.2 APPLICATION OF HONG KONG FINANCIAL REPORTING STANDARDS

At the date of authorisation of the Financial Information, certain new and amended HKFRSs have been published but are not yet effective, and have not been adopted early by the Existing InnoMed Group.

The directors of InnoMed anticipate that all of the pronouncement will be adopted in the Existing InnoMed Group’s accounting policy for the first period beginning after the effective date of the pronouncement. Information on new and amended HKFRSs that are expected to have an impact on the Existing InnoMed Group’s accounting policies is provided below. Certain other new and amended HKFRSs have been issued but are not expected to have a material impact on the Existing InnoMed Group’s Financial Information and the 30 June 2009 financial information.

(a) HKFRS 9 Financial instruments

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based on the entity’s business model for managing the financial assets and the contractual cash flows characteristics for the financial assets. Fair value gains and losses will be recognised in profit or loss except for those on certain equity investments which will be presented in other comprehensive income. The directors of InnoMed are currently assessing the possible impact of the new standard on the Existing InnoMed Group’s results and financial position in the first year of application.

(b) Annual improvements 2010

The HKICPA has issued “Improvements to Hong Kong Financial Reporting Standards 2010”. Most of the amendments become effective for annual periods beginning on or after 1 January 2011. The directors of InnoMed are currently assessing the possible impacts of the amendments on the Existing InnoMed Group’s results and financial position in the first year of application.

2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Subsidiary

A subsidiary is an entity whose financial and operating policies InnoMed controls, directly or indirectly, so as to obtain benefits from its activities.

The results of subsidiary are included in InnoMed’s income statement to the extent of dividends received and receivable. InnoMed’s interests in a subsidiary are stated at cost less any impairment losses.

Goodwill

Goodwill arising on the acquisition of subsidiary represents the excess of the cost of the business combination over the Existing InnoMed Group’s interest in the net fair value of the acquirees’ identifiable assets acquired, and liabilities and contingent liabilities assumed as at the date of acquisition.

Goodwill arising on acquisition is recognised in the consolidated statement of financial position as an asset, initially measured at cost and subsequently at cost less any accumulated impairment losses.

The carrying amount of goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. The Existing InnoMed Group performs its annual impairment test of goodwill as at 31 December.

For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Existing InnoMed Group’s cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Existing InnoMed Group are assigned to those units or groups of units.

Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of cash-generating units) to which the goodwill relates. Where the recoverable amount of the cash-generating unit (group of cash-generating units) is less than the carrying amount, an impairment loss is recognised. An impairment loss recognised for goodwill is not reversed in a subsequent period.

Where goodwill forms part of a cash-generating unit (group of cash-generating units) and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.

Impairment of non-financial assets other than goodwill

Where an indication of impairment exists, or when annual impairment testing for an asset is required (other than inventories and goodwill), the asset’s recoverable amount is estimated. An asset’s recoverable amount is the higher of the asset’s or cash-generating unit’s value in use and its fair value less costs to sell, and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case the recoverable amount is determined for the cash-generating unit to which the asset belongs.

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An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is charged to the income statement in the period in which it arises in those expense categories consistent with the function of the impaired asset.

An assessment is made at the end of each reporting period as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such an indication exists, the recoverable amount is estimated. A previously recognised impairment loss of an asset other than goodwill is reversed only if there has been a change in the estimates used to determine the recoverable amount of that asset, but not to an amount higher than the carrying amount that would have been determined (net of any depreciation/amortisation) had no impairment loss been recognised for the asset in prior years. A reversal of such impairment loss is credited to the income statement in the period in which it arises.

Investments and other financial assets

Initial recognition and measurement

Financial assets within the scope of HKAS 39 are classified as loans and receivables. When financial assets are recognised initially, they are measured at fair value, plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs.

The Existing InnoMed Group’s financial assets include cash and bank balances and other receivables.

Subsequent measurement

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such assets are subsequently measured at amortised cost using the effective interest rate method less any allowance for impairment. Amortised cost is calculated taking into account any discount or premium on acquisition and includes fees or costs that are an integral part of the effective interest. The effective interest rate amortisation is included in finance income in the income statement. The loss arising from impairment is recognised in the income statement in other expenses.

Impairment of financial assets

The Existing InnoMed Group assesses at the end of each reporting period whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred “ loss event ”) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that a debtor or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and observable data indicating that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

Financial assets carried at amortised cost

For financial assets carried at amortised cost, the Existing InnoMed Group first assesses individually whether objective evidence of impairment exists for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Existing InnoMed Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment.

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APPENDIX II

future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate (i.e., the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced either directly or through the use of an allowance account. The amount of the impairment loss is recognised in the statement of comprehensive income. Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.

Loans and receivables together with any associated allowance are written off when there is no realistic prospect of future recovery.

If, in a subsequent period, the amount of the estimated impairment loss increase or decrease because of an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed by adjusting the allowance account. Any subsequent reversal of an impairment loss is recognised in the income statement, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date. If a future write-off is later recovered, the recovery is credited to finance costs in the income statement.

Derecognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when:

the rights to receive cash flows from the asset have expired; or
the Existing InnoMed Group has transferred its rights to receive cash flows from the asset, or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a “pass-through” arrangement; and either (a) the Existing InnoMed Group has transferred substantially all the risks and rewards of the asset, or (b) the Existing InnoMed Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Existing InnoMed Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Existing InnoMed Group’s continuing involvement in the asset. In that case, the Existing InnoMed Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Existing InnoMed Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Existing InnoMed Group could be required to repay.

Financial liabilities

Initial recognition and measurement

All financial liabilities are recognised initially at fair value and in the case of loans and borrowings, plus directly attributable transaction costs.

The Existing InnoMed Group’s financial liabilities include other payables and amount due to a shareholder.

Subsequent measurement

Loans and borrowings

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost, using the effective interest rate method unless the effect of discounting would be immaterial, in which case they are stated at cost. Gains and losses are recognised in the income statement when the liabilities are derecognised as well as through the effective interest rate method amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective interest rate amortisation is included in finance costs in the income statement.

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APPENDIX II

Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and a recognition of a new liability, and the difference between the respective carrying amounts is recognised in the income statement.

Income tax

Income tax comprises current and deferred tax. Income tax relating to items recognised outside profit or loss is recognised outside profit or loss, either in other comprehensive income or directly in equity.

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period, taking into consideration interpretations and practices prevailing in the countries in which the Existing InnoMed Group operates.

Deferred tax is provided, using the liability method, on all temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all taxable temporary differences, except:

where the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
in respect of taxable temporary differences associated with investments in subsidiary, associates and interest in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carryforward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carryforward of unused tax credits and unused tax losses can be utilised, except:

where the deferred tax asset relating to the deductible temporary differences arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
in respect of deductible temporary differences associated with investments in subsidiary, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at the end of the reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at the end of each reporting period and are recognised to the extent that it has become probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Foreign currencies

These financial statements are presented in Hong Kong dollars, which is InnoMed’s functional and presentation currency. Each entity in the Existing InnoMed Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Foreign currency transactions

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APPENDIX II

recorded by the entities in the Existing InnoMed Group are initially recorded using their respective functional currency rates ruling at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rates of exchange ruling at the end of the reporting period. All differences are taken to the income statement. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

The functional currencies of certain overseas subsidiary are currencies other than the Hong Kong dollar. At the end of the reporting period, the assets and liabilities of these entities are translated into the presentation currency of InnoMed at the exchange rates ruling the end of the reporting period and their income statements are translated into Hong Kong dollars at the weighted average exchange rates for the year. The resulting exchange differences are recognised in other comprehensive income and accumulated in a separate component of equity. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in the income statement.

For the purpose of the consolidated statement of cash flows, the cash flows of overseas subsidiary are translated into Hong Kong dollars at the exchange rates ruling at the dates of the cash flows. Frequently recurring cash flows of overseas subsidiary which arise throughout the year are translated into Hong Kong dollars at the weighted average exchange rates for the year.

Cash and cash equivalents

For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise cash on hand and demand deposits, and short term highly liquid investments which are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, and have a short maturity of generally within three months when acquired, less bank overdrafts which are repayable on demand and form an integral part of the Existing InnoMed Group’s cash management.

For the purpose of the statement of financial position, cash and cash equivalents comprise cash on hand and at banks, including term deposits, which are not restricted as to use.

Revenue recognition

Revenue is recognised when it is probable that the economic benefits will flow to the Existing InnoMed Group and when the revenue can be measured reliably. Interest income, on an accrual basis using the effective interest method by applying the rate that exactly discounts the estimated future cash receipts through the expected life of the financial instrument or a shorter period, when appropriate, to the net carrying amount of the financial asset.

Related parties

A party is considered to be related to the Existing InnoMed Group if:

(a) the party, directly or indirectly through one or more intermediaries, (i) controls, is controlled by, or is under common control with, the Existing InnoMed Group; (ii) has an interest in the Existing InnoMed Group that gives it significant influence over the Existing InnoMed Group; or (iii) has joint control over the Existing InnoMed Group;
(b) the party is an associate;
(c) the party is a jointly-controlled entity;
(d) the party is a member of the key management personnel of the Existing InnoMed Group or its parent;
(e) the party is a close member of the family of any individual referred to in (a) or (d);
(f) the party is an entity that is controlled, jointly controlled or significantly influenced by or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (d) or (e); or
(g) the party is a post-employment benefit plan for the benefit of the employees of the Existing InnoMed Group, or of any entity that is a related party of the Existing InnoMed Group.

– 103 –

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3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES

The preparation of the Existing InnoMed Group’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the end of the reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amounts of the assets or liabilities affected in the future.

Judgements

Management has made some judgements in the process of applying the Existing InnoMed Group’s accounting policies, and apart from those involving estimations, no significant effect on the amounts recognised in the financial statements.

Estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of reporting period, do not have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

4. PROFIT/(LOSS) BEFORE TAX

Profit/(loss) before tax is arrived at after charging:

	Year	Year	Year	6 months	6 months
	ended	ended	ended	ended	ended
	31/12/2007	31/12/2008	31/12/2009	30/6/2009	30/6/2010
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
				(Unaudited)
Employees benefits expenses (excluding
directors’ remuneration – note 5)	–	–	166	–	85

5. DIRECTORS’ REMUNERATION

Details of the remuneration paid by the Existing InnoMed Group to the directors during the Relevant Periods is as follows:-

Year
ended
31/12/2007
Year
ended
31/12/2008
Year
ended
31/12/2009
6 months
ended
30/6/2009
HK$’000
HK$’000
HK$’000
HK$’000
(Unaudited)
Fees
–
–
–
–
Other emoluments
–
–
–
–
–
–
–
–
The number of the directors whose remuneration fell within the following bands is as follows:
Year
ended
31/12/2007
Year
ended
31/12/2008
Year
ended
31/12/2009
6 months
ended
30/6/2009
(Unaudited)
Nil – HK$1,000,000
1
1
1
1

6 months
ended
30/6/2010
HK$’000
–
–

–

6 months
ended
30/6/2010
1

There was no arrangements under which a director waived or agreed to waive any remuneration during the Relevant Periods.

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APPENDIX II

6. INCOME TAX EXPENSE

No provision for Hong Kong profits tax has been made as InnoMed did not generate any assessable profit during the Relevant Periods. Taxes on profits assessable elsewhere have been calculated at the rates of tax prevailing in the countries in which the Existing InnoMed Group operates, based on existing legislation, interpretations and practices in respect thereof.

No provision for deferred taxation has been made as there are no temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the tax computation.

7. INTERESTS IN A SUBSIDIARY

					InnoMed	InnoMed
				31/12/2007	31/12/2008	31/12/2009		30/6/2010
				HK$000	HK$000		HK$000	HK$000
Unlisted	shares,	at	cost	–	–		6,278	6,278

In the opinion of the directors of InnoMed, the recoverable amount of the interests in a subsidiary is not less than the carrying amount reflected in the statements of financial position and no provision for impairment is required.

8. OTHER RECEIVABLES

The balances included the amount due from Mr. Hu for investment in Shanghai Ying Sheng of approximately HK$883,000 and amount due from Shanghai Ying Sheng of approximately HK$4,841,000 as at 30 June 2010.

9. CASH AND CASH EQUIVALENTS

				31/12/2007	31/12/2008	31/12/2009	30/6/2010
				HK$’000	HK$’000	HK$’000	HK$’000
Cash	and	bank	balances	803	839	3,870	2,523

At the end of each reporting period, the cash and bank balances of the Existing InnoMed Group denominated in Renminbi (“ RMB ”) are as follows:

				31/12/2007	31/12/2008	31/12/2009	30/6/2010
				HK$’000	HK$’000	HK$’000	HK$’000
Cash	and	bank	balances	–	–	2,313	1,658

The RMB is not freely convertible into other currencies, however, under Mainland China’s Foreign Exchange Control Regulations and Administration of Settlement, Sale and Payment of Foreign Exchange Regulations, the Existing InnoMed Group is permitted to exchange RMB for other currencies through banks authorised to conduct foreign exchange business.

Cash at banks earns interest at floating rates based on daily bank deposit rates. The bank balances and pledged deposits are deposited with creditworthy banks with no recent history of default.

10. OTHER PAYABLES

The balances included the amount due to Shanghai Ying Sheng of approximately HK$535,000 as at 30 June 2010 and other payables are non-interest-bearing.

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11. AMOUNT DUE TO A SHAREHOLDER

The amount is due to the InnoMed Owner and is unsecured, interest-free and has no fixed repayment terms. The amount will be assigned by the InnoMed Owner to the Target Company, upon completion of the InnoMed Share Purchase Agreement.

12. SHARE CAPITAL

Authorised: 10,000 shares at HK$ 1 each Issued and fully paid: 2 shares at HK$ 1 each	31/12/2007 HK$ 10,000 2	InnoMed 31/12/2008 31/12/2009 HK$ HK$ 10,000 10,000 2 2	30/6/2010 HK$ 10,000
			2

The InnoMed was incorporated with an authorised share capital of HK$10,000 divided into 10,000 ordinary shares of HK$1 each.

13. RESERVES

(a) The Existing InnoMed Group

The amount of the reserves and the movements therein for the Relevant Periods of the Existing InnoMed Group are presented in the consolidated statements of changes in equity.

(b) InnoMed

Balance as at 1 January 2007 Comprehensive income for the year Balance as at 31 December 2007 and 1 January 2008 Comprehensive income for the year Balance as at 31 December 2008 and 1 January 2009 Comprehensive income for the year Balance as at 31 December 2009 and 1 January 2010 Comprehensive loss for the period Balance as at 30 June 2010 Balance as at 1 January 2009 Comprehensive income for the period Balance as at 30 June 2009 (Unaudited)	Retained profits/ (accumulated loss) HK$000 – 46	Total HK$000 – 46
	46 – 46 – 46 (6)	46 –
		46 –
		46 (6
	40	40
	46 –	46 –
	46	46

– 106 –

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14. CONTINGENT LIABILITIES

The Existing InnoMed Group and InnoMed had no significant contingent liabilities at the end of each reporting period.

15. COMMITMENTS

The Existing InnoMed Group and InnoMed had no significant commitment at the end of each reporting period.

16. FINANCIAL INSTRUMENTS BY CATEGORY

All financial assets and liabilities of the Existing InnoMed Group and InnoMed as at 31 December 2007, 2008 and 2009 as well as 30 June 2010, are loans and receivables, and financial liabilities at amortised cost, respectively.

17. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Existing InnoMed Group’s principal financial instruments comprise cash and short term deposits. The main purpose of these financial instruments is to raise finance for the Existing InnoMed Group’s operations. The Existing InnoMed Group has various other financial assets and liabilities such as other receivables and other payables, which arise directly from its operations.

The main risks arising from the Existing InnoMed Group’s financial instruments are foreign currency risk, credit risk and liquidity risk. The board of directors reviews and agrees policies for managing each of these risks and they are summarised below.

Foreign currency risk

The Existing InnoMed Group has transactional currency exposures. Such exposures arise from sales or purchases by or expenditure of operating units in currencies other than the units’ functional currency. During the Relevant Periods, the Existing InnoMed Group did not use any financial instruments for hedging purposes.

The following table demonstrates the sensitivity at the end of the reporting date to a reasonably possible change in the RMB exchange rates, with all other variables held constant, of the Existing InnoMed Group’s profit/(loss) before tax (due to changes in the fair value of monetary assets and liabilities).

			Increase/(decrease) in	Increase/(decrease) in	profit/(loss) before	tax
			31/12/2007	31/12/2008	31/12/2009	30/6/2010
			HK$’000	HK$’000	HK$’000	HK$’000
If	HK$	strengthens against RMB by 0.96%	–	–	63	62
If	HK$	weakness against RMB by 0.96%	–	–	(63)	(62)

Credit risk

The credit risk of the Existing InnoMed Group’s financial assets, which comprise cash and cash equivalents and other receivables, arises from default of the counterparty, with a maximum exposure equal to the carrying amounts of these instruments.

There is no significant concentration of credit risk in relation to the Existing InnoMed Group’s financial assets, other than trade receivables.

Liquidity risk

The Existing InnoMed Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of shareholder’s loan. All the Existing InnoMed Group’s financial liabilities are payable within 1 year or on demand.

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Capital management

The Existing InnoMed Group manages its capital structure and makes adjustments to it in light of changes in economic conditions. To maintain or adjust the capital structure, the Existing InnoMed Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Existing InnoMed Group is not subject to any externally imposed capital requirements. No changes were made in the objectives, policies or processes for managing capital during the Relevant Periods. The gearing ratio is zero.

