Trigiant Group Limited - Capital/Financing Update 2012

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**Trigiant Group Limited 俊知集團有限公司[*]**

(Incorporated in the Cayman Islands with limited liability)

WARNING

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This Web Proof Information Pack contains the following information relating to the Company extracted from the draft document:

Summary
Definitions
Glossary of Technical Terms
Risk Factors
Directors
Corporate Information
Industry Overview
Regulatory Overview
History and Development
Business
Relationship with Controlling Shareholders
Directors, Senior Management and Staff
Share Capital
Financial Information
Future Plans
Appendix IA – Accountants’ Report of the Group
Appendix IB – Accountants’ Report of Jiangsu Trigiant
Appendix III – Property Valuation
Appendix IV – Summary of the Constitution of the Company and the Companies Law
Appendix V – Statutory and General Information

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SUMMARY

This summary aims to give you an overview of the information contained in this document and should be read in conjunction with the full text of this document. Since this is only a summary, it does not contain all information that may be important to you.

OVERVIEW

Established in March 2007, the Group is one of the leading PRC manufacturers engaged in research, development and sales of RF coaxial cables, new-type electronic components and other related accessories for use in mobile communications and telecommunications equipment. According to a notice issued by OEC in February 2011, which covered all major RF cables manufacturers in the PRC, Jiangsu Trigiant, the principal operating subsidiary of the Group, ranked first in terms of sales volume for RF cables among all RF cables manufacturers in the PRC in 2010.

The Group has been awarded as one of the top 50 communications equipment suppliers by Communications Weekly (通信產業報社) and China Joint Center for Case Management (中國管理案例聯合中心) for three times. The Group was also awarded “Top 10 Feeder Cable Suppliers (ranked first) (十大饋線供應商 (第一名))” by Communications Weekly (通信產業報社), “China 3G Construction and Innovation Achievement Award” (中國3G建設與創新成就獎) in 2009, “Core Company for Optical Cables in China Communication Industry” (中國通信光電䌫行業核心企業) by the Electrical Cable and Wire Branch of China Electrical Equipment Industry Association (中國電器工業協會電線電纜分會) and OEC in 2010 and 2011, “Key Enterprise of State Torch Program (國家火炬計劃骨幹企業) by Torch High Technology Industry Development Center, Ministry of Science and Technology of PRC (中華人民共和國科學技術部火炬高技術產業開發中心) and “Top 100 PRC Electronic Component Enterprises (ranked 23rd)” (中國電子元件百強企業(第23名)) by Operation Supervision Coordination Bureau of MIIT and CECA in 2011.

The principal products of the Group are RF coaxial cables series (including RF cables for mobile communications and leaky coaxial cables). In addition, the Group manufactures and sells new-type electronic components (such as RF coaxial connectors, antenna lightning arresters and jumpers) and other related accessories (such as flame-retardant flexible cables, splitters, couplers and combiners). The products of the Group are used in the transmission systems of telecommunications operators and service providers and major equipment manufacturers in the PRC. In particular, the products can be applied in different mobile network systems, highways, railways, tunnels, underground facilities, and high-rise buildings. In FY2008, FY2009, FY2010 and the five months ended 31 May 2011, sales of the RF coaxial cables series of the Group accounted for approximately 74.7%, 71.8%, 92.5% and [93.2]% of its total turnover respectively.

– 1 –

SUMMARY

Set out below is the segment turnover of the Group during the Track Record Period:

Turnover

																	Five	Five	months	ended 31 May	ended 31 May	ended 31 May	ended 31 May
	FY2008					FY2009					FY2010						2010					2011
		_% _		of total			_% _		of total			_% _		of total				% of total					% of total
	RMB’000		turnover		RMB’000			turnover		RMB’000			turnover		RMB’000				turnover	RMB’000				turnover
																(unaudited)
*Segment*
RF coaxial cables
series	[173,881]			[74.7]%		[620,983]			[71.8]%	[1,304,738]				[92.5]%		[457,899]			[91.7]%		[657,784]			[93.2]%
New-type electronic
components	[43,213]			[18.6]%		[169,615]			[19.6]%		[73,138]			[5.2]%		[28,058]			[5.6]%		[29,984]			[4.2]%
Others	[15,648]			[6.7]%		[74,411]			[8.6]%		[32,903]			[2.3]%		[13,636]			[2.7]%		[18,222]			[2.6]%


Total	[232,742]			100%		[865,009]			100%	[1,410,779]				100%		[499,593]			[100]%		[705,990]			[100]%

The Group derives its sales principally from sales in the PRC, where it has an experienced sales force and a distribution network covering 31 provinces and municipalities. A majority of the turnover of the Group came from sales of products to the three major telecommunications operators in the PRC, namely China Unicom, China Mobile and China Telecom, as well as equipment manufacturers, including Shenzhen Zhongxin Kangxun Electronics Co., Ltd. (深圳市中興康訊電子有限公司), a subsidiary of ZTE Corporation (中興通訊股份有限公司).

Since its establishment, the Group has formed stable business relationships with its major telecommunications customers in the PRC, especially China Unicom. The Group was the largest supplier of China Unicom in 2009. As at [the Latest Practicable Date], the Group sold its products to [28] out of 31 provincial branches of China Unicom, 22 out of 31 provincial subsidiaries of China Telecom and 17 out of 31 provincial subsidiaries of China Mobile. The Group has been supplying its products to these three major PRC telecommunications operators since 2008 and derives a significant portion of its turnover from the supply of its products to them. The three major PRC telecommunications operators usually invite the Group to participate in the tender separately organised by them annually in their selection of suppliers. If the Group wins the tender, the relevant telecommunications operator will enter into a framework agreement with the Group which sets out the general terms in respect of the supply of products. The Group will need to further negotiate with the provincial subsidiaries or branches of the relevant telecommunications operator the detailed terms of specific sales contracts in each of their purchases thereafter. All suppliers of RF coaxial cables to the three major PRC major telecommunications operators are subject to the tender organised by them. The three major PRC major telecommunications operators will consider various aspects of competencies of candidates, including but not limited to, prices, qualities and services. The Directors believe that the Group is not treated any differently than its major competitors in the tender of the telecommunications operators. To the best knowledge of the Directors, the Group won the tender of the three major PRC telecommunications operators not because the Group submitted a bid lower than other bidders, but rather, amongst others, the product quality and services offered by the Group attracted the customers.

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SUMMARY

The Group relies on and expects to continue to rely on these major customers for a significant turnover contribution in the foreseeable future. To mitigate its reliance on these customers, the Group has taken various measures, including diversifying its product portfolio, identifying new customers and exploring the overseas markets. For instance, the Group became a qualified supplier of Huawei Technologies Co., Ltd. (華為技術有限公司) in December 2010. The Group expects Huawei Technology Co., Ltd. to place purchase order with the Group upon completion of certain pre-agreed quality checking procedures, which include product sample test and QPA test. In FY2008, FY2009, FY2010 and the five months ended 31 May 2011, sales to China Unicom, the largest customer of the Group, were approximately RMB210.0 million, RMB745.0, RMB[1,016.0] million and RMB[330.7] million respectively and accounted for approximately 90.2%, 86.1%, [72.0]% and [46.8]% of its total turnover respectively. In FY2008, FY2009, FY2010 and the five months ended 31 May 2011, sales to the top five customers of the Group were approximately RMB232.4 million, RMB857.0 million, RMB[1,384.4] million and RMB[689.5] million respectively and accounted for approximately 99.9%, 99.1%, [98.1]% and [97.7]% of its total turnover respectively. In addition to sales in the PRC, products of the Group are also exported overseas to India, Russia, Brazil and Southeast Asia, where the Group intends to capture the local market share.

Raw materials for the products of the Group are primarily copper-based materials, PE and PVC. The Group has established stable cooperative relationships with its key suppliers, which enables it to obtain a reliable and uninterrupted supply of raw materials. During the Track Record Period, the Group did not experience any raw material shortages that had materially affected its normal business operation. In FY2008, FY2009, FY2010 and the five months ended 31 May 2011, purchases from the top five suppliers of the Group amounted to approximately RMB129.5 million, RMB407.3 million, RMB[863.3] million and RMB[440.9] million respectively, representing approximately 61.6%, 62.9%, [80.0]% and [81.7]% of the total purchase of the Group respectively. During the same period, purchases from the single largest supplier amounted to approximately RMB48.6 million, RMB247.2 million, RMB[708.2] million and RMB[270.9] million respectively, representing approximately 23.1%, 38.2%, [65.6]% and [50.2]% of the total purchase of the Group respectively.

The Group is committed to maintaining its market position in the RF coaxial cables industry in China by enhancing its research and development capabilities and increasing its market competitiveness through improving product quality. Jiangsu Trigiant was accredited as a high and new technology enterprise (高新技術企業) jointly by the Science and Technology Department of Jiangsu Province (江蘇省科學技術廳), Finance Department of Jiangsu Province (江蘇省財政廳), Jiangsu Province State Administration of Taxation (江蘇省國家稅務局) and Jiangsu Province Local Taxation Bureau (江蘇省地方稅務局) in March 2009. The Group has obtained 19 patents in the PRC for its cable products and accessories and is in the process of applying for another 10 patents in the PRC for its products. As at the [Latest Practicable Date], the Group had developed [43] new varieties of coaxial cables, new-type electronic components and other related accessories. In recognition of its advanced research and development capabilities, the Group has received Advanced Technology Product Certificate (高新技術產品認定證書) from the Science and Technology Department of Jiangsu Province (江蘇省科學技術廳) for 10 of its products.

– 3 –

SUMMARY

Products of the Group are high quality, as evidenced by the awards and certifications given to its products by various organizations such as TL Certification Center (泰爾認證中心) and China Quality Certification Centre (中國質量認證中心). In addition, the Group received an ISO9001:2000 certification in 2007 for its quality control management. The Directors believe such awards and certifications can help the Group attract and secure new customers, thereby strengthening the competitiveness of the Group in the PRC market.

The Group experienced remarkable growth in its business in recent years. Its turnover increased from approximately RMB232.7 million in FY2008 to approximately RMB865.0 million in FY2009 and further increased to approximately RMB[1,410.8] million in FY2010, representing a CAGR of approximately [146.2]%. Its turnover increased from approximately RMB[499.6] million for the five months ended 31 May 2010 to approximately RMB[706.0] million for the five months ended 31 May 2011, representing a growth of approximately [41.3%]. During FY2008, FY2009 and FY2010, the net profit of the Group attributable to owners of the Company was approximately RMB15.3 million, RMB85.3 million and RMB[151.3] million respectively, representing a CAGR of approximately [214.7]%. The net profit of the Group attributable to owners of the Company for the five months ended 31 May 2011 was approximately RMB83.9 million, representing an increase of approximately 63.5% over the same period in 2010. To the best knowledge of the Directors, the significant growth in sales of the RF coaxial cables series of the Group during the Track Record Period was primarily attributable to the focus of the Group on the provision of quality products and after sales service to its customers, and the improvement in product quality.

NON-COMPLIANT TRADE FINANCING

During the Track Record Period, Jiangsu Trigiant on the one part and each of Fullway Technology and Bin Fan, each being a supplier of the Group, entered into certain trade financing transactions with certain PRC commercial banks which were not supported by any underlying transactions. In FY2008 and FY2009, bills in aggregate amounting to RMB70,000,000 and RMB494,000,000 respectively, were issued by Jiangsu Trigiant to Fullway Technology under these trade financing arrangements. In FY2010, bills in aggregate amounting to RMB270,000,000 were issued by Jiangsu Trigiant to Fullway Technology and Bin Fan under these trade financing arrangements. As at 31 December 2008 and 28 December 2009, bank deposits of RMB35,000,000 and RMB159,000,000 respectively, were pledged to those PRC commercial banks for such arrangements. Most of these arrangements were initiated by the relevant banks.

The PRC Legal Adviser has advised that such trade financing arrangements were not in compliance with relevant PRC laws and regulations. The Group has ceased to enter into any further non-compliant trade financing transactions after April 2010 and settled all related bills before the end of October 2010. The Group has formulated and implemented a series of measures to ensure that such non-compliant trade financing arrangements will not occur in future. For more details, please refer to the paragraph headed “The Group has previously entered into certain trade financing transactions that were not in compliance with PRC laws” under the sub-section headed “Risks relating to the Business” in the section headed “Risk Factors” and the paragraph headed “Non-compliant trade financing” in the section headed “Business” of this document.

– 4 –

SUMMARY

COMPETITIVE STRENGTHS

The Directors believe that the Group has the following competitive strengths:

Strong research and development capabilities
Experienced sales and marketing team with extensive sales and distribution network
High quality control standards
Comprehensive range of products
Strong customer base
Advanced manufacturing technology and large-scale production capacity
Experienced management team and technical staff

BUSINESS STRATEGIES

The business objectives of the Group are to expand its production capacity, broaden its product range and maintain its market leading position in the RF coaxial cables industry in the PRC. Below are the business strategies of the Group:

Strengthen research and development capabilities
Diversify product range
Expand market share in the PRC
Broaden the sales and distribution network of the Group
Expand production capacity
Explore strategic cooperation opportunities

– 5 –

SUMMARY

SUMMARY OF TRACK RECORD PERIOD

The following table sets out a summary of the combined financial information of the Group during the Track Record Period which has been prepared in accordance with HKFRS. This summary should be read in conjunction with the section headed “Financial Information” and the Accountants’ Reports set out in Appendices IA and IB to this document.

Summary of statements of comprehensive income

The following table sets out the statements of comprehensive income of Jiangsu Trigiant for FY2008 and FY2009 (immediately before the change in control of Jiangsu Trigiant on 29 December 2009) and the combined statements of comprehensive income of the Group for FY2010 (after the change in control of Jiangsu Trigiant on 29 December 2009) and the five months ended 31 May 2010 and 2011 respectively.

	Jiangsu	Trigiant		The Group
				Five months ended
				31	May
	FY2008	FY2009	FY2010	2010		2011
	RMB’000	RMB’000	RMB’000	RMB’000		RMB’000
				(unaudited)
Turnover	232,742	865,009	1,410,779	499,593		705,990
Cost of goods sold	(190,820)	(654,888)	(1,121,218)	(394,958)		(552,527)
Gross profit	41,922	210,121	289,561	104,635		153,463
Other gains and losses	2,220	5,709	12,150	2,110		6,539
Selling and distribution costs	(7,302)	(60,849)	(24,299)	(8,098)		(11,529)
Administrative expenses	(19,405)	(43,510)	(58,478)	(20,844)		(31,648)
Finance costs	(2,163)	(26,217)	(39,448)	(15,886)		(17,087)
Profit before taxation	15,272	85,254	179,486	61,917		99,738
Taxation	–	–	(28,225)	(10,564)		(15,790)
Profit for the year/period	15,272	85,254	151,261	51,353		83,948
Other comprehensive income
Revaluation surplus on
properties upon transfer to
investment properties	–	–	830	830		–
Income tax relating to the
component of other
comprehensive income	–	–	(208)	(208)		–
Total comprehensive income for
the year/period	15,272	85,254	151,883	51,975		83,948

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SUMMARY

Summary of statements of financial position

The following table sets out the statements of financial position of Jiangsu Trigiant as at 31 December 2008 and 28 December 2009 (immediately before the change in control of Jiangsu Trigiant on 29 December 2009) and the combined statements of financial position of the Group as at 31 December 2010 and 31 May 2011.

	Jiangsu	Trigiant	The Group	The Group
	At 31	At 28	At 31	At
	December	December	December	31 May
	2008	2009	2010	2011
	RMB’000	RMB’000	RMB’000	RMB’000
Non-current assets
Investment properties	–	–	[17,900]	[18,100]
Property, plant and equipment	[107,828]	[177,144]	[190,977]	[185,205]
Land use rights	[11,514]	[51,223]	[73,392]	[72,604]
Available-for-sales investments	–	–	[20,000]	[20,000]

	[119,342]	[228,367]	[302,269]	[295,909]

Current assets
Inventories	[40,483]	[65,300]	[59,980]	[68,520]
Trade and other receivables	[250,526]	[673,497]	[780,308]	[900,759]
Advances to a fellow subsidiary	[30,000]	[66,000]	–	[–]
Land use rights	[244]	[1,226]	[1,891]	[1,891]
Pledged bank deposits	[81,199]	[206,295]	[89,620]	[140,620]
Bank balances and cash	[9,400]	[89,400]	[338,916]	[307,208]

	[411,852]	[1,101,718]	[1,270,715]	[1,418,998]

Current liabilities
Trade and other payables	[101,997]	[209,010]	[297,414]	[306,742]
Amount due to a director	[27,000]	[34,000]	[2,797]	[8,556]
Amounts due to shareholders	–	–	[198,070]	[194,367]
Bills payable to a fellow
subsidiary	[70,000]	[164,000]	[–]	[–]
Bank borrowings
– due within one year	[94,696]	[600,239]	[680,000]	[735,400]
Tax payables	–	–	[8,657]	[7,840]
	[293,693]	[1,007,249]	[1,186,938]	[1,252,905]

– 7 –

SUMMARY

	Jiangsu	Trigiant	The Group	The Group
	At 31	At 28	At 31	At
	December	December	December	31 May
	2008	2009	2010	2011
	RMB’000	RMB’000	RMB’000	RMB’000
Net current assets	[118,159]	[94,469]	[83,777]	[166,093]

Total assets less current liabilities	[237,501]	[322,836]	[386,046]	[462,002]

Non-current liabilities
Government grants	[1,900]	[1,895]	[2,770]	[2,585]
Payable for acquisition
of land use rights	–	[13,502]	[5,502]	[5,502]
Bank borrowings
– due after one year	[80,000]	[70,000]	[150,000]	[140,000]
Deferred taxation	–	–	[12,937]	[15,130]

	[81,900]	[85,397]	[171,209]	[163,217]

Net assets	[155,601]	[237,439]	[214,837]	[298,785]


Capital and reserves
Paid-in capital/share capital	[148,339]	[216,670]	[7]	[7]
Reserves	[7,262]	[20,769]	[214,830]	[298,778]

Total equity	[155,601]	[237,439]	[214,837]	[298,785]

– 8 –

SUMMARY

RISK FACTORS

The Directors consider that there are certain risks involved in the business operations of the Group and the details of such risks are set out in the section headed “Risk Factors” of this document. The risks can be broadly divided into four main categories including (i) risks relating to the business; (ii) risks relating to the industry; (iii) risks relating to the PRC; and (iv) [●], which are summarised below:

Risks relating to the Business

The limited operating history of the Group may make it difficult to evaluate its business, financial performance or prospects
The Group has been substantially dependent on sales of its RF coaxial cables series during the Track Record Period. Its business, financial condition and results of operation would be materially and adversely affected if sales of these products were to decline and/or if it fails to diversify its products
The future growth of the Group is dependent upon its research and development of new products, which may not result in any commercially viable products
The Group is dependent on its major customers and sales to them are subject to their respective tender
The Group is exposed to risks arising from credit terms extended to its customers
The Group relies upon its major raw material supplier
The Group had negative cash flow from operating activities for FY2008, FY2009 and the five months ended 31 May 2010
If the Group is unable to retain, recruit and hire skilled and experienced personnel, its ability to effectively manage its operations and meet its strategic objectives will be harmed
If the patents and other intellectual property rights of the Group do not adequately protect its products, the Group may lose market share to its competitors and be unable to operate its business profitably
Any disruption in the manufacturing facilities of the Group could cause losses to the Group and materially and adversely affect its business, financial condition and results of operations
The Group has previously entered into certain trade financing transactions that were not in compliance with PRC laws

– 9 –

SUMMARY

The Controlling Shareholders have substantial influence over the Company and their interests may not be aligned with the interests of other Shareholders
The Group may not have adequate insurance coverage for its potential losses and liabilities

Risks relating to the Industry

The Group is dependent on the PRC telecommunications industry
The Group operates in a competitive environment and if it is unable to stay competitive, its results of operations may be adversely affected
The Group is subject to risks associated with technological changes
Failure to meet industry technical standards prescribed by relevant authorities and specifications of customers may result in product liability claims and may adversely affect the business, financial condition and results of operations of the Group
An increase in the prices or a shortage of raw materials will lead to increased costs and will adversely affect the results of operations of the Group
The Group faces risks related to natural disasters and health epidemics in China, which could have a material adverse effect on its business and results of operations

Risks relating to the PRC

The recent global market fluctuations, economic downturn and decline in the availability of credit could materially and adversely affect the business, financial condition and results of operation of the Group
Changes in political or economic policies, and a slowdown in the economy of the PRC may have a material adverse impact on the business, financial condition and results of operation of the Group
Changes and uncertainties in the PRC legal system may have a material adverse impact on the business, financial condition and results of operation of the Group
There are certain restrictions on payment of dividends under PRC law
The Company may be deemed a PRC resident enterprise under the new PRC Enterprise Income Tax Law and be subject to PRC taxation on its worldwide income
Dividends payable by the Company to its foreign investors and gain on the sale of its Shares may become subject to withholding taxes under PRC tax laws

– 10 –

SUMMARY

Changes in or discontinuation of the favourable tax treatments in PRC currently available to the Group could adversely affect its business, financial condition and results of operation
The Group is subject to a wide variety of environmental protection regulations, such regulations and the costs associated with the compliance thereof could harm its business
The implementation of the labour contract law and increase in labour costs in the PRC may adversely affect the business and profitability of the Group
Fluctuations in the value of Renminbi may have material adverse effect on [●]
PRC government control over currency conversion may affect the value of [●] and limit the ability of the Group to use its cash effectively
PRC regulation of direct investment and loans by offshore holding companies to PRC entities may delay or limit the Group from using [●] of [●] to make additional contribution or loans to its PRC subsidiaries
Failure to comply with SAFE regulations relating to the establishment of offshore special purpose vehicles by PRC residents, particularly SAFE Circular No. 75, may adversely affect the business operations of the Group
The M&A Rules established more complex procedures for acquisitions by foreign investors, which could make it more difficult for the Group to pursue growth through acquisitions
It may be difficult to enforce judgments against the Group in the PRC
The Group may be indirectly affected by changes in government regulations relating to the telecommunications industry in the PRC
Forward-looking statements contained in this document are subject to risks and uncertainties

– 11 –

DEFINITIONS

In this document, unless the context otherwise requires, the following terms and expressions shall have the following meanings:

“Abraholme”
Abraholme International Limited, a company incorporated in BVI on 3 January 2007 and owned as to 80% by Mr. Qian and 20% by Ms. Wu Di, an Independent Third Party, as at the Latest Practicable Date
“Ace Speed”
Ace Speed Group Limited, a company incorporated in the BVI on 19 April 2007 and wholly owned by China World Agents Limited which in turn was wholly owned by Goi Seng Hui, an Independent Third Party, as at the Latest Practicable Date
“Articles” or “Articles of Association”
the articles of association of the Company, adopted by the sole Shareholder on [●], a summary of certain provisions of which is set out in Appendix IV to this document, as amended from time to time
“associate(s)”
has the meaning ascribed to it under [●]
“Bin Fan”
吳江市賓凡國際貿易有限公司 (Wujiang City Bin Fan International Trade Co., Ltd.*), a company with limited liability established in the PRC [and as at [the Latest Practicable Date] owned equally by two Independent Third Parties, namely 沈阿根 and 張阿二]
“Board” the board of Directors
“Business Day”
any day (other than a Saturday, Sunday or public holiday in Hong Kong and any day on which a tropical cyclone warning signal No. 8 or above or a “black” rainstorm warning signal is issued or remains issued between 9:00 a.m. and 12:00 noon and is not cancelled at or before 12:00 noon) on which banks are generally open for business in Hong Kong throughout their normal business hours
“BVI” the British Virgin Islands
“CBRC”
China Banking Regulatory Commission (中國銀行業監督管理委員會), a regulatory body responsible for the supervision and regulation of banking institutions in the PRC

– 12 –

DEFINITIONS

“CCID” CCID Consulting Co., Ltd., a Chinese consulting firm, and an Independent Third Party, the shares of which are listed on the Growth Enterprise Market of the Stock Exchange. Certain market information on the PRC RF coaxial cables industry in this document is quoted from its report on the study of the RF coaxial cables market

“CECA” China Electronics Components Association (中國電子元件行業協會), a national industry association, established by enterprises in the electronic components industry and related institutions on 16 November 1988. The government authority of CECA is MIIT. It currently has approximately 1,600 members and 14 sub-associations
“chief executive” the chief executive (as defined in Part XV of the SFO) of the Company
“China Mobile” China Mobile Communications Corporation (中國移動通信集團公司), a state-owned company established in the PRC
“China Telecom” China Telecommunications Corporation (中國電信集團公司), a state-owned company established in the PRC
“China Unicom” China United Network Communications Group Co., Ltd. (中國聯合網路通信股份有限公司), a state-owned company with limited liability established in the PRC
“Companies Law” the Companies Law, Cap. 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands
“Companies Ordinance” the Companies Ordinance (Chapter 32 of the Laws of Hong Kong) as amended, supplemented or otherwise modified from time to time
“Company” Trigiant Group Limited, an exempted company incorporated in the Cayman Islands with limited liability on 23 December 2010
“connected person(s)” has the meaning ascribed to it under [●]

– 13 –

DEFINITIONS

“Controlling Shareholder(s)”

has the meaning ascribed to it under [●] and, in the case of the Company, means Trigiant Investments, Abraholme and Mr. Qian, individually and as a group of persons where the context requires

“CSRC”
China Securities Regulatory Commission (中華人民共和國證券監督管理委員會), a regulatory body responsible for the supervision and regulation of the PRC national securities markets
“Director(s)” the director(s) of the Company
“Forerich”
Forerich Investments Limited, a company incorporated in the BVI on 1 September 2005 and owned as to 22% by Sun Xue Lin, 30% by Shen Xinren, 24% by Sun Jinrong, 14% by Dai Xiaolin and 10% by Yu Daxiong, each being a senior management member or a staff of the Group, as at the Latest Practicable Date
“Fullway Technology” Fullway Technology Co., Ltd. (富威科技 (吳江)有限公司), a company incorporated in the PRC with limited liability, which was acquired by Trigiant Singapore in November 2007, subsequently transferred to 宜興市富創電子科技有限公司, Premo Superior Investments Limited and Smart Time Enterprise Limited in December 2009[, and owned by 宜興市富創電子科技有限公司 and Premo Superior Investments Limited, as at the Latest Practicable Date]
“FY2008”
the financial year ended 31 December 2008
“FY2009”
the period from 1 January 2009 to 28 December 2009 (being the day immediately before the change in control of Jiangsu Trigiant)
“FY2010” the period from 29 December 2009 (being the day on which the change in control of Jiangsu Trigiant took place) to 31 December 2010
“GAAP”
Generally Accepted Accounting Principles
“GDP”
gross domestic product

– 14 –

DEFINITIONS

“Group” the Company and its subsidiaries or, where the context so requires, in respect of the period before the Company became the holding company of its present subsidiaries, the present subsidiaries of the Company and the business operated by such subsidiaries
“Headwell” Headwell International Limited, a company incorporated in the BVI on 5 October 2005 and owned as to 32% by Jiang Wei (an executive Director), 28% by Xie Jie, 24% by Jiang Xinhong (a senior management member of the Group) and 16% by Sun Huxing as at the Latest Practicable Date
“Hengxin (Jiangsu)”
江蘇亨鑫科技有限公司 (Jiangsu Hengxin Technology Co., Ltd.), a company established in the PRC and a wholly owned subsidiary of Hengxin (Singapore)
“Hengxin (Singapore)” Hengxin Technology Ltd. (亨鑫科技有限公司), a company incorporated in Singapore, the holding company of Hengxin (Jiangsu) and whose shares are listed on the Singapore Exchange Securities Trading Limited and the Main Board of the Stock Exchange
“HK$” and “HK cents”
Hong Kong dollars and cents, respectively, the lawful currency of Hong Kong
“HKFRS”
Hong Kong Financial Reporting Standards issued by Hong Kong Institute of Certified Public Accountants
“Hong Kong”
the Hong Kong Special Administrative Region of the PRC
“Independent Third Parties”
persons or companies which are independent of and not connected with any of the directors, chief executive, Substantial Shareholders of the Company or any of its subsidiaries and their respective associates, and “Independent Third Party” shall be construed accordingly

– 15 –

DEFINITIONS

“Jiangsu Opto-electrical”
“Jiangsu Sensing”
“Jiangsu Trigiant”
“JSPTPD”
“JSPTPD Report”
“Latest Practicable Date”
“Memorandum” or
“Memorandum of Association”

江蘇俊知光電通信有限公司 (Jiangsu Trigiant Optoelectrical Telecommunication Co., Ltd.*), a limited liability company established in the PRC on 1 March 2010 and owned as to 12.5% by Jiangsu Trigiant, 10.625% by 宜興市杰聯通信技術有限公司 (an Independent Third Party), 43.75% by 宜興市光迅通信設備有限公司 (an Independent Third Party) and 33.125% by 宜興市新富環保設備有限公司 (an Independent Third Party) as at the Latest Practicable Date

江蘇俊知傳感技術有限公司 (Jiangsu Trigiant Sensing Technology Co., Ltd.*), a limited liability company established in the PRC on 1 March 2010 and owned as to 12.5% by Jiangsu Trigiant, 10.625% by 宜興市恆隆通信技術有限公司 (an Independent Third Party), 43.75% by 宜興市博創網絡科技有限公司 (an Independent Third Party) and 33.125% by 江蘇泉溪環保股份有限公司 (an Independent Third Party) as at the Latest Practicable Date
江蘇俊知技術有限公司 (Jiangsu Trigiant Technology Co., Ltd.*), a wholly foreign-owned enterprise established in the PRC on 15 March 2007 and an indirect wholly-owned subsidiary of the Company
江蘇省郵電規劃設計院有限責任公司 (Jiangsu Posts & Telecommunications Planning and Designing Institute Co., Ltd*), an independent market research agency commissioned by the Group to issue a market research report
通信綫纜行業報告 (Analysis Report on the Telecommunication Wire and Cable Industry), a market research report dated [●] and prepared by JSPTPD as commissioned by the Group
[●], being the latest practicable date prior to the printing of this document for ascertaining certain information contained herein
the memorandum of association of the Company, a summary of certain provisions of which is set out in Appendix IV to this document, and as amended from time to time

– 16 –

DEFINITIONS

“MIIT” the Ministry of Industry and Information Technology of the PRC (中華人民共和國工業和信息化部) (previously known as the Ministry of Information Industry of the PRC (中華人民共和國信息產業部))
“MOFCOM”
the Ministry of Commerce of the PRC (中華人民共和國商務部)
“Mr. Qian” Mr. Qian Lirong (錢利榮), an executive Director and the chairman of the Board
“OEC” China Electronics Components Association, Optical Fiber and Electric Cable Sub-association (中國電子元件行業協會光電線纜分會), one of the 14 sub-associations of CECA. It is a national industry association, established by optical and electronic cable manufacturing enterprises and their raw material and equipment suppliers, related research institute and colleges on 28 March 1988. The governing authority of OEC is MIIT
“PBOC” the People’s Bank of China (中國人民銀行)
“PRC” or “China”
the People’s Republic of China which, for the purpose of this document, excludes Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan
“PRC Company Law” The Company Law of the PRC (中華人民共和國公司法), enacted by the Standing Committee of the National People’s Congress on 29 December 1993, which became effective on 1 July 1994, as amended, supplemented or otherwise modified from time to time. The latest revision was approved on 27 October 2005 and came into effect on 1 January 2006
“PRC Legal Adviser” Jin Mao PRC Lawyers (金茂凱德律師事務所), the legal adviser to the Company as to PRC laws
“Reorganisation”

the corporate reorganisation of the Group in preparation for [●], particulars of which are set out in the paragraph headed “The Reorganisation” under the section headed “History and Development” and the paragraph headed “Reorganisation” in Appendix V to this document

“RMB”

Renminbi, the lawful currency of the PRC

– 17 –

DEFINITIONS

“SAFE” State Administration of Foreign Exchange of the PRC (中華人民共和國國家外匯管理局) “SAFE Circular No. 75” the Circular on Issues Relating to Foreign Exchange Control on Fund-raising by Domestic Residents through Offshore Special Purpose Vehicles and Round-trip Investments (國家外匯管理局關於境內居民通過境外特殊目的公司融資及返程投資外匯管理有關問題的通知) promulgated on 21 October 2005 by SAFE

“Share(s)” ordinary share(s) with nominal value of HK$0.01 each in the share capital of the Company
“Shareholder(s)” holder(s) of the Shares
“Singapore” The Republic of Singapore
“subsidiary(ies)” has the meaning ascribed to it under section 2 of the Companies Ordinance and when construed in the context of [●], has the meaning ascribed to it under [●]
“Substantial Shareholder(s)” has the meaning ascribed to it under [●] and in the context of the Company, means Mr. Qian, Abraholme and Trigiant Investments
“S$” Singapore dollar(s), the lawful currency of Singapore “Track Record Period” the period comprising FY2008, FY2009, FY2010 and the five months ended 31 May 2011

“Trigiant BVI” Trigiant Holdings Limited, formerly known as NEW BRIGHT ASSETS MANAGEMENT LIMITED and CENARION INVESTMENTS LTD, a company incorporated in the BVI with limited liability on 12 May 2004 and is a direct wholly-owned subsidiary of the Company “Trigiant Hong Kong” Trigiant (HK) Limited (俊知 (香港)有限公司), formerly known as Chinese Team Limited (浚添有限公司), a company incorporated in Hong Kong with limited liability on 8 December 2009 and is an indirect whollyowned subsidiary of the Company

– 18 –

DEFINITIONS

“Trigiant Investments” Trigiant Investments Limited, formerly known as Superb Market Limited, a company incorporated in the BVI with limited liability on 22 November 2010 and owned as to 55.5% by Abraholme, 25% by Forerich, 5.5% by Headwell, 12% by Zymmetry, and 2% by Ace Speed as at the Latest Practicable Date
“Trigiant Singapore” Trigiant Group Pte. Ltd., a company incorporated in Singapore on 15 February 2007 and, which was owned as to 100% by Abraholme when Jiangsu Trigiant was established on 15 March 2007
“Twelfth Five-Year Plan” the Twelfth Five-year Plan for the national economy and social development of the PRC for the period from 2011 to 2015
“United States” or “U.S.” the United States
“US$” US dollars, the lawful currency of the U.S.
“Zymmetry” Zymmetry Investments Ltd, a company incorporated in the BVI on 13 March 2007 and is wholly owned by Toe Teow Heng (an Independent Third Party) as at the Latest Practicable Date
“km” kilometre
“sq.m” square metre
“%” per cent.

Unless the context requires otherwise, amounts denominated in RMB have been converted into HK$, for the purpose of illustration only, using the exchange rate of RMB[0.82] = HK$[1]. No representation is made that any amount in RMB or HK$ could have been or could be converted at the above rates or at any other rates or at all.

Certain amounts and percentage figures included in this document have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures preceding them.

For ease of reference, the names of certain PRC entities have been included in this document in both English and Chinese languages. The English names are the unofficial translation of their respective Chinese name, and in the event of any inconsistency, the Chinese name shall prevail.

– 19 –

GLOSSARY OF TECHNICAL TERMS

This glossary contains explanations of certain terms used in this document in connection with the Company and its business. The terminologies and their meanings may not correspond to standard industry meanings or usage of those terms.

“2G”

abbreviation for second generation. 2G is a term commonly used to describe the second generation technology used in a specific application or industry. In cellular telecommunications, 2G systems use digital radio technology with advanced messaging and data capabilities

“3G”

abbreviation for third generation. 3G is a term commonly used to describe the third generation of technology used in mobile cellular telecommunications systems, which uses wideband digital radio technology (as opposed to first generation analog systems and second generation digital cellular systems)

“4G”

abbreviation for fourth generation. 4G is a term commonly used to describe the fourth generation of technology used in mobile cellular telecommunications system, which is a successor to the 3G and 2G standards

“antennas”

antenna arrays with signal processing algorithms used to identify spatial signal signature such as the direction of arrival (DOA) of the signal, to calculate beamforming vectors, to track and locate the antenna beam on the mobile target

“argon arc welding”

a welding process that generates an arc between the electrode and the metal work pieces with high electrical voltage, high frequency pulses (or high electrical voltage pulses) under the protection of inert gas such as argon, resulting in the work pieces being heated to higher temperature and fusion

“arrester”

an electronic device that discharges and releases lightning or overvoltage energy of a power system in order to protect communications equipment from instantaneous overvoltage damage

“attenuation”

loss of power or strength of radio signal in the cable, expressed in decibels (dB)

– 20 –

GLOSSARY OF TECHNICAL TERMS

“base station” the radio part of a cellular radio transmission site. A single base station usually contains several radio transmitters, receivers, control sections and power supplies

“CAGR” compound annual growth rate
“CDMA”

abbreviation for Code Division Multiple Access. It is a system that allows multiple users to share one or more radio channels for service by adding a unique code to each data signal that is being sent to and from each of the radio transceivers. These codes are used to spread the data signal to a bandwidth much wider than is necessary to transmit the data signal without the code

“CDMA2000” abbreviation for Code Division Multiple Access 2000. It is an evolved version of the CDMA system that uses wider bandwidth radio channels and enhanced packet transmission protocols to provide for advanced highspeed data services
“combiner” a device that synthesizes multi-channel signal energy into one output
“connector” also called plug or socket, an accessory that connects two active devices in order to transmit electric currents and signals

“coupler” a device that transmits power between system components, which mostly consists of devices with multiple ports such as orientation couplers, power divider, and a variety of microwave branch devices “GB/T28001-2001” a national standard issued by TL Certification Center that complies with the occupational health and safety management activities for the design and manufacturing of a variety of products

“GSM” abbreviation for Global System for Mobile Communications. It is a digital cellular telephone system that originated in Europe and is now available in most parts of the world. The GSM system uses 200kHz wide channels that are divided into frames that hold 8 time slots

– 21 –

GLOSSARY OF TECHNICAL TERMS

“integration of three networks”
the integrated development of telecommunications network, broadcasting television network and internet in order to realise the interconnection of three networks and the ability to share resources in order to provide users with multiple services such as voice, data and broadcasting television
“Internet of Things”
also known as “Internet of Objects”. It refers to the networked interconnection of everyday objects. It is generally viewed as a self-configuring wireless network of sensors whose purpose would be to interconnect all things. The concept is that if all objects of daily life are equipped with radio tags, they can be identified and managed by computers in the same way humans can. The Internet of things should encode 50 to 100 trillion objects and follow the movement of those objects
“ISO”
International Organisation of Standards, a world-wide federation of national standards bodies whose mission is to develop industrial standards that facilitate international trade
“ISO9001:2000”

a standard under ISO which requires organisations seeking compliance or certification to define the processes which form the Quality Management System and the sequence and interaction of these processes

“ISO14001:2004”
a standard under ISO. The International Standard ISO14001 sets out requirements for an Environmental Management System (EMS) which can be employed by an organisation to measure and document their environmental impact. EMS’s that meet the ISO14001 requirements can be externally audited and certified by an accredited Certification Body. The updated systematic ISO14001:2004 approach requires the organisation to take a hard look at all areas where its activities have an environmental impact

“jumper”

part of the assembly for RF coaxial cables, which is made up of a length of coaxial cable with connectors at both ends of the cable

– 22 –

GLOSSARY OF TECHNICAL TERMS

“new-type electronic types of components including sensitive components and components” sensors, frequency control components, hybrid integrated circuits, power electronic devices, photoelectric devices and new-type electromechanical components; and photoelectric devices including jumpers, connectors and antenna lightning arresters

“PE” abbreviation for Polyethylene, which is a thermoplastic material commonly used in packaging and insulation and created through the polymerization of ethene
“PVC” abbreviation for Polyvinyl Chloride, which is a thermoplastic polymer constructed of repeating vinyl group having one hydrogen replaced by chloride, commonly used as electrical insulator for wires and cables
“RF” abbreviation for radio frequency. When RF current is supplied to an antenna, an electromagnetic field is created enabling the RF current to propagate through space. Many wireless technologies are based on RF field propagation
“TD-SCDMA” abbreviation for Time Division Synchronous Code Division Multiple Access. It is a 3G mobile standard developed in the PRC and approved by the International Telecommunication Union
“thermoplastic” a polymer that softens when heated and hardens when cooled
“TL Certification Center” the only professional certification institute in quality management system, environmental management system, occupational health and safety management system and products of enterprises in the telecommunications industries in the PRC. It is under the China Academy of Telecommunication Research of MIIT
“VSWR”
abbreviation for voltage standing wave ratio. VSWR is a ratio value that indicates the homogeneity of cable
“WCDMA”
abbreviation for Wideband Code Division Multiple Access. It is a 3G digital cellular system that uses radio channels which has a wider bandwidth than 2G digital cellular systems

– 23 –

RISK FACTORS

RISKS RELATING TO THE BUSINESS

The limited operating history of the Group may make it difficult to evaluate its business, financial performance or prospects

The Group has a limited operating history. Jiangsu Trigiant, the principal operating subsidiary of the Group in the PRC, was established in March 2007. The turnover of the Group in FY2008, FY2009 and FY2010 was approximately RMB232.7 million, RMB865.0 million, RMB[1,410.8] million respectively, representing an increase of approximately 271.7% from FY2008 to FY2009 and an increase of approximately [63.1]% from FY2009 to FY2010. The turnover of the Group for the five months ended 31 May 2011 was approximately RMB706.0 million, representing [an increase] of approximately [41.3]% from the five months ended 31 May 2010 to the five months ended 31 May 2011. However, due to the limited operating history of the Group, its previous results may not provide a meaningful basis for prospective investors to evaluate its business, financial condition, results of operation and future prospects, and there can be no assurance that the Group will be able to achieve similar results or growth in future.

The Group has been substantially dependent on sales of its RF coaxial cables series during the Track Record Period. Its business, financial condition and results of operation would be materially and adversely affected if sales of these products were to decline and/or if it fails to diversify its products

The Group has been dependent on sales of its RF coaxial cables series for a substantial portion of its turnover during the Track Record Period. The RF coaxial cables series of the Group generated approximately 74.7%, 71.8%, [92.5]% and [93.2]% of the Group’s turnover in FY2008, FY2009, FY2010 and the five months ended 31 May 2011, respectively. The Group expects to continue to derive a majority of its turnover from sales of its RF coaxial cables series in future. If the Group is unable to continue to manufacture or sell its RF coaxial cables series due to regulatory, intellectual property or other reasons, or if the RF coaxial cables series of the Group become unacceptable or less favourable to its major customers due to their more stringent specifications, or if the Group fails to diversify its products as described in the paragraph headed “Business strategies and future plans” under the section headed “Business” in this document, the turnover of the Group would decline, and its business, financial condition and results of operation would be materially and adversely affected accordingly.

The future growth of the Group is dependent upon its research and development of new products, which may not result in any commercially viable products

The market for RF coaxial cables for mobile communications in the PRC is competitive, and market participants frequently modify their designs to adjust to changing market preferences and develop new designs to broaden their product range. As a result, the future growth of the Group is highly dependent on its ability to develop and launch new products that meet market demand and any delay in launching its product may significantly impede its ability to compete.

– 24 –

RISK FACTORS

The Group expands resources on research and development to develop new products and upgrade its existing products. However, there is no assurance that the Group is able to successfully develop and launch products as anticipated by its customers and this may have adverse impact on the ability of the Group to maintain its position in the market or increase its market share for these products. Furthermore, in the event of unexpected poor market response to the new products of the Group, the turnover generated from these products may not be able to cover its research, development and marketing costs. In addition, there is no assurance that these products will achieve technological feasibility, meet prescribed national or industrial technical standards or gain market acceptance. Failure to successfully commercialise its new products would have an adverse impact on the business operations and financial performance of the Group.

The Group is dependent on its major customers and sales to them are subject to their respective tender

The Group derives a significant portion of its turnover from the sale of its products to the three major telecommunications operators in the PRC, namely China Unicom, China Mobile and China Telecom and their respective branches or subsidiaries, all of them are major customers of the Group. They usually invite the Group to participate in the tender separately organised by them annually. If the Group wins the tender, the relevant telecommunications operator will enter into a framework agreement with the Group which sets out the general terms in respect of supply of products. After entering into the framework agreement, the Group still needs to negotiate and enter into definitive sales contracts with the provincial subsidiaries or branches of the telecommunications operator which set out the detailed terms of each purchase. The Group has entered into framework agreements with China Mobile in June 2010, with China Telecom in September 2010 and with China Unicom in December 2010 after winning the tenders organised by China Mobile, China Telecom and China Unicom respectively, specifying product pricing, delivery arrangement, product warranty and liabilities in the event of breach of the terms of the framework agreements. None of these framework agreements provides for any purchase commitment by the three major PRC telecommunications operators. The framework agreement with China Unicom and China Mobile respectively provides that such framework agreement is valid until next tender. The framework agreement with China Telecom does not have any provision in relation to its duration. According to industry practice, it is valid until next tender.

In FY2008, FY2009, FY2010 and the five months ended 31 May 2011, sales to China Unicom, the largest customer of the Group, were approximately RMB210.0 million, RMB745.0 million, RMB[1,016.0] million and RMB[330.7] million, respectively and accounted for approximately 90.2%, 86.1%, [72.0]% and [46.8]% of the Group’s total turnover, respectively. For the same period, sales to the five largest customers of the Group were approximately RMB232.4 million, RMB857.0 million, RMB[1,384.4] million and RMB[689.5] million, respectively and accounted for approximately 99.9%, 99.1%, [98.1]% and [97.7]% of its total turnover, respectively. The Group relies on and expects to continue to rely on these major customers for a significant portion of its turnover.

– 25 –

RISK FACTORS

There can be no assurance that the Group will be able to retain its major customers or win any annual tender organised by them or receive any purchase order at favourable terms to the Group, or that they will maintain or increase their current level of business with the Group. In the event of any cancellation, delay or reduction in the scope of the existing sales to any of the major customers of the Group or if the Group loses in any of the annual tender and hence loses any of its major customers, its business and financial performance will be adversely affected.

The Group is exposed to risks arising from credit terms extended to its customers

The financial conditions and profitability of the Group are dependent on the creditworthiness of its customers. The Group is exposed to payment delays by its customers to whom the Group granted credit terms. As at [31 May 2011], the Group’s net trade and other receivables were approximately RMB[894.3] million, which accounted for approximately [63.0]% of its total current assets. Generally, credit terms extended by the Group to its customers vary from 180 days to 360 days. Average trade and bills receivables turnover days during FY2008, FY2009, FY2010 and the five months ended 31 May 2011 were [191] days, [192] days, [187] days and [179] days respectively.

There can be no assurance on the timeliness of payments by customers and whether they will be able to settle promptly such amounts due to the Group. Any failure by the customers to make timely payment to the Group may have a material adverse impact on the financial performance and operating cash flow of the Group.

The Group relies upon its major raw material supplier

Since FY2010, the Group has relied on Bin Fan as its major raw material supplier for its raw material requirements. In FY2010 and the five months ended 31 May 2011, the purchase of raw materials from Bin Fan amounted to approximately RMB708.2 million and RMB[270.9] million respectively, accounted for approximately 65.6% and [50.2]% of the total purchase of the Group respectively. The Group has relied on and expects to continue to rely on its major supplier for a signification portion of its purchase of raw materials.

There can be no assurance that Bin Fan will make timely delivery of raw materials and if the Group fails to purchase the requisite raw materials from other suppliers in a timely and cost-effective manner, the production of the Group could be delayed. Relationship between the Group and its customers could also be adversely affected as a result of any such delays, which could materially and adversely affect the business and financial performance of the Group.

The Group had negative cash flow from operating activities for FY2008, FY2009 and the five months ended 31 May 2010

The Group has relied on cash generated from its operations and bank borrowings to fund its capital requirements. After [●], it is expected that the Group will continue to derive funding from cash generated from its operations and bank borrowings. In FY2008, FY2009 and the five months ended 31 May 2010, net cash outflow from operating activities of the Group was

– 26 –

RISK FACTORS

approximately RMB167.6 million, RMB239.0 million and RMB40.1 million respectively. For further information, please refer to the sub-section headed “Liquidity, Financial Resources and Capital Structure” under the section headed “Financial Information” in this document. The ability of the Group to obtain adequate funding and generate sufficient cash from its operating activities to finance its operations and expansion plans depends on a number of factors, including but not limited to the general economic and capital market conditions, credit availability from banks, the performance of its operation, inventory purchases and the ability of its customers to settle their payments. As at 31 December 2008 and 28 December 2009, the trade receivables of the Group were approximately RMB233.9 million and RMB668.1 million respectively. Since the Group normally allows a credit period ranging from 180 to 360 days to its customers, it is subject to certain risks relating to settlements. If the ability of its customers to settle their payments is significantly limited or affected for any reason, the business, cash flows, results of operations and financial position of the Group may be materially and adversely affected.

There can be no assurance that the Group will not experience negative operating cash flow in future or that external financing means will be available to mitigate any such negative operating cash flow on terms that are satisfactory or commercially acceptable to the Group. As at 31 December 2010 and 31 May 2011, the aggregate bank borrowings of the Group were approximately RMB830.0 million and RMB[875.4] million respectively. For further information, please refer to the paragraph headed “Bank borrowings and gearing ratio” under the sub-section headed “Indebtedness” in the section headed “Financial Information” in this document. Without sufficient liquidity, the Group will be forced to curtail its operations and expansion plans. Disruption, uncertainty or volatility in the capital markets or credit markets may significantly limit its access to capital for its operations and expansion, decrease its profitability and reduce its financial flexibility. Furthermore, the level of indebtedness of the Group will affect the amount of its cash flow from operating activities that it must allocate to fund repayments of debt, which may reduce the availability of the cash flow to fund working capital, capital expenditures and other general corporate purposes. As a result, the business, financial position and results of operations of the Group may be materially and adversely affected.

If the Group is unable to retain, recruit and hire skilled and experienced personnel, its ability to effectively manage its operations and meet its strategic objectives will be harmed

The future success of the Group depends, partly on the continued service of its officers and other key managerial, sales and technical personnel. In particular, the Group relies on its officers and senior management to operate and grow its business, including its executive Directors, namely, Mr. Qian and Mr. Jiang Wei. Any interruption or termination of the services of any of its senior management or key personnel could significantly reduce its ability to effectively manage its operations and meet its strategic objectives as there can be no assurance that the Group would be able to locate suitable or qualified replacements. In addition, the Group may incur additional expenses and devote significant time to recruit and train new personnel, which could severely disrupt its business and growth.

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RISK FACTORS

Furthermore, as the Group expects to continue to expand its operations and develop new products, it will need to continue to attract and retain skilled and experienced personnel. The Group competes for such personnel with its competitors, academic institutions, government entities and other organisations, and the Group expects such competition to intensify as the telecommunications industry in the PRC grows. The Group may be unable to attract or retain the requisite personnel to achieve its business objectives and failure to do so could materially and adversely impact its competitiveness, business, financial condition and results of operation.

If the patents and other intellectual property rights of the Group do not adequately protect its products, the Group may lose market share to its competitors and be unable to operate its business profitably

The Group relies on its intellectual property rights, in particular, its “Trigiant” trademarks in the sales and distribution of most of its products and its patent in the manufacture of its products. Details of intellectual property rights owned by the Group are set out in the paragraph headed “Intellectual property rights” under the section headed “Further information about the business of the Company” in Appendix V to this document. The Group may need to resort to litigation or other proceedings to enforce its intellectual property rights to protect its proprietary technologies or determine the validity and scope of third-party proprietary rights. Since the validity, enforceability and scope of protection of intellectual property rights in PRC are uncertain, the Group may not succeed in enforcing these rights. As a result, the degree of protection for the intellectual property rights of the Group is uncertain and may not be adequate. Any litigation, proceeding or other efforts or other proceedings to protect the intellectual property rights of the Group could also result in incurring substantial costs and diversion of its resources, which could materially harm its business and profitability. If the Group is unable to protect its trademarks, patents and other propriety information, its competitiveness may be undermined, and the Group may suffer material losses.

Pursuant to the two separate license agreements entered into between Jiangsu Trigiant as licensor and each of Jiangsu Sensing and Jiangsu Opto-electrical as licensees dated 3 December 2010 respectively, the Group has granted a royalty-free license to each of Jiangsu Sensing and Jiangsu Opto-electrical to use its “Trigiant” brand name on a non-exclusive basis. There is no assurance that these companies will not misuse the “Trigiant” brand name which harms the reputation of the Group, which could materially and adversely affect the sales and finances of the Group.

In addition, as the Group develops its products, it may also inadvertently infringe the intellectual property rights of others or others may assert infringement claims against the Group. Such claims against the Group, even if untrue or unfounded, could result in incurring significant legal and other costs, which may have an adverse effect on its business operations.

Any disruption in the manufacturing facilities of the Group could cause losses to the Group and materially and adversely affect its business, financial condition and results of operations

The Group heavily relies on its manufacturing facilities located at the Industrial Park for Environmental Protection Science & Technology (a state high and new technology development zone), Yixing, Jiangsu Province, PRC for the manufacture of its products. Significant damage to the manufacturing facilities of the Group from natural or other causes, such as extreme weather conditions, floods, fires, earthquakes, workforce actions, riots and other disruptions such as system failures will disrupt its manufacturing activities.

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RISK FACTORS

Any such disruption in the manufacturing capacity of the Group could have an adverse impact on its ability to produce sufficient inventory. Disruptions could cause the Group to stop, limit or delay its production, delay or suspend delivery of its products, which may require the Group to incur additional expenses in order to produce sufficient inventory and could impair its ability to meet the demand of its customers and cause such customers to cancel orders, any of which could materially and adversely affect the reputation, business, financial condition and results of operations of the Group.

The Group has previously entered into certain trade financing transactions that were not in compliance with PRC laws

Since July 2008 until January 2010, Jiangsu Trigiant, the PRC subsidiary of the Group, and its then related company, Fullway Technology (100% equity interests of which had been transferred to 宜興市富創電子科技有限公司, Premo Superior Investments Limited and Smart Time Enterprise Limited in 2009) entered into certain trade financing transactions with certain PRC commercial banks which were not supported by any underlying transactions. Between March and April 2010, Jiangsu Trigiant and Bin Fan also entered into certain similar trade financing transactions with certain commercial banks in the PRC. Details of these noncompliant trade financing transactions are set out in the paragraph headed “Non-compliant trade financing” under the section headed “Business” in this document. The PRC Legal Adviser has advised that such trade financing arrangements were not in compliance with PRC laws. The Group has ceased to enter into such non-compliant trade financing transactions after April 2010. The Group has formulated and implemented a series of measures to prevent recurrence of such non-compliant trade financing arrangements in future. There is no assurance that the relevant regulatory authorities will not decide to penalise Jiangsu Trigiant for such transactions in future. Any such penalties may materially and adversely affect the business, financial condition and results of operations of the Group.

The Controlling Shareholders have substantial influence over the Company and their interests may not be aligned with the interests of other Shareholders

Following [●], the Controlling Shareholders will collectively beneficially own [●]% of the issued Shares (assuming [●] is not exercised) with substantial control over the issued share capital of the Company. The interests of the Controlling Shareholders may differ from the interests of other Shareholders.

The Controlling Shareholders will have substantial influence over the business and operations of the Group, including decisions regarding mergers, consolidations and the sales of all or substantially all of its assets, election of Directors and other significant corporate actions. This concentration of ownership may discourage, delay or prevent a change in control of the Company, which could deprive the Shareholders of an opportunity to receive a premium for their Shares in a sale of the Company or may reduce the market price of the Shares. The Company may not be able to enter into transactions that could be beneficial to the Company without the consent of the Controlling Shareholders . Alternatively, the Company may, with the majority vote of the Controlling Shareholders, enter into transactions despite objections from minority Shareholders.

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RISK FACTORS

The Group may not have adequate insurance coverage for its potential losses and liabilities

The Group has taken out insurance policies for its ongoing operations including insurances on production facilities and equipment and machinery. The Group also maintains social security insurance policies for its employees pursuant to PRC laws. The Group has not taken out any insurance on its business operations, including disruption in operations and product liabilities as these are not compulsory under PRC laws. However, there can be no assurance that the insurance coverage which the Group maintains will be adequate to cover all potential losses or liabilities. In addition, there are certain types of risks that are either uninsurable or that the Group cannot obtain insurance for at a reasonable cost. Should an uninsured liability or a liability in excess of its insured limit occur, the Group would have to fund such losses or damages internally which could adversely affect its business, financial condition and results of operations.

RISKS RELATING TO THE INDUSTRY

The Group is dependent on the PRC telecommunications industry

The major customers of the Group, the telecommunications operators and equipment manufacturers in the PRC, contributed to approximately [98.1]% and [97.7]% of the total turnover of the Group for FY2010 and the five months ended 31 May 2011, respectively. As these customers are the focus of the marketing strategy of the Group, any changes to their business strategies, capital expenditure budgets and spending plans will have an impact on the sales of the Group. If any customer of the Group ceases or reduces its deployment of the products of the Group as a result of any change in the PRC telecommunications industry, the demand for the products of the Group will be adversely affected. Although the PRC domestic telecommunications industry has experienced growth in the past years, there can be no assurance that it will grow at the same rate or at all in future. In addition, existing telecommunications laws and regulations may be modified or new laws and regulations may be promulgated. Such modified or new laws and regulations could, directly or indirectly, affect the pricing, distribution and quality standards of telecommunications products and services and may have an uncertain impact on the business of the Group.

The Group operates in a competitive environment and if it is unable to stay competitive, its results of operations may be adversely affected

The Group operates in a competitive environment and it faces competition from existing competitors and new market entrants. Competition in the RF coaxial cables industry includes scale of production, advanced production equipment, technical expertise, range of products and customer service. There can be no assurance that the Group will be able to stay competitive. Should the Group be unable to compete against other industry players or submit competitive bids at project tenders, this would have an adverse effect on its business (including average selling prices of its products) and results of operations.

In order to maintain its customer base and market share, the Group must ensure that it is able to continuously develop and manufacture new products that meet customers’ specific

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RISK FACTORS

requirements. The Group faces technological changes and improvements in the development and production of its products. In the event that the competitors are able to develop more advanced products at competitive prices, the Group may not be able to maintain its competitive edge or its market share, and its profits will be adversely affected.

The Group is subject to risks associated with technological changes

The Group is engaged in an industry where technology changes play a critical role in influencing the demand for its products and services. Technological advances may render certain products of the Group obsolete. Thus, the ability to anticipate changes in technology and to keep pace with such changes, to introduce new and enhanced products promptly, will significantly affect its standing in the industry. The Group has committed time, effort and other resources to the research and development of new products to meet changing market demands. However, rapid changes in market demand may render the research and development efforts obsolete as the Group may not be able to achieve the technological advances necessary for it to keep pace with the changes. In such event, the business, financial condition and results of operations of the Group may be adversely affected.

Failure to meet industry technical standards prescribed by relevant authorities and specifications of customers may result in product liability claims and may adversely affect the business, financial condition and results of operations of the Group

Currently, to the best knowledge of the Directors, the Group is not required to have obtained any specific certificates for the production and marketing of its products. Nonetheless, the Group is still required to manufacture its products in accordance with industrial technical standards set by the various PRC authorities, including MIIT and Ministry of Railways of the PRC (中華人民共和國鐵道部) and requirements of customers. Some of these industrial standards or requirements keep evolving as scientific development continues. If such technical standards or specifications are modified, or any compulsory technical standards prescribed by PRC authorities require higher and more stringent technical requirements beyond the existing technical capacity of the Group, additional unexpected costs and investments in upgrading business lines, enhancing its production facilities and recruiting more experienced technical expertises are required in order to comply with the new product standards. In addition, the Group also needs to maintain the validity of certifications issued by TL Certification Center (泰爾認證中心).

During the five months ended 31 May 2011, one customer identified certain substandard products supplied by the Group. The Group has resolved this quality issue by exchanging those substandard products with new products that met the standard of such customer. As a result of this, the Group incurred additional cost of approximately RMB500,000 which comprised compensation, costs of exchanged products and inspection costs. Should the Group fail to meet prescribed technical standards of relevant PRC authorities or specifications of customers or failure to maintain certifications in future, the Group may lose some of its customers, and/or be subject to product liability claims. Any successful product liability claims against the Group may adversely affect the reputation, business, financial condition and results of operation of the Group.

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RISK FACTORS

An increase in the prices or a shortage of raw materials will lead to increased costs and will adversely affect the results of operations of the Group

Raw material prices have fluctuated during the Track Record Period. Copper-based materials, PE and PVC are the major raw materials used by the Group. The total purchase of copper-based materials accounted for approximately [55.5]%, [66.2]%, [80.3]% and [78.9]% of its total purchases during FY2008, FY2009, FY2010 and the five months ended 31 May 2011, respectively. The purchase price of copper-based materials is usually linked with the commodity price of copper. According to the chart shown below, the monthly average price of copper fluctuated between approximately [RMB61,000] per tonne and approximately [RMB65,000] per tonne during the first eight months of FY2008 and then dropped significantly to approximately [RMB27,000] per tonne at the end of FY2008 as a result of the global financial crisis. The monthly average price of copper gradually increased from approximately [RMB28,000] per tonne at the beginning of FY2009 to approximately [RMB56,000] per tonne at the end of FY2009. In FY2010, the monthly average price of copper fluctuated between approximately [RMB53,000] per tonne to approximately [RMB67,000] per tonne. For the five months ended 31 May 2011, the monthly average price of copper fluctuated between approximately RMB[68,000] per tonne to approximately RMB[73,000] per tonne.

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RISK FACTORS

The following graph shows the average monthly market prices of copper from January 2008 to May 2011:

Monthly Copper Prices from January 2008 to May 2011

==> picture [395 x 237] intentionally omitted <==

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80
70
60
50
40
30
20
Jan-08Mar-08May-08Jul-08Sep-08Nov-08Jan-09Mar-09May-09Jul-09Sep-09Nov-09Jan-10Mar-10May-10Jul-10Sep-10Nov-10Jan-11Mar-11May-11
Copper Price (RMB/kg)
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Source: Yangtze River Nonferrous Metals Network ( 長江有色金屬網 )

During the Track Record Period, fluctuations in the purchase prices of copper-based materials was in line with the trend of commodity price of copper in general. The Group has not entered into any derivative contract to reduce the exposure to fluctuations in the copper price. Generally, the Group tends to pass on most of these additional costs to its customers. The Group has preset a policy in its framework agreements with its major customers to the effect that the selling price of its products shall be linked to the cost, particularly in relation to copper-based materials which can effectively be hedged against its risks associated with the fluctuation of copper prices.

The Group purchases raw materials from local suppliers and has entered into supply agreements with major suppliers of copper-based materials. An increase in the prices or a shortage of raw materials in the PRC will increase the production costs of the Group and may have a significant impact on its profits and its profitability. There can be no assurance that the Group will be able to pass on such increase to its customers on a timely basis or find an alternative source of supply. In the event that the Group is not able to do so, its earnings and financial performance may be adversely affected. For illustration purpose, assuming that all other factors remained constant, if the cost of copper-based materials which were purchased by the Group in each of FY2008, FY2009, FY2010 and the five months ended 31 May 2011 changed by [5.0]% and the Group could not pass on such change to its customers, net profit of the Group in FY2008, FY2009, FY2010 and the five months ended 31 May 2011 would be affected by approximately RMB[5.0] million, RMB[20.6] million, RMB[43.5] million and RMB[21.0] million respectively.

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RISK FACTORS

The Group faces risks related to natural disasters and health epidemics in China, which could have a material adverse effect on its business and results of operations

Business of the Group could be materially and adversely affected by natural disasters or the outbreak of health epidemics in China. For example, in May 2008, a major earthquake registered a magnitude of 7.9 in Sichuan Province of China, devastating much of the affected areas and causing tens of thousands of deaths and widespread injuries. In addition, in early 2008, parts of China, in particular its southern region, experienced what was reportedly the most severe winter weather condition in the country in half a century, which resulted in significant and extensive damages to factories, power lines, homes, automobiles, crops and other properties, blackouts, transportation and communications disruptions and other losses in the affected areas. Moreover, certain countries and regions, including China, have encountered incidents of the H5N1 strain of bird flu, or avian flu, as well as severe acute respiratory syndrome, or SARS, over the past six years and, more recently in 2009, the outbreak of influenza A (H1N1). The Group is unable to predict the effect, if any, that any future natural disasters and health and public security hazards may have on its business. Any future natural disasters and health and public security hazards may, among other things, significantly disrupt its ability to adequately staff its business, and may generally disrupt its operations. Furthermore, such natural disasters and health and public security hazards may severely restrict the level of economic activity in affected areas, which may in turn materially and adversely affect its business and prospects.

RISKS RELATING TO THE PRC

The recent global market fluctuations, economic downturn and decline in the availability of credit could materially and adversely affect the business, financial condition and results of operation of the Group

The global capital and credit markets have been experiencing extreme volatility and disruption in recent periods. Concerns over inflation or deflation, energy costs, geopolitical issues, the availability and cost of credit, the U.S. mortgage market and a declining residential real estate market in the U.S. and elsewhere have contributed to significant levels of market volatility and diminished expectations for the global economy and the capital and consumer markets in the future. These factors, combined with volatile oil prices, declining business activities and consumer confidence and increased unemployment, have precipitated an economic slowdown. These events have led to a slowdown in the Chinese economy in recent periods and which could continue in the future. As a result, demand for the Group’s products may significantly decrease, thereby materially and adversely affecting its business, financial condition and results of operation.

In addition, the availability of credit to entities, such as the Group, operating within emerging markets is significantly influenced by levels of investor confidence in such markets as a whole, therefore, any factor that impacts market confidence (for example, a decrease in credit ratings or state or central bank intervention in one market) could affect the cost or availability of funding for entities within any of these markets. The recent economic slowdown

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RISK FACTORS

and global recession have affected the global credit market and resulted in reduced liquidity, greater volatility, widening of credit spreads, lack of price transparency in credit markets and a reduction in available financing. It is difficult to predict how long these conditions will prevail and the extent to which the Group may be affected. Prolonged disruptions to the global credit markets could materially and adversely affect the liquidity, business, financial condition, results of operation and future prospects of the Group and impair the amount of banking facilities available to the Group.

Changes in political or economic policies, and a slowdown in the economy of the PRC may have a material adverse impact on the business, financial condition and results of operation of the Group

Substantially all assets of the Group are currently located in the PRC. A substantial part of the turnover of the Group is generated from products manufactured and sold in the PRC, and this situation is expected to continue in the near future. As a result, the business, financial condition, results of operation and future prospects of the Group are and will continue to be subject to political, economic and legal developments in the PRC to a significant degree. The PRC economy differs from the economies of most developed countries in many respects, including the extent of government involvement, allocation of resources, capital reinvestment, level of development, growth rate, and control of foreign exchange.

Historically, the PRC economy was centrally-planned, with a series of economic plans promulgated and implemented by the PRC government. Since 1978, the PRC government has been promoting economic and political reforms. The PRC has gradually shifted from a planned economy toward a market-oriented economy. However, continued governmental control of the economy may adversely affect the Group. There can be no assurance that the PRC government will continue to pursue economic reforms. A variety of policies and measures that could be taken by the PRC government to regulate the economy, including the introduction of measures to control inflation, deflation, or regulate economic growth, changes in the rates or methods of taxation, adjustment of interest rates or the imposition of additional restrictions on currency conversions and remittances aboard, could materially and adversely affect the business, financial condition and results of operation of the Group.

Changes and uncertainties in the PRC legal system may have a material adverse impact on the business, financial condition and results of operation of the Group

The PRC is still in the process of developing a comprehensive statutory framework. Since 1979, the PRC government has established a commercial law system, and significant progress has been made in promulgating laws and regulations relating to economic affairs and matters such as corporate organization and governance, foreign investment, commerce, taxation and trade. However, many of these laws and regulations are relatively new, and the implementation and interpretation of these laws and regulations remain uncertain in many areas. Consequently, developments and changes in PRC laws and regulations, including their interpretation and enforcement, may have a material adverse effect on the business, financial condition and results of operation of the Group.

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RISK FACTORS

There are certain restrictions on payment of dividends under PRC law

The Company is a holding company incorporated under the laws of Cayman Islands, with limited liability. All of the business operations of the Group are conducted through Jiangsu Trigiant, its sole PRC operating subsidiary. Its ability to pay dividends to the Shareholders is dependent upon the earnings of its subsidiary and its distribution of funds to the Group, primarily in the form of dividends. The ability of its subsidiary to make distributions to the Group depends upon, among other things, its distributable earnings. Under PRC laws, dividends may be paid only out of distributable profits. Distributable profits with regard to the subsidiary of the Group incorporated in the PRC, i.e. Jiangsu Trigiant, refer to its after tax profits as determined under PRC GAAP, less any recovery of accumulated losses and allocations to statutory funds that it is required to make. Any distributable profits that are not distributed in a given year are retained and available for distribution in subsequent years. The calculation of distributable profits under PRC GAAP differs in many aspects from the calculation under HKFRS. As a result, the PRC subsidiary of the Group may not be able to pay any dividend in a given year to the Company if it does not have distributable profits as determined under PRC GAAP, even if it has profits for that year as determined under HKFRS. Accordingly, since the Group derives all of its profits from its PRC subsidiary, it may not have sufficient distributable profits to pay dividends to its Shareholders, even if there is such an amount as shown in the accounts of the Group prepared under HKFRS.

The Company may be deemed a PRC resident enterprise under the new PRC Enterprise Income Tax Law and be subject to PRC taxation on its worldwide income

The Company was incorporated under the laws of the Cayman Islands and indirectly holds 100% equity interests in Jiangsu Trigiant. The Enterprise Income Tax Law of the PRC (中華人民共和國企業所得稅法) (the “EIT Law”), which became effective on 1 January 2008, and its implementation rules stipulate that if an entity is deemed to be a non-PRC resident enterprise without an office premises in the PRC, withholding tax at the rate of 10% will be applicable to any dividends paid to it by its PRC subsidiary, unless it is entitled to reduction or elimination of such tax, including by tax treaties.

Moreover, the EIT Law provides that, if an enterprise incorporated outside the PRC has its “de facto management organization” located within the PRC, the enterprise may be recognized as a “PRC resident enterprise” and thus may be subject to an enterprise income tax at the rate of 25% on its worldwide income. Under the implementation rules for the EIT Law, “de facto management bodies” is defined as the bodies that have material and overall management control over the business, personnel, accounts and properties of an enterprise. In April 2009, the PRC tax authority issued a circular to clarify the criteria for determining whether the “de facto management bodies” are located within the PRC for enterprises incorporated overseas with controlling shareholders being PRC enterprises. However, the relevant PRC laws and regulations remain unclear as to how the PRC tax authorities will treat an overseas enterprise invested or controlled by another overseas enterprise as in the case of the Company. Substantially all of the management team members of the Company reside in the PRC. If most of them continue to reside in the PRC, the Company may be deemed a PRC

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RISK FACTORS

resident enterprise and therefore subject to the PRC enterprise income tax at a rate of 25% on its worldwide income, which excludes the dividends received directly from another PRC resident enterprise. In that case, the Company’s distributable profits may be adversely affected. Please refer to the paragraph headed “PRC Income Tax Law and Value Added Tax” under the section headed “Regulatory Overview” of this document.

Dividends payable by the Company to its foreign investors and gain on the sale of its Shares may become subject to withholding taxes under PRC tax laws

Under the EIT Law and its implementation regulations, PRC income tax at the rate of 10% is applicable to dividends payable to investors that are “non-resident enterprises” (and that do not have an establishment or place of business in China, or that have such establishment or place of business but the relevant income is not effectively connected with such establishment or place of business) to the extent such dividends are sourced within China. Similarly, any gain realized on the transfer of Shares by such investors is also subject to 10% PRC income tax if such gain is regarded as income derived from sources within China. The investors who are established in Hong Kong and are considered non-resident enterprises by the PRC tax authority are subject to a PRC withholding tax at a rate of 5%. If the Company is considered as a PRC “resident enterprise”, it is unclear whether the dividends it pays with respect to the Shares, or the gain investors may realize from the transfer of the Shares, would be treated as income derived from sources within China and be subject to PRC tax. If the Company is required under the EIT Law to withhold PRC income tax on its dividends payable to its foreign Shareholders, or if investors are required to pay PRC income tax on the transfer of the Shares, the value of their investment in the Shares may be materially adversely affected.