18. EVENTS AFTER THE RELEVANT PERIODS

On 11 October 2010, InnoMed entered into the Shanghai Ying Sheng Equity Transfer Agreement with Mr. Hu to purchase all the equity interest in Shanghai Ying Sheng.

On 12 October 2010, the Target Company entered into the InnoMed Share Purchase Agreement with the InnoMed Owner to purchase the entire issued capital of InnoMed.

Upon completion of the InnoMed Share Purchase Agreement and Shanghai Ying Sheng Equity Transfer Agreement, the Target Company will beneficially own the then total issued capital of InnoMed, which in turn owns or will own the entire equity interest in Shanghai Ying Zhong and Shanghai Ying Sheng.

Yours faithfully, T.O. Yip & Co. Limited Certified Public Accountants Hong Kong

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C. ACCOUNTANTS’ REPORT OF SHANGHAI YING SHENG

The following is the text of an accountants’ report on the Shanghai InnoMed Technologies Incorporation Limited, prepared for the sole purpose of inclusion in this circular, received from the independent reporting accountants, T. O. Yip & Co. Limited, Certified Public Accountants, Hong Kong.

T. O. Yip & Co. Limited Certified Public Accountants 5/F., Effectual Building, 16 Hennessy Road, Wanchai, Hong Kong 30 November 2010

The Directors of CCT Telecom Holdings Limited and

The Directors of CCT Tech International Limited

Dear Sirs,

We set below our report on the financial information (“ Financial Information ”) relating to Shanghai InnoMed Technologies Incorporation Limited (“ Shanghai Ying Sheng ”) for the three years ended 31 December 2007, 2008 and 2009 as well as the six months period from 1 January 2010 to 30 June 2010 (the “ Relevant Periods ”) for inclusion in the circular of CCT Telecom Holdings Limited (“ CCT Telecom ”) and CCT Tech International Limited (“ CCT Tech ”) dated 30 November 2010 (the “ Circular ”) in connection with the proposed conditional acquisition of the entire issued capital in MIV Scientific Holdings Ltd. (the “ Target Company ”) and the subscription of the new shares in the Target Company (the “ Transactions ”), pursuant to the conditional sale, purchase and subscription agreement dated 13 October 2010, as amended and supplemented by the supplemental agreement dated 19 October 2010 and the second supplemental agreement dated 22 October 2010 (together as the “ S&P Agreement ”), entered into amongst the Target Company, MIV Therapeutics, Inc and CCT Tech. Upon completion of the S&P Agreement, CCT Tech will own the then entire issued capital of the Target Company.

Shanghai Ying Sheng was established in the PRC on 26 December 2005, the entire equity interest in which is owned by Mr. Tiefeng Hu (“ Mr. Hu ”) as at the date of this report accountants’ report. As at the date of this accountants’ report, Shanghai Ying Sheng has conducted scientific and medical research and development activities but has not commenced any commercial operations or generated any revenue. Shanghai Ying Sheng will be engaged a medical devices business, which will involve production of cardiovascular medical devices.

The Target Company entered into the conditional share purchase agreement dated 12 October 2010 and the supplemental agreement 19 October 2010 (together as the “ InnoMed Share Purchase Agreement ”), with InnoMed Scientific Limited (the “ InnoMed Owner ”) to purchase the entire issued capital of InnoMed Scientific Incorporation Limited (“ InnoMed ”), which in turn owns 100% equity interest in InnoMed Scientific Incorporation (Shanghai) Ltd. (“ Shanghai Ying Zhong ”). On 11 October 2010, InnoMed entered into the equity transfer agreement (the “ Shanghai Ying Sheng

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Equity Transfer Agreement ”) with Mr. Hu to purchase all the equity interest in Shanghai Ying Sheng. Upon completion of the InnoMed Share Purchase Agreement and the Shanghai Ying Sheng Equity Transfer Agreement, the Target Company will beneficially own the then total issued capital of InnoMed, which in turn owns or will own the entire equity interest in Shanghai Ying Zhong and Shanghai Ying Sheng. The Shanghai Ying Sheng Equity Transfer Agreement will be completed before the Completion and the InnoMed Share Purchase Agreement will be completed simultaneously with the Completion.

The financial statements of Shanghai Ying Sheng for the years ended 31 December 2007, 2008 and 2009 were audited by Shanghai Hddy Certified Public Accountants Co., Ltd. (上海宏大東業會計師事務所有限公司) and Shanghai Pujiang Certified Public Accountants (上海浦江會計師事務所), Shanghai Jing Long Certified Public Accountants Co., Ltd. (上海經隆會計師事務所有限公司), respectively, Certified Public Accountants registered in PRC.

For the purpose of this report, we have undertaken an independent audit of the financial statements of Shanghai Ying Sheng for the Relevant Periods in accordance with Hong Kong Standards on Auditing issued by Hong Kong Institute of Certified Public Accountants (“ HKICPA ”).

For the purposes of this report, the directors of Shanghai Ying Sheng have prepared financial statements of Shanghai Ying Sheng (the “ Underlying Financial Statements ”) for the Relevant Periods in accordance with the Hong Kong Financial Reporting Standards issued by HKICPA. We have examined the Underlying Financial Statements for the Relevant Periods in accordance with the Auditing Guideline 3.340 “Prospectuses and the Reporting Accountant” promulgated by HKICPA.

The Underlying Financial Statements are the responsibility of the directors of Shanghai Ying Sheng who approved their issue. It is also the responsibility of the directors of Shanghai Ying Sheng to compile the Financial Information set out in this report from the Underlying Financial Statements. The directors of Shanghai Ying Sheng are responsible for the contents of the Financial Information, based on our examination, and to report our opinion to you.

In our opinion, the Financial Information gives, for the purpose of this report, a true and fair view of the state of the affairs of Shanghai Ying Sheng as at 31 December, 2007, 2008 and 2009 as well as 30 June 2010 and Shanghai Ying Sheng’s results and cash flows for the Relevant Periods.

The comparative income statement, statement of comprehensive income, statement of changes in equity and statement of cash flows of Shanghai Ying Sheng for the six months ended 30 June 2009 together with the notes thereon which was prepared by the directors of Shanghai Ying Sheng solely for the purpose of this report. We have reviewed the 30 June 2009 Financial information in accordance with Hong Kong Standard on Review Engagements 2400 “Engagements to Review Financial Statements” issued by the HKICPA. Our review of the 30 June 2009 Financial Information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and apply analytical and other review procedures. A Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly we do not express an audit opinion on the 30 June 2009 Financial information. Based on our review, nothing has come to our attention that causes us to believe that the 30 June 2009 financial information is not prepared, in all materials respects, in accordance with the accounting policies consistent with those used in the preparation of the financial information which conform with Hong Kong Financial Reporting Standards.

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I. FINANCIAL INFORMATION

Income Statements

		Year	Year	Year	6 months	6 months
		ended	ended	ended	ended	ended
	Notes	31/12/2007	31/12/2008	31/12/2009	30/6/2009	30/6/2010
		HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
					(Unaudited)
REVENUE	4	–	–	–	–	–
Other income and gains	4	113	113	557	126	264
Administrative expenses		(596)	(614)	(2,118)	(754)	(962)
Other expenses		–	(82)	(1,680)	(933)	(59)
LOSS BEFORE TAX	5	(483)	(583)	(3,241)	(1,561)	(757)
Income tax expense	7	–	–	–	–	–
LOSS FOR THE
YEAR/PERIOD		(483)	(583)	(3,241)	(1,561)	(757)

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Statements of Comprehensive Income

	Year	Year	Year	6 months	6 months
	ended	ended	ended	ended	ended
	31/12/2007	31/12/2008	31/12/2009	30/6/2009	30/6/2010
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
				(Unaudited)
LOSS FOR THE YEAR/PERIOD	(483)	(583)	(3,241)	(1,561)	(757)
Other comprehensive income, net of tax
Exchange differences on translation of
foreign operations	–	(17)	(17)	–	(16)
TOTAL COMPREHENSIVE LOSS FOR
THE YEAR/PERIOD	(483)	(600)	(3,258)	(1,561)	(773)

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Statements of Financial Position

31/12/2007 31/12/2008 31/12/2009 30/6/2010 Notes HK$’000 HK$’000 HK$’000 HK$’000

774	678	2,259	2,000 2,000 535 373 908 2,908 883 (5,367) (4,484) 7,392 7,392 7,392 2,908 (6,484) (4,484)
774 1,576 161 1,737	678 1,899 37 1,936	2,259 314 498 812	2,000
			535 373
			908
2,511	2,614	3,071
883 (1,030) (147) 2,658 2,658	883 (1,630) (747) 3,361 3,361	883 (4,594) (3,711) 6,782 6,782	883 (5,367
			(4,484
			7,392
			7,392
2,658 2,511 (921) (147)	3,361 2,614 (1,425) (747)	6,782 3,071 (5,970) (3,711)

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Statements of Cash Flows

Year ended 31/12/2007 HK$’000 (483) 138 (2)	Year ended 31/12/2008 HK$’000 (583) 189 (1)	Year ended 31/12/2009 6 months ended 30/6/2009 HK$’000 HK$’000 (Unaudited) (3,241) (1,561) 399 87 (1) –	Year ended 31/12/2009 6 months ended 30/6/2009 HK$’000 HK$’000 (Unaudited) (3,241) (1,561) 399 87 (1) –	6 months ended 30/6/2010 HK$’000 (757) 275 – (482) (221) 610 (93) – (93) (6) (6) – –
(347) (1,201) 2,022 474 2 476 (361) (361) – –	(395) (323) 703 (15) 1 (14) – – – –	(2,843) 1,585 3,421 2,163 1 2,164 (1,966) (1,966) 294 294	(1,474) 1,243 201 (30) – (30) (5) (5) – –	(482 (221 610
				(93 –
				(93
				(6
				(6
				–
				–

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NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at beginning of year/period Effect of foreign exchange rate changes CASH AND CASH EQUIVALENTS AT END OF YEAR/PERIOD ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS Cash and bank balances Non-pledged time deposits with original maturity of less than three months when acquired CASH AND CASH EQUIVALENTS AS STATED IN THE STATEMENT OF FINANCIAL POSITION AND THE STATEMENT OF CASH FLOWS	Year ended 31/12/2007 HK$’000 115 46 – 161 161 – 161	Year ended 31/12/2008 HK$’000 (14) 161 (110) 37 37 – 37	Year ended 31/12/2009 6 months ended 30/6/2009 HK$’000 HK$’000 (Unaudited) 492 (35) 37 37 (31) – 498 2 498 2 – – 498 2	6 months ended 30/6/2010 HK$’000 (99) 498 (26) 373 373 – 373

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Statements of Changes in Equity

For the three years ended 31 December 2007, 2008 and 2009 and the six months ended 30 June 2009 and 2010.

			Exchange
	Issued	Capital	fluctuation Accumulated
	capital	reserve	reserve	losses	Total
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Balance as at 1 January 2007	883	–	–	(547)	336
Comprehensive loss for the year	–	–	–	(483)	(483)
Balance as at 31 December 2007 and
1 January 2008	883	–	–	(1,030)	(147)
Comprehensive loss for the year	–	–	(17)	(583)	(600)
Balance as at 31 December 2008 and
1 January 2009	883	–	(17)	(1,613)	(747)
Capital contribution	–	294	–	–	294
Comprehensive loss for the year	–	–	(17)	(3,241)	(3,258)
Balance as at 31 December 2009 and
1 January 2010	883	294	(34)	(4,854)	(3,711)
Comprehensive loss for the period	–	–	(16)	(757)	(773)
Balance as at 30 June 2010	883	294	(50)	(5,611)	(4,484)
Balance as at 1 January 2009	883	–	(17)	(1,613)	(747)
Comprehensive loss for the period	–	–	–	(1,561)	(1,561)
Balance as at 30 June 2009 (Unaudited)	883	–	(17)	(3,174)	(2,308)

Note:

(1) The capital reserve mainly represents the capital contribution from shareholders in 2009.

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II. NOTES TO FINANCIAL INFORMATION

1. CORPORATE INFORMATION

Shanghai Ying Sheng was incorporated in the PRC with limited liability. The principal activity was scientific and medical research and development and will be engaged in medical devices business.

2.1 BASIS OF PREPARATION

For the purposes of preparing and presenting the Financial Information for the Relevant Periods, Shanghai Ying Sheng has consistently applied all of the new and revised HKASs, HKFRSs, amendments and the related interpretations (“ HK (IFRIC”) – Int ”) (hereinafter collectively referred to as the “ new HKFRSs ”) which are effective for the Relevant Periods.

2.2 APPLICATION OF HONG KONG FINANCIAL REPORTING STANDARDS

At the date of authorisation of the Financial Information, certain new and amended HKFRSs have been published but are not yet effective, and have not been adopted early by Shanghai Ying Sheng.

The directors of Shanghai Ying Sheng anticipate that all of the pronouncement will be adopted in Shanghai Ying Sheng’s accounting policy for the first period beginning after the effective date of the pronouncement. Information on new and amended HKFRSs that are expected to have an impact on Shanghai Ying Sheng’s accounting policies is provided below. Certain other new and amended HKFRSs have been issued but are not expected to have a material impact on Shanghai Ying Sheng’s Financial Information and the 30 June 2009 Corresponding Information.

(a) HKFRS 9 Financial instruments

The standard is effective for accounting periods beginning on or after 1 January 2013 and addresses the classification and measurement of financial assets. The new standard reduces the number of measurement categories of financial assets and all financial assets will be measured at either amortised cost on fair value based on the entity’s business model for managing the financial assets and the contractual cash flows characteristics for the financial assets. Fair value gains and losses will be recognised in profit or loss except for those on certain equity investments which will be presented in other comprehensive income. The directors of Shanghai Ying Sheng are currently assessing the possible impact of the new standard on Shanghai Ying Sheng’s results and financial position in the first year of application.

(b) Annual improvements 2010

The HKICPA has issued “Improvements to Hong Kong Financial Reporting Standards 2010”. Most of the amendments become effective for annual periods beginning on or after 1 January 2011. The directors of Shanghai Ying Sheng are currently assessing the possible impacts of the amendments on Shanghai Ying Sheng’s results and financial position in the first year of application.

2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Impairment of non-financial assets

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of the asset’s or cash-generating unit’s value in use and its fair value less costs to sell, and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case the recoverable amount is determined for the cash-generating unit to which the asset belongs. An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is charged to the income statement in the period in which it arises in those expense categories consistent with the function of the impaired asset.

Property, plant and equipment and depreciation

Property, plant and equipment are stated at cost less accumulated depreciation and any impairment losses. The cost of an item of property, plant and equipment comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Expenditure incurred after items of property, plant and equipment have been put into operation, such as repairs and maintenance, is normally charged to the income statement in the period in which it is incurred. In situations where the recognition criteria are satisfied, the expenditure for a major inspection is capitalised in the carrying amount of the asset as a replacement. Where significant parts of property, plant and equipment are required to be replaced at intervals, Shanghai Ying Sheng recognises such parts as individual assets with specific useful lives and depreciation.

Depreciation is calculated on the straight-line basis to write-off the cost of each item of property, plant and equipment to its residual value over its estimated useful life. The principal annual rate is 20%.

Where parts of an item of property, plant and equipment have different useful lives, the cost of that item is allocated on a reasonable basis among the parts and each part is depreciated separately.

Residual values, useful lives and the depreciation method are reviewed, and adjusted if appropriate, at lease at each of reporting date.

An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal or retirement recognised in the income statement in the year the asset is derecognised is the difference between the net sales proceeds and the carrying amount of the relevant asset.

Leases

Leases where substantially all the rewards and risks of ownership of assets remain with the lessor are accounted for as operating leases. Where Shanghai Ying Sheng is the lessor, assets leased by Shanghai Ying Sheng under operating leases are included in non-current assets and rentals receivable under the operating leases are credited to the income statement on the straight-line basis over the lease terms. Where Shanghai Ying Sheng is the lessee, rentals payable under the operating leases are charged to the income statement on the straight-line basis over the lease terms.

Investments and other financial assets

Initial recognition and measurement

Shanghai Ying Sheng’s financial assets include cash and bank balances and other receivables.

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Subsequent measurement

Loans and receivables

Impairment of financial assets

Shanghai Ying Sheng assesses at the end of each reporting period whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred “ loss event ”) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that a debtor or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and observable data indicating that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

Financial assets carried at amortised cost

For financial assets carried at amortised cost, Shanghai Ying Sheng first assesses individually whether objective evidence of impairment exists for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If Shanghai Ying Sheng determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate (i.e., the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced either directly or through the use of an allowance account. The amount of the impairment loss is recognised in the statement of comprehensive income. Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.

Loans and receivables together with any associated allowance are written off when there is no realistic prospect of future recovery.

Derecognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when:

the rights to receive cash flows from the asset have expired; or

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Shanghai Ying Sheng has transferred its rights to receive cash flows from the asset, or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a “pass-through” arrangement; and either (a) Shanghai Ying Sheng has transferred substantially all the risks and rewards of the asset, or (b) Shanghai Ying Sheng has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When Shanghai Ying Sheng has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of Shanghai Ying Sheng’s continuing involvement in the asset. In that case, Shanghai Ying Sheng also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Shanghai Ying Sheng has retained.

Financial liabilities

Initial recognition and measurement

All financial liabilities are recognised initially at fair value and in the case of loans and borrowings, plus directly attributable transaction costs.

Shanghai Ying Sheng ’s financial liabilities include other payables.

Subsequent measurement

Loans and borrowings

Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.