Changes in or discontinuation of the favourable tax treatments in PRC currently available to the Group could adversely affect its business, financial condition and results of operation

The EIT Law which was promulgated on 16 March 2007 and became effective on 1 January 2008 replaced the previous two separate tax legal regimes for foreign invested enterprises (“FIEs”) and Chinese domestic companies and imposes a single uniform income tax rate of 25% for all enterprises, including FIEs, unless they qualify under certain exceptions. Although the EIT Law revokes many of the previous tax exemption, reduction and preferential treatments which were applicable to FIEs, it contemplates various transition periods and measures for previous preferential tax policies enjoyed by the FIEs. FIEs which were established before the promulgation of the EIT Law and were previously entitled to a lower income tax rate will be entitled to a grace period of five years, and enterprises which were entitled to the fixed-term preferential tax exemption or reduction will continue to enjoy such preferential treatment until the expiration of the specified terms, except that the relevant exemption or reduction shall start from January 2008 if the first profit-making year for commencing the relevant exemption or reduction is later than 2008.

Jiangsu Trigiant, the principal operating subsidiary of the Group, was entitled to the tax holiday and exempted from income tax for 2008 and 2009, and is subject to income tax at 12.5% from 2010 to 2012. For details, please refer to the paragraph headed “PRC Income Tax

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RISK FACTORS

and Value Added Tax” under the section headed “Regulatory Overview” in this document. There can be no assurance that Jiangsu Trigiant will continue to be subject to a preferential tax rate, and, accordingly, Jiangsu Trigiant may be subject to the regular income tax rate of 25%, which would materially and adversely affect the business, financial condition and results of operation of the Group.

Furthermore, in connection with the EIT Law, the Ministry of Finance and the State Administration of Taxation jointly issued, on 30 April 2009, the Circular on Issues Concerning Process of Enterprise Income Tax in Enterprise Restructuring Business (Cai Shui [2009] No. 59) (關於企業重組業務企業所得稅處理若干問題的通知) (財稅[2009]59號), which became effective retrospectively in January 2008. In addition, on 26 July 2010, the State Administration of Taxation issued the Administrative Measures on Enterprise Income Tax in relation to Enterprise Restructuring Business (企業重組業務企業所得稅管理辦法) (國家稅務總局公告2010年第4號), effective on 1 January 2010. Under the circular and administrative measures, the transfer of equity interests in certain PRC subsidiaries directly or indirectly held by offshore subsidiaries of the Group to other offshore subsidiaries of the Group is subject to an income tax of 10% on capital gains which may be determined as the difference between the fair value of the equity interests transferred and cost of investment, unless the special tax treatment is applicable when certain stringent conditions are satisfied. During FY2010, the Group underwent the Reorganisation. For more details of the Reorganisation, please refer to the paragraph headed “Reorganisation” in Appendix V to this document. It is currently unclear how the relevant PRC tax authorities will implement or enforce the above circular and administrative measures and whether such income tax on capital gains treatment will be subject to further change. In case the Group is required to pay the income tax on capital gains by the relevant PRC tax authorities, its tax liability may increase and its net profits and cash flow may be affected.

The Group is subject to a wide variety of environmental protection regulations, such regulations and the costs associated with the compliance thereof could harm its business

The Group is required to comply with various and extensive laws and regulations in the PRC governing environmental protection and occupational health and safety, including laws regulating the generation, storage, handling, use and transportation of waste materials; the emission and discharge of waste materials into soil, air or water; and the health and safety of employees. The Group is also required to obtain environmental permits for certain operations and comply with specific requirements. If the Group violates or fails to comply with the requirements, the Group could be exposed to penalties, fines, suspension or revocation of its licenses or permits to conduct business, administrative proceedings and litigation. In some instances, such a fine or sanction could be material. Given the magnitude and the complexity of these laws and regulations, compliance with them or the establishment of effective monitoring systems may be onerous or require a significant amount of financial and other resources. As these laws and regulations continue to evolve, there can be no assurance that the PRC government or the governments of other overseas jurisdictions in which the Group may have future operations will not enact additional or more onerous laws or regulations, compliance with which may cause the Group to incur significantly increased costs. Such events could materially and adversely affect the business, financial condition and results of operation of the Group.

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RISK FACTORS

The implementation of the labour contract law and increase in labour costs in the PRC may adversely affect the business and profitability of the Group

On 29 June 2007, the PRC National People’s Congress enacted the Labour Contract Law (勞動合同法), which became effective on 1 January 2008. Compared with the PRC Labour Law, which took effect on 1 January 1995 and amended on 27 August 2009, the Labour Contract Law imposes more stringent requirements on employers in relation to entry into fixed term employment contracts and dismissal of employees. In particular, the Labour Contract Law requires the payment of a statutory severance to pay upon the termination of an employment contract in most cases, including in cases of the expiration of a fixed-term employment contract. As there has not been much detailed guidance as to how the Labour Contract Law will be interpreted and enforced by the relevant PRC authorities, there remains substantial uncertainty as to its potential impact on the Group’s business and results of operations. Also, under the newly promulgated “Regulations on Paid Annual Leave for Employees” (職工帶薪年休假期), which became effective on 1 January 2008, employees who have worked continuously for more than one year are entitled to a paid vacation ranging from 5 to 15 days, depending on the length of the employees’ work time. Employees who consent to waive such vacation at the request of employers shall be compensated an amount that equals to three times their normal daily salaries for each vacation day being waived. As a result of the new law and regulations, labour costs of the Group may increase. There can be no assurance that any disputes, production halt or strikes will not arise in the future. Increases in labour costs and future disputes with its employees could adversely affect the business, financial condition or results of operations of the Group.

Fluctuations in the value of Renminbi may have material adverse effect on [ ● ]

The value of the Renminbi against the Hong Kong dollar, the US dollar and other foreign currencies is affected by, among other things, changes in the PRC economic and political conditions. In 2005, the PRC government changed its policy of pegging the value of the Renminbi to the US dollar. Under the new policy, Renminbi is permitted to fluctuate within a band against a basket of currencies, determined by the PBOC, against which it could rise or fall by as much as 0.3% each day. On 21 May 2007, the PRC government further widened the daily trading band to 0.5%. Between 21 July 2005 and 31 December 2009, Renminbi has appreciated significantly against the US dollar. Furthermore, in June 2010, the PRC government indicated that it would make the foreign exchange rate of Renminbi more flexible, which increases the possibility of sharp fluctuations in Renminbi value in the near future and thus unpredictability associated with Renminbi exchange rate. Notwithstanding, there still remains significant international pressure on the PRC government to further liberalize its currency policy, which could result in a further and more significant appreciation in the value of Renminbi against the US dollar.

As the Group relies on dividends paid to it by its PRC subsidiary, any significant revaluation of Renminbi may have a material adverse effect on its turnover and financial condition, and the value of any dividends payable on the Company’s Shares in foreign currency terms. In addition, even though substantially all turnover and expenses of the Group are

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RISK FACTORS

denominated in Renminbi, fluctuations in exchange rates may nonetheless in future adversely affect the value of its net assets, earnings or any declared dividends. Also, any unfavourable movement in the exchange rate may lead to an increase in its costs or a decline in sales, which could materially and adversely affect its business, financial condition and results of operation.

PRC government control over currency conversion may affect the value of [ ● ] and limit the ability of the Group to use its cash effectively

All turnover of the Group is denominated in Renminbi. The PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of foreign currencies out of the PRC. Under existing PRC foreign exchange regulations, payments of current account items, including profit distribution, interest payments and expenditures from trade related transactions, can be made in foreign currencies without prior approval from SAFE by complying with certain procedural requirements. However, approval from SAFE is required where Renminbi is to be converted into foreign currency and remitted out of the PRC to pay capital expenditures. The PRC government may also at its discretion restrict access to foreign currencies for current account transactions in the future. The Company relies on its PRC subsidiaries to pay dividends to it. If the PRC foreign exchange control system prevents the Group from obtaining sufficient foreign currency, including Hong Kong dollars, to satisfy its requirements, it may not be able to pay dividends in Hong Kong dollars to Shareholders.

PRC regulation of direct investment and loans by offshore holding companies to PRC entities may delay or limit the Group from using [ ● ] of [ ● ] to make additional contribution or loans to its PRC subsidiaries

Any capital contribution or loans that the Group, as an offshore entity, makes to its PRC subsidiary, including [●] of [●], are subject to PRC regulations. For example, any loan by the Group to its PRC subsidiary cannot exceed the difference between the total amount of investment that its PRC subsidiary was approved to make under relevant PRC laws and their respective registered capital, and any such loans must be registered with the local branch of SAFE. In addition, additional capital contributions by the Group to its PRC subsidiary must be approved by MOFCOM or its local counterpart. There can be no assurance that the Group will be able to obtain these approvals on a timely basis, or at all. If the Group fails to obtain such approvals, its ability to make equity contribution or provide loans to its PRC subsidiary or to fund its operations may be adversely affected, which could harm the liquidity of its PRC subsidiary and its ability to fund its working capital and expansion projects and meet its obligations and commitments.

In addition, in August 2008, SAFE promulgated Circular 142 (國家外匯局綜合司關於完善外商投資企業外匯資本金支付結匯管理有關業務操作問題的通知), a notice regulating the conversion by a foreign-invested company of foreign currency into Renminbi by restricting how the converted Renminbi may be used. Circular 142 requires that Renminbi converted from the foreign currency-denominated capital of a foreign-invested company may only be used for purposes within the business scope approved by the applicable governmental authority and may

– 40 –

RISK FACTORS

not be used for equity investments within the PRC unless otherwise specifically provided for. In addition, SAFE strengthened its oversight over the flow and use of Renminbi funds converted from the foreign currency-denominated capital of a foreign-invested company. The use of such Renminbi may not be changed without approval from SAFE, and may not be used to repay Renminbi loans if the proceeds of such loans have not yet been used. Violations of Circular 142 may result in severe penalties, including substantial fines as set forth in the Foreign Exchange Administration Regulations (外匯管理條例). This may restrict the Group’s ability to implement its acquisition strategy and could materially and adversely affect its business, financial condition, results of operations and future prospects.

Failure to comply with SAFE regulations relating to the establishment of offshore special purpose vehicles by PRC residents, particularly SAFE Circular No. 75, may adversely affect the business operations of the Group

In 2005, SAFE issued a number of rules regarding offshore investments by PRC residents. The currently effective rule, the Circular on Several Issues Relating to the Administration of Foreign Exchange in Fund-Raising and Return Investment Activities of Domestic Residents Conducted via Offshore Special Purpose Companies (國家外匯管理局關於境內居民通過境外特殊目的公司融資及返程投資外匯管理有關問題的通知) known as SAFE Circular No. 75, was issued in October 2005 and further clarified by relevant operative directives. SAFE Circular No. 75 requires domestic residents of the PRC to register with and receive approvals from SAFE before establishing or controlling any company outside China for the purpose of capital financing with assets or equities of PRC companies, referred to therein as a “special purpose company”. In addition, any PRC resident that is a shareholder of an offshore special purpose company is required to amend its SAFE registration within 30 days after any major change in the share capital of the offshore special purpose company without any roundtrip investment being made, such as any increase or decrease of capital, stock right assignment or exchange, merger or division, investment with long term stock rights or credits, provision of guaranty to a foreign party etc. Please refer to the paragraph headed “Laws and Regulations in relation to Foreign Currency Exchange” under the section headed “Regulatory Overview” in this document.

Beneficial shareholders of the Group who are domestic residents defined under SAFE Circular No. 75 (namely, Mr. Qian, Mr. Shen Xinren, Mr. Jiang Wei, Mr. Xia Jie, Mr. Jiang Xinhong, Mr. Sun Huxing, Mr. Sun Jinrong, Mr. Sun Xue Lin, Mr. Yu Daxiong, and Mr. Dai Xiaolin) have registered with the SAFE Jiangsu branch in respect of their investments in Jiangsu Trigiant. However, the Group may not be fully informed of the identities of all its future shareholders who are PRC residents. Moreover, the Group does not have control over its shareholders and there can be no assurance that all of its PRC resident beneficial owners will comply with SAFE Circular No. 75. Failure to register or amend one’s SAFE registrations in a timely manner pursuant to SAFE Circular No. 75 or the failure of future Shareholders who are PRC residents to comply with the registration requirements set out in SAFE Circular No. 75 may subject such beneficial owners and/or the PRC subsidiaries of the Group to fines and legal sanctions and may also limit its ability to contribute additional capital to its PRC subsidiaries, limit the ability of its PRC subsidiaries to distribute dividends to the Group or otherwise materially and adversely affect its business.

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RISK FACTORS

As it is uncertain how the SAFE regulations will be interpreted or implemented, the Group cannot predict how these regulations will affect its business operations or future strategy. For example, the Group may be subject to a more stringent review and approval process with respect to its foreign exchange activities, such as remittance of dividends and foreign currency-denominated borrowings, which may materially and adversely affect its business, financial condition and results of operation. In addition, if the Group decides to acquire a PRC domestic company, there can be no assurance that the company or the owners of such company, as the case may be, will be able to obtain the necessary approvals or complete the necessary filings and registrations required by the SAFE regulations. This may restrict the ability of the Group to implement its acquisition strategy and could materially and adversely affect its business, financial condition, results of operations and future prospects.

The M&A Rules established more complex procedures for acquisitions by foreign investors, which could make it more difficult for the Group to pursue growth through acquisitions

On 8 August 2006, six PRC regulatory agencies, including MOFCOM, the State Assets Supervision and Administration Commission, or SASAC, the State Administration for Taxation, the State Administration for Industry and Commerce, CSRC, and SAFE, jointly adopted the Regulations of Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (關於外國投資者併購境內企業的規定) (the “M&A Rules”), which became effective on 8 September 2006 and revised on 22 June 2009. The M&A Rules established stringent procedures and requirements that could make merger and acquisition activities by foreign investors more time-consuming and complex, including requirements in some instances that the MOFCOM be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise. In the future, the Group may grow its business in part by acquiring complementary businesses, although the Group does not have any plans to do so at this time. Complying with the requirements of the M&A Rules to complete such transactions could be time-consuming, and any required approval processes, including obtaining approval from the MOFCOM or its local counterparts, may delay or inhibit its ability to complete such transactions, which could affect its ability to expand its business or maintain its market share.

It may be difficult to enforce judgments against the Group in the PRC

All business operations of the Group are conducted through its sole PRC operating subsidiary and all executive Directors and most of the other members of senior management of the Group reside within China, and substantially all of its assets and the assets of its Directors and other members of senior management are located within the PRC. Therefore, it may not be possible for investors to enforce against the Group, its PRC subsidiary, the Directors or members of senior management in China any judgment obtained from non-PRC courts.

The PRC does not have treaties providing for the reciprocal recognition and enforcement of judgments of courts with the U.S., the United Kingdom, Japan, the Cayman Islands and some other Western countries. Therefore, recognition and enforcement in China of judgments of a court in any of these jurisdictions may be difficult or impossible.

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RISK FACTORS

The Group may be indirectly affected by changes in government regulations relating to the telecommunications industry in the PRC

Customers of the Group are subject to laws and regulations applicable to the telecommunications industry in the PRC. MIIT, which is the primary telecommunications industry regulator under the PRC State Council, regulates, inter alia, industry policies and regulations, licenses, competition, telecommunications resources allocation, service standards, technical standards, interconnection and settlement arrangements and universal service obligations.

Existing telecommunications laws and regulations may be modified or new laws and regulations may be adopted. Such modified or adopted laws and regulations could, directly or indirectly, affect the pricing, distribution and quality/standards of telecommunications products and services and may have an uncertain impact on the business of the Group.

Forward-looking statements contained in this document are subject to risks and uncertainties

This document contains certain statements that are “forward-looking” and uses forwardlooking terminology such as “believe,” “expect”, “aim”, “intend”, “will”, “may”, “plan”, “of the view”, “consider”, “anticipate”, “seek”, “should”, “would” or similar expressions or the negative thereof. Those statements include, among other things, the discussion of the growth strategy of the Group and the expectations of its future operations, liquidity and capital resources. [●] of [●] are cautioned that reliance on any forward-looking statement involves risk and uncertainties and that any or all of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions could also be incorrect. The uncertainties in this regard include those identified in the risk factors discussed above. In light of these and other uncertainties, the inclusion of forward-looking statements in this document should not be regarded as representations or warranties by the Group that its plans and objectives will be achieved and these forward-looking statements should be considered in light of various important factors, including those set forth in this section. There is no intention to update these forward-looking statements in addition to the ongoing disclosure obligations of the Group pursuant to [●] or other requirements of [●]. Investors should not place undue reliance on such forward-looking information.

– 43 –

DIRECTORS

DIRECTORS
Name	Residential Address	Nationality
*Executive Directors*
Qian Lirong (錢利榮)	No. 69 Jiangnanchuntian Garden	Chinese
	Yicheng Street
	Yixing City
	Jiangsu Province
	PRC
Jiang Wei (蔣唯)	No. 44-504	Chinese
	Long Ze Yuan
	Yicheng Street
	Yixing City
	Jiangsu Province
	PRC
*Independent non-executive Directors*
Professor Jin Xiaofeng	No. 38 Zheda Road	Chinese
(金曉峰教授)	Xihu District
	Hangzhou City
	Zhejiang Province
	PRC
Poon Yick Pang, Philip (潘翼鵬)	Unit A, 8/F, Tower A	Chinese
	Hollywood Terrace
	268 Queen’s Road Central
	Hong Kong
Ng Wai Hung (吳偉雄)	Flat C, 12/F, Block 8	Chinese
	Whampoa Garden Oak Mansions
	7 Tak Fung Street
	Kowloon
	Hong Kong
Jia Lina (賈麗娜)	No. 2-1104	Chinese
	Huijin Garden
	Yunjin Meidi
	Jianye District
	Nanjing City
	Jiangsu Province
	PRC

– 44 –

CORPORATE INFORMATION

Registered office	Cricket Square
	Hutchins Drive
	P.O. Box 2681
	Grand Cayman, KY1-1111
	Cayman Islands
Headquarters of the Group and principal	No. 1 Junzhi Road
place of business in the PRC	Industrial Park for Environmental Protection
	Science & Technology
	Yixing City
	Jiangsu Province
	PRC
Principal place of business	Room 1801, 18th Floor, Tai Tung Building
in Hong Kong	8 Fleming Road
	Wanchai
	Hong Kong
Company’s website	www.trigiant.com.hk
	(information on the website does not form
	part of this document)
Company secretary	Lau Chi Hung, CPA (Practising), FCCA, ACA
Authorised representatives	Lau Chi Hung
(for the purpose of [●])	Flat D, 5/F, Block 38
	Laguna City
	Lam Tin
	Kowloon
	Hong Kong
	Qian Lirong
	No. 69 Jiangnanchuntian Garden
	Yicheng Street
	Yixing City
	Jiangsu Province
	PRC
Authorised representative	Lau Chi Hung
(for the purpose of the Companies	Flat D, 5/F, Block 38
Ordinance)	Laguna City
	Lam Tin
	Kowloon
	Hong Kong
Audit committee	Poon Yick Pang, Philip (Chairman)
	Jia Lina
	Ng Wai Hung
	Jin Xiaofeng

– 45 –

CORPORATE INFORMATION

Remuneration committee Ng Wai Hung (Chairman) Poon Yick Pang, Philip Jiang Wei Nomination committee Jin Xiaofeng (Chairman) Poon Yick Pang, Philip Jia Lina Principal bankers 中國建設銀行宜興支行 China Construction Bank, Yixing Branch No. 1 Fengui Road Huankeyuan Yixing City Jiangsu Province PRC 中國銀行宜興支行 Bank of China, Yixing Sub-branch 106 Taige West Road Yixing City Jiangsu Province PRC 中國農業銀行宜興支行 Agricultural Bank of China, Yixing Branch Business Center in Huankeyuan Yixing City Jiangsu Province PRC 江蘇銀行宜興支行 Bank of JiangSu, Yixing Branch 58 Jingxi South Road Yixing City Jiangsu Province PRC

光大銀行無錫分行

China Everbright Bank, Wuxi Branch No. 1 Middle Renmin Road Wuxi City Jiangsu Province PRC

中信銀行無錫分行

China Citic Bank, Wuxi Branch 350 Zhongnan Road Wuxi City Jiangsu Province PRC

– 46 –

INDUSTRY OVERVIEW

This and other sections of this document contain information relating to the PRC economy and the industry in which the Group operates. Certain information and data contained in this section have been derived partly from publicly available government and official sources. Certain other information and statistics set forth in this section have been extracted from market research reports which the Group commissioned from JSPTPD and CCID, independent market research agencies for inclusion in this document. Unless otherwise stated, the information contained in this section has been extracted from the JSPTPD Report. The Company and [ ● ] have exercised reasonable care in extracting and reproducing such information. The Company and the Sole Sponsor have no reason to believe that such information is false or misleading. Such information has not been independently verified.

SOURCES OF INFORMATION

About JSPTPD

JSPTPD is a Chinese consulting firm and an Independent Third Party, which focuses on the provision of consulting services for business solutions, feasibility reports, engineering design in communications and building, network optimization, system integration, enterprise management and marketing. According to the JSPTPD Report, more than 95% of the personnel of JSPTPD are university graduates, and 56% of them obtained a master’s degree and 3% of them with doctor’s degree. As of the Latest Practicable Date, customers of JSPTPD include China Telecom, China Mobile, China Unicom, China Netcom, China Railcom, etc. The fee payable to JSPTPD for the JSPTPD Report amounted to RMB200,000.

In preparing the JSPTPD Report, JSPTPD conducted interviews with a range of industry participants and professionals, including experts from domestic industry associations, academic, as well as executives from various manufacturers. JSPTPD also collected data samples from telecommunications operators and cable markets in the PRC. JSPTPD mainly relied on the data published by the National Bureau of Statistics of China and the relevant information published by the PRC telecommunications operators in their annual reports. The JSPTPD Report was drafted based on information JSPTPD deemed reliable. JSPTPD also consulted industry representatives to verify information about the industry trend.

About CCID

CCID is a Chinese consulting firm and an Independent Third Party, which focuses on providing market research and consulting services for technology, energy, consumer and other sectors. Certain market information in this document has been quoted from the RF coaxial cables market study report prepared by CCID. For the purpose of preparing the market study report, CCID interviewed with a range of industry participants and professionals, including experts from domestic industry associations, academics as well as executives from various manufacturers. The market study report was drafted based on information CCID deemed reliable. CCID also consulted industry representatives to verify information about the industry

– 47 –

INDUSTRY OVERVIEW

trend. CCID is listed on the Growth Enterprise Market of the Stock Exchange and obtained the ISO 9001: 2000 certification. The fee payable by the Group to CCID for the purpose of conducting the study and preparing the report is RMB300,000.

OVERVIEW OF THE PRC TELECOMMUNICATIONS INDUSTRY

Introduction

In view of the recovery and improvement of the international economy as well as the sustainable and fast development of the PRC domestic economy, the telecommunications industry of the PRC has embraced this as an opportunity to develop its network infrastructure. The PRC policy for “integration of three networks” is being implemented. Together with the Twelfth Five-Year Plan of the PRC, the PRC telecommunications industry will reap the benefits of these developments in the future.

Revenue generated from the PRC telecommunications industry

The PRC telecommunications industry has experienced rapid growth over the past several years from 2007 to 2011. With reference to the statistics provided by MIIT, the gross revenue generated from the principal business of the PRC telecommunications industry (being the provision of telecommunications and related services) from January to May 2011, increased by approximately 9.6% to approximately RMB390.7 billion as compared to the same period in 2010. The following chart illustrates the trend and comparison of revenue generated from the principal business of the PRC telecommunications industry from January 2008 to May 2011.

Revenue generated from the principal business of the PRC telecommunications industry from January 2008 to May 2011

==> picture [365 x 202] intentionally omitted <==

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

(RMB100 million)
900
800
700
600
500
2008 2009 2010 2011
400
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
----- End of picture text -----

(Source: MIIT)

Fixed asset investment in the PRC telecommunications industry

Fixed asset investment in the PRC telecommunications industry has experienced steady growth in recent years. As shown below, the investment scale of mobile communications

– 48 –

INDUSTRY OVERVIEW

networks by the PRC telecommunications operators is expected to increase in the period from 2010 to 2014. A significant proportion of fixed asset investment in the PRC telecommunications industry was capital used for the construction of mobile communications networks. With the improvement of the information infrastructure, investment in fixed assets in the PRC telecommunications industry will slow down and stabilize. In light of the increase in the number of mobile telephone users and enrichment of mobile data services, the demand for infrastructure from mobile communications operators are expected to grow in the next few years.

Investment scale of mobile communication network by the PRC telecommunications operators from 2006 to 2014 (Unit: RMB100 million)

==> picture [396 x 218] intentionally omitted <==

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

(RMB100 million) (Percentage)
6,000 70.00%
5,000 60.00%
50.00%
4,000
40.00%
3,000
30.00%
2,000
20.00%
1,000 10.00%
0 0.00%
Fixed Asset Mobile Communications Ratio of Mobile Communications
Investment Network Investment Network Investment
2006 2007 2008 20092010(E) 2011(E)2012(E)2013(E) 2014(E)
----- End of picture text -----

(Source: http://www.cnii.com.cn ( 中國信息產業網 ))

In the next 5 years, fixed asset investment of the three major PRC telecommunications operators (namely China Unicom, China Mobile and China Telecom) is expected to remain stable and the ratio of mobile communications network investment is expected to increase from approximately 54% in 2009 to approximately 59% in 2014. The aggregate fixed asset investment amount, which is focused on the construction of 3G network, is expected to exceed RMB400 billion during the period from 2010 to 2014, representing a CAGR of approximately 5%.

Continuous increase of mobile telephone users

From January 2010 to May 2011, the net number of new mobile telephone subscribers in China increased by approximately 162.9 million to a total of approximately 910.1 million. In

– 49 –

INDUSTRY OVERVIEW

particular, approximately 9.76 million new subscribers were recorded in May 2011, which were slightly more than the 9.22 million new subscribers recorded in January 2010.

According to the chart below, the number of mobile telephone users increased from approximately [450] million users in 2006 to approximately [850] million users in 2010, representing an increase of approximately [88.9]% or a CAGR of approximately [17]%. By contrast, the number of fixed telephone users decreased from approximately [350] million users in 2006 to approximately [300] million users in 2010, representing a decrease of approximately [14]%. [The Directors are of the view that such was mainly due to the increasing penetration of mobile telephones as a result of fast economic growth in the PRC.] As illustrated in the chart below, the ratio between mobile telephone users and fixed telephone users increased from approximately 55.6% in 2006 to approximately 74.5% in 2010.

Ratio of mobile telephone users from 2006 to 2010

==> picture [372 x 204] intentionally omitted <==

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

(10,000 households)
100,000 74.5%
70.4%
90,000 65.3%
80,000 59.9%
55.6%
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
2006 2007 2008 2009 2010
Fixed Mobile
Ratio of Mobile Telephone User
Telephone User Telephone User
----- End of picture text -----

(Source: MIIT)

The increasing mobilization trend is evidenced by the rapid growth in mobile telephone users and the continuous decline in fixed telephone users over the years. From January 2011 to May 2011, the total number of fixed telephone users decreased by approximately 3.701 million to approximately 290.7 million. By contrast, during the same period, the total number of mobile telephone users increased by approximately 51.15 million to approximately 910.15 million.

In the past six years, there was a rapid growth in the number of mobile telephone users in China. By May 2011, the market penetration of mobile telephones in the PRC reached approximately 64.4%, although still relatively low as compared to that of developed countries and the average penetration level of the world. The number of mobile telephone users is expected to reach between 1.1 billion and 1.2 billion by the end of 2015 according to the Twelfth Five-year Plan, which anticipates that the mobile communications industry develops at an annual growth rate above 7.6%.

– 50 –

INDUSTRY OVERVIEW

The three major PRC telecommunications operators will continue to invest in and modify their respective 2G and 3G network facilities, to improve their network signal coverage and quality. As a consequence, the demand for construction of mobile communications network is enormous, and in turn increases the demand for RF coaxial cables and flexible cables for mobile communications network, which provide coverage for buildings and underground transportation networks.

OVERVIEW OF THE RF COAXIAL CABLES MARKET IN CHINA

Introduction

RF coaxial cables series, including RF cables for mobile communications and leaky coaxial cables, are integral parts of the telecommunications system. RF cables for mobile communications are mainly used as feeder cables for transmitting and receiving radio signals in base stations, while leaky coaxial cables are mainly used for transmitting antenna data in places where wireless signals cannot be directly transmitted, or where transmission of wireless signals is weak, such as tunnels, subways and other underground environments. In light of the economic recovery after the 2008 financial crisis, rapid development of mobile communications in developing countries and upgrades of mobile communications networks in developed countries, market prospects for RF coaxial cables series are promising. In China, constructions and maintenance of telecommunications network put forward by the three major PRC telecommunications operators become the main driver of the demand for RF coaxial cables and flexible cables.

The RF coaxial cables market is mainly divided into the demand from 2G and 3G networks as well as the demand from overseas market.

Demand for RF coaxial cables under 2G base station network

At present, 2G network users remain dominant in the PRC telecommunications market. The construction of 2G base stations is still increasing in response to the increasing number of mobile telephone users and their increase in demand on data transmission. In addition, the construction of 2G network is necessary in order to provide comprehensive coverage. According to CCID, the demand for RF coaxial cables used in 2G base stations in China increased from approximately 25,000 km in 2006 to approximately 71,600 km in 2009, representing an increase of approximately 46,600 km or 186%. Such demand decreased to approximately 51,500 km in 2010, as the three major PRC telecommunications operators focused and allocated their resources on the establishment of 3G base station network. The following shows the demand for RF coaxial cables used in 2G base stations in China from 2006 to 2010.

– 51 –

INDUSTRY OVERVIEW

Demand for RF coaxial cables used in 2G base stations in China from 2006 to 2010

==> picture [302 x 171] intentionally omitted <==

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

80 100%
71.62
70 66.82 80%
52.9%
60 74.8%
51.54 60%
50
40%
38.22
40
7.2% 20%
30 25.00
0%
20
-28.0%
10 -20%
0 -40%
2006 2007 2008 2009 2010
----- End of picture text -----

RF coaxial cable demand for 2G base station (thousand km) Growth rate

(Source: CCID)

Demand for RF coaxial cables from 3G base station network

The telecommunications industry in China had officially entered the 3G era when 3G licenses were issued to the three major PRC telecommunications operators in January 2009, which prompted the launch of 3G network systems. As illustrated in the following chart, the demand for RF coaxial cables used in 3G base stations substantially increased from approximately 1,330 km in 2008 to approximately 92,500 km in 2009, and further to approximately 152,500 km in 2010.

Demand for RF coaxial cables used in 3G base stations in China from 2006 to 2010

==> picture [318 x 170] intentionally omitted <==

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

200 8,000%
6,847%
7,000%
152.6
150 6,000%
5,000%
3,418% 4,000%
100 92.5
3,000%
2,000%
-77%
50
1,000%
0%
0.2 5.8 1.3 65%
0 -1,000%
2006 2007 2008 2009 2010
----- End of picture text -----

Demand for RF coaxial cables used in 3G base stations (thousand km) Growth rate

(Source: CCID)

– 52 –

INDUSTRY OVERVIEW

Under the influence of policies adopted by MIIT in relation to the development of 3G network, construction of 3G base stations is expected to continue in the next 5 years. Currently, there are about 470,000 3G base stations in the PRC. Due to the relatively narrow signal coverage of 3G base station, about 1.5 million additional 3G base stations need to be constructed in order to attain similar coverage of 2G networks.

Total demand for RF coaxial cables in China

Apart from 2G and 3G base stations, urbanization also increased the demand for RF coaxial cables in China. Since RF signals cannot be directly transmitted and the transmission of RF signals is weak in areas such as tunnels, subways and other underground environments, leaky coaxial cables are required in order to ensure service availability. Taking into account the demand for leaky coaxial cables used in tunnels, subways and other underground environments as well as the RF cables for mobile communications used in base stations, demand for RF coaxial cable from 2G, 3G base stations and indoor radio frequency from 2006 to 2010 is illustrated below.

Demand for RF coaxial cables in China from 2G, 3G base stations and indoor radio coverage from 2006 to 2010

==> picture [282 x 170] intentionally omitted <==

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

450
408.22
400
350 328.26
51.54
300
250 227.16
92.51
200
146.82
150
83.89
100
50
0.17 5.83 1.33
0
2006 2007 2008 2009 2010
----- End of picture text -----

Demand for RF coaxial cables in China from 2G, 3G base stations and indoor radio coverage (thousand km)

(Source: CCID)

– 53 –

INDUSTRY OVERVIEW

MAJOR FACTORS BLOOMING THE RF COAXIAL CABLES MARKET IN THE PRC

3G network construction brings new market space for the RF coaxial cables market

On 17 March 2010, MIIT, National Development and Reform Commission, the Ministry of Science and Technology, the Ministry of Finance, the Ministry of Land and Resources, the Ministry of Environmental Protection, the Ministry of Housing and Urban-rural Construction and State Administration of Taxation jointly promulgated Suggestions on Promotion of Construction of the 3rd Generation of Mobile Communication Network (關於推進第三代移動通信網路建設的意見), which, among others, (i) guide and promote the construction of 3G mobile communications network, (ii) drive the development of relevant industries in China and (iii) promote the effect of 3G on national economy and social development.

To date, the global 3G network has experienced rapid growth. About 144 3G licenses have been issued globally. Developing countries such as India, have been constructing 3G network in view of fierce market competition, whereas the development of 3G network in China is relatively slow. In the meantime, in order to establish a better and more favourable competitive environment, the PRC government has conducted a series of reorganisations of the three major telecommunications operators in China. Currently, only three 3G licenses have been issued in China, one for each of China Mobile, China Unicom and China Telecom.

Competition amongst the three major PRC telecommunications operators becomes more intense since they have each been granted a 3G license. At present, China Mobile owns 505,000 2G base stations and 115,000 TD base stations, China Unicom owns 306,000 2G base stations and 153,000 WCDMA base stations and China Telecom owns 300,000 base stations. Due to an increase in the number of 3G users and 3G service types, the construction of 3G network in the PRC is expected to accelerate in the next few years. Since the signal frequency of 3G network is higher and its penetrability is inferior to 2G network, the demands for RF coaxial cables used for 3G network is comparatively higher in any specific area. Nevertheless, 2G mobile telephone users still remain dominant in the telecommunications market in China, the construction of 2G base stations will be maintained at a relatively high level. Based on (i) the historical trend of growth in numbers of 2G and 3G base stations from 2009 to 2010; (ii) the above analysis of the future telecommunications market; and (iii) interviewing the three PRC

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INDUSTRY OVERVIEW

telecommunications operators, the number of 2G and 3G base stations expected to be constructed by the three major PRC telecommunications operators from 2008 to 2015 is set out below:

Number of 2G and 3G base stations in China from 2008 to 2011 and projection of number of 2G and 3G base stations in China from 2011 to 2015

(in thousand)

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

2,000 1,870
1,810
1,735
1,680
1,800 1,610
1,600
1,353
1,400
1,200 1,037
1,000 841 870 900 925 950 970
647 796
800 900
860
512 780 810
600 740
629
241
400
200 18
0
2008 2009 2010 2011 2012 2013 2014 2015
2G base station 3G base station Total
----- End of picture text -----

(Source: CCID)

Integration of three networks and construction of national optical fibre broadband network will promote the development of optical cable industry

Integration of three networks is inevitable and in-line with the global trend of information network development. On 1 July 2010, the first group of cities (regions) for the trial integration project was announced, which symbolized the formal launch of network integration in the PRC.

In the next 3 years, integration of three networks is expected to drive investment in construction of optical fibre broadband network in China. In order to enhance the launching of integration services and accelerate the construction of optical fibre broadband, telecommunications and broadcasting television operators will speed up improvements to their respective basic network infrastructure. This development brings a great opportunity to manufacturers, especially RF coaxial cables manufacturers, as RF coaxial cables are the main components of the communications system and are mainly used for antenna feeder of wireless communications, optical communications equipment and optical cables.

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INDUSTRY OVERVIEW

Internet of Things is expected to bring new market space for the telecommunications industry

Internet of Things is an important integral part of the new generation of information technology. Internet of Things refers to a network that connects any object with the internet to carry out information exchange and communication through radio-frequency identification, infrared sensor, global positioning system, laser scanner and other information sensor equipment so as to realize the intelligent identification, positioning, tracking, monitoring and management of the objects.

The market scale of the industry of Internet of Things reached approximately RMB171.6 billion in China in 2009. It is expected that the number will reach RMB750 billion by 2015, representing a CAGR of more than 30%. By 2020, the overall output of the industry of Internet of Things will exceed RMB5 trillion in China. The growth in demand for Internet of Things provides the relevant mobile communications RF coaxial cables industry a promising market prospect.

Twelfth Five-Year Plan

The main development goals of the PRC telecommunications industry in the Twelfth Five-Year Plan, among others, include the comprehensive popularization of 3G Network and optical fibre access, comprehensive promotion of “integration of three networks” and promotion of information technology.

At the end of the “Twelfth Five-Year” period, the number of 3G users in the PRC is expected to reach approximately 700 million while the number of users with fixed broadband access will reach approximately 250 million. The access to broadband by villages, urban families, community centres, schools, medical health institutions, libraries and other public institutions will be basically realized. Broadband access will also be made available to rural families for basic network surfing. The varieties of information applications will further enrich, and the number and scale of service platforms will increase substantially.

In light of the integration of three networks, the promotions of double-direction staged access of broadcasting television and telecommunications services are taken as the focus, and thus the upgrading and improvement of the network, broadcasting television network and the internet are being pushed forward.

The promotion of information technology focuses to gradually transform conventional information services to combined, multi-media and integrated information services. This includes the establishment of new types of operation of broadband and mobile internet, innovation of network value-added services, and the development of digital content and network finance.

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INDUSTRY OVERVIEW

Given the Twelfth Five-Year Plan, there sees a great potential in the development of mobile communications network infrastructures, radio-frequency cable and flexible cable industry, which can in turn be expected to bring sustainable demand for RF coaxial cables.

Having considered the positive effect of the factors mentioned above on the RF coaxial cables market in China, together with the historical trend of growth in numbers of 2G and 3G base stations from 2009 to 2010 and after interviewing the three PRC telecommunications operators, CCID projected the future demand for RF coaxial cables applied to base stations and indoor environment in China from 2011 to 2020 as follows:

RF coaxial cables demand from 2G, 3G base stations and indoor radio coverage in China from 2011 to 2020

==> picture [340 x 172] intentionally omitted <==

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

1,600 1,500
1,400 1,300
1,200 1,120
950
1,000
800
800 684
600 463 496 526 549
400
200
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
----- End of picture text -----

RF coaxial cables demand from 2G, 3G base stations and indoor radio coverage (thousand km)

(Source: CCID)

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INDUSTRY OVERVIEW

OVERVIEW OF RF COAXIAL CABLES MARKETS IN INDIA, BRAZIL AND RUSSIA

RF coaxial cables market in India

In 2010, the population of India has reached approximately 1.2 billion and mobile phone penetration rate was approximately 64%. In view of the economic growth and development of India, the number of 2G mobile communications users will continue to grow in coming years. According to CCID, the demand for RF coaxial cables for 2G base station construction and maintenance will increase and will gradually transfer to 3G. The following diagram illustrates the demand for RF coaxial cables in India from 2006 to 2010:

Total demand for RF coaxial cables in India from 2006-2010

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

400.00
350.00 335.82
300.00
51.54
250.00
200.00
150.00
92.16
100.00 72.60
60.98
44.09
50.00
0.00
2006 2007 2008 2009 2010
Total demand of RF coaxial cables (thousand km)
----- End of picture text -----

(Source: CCID)

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INDUSTRY OVERVIEW

RF coaxial cables market in Brazil

The population of Brazil in 2010 was 200 million and mobile phone penetration rate was approximately 104%. The following diagram illustrates the demand for RF coaxial cables in Brazil from 2006 to 2010:

Total demand for RF coaxial cables in Brazil from 2006-2010

==> picture [292 x 193] intentionally omitted <==

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

350.00
309.01
300.00
250.00 51.54
198.01
200.00
175.00
146.76
150.00
100.00 79.58
50.00
0.00
2006 2007 2008 2009 2010
Total demand for RF coaxial cables (thousand km)
----- End of picture text -----

(Source: CCID)

CCID estimated that there will be a slight increase in the demand for RF coaxial cables from 2011 to 2013. By 2011 the demand for 2G RF coaxial cables will reach approximately 37,800 km and approximately 39,600 km in 2012. After 2013, with the transfer of users from 2G to 3G, the demand for 2G RF coaxial cables will start to decrease. As a result of the increase in the running time of 2G base stations, the demand for RF coaxial cables for maintenance purpose is expected to increase year by year.

Due to the accelerated growth in 3G users, it is expected that there will be an upward trend in the demand for 3G RF coaxial cables from 2011 to 2014. According to CCID, the demand for RF coaxial cables in Brazil will reach approximately 148,800 km by 2014. As the 4G communications technology has already been introduced in Brazil, CCID estimated that the demand for new 3G base stations and hence the demand for 3G RF coaxial cables will decrease while the demand for RF coaxial cables for maintenance purpose will increase. At the same time, 4G RF coaxial cables demand will start to increase at a speed higher than that for 3G RF coaxial cables.

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INDUSTRY OVERVIEW

RF coaxial cables market in Russia

As there is a trend of negative growth in the Russian population and the deployment work for 3G network has begun since 2007, the number of 2G users and the number of new base station construction are expected to decrease.

Total demand for RF coaxial cables in Russia from 2006-2010

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

400.00 376.67
359.64
350.00
300.00
250.00 227.74 236.41 241.38
200.00
150.00
100.00
50.00
0.00
2006 2007 2008 2009 2010
Total demand for RF coaxial cables (thousand km)
----- End of picture text -----

(Source: CCID)

The Russian 3G network technology is relatively mature since the deployment of the 3G network in 2007. Coupled with the switch in 2G users to the 3G market, CCID estimated that the demand for 3G RF coaxial cables will increase from 2011 to 2014. With the development and import of 4G technology, a slow down in the pace of construction of 3G base stations is expected after 2014 and thus the demand for 3G RF coaxial cables will decrease accordingly. The demand for 3G RF coaxial cables will be replaced by demand for RF coaxial cables for 4G base stations. However, the number of users is expected to shrink as a result of the decrease in population, thereby causing a slight decrease in the demand for 3G and 4G RF coaxial cables after 2016.

MARKET SIZE OF GLOBAL RF COAXIAL CABLES INDUSTRY

Scale of the RF coaxial cables industry in the global market

The global development of the telecommunications industry has brought about a high demand for RF coaxial cables. With the rising number of mobile telephone users in developing countries, and 2G networks being replaced by the growing popularity of 3G, there will be a further increase in the demand for RF coaxial cables in the future.

The 3G market in North America and Asia has, up to date, developed rapidly. At the end of 2010, the number of 3G users in China and Africa reached approximately 62 million and approximately 100 million respectively, and it is estimated that the number of 3G users in Asia

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INDUSTRY OVERVIEW

will surpass one billion within the next five years. In contrast, there has been a significant decrease in the number of 2G users in the European mobile communications market. With the market saturation of 2G and the advancement in the 3G technology, the replacement of 2G by 3G service is inevitable.

Current situation of the RF coaxial cables industry in the global market

Certain developed countries began issuing 3G licenses in 2000 to promote 3G network service. As a result, there has been a significant increase in the demand for 3G RF coaxial cables. In respect of the 2G market in these developed countries, RF coaxial cables have been relegated to facility maintenance use as fewer 2G mobile communications base stations are being constructed.

In developing countries such as China, India and Brazil, 2G communications service did not become popular until 2006. Since 2006, price of mobile telephone had dropped and continuous enhancements in 2G mobile communications technology brought about improvements to signal coverage of 2G networks. These are contributing factors to an increase in the use of RF coaxial cables for construction of 2G mobile communications base stations.

There has been an increased demand in the use of RF coaxial cables by 2G users in densely populated areas of developed countries in the past 5 years. By 2010, the scale of 2G mobile network communications coaxial cables in the global market reached approximately RMB8.723 billion, with a growth of approximately 41.3% compared to 2009.

Global market size of RF coaxial cables used in 2G network

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

10.00 137.0% 140.0%
8.72
9.00
120.0%
8.00
7.00 6.17 100.0%
5.43
6.00
80.0%
5.00 4.35
60.0%
4.00
41.0%
3.00 1.84 40.0%
25.0%
2.00
20.0%
1.00 14.0%
0.00 0.0%
2006 2007 2008 2009 2010
----- End of picture text -----

Global market size of RF coaxial cables used in 2G network (billion RMB) Growth rate

(Source: CCID)

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INDUSTRY OVERVIEW

With the increase in the number of licenses issued in countries worldwide, more 3G base stations have been built. The global market scale of RF coaxial cables came to approximately 3.8 billion in 2006, approximately 5.39 billion in 2007 and approximately 5.93 billion in 2008. The market scale continued to undergo expansion in these years, despite at a slower rate. The speeding up of 3G network construction in developing countries, the improvement in 3G technology and the introduction of 3G messages, video and calling services led to the migration of 2G users to the 3G market.

With the issuance of 3G licenses in China in 2009, and in India in 2010, these two developing countries officially entered the 3G network construction era. As the aggregate population of China and India accounted for approximately 37% of the total world population, the increase in 3G users in these two countries stimulated an immense demand for RF coaxial cables in the global market. The scale of coaxial cables for 3G mobile network communications in the global market came to approximately RMB9.952 billion in 2009 and approximately RMB15.915 billion in 2010, with a growth of approximately 68.0% and approximately 59.9% respectively.

After 2009, many developing countries with large populations (such as China, India and countries in Southeast Asia) began to enter the 3G era as they started issuing 3G licenses. The significant reduction in prices of 3G mobile terminal equipment is a contributing factor to the increasing number of 3G network users. It is estimated by CCID that there will be a rising trend in the demand for 3G RF coaxial cables in the global market gradual from 2011 to 2014, and it is expected that the demand for RF coaxial cables in the 3G mobile communications market in 2014 will reach 1.5 million km.

Global market size of RF coaxial cables Used in 3G network

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

18.00 100.0%
15.92
16.00
80.0%
14.00
67.8%
12.00 60.0%
9.95 60.0%
10.00
41.8%
8.00
5.93 40.0%
5.39
6.00
3.80
4.00
20.0%
10.0%
2.00
0.00 0.0%
2006 2007 2008 2009 2010
----- End of picture text -----

Global market size of RF coaxial cables used in 3G network (billion RMB) Growth rate

(Source: CCID)

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INDUSTRY OVERVIEW

MARKET COMPETITION AND OPPORTUNITIES

At present, the RF coaxial cables market in China is mainly occupied by domestic manufacturers with an occupancy rate exceeding 90%. According to the report of CCID, Jiangsu Trigiant, Zhuhai Hansen Technology Co., Ltd. and Hengxin (Jiangsu) capture over 60% of the market share.

Based on the market demand for RF coaxial cables in the PRC in 2011, the respective market share of Jiangsu Trigiant, Zhuhai Hansen Technology Co., Ltd. and Hengxin (Jiangsu) in 2010 in terms of sales volumes and revenue is set out below:

	Market share	Market share	Market share
	by sales volumes	by revenue
Enterprise	(%)		%
Jiangsu Trigiant	23.5%		23.5%
Hengxin (Jiangsu) (Note 1)	22%		19.3%
Hansen Technology Co., Ltd. (Note 2)	18.4%		20.4%

(Source: CCID)

Notes:

Hengxin (Jiangsu) is mainly engaged in manufacturing mobile communications RF cables, leaky cables and coaxial cables used for cable television system.
Hansen Technology Co., Ltd. is mainly engaged in supplying products for and providing services to radio transmission system, cable television system engineering, hybrid fiber-coaxial network construction and chemical building materials.

Based on statistical data in the notice issued by OEC, a sub-association of CECA, in February 2011, Jiangsu Trigiant ranked first in terms of sales volume for RF cables among all RF cables manufacturers in the PRC in 2010.

In the domestic communications industry, customers who use RF coaxial cables and flexible cables are mainly domestic telecommunications operators (China Mobile, China Unicom and China Telecom), mobile communications equipment manufacturers and mobile communications equipment integrators. Telecommunications operators and communications equipment manufacturers are currently the largest customers in this industry.

At present, there are only a few number of cable manufacturers in China and thus the industry market concentration is relatively high. Since 3G communications require higher frequency, data transmission rate and quality of data transmission than 2G communications, higher capacity is required of RF coaxial cables for 3G communications. RF coaxial cables for 3G communications must have high capacity in terms of resistance to wear under high frequency, VSWR, third-order cross and physical properties. To produce such RF coaxial cables, manufacturers need to acquire new plant and equipment, production techniques and management process. For these reasons, entry threshold to the RF coaxial cables manufacturing

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INDUSTRY OVERVIEW

industry is relatively high. However, with the rapid development of domestic and foreign mobile communications industry and bulk purchases from international mobile system integrators, expansion of new market space is expected. Those enterprises with relatively high research and development capacities, high product innovation speed, effective business risk control and comprehensive competitiveness will secure more market share.

SYNERGISING RF COAXIAL CABLES AND OPTICAL FIBRES

Analog electrical signal and digital signal are two different data transmission media in telecommunications technology; RF coaxial cables are used for transmission of analog electrical data, while optical fibres are used for transmission of digital data.

According to the reports of JSPTPD and CCID, RF coaxial cables are used to receive analog electrical signal, and analog electrical signal will be transformed to digital data. Fibre cables are used for mass digital data transmission in the base station.

Digital data transmission through fibre cables has the advantages of higher capacity, lower decay, higher safety standard and smaller size, etc. It has competitive advantage on long distance data transmission. Due to this competitive advantage, most telecommunications operators would use fibre cables for transmission of data between base stations.

Electrical data transmission through RF coaxial cables has the advantages of broader bandwidth, higher resistance to interference, stabilising signal etc. It is usually used for signal spreading and reception in base stations. It also strengthens coverage of the base station.

RF coaxial cables are necessary for mobile communications systems, as digital data must be modulated as an analog signal to transmit between the base station and mobile telephones. Installation and maintenance costs of facilities using fibres are relatively high, whereas those costs of facilities using RF coaxial cables are relatively low and can easily be repaired in the case of natural disasters, or at times when special events such as the Olympic Games and World Expo are held. Due to the nature of RF coaxial cables as set out above, the application of RF coaxial cables in telecommunications cannot be replaced by optical fibres.

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REGULATORY OVERVIEW

This section sets forth a summary of certain aspects of the PRC laws and regulations, which are relevant to the business of the Group and the industry in which the Group operates.

1. ESTABLISHMENT, OPERATION AND MANAGEMENT OF A WHOLLY FOREIGN-OWNED ENTERPRISE

(a) Pertinent PRC laws relating to wholly foreign-owned enterprise

The establishment, operation and management of corporate entities in China are governed by the PRC Company Law. The PRC Company Law generally governs two types of companies – limited liability companies and joint stock limited companies. The PRC Company Law also applies to foreign-invested limited liability companies. Where there are other stipulations in other PRC laws on foreign investment, such stipulations shall prevail.

The establishment procedures, verification and approval procedures, registered capital requirement, foreign exchange restriction, accounting practices, taxation and labour matters of wholly foreign-owned enterprises are governed by the Wholly Foreign-owned Enterprise Law of the PRC (the “Foreign Enterprise Law”) (中華人民共和國外資企業法), which was promulgated on 12 April 1986 and amended on 31 October 2000, and the Implementation Regulation under the Wholly Foreign-owned Enterprise Law (中華人民共和國外資企業法實施細則), which was promulgated on 12 December 1990 and amended on 12 April 2001.

(b) Procedures for establishment of a wholly foreign-owned enterprise

The establishment of a wholly foreign-owned enterprise must be approved by MOFCOM or its local branches. Moreover, a wholly foreign-owned enterprise must obtain a business licence from the State Administration of Industry and Commerce (“SAIC”) or its local branches before it can commence business. Foreign investors and foreign-owned enterprises that invest in the PRC must comply with the Guidance Catalogue of Industries for Foreign Investment (the “Catalogue”) (外商投資產業指導目錄), which was amended and promulgated by MOFCOM and the National Development and Reform Commission on 31 October 2007. The Catalogue, as amended, became effective on 1 December 2007 and contains specific guidelines in relation to market access of foreign capital, which set out in detail categories of industries in which foreign investment is encouraged, restricted or prohibited respectively. Any industry that is not listed in the Catalogue is an industry in which foreign investment is permitted.

As advised by the PRC Legal Adviser, none of the current business of the Group falls in the categories of “prohibited industries” or “restricted industries”.

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REGULATORY OVERVIEW

(c) Dividend distribution

The Foreign Enterprise Law provides that after payment of taxes, a wholly foreign-owned enterprise must make contributions to a reserve fund and an employee bonus and welfare fund. The allocation ratio for the employee bonus and welfare fund to be made by a wholly foreign-owned enterprise may be determined by the enterprise, whereas at least 10% of the after-tax profits of the enterprise must be allocated to the reserve fund. If the cumulative total of allocated reserve funds reaches 50% of the registered capital of the enterprise, the enterprise will not be required to make any further contribution. The reserve fund may be used by a wholly foreign-owned enterprise to make up its losses, to expand its production operations and to increase its capital, subject to consent of the relevant examination and approval authority. In addition, a wholly foreign-owned enterprise is prohibited from distributing dividends unless the losses (if any) of previous years have been made up.

2. INDUSTRY REGULATIONS

According to the Rules on Network Access License for Telecommunications Equipment (電信設備進網管理辦法) which were promulgated by the Ministry of Information Industry (“MII”) and came into effect on 1 June 2001, a network access license must be obtained from the MII for use and sales of telecommunications equipments under the network access license system.

According to the Notice on Production Authentication for Telecommunications Equipment (關於對光電纜等電信設備實行產品認證的通知) promulgated by the MII on 9 February 2004, coaxial cables do not fall within the scope of products which require network access licenses, however, as from 2002, certificates issued by third parties such as TL Certification Center (泰爾認證中心) must be obtained.

The PRC Legal Adviser advised and the Directors confirmed that the RF coaxial cable series of the Group did not require network access licenses, and that certificates from TL Certification Center had been obtained.

Most of the sales of products of the Group are governed by the Bidding Law of the PRC (“Bidding Law”) (中華人民共和國招標投標法), which was promulgated by the Standing Committee of the National People’s Congress and came into effect on 1 January 2000. Under the Bidding Law, bidding shall be carried out for construction projects, procurement of important equipment, materials relevant to the construction project; large scale infrastructure or public utility projects concerning public safety or public interests; projects funded by the State or receiving state loans. An invitation to bid shall be made through either public notices or special requests. Tenderers shall not collude with each other in setting bidding prices, nor shall they be engaged in any activity that would prejudice fair competition and harm the lawful rights and interests of the offeror of the project and other tenderers. Offeror of projects shall not disclose to any other person title, number of potential tenderers invited to participate in the bid or any other information that may affect fair competition. Tenderers shall not participate in bidding competition by offering a price lower than the cost of the project, nor shall they attempt to win the bid in the name of other persons or through other fraudulent means.

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REGULATORY OVERVIEW

Some products of the Group, such as, the PVC insulated non-sheathed cables and wires and the PVC insulated flexible cables and wires were granted mandatory product certifications. Such products are subject to regulatory requirements. According to the Regulation for Compulsory Product Certification (強制性產品認證管理規定) promulgated by the General Administration of Quality Supervision, Inspection and Quarantine of the PRC (國家質量監督檢驗檢疫總局) which came into effect on 1 September 2009, products which relate to human health and safety, animal life and health, environmental protection and public safety are subject to compulsory quality inspections and certification requirements. Under the regulation, the General Administration of Quality Supervision, Inspection and Quarantine shall administer the compulsory product certification throughout the country. The regulation also provides that products listed on the Catalogues of the Products Subject to Compulsory Certification issued by the General Administration of Quality Supervision, Inspection and Quarantine of the PRC and Certification and Accreditation Administration of PRC (國家認證認可監督委員會) shall be certified by designated government agencies or professional entities before they can be sold, imported or used for business purposes. Pursuant to the 1st Catalogue of Products Subject to Compulsory Certification (第一批實施強制性產品認證的產品目錄) dated 3 December 2001, PVC insulated cables of rated voltages up to 450/750V require certifications.

3. PRC INCOME TAX AND VALUE ADDED TAX

Income Tax

The Enterprise Income Tax Law of the PRC (“EIT”) (中華人民共和國企業所得稅法) was enacted on 16 March 2007 and the Implementation Regulations of Enterprise Income Tax Law of the PRC (中華人民共和國企業所得稅法實施條例) was enacted on 6 December 2007 (collectively the “Income Tax Law”). According to the Income Tax Law which came into effect on 1 January 2008, the EIT for both domestic and foreign-invested enterprises are unified at 25%, whereas high-tech enterprises encouraged by the State may enjoy a reduced EIT rate of 15%. For enterprises established before 16 March 2007 which are entitled to preferential income tax treatments under tax-related laws and administrative regulations, the Income Tax Law provides for a five-year transitional period, during which the applicable EIT rate shall be converted to the unified rate at 25% gradually.

According to the Notice of the State Council on the Implementation of the Enterprise Income Tax Transitional Preferential Policy (國務院關於實施企業所得稅過渡優惠政策的通知) issued on 26 December 2007 which took effect on 1 January 2008, enterprises that enjoy “2-year exemption and 3-year half payment,” “5-year exemption and 5-year half payment” of EIT and other preferential treatments in the form of periodic tax deductions and exemptions in the past may, after the coming into effect of Income Tax Law on 1 January 2008, continue to enjoy the relevant preferential treatments under the preferential measures for the time period as set out in the previous tax law, administrative regulations and relevant documents until the expiration of the said time period. The preferential time period applicable to an enterprise shall start to run from 2008 even if such enterprise had not enjoyed the benefit of the preferential treatments before 1 January 2008 because of

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REGULATORY OVERVIEW

its failure to make profits. In addition, enterprises which were entitled to a preferential income tax at the rate of 15% will gradually be levied on the unified 25% tax within five years commencing on 1 January 2008. The respective transitional tax rate applicable to enterprises entitled to the 15% preferential rate is 18% for 2008, 20% for 2009, 22% for 2010, 24% for 2011 and 25% for 2012. Enterprises which previously enjoyed the 24% preferential tax rate were imposed with the unified 25% tax rate as from 1 January 2008.

The PRC Legal Adviser advised that the Group is entitled to the “2-year exemption and 3-year half payment” preferential EIT treatment and that such entitlement will terminate on 31 December 2012.

Under the EIT Law, an enterprise established outside China with “ de facto management organization” located within China is considered a “resident enterprise” and is treated in a manner similar to a Chinese enterprise for EIT purposes. The implementing rules of the EIT Law define “ de facto management” as “substantial and overall management and control over the production and operations, personnel, accounting, and properties” of an enterprise. As all of the management of the Company reside in the PRC, if the Company is deemed a PRC resident enterprise, the results of operation of the Company will be adversely affected. Please refer to the paragraph headed “The Company may be deemed a PRC resident enterprise under the new PRC Enterprise Income Tax Law and be subject to the PRC taxation on its worldwide income” under the section headed “Risk Factors” in this document.

Value Added Tax

The Provisional Regulations of the People’s Republic of China Concerning Value Added Tax (中華人民共和國增值稅暫行條例) promulgated by the State Council came into effect on 1 January 1994 and was amended on 5 November 2008. Under these regulations and the Implementing Rules of the Provisional Regulations of the People’s Republic of China Concerning Value Added Tax, value added tax is imposed on goods sold in or imported into the PRC and on processing, repair and replacement services provided within the PRC.

Value added tax payable in the PRC is charged on an aggregate basis at a rate of 13% or 17% (depending on the type of goods involved) on the full price collected for the goods sold or, in the case of taxable services provided, at a rate of 17% on the charges for the taxable services provided but excluding, in respect of both goods and services, any amount paid in respect of value added tax included in the price or charges, and less any deductible value added tax already paid by the taxpayer on purchases of goods and service in the same financial year.

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REGULATORY OVERVIEW

4. ENVIRONMENTAL PROTECTION

According to the Environmental Protection Law of the PRC (the “Environmental Protection Law”) (中華人民共和國環境保護法) which was promulgated and came into effect on 26 December 1989, entities that operate production facilities that may cause pollution or produce toxic materials are required to take measures to protect the environment and establish an environmental protection and management system. Such system includes the adoption of effective measures to prevent and control exhaust gas, sewage, waste residues, dust and other waste materials. Entities discharging pollutants must register with the relevant environmental protection authorities.

The Environmental Protection Law and the Administrative Regulations on Environmental Protection for Construction Project (建設項目環境保護管理條例), which came into effect on 29 November 1998, stipulates that prior to the construction of new facilities or expansion or transformation of existing facilities that may have significant impact on the environment, a report on the environmental impact of the proposed construction project shall be submitted to the relevant environmental protection authorities. Newly constructed production facilities cannot operate until the relevant department is satisfied that such facilities are in compliance with all relevant environmental protection standards.

Pursuant to the Environmental Protection Law, any production facilities that may cause pollution or other public hazards shall adopt measures on environmental protection and shall establish a system on environmental protection and administration. Effective measures shall be adopted to prevent and control pollution and harm to the environment by emission of exhaust air, sewage, waste residues, dust, malodorous gas, radioactive substances, noise, vibration and electromagnetic radiation. Enterprises that discharge pollutants shall register with the relevant environmental protection authority. The State Environmental Protection Administration shall formulate national standards on emission of pollutants in accordance with the national standards on environmental quality and the State economic and technological conditions. Government authorities at provincial level and of autonomous regions and municipalities may formulate their respective local standards on the discharge of pollutants for items which are not specified in the national standards. Local governments may formulate local standards which are more stringent than those formulated by the national government authorities. Pursuant to the amended Law on Prevention of Water Pollution of the PRC (中華人民共和國水污染防治法) which came into effect on 1 June 2008, the Law on Prevention of Air Pollution of the PRC (as amended) (中華人民共和國大氣污染防治法) which came into effect on 1 September 2000, and the Administrative Regulations on Levy and Utilization of Sewage Charge (排污費徵收使用管理條例) which came into effect on 1 July 2003, enterprises which discharge water or air pollutants shall pay discharge fees. The scale of discharge fees depend on the types and volume of pollutants discharged and are calculated by the local environmental protection authority, which shall review and verify the types and volume of pollutants discharged. Once the discharge fees have been calculated, a notice on payment of discharge fees shall be issued to the relevant enterprises.

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According to the Solid Waste Pollution Prevention and Control Law of PRC (中華人民共和國固體廢物污染環境防治法), which came into effect on 1 April 2005, entities and individuals collecting, storing, transporting, utilizing, or disposing of solid wastes shall take precautions against the spread, loss, and leakage of such solid wastes or adopt other measures to prevent such solid wastes from polluting the environment.

Consequences for breach of the environmental protection laws vary from ratification orders and fines to administrative sanctions, depending on the degree of damage. Any entity whose construction projects fail to satisfy the requirements of pollution prevention may be ordered to suspend its production or operation and be subject to a fine. The responsible person of the entity may be subject to criminal liabilities for serious breaches resulting in significant damage to private or public property or personal death or injury.

5. PRC LABOUR LAWS

Under the Labour Contract Law of the PRC (the “Labour Contract Law”) (中華人民共和國勞動合同法), which came into effect on 1 January 2008, labour contracts shall be concluded in writing if labour relationships are to be or have been established between enterprises or institutions and labourers. Enterprises and institutions are forbidden to force labourers to work beyond the prescribed time limit and employers shall pay labourers for overtime work in accordance with national regulations. In addition, the requirement of entry into fixed term employment contracts and dismissal of employees is very strict. In particular, statutory severance pay must be paid upon termination of an employment contract in most cases, including expiration of a fixed-term employment contract. According to the Labour Law of the PRC (中華人民共和國勞動法) which was promulgated on 5 July 1994 and came into effect on 1 January 1995, enterprises and institutions shall establish and perfect their system of work place safety and sanitation and shall strictly abide by State rules and standards on work place safety. Under the newly promulgated Regulations on Paid Annual Leave for Employees (職工帶薪年休假期條例), which came into effect on 1 January 2008, employees who have worked continuously for more than one year are entitled to paid vacation ranging from 5 to 15 days, depending on the length of their employment. Employees who consent to waive such entitlement to paid vacation at the request of employers shall be paid compensation in the amount of three times their normal daily salaries for each vacation day waived.

Jiangsu Trigiant is subject to additional employee welfare rules and regulations as set out below:

According to the Regulation of Insurance for Labour Injury (工傷保險條例) promulgated by the State Council and came into effect on 1 January 2004 and the amendment thereto which came into effect on 1 January 2011 (collectively, the “Insurance Regulation”), enterprises shall, in accordance with the provision of the Insurance Regulation, take out work-related injury insurance and pay work-related injury insurance premiums for all their employees on time. Where an employee is injured in an accident related to his employment or suffers from an occupational disease, he is entitled to employment injury insurance paid by the labour injury fund, which covers all costs, including but not limited to medical treatment bills, board wages

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and traffic expenses resulting from such accident or occupational disease. Such employee or the family of such employee (as the case may be) is also entitled to disability or death subsidy if the work related accident or occupational disease causes disability or death.

According to the Interim Regulation on the Collection and Payment of Social Insurance Premiums (社會保險費徵繳暫行條例) promulgated by the State Council and came into effect on 22 January 1999, either the taxation authorities or the social insurance agencies established by the administrative department of labor and social security may act as agents for the collection of social insurance premiums. Enterprises with employees shall carry out social insurance registration at the local social insurance agency and participate in social insurance programmes. Such enterprises shall report to the social insurance agency the amount of social insurance premiums payable and pay its social insurance premiums every month within the prescribed time limit upon assessment of the social insurance agency. The social insurance premiums payable by the individuals shall be withheld from their wages and paid for them by. All premiums shall be paid in full by cash. If a premium paying entity fails to carry out social insurance registration, changes its registration or cancels its registration, or fails to report the amount of social insurance premiums payable in accordance with the relevant provisions, the administrative department of labor and social security can order it to rectify the situation by paying the outstanding premium within the prescribed time limit. Where the circumstance is serious, the principals and other persons held to be directly responsible shall be imposed a fine ranging from RMB1,000 to RMB5,000; and where the circumstance is extremely serious, the principals and other persons held to be directly responsible shall be imposed a fine ranging from RMB5,000 to RMB10,000. If an enterprise refuses to pay social insurance premiums or late-payment fines within the prescribed time limit, the administrative department of labour and social security or the tax authority shall apply to the People’s Court to enforce the relevant laws on social insurance payment. The Interim Provisions on Registration of Social Insurance (社會保險登記管理暫行辦法), which was promulgated by State Council and came into effect on 19 March, 1999, stipulate that any premium paying entity shall carry out social insurance registration at the local social insurance agency within 30 days from the day it receives its business license or the date of its establishment.

According to the PRC Social Insurance Law (中華人民共和國社會保險法) (the “Social Insurance Law”) promulgated by the Standing Committee of the NPC on 28 October 2010 and came into effect on 1 July 2011, enterprises and its employees shall pay social insurance premiums including basic pension, basic medical, employment injury, unemployment and maternity. Enterprises shall be solely responsible to pay employment injury insurance and maternity insurance for their employees, while enterprises and their employees shall be jointly responsible to pay insurance premiums of basic pension insurance, basic medical insurance and unemployment insurance. In addition, an enterprise shall register with the local social security department (the “Local Department”) within 30 days after its establishment. Where an enterprise fails to pay the full amount of the social insurance premiums, (i) the Local Department has authority to order such enterprise to pay the outstanding amount; (ii) if the enterprise does not pay the outstanding amount after such demand, the Local Department has authority to inquire the deposit account of such enterprise, or apply to the related department at or above the county level for making a decision to allocate funds of the enterprise to pay the

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outstanding social insurance premiums and to inform the bank or other financial institution to execute the allocation by written notice; (iii) if the fund in the deposit account is less than the outstanding amount, the department can require the enterprise to provide a security and postpone the date to pay the outstanding amount; and (iv) if the fund in the deposit account is less than the outstanding amount and the enterprise failed to provide security, the department shall apply to the court for detaining, sealing and auction the property of the such enterprise.

Enterprises and their employees shall contribute to the house accumulation fund according to Regulations on Management of Housing Fund (住房公積金管理條例), which was promulgated by the State Council and came into effect on 3 April 1999, and the amendment of them which came into effect on 24 March 2002. Under these regulations, housing accumulation funds contributed by an employee and those contributed by the enterprise are owned by the employee. Housing accumulation funds shall be used by employees for purchasing or building houses, rebuilding or overhauling houses for self-dwelling, and shall not be misappropriated by any entity or individual for any other purpose. Where an entity employs an employee, it shall, within 30 days from the date when it decides to employ him, register with the housing accumulation fund management center to make fund deposit. In case of purchase or construction of a house, renovation or remodelling of a house for self-dwelling, an employee may withdraw funds in his housing accumulation fund account. Where an entity fails to comply with the registration requirement for making housing accumulation fund deposit or fails to open a housing accumulation fund account for its employees, the housing accumulation fund management center shall order it to rectify the situation within a time limit; if it fails to rectify the situation within the time limit, it shall be imposed a fine ranging from RMB10,000 to RMB50,000. Where an entity fails to deposit the housing accumulation fund within the time limit or by making insufficient deposit to the fund, it shall be ordered by the housing accumulation fund management center to deposit the outstanding amount within a time limit; if it fails to deposit the fund within the time limit, the housing accumulation fund management center may apply to the people’s court for enforcement.

6. PRODUCTION SAFETY LAWS

Effective from 1 November 2002, enterprises and institutions shall be equipped with measures for safe production as provided in the Production Safety Law and other relevant laws, administrative regulations, national standards and industrial standards under the PRC Production Safety Law (the “Production Safety Law”) (中華人民共和國安全生產法). Any entity that is not equipped with such measures for safe production is not allowed to engage in production and business operation activities.

7. LAWS AND REGULATIONS IN RELATION TO INTELLECTUAL PROPERTY RIGHTS

China has adopted comprehensive legislation governing intellectual property rights, including trademarks, patents and copyrights. China has adhered to the main international conventions on intellectual property rights and has become a member of the Agreement on Trade Related Aspects of Intellectual Property Rights upon its accession to the World Trade Organisation in December 2001.

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Patent Law

The National People’s Congress adopted the Patent Law of the PRC (the “Patent Law”) (中華人民共和國專利法) in 1984, and amended it in 1992, 2000 and 2008. The purpose of the Patent Law is to protect the legal interest of patentee and to encourage invention, foster applications of invention, improve the innovative ability and promote the development of science and technology. An invention or utility model must meet three conditions before patent will be granted: novelty, inventiveness and practical applicability. Patents will not be granted for scientific discoveries, rules and methods for intellectual activities, methods used to diagnose or treat diseases, animal and plant breeds or substances obtained by means of nuclear transformation or the design used primarily for the identification of pattern, color or the combination of the two on printed flat works. The Intellectual Property Office under the State Council is responsible for receiving, examining and approving patent applications. A patent is valid for a term of 20 years in the case of an invention and a term of ten years in the case of a utility model or design, starting from the application date. A third-party user must obtain consent or a proper license from the patent owner to use the patent except for certain specific circumstances provided by law. Otherwise, the use will constitute an infringement of the patent rights.

Trademark Law

Registered trademarks are protected under the Trademark Law of the PRC (中華人民共和國商標法) (the “Trademark Law”) adopted in 1982 and amended in 1993 and 2001. The PRC Trademark Office of the SAIC is responsible for the registration and administration of trademarks throughout China. The Trademark Law has adopted a “first-to-file” principle with respect to trademark registration. Where a trademark for which a registration has been made is identical or similar to another trademark which has already been registered or been subject to a preliminary examination and approval for use on the same kind of or similar commodities or services, the application for registration of such trademark may be rejected. Any person applying for the registration of a trademark shall not prejudice the existing right of others obtained by priority, nor shall any person register in advance a trademark that has already been used by another person and has already gained “sufficient degree of reputation” through that person’s use. After receiving an application, the PRC Trademark Office will make a public announcement if the relevant trademark passes the preliminary examination. Any person may, within three months after such public announcement, file an opposition against a trademark that has passed a preliminary examination. The decisions of the PRC Trademark office to reject, oppose or cancel an application may be appealed to the PRC Trademark Review and Adjudication Board, whose decision may be further appealed through judicial proceedings. If no opposition is filed within three months after the public announcement period or if the opposition has been overruled, the PRC Trademark Office will approve the registration and issue a registration certificate, upon which the trademark is registered and will be effective for a renewable ten-year period, unless otherwise revoked.