Income tax

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Deferred tax liabilities are recognised for all taxable temporary differences, except:

where the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
in respect of taxable temporary differences associated with investments in subsidiaries, associates and interest in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

where the deferred tax asset relating to the deductible temporary differences arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
in respect of deductible temporary differences associated with investments in subsidiaries, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

Other employee benefits

The employees of Shanghai Ying Sheng which operate in Mainland China are required to participate in a central pension scheme operated by the local municipal government. Shanghai Ying Sheng is required to contribute a percentage of the payroll costs to the central pension scheme. The contributions are charged to the income statement as they become payable in accordance with the rules of the central pension scheme.

Foreign currencies

The functional currency of Shanghai Ying Sheng is Renminbi (“ RMB ”). Foreign currency transactions recorded in Shanghai Ying Sheng are initially recorded using their respective functional currency rates ruling at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rates of exchange ruling at the end of the reporting period. All differences are taken to the income statement. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

At the end of the reporting period, the assets and liabilities are translated into the presentation currency of Shanghai Ying Sheng at the exchange rates ruling the end of the reporting period and their income statements are translated into Hong Kong dollars at the weighted average exchange rates for the year. The resulting exchange differences are recognised in other comprehensive income and accumulated in a separate component of equity. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in the income statement.

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Cash and cash equivalents

For the purpose of the statement of cash flows, cash and cash equivalents comprise cash on hand and demand deposits, and short term highly liquid investments which are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, and have a short maturity of generally within three months when acquired, less bank overdrafts which are repayable on demand and form an integral part of Shanghai Ying Sheng’s cash management.

For the purpose of the statement of financial position, cash and cash equivalents comprise cash on hand and at banks, including term deposits, which are not restricted as to use.

Revenue recognition

Revenue is recognised when it is probable that the economic benefits will flow to Shanghai Ying Sheng and when the revenue can be measured reliably. Interest income, on an accrual basis using the effective interest method by applying the rate that exactly discounts the estimated future cash receipts through the expected life of the financial instrument or a shorter period, when appropriate, to the net carrying amount of the financial asset.

Related parties

A party is considered to be related to Shanghai Ying Sheng if:

(a) the party, directly or indirectly through one or more intermediaries, (i) controls, is controlled by, or is under common control with, Shanghai Ying Sheng; (ii) has an interest in Shanghai Ying Sheng that gives it significant influence over Shanghai Ying Sheng; or (iii) has joint control over Shanghai Ying Sheng;
(b) the party is an associate;
(c) the party is a jointly-controlled entity;
(d) the party is a member of the key management personnel of Shanghai Ying Sheng or its parent;
(e) the party is a close member of the family of any individual referred to in (a) or (d);
(f) the party is an entity that is controlled, jointly controlled or significantly influenced by or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (d) or (e); or
(g) the party is a post-employment benefit plan for the benefit of the employees of Shanghai Ying Sheng, or of any entity that is a related party of Shanghai Ying Sheng.

3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES

The preparation of Shanghai Ying Sheng’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the end of the reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amounts of the assets or liabilities affected in the future.

Judgements

Management has made some judgements in the process of applying Shanghai Ying Sheng’s accounting policies, and apart from those involving estimations, no significant effect on the amounts recognised in the financial statements.

Estimation uncertainty

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4. REVENUE, OTHER INCOME AND GAINS

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

Year ended 31/12/2007 Year ended 31/12/2008 Year ended 31/12/2009 6 months ended 30/6/2009 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) Revenue – – – – Other income Interest income 2 1 1 – Sundry income 111 112 556 126 113 113 557 126	6 months ended 30/6/2010 HK$’000 – – 264
	264

5. LOSS BEFORE TAX

Loss before tax is arrived at after charging:

	Year	Year	Year	6 months	6 months
	ended	ended	ended	ended	ended
	31/12/2007	31/12/2008	31/12/2009	30/6/2009	30/6/2010
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
				(Unaudited)
Write-off of other receivables	–	83	1,373	–	59
Depreciation	138	189	399	87	275
Employees benefits expenses (excluding
directors’ remuneration – note 6)	–	–	421	197	168

6. DIRECTORS’ REMUNERATION

Details of the remuneration paid by Shanghai Ying Sheng to the directors during the Relevant Periods is as follows:-

Year ended 31/12/2007 Year ended 31/12/2008 Year ended 31/12/2009 6 months ended 30/6/2009 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) Fees – – – – Other emoluments – – – – – – – –	6 months ended 30/6/2010 HK$’000 – –
	–

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The number of the directors whose remuneration fell within the following bands is as follows:

			Year	Year	Year	6 months	6 months
			ended	ended	ended	ended	ended
			31/12/2007	31/12/2008	31/12/2009	30/6/2009	30/6/2010
						(Unaudited)
Nil	–	HK$1,000,000	1	1	1	1	1

There was no arrangements under which a director waived or agreed to waive any remuneration during the Relevant Periods.

7. INCOME TAX EXPENSE

No provision for profits tax has been made as Shanghai Ying Sheng did not generate any assessable profits during the Relevant Periods.

8. PROPERTY, PLANT AND EQUIPMENT

At 31 December 2006 and 1 January 2007 Cost Accumulated depreciation Net carrying amount At 1 January 2007, net of accumulated depreciation Additions Depreciation provided during the year At 31 December 2007, net of accumulated depreciation At 1 January 2008, net of accumulated depreciation Depreciation provided during the year Exchange differences At 31 December 2008, net of accumulated depreciation At 1 January 2009, net of accumulated depreciation Additions Depreciation provided during the year Exchange differences At 31 December 2009, net of accumulated depreciation	Furniture, office equipment and motor vehicles HK$’000 578 (27
	551
	551 361 (138
	774
	774 (189 93
	678
	678 1,966 (399 14
	2,259

– 124 –

ACCOUNTANTS’ REPORTS OF THE TARGET GROUP

APPENDIX II

At 1 January 2010, net of accumulated depreciation Additions Depreciation provided during the period Exchange differences At 30 June 2010, net of accumulated depreciation At 1 January 2009, net of accumulated depreciation Additions Depreciation provided during the period At 30 June 2009, net of accumulated depreciation (Unaudited)	Furniture, office equipment and motor vehicles HK$’000 2,259 6 (275 10
	2,000
	678 5 (87
	596

9. OTHER RECEIVABLES

The balances included the amount due from the Existing InnoMed Group of approximately HK$535,000 as at 30 June 2010. None of the reported balances is either past due or impaired. The financial assets included in the reported balances relate to receivables for which there was no recent history of default.

10. CASH AND CASH EQUIVALENTS

				31/12/2007	31/12/2008	31/12/2009	30/6/2010
				HK$’000	HK$’000	HK$’000	HK$’000
Cash	and	bank	balances	161	37	498	373

All of the above balances are denominated in Renminbi (“ RMB ”).

The RMB is not freely convertible into other currencies, however, under Mainland China’s Foreign Exchange Control Regulations and Administration of Settlement, Sale and Payment of Foreign Exchange Regulations, Shanghai Ying Sheng is permitted to exchange RMB for other currencies through banks authorised to conduct foreign exchange business.

Cash at banks earns interest at floating rates based on daily bank deposit rates. The bank balances and pledged deposits are deposited with creditworthy banks with no recent history of default.

11. OTHER PAYABLES

The balances included the amount due to the Existing InnoMed Group of approximately HK$4,841,000 as at 30 June 2010 and other payables are non-interest-bearing.

12. SHARE CAPITAL

	31/12/2007	31/12/2008	31/12/2009	30/6/2010
	US$	US$	US$	US$
Registered:	110,000	110,000	110,000	110,000
	HK$	HK$	HK$	HK$
Paid up:	883,042	883,042	883,042	883,042

Shanghai Ying Sheng was incorporated on 26 December 2005 with a registered capital of US$110,000.

– 125 –

ACCOUNTANTS’ REPORTS OF THE TARGET GROUP

APPENDIX II

13. RESERVES

The amount of the reserves and the movements therein for the Relevant Periods of Shanghai Ying Sheng are presented in the statements of changes in equity.

14. CONTINGENT LIABILITIES

Shanghai Ying Sheng had no significant contingent liabilities at the end of each reporting period.

15. OPERATING LEASE ARRANGEMENTS

Shanghai Ying Sheng leases certain of its office properties under operating lease arrangements. Leases for properties are negotiated for terms ranging from one to three years.

At the end of each reporting period, Shanghai Ying Sheng had total future minimum lease payments under non-cancelable operating leases falling due as follows: -

Within one year In the second to fifth years, inclusive	31/12/2007 HK$’000 433 540 973	31/12/2008 HK$’000 565 989 1,554	31/12/2009 HK$’000 576 433 1,009	30/6/2010 HK$’000 1,126 990
				2,116

16. COMMITMENTS

Shanghai Ying Sheng had no significant commitment at the end of each reporting period.

17. FINANCIAL INSTRUMENTS BY CATEGORY

All financial assets and liabilities of Shanghai Ying Sheng as at 31 December 2007, 2008 and 2009 as well as 30 June 2010, are loans and receivables, and financial liabilities at amortised cost, respectively.

18. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

Shanghai Ying Sheng’s principal financial instruments comprise cash and short term deposits. The main purpose of these financial instruments is to raise finance for Shanghai Ying Sheng’s operations. Shanghai Ying Sheng has various other financial assets and liabilities such as other receivables and other payables, which arise directly from its operations.

The main risks arising from Shanghai Ying Sheng’s financial instruments are credit risk and liquidity risk. The board of directors reviews and agrees policies for managing each of these risks and they are summarised below.

Credit risk

The credit risk of Shanghai Ying Sheng’s financial assets, which comprise cash and cash equivalents and other receivables, arises from default of the counterparty, with a maximum exposure equal to the carrying amounts of these instruments.

There is no significant concentration of credit risk in relation to Shanghai Ying Sheng’s financial assets, other than trade receivables.

Liquidity risk

– 126 –

ACCOUNTANTS’ REPORTS OF THE TARGET GROUP

APPENDIX II

Shanghai Ying Sheng’s objective is to maintain a balance between continuity of funding and flexibility through the use of shareholder’s loan. All Shanghai Ying Sheng’s financial liabilities are payable within 1 year or on demand.

Capital management

Shanghai Ying Sheng manages its capital structure and makes adjustments to it in light of changes in economic conditions. To maintain or adjust the capital structure, Shanghai Ying Sheng may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. Shanghai Ying Sheng is not subject to any externally imposed capital requirements. No changes were made in the objectives, policies or processes for managing capital during the Relevant Periods. The gearing ratio is zero.

19. EVENTS AFTER THE RELEVANT PERIODS

On 11 October 2010, InnoMed entered into the Shanghai Ying Sheng Equity Transfer Agreement with Mr. Hu, shareholder of Shanghai Ying Sheng, to purchase all the equity interest in Shanghai Ying Sheng. Upon completion of the Shanghai Ying Sheng Equity Transfer Agreement, InnoMed will become the immediate holding company of Shanghai Ying Sheng.

Yours faithfully, T.O. Yip & Co. Limited Certified Public Accountants Hong Kong

– 127 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

Set out below is the letter from Ernst & Young, the auditors of CCT Tech, on the unaudited pro forma financial information of the Enlarged Group together with the unaudited pro forma financial information of the Enlarged Group in connection with the Capital Reorganisation, the Placing and the Transactions of the Company.

==> picture [153 x 39] intentionally omitted <==

18th Floor Two International Finance Centre 8 Finance Street, Central Hong Kong

30 November 2010

The Directors CCT Tech International Limited

Dear Sirs,

CCT Tech International Limited (the “Company”) and its subsidiaries (the “Group”)

We report on the unaudited pro forma financial information of the Group (the “ Unaudited Pro Forma Financial Information ”) set out on pages 130 to 141 in Appendix III to the circular of the Company dated 30 November 2010 (the “ Circular ”) in connection with the proposed Capital Reorganisation (as defined in the Circular), the Placing (as defined in the Circular) and major acquisition, which has been prepared by the directors of the Company for illustrative purposes only, to provide information to the shareholders of the Company about how the Capital Reorganisation, the Placing and the Transactions (as defined in the Circular) might have affected the financial information presented in respect of the Group. The basis of preparation of the Unaudited Pro Forma Financial Information is set out on pages 130 to 141 to the Circular.

Responsibilities

It is the responsibility solely of the directors of the Company to prepare the Unaudited Pro Forma Financial Information in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “ Listing Rules ”) and with reference to Accounting Guideline 7 “Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars” issued by the Hong Kong Institute of Certified Public Accountants (the “ HKICPA ”).

It is our responsibility to form an opinion, as required by paragraph 4.29(7) of the Listing Rules, on the Unaudited Pro Forma Financial Information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the Unaudited Pro Forma Financial Information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

Basis of opinion

We conducted our engagement in accordance with Hong Kong Standards on Investment Circular Reporting Engagements 300 “Accountants’ Reports on Pro Forma Financial Information in Investment

– 128 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

Circulars” issued by the HKICPA. Our work consisted primarily of comparing the unadjusted financial information with the source documents, considering the evidence supporting the adjustments, and discussing the Unaudited Pro Forma Financial Information with the directors of the Company. This engagement does not involve independent examination of any of the underlying financial information.

Our work did not constitute an audit or a review made in accordance with Hong Kong Standards on Auditing, Hong Kong Standards on Review Engagements or Hong Kong Standards on Assurance Engagements issued by the HKICPA, and accordingly, we do not express any such audit or review assurance on the Unaudited Pro Forma Financial Information.

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the Unaudited Pro Forma Financial Information has been properly compiled by the directors of the Company on the basis stated, that such basis is consistent with the accounting policies of the Group and that the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

The Unaudited Pro Forma Financial Information is for illustrative purposes only, based on the judgements and assumptions of the directors of the Company, and, because of its hypothetical nature, does not provide any assurance or indication that any event will take place in the future and may not be indicative of:

the financial position of the Group as at 30 June 2010 or any future dates; or
the results and cash flows of the Group for the year ended 31 December 2009 or any future periods.

Opinion

In our opinion:

(a) the Unaudited Pro Forma Financial Information has been properly compiled by the directors of the Company on the basis stated;
(b) such basis is consistent with the accounting policies of the Group; and
(c) the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

Yours faithfully, Ernst & Young

Certified Public Accountants Hong Kong

– 129 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

INTRODUCTION TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

Capitalised terms used herein shall have the same meanings as those defined in the Circular, unless that the context requires otherwise.

The accompanying unaudited pro forma financial information of the Enlarged Group has been prepared to illustrate the effect that the Placing and the Transactions, assuming that there is no conversion of the Redeemable CPS, might have on the financial information of the Group.

The unaudited pro forma consolidated statement of financial position of the Enlarged Group which is prepared based on the unaudited consolidated statement of financial position of the Group as at 30 June 2010, after giving effect to the pro forma adjustments as explained in the notes below, for the purpose of illustrating the effect of the Placing and the Transactions on the financial position of the Enlarged Group as if the Placing and the Transactions had taken place and the Capital Reorganisation had become effective on 30 June 2010.

The unaudited pro forma consolidated income statement, the unaudited pro forma consolidated statement of comprehensive income and the unaudited pro forma statement of cash flows of the Enlarged Group are prepared based on the audited consolidated income statement, the audited consolidated statement of comprehensive income and the audited consolidated statement of cash flows of the Group for the year ended 31 December 2009, respectively, after giving effect to the pro forma adjustments as explained in the notes below, for the purpose of illustrating the effect of the Placing and the Transactions on the results and cash flows, respectively, of the Enlarged Group as if the Placing and the Transactions had taken place and the Capital Reorganisation had become effective on 1 January 2009.

The unaudited pro forma financial information of the Enlarged Group have been prepared for illustrative purposes only and because of its hypothetical nature, it may not give a true picture of the financial position of the Enlarged Group had the Placing and the Transactions been completed as at 30 June 2010 or at any future dates and of the results and cash flows of the Enlarged Group for the year ended 31 December 2009 or any future periods had the Placing and the Transactions been completed on 1 January 2009 or any future dates.

– 130 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

(1) Unaudited pro forma consolidated statements of financial position of the Enlarged Group

HK$ million The Group as at 30 June 2010 Note (a) ASSETS NON-CURRENT ASSETS Property, plant and equipment 375 Investment properties 178 Prepaid land lease payments 45 Intangible assets – Derivative financial instrument – Goodwill 22 Total non-current assets 620 CURRENT ASSETS Inventories 101 Trade receivables 326 Prepayments, deposits and other receivables 51 Pledged time deposits 82 Cash and cash equivalents 427 Total current assets 987 Total assets 1,607 EQUITY AND LIABILITIES Equity attributable to owners of the parent Issued capital 654 Redeemable convertible preference shares – Reserves 60 Total equity 714	The Existing InnoMed Group as at 30 June 2010 Note (b) – – – – – –	Shanghai Ying Sheng as at 30 June 2010 Note (c) 2 – – – – –	Pro forma adjustments Notes – – – 624 (g) 5 (h) 170 (i)	Unaudited pro forma Enlarged Group 377 178 45 624 5 192
620 101 326 51 82 427 987	– – – 6 – 3 9	2 – – 1 – – 1	799 – – (7) (d),(e) – 185 (j) 178	1,421
				101 326 51 82 615
				1,175
1,607	9	3	977	2,596
654 – 60 714	– – – –	1 – (6) (5)	(577) (e),(f) 6 (k) 1,406 (m) 835	78 6 1,460
				1,544

– 131 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

		The
		Existing	Shanghai
	The	InnoMed	Ying			Unaudited
	Group as at	Group as at	Sheng as			pro forma
	30 June	30 June	at 30 June	Pro forma		Enlarged
HK$ million	2010	2010	2010	adjustments	Notes	Group
	Note (a)	Note (b)	Note (c)
NON-CURRENT LIABILITIES
Interest-bearing bank borrowings	151	–	–	–		151
Deferred tax liabilities	1	–	–	156	(n)	157
Total non-current liabilities	152	–	–	156		308
CURRENT LIABILITIES
Trade and bills payables	423	–	–	–		423
Tax payable	9	–	–	–		9
Other payables and accruals	117	1	8	(6)	(d)	120
Amount due to a shareholder	–	8	–	(8)	(o)	–
Interest-bearing bank borrowings	192	–	–	–		192
Total current liabilities	741	9	8	(14)		744
Total liabilities	893	9	8	142		1,052
Total equity and liabilities	1,607	9	3	977		2,596
Net current assets/(liabilities)	246	–	(7)	192		431
Total assets less current liabilities	866	–	(5)	991		1,852

Notes:

(a) The unaudited consolidated statement of financial position of the Group as at 30 June 2010 was extracted from the published interim report of the Group for the period ended 30 June 2010.
(b) The audited consolidated statement of financial position of the Existing InnoMed Group as at 30 June 2010 was extracted from the accountants’ report of the Existing InnoMed Group, which is set out in Appendix IIB to the Circular.
(c) The audited statement of financial position of the Shanghai Ying Sheng as at 30 June 2010 was extracted from the accountants’ report of Shanghai Ying Sheng, which is set out in Appendix IIC to the Circular.
(d) The adjustment represents the intercompany elimination between the Existing InnoMed Group and Shanghai Ying Sheng.