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8. LAWS AND REGULATIONS IN RELATION TO FOREIGN CURRENCY EXCHANGE

Foreign currency exchange

The principal regulations governing foreign currency exchange in China is the Foreign Exchange Administration Regulations of the PRC (the “Foreign Exchange Administration Regulations”) (中華人民共和國外匯管理條例), which was promulgated by the State Council on 29 January 1996 and came into effect on 1 April 1996 and was amended on 14 January 1997 and 1 August 2008. Under these regulations, Renminbi is freely convertible for payments of current account items, including profit distribution, interest payments and expenditures from trade related transactions, but not for payments of capital account items, such as direct investment, loan or investment in securities outside China unless prior approval by SAFE is obtained.

Under the Foreign Exchange Administration Regulations, foreign-invested enterprises in the PRC may purchase foreign exchange without approval by SAFE for trade and services-related foreign exchange transactions, by providing commercial documents evidencing such transactions. They are also allowed to retain foreign currency (subject to a cap approval by SAFE) to satisfy foreign exchange liabilities or to pay dividends. In addition, foreign exchange transactions involving direct investment, loans and investment in securities outside China are subject to limitations and require approvals by SAFE.

In addition, Circular 142 (國家外匯局綜合司關於完善外商投資企業外匯資本金支付結匯管理有關業務操作問題的通知) was promulgated by SAFE and came into effect on 29 August 2008. Circular 142 regulates the conversion by a foreign-invested company of foreign currency into Renminbi by restricting how the converted Renminbi may be used. It requires that Renminbi converted from the foreign currency-denominated capital of a foreign-invested company may only be used for purposes within the business scope approved by the relevant governmental authority and may not be used for equity investments within the PRC unless otherwise specifically provided for. Further, it cannot be used to repay Renminbi loans if the proceeds of such loans have not yet been used. Violations of Circular 142 may result in severe penalties, including substantial fines as set forth in the Foreign Exchange Administration Regulations.

Foreign Exchange Registration

Pursuant to the SAFE Notice on Relevant Issues Concerning Foreign Exchange Administration for PRC Residents to Engage in Financing and Inbound Investment via Overseas Special Purpose Vehicles (國家外匯管理局關於境內居民通過境外特殊目的公司融資及返程投資外匯管理有關問題的通知) (SAFE Circular No. 75), issued by SAFE on 21 October 2005, (i) a PRC resident shall register with the local branch of SAFE before it establishes or controls an overseas special purpose vehicle (overseas SPV), for the purposes of overseas equity financing (including convertible debt financing); (ii)

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where a PRC resident injects the assets of or the equity interests in a domestic enterprise into an overseas SPV, or engages in overseas financing after injecting such assets or equity interests into an overseas SPV, such PRC resident shall register his or her interest in the overseas SPV and any change thereof with the local branch of SAFE; and (iii) where the overseas SPV undergoes a material event outside China, such as change in share capital or merger or acquisition, the PRC resident shall, within 30 days from the occurrence of such event, register or file such change with the local branch of SAFE. SAFE issued relevant guidance with respect to the operational process for SAFE registration under SAFE Circular No. 75, which standardized more specific and stringent supervision on the registration relating to SAFE Circular No. 75 and imposed obligations on onshore subsidiaries of overseas SPV to coordinate with and supervise the beneficial owners of overseas SPV who are PRC residents to complete SAFE registration process. Under SAFE Circular No. 75 and the relevant SAFE rules, failure to comply with the registration procedures set forth above may result in restrictions on foreign exchange activities of a PRC subsidiary and the ability of a PRC subsidiary to distribute dividends to overseas SPV, and penalties on the PRC residents and/or the PRC subsidiary of the overseas SPV. In case a PRC resident refuses to comply with the registration and filing requirements, the relevant onshore company may be exempted from penalties if it has reported such refusal to SAFE in writing.

On 20 May 2011, SAFE issued the Implementation Procedure on SAFE Circular No. 75 (the “New Implementation Procedure”) (境內居民通過境外特殊目的公司融資及返程投資外匯管理操作規程), which came into effect on 1 July 2011. The New Implementation Procedure stipulates the detailed procedures on first-time registration with SAFE, registration of subsequent changes and cancellation of registration with SAFE or its local branches.

As advised by the PRC Legal Adviser, certain ultimate beneficial owners of the Company who are PRC residents, namely Mr. Qian, Mr. Jiang Wei, Mr. Xia Jie, Mr. Jiang Xinhong, Mr. Sun Huxing, Mr. Shen Xinren, Mr. Sun Jinrong, Mr. Sun Xue Lin, Mr. Dai Xiaolin and Mr. Yu Daxiong have completed the necessary foreign exchange registration with the local foreign exchange authority in accordance with SAFE Circular No. 75.

9. NEW MERGERS AND ACQUISITIONS REGULATIONS AND [ ● ]

On 8 August 2006, six PRC regulatory agencies, namely, MOFCOM, the State-owned Assets Supervision and Administration Commission , the State Administration of Taxation, the State Administration for Industry and Commerce, CSRC, and SAFE, jointly promulgated the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (the “M&A Rules”) (關於外國投資者併購境內企業的規定). The M&A Rules came into effect on 8 September 2006 and were subsequently amended on 22 June 2009. The PRC Legal Adviser advised that the M&A Rules apply to acquisitions of shares in or assets of PRC domestic enterprises by foreign-invested enterprises and the prerequisite for the application of the M&A Rules is the existence of “an acquisition of a PRC domestic enterprise by a foreign investor”. According to the PRC Foreign Enterprise Law, foreign-invested enterprise refers to an

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enterprise established within PRC pursuant to the relevant PRC laws, the capital of which was invested by foreign investors. For such purpose, foreign investors include foreign individuals and enterprises incorporated in foreign countries. Under the PRC Foreign Enterprise Law and the practice of approval by the relevant authorities in PRC, the determination of whether an enterprise is a foreign-invested enterprise is based on whether the direct shareholders of such enterprise are foreign investors. As such, Jiangsu Trigiant remains a foreign-invested enterprise notwithstanding the fact that certain ultimate beneficial owners of it are PRC residents.

On 12 March 2007, the Department of Commerce of Jiangsu Province approved the establishment of Jiangsu Trigiant by Trigiant Singapore, a company incorporated in Singapore and the articles of association of Jiangsu Trigiant, which stated that Jiangsu Trigiant was established as a wholly foreign-owned enterprise. On 13 March 2007, Jiangsu Trigiant obtained a Certificate of Approval for Establishment of Enterprises with Foreign Investment in the People’s Republic of China from the Jiangsu People’s Government. On 15 March 2007, Jiangsu Trigiant obtained a notice of approval of the establishment of foreign-invested enterprise and a corporate business license from the Yixing Administration of Industry and Commerce of Wuxi City, which indicated its status as a wholly foreign-owned enterprise. The above approvals and registration certify that Jiangsu Trigiant is a foreign-invested enterprise.

Based on the foregoing, the PRC Legal Adviser advised that as such, Jiangsu Trigiant was not a PRC domestic enterprise under the M&A Rules and that the transfer of the registered capital of Jiangsu Trigiant from Trigiant Singapore to Trigiant Hong Kong did not involve any acquisition of shares in or assets of a PRC domestic enterprise by a foreign investor. Thus, the M&A Rules, which are applicable to non foreign-invested enterprise, should not be applicable.

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The principal operating subsidiary of the Group, Jiangsu Trigiant, was established by Trigiant Singapore as a wholly foreign-owned enterprise in the Industrial Park for Environment Protection Science & Technology (a state high and new technology development zone) in Yixing City, Jiangsu Province, PRC on 15 March 2007 with an initial registered capital of US$20 million. At the time of the establishment of Jiangsu Trigiant, Trigiant Singapore was a wholly-owned subsidiary of Abraholme and Abraholme was wholly owned by Ms. Wu Di. Jiangsu Trigiant was initially principally engaged in research and development, manufacture and sales of special cable series for mobile communications. Jiangsu Trigiant was and remains the principal operating subsidiary of the Group since its establishment.

A summary of the corporate history of each existing member of the Group and a predecessor of the immediate holding company of Jiangsu Trigiant, namely Trigiant Singapore, is set out below:

(A) Predecessor of the immediate holding company of Jiangsu Trigiant – Trigiant Singapore

Trigiant Singapore was incorporated in Singapore on 15 February 2007 and wholly owned by Ms. Wu Di at the time of its incorporation. On 17 February 2007, Ms. Wu Di transferred all her shareholding in Trigiant Singapore to Abraholme at par. After such transfer, Trigiant Singapore became a wholly-owned subsidiary of Abraholme.

On 15 March 2007, Trigiant Singapore established Jiangsu Trigiant in the PRC as a wholly foreign-owned enterprise. For more details relating to Jiangsu Trigiant, please refer to the sub-paragraph headed “Jiangsu Trigiant” below. As at 21 June 2007, an aggregate of US$7 million of the registered capital of Jiangsu Trigiant had been paid up by Trigiant Singapore. Trigiant Singapore was then wholly-owned by Abraholme, which in turn was wholly-owned by Ms. Wu Di.

Mr. Qian met Ms. Wu Di in Singapore and became acquainted with her in November 2004. Ms. Wu Di, a Singaporean was introduced to Mr. Qian (while he was working for Hengxin (Jiangsu)) by OEC in order to assist Mr. Qian in establishing business connections in Singapore. In the second half of 2007, Ms. Wu Di orally invited Mr. Qian, who has experience in managing business in the RF coaxial cables industry, to join Trigiant Singapore as a shareholder and director to further the business development of Trigiant Singapore. Subsequently on 9 November 2007, Ms. Wu Di entered into a reorganisation and joint venture agreement (the “Reorganisation and Joint Venture Agreement”) with 17 investors (the “Investors”), including Mr. Qian, Mr. Xia Jie, Mr. Jiang Wei, Mr. Jiang Xinhong, Mr. Sun Huxing, Mr. Sun Xue Lin, Mr. Dai Xiaolin, Mr. Yu Daxiong, Mr. Sun Jinrong, Mr. Shen Xinren, Mr. Sun Jianxin, Mr. Zhu Ronghua, Mr. Zhang Rongming, Mr. Gu Quanming, Mr. Dong Jingen, Mr. Toe Teow Heng and Mr. Shi Zhengkang. Pursuant to the Reorganisation and Joint Venture Agreement, (i) the Investors should, through various BVI companies controlled by them, provide a total sum of

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US$30,000,000 to Trigiant Singapore; (ii) Trigiant Singapore should allot and issue new shares to the Investors in such proportion to reflect the contributions made by each of the Investors respectively; (iii) Trigiant Singapore should inject a capital of US$13,000,000 into Jiangsu Trigiant; and (iv) Mr. Qian should be appointed as the chairperson of the board of directors of both Trigiant Singapore and Jiangsu Trigiant. The parties acknowledged that the said total sum of US$30,000,000 included the US$7,000,000 previously provided to Trigiant Singapore by way of shareholder’s loan by Ms. Wu Di, which sum had been used to contribute to the registered capital of Jiangsu Trigiant.

On 15 November 2007, Abraholme, Forerich, Premo Superior Investments Limited, Globalwealth Resources Limited, Headwell, Noble Luck Investments Limited and Zymmetry, being the BVI companies controlled by Ms. Wu Di and the Investors (collectively known as the “Lenders”), and Trigiant Singapore entered into a loan agreement (the “Loan Agreement”), pursuant to which: (i) the Lenders have agreed to advance interest-free loans of an aggregate sum of US$30,000,000 and S$60,000 (the “Loan”) to Trigiant Singapore, of which US$11,550,000 and S$23,100 was to be advanced by Abraholme; US$7,500,000 and S$15,000 by Forerich; US$3,000,000 and S$6,000 by Premo Superior Investments Limited; US$1,050,000 and S$2,100 by Globalwealth Resources Limited; US$3,300,000 and S$6,600 by Headwell; US$2,700,000 and S$5,400 by Noble Luck Investments Limited; and US$900,000 and S$1,800 by Zymmetry; (ii) upon the disbursement of the Lender’s respective portions of the Loan, the Lenders were entitled to subscribe for an aggregate of 999 new shares to be allotted by Trigiant Singapore at S$1 per share pro rata to their respective contributions to the Loan.

Pursuant to the Reorganisation and Joint Venture Agreement and the Loan Agreement:

(i) in December 2007, Abraholme, Forerich, Premo Superior Investments Limited, Globalwealth Resources Limited, Headwell, Noble Luck Investments Limited and Zymmetry provided the Loan to Trigiant Singapore in accordance with the terms of the Loan Agreement;
(ii) on 26 December 2007, Mr. Qian joined Trigiant Singapore as a director; and
(iii) on 26 December 2007, pursuant to the Loan Agreement, Trigiant Singapore allotted and issued 999 new shares at S$1 each, amongst which 384 shares, representing 38.4% of its enlarged issued share capital, were allotted and issued to Abraholme for S$384; 250 shares, representing 25% of its enlarged issued share capital, were allotted and issued to Forerich for S$250; 100 shares, representing 10% of its enlarged issued share capital, were allotted and issued to Premo Superior Investments Limited for S$100; 35 shares, representing 3.5% of its enlarged issued share capital, were allotted and issued to Globalwealth Resources Limited for S$35; 110 shares, representing 11% of its enlarged issued share capital, were allotted and issued to Headwell for

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S$110; 90 shares, representing 9% of its enlarged issued share capital, were allotted and issued to Noble Luck Investments Limited for S$90; and 30 shares, representing 3% of its enlarged issued share capital, were allotted and issued to Zymmetry for S$30.

At the relevant time, each of Forerich and Headwell was held as to 50% by Mr. Qian. The monies that Forerich and Headwell paid to Trigiant Singapore as their respective contributions to the Loan and for subscribing shares in Trigiant Singapore were funded by Mr. Qian. The funds came from the proceeds of sales of certain shares in Hengxin (Singapore) between May and November 2007 which were held by Mr. Qian through Siskin Investment Limited. The above shareholding structure of Trigiant Singapore remained the same as at 29 December 2009, being the date on which the equity interest in Jiangsu Trigiant was transferred to Trigiant Hong Kong.

The shareholding structure of the shareholders of Trigiant Singapore as at 26 December 2007 was as follows:

(a) Abraholme was wholly owned by Ms. Wu Di;
(b) Forerich was owned as to 50% by Mr. Qian, 15% by Mr. Shen Xinren, 12% by Mr. Sun Jinrong, 11% by Mr. Sun Xue Lin, 7% by Mr. Dai Xiaolin and 5% by Mr. Yu Daxiong, each currently being either a Director or an employee of the Group;
(c) To the best knowledge of the Directors, Premo Superior Investments Limited was owned as to 50% by each of Sun Jianxin and Zhu Ronghua, each being an Independent Third Party;
(d) To the best knowledge of the Directors, Globalwealth Resources Limited was owned as to 42% by Zhang Rongming, 40% by Gu Quanming, 9% by Dong Jingen, and 9% by Shi Zhengkang, each being an Independent Third Party;
(e) Headwell was owned as to 50% by Mr. Qian, 16% by Mr. Jiang Wei, an executive Director, and 12% by Mr. Jiang Xinhong, a senior management staff of the Group, 14% by Mr. Xia Jie and 8% by Mr. Sun Huxing;
(f) Noble Luck Investments Limited was owned as to 19.61% by ICH Limited (which was owned as to approximately 57.94% by Toe Teow Teck, approximately 26.00% by Toe Teow Heng, approximately 5.00% by Cheah Chow Seng, approximately 2.78% by Rich China Industrial Limited, approximately 2.27% by Flextronics Plastics (Singapore) Pte Ltd., approximately 1.69% by Wang Lan, Loni, approximately 1.60% by Danny Tak Tim Chan, approximately 1.36% by Stellar Group, Inc. and approximately 1.36% by Chun Sing Investment Limited), 35.95% by Newyard Worldwide Holdings Ltd. (which was owned as to 70% by Ren Yuanlin and 30% by Xiang Jianjun), and 44.44% by Beeston Invest & Trade Inc. (which was owned equally by Toe Teow Teck and Toe Teow Heng); and

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(g) Zymmetry was wholly owned by Toe Teow Heng.

On 18 December 2009, the shareholding structure of each of Forerich and Headwell was changed. The shareholding structure of Abraholme was changed on 19 December 2009. The shareholding structure of each of Abraholme, Forerich and Headwell as at 19 December 2009 was as follows and remained the same since then:

(a) Abraholme was owned as to 80% by Mr. Qian, and 20% by Ms. Wu Di;
(b) Forerich was owned as to 30% by Mr. Shen Xinren, 24% by Mr. Sun Jinrong, 22% by Mr. Sun Xue Lin, 14% by Mr. Dai Xiaolin, and 10% by Mr. Yu Daxiong, each currently being an employee of the Group; and
(c) Headwell was owned as to 32% by Mr. Jiang Wei, an executive Director, 24% by Mr. Jiang Xinhong, a senior management staff of the Group, 28% by Mr. Xia Jie and 16% by Mr. Sun Huxing.

As a result of the change in the shareholding structure of each of Abraholme, Forerich and Headwell as described above, the indirect interest of Mr. Qian in Jiangsu Trigiant increased by 26.4%, from 18% to 44.4%.

Based on the unaudited management accounts of Trigiant Singapore for the 11 months ended 30 November 2009, as at 30 November 2009, the consolidated net asset value of Trigiant Singapore was approximately RMB129.6 million and Abraholme’s pro-rata share of such net asset value based on its 38.5% shareholding in Trigiant Singapore as at 30 November 2009, was approximately RMB49.9 million. Eight shares in Trigiant Singapore were allotted and issued to Mr. Qian at US$1 per share in consideration of Mr. Qian’s expertise in the information and telecommunications industry, the contribution made by Mr. Qian to the business development of Jiangsu Trigiant and the adjustment of the proportion of shareholder’s loan advanced to Abraholme by Ms. Wu Di and Mr. Qian. In particular, a shareholder’s loan in the amount of US$7,920,000 advanced to Abraholme by Ms. Wu Di was repaid by Mr. Qian on behalf of Abraholme. Such amount represented 26.4% of the US$30,000,000 shareholders’ loan advanced to Trigiant Singapore by Ms. Wu Di and the Investors pursuant to the Reorganisation and Joint Venture Agreement.

On 28 December 2009, Trigiant Singapore as vendor and Trigiant Hong Kong (then known as Chinese Team Limited) as purchaser entered into an agreement for the sale and purchase of the entire registered capital of Jiangsu Trigiant at a consideration of US$30 million, being the paid-up registered capital of US$30 million of Jiangsu Trigiant as at 29 December 2009. Upon settlement of the consideration and completion of the transfer of the equity interest in Jiangsu Trigiant on 29 December 2009, Jiangsu Trigiant became a wholly owned subsidiary of Trigiant Hong Kong and Trigiant Singapore ceased to hold any interests in Jiangsu Trigiant. [As at the Latest Practicable Date, Trigiant Singapore was undergoing the voluntary winding up process.]

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HISTORY AND DEVELOPMENT

(B) The Group members

(1) Jiangsu Trigiant

Jiangsu Trigiant, the principal operating subsidiary of the Group, was established by Trigiant Singapore in Yixing City, Jiangsu Province, PRC as a wholly foreign-owned enterprise on 15 March 2007 with a registered capital of US$20 million and a total investment of US$49.8 million. At the time of establishment, Mr. Xia Jie, Mr. Jiang Xinhong, Mr. Sun Huxing and Mr. Dai Xiaolin were appointed as directors and Ms. Wu Di was appointed as a director, the chairperson of the board of directors, general manager and legal representative of Jiangsu Trigiant. On 10 November 2007, Mr. Qian was appointed as a director, the chairperson of the board of directors and legal representative and Mr. Jiang Wei was appointed as a director of Jiangsu Trigiant. On the same day, Ms. Wu Di resigned from all her positions in Jiangsu Trigiant as she considered that Mr. Qian and Mr. Jiang Wei were more capable of managing Jiangsu Trigiant, given their respective management experiences in the relevant industry. Since then, she has not been involved in the management of Jiangsu Trigiant directly or through any agent appointed by her. Apart from being a founder of the Group and an ultimate beneficial owner of the Company, Ms. Wu Di has not had any past relationship and does not have any present relationship with the Company, its subsidiaries, their directors, shareholders, senior management or any of their respective associates.

At the time of establishment, the business scope of Jiangsu Trigiant included new-type electronic component development, manufacture and technical service, manufacture of special cables and mobile communications switching equipment, and sales of own products.

In April 2008, the business scope of Jiangsu Trigiant was expanded to include manufacturing of RF coaxial cables, manufacturing of wooden cable roller and packaging services. The business scope of Jiangsu Trigiant was further expanded to include manufacturing of flexible communications power cable in June 2009 to cope with the business development of the Group.

On 25 June 2009, Jiangsu Trigiant was approved to increase its registered capital to US$30 million and total investment to US$74.8 million. A capital verification report of Jiangsu Trigiant dated 29 June 2009 indicates that the increased registered capital had been paid up in full as at 25 June 2009.

On 29 December 2009, upon completion of the acquisition of Jiangsu Trigiant by Trigiant Hong Kong, Jiangsu Trigiant became a wholly-owned subsidiary of Trigiant Hong Kong.

As advised by the PRC Legal Adviser, all necessary administrative and legal procedures and requirements in relation to the establishment (and the contribution of the registered capital by the then equity holders), increases in registered capital, changes in equity interests in and legal status of Jiangsu Trigiant have been complied with.

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HISTORY AND DEVELOPMENT

(2) Trigiant Hong Kong

Trigiant Hong Kong was incorporated in Hong Kong on 8 December 2009 under the name “Chinese Team Limited (浚添有限公司)” and changed its name to its present name on 4 January 2010. On 28 December 2009, Trigiant BVI acquired the one founder member share, representing the then entire issued share capital of Trigiant Hong Kong, from the founder member of Trigiant Hong Kong at par. Subsequent to such acquisition, Trigiant Hong Kong became a wholly-owned subsidiary of Trigiant BVI.

On the same day as Trigiant BVI acquired the founder share in Trigiant Hong Kong, Trigiant Hong Kong and Trigiant Singapore entered into an agreement for the acquisition of the entire registered capital of Jiangsu Trigiant. Completion of the acquisition took place on 29 December 2009, upon which Jiangsu Trigiant became a wholly-owned subsidiary of Trigiant Hong Kong.

(3) Trigiant BVI

Trigiant BVI was incorporated in BVI on 12 May 2004 under the name “New Bright Assets Management Limited” and changed its name to “Cenarion Investments Ltd” on 17 May 2007 and further changed its name to its present name on 30 December 2009.

As at 1 January 2008, being the date of commencement of the Track Record Period, Trigiant BVI was owned by Chen Li and Loo Wen Lieh in equal shares.

On 23 December 2009, the shareholding structure of Trigiant BVI was changed as a result of (i) the acquisition of its then entire issued share capital by Abraholme at the consideration of US$2.00 and (ii) its allotment and issue of new shares to Abraholme, Forerich, Headwell, Zymmetry and Ace Speed at par. Subsequent to such share acquisition and the allotment and issue of new shares, Trigiant BVI was owned as to 55.5% by Abraholme, 25% by Forerich, 5.5% by Headwell, 12% by Zymmetry and 2% by Ace Speed. The shareholding structure of the shareholders of Trigiant BVI as at 23 December 2009 were as follows:

(a) Abraholme was owned as to 80% by Mr. Qian, and 20% by Ms. Wu Di;
(b) Forerich was owned as to 30% by Mr. Shen Xinren, 24% by Mr. Sun Jinrong, 22% by Mr. Sun Xue Lin, 14% by Mr. Dai Xiaolin, and 10% by Mr. Yu Daxiong, each currently being an employee of the Group;
(c) Headwell was owned as to 32% by Mr. Jiang Wei, an executive Director, and 24% by Mr. Jiang Xinhong, a senior management staff of the Group, 28% by Mr. Xia Jie, and 16% by Mr. Sun Huxing;
(d) Zymmetry was wholly owned by Toe Teow Heng; and

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HISTORY AND DEVELOPMENT

(e) Ace Speed was wholly owned by China World Agents Limited, which was in turn wholly owned by Goi Seng Hui.

The following charts set out the shareholding structure of Jiangsu Trigiant immediately prior to and following the acquisition of Jiangsu Trigiant by Trigiant Hong Kong on 29 December 2009:

Shareholding structure of Jiangsu Trigiant immediately prior to its acquisition by Trigiant Hong Kong on 29 December 2009

==> picture [414 x 200] intentionally omitted <==

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

Premo
Globalwealth Noble Luck
Abraholme Forerich InvestmentsSuperior Resources Headwell Investments Zymmetry
(BVI) (BVI) Limited Limited (BVI) Limited (BVI)
(BVI) (BVI)
(BVI)
38.5% 25% 10% 3.5% 11% 9% 3%
(Note 1) (Note 2) (Note 3) (Note 4) (Note 5) (Note 6) (Note 7)
100%
Trigiant Singapore
(Singapore)
100%
Jiangsu Trigiant
(PRC)
----- End of picture text -----

Notes:

Abraholme was owned as to 80% by Mr. Qian and 20% by Ms. Wu Di.
Forerich was owned as to 30% by Mr. Shen Xinren, 24% by Mr. Sun Jinrong, 22% by Mr. Sun Xue Lin, 14% by Mr. Dai Xiaolin, and 10% by Mr. Yu Daxiong, each currently being an employee of the Group.
To the best knowledge of the Directors, Premo Superior Investments Limited was owned as to 50% by each of Sun Jianxin and Zhu Ronghua, each being an Independent Third Party.
To the best knowledge of the Directors, Globalwealth Resources Limited was owned as to 42% by Zhang Rongming, 40% by Gu Quanming, 9% by Dong Jingen, and 9% by Shi Zhengkang, each being an Independent Third Party.
Headwell was owned as to 32% by Mr. Jiang Wei, an executive Director, and 24% by Mr. Jiang Xinhong, a senior management staff of the Group, 28% by Mr. Xia Jie and 16% by Mr. Sun Huxing.
Noble Luck Investments Limited was owned as to 19.61% by ICH Limited (which was owned as to approximately 57.94% by Toe Teow Teck, approximately 26.00% by Toe Teow Heng, approximately 5.00% by Cheah Chow Seng, approximately 2.78% by Rich China Industrial Limited, approximately 2.27% by Flextronics Plastics (Singapore) Pte Ltd., approximately 1.69% by Wang Lan, Loni, approximately 1.60% by Danny Tak Tim Chan, approximately 1.36% by Stellar Group, Inc. and approximately 1.36% by Chun Sing Investment Limited), 35.95% by Newyard Worldwide Holdings Ltd. (which was owned as to 70% by Ren Yuanlin and 30% by Xiang Jianjun), and 44.44% by Beeston Invest & Trade Inc. (which was owned equally by Toe Teow Teck and Toe Teow Heng).
Zymmetry was wholly owned by Toe Teow Heng.

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HISTORY AND DEVELOPMENT

Shareholding structure of Jiangsu Trigiant immediately following its acquisition by Trigiant Hong Kong on 29 December 2009

==> picture [296 x 345] intentionally omitted <==

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

China World
Agents
Limited
(BVI)
100%
Abraholme Forerich Headwell Zymmetry Ace Speed
(BVI) (BVI) (BVI) (BVI) (BVI)
55.5% 25% 5.5% 12% 2%
(Note 1) (Note 2) (Note 3) (Note 4) (Note 5)
100%
Trigiant BVI
(BVI)
100%
Trigiant Hong Kong
(Hong Kong)
100%
Jiangsu Trigiant
(PRC)
----- End of picture text -----

Notes:

Abraholme was owned as to 80% by Mr. Qian and 20% by Ms. Wu Di.
Forerich was owned as to 30% by Mr. Shen Xinren, 24% by Mr. Sun Jinrong, 22% by Mr. Sun Xue Lin, 14% by Mr. Dai Xiaolin and 10% by Mr. Yu Daxiong, each currently being an employee of the Group.
Headwell was owned as to 32% by Mr. Jiang Wei, an executive Director, and 24% by Mr. Jiang Xinhong, a senior management staff of the Group, 28% by Mr. Xia Jie and 16% by Mr. Sun Huxing.
Zymmetry was wholly owned by Toe Teow Heng.
Ace Speed was owned wholly owned by China World Agents Limited, which was in turn wholly owned by Goi Seng Hui.

For illustrative purposes, the following table sets out the attributable interests of the ultimate individual beneficial owners of Jiangsu Trigiant immediately prior to and following its acquisition by Trigiant Hong Kong on 29 December 2009 who were either a Director or an employee of the Group and Ms. Wu Di:

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HISTORY AND DEVELOPMENT

	Attributable	interests in
	Jiangsu Trigiant (%)
		Immediately
	Immediately prior	following the
	to the acquisition	acquisition of
	of Jiangsu Trigiant	Jiangsu	Trigiant
	by Trigiant	by	Trigiant
	Hong Kong on	Hong	Kong on
Name of beneficial shareholder	29 December 2009	29 December 2009
	(Note 1)		(Note 2)
Ms. Wu Di	7.70		11.10
Mr. Qian (Note 3)	30.80		44.40
Mr. Jiang Wei (Note 3)	3.52		1.76
Mr. Jiang Xinhong (Note 4)	2.64		1.32
Mr. Sun Xue Lin (Note 4)	5.50		5.50
Mr. Dai Xiaolin (Note 4)	3.50		3.50
Mr. Yu Daxiong (Note 4)	2.50		2.50
Mr. Sun Jinrong (Note 4)	6.00		6.00
Mr. Shen Xinren (Note 4)	7.50		7.50
Mr. Xia Jie (Note 5)	3.08		1.54
Mr. Sun Huxing (Note 5)	1.76		0.88
Independent Third Parties	25.50		14.00
Total:	100.00		100.00

Notes:

The attributable interests is calculated by multiplying the shareholding of the individual concerned in the relevant corporate shareholder of Trigiant Singapore by the shareholding interest of that corporate shareholder in Trigiant Singapore immediately prior to the acquisition of Jiangsu Trigiant by Trigiant Hong Kong on 29 December 2009.
The attributable interests is calculated by multiplying the shareholding of the individual concerned in the relevant corporate shareholder of Trigiant BVI by the shareholding interest of that corporate shareholder in Trigiant BVI immediately following the acquisition of Jiangsu Trigiant by Trigiant Hong Kong on 29 December 2009.
Each of Mr. Qian and Mr. Jiang Wei is an executive Director.
Each of Mr. Jiang Xinhong, Mr. Sun Xue Lin, Mr. Dai Xiaolin, Mr. Yu Daxiong, Mr. Sun Jinrong and Mr. Shen Xinren is an employee of the Group.
Each of Mr. Xia Jie and Mr. Sun Huxing was an employee of Jiangsu Trigiant immediately prior to and following the acquisition of Jiangsu Trigiant by Trigiant Hong Kong on 29 December 2009. Each of Mr. Xia Jie and Mr. Sun Huxing ceased to be employee of Jiangsu Trigiant in May 2011.

On 23 August 2011, Trigiant BVI became the intermediate holding company of the Group following its acquisition by the Company as set out in the section headed “The Reorganisation” below.

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HISTORY AND DEVELOPMENT

(4) The Company

The Company was incorporated in the Cayman Islands by Codan Trust Company (Cayman) Limited on 23 December 2010 and became wholly owned by Abraholme on the same day. The subscriber’s share in the Company held by Codan Trust Company (Cayman) Limited was transferred to Abraholme on the same day at nil consideration.

This shareholding structure of the Company remained unchanged until the Reorganisation, details of which are set out in the paragraph headed “The Reorganisation” below.

As set out in the paragraph headed “The Reorganisation” below, the Company became the holding company of the Group on 23 August 2011.

(C) Invested companies

(1) Jiangsu Opto-electrical

In March 2010, to further the business development of the Group in 3G communications and fibre-to-the-X (FTTX) industry, Jiangsu Trigiant invested RMB14,000,000 to establish Jiangsu Opto-electrical to develop the business of manufacturing optical fibre and optical cable products. At the time of establishment, Jiangsu Opto-electrical was principally engaged in the research and development, manufacturing and sale of optical fibre, optical cables, special cable series, electronic components and communication equipment etc. In accordance with the Group’s existing business development plan and to further its business development, Jiangsu Opto-electrical required additional capital. Instead of seeking further capital injection from Jiangsu Trigiant, which had no plan to increase its original investment capital of RMB14,000,000, Jiangsu Opto-electrical sought additional capital by admitting new shareholders in March and June 2010 respectively. In March 2010, Jiangsu Opto-electrical increased its registered capital from RMB14,000,000 to RMB70,000,000 and admitted two new shareholders, namely 宜興市光迅通信設備有限公司 (unofficial English translation being Yixing City Guang Xun Communications Equipment Co., Ltd.) (which engages in the business of sales of communications equipment and accessories, hardware and electric material, electronic products and cables) and 宜興市傑聯通信技術有限公司 (unofficial English translation being Yixing City Jie Lian Communications Technology Co., Ltd.) (which engages in the business of research and development of communications technology and sales of communications equipments, cables and metal products), each being an Independent Third Party. The equity interest in Jiangsu Opto-electrical held by Jiangsu Trigiant was diluted from 100% to 20% as a result of the increase in registered capital. In June 2010, Jiangsu Opto-electrical further increased its registered capital from RMB70,000,000 to RMB112,000,000 and admitted another new shareholder, 宜興市新富環保設備有限公司 (unofficial

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HISTORY AND DEVELOPMENT

English translation being Yixing City Xin Fu Environmental Protection Equipment Co., Ltd.) (an Independent Third Party), which engages in the business of providing consultancy services on the manufacturing of environmental construction equipments and technology. The equity interest in Jiangsu Opto-electrical owned by Jiangsu Trigiant was further reduced to its current level of 12.5% as a result of the increase in registered capital in June 2010. As at [the Latest Practicable Date], Jiangsu Opto-electrical has commenced manufacturing and sales of its products.

As advised by the PRC Legal Adviser, all necessary administrative and legal procedures and requirements in relation to the increases in registered capital of Jiangsu Opto-electrical have been complied with.

(2) Jiangsu Sensing

In March 2010, Jiangsu Trigiant invested RMB6,000,000 to establish Jiangsu Sensing to further the Group’s business development in the fibre-to-the-home (FTTH) industry and the business of manufacturing of programmable logic controller (PLC) optical splitters. At the time of establishment, Jiangsu Sensing was principally engaged in the research and development, manufacturing and sale of RF identification systems, new type opto-electronic integrated components, optoelectronic integrated subsystems, microelectronic components and microelectronic smart label products etc. In accordance with the Group’s existing business development plan and to further its business development, Jiangsu Sensing required additional capital. Instead of seeking further capital injection from Jiangsu Trigiant, which had no plan to increase its original investment capital of RMB6,000,000, Jiangsu Sensing sought additional capital by admitting new shareholders in March and June 2010 respectively. In March 2010, Jiangsu Sensing increased its registered capital from RMB6,000,000 to RMB30,000,000 and admitted two new shareholders, namely 宜興市博創網絡科技有限公司 (unofficial English translation being Yixing City Bo Chuang Network Technology Co., Ltd.) (which engages in the business of research and development of computer network designs, development of computer software and sales of electronic products, general mechanical equipments and accessories, communications equipments and cables) and 宜興市恆隆通信技術有限公司 (unofficial English translation being Yixing City Heng Long Communications Technology Co., Ltd.) (which engages in the business of research and development of communications technology and sales of communications equipments, cables and metal products), each being an Independent Third Party. The equity interest in Jiangsu Sensing held by Jiangsu Trigiant was diluted from 100% to 20% as a result of the increase in registered capital. In June 2010, Jiangsu Sensing further increased its registered capital from RMB30,000,000 to RMB48,000,000 and admitted another new shareholder, 江蘇泉溪環保股份有限公司 (unofficial English translation being Jiangsu Quanxi Environmental Protection Shares Co., Ltd.) (an Independent Third Party), which engages in the business of manufacturing solid-liquid separation equipments and environmental products, designing and providing consultancy services on environmental construction and the imports and exports of various

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HISTORY AND DEVELOPMENT

products and technologies. The equity interest in Jiangsu Sensing owned by Jiangsu Trigiant was further reduced to its current level of 12.5% as a result of the increase in registered capital in June 2010. As at [the Latest Practicable Date], Jiangsu Sensing has commenced manufacturing and sales of its products.