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

(e) The adjustment represents the elimination of the investment in Shanghai Ying Sheng of approximately HK$1 million assuming completion of the Shanghai Ying Sheng Equity Transfer Agreement had taken place on 30 June 2010.
(f) The adjustment represents the net effect of the Capital Reorganisation and the Placing to the Group, calculated by (i) debiting the effect arising from the Share Consolidation and the Capital Reduction of HK$589 million to the issued capital of CCT Tech, assuming that the Placing was undertaken after the Capital Reorganisation becoming effective; and (ii) crediting to the issued capital of CCT Tech with the amount of HK$13 million, representing the aggregate par value of the Placing Shares of par value of HK$0.01 each assuming that a total of 1,300,000,000 Placing Shares were issued.
(g) The adjustment represents the estimated fair value of the Patents as at 30 September 2010, which were transferred to the Target Company on 6 October 2010 by the Vendor, on the assumption that the Patents were transferred by the Vendor to the Target Company on 30 June 2010.
(h) The adjustment represents the estimated fair value of the Put Option as at 13 October 2010, on the assumption that Put Option was granted by the Vendor to the Company on 30 June 2010.
(i) The adjustment represents goodwill arising from the acquisition of the Target Group and is estimated as follows:

Cost of investment:
InnoMed Cash Consideration (Note (l))
Fair value of the 650,000,000 Redeemable CPS to be issued to the InnoMed Owner
subject to the S&P Agreement, upon Completion
Fair value of the contingent consideration for the 2,816,700,000 Redeemable CPS
to be issued to the Vendor, subject to achievement of various milestones
by the Target Group and conditions of the S&P Agreement
Less: Fair value of the Put Option (Note (h))
Total cost of investment
Less:
Fair value of net identifiable assets of the Target Group to be acquired:
Net deficit of the Target Group (Notes (b) to (e))
InnoMed Shareholder’s Loan (Note (o))
Fair value of the Patents (Note (g))
Deferred tax liabilities on the fair value of the Patents (Note (n))
Goodwill

HK$ million
39
117
489
645
(5)
640
(6)
8
624
(156)
470
170

The identifiable assets and liabilities of the Target Group will be accounted for in the consolidated financial statements of the Group at fair value under the purchase method of accounting in accordance with Hong Kong Financial Reporting Standard 3 (Revised) “Business Combinations” (“ HKFRS 3 (Revised) ”). For the purpose of determining goodwill arising from the Transactions in the Unaudited Pro Forma Financial Information, the Group has estimated the fair value of each of: (i) the batch of the Redeemable CPS to be issued to the InnoMed Owner at the issue price of HK$0.18 each; (ii) the contingent consideration for the batches of Redeemable CPS to be issued to the Vendor; (iii) the fair value of the Patents as at 30 September 2010; and (iv) the fair values of the other identifiable assets and liabilities of the Target Group as at 30 June 2010, as shown above.

– 133 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

The Directors have reviewed the pro forma fair values of the intangible assets (including the goodwill and the Patents) of the Enlarged Group in accordance with Hong Kong Accounting Standard 36 “Impairment of Assets” (“ HKAS 36 ”). The Directors are of the opinion that there is no indication that the pro forma fair values of the intangible assets (including the goodwill and the Patents) of the Enlarged Group may be impaired at the date of preparation of this unaudited pro forma financial information.

In accordance with HKAS 36, the Directors will assess at the end of each reporting period ending after the Completion Date to determine as to whether there is any indication that the intangible assets (including the goodwill and Patents) of the Enlarged Group may be impaired. If any such indication exists, the Directors will estimate the recoverable amount of the intangible assets. An impairment loss is recognised only if the carrying amount of an intangible asset exceeds its recoverable amount. In the absence of unforeseen circumstances, the Directors will adopt consistent accounting policies, principal assumptions and valuation methods as used in this unaudited pro forma financial information to assess the recoverable account of the intangible assets.

The reporting accountants, who are also the auditors of the Company, will examine the Company’s assessment whether there is any indication that the Enlarged Group’s intangible assets (including the goodwill and the Patents) may be impaired, and if such indication exists, the Company’s auditors will examine the recoverable amount of the intangible assets estimated by the Company in accordance with HKAS 36 during their audit on the Enlarged Group’s financial statements for any financial period ending after the Completion Date.

If the Company engages an expert in assessing the recoverable amount of the Enlarged Group’s intangible assets, the Company’s auditors will evaluate the appropriateness of the work of the expert as audit evidence considering, including but not limited to, (i) the relevance and reasonableness of the expert’s findings or conclusions, their consistency with other audit evidence, and whether they have been appropriately reflected in the Enlarged Group’s financial statements; (ii) the relevance and reasonableness of the significant assumptions and methods used by the expert; and (iii) the relevance, completeness, and accuracy of the source data used by the expert in accordance with Hong Kong Standard on Auditing 500 (Clarified) “Audit Evidence”, during their audit on the Enlarged Group’s financial statements.

On Completion, the fair values of the cost of investment and the net identifiable assets of the Target Group to be acquired will have to be reassessed and accordingly, their fair values at the date of Completion may be different from those used in the preparation of the Unaudited Pro Forma Financial Information. Accordingly, the actual goodwill at the date of Completion may be different from that presented above.

(j) The adjustment represents net cash inflow to the Group arising from the Placing, after deducting cash outflow arising from the Transactions, upon Completion, are calculated as follows:

Cash Inflow: Gross proceeds from the Placing, assuming that 1,300,000,000 Placing Shares were issued at the Placing Price of HK$0.18 Cash Outflow: Estimated Placing fee InnoMed Cash Consideration (Note (l)) Expenses and professional fees relating to the Transactions	HK$ million 234 (7) (39) (3) 185

(k) The adjustment represents the aggregate par value of the 650,000,000 Redeemable CPS of par value of HK$0.01 each issued upon Completion, to the InnoMed Owner to satisfy the InnoMed Non-Cash Consideration.
(l) The adjustment represents the cash consideration of US$5 million (equivalent to HK$39 million) to be paid to the InnoMed Owner, pursuant to the S&P Agreement, which would be funded by the Subscription Consideration of US$20 million; the balance of which in the amount of US$15 million would be retained in the Target Group to finance the development costs of the Medical Device Business and the working capital of the Target Group.

– 134 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

(m) The adjustment represents the net effect of the Placing and the Transactions to the reserve account of the Group, are calculated as follows:

	Share
	premium	Reserves	Total
HK$ million	Credit/(Debit)	Credit/(Debit)	Credit/(Debit)
Credit Transfer (which corresponds to the Capital Reduction
(Note (f))	–	589	589
Share premium of the Placing Shares issued, equal to the
multiple of (i) HK$0.17 (difference between the Placing Price
of HK$0.18 and par value of HK$0.01); and (ii)
1,300,000,000 (aggregate number of Placing Shares issued),
net of placing fee of approximately HK$7 million	214	–	214
Share premium of the 650,000,000 Redeemable CPS to be
issued to the InnoMed Owner, equal to the multiple of (i)
HK$0.17 (difference between the issue price of HK$0.18 each
and the par value of HK$0.01); and (ii) 650,000,000
Redeemable CPS	111	–	111
– Fair value of the contingent consideration of the
2,816,700,000 Redeemable CPS to be issued to the
Vendor (Note (i))	–	489	489
– Elimination of the pre-acquisition net deficit
of the Target Group (notes (b) to (e))	–	6	6
– Expenses and professional fees relating
to the Transactions (Note (j))	–	(3)	(3)
	325	1,081	1,406

(n) The adjustment represents the deferred tax liabilities of HK$156 million arising from the fair value of the Patents of HK$624 million at the applicable tax rate of 25% in the PRC.

(o) The adjustment represents the InnoMed Shareholder’s Loan which will be assigned by the InnoMed Owner to the Target Company upon completion of the InnoMed Share Purchase Agreement.

– 135 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

(2) Unaudited pro forma consolidated income statements of the Enlarged Group

The Group for the Year ended 31 December 2009 Note (a) 1,446 (1,330)	The Existing InnoMed Group for the Year ended 31 December 2009 Note (b) – –	Shanghai Ying Sheng for the Year ended 31 December 2009 Note(c) – –	Pro forma adjustments Note (d) Note (e) Note (f) – – – – – –	Pro forma adjustments Note (d) Note (e) Note (f) – – – – – –	Pro forma adjustments Note (d) Note (e) Note (f) – – – – – –	Unaudited pro forma Enlarged Group 1,446 (1,330
116 23 (24) (111) (18) (3) (17) (2)	– – – – – – – –	– – – (2) (1) – (3) –	– – – – (21) – (21) –	– – – – – – – 5	– – – – (3) – (3) –	116 23 (24 (113 (43 (3
						(44 3
	– (3) (21)

Notes:

(a) The audited consolidated income statement of the Group for the year ended 31 December 2009 was extracted from the published annual report of the Group for the year ended 31 December 2009.
(b) The audited consolidated income statement of the Existing InnoMed Group for the year ended 31 December 2009 was extracted from the accountants’ report of the Existing InnoMed Group, which is set out in Appendix IIB to the Circular.
(c) The audited income statement of Shanghai Ying Sheng for the year ended 31 December 2009 was extracted from the accountants’ report of Shanghai Ying Sheng, which is set out in Appendix IIC to the Circular.

– 136 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

(d) The adjustment represents the amortisation charge of the Patents for the year ended 31 December 2009 on the assumptions that the Patents were transferred to the Group on 1 January 2009 and that the estimated useful life of the Patents was 30 years, and on the basis that the Patents are stated at cost less any impairment losses and are amortised on the straight-line basis over the estimated useful life of 30 years starting from 1 January 2009. This unaudited pro forma adjustment will have continuing effect on the consolidated income statement of the Enlarged Group.
(e) The adjustment represents the release of the deferred tax liabilities of approximately HK$5 million per annum arising from the amortisation charge of the Patents. This unaudited pro forma adjustment will have continuing effect on the consolidated income statement of the Enlarged Group.
(f) The adjustment represents the estimated amount of the expenses and professional fees relating to the Transactions. The Group adopted HKFRS 3 (Revised) in preparing the unaudited pro forma consolidated income statement for the year ended 31 December 2009, pursuant to which all transaction costs and expenses relating to the Transactions are expensed. As the costs and expenses relating to the Transactions are non-recurring in nature, this unaudited pro forma adjustment will not have continuing effect on the consolidated income statement of the Enlarged Group.
(g) The Placing will not have any material effect on the unaudited pro forma consolidated income statement of the Enlarged Group.
(h) No adjustments have been made to reflect any trading results or other transactions of the Group and the Target Group entered into subsequent to 31 December 2009.

(3) Unaudited pro forma consolidated statements of comprehensive income of the Enlarged Group

		The Existing
		InnoMed	Shanghai
	The Group	Group for	Ying Sheng
	for the	the Year	for the Year				Unaudited
	Year ended	ended 31	ended				pro forma
	31 December	December	31 December				Enlarged
HK$ million	2009	2009	2009	Pro forma adjustments			Group
	Note (a)	Note (b)	Note (c)	Note (d)	Note (e)	Note (f)
LOSS FOR THE YEAR AND
TOTAL
COMPREHENSIVE LOSS
ATTRIBUTABLE TO
OWNERS OF THE
PARENT	(19)	–	(3)	(21)	5	(3)	(41)

Notes:

(a) The audited consolidated statement of comprehensive income of the Group for the year ended 31 December 2009 was extracted from the published annual report of the Group for the year ended 31 December 2009.
(b) The audited consolidated statement of comprehensive income of the Existing InnoMed Group for the year ended 31 December 2009 was extracted from the accountants’ report of the Existing InnoMed Group, which is set out in Appendix IIB to the Circular.
(c) The audited statement of comprehensive income of Shanghai Ying Sheng for the year ended 31 December 2009 was extracted from the accountants’ report of Shanghai Ying Sheng, which is set out in Appendix IIC to the Circular.

– 137 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

(d) The adjustment represents the amortisation charge of the Patents for the year ended 31 December 2009 on the assumptions that the Patents were transferred to the Group on 1 January 2009 and that the estimated useful life of the Patents was 30 years, and on the basis that the Patents are stated at cost less any impairment losses and are amortised on the straight-line basis over the estimated useful life of 30 years starting from 1 January 2009. This unaudited pro forma adjustment will have continuing effect on the consolidated statement of comprehensive income of the Enlarged Group.
(e) The adjustment represents the release of the deferred tax liabilities of approximately HK$5 million per annum arising from the amortisation charge of the Patents. This unaudited pro forma adjustment will have continuing effect on the consolidated statement of comprehensive income of the Enlarged Group.
(f) The adjustment represents the estimated amount of expenses and legal and professional fees relating to the Transactions. This unaudited pro forma adjustment will not have continuing effect on the consolidated statement of comprehensive income of the Enlarged Group.
(g) No adjustments have been made to reflect any trading results or other transactions of the Group and the Target Group entered into subsequent to 31 December 2009.

– 138 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

(4) Unaudited pro forma consolidated statements of cash flows of the Enlarged Group

The Group for the Year ended 31 December 2009 Note (a) (17) 3 63 – 2 1 5 13 (9)	The Existing InnoMed Group for the Year ended 31 December 2009 Note (b) – – – – – – – – –	Shanghai Ying Sheng for the Year ended 31 December 2009 Pro forma adjustments Notes Note (c) (3) (24) (d),(e) – – – – – 21 (d) – – – – – – – – – –	Shanghai Ying Sheng for the Year ended 31 December 2009 Pro forma adjustments Notes Note (c) (3) (24) (d),(e) – – – – – 21 (d) – – – – – – – – – –	Unaudited pro forma Enlarged Group (44) 3 63 21 2 1 5 13 (9) 55 47 37 (11) (216) (88) (3) (2) (2) (95)
61 47 37 (12) (223) (90) (3) (2) (2) (97)	– – – (4) 7 3 – – – 3	(3) – – 2 3 2 – – – 2	(3) – – 3 (f) (3) (f) (3) – – – (3)	55 47 37 (11 (216
				(88 (3 (2 (2
				(95

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APPENDIX III

The Group for the Year ended 31 December 2009 Note (a) (11) 24 –	The Existing InnoMed Group for the Year ended 31 December 2009 Note (b) – – –	Shanghai Ying Sheng for the Year ended 31 December 2009 Pro forma adjustments Notes Note (c) (2) – – – – (39) (g)	Shanghai Ying Sheng for the Year ended 31 December 2009 Pro forma adjustments Notes Note (c) (2) – – – – (39) (g)	Unaudited pro forma Enlarged Group (13) 24 (39) (28) 104 (42) (84) 227 205 82 456 538
13 104 (42) (84) –	– – – – –	(2) – – – –	(39) – – – 227 (h)	(28
				104 (42 (84 227
(22)	–	–	227
(106) 455	3 1	– –	185 –	82 456
349	4	–	185

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APPENDIX III

HK$ million ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS Cash and bank balances Non-pledged time deposits with original maturity of less than three months when acquired	The Group for the Year ended 31 December 2009 Note (a) 266 83 349	The Existing InnoMed Group for the Year ended 31 December 2009 Note (b) 4 – 4	Shanghai Ying Sheng for the Year ended 31 December 2009 Pro forma adjustments Notes Note (c) – 185 (i) – – – 185	Unaudited pro forma Enlarged Group 455 83
				538

Notes:

(a) The audited consolidated statement of cash flows of the Group for the year ended 31 December 2009 was extracted from the published annual report of the Group for the year ended 31 December 2009.
(b) The audited consolidated statement of cash flows of the Existing InnoMed Group for the year ended 31 December 2009 was extracted from the accountants’ report of the Existing InnoMed Group, which is set out in Appendix IIB to the Circular.
(c) The audited statement of cash flows of Shanghai Ying Sheng for the year ended 31 December 2009 was extracted from the accountants’ report of Shanghai Ying Sheng, which is set out in Appendix IIC to the Circular.
(d) The adjustment represents the cash outflow for the payment of expenses and professional fees of HK$3 million relating to the Transactions. The unaudited pro forma adjustment will not have continuing effect on the consolidated statement of cash flows of the Enlarged Group.
(e) The adjustment represents the amortisation charge of the Patents for the year ended 31 December 2009 on the assumptions that the Patents were transferred to the Group on 1 January 2009 and that the estimated useful life of the Patents was 30 years, and on the basis that the Patents are stated at cost less any impairment losses and are amortised on the straight-line basis over the estimated useful life of 30 years starting from 1 January 2009. The unaudited pro forma adjustment will have continuing effect on the consolidated statement of cash flows of the Enlarged Group.
(f) The adjustment represents the intercompany elimination between the Existing InnoMed Group and Shanghai Ying Sheng. The unaudited pro forma adjustment will have continuing effect on the consolidated statement of cash flows of the Enlarged Group.
(g) The adjustment represents the payment of the InnoMed Cash Consideration of US$5 million (equivalent to HK$39 million) pursuant to the S&P Agreement. The unaudited pro forma adjustment will not have continuing effect on the consolidated statement of cash flows of the Enlarged Group.
(h) The adjustment represents the gross proceeds from the Placing, assuming that 1,300,000,000 Placing Shares were issued at the Placing Price of HK$0.18 at an aggregate consideration of HK$227 million (net of placing fee of HK$7 million) and that the Placing is undertaken after the effective date of the Capital Reorganisation. The unaudited pro forma adjustment will not have continuing effect on the consolidated statement of cash flows of the Enlarged Group.
(i) The adjustment represents net cash inflow to the Group arising from the Placing, after deducting cash outflow arising from the Transactions, upon Completion, details was set out in Appendix III (1)(j) above.
(j) No adjustments have been made to reflect cash flows from any trading results or other transactions of the Group and the Target Group entered into subsequent to 31 December 2009.

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APPENDIX IV

The following is the text of the valuation report prepared by Roma Appraisals Limited for the purpose of incorporation in this circular, in respect of the valuation of the Target Group. The valuation report have been prepared in compliance with the International Valuation Standards.

30 November 2010

==> picture [75 x 43] intentionally omitted <==

Unit 3806, 38/F, China Resources Building 26 Harbour Road, Wan Chai, Hong Kong Tel: (852) 2529 6878 Fax: (852) 2529 6806 E-mail: [email protected] http://www.roma-international.com

The Board of Directors

CCT Tech International Limited & CCT Telecom Holdings Limited

2208, 22/F., St. George’s Building 2 Ice House Street, Central Hong Kong

Dear Sirs,

Re: Business Valuation of the 100% Equity Interest in MIV Scientific Holdings Limited, InnoMed Scientific Incorporation Limited, InnoMed Scientific Incorporation (Shanghai) Limited and Shanghai InnoMed Technologies Incorporation Limited

In accordance with the instructions from CCT Tech International Limited and CCT Telecom Holdings Limited (hereinafter collectively referred to as the “Clients”) to us to conduct a business valuation on the 100% equity interest in MIV Scientific Holdings Limited, InnoMed Scientific Incorporation Limited, InnoMed Scientific Incorporation (Shanghai) Limited and Shanghai InnoMed Technologies Incorporation Limited (the latter four companies hereinafter collectively referred to as the “Target Group”), we are pleased to report that we have made relevant enquiries and obtained other information which we consider are relevant for the purpose of providing our opinion of the market value of the Target Group as at 30 September 2010 (hereinafter referred to as the “Date of Valuation”).

This report states the purpose and basis of valuation, scope of work, economic and industry overview, an overview of the Target Group, major assumptions, valuation methodology, limiting conditions, and presents our opinion of value. This report has been prepared in accordance with the guidelines set by the International Valuation Standards published by the International Valuation Standards Committee.

1. PURPOSE OF VALUATION

This report is prepared solely for the use of the directors and management of the Clients. The Clients are both public companies listed on the main board of the Hong Kong Stock Exchange. In addition, Roma Appraisals Limited (hereinafter referred to as “Roma Appraisals”) acknowledges that this report may be made available for public documentation purpose and included in the clients’ circulars only.

Roma Appraisals assumes no responsibility whatsoever to any person other than the Clients in respect of, or arising out of, the contents of this report. If others choose to rely in any way on the contents of this report they do so entirely on their own risk.

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2. SCOPE OF WORK

Our valuation conclusion is based on the assumptions stated herein and on information provided by the management of the Target Group, and/or its representative (together referred to as the “Management”).

In preparing this report, we have had discussions with the Management in relation to the development and prospect of the pharmaceutical industry in the People’s Republic of China (“PRC”), and the development, operations and other relevant information of the Target Group. As part of our analysis, we have reviewed such financial information and other pertinent data concerning the Target Group provided to us by the Management and have considered such information and data as attainable and reasonable.

We have no reason to believe that any material facts have been withheld from us, however, we do not warrant that our investigations have revealed all of the matters which an audit or more extensive examination might disclose.

3. ECONOMIC AND INDUSTRY OVERVIEW

3.1 Overview of the Economy in the PRC

According to the National Bureau of Statistics of China, the Gross Domestic Product (“GDP”) for the first two quarters of 2010 was RMB17,284.0 billion, an 11.1% increase over the same period last year. The PRC is the third largest economy in the world in terms of nominal GDP measured by International Monetary Fund in 2009. Despite global financial crisis, the Chinese economy continues to be supported by the government through spending in infrastructure and real estates.

Throughout 2009, the global economic downturn reduced foreign demand for Chinese exports for the first time in many years. The government vowed to continue reforming the economy and emphasized the need to increase domestic consumption in order to make the PRC less dependent on foreign exports for the GDP growth in the future.

Over the past decade from 1999 to 2009, the PRC’s growth in real GDP had achieved a compound annual growth rate of 14.15% on average, increased from approximately RMB8,967.7 billion in 1999 to approximately RMB33,535.3 billion in 2009. The nominal GDP of 2009 has an 11.5% growth over the previous year. Figure 1 further illustrates the GDP from 2005 to 2009 in the PRC.

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APPENDIX IV

Figure 1 – The PRC’s Gross Domestic Product (“GDP”) 2005 – 2009

billion RMB

==> picture [373 x 185] intentionally omitted <==

----- Start of picture text -----

40,000
35,000 33535.3
30067.0
30,000
25730.6
25,000
21192.3
20,000 18321.7
15,000
10,000
5,000
0
2005 2006 2007 2008 2009
----- End of picture text -----

Source: National Bureau of Statistics of China

3.2 Overview of Global Pharmaceutical Industry

The United States of America, Europe and Japan are the leaders in the global pharmaceutical industry. According to an analysis conducted by Zero Power Intelligence Co. Ltd., an independent third party (“ZPI Report”), in the year of 2008, the above three countries have reached a total market share of almost 78% globally. In the year of 2008, the global medical device market earned a total output value of more than USD 200 billion.

According to the ZPI Report, global pharmaceutical industry has a sustained average annual growth rate of 8% since the early 80s in the twentieth century. The growth rate of pharmaceutical industry in most countries is higher than that of their own GDP. As a result, pharmaceutical industry is one of the most competitive fields in research and development.

In most developed countries, the pharmaceutical market has an inelastic demand, hence influences from the economic crisis is slighter and can still maintain a high growth rate.

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3.3 Overview of Pharmaceutical Industry in the PRC

After the reorganization in the year of 2006, the pharmaceutical industry in the PRC continues to boom constantly. According to the ZPI Report, the number of enterprises in the pharmaceutical industry accounted for loss decreased from nearly 30% in 2006 down to 17% in 2010. Up to the month of May in 2010, the pharmaceutical industry sales and profits increased by 27.8% and 39.0% respectively, the growth rate was faster than the PRC’s GDP. For the pharmaceutical industry, due to rigid medical needs benefiting from aging population, urbanization, new medical reform and other favorable factors, it would remain a steady and rapid growth for the next 10 years.

Up to the year 2010, there are up to 4,700 domestic pharmaceutical enterprises, small and medium scale enterprises account for about 70%, that is, more than 3,200. Among them, the best annual sales was accounted for approximately RMB100 million, while nearly 70% of SMEs had annual sales with around RMB50 million, net profit was about RMB10 million to RMB20 million.

3.3.1 Overview of Medical Device Industry in the PRC

With the accelerated economic development, upgrade drive demand for medical services, the PRC government gradually opens up the medical service market, as a result the domestic and foreign capital investment in the PRC speed up the rate of medical services industry, which directly led to increased demand for medical equipment market.

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APPENDIX IV

the poor central and western regions, and eastern areas in primary health care institutions. Basic hospital equipment standards and related policies will also be launched soon.

3.3.2 Factors Driving the Growth in Worldwide Healthcare Industry

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APPENDIX IV

3.3.3 Ongoing Healthcare Reform in the PRC

In January 2009, the Chinese government approved in principle a healthcare reform plan to address the affordability of health care services, rural healthcare system and healthcare service quality in the PRC. In March 2009, the government published a healthcare reform plan for 2009 to 2011, which calls for, among other things, additional government spending on healthcare of RMB850 billion for 2009 to 2011 to improve accessibility and affordability of healthcare. The healthcare reform was designed to develop the healthcare infrastructure, expand basic medical insurance programs, establish a national essential drug system to meet basic needs for treatment and prevention of diseases, and improve basic public health services.

4. THE TARGET GROUP

The Target Group consists of MIV Scientific Holdings Limited (hereinafter referred to as the “MIV Scientific”), InnoMed Scientific Incorporation Limited (hereinafter referred to as the “InnoMed”), InnoMed Scientific Incorporation (Shanghai) Limited (hereinafter referred to as the “Shanghai Ying Zhong”) and Shanghai InnoMed Technologies Incorporation Limited (hereinafter referred to as the “Shanghai Ying Sheng”).

MIV Scientific is a company incorporated in the British Virgin Islands (“BVI”) with limited liability. MIV Scientific entered into the share purchase agreement and a supplemental agreement dated 12 October 2010 and 19 October 2010 (hereinafter referred to as the “InnoMed Share Purchase Agreement”), with InnoMed to purchase the entire issued capital of InnoMed, which in turn owns 100% equity interest in Shanghai Ying Zhong. On 11 October 2010, InnoMed entered into the equity transfer agreement (hereinafter referred to as the “Shanghai Ying Sheng Equity Transfer Agreement”) with Mr. Tiefeng Hu to purchase all the equity interest in Shanghai Ying Sheng. Upon completion of the InnoMed Share Purchase Agreement and the Shanghai Ying Sheng Equity Transfer Agreement, MIV Scientific will beneficially own 100% of the total issued capital of InnoMed, which in turn owns or will own the entire equity interest in Shanghai Ying Zhong and Shanghai Ying Sheng. The Shanghai Ying Sheng Equity Transfer Agreement will be completed before completion of the proposed acquisition of the sales share in MIV Scientific by the Clients and the proposed subscription of the new shares in MIV Scientific (hereinafter referred to as the “Completion”). The InnoMed Share Purchase Agreement will be completed simultaneously with the Completion. Figure 2 shows the structure of the Target Group before the Completion, but after the completion of the InnoMed Share Purchase Agreement and the Shanghai Ying Sheng Equity Transfer Agreement.

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APPENDIX IV

Figure 2 – Structure of the Target Group Before the Completion But After the Completion of the InnoMed Share Purchase Agreement and the Shanghai Ying Sheng Equity Transfer Agreement

==> picture [257 x 161] intentionally omitted <==

----- Start of picture text -----

MIV Scientific (BVI)
100%
InnoMed (Hong Kong)
100% 100%
Shanghai Ying Sheng Shanghai Ying Zhong
(PRC) (PRC)
----- End of picture text -----

5. BASIS OF VALUATION

Our valuation is based on going concern premise and conducted on a market value basis. Market value is defined as “the amount for which an asset could be exchanged, or a liability settled between knowledgeable, willing parties in an arm’s length transaction”.

6. INVESTIGATION AND ANALYSIS

Our investigation included discussions with members of the Management in relation to the development, operations and other relevant information of the Target Group. In addition, we have made relevant inquiries and obtained further information and statistical figures regarding the economy of the PRC as we considered necessary for the purpose of the valuation.

As part of our analysis, we have reviewed such financial information and other pertinent data concerning the Target Group provided to us by the Management and had considered such information and data as attainable and reasonable. We have also consulted other sources of financial and business information.

The valuation of the Target Group requires consideration of all pertinent factors, which may or may not affect the operation of the business and its ability to generate future investment returns. The factors considered in our valuation include, but are not necessarily limited to, the following:

The nature and prospect of the Target Group;
The financial condition of the Target Group;
The economic outlook in general and the specific economic environment and market elements affecting the business, industry and market;
Relevant licenses and agreements;
The business risk of the Target Group such as the ability in maintaining competent technical and professional personnel; and
Investment returns and market transactions of entities engaged in similar lines of business.

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APPENDIX IV

7. VALUATION METHODOLOGY

There are generally three accepted approaches to obtain the market value of the Target Group, namely the Market-Based Approach, Income-Based Approach and Asset-Based Approach. Each of these approaches is appropriate in one or more circumstances, and sometimes, two or more approaches may be used together. Whether to adopt a particular approach will be determined by the most commonly adopted practice in valuing business entities that are similar in nature.

7.1 Market-Based Approach

The Market-Based Approach values a business entity by comparing prices at which other business entities in a similar nature changed hands in arm’s length transactions. The underlying theory of this approach is that one would not pay more than one would have to for an equally desirable alternative. By adopting this approach, the valuer will first look for valuation indication of prices of other similar business entities that have been sold recently.

The right transactions employed in analyzing indications of values need to be sold at an arm’s length basis, assuming that the buyers and sellers are well informed and have no special motivations or compulsions to buy or to sell.

7.2 Income-Based Approach

The Income-Based Approach focuses on the economic benefits due to the income producing capability of the business entity. The underlying theory of this approach is that the value of the business entity can be measured by the present worth of the economic benefits to be received over the useful life of the business entity. Based on this valuation principle, the Income-Based Approach estimates the future economic benefits and discounts them to their present values using a discount rate appropriate for the risks associated with realizing those benefits.

Alternatively, this present value can be calculated by capitalizing the economic benefits to be received in the next period at an appropriate capitalization rate. This is subject to the assumption that the business entity will continue to maintain stable economic benefits and growth rate.

7.3 Asset-Based Approach

The Asset-Based Approach is based on the general concept that the earning power of a business entity is derived primarily from its existing assets. The assumption of this approach is that when each of the elements of working capital, tangible and intangible assets is individually valued, their sum represents the value of a business entity and equals to the value of its invested capital (“equity and long term debt”). In other words, the value of the business entity is represented by the money that has been made available to purchase the business assets needed.

This money comes from investors who buy stocks of the business entity (“equity”) and investors who lend money to the business entity (“debt”). After collecting the total amounts of money from equity and debt, and converted into various types of assets of the business entity for its operation, their sum equals the value of the business entity.

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7.4 Business Valuation

In the process of valuing the market value of the Target Group, we have taken into account of the uniqueness of its nature and the relevant industry. The Income-Based Approach was not adopted in this case because there is insufficient historical financial information of the Target Group. The Asset-Based Approach was also not adopted because it could not reflect the future potential growth of the Target Group. We have therefore considered the adoption of Market-Based Approach in arriving at the market value of the Target Group.

Under the Market-Based Approach, we have to determine the appropriate value multiples of similar companies, in which we have considered price-to-sales, price-to-earnings and price-to-book value. In this valuation, we have adopted the price-to-sales multiple and we considered it as the most appropriate method to value the Target Group.

We have selected six listed comparable companies of which their operating businesses were in pharmaceutical industry. The price-to-sales multiples of the comparable companies were extracted from Bloomberg as at the Date of Valuation and the details are listed as follows:

	Stock	Listing		Price-to-Sales
Company Name	Code	Location	Principal Business	Multiple
Jiangsu Yuyue Medical	002223.CH	The PRC	Develops, manufactures and distributes	18.93
Equipment Co. Ltd.			medical equipments.
Shanghai Kehua	002022.CH	The PRC	Develops and manufactures	12.07
Bio-Engineering Co.,			bio-chemicalreagents, medical
Ltd.			equipment, diagnostic reagents, and
			genetic engineering pharmaceuticals.
Guangzhou Improve	300030.CH	The PRC	Researches, develops, and manufactures	9.39
Medical Instrument			medical instruments. The company’s
Co., Ltd			products include evacuated blood
			collection system, microbe specimen
			collection and transport, clinical
			testing reagent, equipment for clinical
			specimen testing & processing, etc.
Beijing Wandong Medical	600055.CH	The PRC	Develops and manufactures medical	5.28
Equipment Co., Ltd.			instruments. The company’s products
			include X-ray machines, dental
			equipment, and other related
			products.

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VALUATION REPORT ON THE TARGET GROUP

APPENDIX IV

Company Name
Stock
Code
Listing
Location
Principal Business
Biosensors International
Group Ltd.
BIG.SP
Singapore
Manufactures medical devices. The
company produces drug-eluting stents
used to widen narrowing arteries,
critical care catheter systems, and
blood pressure transducers.
Lombard Medical
Technologies PLC
LMT.LN
The United
Kingdom
Manufactures cardiovascular devices.
The company produces stent grafts
for abdominal aortic aneurysm
disease and repositionable clips for
surgical fixation, and develops
polymers used to coat stents with
timed release drugs.
Average:

Price-to-Sales
Multiple
6.38
4.44

9.41

The price-to-sales multiple adopted was the average of price-to-sales multiples of all the comparable companies listed above. Also, we have estimated the annual sales generated by the Target Group, which is determined in accordance with the Client’s accounting policy, based on the financial information provided by the Management. Price-to-sales multiple is an acceptable basis for valuation of pharmaceutical or medical device manufacturer. Price-to-earnings ratios were not adopted because earnings would depend on various other controllable and uncontrollable factors including operating expenditure, tax, inflation and would therefore require further assumptions comparing to the estimated sales figures. Price-to-book multiple is not considered appropriate as a medical device manufacturer, unlike a bank or a property company, is not capital intensive. As such, price-to-sales multiple is considered to be the appropriate method in valuation of the Target Group. Then we applied the average price-to-sales to the estimated annual sales figure of the Target Group in 2013. The estimated annual sales as at 31 December 2013, which will be RMB285,219,082, was adopted because the Target Group is still at an early stage and the growth of its business operation will be stable starting from 2013, according to the business plan of the Target Group. This future amount was discounted by an appropriate discount rate to present terms as at Date of Valuation.