As advised by the PRC Legal Adviser, all necessary administrative and legal procedures and requirements in relation to the increases in registered capital of Jiangsu Sensing have been complied with.

THE REORGANISATION

The companies comprising the Group underwent the Reorganisation to rationalise the Group structure in preparation for [●]. As a result, the Company became the holding company of the Group.

The major steps of the Reorganisation are set out below:

Step 1: Incorporation of the Company which acts as the holding company of the Group

The Company was incorporated in the Cayman Islands on 23 December 2010 with an authorised share capital of HK$100,000 divided into 10,000,000 Shares. On 23 December 2010, one Share was allotted and issued nil-paid to Codan Trust Company (Cayman) Limited as subscriber’s share which was subsequently transferred to Abraholme at nil consideration on the same date. On 23 August 2011, Abraholme transferred to Trigiant Investments the one nil-paid Share at nil consideration.

Step 2: Acquisition of Trigiant BVI

On 23 August 2011, Abraholme, Forerich, Headwell, Zymmetry and Ace Speed transferred to the Company their 55.5%, 25%, 5.5%, 12% and 2% interests (an aggregate total of 100%) in the issued share capital of Trigiant BVI respectively, and in consideration of which the Company (i) allotted and issued, credited as fully paid, 9,999,999 Shares to Trigiant Investments; and (ii) credited as fully paid at par the one nil-paid Share held by Trigiant Investments that was transferred from Abraholme. After such transfer, Trigiant BVI became wholly owned by the Company as an intermediate investment holding company of the Group.

As a result of the share transfer and the allotment and issue of new Shares by the Company as indicated above, the Company became wholly owned by Trigiant Investments, and each of Abraholme, Forerich, Headwell, Zymmetry and Ace Speed became a shareholder of Trigiant Investments holding 55.5%, 25%, 5.5%, 12% and 2% of the issued share capital of Trigiant Investments respectively.

Further details of the Reorganisation are set out in the paragraph headed “Reorganisation” in the section headed “Further information about the Group” in Appendix V to this document.

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HISTORY AND DEVELOPMENT

SIGNIFICANT MILESTONES

The following highlights the significant business development milestones of the Group:

Date Milestones

March 2007 Jiangsu Trigiant was established. September 2007 The Group commenced trial production of its first NM-1/2”L connector.

October 2007 The Group commenced trial production of RF coaxial cables series.
November 2007 Jiangsu Trigiant was awarded the “ISO9001 Quality Control System Certificate” from TL Certification Center.

Five of the Group’s RF coaxial cable series, namely, HCAAY-50-12(1/2”) RF coaxial cable, HCAAY-50-6(1/4”) RF coaxial cable, HCTAY-50-32(1-1/4”) RF coaxial cable, HCTAY-50-22(7/8”) RF coaxial cable and HRCAY-50-9(1/2”S) base station RF coaxial cable were accredited product certifications by TL Certification Center.

April 2008 Two of the Group’s products, namely, N-Type RF connector for 3G systems and high-frequency signal antenna lightning arrester received the Advanced Technology Product designation by the Science and Technology Department of Jiangsu Province (江蘇科學技術廳).

July 2008 Jiangsu Trigiant was selected as one of the Top 50 Chinese Communications Equipment Manufacturers (ranked 22nd).

November 2008 The RF coaxial cable series, HHTAY-50-21(7/8”S), HCAHY-50-5(1/4”S), HCTAY-50-23(7/8”A) and HHTAY-50-42(1-5/8”) RF coaxial cables, were accredited product certifications by TL Certification Center.

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HISTORY AND DEVELOPMENT

Date

Milestones

March 2009 The Group was accredited as a high and new technology enterprise (高新技術企業) jointly by the Science and Technology Department of Jiangsu Province (江蘇科學技術廳), Finance Department of Jiangsu Province (江蘇省財政廳), Jiangsu Province State Administration of Taxation (江蘇省國家稅務局) and Jiangsu Province Local Taxation Bureau (江蘇省地方稅務局).

The Group developed the antenna system with high-frequency signal lightning protection, which was considered a Jiangsu First Batch New Key Product of 2009 (2009年江蘇省第一批重點新產品).

July 2009

The broadband, low deterioration, low VSWR RF coaxial cable for 3G systems of the Group received the Advanced Technology Product designation by the Science and Technology Department of Jiangsu Province (江蘇省科學技術廳).

October 2009

The flame retardant flexible cable series, ZA-RV, ZA-RVV, ZA-RVV22, WDNA-RYY23, WDNARYY and WDNA-RY communication power supply flame retardant flexible cables, of the Group were accredited product certifications by TL Certification Center.

The HLCTAYZ-50-22(7/8”) leaky coaxial cable of the Group was accredited a product certification by TL Certification Center.

November 2009

The Group’s low smoke halogen RF coaxial cable for 3G mobile communications received the Advanced Technology Product designation by the Science and Technology Department of Jiangsu Province (江蘇省科學技術廳).

December 2009

The Group’s environmentally friendly RF coaxial cable for 3G communications received the Advanced Technology Product designation by Science and Technology Department of Jiangsu Province (江蘇省科學技術廳).

– 90 –

HISTORY AND DEVELOPMENT

Date

April 2010
May 2010
July 2010
August 2010

Milestones

Jiangsu Trigiant earned the 2009 Award for Product Safety Integrity (2009年度江蘇省安全生產誠信企業) by Jiangsu Province Production Safety Supervision and Management Bureau (江蘇省安全生產監督管理局).

Jiangsu Trigiant was selected as one of the Top 50 Chinese Communications Equipment Technology Supplier and was identified as a Customer Satisfaction Enterprise in China Communications Industry by Communications Weekly (通信產業報社) and China Joint Center for Case Management (中國管理案例聯合中心).

The NM(F)-12 50� RF coaxial cable for mobile communication of the Group was accredited a product certification by TL Certification Center.

The 7/16 welded RF coaxial cable component of the Group received the Advanced Technology Product designation by the Science and Technology Department of Jiangsu Province (江蘇省科學技術廳).

The HCAHY-50-9(1/2”5) RF coaxial cable of the Group was accredited a product certification by TL Certification Center.

November 2010
December 2010

Jiangsu Trigiant was identified as the first “Integrated Pilot Enterprise for Information and Industry of Jiangsu Province” (江蘇省信息化與工業化融合試點企業) by Jiangsu Economic and Information Technology Commission (江蘇省經濟和信息化委員會).

The Group was selected as a qualified supplier of Huawei Technologies Co., Ltd. (華為技術有限公司).

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HISTORY AND DEVELOPMENT

Date Milestones February 2011 Jiangsu Trigiant was identified as 2010 Top Seller of RF Coaxial Cable Series (射頻同軸電纜銷售第一) by CECA.

Jiangsu Trigiant was identified as Key Enterprise of State Torch Program (國家火炬計劃骨幹企業) by Torch High Technology Industry Development Center, Ministry of Science and Technology of PRC (中華人民共和國科學技術部火炬高科技術產業開發中心).

July 2011 Jiangsu Trigiant was identified as a Core Company for Optical Cables in China Communication Industry (中國通信光電纜行業核心企業) by the Electrical Cable and Wire Branch of China Electrical Equipment Industry Association (中國電器工業協會電線電纜分會) and OEC.

Jiangsu Trigiant was awarded as Top 100 PRC Electronic Component Enterprises (ranked 23rd) (中國電子元件百強企業(第23名)) by Operation Supervision Coordination Bureau of MIIT and CECA.

Since incorporation, the Group has been devoted to the manufacturing and sales of cables, antenna and feeding system and related products for mobile telecommunications and has always placed high importance on high-tech research and development. Through three years of business development, the Group has been recognised by the industry and accredited with many honours for its high-quality products, efficient management and satisfactory services. The Group was awarded, among others, the “2008-2009 Communication Industrial Technology Contribution Award” (2008-2009年度通信產業技術貢獻獎), “Top 10 Feeder Cable Suppliers (ranked first) (十大饋線供應商 (第一名))” and “China 3G Construction and Innovation Achievement Award”(中國 3G建設與創新成就獎) in 2009, “Customer Satisfaction Enterprise in China Communication Industry” (中國通信產業用戶滿意企業) in May 2010, “Core Company for Optical Cables in China Communication Industry” (中國通信光電纜行業核心企業) by the Electrical Cable and Wire Branch of China Electrical Equipment Industry Association (中國電器工業協會電線電纜分會) and OEC in 2010 and 2011, “Key Enterprise of State Torch Program (國家火炬計劃骨幹企業) by Torch High Technology Industry Development Center, Ministry of Science and Technology of PRC (中華人民共和國科學技術部火炬高技術產業開發中心) and “Top 100 PRC Electronic Component Enterprises (ranked 23rd)” (中國電子元件百強企業(第23名)) by Operation Supervision Coordination Bureau of MIIT and CECA in 2011.

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BUSINESS

OVERVIEW

Established in March 2007, the Group is one of the leading manufacturers engaged in research, development and sales of RF coaxial cables, new-type electronic components and other related accessories for use in mobile communications and telecommunications equipment. According to a notice issued by OEC in February 2011, which covered all major RF cables manufacturers in the PRC, Jiangsu Trigiant, the principal operating subsidiary of the Group, ranked first in terms of sales volume for RF cables among all RF cables manufacturers in the PRC in 2010.

The Group has been awarded as one of the top 50 communications equipment suppliers by Communications Weekly (通信產業報社) and China Joint Center for Case Management (中國管理案例聯合中心) for three times. The Group was also awarded “Top 10 Feeder Cable Suppliers (ranked first) (十大饋線供應商 (第一名))” by Communications Weekly (通信產業報社), “China 3G Construction and Innovation Achievement Award” (中國 3G建設與創新成就獎) in 2009, “Core Company for Optical Cables in China Communication Industry” (中國通信光電纜行業核心企業) by the Electrical Cable and Wire Branch of China Electrical Equipment Industry Association (中國電器工業協會電線電纜分會) and OEC in 2010 and 2011, “Key Enterprise of State Torch Program (國家火炬計劃骨幹企業) by Torch High Technology Industry Development Center, Ministry of Science and Technology of PRC (中華人民共和國科學技術部火炬高技術產業開發中心) and “Top 100 PRC Electronic Component Enterprises (ranked 23rd)” (中國電子元件百強企業(第23名)) by Operation Supervision Coordination Bureau of MIIT and CECA in 2011.

The principal products of the Group are RF coaxial cables series (including RF cables for mobile communications and leaky coaxial cables). In addition, the Group manufactures and sells new-type electronic components (such as RF coaxial connectors, antenna lightning arresters and jumpers) and other related accessories (such as flame-retardant flexible cables, splitters, couplers and combiners). The products of the Group are used in the transmission systems of telecommunications operators and service providers and major equipment manufacturers in the PRC. In particular, the products can be applied in different mobile network systems, highways, railways, tunnels, underground facilities, and high-rise buildings. In FY2008, FY2009, FY2010 and the five months ended 31 May 2011, sales of the RF coaxial cables series of the Group accounted for approximately 74.7%, 71.8%, [92.5]% and [93.2]% of its total turnover respectively.

Set out below is the segment turnover of the Group during the Track Record Period:

Turnover

																			Five months ended	Five months ended	Five months ended	Five months ended
																			31	May
	FY2008					FY2009					FY2010						2010						2011
		_% _		of total			_% _		of total			_% _		of total				% of total						% of total
	RMB’000		turnover		RMB’000			turnover		RMB’000			turnover		RMB’000				turnover		RMB’000				turnover
																(unaudited)
*Segment*
RF coaxial cables
series	[173,881]			[74.7]%		[620,983]			[71.8]%	[1,304,738]				[92.5]%		[457,899]			[91.7]%			[657,784]			[93.2]%
New-type electronic
components	[43,213]			[18.6]%		[169,615]			[19.6]%		[73,138]			[5.2]%		[28,058]			[5.6]%			[29,984]			[4.2]%
Others	[15,648]			[6.7]%		[74,411]			[8.6]%		[32,903]			[2.3]%		[13,636]			[2.7]%			[18,222]			[2.6]%


Total	[232,742]			100%		[865,009]			100%	[1,410,779]				100%		[499,593]			100%			[705,990]			100%

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The Group derives its sales principally from sales in the PRC, where it has an experienced sales force and a distribution network covering 31 provinces and municipalities. A majority of the turnover of the Group came from the sales of products to the three major telecommunications operators in the PRC, namely China Unicom, China Mobile and China Telecom, as well as equipment manufacturers, including Shenzhen Zhongxin Kangxun Electronics Co., Ltd. (深圳市中興康訊電子有限公司), a subsidiary of ZTE Corporation (中興通訊股份有限公司).

Since its establishment, the Group has formed stable business relationships with its major telecommunications customers in the PRC, especially China Unicom. The Group was the largest supplier of China Unicom in 2009. In FY2008, FY2009, FY2010 and the five months ended 31 May 2011, sales to China Unicom, the largest customer of the Group, were approximately RMB210.0 million, RMB745.0 million, RMB[1,016.0] million and RMB[330.7] million respectively and accounted for approximately 90.2%, 86.1%, [72.0]% and [46.8]% of its total turnover respectively. In FY2008, FY2009, FY2010 and the five months ended 31 May 2011, sales to the top five customers of the Group were approximately RMB232.4 million, RMB857.0 million, RMB[1,384.4] million and RMB[689.5] million respectively and accounted for approximately 99.9%, 99.1%, [98.1]% and [97.7]% of its total turnover respectively. In addition to sales in the PRC, products of the Group are also exported overseas to India, Russia, Brazil and Southeast Asia, where the Group intends to capture the local market share.

The Group is committed to maintaining its market position in the RF coaxial cables industry in China by enhancing its research and development capabilities and increasing its market competitiveness through improving product quality. Jiangsu Trigiant was accredited as a high and new technology enterprise (高新技術企業) jointly by the Science and Technology Department of Jiangsu Province (江蘇省科學技術廳), Finance Department of Jiangsu Province (江蘇省財政廳), Jiangsu Province State Administration of Taxation (江蘇省國家稅務局) and Jiangsu Province Local Taxation Bureau (江蘇省地方稅務局) in March 2009. The Group has obtained [19] patents in the PRC for its cable products and accessories and is in the process of applying for another [10] patents in the PRC for its products. As at the [Latest Practicable Date], the Group had developed [43] new varieties of RF coaxial cables, new-type electronic components and other related accessories. In recognition of its advanced research and development capabilities, the Group has received Advanced Technology Product Certificate (高新技術產品認定證書) from the Science and Technology Department of Jiangsu Province (江蘇省科學技術廳) for 10 of its products.

Products of the Group are of high quality, as evidenced by the awards and certifications given to its products by various organisations such as TL Certification Center (泰爾認證中心) and China Quality Certification Centre (中國質量認證中心). The Group received an ISO9001:2000 certification in 2007 for its quality control management. The Directors believe such awards and certifications can help the Group to attract and secure new customers, thereby strengthening the competitiveness of the Group in the PRC market.

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[The Group has experienced remarkable growth in its business in recent years. Its turnover increased from approximately RMB232.7 million in FY2008 to approximately RMB865.0 million in FY2009 and further increased to approximately RMB[1,410.8] million in FY2010, representing a CAGR of approximately [146.2]%. Its turnover increased from approximately RMB[499.6] million for the five months ended 31 May 2010 to approximately RMB[706.0] million in the five months ended 31 May 2011, representing a growth of approximately [41.3]%. During FY2008, FY2009 and FY2010, net profit of the Group attributable to owners of the Company were approximately RMB15.3 million, RMB85.3 million and RMB[151.3] million, respectively, representing a CAGR of approximately [214.7%]. Net profit of the Group attributable to owners of the Company for the five months ended 31 May 2011 was approximately RMB[83.9] million, representing an increase of [63.5]% over the same period in 2010. To the best knowledge of the Directors, the significant growth in sales of the RF coaxial cables series of the Group during the Track Record Period was primarily attributable to the focus of the Group on the provision of quality products and after sales service to its customers and the improvement in product quality.

COMPETITIVE STRENGTHS

The Directors believe that the Group has the following competitive strengths:

Strong research and development capabilities

As at the Latest Practicable Date, the Group had developed [43] new varieties of RF coaxial cables, new-type electronic components and other related accessories and had obtained [19] patents in the PRC in respect of its products. The Group is dedicated to continuously innovating and developing new products to meet diverse market needs. As the wireless mobile network infrastructure continues to develop, the Group has to ensure that its products are up-to-date as customers migrate to third generation (3G) networks and even fourth generation (4G) networks. As at 31 May 2011, the Group had a research and development team comprising [61] professional technical personnel, most of whom had completed at least tertiary education and had accumulated related experience and expertise in the PRC cables industry.

As at the [Latest Practicable Date], [10] patent applications in relation to the products of the Group have been submitted to the State Intellectual Property Bureau of the PRC (中華人民共和國國家知識產權局) and are under examination. In addition, the Group has received the Advanced Technological Product Certificate (高新技術產品認定證書) issued by the Science and Technology Department of Jiangsu Province (江蘇省科學技術廳) for 10 of its products.

In March 2009, Jiangsu Trigiant was accredited as a high and new technology enterprise (高新技術企業) jointly by the Science and Technology Department of Jiangsu Province (江蘇省科學技術廳), Finance Department of Jiangsu Province (江蘇省財政廳), Jiangsu Province State Administration of Taxation (江蘇省國家稅務局) and Jiangsu Province Local Taxation Bureau (江蘇省地方稅務局). In 2010, with the approval from the Science and Technology Department of Jiangsu Province (江蘇省科學技術廳), the Group established Jiangsu Information Transmission Technology Engineering Research Center (江蘇信息傳輸工程技術研

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究中心). The centre is developing two products, namely, broadband environmentally-friendly RF cables (寬頻綠色環保射頻電纜) and high-speed special optical cables used for Internet of Things (物聯網系統用高速率特種光纜).

The Group believes that its research and development capabilities will consistently improve the quality of its products and broaden the varieties of products offered to meet the changing needs of its customers.

Experienced sales and marketing team with extensive sales and distribution network

The Group has an extensive sales and distribution network covering 31 provinces and municipalities in the PRC. As at [the Latest Practicable Date], the Group sold its products to 28 out of 31 provincial branches of China Unicom, 22 out of 31 provincial subsidiaries of China Telecom and 17 out of 31 provincial subsidiaries of China Mobile. Over the years since its establishment, the Group has set up a strong sales and marketing team, which, as at 31 May 2011, consisted of 45 experienced sales personnel. Sales personnel of the Group are strategically located throughout the PRC, and are able to timely and efficiently market products to existing and potential customers. In addition, they are trained to provide quality pre-sales, during-sales and post-sales services to customers, to ensure and maintain a close and good working relationship between the Group and its customers. To effectively serve customers in various markets and ensure efficient allocation of resources, the sales and marketing department of the Group comprises eight divisions which handle sales to domestic customers in different provinces and municipalities, one overseas division which handles sales to overseas customers and one sales management division. For further details, please refer to the paragraph headed “Sales and Marketing” in this section.

The Group believes that its sales and distribution network helps to maintain good working relationships with its customers and capture business opportunities both in the PRC and overseas markets.

High quality control standards

Leveraging on its solid experience and research and development capabilities in the industry, the Group is able to develop and produce high quality products. With over four years of industrial experience, the “Trigiant” brand has become a well-recognised brand name for RF coaxial cables in the PRC. This is evidenced by a variety of awards and certifications the Group has received in recognition of its products and services, as well as the increasing number of purchase orders received from customers over the last four years.

The Group has adopted a standardized quality management system throughout the various stages of production, including production process and inspection of finished products, in order to maintain quality control standards. Jiangsu Trigiant, the principal PRC operating subsidiary of the Group, was awarded the ISO9001:2000 certification by TL Certification Center (泰爾認證中心) (then known as China Information and Industry Department, Telecommunications Certification Centre) (中國信息產業部郵電通信質量管理體系認證中心) in 2007. The

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certification was then upgraded to ISO9001:2008 certification in October 2009. In addition to the internal quality controls, its products are also required to comply with various industry technical standards promulgated by PRC authorities. For details of the industry technical standards, please refer to the paragraph headed “Quality Control” in this section.

Comprehensive range of products

The Group offers a comprehensive range of products including RF cables for mobile communications, leaky coaxial cables, RF coaxial connectors, antenna lightning arrester, jumpers and antenna components. These cables and related components offer customers a one-stop solution service for signal transmission in mobile communications as well as new generation wireless broadband mobile network system, which saves them time from visiting multiple suppliers for the products they need. In addition, the soft cable series plays an important role in a wireless communication network, especially in areas where signal coverage through conventional antennas is low, such as railways, underground mines, tunnels and high-rise buildings. Main products of the Group are set out under the paragraph headed “Principal Products” in this section.

Strong customer base

The Group has built a strong customer base with the leading telecommunications operators in the PRC, namely China Unicom, China Telecom and China Mobile. China Mobile, China Telecom and China Unicom have been customers of the Group since 2008. There has not been any material default in payment by any of the three major customers during the Track Record Period. Save as disclosed in the paragraph headed “Quality Control” in this section, the Group had not received material complaints from any of the major customers during the Track Record Period.

Advanced manufacturing technology and large-scale production capacity

Since the Group is relatively new to the RF coaxial cables industry compared with other existing manufacturers, the Directors believe that most of the production equipment used by the Group are comparatively new and advanced, allowing the Group to produce high quality products, while minimizing product quality issues. With a view to enhance its product quality and production efficiency, the Group invested in new and advanced manufacturing equipment. Major production equipment for the manufacturing RF coaxial cables series and some new-type electronic components were imported from Austria, Germany, Japan and the United States. The Group also purchased advanced inspection and testing instruments from overseas suppliers. By constantly expanding its production capacity, the Group is equipped to meet increasing market demand. As at [the Latest Practicable Date], the Group had [34] production lines for RF coaxial cables series; [16] production lines for flame-retardant flexible cable series, and [44] production lines for new-type electronic components. The production scale of the Group capacity enables it to reduce production and operational costs and to achieve economies of scale which in turn increases the market competitiveness of its products.

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Experienced management team and technical staff

The Group believes that its skilled management team and technical staff are one of the key factors contributing to the success of the Group. The management team of the Company, led by Mr. Qian, the chairman of the Board, has more than 20 years of operations and management experience in the coaxial cables industry. A majority of the senior management team has accumulated technical expertise and experience in the information and telecommunications industry and has been with the Group since its establishment in 2007. Furthermore, Directors and senior management have been instrumental in instilling and fostering a distinct corporate culture that promotes responsibility, achievement and innovation, which in turn encourages the consistent delivery of quality products.

As of the Latest Practicable Date, the Group had 390 skilled production workers, and in particular, a research and development team comprised of 61 professional technical personnel responsible for developing new products and upgrading existing product. Under the leadership of its management team, the Group has achieved significant growth in its business during the Track Record Period.

BUSINESS STRATEGIES AND FUTURE PLANS

The business objectives of the Group are to expand its production capacity, broaden its product range and maintain its market leading position in the RF coaxial cables industry in the PRC.

Set out below are the business strategies of the Group:

Strengthen research and development capabilities

The Directors believe that one of the key competitive advantages of the Group over its competitors is its research and development capabilities. The Group will continue to upgrade and improve its technology platform by investing in research and development. While keeping its focus on RF coaxial cables series for mobile communications and telecommunications equipment, as well as other new-type electronic components, the Group also intends to utilise its research and development capability to develop new versions of its existing products such as aluminum cables, 3G leaky coaxial cables, connectors, high frequency connectors, multi-core flexible cables and fire resistant cables and also to enhance product quality and safety.

Diversify product range

Driven by the PRC government policies to integrate its three existing networks and implement “fibre to the home” (光纖到戶) network infrastructure, market demand for fibre, ribbon cable and other optical accessories is expected to grow significantly. To meet this potentially strong market demand and capture the accompanying business opportunities, the Group intends to strengthen its research and development efforts on fibre, ribbon cable, and other optical accessories and commence mass production of these products in future.

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Through its strong research and development capabilities, the Group is also equipped to expand the scope and application of its products to serve a broader range of customers in different industries.

Expand market share in the PRC

In addition to RF coaxial cables series which are widely used by current PRC telecommunications operators, the Group also has self-developed aluminum telecommunications cables, leaky cables and low-attenuation cables. The flexible cables for 3G mobile telecommunications developed by the Group have been widely accepted among the PRC telecommunications operators. The Group intends to take advantage of its 3G products to enhance its market share and standing among major telecommunications operators in the PRC.

Leveraging on its relationship with the three major telecommunications operators in the PRC, the Group intends to attract new business from provincial branches or subsidiaries of the three major PRC telecommunications operators with which the Group has yet to establish business relationship. The Group also intends to bid for high-profile projects such as network coverage upgrade, urban high-rise indoor signal coverage and network operation maintenance. The Group believes that these target business opportunities will help grow the business and expand its market share in the PRC across a suite of products.

Broaden the sales and distribution network of the Group

The Group intends to strengthen its sales and marketing efforts by setting up sales offices and sending its sales and marketing teams to areas in the PRC where the Group has yet to establish its presence.

In each of FY2008, FY2009, FY2010 and the five months ended 31 May 2011, turnover derived from PRC accounted for more than [90]% of the total turnover of the Group. The remaining was derived from sales to overseas markets including India, Russia and Brazil. The Group intends to allocate additional resources to explore and develop overseas markets, while maintaining its principal presence in the PRC. The Group is aware of the growth potential of the mobile telecommunications market in developing countries such as Russia, Brazil and India and intends to focus its overseas sales and marketing efforts on these countries. Certain products of the Group, such as RF coaxial cables series, connectors and antenna lightning arresters are already being sold to Russia. In addition, the Group has also opened up the Brazilian market in FY2010 and sold its products to Brazil. In order to further promote products of the Group in overseas markets, the Group intends to strengthen its sales and marketing team’s effort to enhance the relationship with local telecommunications operators and telecommunications equipment providers in those markets.

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The Directors believe that the sales and distribution network of the Group will be significantly expanded if it continues to promote its brand name both domestically and internationally among existing and prospective customers. At the same time, the Group also intends to explore sales opportunities in potential new markets by increasing its participation in tradeshows and organising more marketing activities in those markets to attract new customers and broaden its network of local relationships.

Expand production capacity

The Directors believe that there is significant potential for development and growth in the PRC telecommunications and RF coaxial cables markets following the launch of the 3G network in the PRC in 2009. In order to increase the 3G network usage, telecommunications operators need to expand and upgrade their base station, which ultimately would lead to additional demand for RF coaxial cables and related products. As shown in the chart in the paragraph headed “Twelfth Five-Year Plan” in the section headed “Industry Overview”, the market demand for RF coaxial cables is expected to increase from approximately [463,000] km in 2011 to approximately [549,000] km in 2014. Additional production equipment will be required in order for the Group to be able to meet the increased market demand. Such additional production equipment will comprise, among others, a large-scale physical foaming production line, an argon arc welding production line and a sheath production line.

As at the Latest Practicable Date, the annual production capacity of the Group for its RF coaxial cables series was approximately 150,000 km. The Group intends to implement the above expansion plans in 2012 and targets to commence production in the second half of 2012. In order to ensure that the Group is able to meet market demand when opportunities arise and maintain its position in the industry, the Group will expand its production capacity depending on future demand for its products.

Explore strategic cooperation opportunities

The Group will consider entering into strategic investments or alliances and/or acquiring businesses in related fields where opportunities arise with a view to improve its technological capabilities and expand its business. To date, the Group has not identified any investment or acquisition targets, however, the Group believes strategic cooperation initiatives may present meaningful expansion opportunities in the PRC and overseas markets.

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PRINCIPAL PRODUCTS

Currently, the Group specialises in the research and development, production and sales of telecommunications related products, comprising RF coaxial cables series, new-type electronic components and other related accessories for the mobile communications and telecommunications equipment industry.

The following table sets forth the turnover for the production and sales of telecommunications related products of the Group for the periods indicated:

															Five months ended	Five months ended
															31 May
	FY2008			FY2009				FY2010					2010				2011
	RMB	% of total		RMB	% of total			RMB	_% _		of total	RMB		% of total		RMB		% of total
	(’000)		turnover	(’000)		turnover		(’000)		turnover		(’000)			turnover	(’000)			turnover
												(unaudited)
Segments
RF coaxial cables
series	173,881		74.7	620,983		71.8	1,304,738				[92.5]	[457,899]			[91.7]	[657,784]			[93.2]
New-type electronic
components	43,213		18.6	169,615		19.6		[73,138]			[5.2]	[28,058]			[5.6]	[29,985]			[4.2]
Others	15,648		6.7	74,411		8.6		[32,903]			[2.3]	[13,636]			[2.7]	[18,221]			[2.6]


Total	232,742		100	865,009		100	1,410,779				[100]	[499,593]			[100]	[705,990]			[100]

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Products

The principal products of the Group are used in signal transmission systems for deployment in telecommunications networks. The following diagram illustrates the applications of the products of the Group in base station of wireless communications infrastructure.

==> picture [409 x 582] intentionally omitted <==

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

antenna
outdoor jumper
feeder kit
grounding kit
RF coaxial cable
outdoor jumper
indoor jumper
window feeder
lightning arrester
connector
flame-retardant
flexible cable
----- End of picture text -----

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Set out below are products which the Group manufactures and sells:

RF coaxial cables series

(a) RF cables for mobile communications

==> picture [323 x 190] intentionally omitted <==

RF cables for mobile communications are mainly used as feeder cables for transmitting and receiving radio signals and are also essential components for telecommunications transmission equipment. They appear throughout applications in telecommunications, broadcasting, television, microwave radio relay, radar, remote control, telemetry, instrumentation, and energy systems. With an operating frequency range of 100-3000MHz, the RF cables for mobile communications of the Group are especially used as main and sub-feeder lines as well as other high frequency applications that provide low attenuation and low VSWR for transmitting radio signals.

(b) Leaky coaxial cables

==> picture [286 x 211] intentionally omitted <==

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The leaky coaxial cables of the Group are mainly used for wireless mobile communications, wireless remote control, and wireless alarm systems under a working frequency range of 5-2500MHz. They can transmit RF signals as well as send and receive antenna data in places where wireless signals cannot be directly transmitted, or the transmission of which is weak, such as tunnels, subways and other underground environments. In particular, these cables are used in low signal coverage areas such as mountainous areas, mines, underground structures, shopping centres and also in television broadcasting, microwave communications, and cellular mobile networks. The aerospace, marine, defense and military sectors also use leaky coaxial cables.

New-type electronic components

New-type electronic components of the Group mainly include jumpers, connectors and antenna lightning arresters.

Jumpers

==> picture [386 x 211] intentionally omitted <==

The Group manufactures and sells a variety of jumpers, including heavy-duty jumpers, soft jumpers, feeder clamps, grounding kits, grounding copper, feeder window, and grounding wires. These components connect wireless antennas with feeder cables and various communications equipment and are easy to bend, install and fix.

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• Connectors

==> picture [136 x 208] intentionally omitted <==

Connectors connect RF circuits to radio equipment and electronic devices, operating on a 5-3000MHz frequency. Installed on cables or electronic devices such as base stations as electrical transmission lines, RF coaxial connectors are especially suitable for mobile communications, microwave devices, digital communications systems, ground-launch systems, and radio equipment operating under poor conditions.

• Antenna lightning arresters

Antenna lightning arresters are installed between a high-frequency device and a coaxial feeder cable. When lightning strikes, a designated channel quickly grounds the energy exerted by thunderbolts so as to prevent damages to the high-frequency device, protecting the antenna and other communication equipment. The outdoor base station itself has several lightning arresters to provide additional protection. In addition to preventing lightning damages to telecommunications base stations, the antenna lightning arresters are also used for prevention of lightning damages to Personal Handyphone Systems (PHS), GPRS global positioning systems, MMDS spread spectrum communications, satellite and microwave communications transceiver station equipment, and communications systems antennas.

Others

In addition to cables and new-type electronic components, the Group also manufactures and sells other related accessories, including flame-retardant flexible cable, splitters, couplers, combiners, feeder wall plate, adjustable stand, waterproof clay, insulating tape, cable tie, and feeder hoisting grip. Other than flame-retardant flexible cable, the accessories are mainly used to install, fix and set main feeder, sub-feeder, leaky coaxial cable, soft jumper, heavy-duty jumper, antenna, coaxial connector and antenna lightning arrester. They are also used as a waterproof means and to prevent corrosion between feeders.

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Flame-retardant flexible cable

==> picture [198 x 298] intentionally omitted <==

Flame-retardant flexible cables of the Group are widely used as internal connection cables for power systems or mobile cable transmission and distribution systems in telecommunications, railways, chemical engineering, high-rise buildings. Under a 90°C~125°C working temperature, its working voltage is rated 600V~1000V. Flame-retardant flexible cables of the Group are for application in areas with uninterrupted power supply including communications switch centres, skyscrapers, elevator machine rooms, airports, subways, air defense and automatic fire extinguishing systems. Other applications include cable groove, shelf, ditch and pipe laying.

Splitters

==> picture [207 x 138] intentionally omitted <==

Splitters are used to divide the power of one input signal into two or more outputs. They are widely applied in skyscrapers, subways and tunnels. They can also be found in indoor coverage projects and outdoor repeaters.

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Couplers

==> picture [212 x 141] intentionally omitted <==

As a microwave and millimetre wave component, coupler is used for signal isolation, separation and mixing, such as power monitoring (for steady power output), and transmission and reflection of sweep test. Couplers are widely applied in skyscrapers, subways, tunnels, indoor coverage projects and outdoor repeaters.

Combiners

Combiners are used to combine a multi-system signal into one indoor distribution system, allowing the system to work on both CDMA and GSM frequency bands simultaneously.

Production Process

The production process of the principal products is set out below:

RF coaxial cable series

==> picture [388 x 83] intentionally omitted <==

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

Copper Physical
Reshaping Covering Forming
Conductor foaming
Packaging Jacketing Corrugating Welding
----- End of picture text -----

Major raw materials used in the production of RF coaxial cables series are copper tube, copper wire and/or copper clad aluminum. Copper conductors are first reshaped using straighteners and wiredrawing moulds. A thin layer of endothelium is then squeezed onto the inner conductor to serve as an adhesive layer after ultrasonic cleaning. High pressure and purified carbon dioxide is injected to form a foaming polyethylene insulation layer. Copper tape is evenly and smoothly wrapped around the insulated core, followed by the welding and corrugating processes. A welded pipe is formed after an electric arc is ignited between the electrode and joining seam with high voltage and high-frequency or high-voltage pulse in order to generate high temperature and evenly fuse the joining seam. The welded pipe then undergoes

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a high-speed rotation process with a specially designed mould that makes the pipe corrugate continuously. Fire-retarding polyethylene jacket is squeezed out and then wrapped evenly on the outer conductor. The Group packages and stores the finished product after it passes final inspection.

An additional step is needed in the manufacturing process of leaky coaxial cables after corrugation, known as slotting. Slotting produces a symmetrical or spiral ring or slot and is done by cutting on the outer conductor. Special slotting equipment is used for this particular step.

New-type electronic components

==> picture [426 x 37] intentionally omitted <==

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

Copper Refinement
Plating Assembly Packaging
Bar processes
----- End of picture text -----

Copper bar is the major raw material used in the manufacturing of RF coaxial connectors, jumpers and other related accessories. Before assembly, the copper material undergoes a series of refinement processes at the processing centre (數控加工中心) including baiting, blanketing, rough machining, milling, and fine machining for the plate and various parts of the accessories. The parts are assembled into a variety of connectors, jumpers and other related accessories. Semi-finished product will be discarded or repaired if it fails any of the quality control tests conducted at each step of the manufacturing process. Finished products will be packaged and stored.