7.4.1 Discount Rate

In calculating the discount rate, we first obtained the weighted average cost of equity (“WACC”) of the Target Group, which was calculated by the formula below:

WACC = We x Re + Wd x Rd x (1 – Tc)

In which Re = Cost of equity;

Rd = Cost of debt;

We = Weight of equity value to enterprise value;

Wd = Weight of debt value to enterprise value; and

Tc = Corporate tax rate.

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The cost of equity was calculated by using the following formula:

Re = Rf + β x Market Risk Premium + Other Risk Premium

In which

Re = Cost of equity; Rf = Risk-free rate; and β = Beta coefficient.

We arrived at 21.18% of cost of equity by adopting 3.33% as the risk-free rate, 11.22% as the market risk premium and a beta estimate of 0.79, and other risk premium of 8.99%. In addition, we have adopted 5.94% as the cost of debt and 11.12% as debt-to-equity ratio. Hence, we concluded a discount rate of 19.50% in valuing the Target Group as at the Date of Valuation.

7.4.2 Marketability Discount

Compared to similar interest in public companies, ownership interest is not readily marketable for closely held companies. Therefore, the value of a share of stock in a privately held company is usually less than an otherwise comparable share in a publicly held company. Hence, a 30.80% marketability discount has been considered in arriving at our opinion of value of the Target Group.

8. MAJOR ASSUMPTIONS

We have adopted certain specific assumptions in our valuation and the major ones are as follows:

All relevant legal approvals and business certificates or licenses to operate the business in the localities in which the Target Group operates or intends to operate would be officially obtained and renewable upon expiry;
There will be sufficient supply of technical staff in the industry in which the Target Group operates, and the Target Group will retain competent management, key personnel and technical staff to support its ongoing operations and developments;
There will be no major change in the current taxation laws in the localities in which the Target Group operates or intends to operate and that the rates of tax payable shall remain unchanged and that all applicable laws and regulations will be complied with;
There will be no major change in the political, legal, economic or financial conditions in the localities in which the Target Group operates or intends to operate, which would adversely affect the revenues attributable to and profitability of the Target Group;
Interest rates and exchange rates in the localities for the operation of the Target Group will not differ materially from those presently prevailing;

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VALUATION REPORT ON THE TARGET GROUP

APPENDIX IV

The estimated price of the next generation drug eluting stent (hereinafter refer to as the “Product”) is determined based on comparable price of stents available in the market; and
The estimated annual sales figure for the Target Group in 2013 was arrived at based on the following major assumptions:
The Target Group will obtain the CE Marking for the Product by the end of 2011 and will start production and international sale of the Product with effect from 2010 to those countries which accept the CE Marketing certificate, including the European Union.
The Target Group will obtain the State Food and Drug Administration of the PRC (hereinafter refer to as the “SFDA”) approval for the Product at the end of 2012 and the Product will be launched in the PRC market in 2013.
The coronary stent market in the PRC is estimated to grow at the annual compound rate of 30% for the next three years and will reach approximately 900,000 stents in 2013. It is estimated that the Target Group will sell about 30,000 units of the Product in the PRC in 2013. Given the Product is the next generation of coronary stent and is developed based on more advanced technology, the first year sale estimate of 30,000 units is considered to be fair and reasonable.
The Target Group will manufacture and sell other medical device products such as coronary and peripheral vascular dilatation balloon and catheter in the PRC after obtaining the SFDA approval, which is expected to be granted in 2011.

We are of the opinion those assumptions are fair and reasonable.

9. INFORMATION REVIEWED

Our estimate requires consideration of relevant factors affecting the market value of the Target Group. The factors considered included, but were not necessarily limited to, the following:

Historical information of the Target Group;
Market trends of the pharmaceutical industry and other dependent industries;
General descriptions in relation to the Target Group; and
Economic outlook in the PRC.

We have discussed the details and reviewed the basis with the Management. The Management had confirmed with us that they have made the financial estimation of the Target Group after due and careful enquiry based on market and economic data from the industry and publicly available sources of information. We have also conducted research from various sources to verify the reasonableness and fairness of information provided and we believe that such information is reasonable and reliable. We had assumed the accuracy of information provided and relied to a considerable extent on such information in arriving at our estimate.

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10. LIMITING CONDITIONS

The valuation reflects facts and conditions existing at the Date of Valuation. Subsequent events or circumstances have not been considered and we are not required to update our report for such events and conditions.

We would particularly point out that our valuation was based on the information such as company background, business nature and market share of the Target Group provided to us.

To the best of our knowledge, all data set forth in this report are reasonable and accurately determined. The data, opinions, or estimates identified as being furnished by others that have been used in formulating this analysis are gathered from reliable sources; yet, no guarantee is made nor liability assumed for their accuracy.

We have relied to a considerable extent on the historical and/or prospective information provided by the Management and other third parties in arriving at our opinion of value. The information has not been audited or compiled by us. We are not in the position to verify the accuracy of all information provided to us. However, we have had no reason to doubt the truth and accuracy of the information provided to us and to doubt that any material facts have been omitted from the information provided. No responsibilities for the operation and financial information that have not been provided to us are accepted.

We assume that the Management is competent and perform duties under the company regulation. Also, ownership of the Target Group was in responsible hands, unless otherwise stated in this report. The quality of the Management may have direct impact on the viability of the business as well as the market value of the Target Group.

We have not investigated the title to or any legal liabilities of the Target Group and have assumed no responsibility for the title to the Target Group appraised.

Our conclusion of the market value was derived from generally accepted valuation procedures and practices that rely substantially on the use of various assumptions and the consideration of many uncertainties, not all of which can be easily quantified or ascertained. The conclusion and various estimates may not be separated into parts, and/or used out of the context presented herein, and/or used together with any other valuation or study.

We assume no responsibility whatsoever to any person other than the directors and the Management in respect of, or arising out of, the content of this report. If others choose to rely in any way on the contents of this report, they do so entirely on their own risk.

No change to any item in any part of this report shall be made by anyone except Roma Appraisals. We have no responsibility for any such unauthorized change. Neither all nor any part of this report shall be disseminated to the public through any means of communication or referenced in any publications, including but not limited to advertising, public relations, news or sales media.

This report may not be reproduced, in whole or in part, and utilized by any third parties for any purpose, without the written consent and approval of Roma Appraisals.

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The working papers and models for this valuation are being kept in our files and would be available for further references. We would be available to support our valuation if required.

11. REMARKS

Unless otherwise stated, all monetary amounts stated in this valuation report are in Renminbi (RMB).

We hereby confirm that we have neither present nor prospective interests in the Clients and the associated companies, the Target Group or the values reported herein.

12. OPINION OF VALUE

Based on the investigation and analysis stated above and on the valuation method employed, the market value of the Target Group as at the Date of Valuation, in our opinion, is reasonably estimated as RMB1,041,000,000 (RENMINBI ONE BILLION AND FORTY ONE MILLION ONLY).

Yours faithfully, For and on behalf of

Roma Appraisals Limited

Kelvin Luk	Kwan Hoi Cheung
MIBA	CFA
Director	Director

Note:

Mr. Luk is a member of the Institute of Business Appraisers. He has over 5 years of experience in valuation and consultation related to similar assets or companies engaged in similar business activities worldwide as that of the Target Group.

Mr. Kwan is a member of the CFA Institute. He has over 10 years of experience in valuation of similar assets or companies engaged in similar business activities as that of the Target Group.

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GENERAL INFORMATION

APPENDIX V

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. SHARE CAPITAL

The authorised and issued share capital of the Company as at 31 December 2009 (being the date of the latest published audited accounts of the Company), the Latest Practicable Date, immediately after the Capital Reorganisation becoming effective, after the Placing, the Completion and the allotment and issue of all the Redeemable CPS to the InnoMed Owner and the Vendor (assuming that the Placing is undertaken after the Capital Reorganisation becoming effective with the maximum number of the Placing Shares having been allotted and issued and assuming that there will be no change of the shareholding structure between the Latest Practicable Date and the date when all the Redeemable CPS are allotted and issued to the InnoMed Owner and the Vendor except for the Placing of the Placing Shares) but before any conversion of the Redeemable CPS, and immediately after the issue of the Conversion Shares upon full conversion of the Redeemable CPS into the Conversion Shares at the Conversion Ratio, were and will be as follows:

Authorised:

As at 31 December 2009 and as at the Latest Practicable Date: – shares of the Company of par value of HK$0.01 each Immediately after the Capital Reorganisation becoming effective: – CCT Tech Ordinary Shares of par value of HK$0.01 each – Redeemable CPS of par value of HK$0.01 each Total authorised capital	Number of shares 120,000,000,000	Nominal value HK$ 1,200,000,000.00
	26,533,300,000 3,466,700,000	265,333,000.00 34,667,000.00
	30,000,000,000	300,000,000.00

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GENERAL INFORMATION

APPENDIX V

Issued and fully paid and to be issued and fully paid or credited as fully paid: As at 31 December 2009 and as at the Latest Practicable Date: – shares of the Company in issue of par value of HK$0.01 each Immediately after the Capital Reorganisation becoming effective: – CCT Tech Ordinary Shares in issue – Redeemable CPS in issue Total issued share capital Immediately after the Placing, the Completion and the allotment and issue of all the Redeemable CPS to the InnoMed Owner and the Vendor: – CCT Tech Ordinary Shares in issue – CCT Tech Ordinary Shares allotted and issued to the Placees – Total CCT Tech Ordinary Shares in issue – Redeemable CPS allotted and issued to the InnoMed Owner – Redeemable CPS allotted and issued to the Vendor Total issued share capital Immediately after the issue of the Conversion Shares upon full conversion of the Redeemable CPS: – CCT Tech Ordinary Shares in issue before conversion of the Redeemable CPS – Issue of the CCT Tech Ordinary Shares upon full conversion of the Redeemable CPS CCT Tech Ordinary Shares in issue after full conversion of the Redeemable CPS Redeemable CPS in issue before conversion of the Redeemable CPS Full conversion of the Redeemable CPS Redeemable CPS in issue after full conversion of the Redeemable CPS	Number of shares 65,413,993,990	Nominal value HK$ 654,139,939.90 65,413,993.99 – 65,413,993.99 65,413,993.99 13,000,000.00 78,413,993.99 6,500,000.00 28,167,000.00 113,080,993.99 78,413,993.99 34,667,000.00 113,080,993.99 34,667,000.00 (34,667,000.00) –
	6,541,399,399 –	65,413,993.99 –
	6,541,399,399
	6,541,399,399 1,300,000,000 7,841,399,399 650,000,000 2,816,700,000	65,413,993.99 13,000,000.00
		78,413,993.99 6,500,000.00 28,167,000.00
	11,308,099,399
	7,841,399,399 3,466,700,000	78,413,993.99 34,667,000.00
	11,308,099,399
	3,466,700,000 (3,466,700,000)	34,667,000.00 (34,667,000.00
	–

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GENERAL INFORMATION

APPENDIX V

All shares of the Company, the CCT Tech Existing Shares, the CCT Tech Ordinary Shares, and the Placing Shares and the Conversion Shares to be issued rank equally in all respects, including capital, dividends and voting rights. The CCT Tech Existing Shares in issue are currently listed on the Stock Exchange. As at the Latest Practicable Date, the Company has outstanding Existing Share Options of 600,000,000 giving rights to subscribe for 600,000,000 unissued CCT Tech Existing Shares at the exercise price of HK$0.01 per CCT Tech Existing Share. Upon the Capital Reorganisation becoming effective, the Existing Share Options will be consolidated into 60,000,000 Consolidated Share Options which give the rights to their holders to subscribe for 60,000,000 CCT Tech Ordinary Shares at the revised exercise price of HK$0.10 per CCT Tech Ordinary Share. Other than the Existing Share Options, the Company has no outstanding options, warrants, conversion rights or other similar rights giving rights to subscribe for the unissued existing shares of the Company as at the Latest Practicable Date.

Save as disclosed above, since 31 December 2009 (being the date of the latest published audited accounts of the Company), no shares or loan capital of the Company has been issued or is proposed to be issued for cash or otherwise and no commissions, discounts, brokerages or other special terms has been granted in connection with the issue or sale of any such capital.

3. DISCLOSURE OF INTERESTS

(a) Directors’ interests and short positions in the shares and the underlying shares of the share options of the Company and its associated corporations

As at the Latest Practicable Date, the Directors and chief executive of the Company and/or any of their respective associates had the following interests and short positions in the shares, underlying shares and debentures of the Company and/or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO) or were required, pursuant to section 352 of the SFO, to be entered in the register of the Company referred to therein or which were required, pursuant to Part XV of the SFO or the Model Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules, to be notified to the Company and the Stock Exchange:

(1) Interests and short positions in the shares and the underlying shares of the share options of the Company as at the Latest Practicable Date
(i) Long positions in the CCT Tech Existing Shares:

				Approximate
				percentage of
	Number of the shares interested			the total issued
		and nature of interest		share capital of
Name of the Directors	Personal	Corporate	Total	the Company
				(%)
Mak Shiu Tong, Clement_(Note)_	120,000,000	33,026,391,124	33,146,391,124	50.67
Cheng Yuk Ching, Flora	18,000,000	–	18,000,000	0.03
Tam Ngai Hung, Terry	20,000,000	–	20,000,000	0.03
Chen Li	10,000,000	–	10,000,000	0.02

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GENERAL INFORMATION

APPENDIX V

Note: Of the shareholding in which Mr. Mak Shiu Tong, Clement was interested, 33,026,391,124 CCT Tech Existing Shares were held by CCT Telecom through its indirect wholly-owned subsidiaries. Mr. Mak Shiu Tong, Clement is deemed to be interested in such CCT Tech Existing Shares under the SFO as he is entitled to exercise or control the exercise of one-third or more of the voting power at general meetings of CCT Telecom through his interest in the shareholding of 50.03% of the total issued share capital in CCT Telecom as at the Latest Practicable Date.

(ii) Long positions in the underlying shares of the share options granted under the share option scheme of the Company:

						Approximate
						percentage
		Exercise		Number of	Number of	of the total
	Date of grant	period of	Exercise	the share	the total	issued share
	of the share	the share	price per	options	underlying	capital of
Name of the Directors	options	options	share	outstanding	shares	the Company
			HK$			(%)
Cheng Yuk Ching, Flora	23/7/2009	23/7/2009 –	0.01	245,000,000	245,000,000	0.37
		6/11/2012
Tam Ngai Hung, Terry	23/7/2009	23/7/2009 –	0.01	223,000,000	223,000,000	0.34
		6/11/2012
William Donald Putt	23/7/2009	23/7/2009 –	0.01	8,000,000	8,000,000	0.01
		6/11/2012
Chow Siu Ngor	23/7/2009	23/7/2009 –	0.01	8,000,000	8,000,000	0.01
		6/11/2012
Lau Ho Kit, Ivan	23/7/2009	23/7/2009 –	0.01	8,000,000	8,000,000	0.01
		6/11/2012
Chen Li	23/7/2009	23/7/2009 –	0.01	8,000,000	8,000,000	0.01
		6/11/2012

(2) Interests and short positions in the shares and the underlying shares of an associated corporation – CCT Telecom as at the Latest Practicable Date

Long positions in the shares of CCT Telecom:

				Approximate
				percentage of
				the total
	Number of the shares interested			issued share
		and nature of interest		capital of
Name of the Directors	Personal	Corporate	Total	CCT Telecom
				(%)
Mak Shiu Tong, Clement_(Note)_	8,475,652	294,775,079	303,250,731	50.03
Tam Ngai Hung, Terry	500,000	–	500,000	0.08
William Donald Putt	591,500	–	591,500	0.10

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GENERAL INFORMATION

APPENDIX V

Note: Of the shareholding in which Mr. Mak Shiu Tong, Clement was interested, an aggregate of 294,775,079 shares of CCT Telecom were beneficially held by Capital Force International Limited, New Capital Industrial Limited and Capital Winner Investments Limited, all of which are corporations wholly-owned by him, his spouse and his two sons. Mr. Mak Shiu Tong, Clement is deemed to be interested in such shares of CCT Telecom under the SFO as he controls the exercise of one-third or more of the voting power at general meetings of Capital Force International Limited, New Capital Industrial Limited and Capital Winner Investments Limited.

(3) Interests and short positions in the shares and the underlying shares of the share options of an associated corporation – CCT Resources as at the Latest Practicable Date
(i) Long positions in the shares of CCT Resources:

				Approximate
				percentage of
	Number of the shares interested			the total issued
		and nature of interest		share capital of
Name of the Directors	Personal	Corporate	Total	CCT Resources
				(%)
Mak Shiu Tong, Clement_(Note)_	19,344,000	1,331,764,070	1,351,108,070	25.36
Tam Ngai Hung, Terry	7,500,000	–	7,500,000	0.14

Note: Of the shareholding in which Mr. Mak Shiu Tong, Clement was interested, 1,331,764,070 shares of CCT Resources were beneficially held by Manistar Enterprises Limited, an indirect wholly-owned subsidiary of CCT Telecom. Mr. Mak Shiu Tong, Clement is deemed to be interested in such shares of CCT Resources under the SFO as he is entitled to exercise or control the exercise of one-third or more of the voting power at general meetings of CCT Telecom through his interest in the shareholding of 50.03% of the total issued share capital in CCT Telecom as at the Latest Practicable Date.

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GENERAL INFORMATION

APPENDIX V

(ii) Long positions in the underlying shares of the share options granted under the share option scheme of CCT Resources:

						Approximate
						percentage of
						the total
				Number of	Number of	issued
	Date of grant	Exercise	Exercise	the share	the total	share capital
	of the share	period of the	price per	options	underlying	of CCT
Name of the Directors	options	share options	share	outstanding	shares	Resources
			HK$			(%)
Mak Shiu Tong, Clement	5/7/2006	14/8/2006 –	0.038	22,500,000	22,500,000	0.42
		13/8/2011
Cheng Yuk Ching, Flora	5/7/2006	14/8/2006 –	0.038	5,000,000	5,000,000	0.09
		13/8/2011
	7/7/2009	11/8/2009 –	0.160	46,000,000	46,000,000	0.86
		6/3/2012
Tam Ngai Hung, Terry	5/7/2006	14/8/2006 –	0.038	18,000,000	18,000,000	0.34
		13/8/2011
	7/7/2009	11/8/2009 –	0.160	40,500,000	40,500,000	0.76
		6/3/2012
William Donald Putt	5/7/2006	14/8/2006 –	0.038	5,000,000	5,000,000	0.09
		13/8/2011
	7/7/2009	11/8/2009 –	0.160	3,500,000	3,500,000	0.07
		6/3/2012

(b) Particulars of the Directors’ other interests

As at the Latest Practicable Date, none of the Directors had entered or was proposing to enter into a service contract with the Company or any other member of the Enlarged Group (excluding contracts expiring or determinable by the Company or any member of the Enlarged Group within one year without payment of any compensation, other than statutory compensation).

(c) Save as disclosed above, as at the Latest Practicable Date

(i) none of the Directors and chief executive of the Company and/or any of their respective associates had any interest and short position in the shares, underlying shares and debentures of the Company and/or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO) or were required, pursuant to section 352 of the SFO, to be entered in the register of the Company referred to therein or were required, pursuant to Part XV of the SFO or the Model Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules, to be notified to the Company and the Stock Exchange;

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GENERAL INFORMATION

APPENDIX V

(ii) none of the Directors had any direct or indirect interest in any asset which had been, since 31 December 2009, being the date of the latest published audited accounts of the Company were made up, acquired or disposed of by or leased to any member of the Enlarged Group, or were proposed to be acquired or disposed of by or leased to any member of the Enlarged Group; and
(iii) none of the Directors was materially interested in any contract or arrangement entered into by any member of the Enlarged Group which contract or arrangement was subsisting and which was significant in relation to the business of the Enlarged Group taken as a whole.

(d) Substantial Shareholders’ interests

As at the Latest Practicable Date, so far as was known to, or could be ascertained after reasonable enquiries by, the Directors, the following persons (other than the Directors or chief executive of the Company) had interests or short positions in the shares or the underlying shares of the Company which would fall to be disclosed to the Company under provisions of Divisions 2 and 3 of Part XV of the SFO, or were, directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Enlarged Group:

(1) Long positions in the CCT Tech Existing Shares as at the Latest Practicable Date:

		Approximate
		percentage of
		the total issued
	Number of the	share capital
Name of the Shareholders	shares held	of the Company
		(%)
CCT Telecom (Note 1)	33,026,391,124	50.49
CCT Technology Investment Limited	33,026,391,124	50.49
(Note 2)
Jade Assets	29,326,391,124	44.83

Notes:

1. The interest disclosed represents 33,026,391,124 CCT Tech Existing Shares indirectly owned by CCT Technology Investment Limited through the subsidiaries stated in Note 2 below. CCT Technology Investment Limited is a wholly-owned subsidiary of CCT Telecom.

2. The interest disclosed represents 29,326,391,124 CCT Tech Existing Shares held by Jade Assets, 1,350,000,000 CCT Tech Existing Shares held by CCT Assets and 2,350,000,000 CCT Tech Existing Shares held by Expert Success, all of them are wholly-owned subsidiaries of CCT Technology Investment Limited.

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GENERAL INFORMATION

APPENDIX V

(2) Long positions in the underlying shares of the Redeemable CPS as at the Latest Practicable Date:

			Approximate
		Number of	percentage of
Name of	Amount of	the total	the total issued
the holders of	the Redeemable	underlying	share capital
the Redeemable CPS	CPS	shares	of the Company
	HK$		(%)
InnoMed Owner	117,000,000	6,500,000,000	9.94
		(Note 1)
Mr. Hu (Note 2)	117,000,000	6,500,000,000	9.94
		(Note 1)
Vendor	507,006,000	28,167,000,000	43.06
		(Note 1)

Notes:

1. Being number of the underlying shares of the Redeemable CPS before the proposed Share Consolidation becoming effective.

2. Mr. Hu is deemed to be interested in such underlying shares of the Redeemable CPS under the SFO as he is entitled to exercise or control the exercise of one–third or more of the voting power at general meetings of the InnoMed Owner through his 35.65% personal shareholding in the InnoMed Owner as at the Latest Practicable Date.

Save as disclosed above, so far as was known to the Directors, as at the Latest Practicable Date, there was no other person (other than the Directors or chief executive of the Company) who had any interests or short positions in the shares and the underlying shares of the Company which would fall to be disclosed under the provisions of Divisions 2 and 3 of Part XV of the SFO, or were, directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstance at general meetings of any other member of the Enlarged Group.

4. LITIGATION

As at the Latest Practicable Date, neither the Company nor any member of the Enlarged Group was engaged in any litigation or claims of material importance and no litigation or claim of material importance was known to the Directors to be pending or threatened by or against the Company or any member of the Enlarged Group.

5. COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors and their respective associates was considered to have an interest in a business which competes or is likely to compete, either directly or indirectly, with the business of the Enlarged Group.

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GENERAL INFORMATION

APPENDIX V

6. QUALIFICATIONS AND CONSENTS OF EXPERTS

(i) The following are the qualifications of the experts who have given opinions and advice which are contained in this circular:

Name Qualification Ernst & Young Certified Public Accountants T. O. Yip & Co. Limited Certified Public Accountants (“ TOYCL ”) Roma Independent valuers

(ii) None of Ernst & Young, TOYCL and Roma has any shareholding, directly or indirectly, in the Company or any member of the Enlarged Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in the Company or any member of the Enlarged Group;
(iii) Each of Ernst & Young, TOYCL and Roma has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its letter and/or reference to its name in the form and context in which it is included; and
(iv) None of Ernst & Young, TOYCL and Roma has any direct or indirect interest in any asset which had been acquired, or disposed of by, or leased to the Company or any member of the Enlarged Group, or was proposed to be acquired, or disposed of by, or leased to any member of the Enlarged Group since 31 December 2009, the date to which the latest published audited financial statements of the Group were made up.

7. MATERIAL ADVERSE CHANGE

The Directors have confirmed that there has been no material adverse change in the financial or trading position or prospects of the Group since 31 December 2009, being the date to which the latest published audited financial statements of the Group were made up, up to the Latest Practicable Date.

The Capital Reorganisation, the Placing and the Transactions will not have any adverse effect on the operation, liquidity and financial resources, and capital structure of the Enlarged Group.

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GENERAL INFORMATION

APPENDIX V

8. MATERIAL CONTRACTS

The following contracts (not being contracts entered into in the ordinary course of business of the Enlarged Group) have been entered into by the Enlarged Group within the two years immediately preceding the date of the Announcement and up to and including the Latest Practicable Date which are, or may be, material:

(i) the sale and purchase contract dated 29 October 2010 entered into between Huiyang CCT Telecommunications Products Co., Ltd. (惠陽中建電訊制品有限公司) (an indirect wholly-owned subsidiary of the Company) and an independent third party in relation to the acquisition of office premises;
(ii) the S&P Agreement dated 13 October 2010 (including the Supplemental Agreement dated 19 October 2010 and the Second Supplemental Agreement dated 22 October 2010) entered into amongst the Company, the Vendor and the Target Company;
(iii) the Placing Agreement dated 19 October 2010 entered into between the Company and the Placing Agent;
(iv) the MIV Share Charge dated 13 October 2010 executed by the Vendor in favour of the Company;
(v) the InnoMed Share Purchase Agreement dated 12 October 2010 (including the supplemental agreement dated 19 October 2010) entered into amongst the Target Company, the InnoMed Owner and Mr. Hu;
(vi) the Shanghai Ying Sheng Equity Transfer Agreement dated 11 October 2010 entered into between InnoMed and Mr. Hu; and
(vii) the conditional agreement dated 29 April 2009 as amended by the supplemental agreement dated 7 May 2009 and the second supplemental agreement dated 27 May 2009 entered into between CCT Telecom as vendor and the Company as purchaser in respect of the proposed acquisition by the Company of one share of US$1.00 each in CCT Industrial Products Holdings Limited ( “CCT Industrial” ), the then direct wholly-owned subsidiary of CCT Telecom, representing the entire issued share capital of CCT Industrial and the outstanding interest-free loan due from CCT Industrial to CCT Telecom at a consideration of HK$346,311,000 (the transaction contemplated thereunder was not proceeded as the resolution to approve the transaction was not passed by the independent shareholders of the Company at the special general meeting of the Company which was held on 29 June 2009).

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GENERAL INFORMATION

APPENDIX V

9. MISCELLANEOUS

(a) The registered office of the Company is located at Canon’s Court, 22 Victoria Street, Hamilton HM 12, Bermuda and the head office and the principal place of business of the Company in Hong Kong is located at 2208, 22/F., St. George’s Building, 2 Ice House Street, Central, Hong Kong.
(b) The branch share registrar and transfer office of the Company in Hong Kong is Tricor Tengis Limited at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong.
(c) The company secretary of the Company is Ms. Tong Kam Yin, Winnie, who is an associate member of both The Institute of Chartered Secretaries and Administrators and The Hong Kong Institute of Chartered Secretaries.
(d) All time references contained in this circular refer to Hong Kong time.
(e) In the event of inconsistency, the English text of this circular shall prevail over the Chinese text.

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection at the head office and the principal place of business of the Company in Hong Kong at 2208, 22/F., St. George’s Building, 2 Ice House Street, Central, Hong Kong during normal business hours on any Business Day from the date of this circular up to and including the date of the SGM:

(a) the memorandum of association and the bye-laws of the Company;
(b) the memorandum and articles of association of the Target Company;
(c) the Companies Act;
(d) the letter from the Board, the text of which is set out on pages 15 to 70 of this circular;
(e) the accountants’ reports of the Target Group, the text of which is set out in Appendix II to this circular;
(f) the unaudited pro forma financial information of the Group and the Enlarged Group and the comfort letter from Ernst & Young on pro forma financial information, the text of which is set out in Appendix III to this circular;
(g) the Valuation Report on the Target Group, the text of which is set out in Appendix IV to this circular;
(h) the letters of consent from Ernst & Young, TOYCL and Roma referred to under the section headed “Qualifications and Consents of Experts” in this appendix;

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GENERAL INFORMATION

APPENDIX V

(i) the annual reports of the Company for the three financial years ended 31 December 2007, 2008 and 2009;
(j) the interim reports of the Company for the six months ended 30 June 2009 and 2010;
(k) the material contracts referred to in the section headed “Material Contracts” in this appendix; and
(l) this circular.

– 167 –

NOTICE OF THE SGM

(Incorporated in Bermuda with limited liability)

(Stock Code: 00261)

NOTICE IS HEREBY GIVEN that a special general meeting (the “ SGM ”) of the shareholders of CCT Tech International Limited (the “ Company ”) will be held at 2208, 22/F., St. George’s Building, 2 Ice House Street, Central, Hong Kong on Friday, 24 December 2010 at 10:30 a.m. for the purpose of considering and, if thought fit, passing, with or without modification, the following resolutions as a special resolution and an ordinary resolution of the Company:

SPECIAL RESOLUTION

(I) “ THAT subject to the passing of the ordinary resolution numbered (II) of this notice, the capital reorganisation of the Company (the “ Capital Reorganisation ”) which involves the steps set out in paragraphs (A) to (E) below, which is conditional upon fulfillment of the conditions set out in the circular of the Company dated 30 November 2010 (the “ Circular ”) (a copy of which is tabled at the meeting and marked “A” and initialled by the chairman of the meeting (the “ Chairman ”) for identification purpose), be and is hereby approved, and the Capital Reorganisation shall become effective from 9:30 a.m. on the business day next following the day on which this resolution is passed by the shareholders of the Company:
(A) every 10 existing shares of HK$0.01 each of the Company be consolidated (the “ Share Consolidation ”) into one consolidated share of HK$0.10 each (the “ Consolidated Share(s) ”);
(B) the par value of each issued Consolidated Share be reduced from HK$0.10 to HK$0.01 by cancelling HK$0.09 of the paid-up capital on each issued Consolidated Share to form issued share of HK$0.01 each (the “ Capital Reduction ”);
(C) the credit arising from the Capital Reduction be credited to the contributed surplus account of the Company and the directors of the Company be and are hereby authorised to apply the amount in the contributed surplus account of the Company to set-off against the accumulated losses of the Company (the “ Credit Transfer ”);
(D) subject to and forthwith upon the Share Consolidation and the Capital Reduction becoming effective, the authorised share capital of the Company be increased from HK$120,000,000 divided into 12,000,000,000 shares of par value of HK$0.01 each of the Company to HK$300,000,000 divided into 30,000,000,000 shares of par value of HK$0.01 each (the “ Capital Increase ”);

– 168 –

NOTICE OF THE SGM

(E) subject to and forthwith upon the Capital Increase becoming effective, redeemable convertible preference shares of par value of HK$0.01 each of the Company (the “ Redeemable CPS ”) having the rights, benefits and restrictions set out in paragraph (F) below be created and the increased authorised share capital of HK$300,000,000 divided into 30,000,000,000 shares of par value of HK$0.01 each shall be reclassified and re-designated to the effect that the authorised share capital of the Company of HK$300,000,000 divided into 30,000,000,000 shares of par value of HK$0.01 each shall comprise of 3,466,700,000 Redeemable CPS and 26,533,300,000 ordinary shares of par value of HK$0.01 each (the “ Ordinary Share(s) ”) and all of the shares of the Company then in issue shall be designated as Ordinary Shares;
(F) the Redeemable CPS shall carry equal rights and rank pari passu with one another and each Redeemable CPS shall have the rights and benefits and subject to the restrictions as follows:
Dividend, bonus issue and distribution

Holders of the Redeemable CPS shall not be entitled to any dividend payment or any distribution (including bonus issue) of the Company.

Transferability

Subject to the lock-up provisions set forth in the S&P Agreement (as defined in the ordinary resolution numbered (II) of this notice), the Redeemable CPS are freely transferable. Any transfer shall be in compliance with the bye-laws of the Company (the “ Bye-laws ”), applicable laws and regulatory requirements, including the rules of any stock exchange on which the securities of the Company are listed.

Moratorium and conversion
3.1 The Redeemable CPSs are subject to lock-up provisions set forth in the S&P Agreement.
3.2 Subject to the lock-up set forth in the S&P Agreement and paragraph 3.3 below, holders of the Redeemable CPS shall have the right (the “ Conversion Right ”) to convert the Redeemable CPS into the Ordinary Shares at the conversion ratio of one Redeemable CPS convertible into one Ordinary Share (following completion of the Share Consolidation) (the “ Conversion Ratio ”), subject to adjustment in the manner provided in paragraph 4 below, on a day (other than a Saturday, Sunday, a public holiday or a day on which a tropical cyclone warning No.8 or above or a “black rainstorm warning signal” is hoisted in Hong Kong at any time between 9:00 a.m. and 5:00 p.m.) on which licensed banks in Hong Kong are open for general banking business (the “ Business Day ”) at any time after the issue of the Redeemable CPS.

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NOTICE OF THE SGM

3.3 If the issue of the Ordinary Shares following the exercise of the Conversion Right by a holder of the Redeemable CPS would result in (a) a holder of the Redeemable CPS and parties acting in concert with it (within the meaning of the Hong Kong Code on Takeovers and Mergers) (the “ Takeovers Code ”), taken together, directly or indirectly controlling or being interested in 30% or more of the entire issued voting share capital of the Company (or such other percentage as may from time to time be specified in the Takeovers Code as being the level for triggering a mandatory general offer) as at the date of conversion unless either (i) the holder and parties acting in concert with it comply with the Takeovers Code and make a general offer to acquire for all the Ordinary Shares not already owned by them; or (ii) a whitewash waiver to waive the requirement for the holder and parties acting in concert with it to make the mandatory general offer is approved by the independent shareholders of the Company and is granted by the Executive Director of the Corporate Finance Division of the Securities and Futures Commission pursuant to the Takeovers Code before the date of completion of the conversion; or (b) the Company not meeting the requirement under the Rules Governing the Listing of Securities (the “ Listing Rules ”) on The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”) applicable to the Company that not less than 25% or the minimum percentage as set out in the Listing Rules from time to time shall be held by the public (the “ Public Float Requirement ”) immediately after the conversion; then the number of Ordinary Shares to be issued pursuant to such conversion shall be limited to the maximum number of Ordinary Shares issuable by the Company which would not result in a breach of the Public Float Requirement or a mandatory general offer being triggered under the Takeovers Code (as the case may be), and the balance of the Conversion Right attached to the Redeemable CPS which the holder of the Redeemable CPS sought to convert shall be suspended until such time when the Company is able to issue new Ordinary Shares in satisfaction of the exercise of the said balance of the Conversion Right in compliance with the Public Float Requirement or without triggering a mandatory general offer under the Takeovers Code or the general offer is made by the holder and parties acting in concert with it or a whitewash waiver is approved and granted as set out above.
3.4 The Conversion Right may, subject as provided herein, be exercised by a holder of the Redeemable CPS delivering, at its own expense, during normal business hours on a Business Day to the principal place of business of the Company in Hong Kong a notice (the “ Conversion Notice ”) duly completed and signed stating the intention of such holder to convert and the address in Hong Kong for the delivery of the certificate(s) for the Ordinary Shares arising from such conversion together with the original certificate(s) of the Redeemable CPS. The Company shall be responsible for payment of all taxes and stamp, issue and registration fees and duties (if any), and the levies and charges (if

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NOTICE OF THE SGM

any) of the Stock Exchange arising on any such conversion. A Conversion Notice once delivered shall be irrevocable.