Splitters, couplers and combiners which are categorized as “Others” share similar production processes with the new-type electronic components.

PRODUCTION FACILITIES

All production activities of the Group are carried out at the plant located at the Industrial Park for Environmental Protection Science & Technology (a state high and new technology development zone), Yixing City, Jiangsu Province, PRC. As at the Latest Practicable Date, the Group’s production facilities occupied a site area of approximately 240,000 sq.m.

As at [the Latest Practicable Date], the Group had [34] production lines for RF coaxial cables series; [44] production lines for new-type electronic components; and [16] production lines for flame-retardant flexible cables series. The normal production lead time of RF coaxial cables series is about [2 to 3] days.

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The table below sets out the production capacity, production volume and utilisation rates of the production lines of the Group for each of its production groups during the Track Record Period:

										Five months ended	Five months ended	Five months ended
											31 May
		FY2008			FY2009			FY2010			2011
			Utilization			Utilization			Utilization			Utilization
	Production	Production	Rates	Production	Production	Rates	Production	Production	Rates	Production	Production	Rates
	Capacity(1)	Volume	(%)(2)	Capacity(1)	Volume	(%)(2)	Capacity(1)	Volume	(%)(2)	Capacity(1)	Volume	(%)(2)
RF coaxial cables series
(km in thousand)	18	12	67	68	55	81	[123]	[96]	78	[62.5]	[40]	[64]
New-type electronic
components
(set in million)	1.9	1.45	76	11.2	9.5	84	11.2	[7.2]	[64]	[4.6]	[3.3]	[71]

Notes:

(1) This represents the weighted average production capacity of the Group for the relevant period, which is calculated by dividing the sum of annualized production capacity as at the end of each month during such period by the number of months in the same period. The annualized production capacity as at the end of each month is calculated based on 26 operating days per month and 24 hours each day for its production lines. The Group generally increases its production capacity in anticipation of the increase in market demand for its products in the subsequent year. As at the Latest Practicable Date, the annualized production capacity of RF coaxial cable series was approximately 150,000 km.
(2) The utilization rates are calculated by dividing the actual production volume for the relevant period by the weighted average production capacity during the same period.

The major production equipment used in the production lines, particularly for RF coaxial cables series and some new-type electronic components, are imported from or made in Austria, Germany, Japan and the U.S., which had helped the Group to maintain high product quality, production efficiency, cost-effectiveness and its advanced position in terms of manufacturing capacity in the cables industry. The Group generally conducts its maintenance work on its production lines on a regular basis.

Further, in order to ensure that its products meet customers’ specifications and to maintain product quality, the Group also imported advanced inspection and testing instruments from the U.S., Germany and Japan.

PROCUREMENT AND SUPPLIERS

Raw materials for production are primarily copper-based raw materials, PE and PVC. The Group purchases its raw materials only from suppliers in the PRC. The raw materials that the Group purchased from the single largest supplier during the Track Record Period are copper-based raw materials. Purchases from the single largest supplier increased during the Track Record Period primarily due to the increase in the demand for copper-based raw materials as a result of the significant growth in sales. Further, the Group intends to have better control over the supply of major raw materials in terms of quality, delivery and cost. The Group purchases its copper-based raw materials primarily from suppliers close to its production facilities, in Shanxi province, Jiangsu province and Zhejiang province. Purchase of copperbased raw materials by the Group accounted for approximately [55.5]%, [66.2]%, [80.3]% and [78.9]% of its total purchases in FY2008, FY2009, FY2010 and the five months ended 31 May 2011, respectively.

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The Group selects its suppliers through tenders and invites potential suppliers to submit bids. When selecting potential supplier candidates, the Group takes into consideration their reputation, product quality, prices, reliability, delivery time, and credit terms offered by the candidates. Before the Group invites a potential candidate to submit a bid, its procurement personnel usually reviews the necessary permits, licenses, and certificates of such candidate and requires the candidate to complete a questionnaire on its background and the quality and technical standard of the raw materials it supplies. With respect to the procurement of its major raw materials, such as copper-based materials, the Group will, if necessary, conduct an onsite visit to the potential supplier candidate and carry out sample inspection and testing before inviting the potential supplier candidate to participate in the tender and submit a bid. According to the internal control guidelines of the Group, there shall be at least two or more potential candidates for each type of raw materials which the Group will invite to submit bids at open tenders so as to lower the costs on raw material purchases. In addition, the Group maintains a list of qualified suppliers, which is subject to annual review conducted jointly by its procurement, production, quality control and technology departments. Only those suppliers who pass such annual joint review are qualified to continue to be the supplier of the Group in the following year.

The Group has built up business relationships with most of its major suppliers since its official operation. The Directors believe that the Group has established stable cooperative relationships with its key suppliers, which enables the Group to obtain a reliable and uninterrupted supply of requisite raw materials. During the Track Record Period, the Group had not experienced any raw material shortages that materially affected its normal course of business. The Directors further believe that as there are numerous alternative suppliers of raw materials in the market, it is unlikely that the Group will encounter any difficulty in procuring an adequate supply of raw materials.

The following graph shows the average monthly market prices of copper from January 2008 to May 2011:

Monthly Copper Prices from January 2008 to May 2011

80 70 60 50 40 30 20

Source: Yangtze River Nonferrous Metals Network ( 長江有色金屬網 )

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The Group has from time to time experienced cost increases for copper-based materials, the major raw materials used by the Group, due to price fluctuations in the copper supply market during the Track Record Period. The Group has not entered into any derivative contract to reduce the exposure of fluctuations in the copper price. Generally, the Group tends to pass on most of these additional costs to its customers. The Group has preset a policy in its framework agreements with its major customers to the effect that the selling price of its products shall be linked to cost, particularly in relation to copper-based materials which can effectively be hedged against its risks associated with the fluctuation in copper prices. The framework agreement with China Telecom, one of its major customers, sets forth that selling prices for each category of products either under different copper price ranges or with a basic selling price plus a formula for adjustment in the event that the fluctuation in copper price exceeds the prescribed limit. As for one of its other major customer China Mobile, the framework agreement sets forth a formula for adjustment of the selling prices of each category of products in the event that the fluctuation of copper price exceeds the prescribed limit. On the other hand, the framework agreement between the Group and China Unicom provides a price adjustment mechanism to adjust the selling prices of products to be supplied by the Group, which is linked to copper price. In the event that the fluctuation in copper price exceeds the prescribed limit, the Group and China Unicom shall determine the selling prices of products to be supplied by the Group by mutual consent.

Suppliers of the Group generally grant to the Group credit terms ranging from 15 days to [90] days. The Group requests some of its suppliers to deposit a quality bond with it, which will only be released to the suppliers within one month upon termination of the business relationship between the Group and them. If there is any insolvable dispute on the quality of the raw materials supplied to the Group, the Group may discontinue the business relationship with the relevant supplier and confiscate the quality bond deposited by such supplier. During the Track Record Period, the Group had not experienced any material quality problems on any raw materials supplied to it. Raw material purchases are settled in RMB.

In FY2008, FY2009, FY2010 and the five months ended 31 May 2011, purchases from the top five suppliers amounted to approximately RMB129.5 million, RMB407.3 million, RMB[863.3] million and RMB[440.9] million respectively, representing approximately 61.6%, 62.9%, [80.0]% and [81.7]% of the total purchase of the Group respectively. During the same period, purchases from the single largest supplier amounted to approximately RMB48.6 million, RMB247.2 million, RMB[708.2] million and RMB[270.9] million respectively, representing approximately 23.1%, 38.2%, [65.6]% and [50.2]% of the total purchase of the Group respectively. The top five suppliers of the Group during the Track Record Period are mainly engaged in the production of, among others, copper pipe, copper related products, PVC cable materials, polyethylene, plastic materials, electronic wire and copper clad aluminum wire.

The supply agreements for copper-based materials between the Group and its major suppliers include the following major terms:

i. quality of goods provided by the suppliers shall meet the Group’s procurement specifications and packaging materials need to be environmentally friendly and recyclable;

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ii. if the goods supplied do not meet the specifications or standards of the Group, the Group is entitled to reject the goods;
iii. price determination mechanism with reference to the prevailing copper price, price of the goods (inclusive of value added taxes) are fixed at the time when the Group places orders with the suppliers;
iv. suppliers shall be liable for economic loss incurred by the Group due to quality problems of the goods supplied by them;
v. generally the purchase price is required to be settled within 15 days upon delivery of the goods, and in some of the supply agreements, RMB200,000 out of the purchase price will be held by the Group as quality bond which is released to the suppliers within one month upon termination of the business relationship with the suppliers; and
vi. disputes arising from the supply agreements shall be resolved through negotiations between the parties, failing which the dispute shall be resolved by the court.

Such supply agreements do not contain any provision in relation to the duration of the agreement, exclusivity, termination or minimum sale or purchase requirements. Some supply agreements contain confidentiality clauses which prohibit the parties from disclosing the terms and confidential information of the supply agreement to any third party. As advised by the PRC Legal Adviser, the supply agreements in respect of copper-based materials with major suppliers are valid, legally binding and enforceable by each of the parties thereto.

During the Track Record Period, [none of the Directors or their associates or the Shareholders who, to the knowledge of the Directors, owned more than 5% of the issued share capital of the Company had any interest in any of the top five suppliers other than Fullway Technology].

Fullway Technology was acquired by Trigiant Singapore in November 2007 and was later transferred to 宜興市富創電子科技有限公司, Premo Superior Investments Limited and Smart Time Enterprise Limited in December 2009. Fullway Technology, with its production and customers base in the PRC, is principally engaged in the production of precision seamless copper pipe and was one of the top five suppliers of the Group in FY2008 and FY2009. In FY2008 and FY2009, purchases from Fullway Technology were approximately RMB48.6 million and RMB247.2 million respectively, representing approximately 23.1% and 38.2% of the total purchase of the Group respectively.

CUSTOMERS

The Group sells to its major customers in the PRC RF coaxial cables series, new-type electronic components and other related accessories for mobile communications and other telecommunications equipment. The Group also exports some products to overseas customers in countries and regions including India, Russia, Brazil and Southeast Asia.

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Products of the Group are sold to the following categories of customers:

(1) major telecommunications operators: these include China Unicom, China Mobile, China Telecom and their respective branches or subsidiaries in the PRC;
(2) equipment manufacturers: these include Shenzhen Zhongxin Kangxun Electronics Co., Ltd. (深圳市中興康訊電子有限公司), a subsidiary of ZTE Corporation (中興通訊股份有限公司), Comba Telecom Systems Corporation (京信通信系統控股有限公司), and Rosenberger Asia Pacific Co., Ltd. (羅森伯格亞太電子有限公司).

In addition, the Group became a qualified supplier of Huawei Technologies Co., Ltd. (華為技術有限公司) (“Huawei”) in December 2010. To be a qualified supplier of Huawei, the supplier must pass an assessment of Huawei, which includes different aspects, such as pricing, quality and services quality. During the Track Record Period, there was no sales to Huawei.

The major customers of the Group, the three major PRC telecommunications operators, usually select their suppliers annually through tender. They would invite the Group and its competitors to participate in the tender and submit bid. If the Group wins the tender, the relevant customer will enter into a framework agreement with the Group setting out the general terms of the supply of products. The Group will then enter into specific sales contracts with the subsidiaries or branches of such customer which will set out the detail and specific terms of each purchase. All suppliers of RF coaxial cables series to the three major PRC telecommunications operators are subject to annual tender. The three major PRC telecommunications operators primarily consider pricing, quality and service offerings when selecting the winning bidder. Despite intense competition which has led some of the Group’s competitors to lower its prices, the average selling prices of the RF coaxial cables series of the Group for the year ended 31 December 2010 and the five months ended 31 May 2011 increased in comparison with that for the year ended 31 December 2009 and the five months ended 31 May 2010, respectively. The Directors believe that the Group is subject to the same assessment by the three major PRC telecommunications operators as its competitors. To the best knowledge of the Directors, the Group won the tender of the three major PRC telecommunications operators not because the Group submitted a bid lower than other bidders, but rather, amongst others, the product quality and services offered by the Group attracted the customers.

Currently, the Group has entered into framework agreements with China Unicom, China Mobile and China Telecom respectively, specifying pricing, delivery arrangement, product warranty and liabilities in the event of breach of the framework agreement. The framework agreement with China Unicom and China Mobile respectively stipulates that such framework agreement will remain valid until next tender. The framework agreement with China Telecom does not have any provision in relation to its duration, but according to industry practice, it will also remain valid until the next tender. The Group has also entered into contracts with individual branches or subsidiaries of each of the three major PRC telecommunications operators. As advised by the PRC Legal Adviser, such framework agreements are valid, legally binding on and enforceable by each of the parties thereto.

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None of the framework agreements contains any restriction on the operations of the Group.

Other than these framework agreements with each of the three major PRC telecommunications operators, the Group has not entered into any long-term contract with its top five customers during the Track Record Period.

Since its establishment, the Group has formed stable business relationships with its major customers and started supplying products to China Unicom, China Telecom and China Mobile since 2008. The Group was the largest supplier of China Unicom in 2009, and as at [the Latest Practicable Date], the Group sold its products to [28] out of 31 provincial branches of China Unicom. The Group also sold its products to 22 out of 31 provincial subsidiaries of China Telecom and 17 out of 31 provincial subsidiaries of China Mobile. The Group derives a significant portion of its turnover from the supply of products to these three major PRC telecommunications operators. The Group relies on and expects to continue to rely on these major customers for a significant percentage of its sales in the foreseeable future. To diversify its customers concentration, the Group has diversified its product portfolios, to identify and serve new customers in the PRC and in overseas markets. For instance, the Group became a qualified supplier of Huawei in December 2010. Huawei is expected to place a purchase order with the Group starting from [August] 2011, subject to the completion of certain pre-agreed quality checking procedures, which include product sample test and QPA test.

The Group generally takes into consideration the following factors in determining its product prices:

cost of raw materials, in particular, major raw materials;
cost of services;
competitive position of its products and recognition of its brand in the market;
sales region;
development stage of new products; and
prior dealings with the customer and volume of sales.

In FY2008, FY2009, FY2010 and the five months ended 31 May 2011, sales to its top five customers were approximately RMB232.4 million, RMB857.0 million, RMB[1,384.4] million and RMB[689.5] million respectively and accounted for approximately 99.9%, 99.1%, [98.1]% and [97.7]% of the total turnover of the Group respectively. The three major PRC telecommunications operators, namely, China Unicom, China Mobile and China Telecom, who were amongst the top five customers of the Group during the Track Record Period, are engaged in the provision of mobile telecommunications services, fixed line and broadband services in the PRC. Other top five customers of the Group during the Track Record Period are engaged

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in (i) design, development and production of RF related products in India; (ii) manufacturing of high-frequency and fiber optics technology products worldwide; (iii) manufacturing of telecommunications and related equipments in the PRC; and (iv) logistics and distribution of telecommunications related products to customers including the three major PRC telecommunications operators.

Domestic customers generally settle their payments in RMB by way of direct bank transfers. In most sales contracts, the Group generally requests customers to pay [60%-80%] of the total purchase price upon delivery of the goods and the remaining [20%-40%] when all goods and related services pass customers’ final inspection. The typical duration from the delivery of goods to the passing of its customers’ final inspection is between four and five months on average.

In general, the Group allows a credit period of 180 days to 360 days to its major customers. The Group had not experienced any material defaults in payment by its customers during the Track Record Period.

During the Track Record Period, none of the Directors or their associates or the Shareholders who, to the knowledge of the Directors, owned more than 5% of the issued share capital of the Company had any interest in any of the top five customers of the Group.

SALES AND MARKETING

As at the [Latest Practicable Date], the sales and marketing department of the Group had [45] well-trained and experienced sales staff, led by Mr. Jiang Wei, an executive Director. Mr. Jiang Wei has over 30 years experience in the cable industry and has established good business relationships with telecommunications operators and equipment manufacturers in the PRC. The Group sells its products directly to its customers through the sales and marketing department. In FY2008, FY2009, FY2010 and the five months ended 31 May 2011, the total turnover derived through tenders organized by China Unicom, China Mobile and China Telecom was approximately RMB[218.5] million, RMB[844.8] million, RMB[1,367.0] million and RMB[675.0] million respectively; and the success rate of the bids submitted by the Group for such tenders in FY2008, FY2009, FY2010 and the five months ended 31 May 2011, was 100%, 100%, 75% and [●]% respectively.

The sales and marketing department comprises eight divisions that handle sales to domestic customers in different provinces and municipalities, one overseas division that handles sales to overseas customers and one sales management division. Each division works independently of one another and is responsible for its own duties as follows:

seven of the eight domestic sales divisions are mainly responsible for conducting sales and marketing activities relating to the three major customers of the Group, i.e. the three major telecommunications operators in the PRC;
one of the eight domestic sales divisions is mainly in charge of sales and marketing activities relating to the PRC telecommunications equipment manufacturers;

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the overseas sales division is in charge of sales and marketing activities in respect of overseas markets; and
the sales management division is in charge of organising and arranging tenders, providing quotations and technical support.

Each sales and marketing personnel has received proper training in respect of sales and marketing methods and strategies including training relating to provision of pre-sales, during-sales and post-sales services, in an effort to better understand customers’ requirements and respond quickly to changes in their demands and new product development needs.

In addition, commercialising and marketing new products is a key sales and marketing strategy of the Group. In order to better understand market trends and develop new products suitable for the market, the research and development team interacts extensively with the sales and marketing department. After new products are developed, the research and development team will provide necessary training to sales personnel on the functions, strengths and particulars of the new products to ensure that sales personnel are familiar with the products before marketing them to customers. Further, sales personnel of the Group also visit customers periodically to collect feedback on its products, which is then communicated to the Group’s research and development team for analysis.

The Group will continue to further strengthen its sales and marketing efforts to take full advantage of its sales team, network of customer relationships, industry knowledge and experience.

According to the internal policies of the Group, wrong product models inadvertently ordered by customers can be exchanged without handling charge. Customers requesting for a return or exchange will notify the Group in writing stating the specific product name, reason for the return and replacement as well as the quantity of the products to be returned or exchanged. The Group will then prepare a product return form based on the information and details provided by the customers for the various departments to confirm. The request for returns or exchanges will only be allowed with the approvals from the production, quality control and sales and marketing departments. Representatives of each of the departments will counter-sign on the product return form if they are satisfied with the request. The Group generally offers its customers a warranty period of three years. Since established in March 2007, the Group did not incur material cost in relation to warranty for products returned by customers and accordingly, no warranty provision is made.

QUALITY CONTROL

The Group places great emphasis on product quality.

The Group has a team of quality management personnel, headed by one of Jiangsu Trigiant’s deputy general managers, Mr. Jiang Xinhong who is responsible for quality management and quality control of coaxial cables.

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The Group has adopted a standardized quality management system throughout the various stages of production, including production process, inspection and service of finished products. Jiangsu Trigiant, the Group’s sole PRC operating subsidiary, was awarded the ISO9001:2000 certification by TL Certification Center (泰爾認證中心) (then known as China Information and Industry Department, Telecommunications Certification Centre (中國信息產業部郵電通信質量管理體系認證中心)) in 2007. The certification was then upgraded to the ISO9001:2008 certification in October 2009.

The ISO certification process involves reviewing and observing the manufacturing processes and quality management systems. The Group has a specialised team of staff members headed by Mr. Jiang Xinhong, designated to monitor compliance with ISO standards. This specialised team consists of management, engineers, technicians and staff members from quality control, supply, production, sales and marketing, logistics and research and development departments. Most members of the specialized team have received training relating to the relevant applicable ISO standards. In addition to providing training to the specialised team, the Group also conducts internal reviews of its operations periodically or when the management considers necessary to ensure ongoing compliance with ISO standards. The Group passed the ISO annual review in [August 2010].

The Group has implemented a series of systems to ensure thorough and strict quality control during various stages of production. Firstly, the Group assesses and selects its suppliers after conducting market research and in accordance with the internal guidelines. Secondly, at each stage of production, there is an examination station whereby inspection personnel will inspect and examine semi-finished products using advanced testing equipment. Thirdly, the products are subject to a final quality inspection before they are delivered to the warehouse. Inspection personnel make use of advanced instruments to carry out inspections on various performance parameters of the products to ensure that the products are free from defects and meet the requirements of customers. Only products which pass the final quality control inspection are issued qualified product certificates and allowed to be sold on the market.

During the five months ended 31 May 2011, one customer identified certain substandard products supplied by the Group. The Group has resolved this quality issue by exchanging those substandard products with new products that met the standard of such customer. As a result of this, the Group incurred additional cost of approximately RMB500,000 which comprised compensation, costs of exchanged products and inspection costs. The management of the Group confirms that this was an isolated incident and did not have any material adverse effect on the business relationship with such customer. [The Group has also tightened the inspection of products during the production process.] Up to the Latest Practicable Date, the Group continued normal business dealings with such customer.] Apart from the aforementioned, the Directors confirmed that the Group did not make any compensation to its customers due to product quality issue during the Track Record Period [and up to the Latest Practicable Date].

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In addition to the internal quality controls, products of the Group are also required to comply with various industry technical standards prescribed by competent PRC authorities, including the following:

	Governing	Applicable
Industry Standards	Authority	Products	Specifications
YD/T1092-2004	MIIT	RF coaxial cable	The standard provides product
		series for mobile	classifications, technical requirements,
		communications	test methods, inspection rules and
		(移動通信RF電纜	logo, packaging and other
		系列)	requirements of RF coaxial cables for
			wireless communication with 50 ohm
			foam polyethylene dielectric,
			corrugated copper outer conductor.
			The cable is used to connect wireless
			communication devices to the antenna
			and RF electronic equipment and has
			an operating frequency mainly in the
			range of 100-3000MHz.
YD/T1120-2007	MIIT	Leaky coaxial	The standard specifies product
		cable	classifications, requirements, test
		(漏泄同軸電纜)	methods, inspection rules, packaging,
			labeling, certification, transportation,
			and storage of the physical foam
			polyethylene dielectric, corrugated
			copper outer conductor leaky RF
			cable.
			Its operating frequency range is 10-
			2500MHz.
TB/T3201-2008	Ministry of	Leaky coaxial	The standard specifies the models,
	Railways	cable	specifications, technical requirements,
	(中華人民共和國鐵	(漏泄同軸電纜)	test methods, inspection rules and
	道部)		logo, packaging, transportation, and
			storage of the leaky coaxial cable for
			the railway wireless communication
			system.
			The standard applies to the
			manufacturing, inspection, and
			engineering design of the leaky
			coaxial cable in the railway wireless
			communication system for the
			frequency band 450MHz and
			900MHz.

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	Governing	Applicable
Industry Standards	Authority	Products	Specifications
YD/T1542-2006	MIIT	Antenna	The standard specifies the definition,
		Lightning Arrester	classification, technology,
		(天饋避雷器)	requirements, test methods, and
			inspection rules of surge protective
			device (SPD) (including the line
			interface arrester and antenna
			lightning arrester).
			The standard applies to the quality
			inspection and evaluation of SPD,
			which protects other devices from
			sudden power surges caused by
			lightning.
YD/T1966-2009	MIIT	RF coaxial jumper	The standard provides product
		(射頻同軸跳線)	classifications, requirements, test
			methods, inspection rules, packaging,
			transportation, and storage of the
			mobile telecommunications with 50
			ohm RF coaxial jumpers.
			The standard applies to RF coaxial
			jumpers of connecting the base station
			antenna to the main feeder or
			amplifier on top of tower, main feeder
			or a lightning arrester and the base
			station receiver devices. Its main
			frequency range is 5MHz-3000MHz.
YD/T1967-2009	MIIT	RF coaxial	The standard provides product
		connector	classifications, requirements, test
		(射頻同軸連接器)	methods, inspection rules, packaging,
			transportation, and storage of the 50
			ohm RF coaxial connectors for mobile
			communication.
			The standards applies to 50 ohm 7/16
			type and N type RF coaxial,
			connectors which are used in antenna
			and feeding system for mobile
			telecommunications. Its main
			frequency range is 5MHz-3000MHz.
YD/T1173-2001	MIIT	Flexible cable	The standard provides product
		series	classifications, requirements, test
		(軟電纜系列)	methods, inspection rules, packaging,
			transportation, and storage of flame-
			retardant and fire resistant flexible
			cables for power supply system of
			communication.
			The standard is mainly applied to the
			fire retardant flexible cable which is
			used in the power supply and
			distribution system of communication
			stations and high-rise building.

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The Group strives to develop and adhere to higher product standards than those commonly adopted in the industry with respect to its products. The Group also regularly organizes training for its employees to keep them updated as to the product standards adopted by the Group from time to time.

AWARDS AND CERTIFICATIONS

In recognition of the quality of its products and management, the Group has been given a number of awards and certifications by various government authorities and other organisations. The more significant awards and certifications received by the Group are summarised as follows:

(i) Awards

Year	Award	Significance	Awarding Authority
2007	Top 50 Chinese	In recognition of the	Communications
	Communications	good quality of the	Weekly
	Equipment Supplier	products of the Group	(通信產業報社)
	(Ranked 22nd)	and its excellent
	(中國通信設備供應商	customer service	Communications
	50強(排名第22名))		Industry Ranking
			Committee
			(通信產業榜評選委員會)
2008	“Greatest Potential for	In recognition of the	Communications World
	Growth”	development potential	Weekly
	(“最具成長潛力獎”)	of the Group among its	(通信世界週刊)
		peers
2008	Top 50 Chinese	In recognition of the	Communications
	Communications	good quality of the	Weekly
	Equipment Suppliers	products of the Group	(通信產業報社)
	(中國通信設備供應商	and its excellent
	50強)	customer service	China Joint Center for
			Case Management
			(中國管理案例聯合中心)

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Year	Award	Significance	Awarding Authority
2008-	Communication	In recognition of the	2009 China Annual
2009	Industrial Technology	advanced technological	Committee for
	Contribution Award	capabilities of the	Communication
	(通信產業技術貢獻獎)	Group	Technology
			(2009中國通信技術
			年會組委會)
			Communications
			Weekly
			(通信產業報社)
2009	China 3G Construction	In recognition of the	2009 International
	and Innovation	advanced technological	Seminar for Wireless
	Achievement Award	capabilities of the	Communications
	(中國3G建設與	Group	Applications
	創新成就獎)		(2009無線通信應用(國
			際)研討會)
			MIIT
			China Center for
			Information Industry
			Development
			(中國電子資訊產業
			發展研究院)
			Communications
			Weekly
			(通信產業報社)

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Year	Award	Significance	Awarding Authority
2009	High and New	In recognition of the	Science and Technology
	Technology Enterprise	advanced technological	Department of Jiangsu
	Certificate	capabilities of the	Province
	(高新技術企業證書)	Group	(江蘇省科學技術廳)
			Finance Department of
			Jiangsu Province (江蘇
			省財政廳)
			Jiangsu State
			Administration of
			Taxation (江蘇省國家稅
			務局)
			Jiangsu Local Taxation
			Bureau (江蘇省地方稅
			務局)
2009	Top 10 Feeder Cable	In recognition of the	Communications
	Suppliers (ranked 1st)	good quality of the	Weekly
	(十大饋線供應商	products of the Group	(通信產業報社)
	(第一名))	and its excellent
		customer service
2009	Top 100	In recognition of the	China Annual
	Technologically	advanced technological	Committee for Small &
	Innovative Small &	capabilities of the	Medium Enterprises
	Medium Enterprises	Group	(中國中小企業家年會
	(中國科技創新型		組委會)
	中小企業)
			China Association of
			Small & Medium
			Commercial Enterprises
			(中國中小商業企業協會)

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Year	Award	Significance	Awarding Authority
2009	China Influential	In recognition of the	CCID Group
	Business in	reputation and brand	(賽迪集團)
	Communication	name of the Group in
	Technology	the industry	China Center for
	(中國信息產業年度		Information Industry
	影響力企業)		Development
			(中國電子資訊產業
			發展研究院)
2009-	Technological	In recognition of the	2010 China Annual
2010	Innovation for the	advanced technological	Committee for
	Communication	capabilities of the	Communication
	Industry	Group	Technology
	(通信產業技術創新獎)		(2010中國通信技術
			年會組織委員會)
			Communications
			Weekly
			(通信產業報社)
2009	Outstanding Wireless	In recognition of the	2009 China
	Coverage	good quality of the	Communication Industry
	(無線覆蓋傑出表現獎)	products of the Group	of Large Inventory
		and its excellent	(2009中國通信行業
		customer service	大盤點)
			Communications World
			Weekly
			(通信世界週刊)
2009-	Top 50 Chinese	In recognition of the	Communications
2010	Communications	good quality of the	Weekly
	Equipment Technology	Group products and its	(通信產業報社)
	Suppliers	excellent customer
	(中國通信設備技術	service	China Joint Center for
	供應商50強)		Case Management
			(中國管理案例聯合中心)

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Year	Award	Significance	Awarding Authority
2009-	Customer Satisfaction	In recognition of the	Communications
2010	Enterprise in China	good quality of the	Weekly
	Communication	products of the Group	(通信產業報社)
	Industry	and its excellent
	(中國通信產業用戶	customer service	China Joint Center for
	滿意企業)		Case Management
			(中國管理案例聯合中心)
2010	[Key Enterprise of	In recognition of the	Torch High Technology
	State Torch Program	advanced technological	Industry Development
	(國家火炬計劃骨幹企	capabilities of the	Center, Ministry of
	業)]	Group	Science and Technology
			of PRC
			(中華人民共和國科學技
			術部火炬高技術產業開
			發中心)
2010	Top 10 Partners of	In recognition of the	Henan Branch, China
	2010 (十佳合作夥伴)	good quality of the	Unicom
		products of the Group	(中國聯合網路通信有限
		and its excellent	公司河南省分公司)
		customer service
2010	Jiangsu Model	In recognition of the	Intellectual Property
	Company in	Group’s management	Office of Jiangsu
	Standardized	of intellectual property	Province
	Intellectual Property	rights	(江蘇省知識產權局)
	Rights Management
	(江蘇省企業知識產權		Quality and Technical
	管理標準化示範創建		Supervisors Bureau of
	單位)		Jiangsu Province
			(江蘇省質量技術監督局)

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Year	Award	Significance	Awarding Authority
2010	Honest and Law-	In recognition of the	Ruling City by Law
	Abiding Company	reputation of the	Leading Team of Wuxi
	(誠信守法企業)	Group and good	(無錫市依法治市領導
		standing with the law	小組)
2010	Top Supplier of China	In recognition of the	Jiangsu Branch, China
	Telecom of Jiangsu	good quality of the	Telecom
	(中國電信江蘇公司優	products of the Group	(中國電信江蘇公司)
	秀供應商)	and its excellent
		customer service
2010	Core Company for	In recognition of the	The Electrical Cable
	Optical Cables in	quality of the products	and Wire Branch of
	China Communication	of the Group and its	China Electrical
	Industry	reputation in the	Equipment Industry
	(中國通信光電纜行業	industry	Association
	核心企業)		(中國電器工業協會電線
			電纜分會)
			OEC
2011	Core Company for	In recognition of the	The Electrical Cable
	Optical Cables in	quality of the products	and Wire Branch of
	China Communication	of the Group and its	China Electrical
	Industry	reputation in the	Equipment Industry
	(中國通信光電纜行業	industry	Association
	核心企業)		(中國電器工業協會電線
			電纜分會)
			OEC
2011	Top 100 China	In recognition of the	Operation Supervision
	Electronic Component	quality of electronic	Coordination Bureau of
	Enterprises (ranked	component products of	MIIT (中國工業和信息
	23rd) (中國電子元件百	the Group	化部運行監測協調局)
	強企業(第23名))
			CECA

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In addition to the above awards, the following table sets out the various certificates the Group has received for its products:

Issuing Product Name Certificates Authority Validity Type-N RF connectors Advanced Science and 24 April 2008 to for 3G system Technology Technology 23 April 2013 (3G系統用 N型射頻連 Product Department of 接器) Certificate Jiangsu Province (高新技術產品認 (江蘇省科學技術定證書) 廳) High frequency Advanced Science and 24 April 2008 to lightning protector for Technology Technology 23 April 2013 antenna system Product Department of (天饋系統用高頻信號 Certificate Jiangsu Province 防雷保護器) (高新技術產品認 (江蘇省科學技術定證書) 廳) Broadband, low Advanced Science and July 2009 to attenuation, low Technology Technology July 2014 VSWR RF coaxial Product Department of cable for 3G system Certificate Jiangsu Province (3G系統用寬頻、 (高新技術產品認 (江蘇省科學技術低損耗、低駐波比射定證書) 廳) 頻同軸電纜) Low smoke and halogen Advanced Science and November 2009 free RF coaxial cable Technology Technology to November for third generation Product Department of 2014 mobile Certificate Jiangsu Province communications (高新技術產品認 (江蘇省科學技術 (第三代移動通信用低定證書) 廳) 煙無鹵射頻同軸電纜) EnvironmentallyAdvanced Science and December 2009 friendly RF coaxial Technology Technology to December cable for third Product Department of 2014 generation mobile Certificate Jiangsu Province communications (高新技術產品認 (江蘇省科學技術 (第三代移動通信用綠定證書) 廳) 色環保射頻同軸電纜)

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Issuing Product Name Certificates Authority Validity Type-7/16 RF coaxial Advanced Science and August 2010 to cable welding Technology Technology August 2015 component for third Product Department of generation mobile Certificate Jiangsu Province communications (高新技術產品認 (江蘇省科學技術廳) (第三代移動通信用定證書) 7/16型焊培式射頻同軸電纜組件) Low consumption Advanced Science and December 2010 aluminum feeder for Technology Technology to December wireless cellular Product Department of 2015 communications Certificate Jiangsu Province (無線蜂窩通信用低耗 (高新技術產品認 (江蘇省科學技術廳) 鋁饋線) 定證書) Low attenuation Advanced Science and December 2010 waterproof RF coaxial Technology Technology to December cable for mobile Product Department of 2015 communications Certificate Jiangsu Province (移動通信用低損耗防 (高新技術產品認 (江蘇省科學技術廳) 水射頻同軸電纜) 定證書) New-type low carbon Advanced Science and May 2011 emission Technology Technology to May 2016 environmentallyProduct Department of friendly feeder for Certificate Jiangsu Province mobile (高新技術產品認 (江蘇省科學技術 communications 定證書) 廳) (移動通信用新型低碳環保饋線) Low carbon emission Advanced Science and May 2011 environmentallyTechnology Technology to May 2016 friendly refractory Product Department of multi-core cable for Certificate Jiangsu Province communications (高新技術產品認 (江蘇省科學技術 power supply 定證書) 廳) (通信電源用低碳環保型耐火多芯軟電纜)

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(ii) Certifications

The Group has obtained all necessary permits, certifications and approvals for the purposes of carrying on its businesses.