3.5 The Ordinary Shares arising from the conversion shall be allotted and issued by the Company, credited as fully paid, to the holder of the relevant Redeemable CPS on the day on which the Conversion Notice is given to the Company, and the Company shall within 21 Business Days thereafter issue certificate(s) for the relevant Ordinary Shares to which the holder of the relevant Redeemable CPS on exercise of its Conversion Right in board lots with one certificate for any odd lot of Ordinary Shares arising from the conversion (unless otherwise directed by the relevant holder) and shall deliver such certificate(s) to the relevant holder at the address in Hong Kong set out in the Conversion Notice (or, in the absence of such address in the Conversion Notice, the registered address of such holder) and, if applicable, a new certificate for any unconverted Redeemable CPS.
3.6 Conversion of the Redeemable CPS shall be effected in such manner as the directors of the Company shall subject to the Bye-laws and to any other applicable laws and regulations, from time to time determine provided that no conversion shall take place if to do so would result in the Ordinary Shares arising from the conversion being issued at a price below their nominal value as at the date of the conversion.
3.7 Ordinary Shares arising on conversion shall carry the right to receive all dividends and other distributions declared, made or paid upon the Ordinary Shares by reference to any record date on or after the date of surrender of the certificate(s) for the Redeemable CPS and the delivery of the Conversion Notice and shall rank pari passu in all other respects and form one class with the Ordinary Shares then in issue and fully paid.
3.8 Until such time as all Redeemable CPS have been converted to Ordinary Shares, the Company shall:
(i) at all times keep available for issue and free of all liens, charges, options, mortgages, pledges, claims, equities, encumbrances and other third-party rights of any nature, and not subject to any pre-emptive rights out of its authorised but unissued share capital such number of authorised but unissued Ordinary Shares as would enable all Redeemable CPS to be converted to Ordinary Shares and any other rights of conversion into, subscription for or exchange into Ordinary Shares to be satisfied in full; and
(ii) use its best endeavours to maintain the listing of the Ordinary Shares on the Main Board of the Stock Exchange.

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Adjustment to conversion
4.1 If while any of the Redeemable CPS remain outstanding, the Company shall subdivide or consolidate the Ordinary Shares, the Conversion Ratio applicable to any subsequent conversion shall in the case of a subdivision be increased or in the case of a consolidation be reduced proportionately.
4.2 Save as provided in paragraph 4.1, no adjustment shall be made to the Conversion Ratio as a result of any other changes to the share capital of the Company, including without limitation, to the generality of the foregoing, any bonus issue, scrip dividend or other distribution and any rights issue or other issue of shares, options to subscribe for or any other securities convertible into Ordinary Shares.
4.3 Any adjustment to the Conversion Ratio shall be made to the nearest whole number such that in the event of any fraction of a whole number of Ordinary Shares in the case of a conversion, such fraction shall be rounded down to the nearest whole number of Ordinary Shares.
4.4 Whenever the Conversion Ratio is adjusted as herein provided, the Company shall as soon as possible but no later than 28 days of the event giving rise to such adjustment give written notice to the holders of the Redeemable CPS that the Conversion Ratio has been adjusted (setting out brief particulars of the event giving rise to the adjustment, the Conversion Ratio in effect prior to such adjustment, the adjusted Conversion Ratio and the effective date thereof) and such notice shall be conclusive and binding.
Redemption
5.1 Without prejudice to the power of the Company to repurchase the Redeemable CPS in accordance with the Bye-laws, the Redeemable CPS are not redeemable except by the Company at its absolute and sole discretion, in accordance with this paragraph 5 or in accordance with the provisions of the S&P Agreement.
5.2 The Company may redeem from any source of funds legally available therefor, the Redeemable CPS at any time by paying in cash or in kind in exchange for the Redeemable CPS to be redeemed a sum equal to its issue price of HK$0.18 each (as adjusted for stock splits, stock dividends, reclassifications or the like) (the “ Redemption Price ”). Without prejudice to the foregoing, the Redeemable CPS may be redeemed by the Company upon exercise of the Put Option (within the meaning of the S&P Agreement) in accordance with the provisions of the S&P Agreement.

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NOTICE OF THE SGM

5.3 A holder of the Redeemable CPS shall have no right to demand repayment or redemption of whole or any part of the Redeemable CPS.
5.4 To redeem the Redeemable CPS, written notice shall be given to the holders of the Redeemable CPS, notifying the holders of the Redeemable CPS of the redemption to be effected, specifying the number of Redeemable CPS to be redeemed, the date on which redemption shall take place (the “ Redemption Date ”) and the applicable Redemption Price (the “ Redemption Notice ”). Unless otherwise specified by the Company in the Redemption Notice, completion of the redemption shall take place at the principal office of the Company in Hong Kong. On or before the Redemption Date, the holders of the Redeemable CPS shall surrender to the Company the certificate or certificates representing such number of the Redeemable CPS subject to the Redemption Notice, and thereupon the Redemption Price shall be (i) payable to the holders of the Redeemable CPS at the bank account designated by the holders of the Redeemable CPS in writing prior to the Redemption Date, or (ii) set off or otherwise satisfied in accordance with the S&P Agreement, and thereafter, each surrendered certificate shall be cancelled. In the event less than all the Redeemable CPS represented by any such certificate are redeemed, a new certificate shall be issued representing the unredeemed Redeemable CPS.
5.5 From and after the Redemption Date, all rights of the holders of the Redeemable CPS designated for redemption in the Redemption Notice as holders of the Redeemable CPS shall cease with respect to such Redeemable CPS, and such Redeemable CPS shall not thereafter be transferred on the books of the Company or be deemed to be outstanding for any purpose whatsoever.
Voting rights

Without prejudice to the sub-paragraph below, until the Redeemable CPS are converted into Ordinary Shares, holders of the Redeemable CPS shall be entitled to receive notices of and attend any general meetings of the Company but shall not be entitled to vote at such general meetings of the Company unless:

6.1 the resolution in question, which if passed would (subject to any consents required for such purpose being obtained) vary or abrogate the rights or privileges of the holders of the Redeemable CPS; or
6.2 the resolution in question relates to the dissolution or winding-up of the Company, in which event the Redeemable CPS shall confer on the holders thereof the right to participate and vote (either in person or by proxy) at that general meeting on an “as-converted-to-Ordinary Share” basis at the time of the relevant general meeting.

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Rights in liquidation

On a return of capital in liquidation or otherwise the assets of the Company available for distribution among the members of the Company shall be applied as follows:

7.1 firstly, towards payment to the holders of the Redeemable CPS of an amount equal to the aggregate of the amounts paid up or credited as paid up on all the outstanding Redeemable CPS (pro rata to the aggregate of the nominal amount of the Redeemable CPS held by each such holder); and
7.2 secondly, the balance of such assets shall belong to and be distributed among the holders of the Ordinary Shares and other classes of shares of the Company currently or to be created in future in the capital of the Company. Holders of the Redeemable CPS shall not have the right to participate in such remaining assets.
Listing

No listing of the Redeemable CPS shall be sought on the Stock Exchange or on any other stock exchanges. Application shall be made to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Ordinary Shares which may fall to be issued upon the exercise of the Conversion Right attaching to the Redeemable CPS.

Maturity

The Redeemable CPS shall have perpetual maturity.

(G) the allotment and issue of Redeemable CPS by the Company in accordance with the terms and subject to the conditions of the S&P Agreement as set out in the ordinary resolution numbered (II) of this notice be and is hereby approved;
(H) any redemption or repurchase of Redeemable CPS by the Company in accordance with the terms and subject to the conditions of the S&P Agreement and/or this resolution be and is hereby approved; and
(I) any director of the Company be and is hereby authorised to sign and execute such documents and do all such acts and things incidental to any of the foregoing or as he/she considers necessary, desirable or expedient in connection with the implementation of or giving effect to the Capital Reorganisation, the S&P Agreement and the transactions contemplated thereunder including without limitation to aggregate all of the fractional shares and to sell them for the benefit of the Company.”

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NOTICE OF THE SGM

ORDINARY RESOLUTION

(II) “THAT, SUBJECT TO THE PASSING OF THE SPECIAL RESOLUTION NUMBERED (I) OF THIS NOTICE:
(A) the agreement dated 13 October 2010 (the “ Original Agreement ”) amongst (1) MIV Therapeutics, Inc. as the vendor (the “ Vendor ”), the Company as the purchaser and MIV Scientific Holdings Ltd. (“ MIV Scientific ”) as amended by the supplemental agreement dated 19 October 2010 (the “ Supplemental Agreement ”) and the second supplemental agreement dated 22 October 2010 (the “ Second Supplemental Agreement ”) (the Original Agreement, the Supplemental Agreement and the Second Supplemental Agreement, together, as the “ S&P Agreement ”) (a copy of each of which is tabled at the meeting and marked “B”, “C” and “D” respectively and initialled by the Chairman for identification purpose), pursuant to which the Company conditionally agreed to purchase and the Vendor conditionally agreed to sell the Sale Shares (as defined in the Circular) in MIV Scientific and the Company conditionally agreed to subscribe for the Subscription Shares (as defined in the Circular) in MIV Scientific (the “ Transactions ”), at the total consideration of US$100,000,000, of which US$20,000,000 is to be satisfied by cash and US$80,000,000 is to be satisfied by way of allotment and issue of an aggregate of 3,466,700,000 Redeemable CPS, as to 650,000,000 Redeemable CPS in favour of the InnoMed Owner (as defined in the Circular) and as to 2,816,700,000 Redeemable CPS in favour of the Vendor, credited as fully paid at the subscription price of HK$0.18 each, pursuant to the terms and subject to the conditions set out in the S&P Agreement, and the execution of the S&P Agreement be and are hereby approved, ratified and confirmed; and that the Transactions, which constitute a major transaction for the Company under the Listing Rules, and any other transactions contemplated under the S&P Agreement, be and are hereby approved;
(B) the allotment and issue of an aggregate of 3,466,700,000 Redeemable CPS as to 650,000,000 Redeemable CPS in favour of the InnoMed Owner and as to 2,816,700,000 Redeemable CPS in favour of the Vendor to satisfy the Purchase Consideration (as defined in the Circular) of the Transactions pursuant to the terms and subject to the conditions of the S&P Agreement, be and is hereby confirmed and approved;
(C) the directors of the Company be and are hereby authorised to allot and issue up to 3,466,700,000 Ordinary Shares (subject to adjustment as a result of the change in the Conversion Ratio but not otherwise) upon exercise of the Conversion Right attaching to the Redeemable CPS pursuant to the terms and subject to the conditions set out in the S&P Agreement and subject to the rights, benefits and restrictions of the Redeemable CPS as set out in the special resolution numbered (I) of this notice and in compliance with the relevant Listing Rules, and the directors of the Company be and are hereby also authorised to do all such acts and things as they consider necessary or expedient in relation to the exercise of the Conversion Right attaching to the Redeemable CPS; and
(D) any one director of the Company, or any two directors of the Company if affixation of the common seal of the Company is necessary, be and is/are hereby authorised to execute all such other document, instrument and agreement (if any) and do all such acts and things and to take all such steps which in his/her/their opinion, may be necessary, appropriate, desirable or expedient to give effect to or in connection with the matters contemplated in and

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NOTICE OF THE SGM

for completion of the S&P Agreement and the transactions contemplated therein and to agree to any variation, amendment, supplement or waiver of matters relating thereto as is/are, in his/her/their opinion, in the interest of the Company, to the extent that such variation, amendment, supplement or waiver does/do not constitute material changes to the material terms of the transactions contemplated under the S&P Agreement.”

By Order of the Board of CCT TECH INTERNATIONAL LIMITED Mak Shiu Tong, Clement Chairman

Hong Kong, 30 November 2010

Head office and principal place of business

in Hong Kong:

2208, 22/F., St. George’s Building

2 Ice House Street

Central

Hong Kong

Notes:

1. A form of proxy for use at the SGM is enclosed herewith.

2. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his/her attorney duly authorised in writing or, if the appointor is a corporation, either executed under its common seal or under the hand of any officer, attorney or other person duly authorised to sign the same.

3. Any shareholder entitled to attend and vote at the SGM is entitled to appoint another person as his/her proxy to attend and vote instead of him/her. A shareholder who is the holder of two or more shares may appoint not more than two proxies (who must be an individual or individuals) to attend and vote instead of him/her on the same occasion. A proxy need not be a shareholder of the Company but must attend the SGM in person to represent him/her.

4. In order to be valid, a form of proxy in the prescribed form together with the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of such power or authority, must be lodged with the branch share registrar and transfer office of the Company in Hong Kong, Tricor Tengis Limited at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong, not later than 48 hours before the time appointed for holding the SGM or any adjourned meeting thereof (as the case may be). Such prescribed form of proxy for use at the SGM is also published on the websites of the Stock Exchange at www.hkexnews.hk and the Company at www.cct-tech.com.hk.

5. Completion and return of the form of proxy will not preclude shareholders from attending and voting in person at the SGM or at any adjourned meeting thereof (as the case may be) should they so wish, and in such event, the form of proxy shall be deemed to be revoked.

6. Where there are joint registered holders of any share(s), any one of such joint holders may attend and vote at the SGM or at any adjourned meeting thereof (as the case may be), either in person or by proxy, in respect of such share(s) as if he/she was solely entitled thereto, but if more than one of such joint holders are present at the SGM or at any adjourned meeting thereof (as the case may be), the most senior shall alone be entitled to vote, whether in person or by proxy. For this purpose, seniority shall be determined by the order in which the names stand in the register of members of the Company in respect of the joint holding.

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AI assistant

GBA Holdings Limited — Proxy Solicitation & Information Statement 2010

49077_rns_2010-11-29_88f5d36a-d9bc-4851-8f54-d9e89c72beee.pdf

(1) PROPOSED CAPITAL REORGANISATION AND (2) MAJOR ACQUISITION ACQUISITION OF A MEDICAL DEVICE BUSINESS

Financial Adviser to the Company for the Transactions

SAMSUNG SECURITIES (ASIA) LIMITED

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

research and development;

DEFINITIONS

DEFINITIONS

(1) PROPOSED CAPITAL REORGANISATION AND (2) MAJOR ACQUISITION ACQUISITION OF A MEDICAL DEVICE BUSINESS

INTRODUCTION

THE PROPOSED CAPITAL REORGANISATION

Effects of the Capital Reorganisation

Conditions of the Capital Reorganisation

Reasons for the Capital Reorganisation

Listing and dealings

Arrangement for odd lot trading

Free exchange of share certificates for the CCT Tech Ordinary Shares

PROPOSED CHANGE IN BOARD LOT SIZE

EXPECTED TIMETABLE

THE S&P AGREEMENT AND THE TRANSACTIONS

Assets to be acquired

The existing structure of the Target Group before completion of the InnoMed Share Purchase Agreement and the Shanghai Ying Sheng Equity Transfer Agreement

The Consideration for the Transactions

The Consideration

Subscription Consideration

Use of the Subscription Consideration

Purchase Consideration

LETTER FROM THE BOARD

Basis of determination of the Consideration

Vendor’s guarantee

Lock-up Undertakings and the Charge on the Redeemable CPS

(1) Number of Redeemable CPS

(2) Date

(2) Releases

Rights, benefits and restrictions on conversion of the Redeemable CPS

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Conditions precedent to the S&P Agreement

LETTER FROM THE BOARD

Completion of the S&P Agreement

The Put Option

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

INFORMATION ON THE TARGET GROUP

Title

Products developed by the Target Company

KEY MANAGEMENT

Particulars of the Key Management

LETTER FROM THE BOARD

Incentive to the Key Management

INDUSTRY REVIEW OF MEDICAL DEVICE INDUSTRY

Overview of global pharmaceutical industry

LETTER FROM THE BOARD

Overview of pharmaceutical industry in the PRC

Overview of medical device industry in the PRC

Factors driving the growth in the worldwide healthcare industry

Ongoing healthcare reform in the PRC

LETTER FROM THE BOARD

REGULATIONS IN RELATION TO THE MEDICAL DEVICE BUSINESS

General

Manufacturing and operation permits

Registration and clinical trials of medical devices

Export registration certificate

Advertisement and promotion

Continuing regulations

Regulation in relation to CE Marking

RISK FACTORS OF THE TRANSACTIONS

Relating to the Group

New business segment of the Group

Relating to the Target Group

Uncertainty of demand for the Specified Product

Regulatory control

LETTER FROM THE BOARD

GBA Holdings Limited Proxy Solicitation & Information Statement 2010