The following are the major certificates/permits obtained by the Group:

Issuing Certificates/Permits Significance Authority Validity Management System Certificate The Group’s TL 16 August (the design, production, and manufacture of Certification 2010 to 15 servicing process of RF coaxial RF coaxial Center August 2013 cable, connector and assembly cables (泰爾認證中心) flame-retardant and fire complies with resistant flexible cable, leaky GB/T19001coaxial cable) 2008 idt (管制體系認證證書) ISO9001:2008 (RF射頻同軸電纜、連接器 standards of 及組件，阻燃耐火軟 quality 電纜、漏泄同軸電纜的 assurance 設計、生產和服務過程)) Management System Certificate The Group’s TL 16 August for the Group’s Environment environment Certification 2010 to 15 Management System (the management Center August 2013 relative environment system (泰爾認證中心) management activities and areas complies with of design, manufacturing and GB/T24001services process of RF coaxial 2004 idt cable, connector and assembly ISO14001:2004 flame-retardant and fire standards resistant flexible cable, leaky coaxial cable) (關於環境管理體系的管制體系認證證書) (RF射頻同軸電纜、連接器及組件、阻燃耐火軟電纜、漏泄同軸電纜的設計、生產和服務過程相關的環境管理活動和場所)

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Certificates/Permits

Management System Certificate for the Group’s Occupational Health and Safety Management System (the relative

occupational health and safety management activities and areas of design, manufacturing and services process of RF coaxial cable, connector and assembly flame-retardant and fire resistant flexible cable, leaky coaxial cable (關於職業健康安全管理體系的管制體系認證證書) (RF射頻同軸電纜、連接器及組件、阻燃耐火軟電纜、漏泄同軸電纜的設計、生產和服務過程相關的職業健康安全管理活動和場所)

	Issuing
Significance	Authority	Validity
The safety	TL	16 August
management	Certification	2010 to 15
system of the	Center	August 2013
Group comply	(泰爾認證中心)
with
GB/T28001-
2001 standards

Product Certification The cables of TL 13 August (產品認證證書) the Group meet Certification 2010 to 12 (HCAAY(Z)-50-12(1/2”) the YD/T1092Center August 2013 RF coaxial cable 2004 product (泰爾認證中心) (射頻同軸電纜) standards set by MIIT Product Certification The cables of TL 13 August (產品認證證書) the Group meet Certification 2010 to 12 (HCAAY-50-6(1/4”) the YD/T1092Center August 2013 RF coaxial cable 2004 product (泰爾認證中心) (射頻同軸電纜)) standards set by MIIT Product Certification The cables of TL 13 August (產品認證證書) the Group meet Certification 2010 to 12 (HCTAY-50-32(1-1/4”) the YD/T1092Center August 2013 RF coaxial cable 2004 product (泰爾認證中心) (射頻同軸電纜)) standards set by MIIT

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		Issuing
Certificates/Permits	Significance	Authority	Validity
Product Certification	The cables of	TL	13 August
(產品認證證書)	the Group meet	Certification	2010 to 12
(HCTAY(Z)-50-22(7/8”)	the YD/T1092-	Center	August 2013
RF coaxial cable	2004 product	(泰爾認證中心)
(射頻同軸電纜))	standards set
	by MIIT
Product Certification	The cables of	TL	13 August
(產品認證證書)	the Group meet	Certification	2010 to 12
(HCAHY-50-9(1/2”S)	the YD/T1092-	Center	August 2013
RF coaxial cable	2004 product	(泰爾認證中心)
(射頻同軸電纜))	standards set
	by MIIT
Product Certification	The cables of	TL	6 November
(產品認證證書)	the Group meet	Certification	2008 to 5
(HHTAY-50-21(7/8”S)	the YD/T1092-	Center	November
RF coaxial cable	2004 product	(泰爾認證中心)	2011
(射頻同軸電纜))	standards set
	by MIIT
Product Certification	The cables of	TL	6 November
(產品認證證書)	the Group meet	Certification	2008 to 5
(HCAHY-50-5(1/4”S)	the YD/T1092-	Center	November
RF coaxial cable	2004 product	(泰爾認證中心)	2011
(射頻同軸電纜))	standards set
	by MIIT
Product Certification	The cables of	TL	6 November
(產品認證證書)	the Group meet	Certification	2008 to 5
(HCTAY-50-23(7/8”A)	the YD/T1092-	Center	November
RF coaxial cable	2004 product	(泰爾認證中心)	2011
(射頻同軸電纜))	standards set
	by MIIT

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Certificates/Permits

Product Certification (產品認證證書) (NM(F)-12 50� RF coaxial connector for mobile communication use (移動通信用50�射頻同軸連接器))

Product Certification (產品認證證書) (HHTAY-50-42(1-5/8”) RF coaxial cable (射頻同軸電纜))

Product Certification (產品認證證書) (HLCTAYZ-50-22(7/8”) RF leaky coaxial cable (漏泄同軸電纜))

Product Certification (產品認證證書) (ZA-RVV22 Power supply with flame-retardant flexible cable (通信電源用阻燃軟電纜))

Product Certification (產品認證證書) (ZA-RVV Power supply with flame-retardant flexible cable (通信電源用阻燃軟電纜))

Issuing Significance Authority Validity The connector TL 6 July 2010 to of the Group Certification 5 July 2013 meets the Center YD/T1967(泰爾認證中心) 2009 product standards set by MIIT The cables of TL 6 November the Group meet Certification 2008 to 5 the YD/T1092Center November 2004 product (泰爾認證中心) 2011 standards set by MIIT The cables of TL 27 October the Group meet Certification 2009 to 26 the YD/T1120Center October 2012 2007 product (泰爾認證中心) standards set by MIIT The cables of TL 27 October the Group meet Certification 2009 to 26 the YD/T1173Center October 2012 2001 product (泰爾認證中心) standards set by MIIT The cables of TL 27 October the Group meet Certification 2009 to 26 the YD/T1173Center October 2012 2001 product (泰爾認證中心) standards set by MIIT

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		Issuing
Certificates/Permits	Significance	Authority	Validity
Product Certification	The cables of	TL	27 October
(產品認證證書)	the Group meet	Certification	2009 to 26
(ZA-RV Power supply	the YD/T1173-	Center	October 2012
with flame-retardant	2001 product	(泰爾認證中心)
flexible cable	standards set
(通信電源用阻燃軟電纜))	by MIIT
Product Certification	The cables of	TL	27 October
(產品認證證書)	the Group meet	Certification	2009 to 26
(WDNA-RYY23 Power	the YD/T1173-	Center	October 2012
supply with fire-resistant	2001 product	(泰爾認證中心)
flexible cable	standards set
(通信電源用耐火軟電纜))	by MIIT
Product Certification	The cables of	TL	27 October
(產品認證證書)	the Group meet	Certification	2009 to 26
(WDNA-RYY Power	the YD/T1173-	Center	October 2012
supply with fire-resistant	2001 product	(泰爾認證中心)
flexible cable	standards set
(通信電源用耐火軟電纜))	by MIIT
Product Certification	The cables of	TL	27 October
(產品認證證書)	the Group meet	Certification	2009 to 26
(WDNA-RY Power	the YD/T1173-	Center	October 2012
supply with fire-resistant	2001 product	(泰爾認證中心)
flexible cable	standards set
(通信電源用耐火軟電纜))	by MIIT
Mandatory Product Certification	The product of	China Quality	25 November
(中國強制性產品認證證書)	the Group	Certification	2009 to 25
(PVC insulated non-sheathed	meets the	Centre	November
cables and wires 60227 IEC02	GB/T5023.3-	(中國質量認證	2014
(RV)450/750V1.5-240 outer	2008/IEC60227-	中心)
colour: black)	3:1997
(聚氯乙烯絕緣無護套電纜電線)	standards and
	technical
	requirements

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		Issuing
Certificates/Permits	Significance	Authority	Validity
Mandatory Product Certification	The cables of	China Quality	25 November
(中國國家強制性產品認證證書)	the Group meet	Certification	2009 to 25
(PVC insulated flexible cables	the	Centre	November
and wires 60227 IEC 53 (RVV)	GB/T5023.5-	(中國質量	2014
300/500 V 1-2.5 (2-5 Cores,	2008 / IEC	認證中心)
round shape, black)	60227-5:2003
(聚氯乙烯絕緣軟電纜電線))	product
	standards

The products which are granted with mandatory product certification are subject to different regulatory requirements, please refer to the section headed “Regulatory Overview” for details.

The above awards and certifications signify the quality of the products of the Group and the established position of the “Trigiant” brand in the PRC market, which makes it more effective for the Group in promoting its products domestically and for its products to capture a larger market share in the domestic cables industry.

INVENTORY MANAGEMENT

The Group closely monitors the inventory levels of its raw materials to ensure that there are sufficient raw materials to meet its production needs as well as to minimize obsolete inventory. The Group’s inventory comprises raw materials, work-in-progress, semi-finished products, finished goods, and etc.

The Group has implemented the following principal inventory management procedures:

all purchase of raw materials and components must be authorised and approved by the production department;
all incoming raw material types, specifications, quantities and delivery time must be examined and verified against the purchase orders before acceptance;
all outgoing raw materials must be authorised by the production manager and recorded in the inventory management system;
all raw materials must be used at designated areas at each production stage;
before storage in the warehouse, all finished products shall be inspected and tested by the quality control department; and
monthly stock counts and semi-annual stock takes are carried out to ensure consistency between the number of stored items and all recorded entries.

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Inventories of the Group are managed on a “first-in first-out” basis to avoid unnecessary overstocking and obsolescence.

As at 31 December 2008, 28 December 2009, 31 December 2010 and 31 May 2011, inventory of the Group was approximately RMB40.5 million, RMB65.3 million, [RMB60.0 million] and RMB[68.5] million respectively, and the turnover days were [47], [29], [20] and [18] respectively.

[The Group has not experienced any inventory write-off or made any provisions for inventory obsolescence during the Track Record Period.]

RESEARCH AND DEVELOPMENT

The Directors consider the research and development department of the Group is a competitive advantage of the Group. As of [the Latest Practicable Date], the department consisted of [61] professional technical personnel most of whom obtained at least tertiary education with relevant experience and expertise in the cables industry. These engineers and technicians, apart from performing production and other operational functions, also engage in research and development projects organized and initiated by the research and development department. The head of the research and development department of the Group is Mr. Guo Zhihong.

The research and development department is mainly responsible for developing new products and upgrading existing products of the Group aiming to improve product quality, widen product application scope and reduce production costs.

To keep up with the latest technological developments and commercialise its research and development efforts into successful products, the Group relies on its sales team to communicate with customers on a regular basis to get a better understanding of customer needs and market demands. To capture potential business opportunities brought by new market trends and develop new products suitable for the market, the research and development department works closely with its sales personnel. Periodic visits to customers by sales personnel of the Group help the research and development team collect feedback on its products from customers. Upon successful development of new products, business training on the new products organised by the research and development department is provided to sales personnel to ensure the new products are marketed timely and efficiently.

In March 2009, Jiangsu Trigiant was accredited as an high and new technology enterprise (高新技術企業) jointly by the Science and Technology Department of Jiangsu Province (江蘇省科學技術廳), Finance Department of Jiangsu Province (江蘇省財政廳), Jiangsu Province State Administration of Taxation (江蘇省國家稅務局) and Jiangsu Province Local Taxation Bureau (江蘇省地方稅務局). With the approval from the Science and Technology Department of Jiangsu Province (江蘇省科學技術廳), the Group established Jiangsu Information Transmission Technology Engineering Research Center (江蘇俊知信息傳輸工程技術研究中心) in 2010. Using the government subsidy of RMB800,000 granted by Yixing Science and

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Technology Department (宜興市科技局), the centre is developing two products, namely, broadband environmentally-friendly RF cables (寬頻綠色環保射頻電纜), and high-speed special optical cables used for Internet of Things (物聯網系統用高速率特種光纜). The Directors believe that the establishment of the centre helps boost its research and development capabilities and allows the Group to keep abreast of latest product technology and industry trends.

As at the Latest Practicable Date, the Group developed 43 new varieties of RF coaxial cables, new-type electronic components and other related accessories. Among those products, 10 of them were awarded the Advanced Technology Product Certificate (高新技術產品認定證書) by the Science and Technology Department of Jiangsu Province (江蘇省科學技術廳). Please refer to the paragraph headed “Awards and Certifications” of this section for further details on the awards the Group received for its products over the years.

In addition to the recognition of its products, the Group has also received numerous awards for technological innovation in the field of RF coaxial cable series, new-type electronic components and accessories for use in mobile communications and telecommunications equipment. The Group has registered 19 patents in the PRC for its cable products and accessories and is in the process of applying for another 10 patents in the PRC for its products. For details of such patents, please refer to the paragraph headed “Intellectual property rights – Patents” under the section headed “Further information about the business of the Company” in Appendix V to this document.

The Directors believe that the research and development capabilities of the Group is one of the factors that enables the Group to maintain its competitiveness in the PRC cables industry. Leveraging on this, the Group is positioned to expand the scope and suite of its product mix to serve new and existing customers in various industries. The Group has put in such research and development efforts with a view to produce existing products at a high quality at lower cost.

In FY2008, FY2009, FY2010 and the five months ended 31 May 2011, the research and development expenditures incurred by the Group were approximately RMB[0.14] million, RMB[0.48] million, RMB[0.87] million and RMB[0.96] million respectively.

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SAFETY

The Group has an internal safety manual compiled in accordance with the requirements of GB/T28001-2001 which provides guidance to its staff on maintaining a safe working environment. The GB/T28001-2001 standard outlines the range of products it covers, the general requirements and policies of an effective occupational health and safety management system, plans for identifying, assessing and controlling risk, proposals to monitor and improve safety mechanisms and prevention and corrective measures. Furthermore, the standard details training requirements to ensure the awareness of safety controls and capacity to take necessary steps to comply with all safety standards. The Group has a safety management team consisting of representatives from the management and staff and is headed by Mr. Hao Guangyun. The safety management team carries out regular safety inspection of the production facilities of the Group to ensure that the safety measures are complied with and proper production procedures are followed. All new production equipment and machineries are required to pass safety tests before commencement of production. Protective devices are installed and warning signage posted on the production equipment and machinery to ensure the machines are operated safely. Production staff is provided with regular trainings on operations of production equipment and occupational safety gear.

The Group has formed its own security team, and has monitoring systems, which performs 24-hour patrols around the production plants and other ancillary facilities at regular intervals to ensure safety and security at its site.

During the Track Record Period, the Group has not experienced any material fire or collapse in its production equipment and machinery or industrial accidents.

ENVIRONMENTAL PROTECTION

The Group is subject to the following major environmental protection laws and regulations in the PRC:

the Environmental Protection Law of the PRC (中華人民共和國環境保護法)
the PRC Law of the Prevention and Control of the Air Pollution (中華人民共和國大氣污染防治法)
the Law of the Prevention of Water Pollution in the PRC (中華人民共和國水污防治法)
the Administration Regulation on the Levy and Use Discharge Fees (排污費徵收使用管理條例)]

For further details of the above laws and regulations, please refer to the section headed “Regulatory Overview” of this document.

In December 2007, the Group obtained the ISO 14001:2004 certification, an international standard used to measure the impact of an operation on the environment, taking into account compliance with applicable laws, regulations and other environment oriented requirements from time to time.

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The Directors confirmed that the manufacturing process of the Group does not generate significant chemical wastes, waste water or other industrial wastes. The negative impact of the production process of the Group on the environment is believed to be minimal. Despite this, the Group has entered into agreements with third party contractors in relation to dangerous wastes disposal and waste water treatment. Under the waste water treatment agreement with an Independent Third Party, such third party agrees to help pre-treat the waste water of the Group with the maximum discharge tonnage of 150 tonnes each day and the Group agrees to pay the Independent Third Party treatment fee of RMB1.1 per tonne. This treatment agreement also sets forth the standards of waste water the Group discharges and an indemnity if the Group breaches such standards. There is no specified term for this agreement. In addition, the Group also entered into a dangerous wastes disposal agreement with another professional third party with a one-year validity term commencing from 25 May 2010. Under the disposal agreement, (i) the third party agrees to help dispose of the dangerous wastes the Group discharges, and (ii) the Group agrees to pay the third party an annual service fee of RMB8,000. The third party contractor is also required to classify and label wastes of the Group based on their different features. The PRC Legal Adviser advised that the Group is not liable for the improper waste treatment by third party contractors. In addition, the Group has obtained a City Water Discharge Permit (城市排水許可證) (effective from January 2008 to January 2013) in 2008, which allows the Group to discharge waste water within the designated city water pipe network.

Before commencing production, the Group is required to carry out environmental impact assessment, including submitting a report to the Environmental Protection Bureau of Yixing City (宜興巿環境保護局) for approval. As advised by the PRC Legal Adviser, the Group has passed such assessment.

The PRC Legal Adviser has confirmed that the Group has complied with all relevant environmental protection laws and regulations and has obtained all relevant necessary permits and licenses for its business and operations. On 25 January 2011, the Group also received a confirmation from the Environmental Protection Bureau of Yixing City (宜興市環境保護局), being the competent authority in issuing such confirmation, stating that the Group had complied with all relevant environmental protection laws and regulations.

The Directors believe that the Group has adopted effective measures to prevent and control pollution to the environment. During the Track Record Period, the Group had not received any warning in relation to nor was the Group penalized for any non-compliance with applicable environmental protection or related laws and regulations.

INSURANCE

The Group has taken out insurances on its buildings, production plants, equipment and machinery, buildings under construction and vehicles. The Group also provides social insurance for its employees, covering areas such as retirement, sickness and injury, etc. Current PRC laws do not require the Group to maintain any insurance in relation to its business operation, and the Group has not taken out any insurance on product liability or disruption of

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operation. The Group does not carry any insurance coverage against wars or acts of terrorism either. The Directors believe that the types of insurance coverage the Group currently has are adequate and sufficient to cover its operation and consistent with the usual industry practice. The Group has made all necessary social insurance contributions for eligible employees since its establishment and has not been in default of any such payment.

During the Track Record Period, the Group had not made or been the subject of any insurance claims which are material to the Group.

The Group will continue to review and assess its operation and other risks regularly and make necessary adjustments to its current insurance practice so as to make it more in line with operation needs and industry practice as it sees fit.

PROVISION OF SERVICES BY ASSOCIATES OF A RELATED PARTY PRIOR TO

[ ● ]

Prior to [●], the Group has entered into several agreements with 北京因特聯企業諮詢有限公司 (Beijing Yin Te Lian Corporate Consultancy Co., Ltd.) (“Beijing YTL”) and ICH Partners Ltd (“ICH”) respectively to provide the Group with certain services in connection with the preparation for [●]. The Directors are of the view that both Beijing YTL and ICH are competent and able to provide the services as required by the Group. Each of Beijing YTL and ICH is controlled by Mr. Toe Teow Heng (“Mr. Toe”) (being the ultimate beneficial owner of Zymmetry) and Mr. Toe Teow Teck, the brother of Mr. Toe. Pursuant to the said agreements, each of Beijing YTL and ICH agreed to provide the following services to the Group:

[●]

INTELLECTUAL PROPERTY

The Group owns and uses a number of trademarks, patents and domain names in connection with its business operation.

The Group has registered certain trademarks. As at the Latest Practicable Date, the Group owned 50 registered trademarks in the PRC, 12 registered trademarks in Hong Kong and 8 registered trademarks in Singapore. In addition, the Group has also filed 3 trademark applications to the Trade Marks Registry of the Hong Kong Intellectual Property Department which are currently under review. For details of such trademarks, please refer to the paragraph headed “Intellectual property rights −Trademarks” under the section headed “Further information about the business of the Company” in Appendix V to this document.

In order to protect its own research and development results, as at the Latest Practicable Date, the Group had registered 19 patents in the PRC for its RF coaxial cables series and accessories and another 10 patent applications for its products are under review by the PRC Intellectual Property Rights Bureau. For details of such patents, please refer to the paragraph headed “Intellectual property rights – Patents” under the section headed “Further information about the business of the Company” in Appendix V to this document.

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On 3 December 2010, Jiangsu Trigiant entered into separate license agreements with each of Jiangsu Sensing and Jiangsu Opto-electrical, pursuant to which Jiangsu Trigiant confirmed the use of the “Trigiant” brand name by each of Jiangsu Sensing and Jiangsu Opto-electrical since 1 March 2010 and agreed to grant a royalty-free non-exclusive license to each of Jiangsu Sensing and Jiangsu Opto-electrical to use the “Trigiant” brand name until the date when Jiangsu Trigiant ceases to hold any interest in the registered capital of each of them respectively. The license to use the “Trigiant” brand name granted by Jiangsu Trigiant is only limited to within the PRC. The licensee shall not without the prior written consent of Jiangsu Trigiant, directly or indirectly use or grant a sub-license to use the “Trigiant” brand name or any name similar to the “Trigiant” brand name or trademarks, whether phonetically or in fonts, anywhere outside the PRC. The license agreement can be terminated prior to the expiry of its term, inter alia, by mutual agreement, as a result of any breach by the licensee or unilaterally by Jiangsu Trigiant upon giving 30 days advance notice to the licensee.

During the Track Record Period, the Group had not encountered any proceedings concerning any actual, pending or threatened claims of actual or potential infringement of any intellectual property rights that is of material importance, in which the Group is the claimant or respondent.

PROPERTIES

As of the Latest Practicable Date, the Group had land use rights for [three] parcels of lands occupying a total site area of approximately 240,737.20 sq.m.. Upon these lands, [21] buildings, having a total gross floor area of [82,481.57] sq.m., were erected.

Pursuant to a tenancy agreement entered into between Jiangsu Trigiant as landlord and Jiangsu Sensing as tenant, a parcel of land with an area of 4,000 sq.m. and a production facility with a gross floor area of approximately 4,023.59 sq.m. both owned by the Group were rented to Jiangsu Sensing for a term of three years from 1 March 2010 to 28 February 2013 at a total annual rental of RMB240,660.00, exclusive of water, gas and electricity charges. Pursuant to another tenancy agreement entered into between Jiangsu Trigiant as landlord and Jiangsu Opto-electrical as tenant, another parcel of land with an area of 7,200 sq.m. and a production facility with a gross floor area of approximately 7,916.72 sq.m. both owned by the Group were rented to Jiangsu Opto-electrical for a term of three years from 1 March 2010 to 28 February 2013 at a total annual rental of RMB484,428.00, exclusive of water, gas and electricity charges.

As at the Latest Practicable Date, the Group rented a property in the PRC with a total gross floor area of approximately 243.19 sq.m. at Room 504, Unit 2, No. 2 Building, Beijing Jinchen International Apartment, Xicheng District, Beijing, as dormitory. As advised by the PRC Legal Adviser, the lessor of such property has legal rights to lease the relevant property to the Group and the leasehold interests of the Group under such lease agreement are protected by PRC laws and regulations. As confirmed by the PRC Legal Adviser, the non-registration of the tenancy agreement would not affect the possession and use of the leased properties by the Group according to the lease agreements and PRC laws and regulations.

As at the Latest Practicable Date, the Group rented a property at Room No.1801, 18th Floor, Tai Tung Building, No. 8 Fleming Road, Wan Chai, Hong Kong with a gross floor area of approximately 101.1 sq.m. as its principal place of business in Hong Kong.

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[●], an independent property valuer, has assessed the property interests of the Group as of 31 July 2011. The letter from [●], summary of the valuation and the valuation certificate are set out in Appendix III to this document. The Group has obtained all land use right certificates and building ownership certificates with a total gross floor area of 82,481.57 sq.m. in respect of properties owned by it as referred to in Group I and Group II in the property valuation report as set out in Appendix III to this document.

NON-COMPLIANT TRADE FINANCING

Background

In FY2008, FY2009 and FY2010, Jiangsu Trigiant, the principal operating subsidiary of the Group, and Fullway Technology entered into certain trade financing transactions with certain commercial banks in the PRC which were not supported by any underlying transactions. Most of these transactions were initiated by the relevant banks. In FY2008 and FY2009, Fullway Technology was a major supplier of Jiangsu Trigiant.

Prior to the transfer by Trigiant Singapore of (i) the entire equity interests in Jiangsu Trigiant to Trigiant Hong Kong in December 2009; and (ii) the entire equity interests in Fullway Technology in December 2009, Trigiant Singapore was the holding company of both of Jiangsu Trigiant and Fullway Technology. In July 2008, Jiangsu Trigiant entered into its first non-compliant trade financing transaction with Fullway Technology in the amount of RMB10,000,000 and Jiangsu Trigiant deposited RMB5,000,000 into the relevant bank as guarantee deposit for drawing such bill. Jiangsu Trigiant was not in need of working capital at the relevant time.

In December 2009, the Directors considered that focusing on the development and manufacturing of RF coaxial cable series would be in the best interest of Group and would provide the Group better return. Thus Trigiant Singapore, which was then the predecessor holding company of Jiangsu Trigiant, disposed of its entire shareholding interests in Fullway Technology to 宜興市富創電子科技有限公司 (unofficial English translation being Yixing City Fu Chuang Electronics Technology Co., Limited), Premo Superior Investments Limited and Smart Time Enterprise Limited (collectively the “Purchasers”) in order to centralise human resources and working capacity for the development of RF coaxial cables business. Since the major raw materials for the Group’s RF coaxial cables series, i.e. copper based materials, are common materials used in various manufacturing industries and are easily sourced from other independent suppliers, the Directors consider that the termination of purchase from and disposal of Fullway Technology had no material adverse impact on the business and operation of the Group despite Fullway Technology was one of the major suppliers of the Group in FY2008 and FY2009.

The aggregate consideration paid by the Purchasers was US$10,000,000, representing the then total paid-up capital of Fullway Technology.

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The background of the Purchasers are as follows:

(i) 宜興市富創電子科技有限公司 (unofficial English translation being Yixing City Fu Chuang Electronics Technology Co., Limited) (“FC Electronics”)

FC Electronics is a company established in the PRC with limited liability and was at the time of its acquisition of Fullway Technology in December 2009 owned as to approximately 30% of Zhang Rongming, 30% by Zhu Ronghua and 40% by Sun Jianxin, who were directors of Fullway Technology but not directors of any company comprising the Group. In October 2010, Sun Jianxin and Zhu Ronghua respectively transferred 35% and 24% equity interest in FC Electronics to Zhang Rongming, resulting in Zhang Rongming becoming the major shareholder holding 89% equity interest while each of Sun Jianxin and Zhu Ronghua held 5% and 6% equity interest in FC Electronics respectively.

Save as disclosed above and below, the Directors confirm that to the best of their knowledge, FC Electronics, its shareholders and directors have no other past or present family, employment, trust or other relationships with the Company, its subsidiaries, and Fullway Technology, their shareholders, directors and senior management and any of their respective associates.

(ii) Premo Superior Investments Limited (“Premo Superior”)

Premo Superior is a company incorporated in the BVI with limited liability and to the best knowledge of the Directors, at the time of its acquisition of Fullway Technology in December 2009, was managed by an Independent Third Party (being its sole director, who is also the current sole shareholder of Premo Superior). Premo Superior was in or around January 2007 equally owned by Sun Jianxin, who was one of the shareholders of Bin Fan from September 2005 to November 2006, and Zhu Ronghua. To the best knowledge of the Directors, Sun Jianxin and Zhu Ronghua subsequently disposed of their entire shareholding in Premo Superior to an Independent Third Party around the time when Premo Superior acquired Fullway Technology. Prior to the disposal of Jiangsu Trigiant by Trigiant Singapore in December 2009, Sun Jianxin was one of the ultimate beneficial owners of Trigiant Singapore through his 50% equity interest in Premo Superior. Premo Superior owned 10% of Trigiant Singapore at the time when Trigiant Hong Kong acquired Jiangsu Trigiant on 29 December 2009. After the disposal of Jiangsu Trigiant by Trigiant Singapore to Trigiant Hong Kong, Premo Superior was no longer a shareholder of the Group.

Save as disclosed above, the Directors confirm that to the best knowledge of the Directors, Premo Superior, its shareholders and directors, have no other past or present family, employment, trust or other relationships with the Company, its subsidiaries, and Fullway Technology, their shareholders, directors and senior management and any of their respective associates.

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(iii) Smart Time Enterprise Limited (“Smart Time”)

Smart Time is a company incorporated in the BVI with limited liability and, at the time of its acquisition of Fullway Technology in December 2009 and as at the Latest Practicable Date, was indirectly wholly-owned by Goi Seng Hui through China World Agents Limited. At the time when Trigiant Hong Kong acquired Jiangsu Trigiant on 29 December 2009, Trigiant BVI was indirectly owned as to 2% by Goi Seng Hui through Ace Speed, a company incorporated in the BVI and wholly-owned by China World Agents Limited. As at the Latest Practicable Date (i) Smart Time was indirectly wholly-owned by Goi Seng Hui through China World Agents Limited; and (ii) China World Agents Limited, through its interest in Ace Speed, held 2% of the issued share capital of Trigiant Investments, which is expected to hold [70]% of the issued share capital of the Company upon completion of [●] and [●] (assuming [●] is not exercised).

Save as disclosed above, the Directors confirm that to the best knowledge of the Directors, Smart Time, its shareholders and directors have no other past or present family, employment, trust or other relationships with the Company, its subsidiaries, and Fullway Technology, their shareholders, directors and senior management and any of their respective associates.

In FY2010, Jiangsu Trigiant and Bin Fan, [then an Independent Third Party to both the Group and] Fullway Technology also entered into certain trade financing transactions with certain commercial banks in the PRC which were not supported by any underlying transactions. Bin Fan’s former controlling shareholder Sun Jianxin who (i) was a director of Fullway Technology between November 2004 and November 2010, (ii) was one of the ultimate beneficial owners of Trigiant Singapore through his 50% equity interest in Premo Superior prior to the disposal of Jiangsu Trigiant by Trigiant Singapore in December 2009 (at the relevant time, Premo Superior owned 10% of the issued share capital of Trigiant Singapore) and (iii) currently holds 5% equity interest in FC Electronics, one of the current shareholders of Fullway Technology; the Directors confirm that to the best of their knowledge, Bin Fan and its current shareholders and directors have no other past or present family, employment, trust or other relationships with (i) the Company and its subsidiaries and (ii) Fullway Technology and its shareholders, directors and senior management and any of their respective associates. Bin Fan, with its production and customers base in the PRC, is principally engaged in manufacturing copper pipe. Since it became one of the major suppliers of the Group in FY2010, the business relationship between the Group and Fullway Technology ceased. One of Fullway Technology’s then shareholders, Smart Time, is indirectly wholly-owned by Goi Seng Hui through China World Agents Limited. At the time when Trigiant Hong Kong acquired Jiangsu Trigiant on 29 December 2009, Trigiant BVI was indirectly owned as to 2% by Goi Seng Hui through Ace Speed, a company incorporated in the BVI and wholly owned by China World Agents Limited. As at the Latest Practicable Date, China World Agents Limited, through its interest in Ace Speed, held 2% of the issued share capital of Trigiant Investments, which is expected to hold [●]% of the issued share capital of the Company upon completion of [●] and [●] (assuming [●] is not exercised). Save as disclosed above, each of Fullway Technology and Bin Fan does not have any present relationship with the Company, its subsidiaries, their directors, shareholders, senior management or any of their respective associates.

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As the relevant commercial banks proceeded with the non-compliant trade financing activities and all of the relevant commercial banks confirmed to Jiangsu Trigiant their consent to and approval of such activities, the Directors believe that such commercial banks should have consented and approved the non-compliant trade financing arrangements prior to commencing the same. Under the bank acceptance agreements entered into between Jiangsu Trigiant and the relevant banks, (i) the banks agreed to accept bills issued by Jiangsu Trigiant and presented by third parties; (ii) Jiangsu Trigiant agreed to provide guarantees for the banks (such as cash deposit) and pay the banks service fees in the amount of approximately 0.05% of the face amount of the bills; and (iii) Jiangsu Trigiant made representations that the bills should be issued with the support of genuine underlying transactions. Under these arrangements, the Group issued bank bills to Bin Fan and Fullway Technology at certain face amounts with pledged bank deposits ranging from [30]% to [100]% of the face amount of the bills. These bank bills were presented by Bin Fan and Fullway Technology to other PRC commercial banks for discounting and then remitted back the proceeds of the discounted bills to the Group.

As advised by the PRC Legal Adviser, since such arrangements were not supported by any underlying transactions, those arrangements were therefore not in compliance with the relevant PRC laws.

The diagram below illustrates the details of the trade financing arrangements:

==> picture [375 x 162] intentionally omitted <==

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

6. Settle bills with cash and withdraw deposits [(1)]
Jiangsu Trigiant Bank A
1. Put pledged deposits into bank and bank issues bills [(2)]
2. Issue bills to Fullway Technology/Bin Fan
5. Remit money to the Group [(4)]
3. Present bills to bank Fullway Technology/
Bank B Bin Fan
4. Cash collected from discounted bills [(3)]
----- End of picture text -----

(1) Bills are typically settled within six months.
(2) The amount of the deposit was entered as pledged bank deposits in the financial statements of Jiangsu Trigiant.
(3) The relevant interest expenses were recognised as finance costs by Jiangsu Trigiant.
(4) Representing repayment of bills payable to related company.

Most of such non-compliant trade financing arrangements were initiated by the relevant banks. The principal reason for such non-compliant trade financing arrangements was to lower the overall financing costs of Jiangsu Trigiant on bank deposits. In addition, from the perspective of the banks involved, they entered into such non-compliant trade financing

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arrangements with a view to boost their respective banking business. In FY2008, FY2009 and FY2010, the interest rates of the bank bills issued by Jiangsu Trigiant and discounted by Fullway Technology and Bin Fan ranged from approximately [1.99]% to [6.06]%, [1.58]% to [2.47]% and [2.24] to [4.35]% per annum, respectively. Mr. Qian, the chairman of the Board, and Mr. Sun Huxing, who was then the assistant to the general manager and deputy general manager of Jiangsu Trigiant, authorised and approved the non-compliant trade financing activities. Both Mr. Qian and Mr. Sun Huxing confirmed that neither of them received any direct or indirect benefit from such activities. The Directors believe that the principal reason for Bin Fan and Fullway Technology entering into such non-compliant trade financing activities was their intention to build up good business relationship with the Group and that Bin Fan, Fullway Technology and their respective directors did not obtain any other benefit from such activities or obtained financing through the Group under similar transactions, including any rebate or amount in connection with the non-compliant trade financing activities.

Effect on the Group’s financial position

In FY2008 and FY2009, bills in aggregate amounting to RMB70,000,000 and RMB494,000,000 respectively, were issued by Jiangsu Trigiant to Fullway Technology under these non-compliant trade financing arrangements. As at 31 December 2008 and 28 December 2009, there were bank deposits of RMB35,000,000 and RMB159,000,000 respectively, pledged to those PRC commercial banks for those non-compliant trade financing arrangements. In FY2008 and FY2009, the bank bills issued by Jiangsu Trigiant and discounted by Fullway Technology carried interest rates ranging from 1.99% to 6.06% and 1.58% to 2.47% per annum, respectively. These related interest expenses were incurred and recognised as finance costs of approximately RMB[392,000] and RMB[4,478,000] by Jiangsu Trigiant in FY2008 and FY2009 respectively.

In FY2010, bills in aggregate amounting to RMB270,000,000 were issued by Jiangsu Trigiant to Fullway Technology and Bin Fan under these non-compliant trade financing arrangements. In FY2010, the bank bills issued by Jiangsu Trigiant and discounted by Bin Fan and Fullway Technology carried interest rates ranging from approximately [2.24%] to [4.35%] per annum. These related interest expenses were incurred and recognized as finance costs of approximately RMB[5,102,000] by Jiangsu Trigiant in FY2010.

The Group used the receipts/advances from the non-compliant trade financing arrangements as working capital to partially finance its daily operations. However, as the Group had pledged deposits in connection with such non-compliant trade financing transactions, the Group could have used such pledged cash as working capital if the Group had not entered into such non-compliant trade financing transactions during the Track Record Period. In addition, there were other existing resources, such as cash generated from its operations, which the Group could also have used to fund its working capital requirements during the Track Record Period. As at 31 December 2008, 28 December 2009 and 31 December 2010, the Group had undrawn bank loan facilities of approximately RMB[190.0] million, RMB[530.8] million and RMB[748.0] million respectively which could also have been used by the Group as general working capital. In this respect, the Directors have confirmed that the

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Group would have had sufficient working capital even if it had not made use of such non-compliant trade financing arrangements during the Track Record Period. Upon the cessation of such non-compliant trade financing arrangements after April 2010, the Group continued to have sufficient resources for its working capital needs based on its undrawn bank loan facilities and the amount of pledged cash released as a result of the termination of the non-compliant trade financing arrangements. In addition, the Group had approximately RMB[140.6] million pledged bank deposits and approximately RMB[307.2] million bank balances and cash equivalents as at 31 May 2011. The Directors have also confirmed that, after taking into account the estimated [●] of [●], the Group will have sufficient working capital to satisfy its requirements for at least the next 12 months following the [●]. For more information on this, please refer to the paragraph headed “Working Capital” under the section headed “Financial Information” of this document.

In FY2008, FY2009 and FY2010, had the Group not entered into the non-compliant trade financing arrangements, the alternative source of funding available to the Group would have been undrawn credit facilities (including unsecured or secured short-term bank loans which were subject to higher interest rates in general). As at 31 December 2008, 28 December 2009 and 31 December 2010, the fixed rate bank borrowings of the Group carried interest ranging from approximately [6.66]% to [7.77]%, [4.37]% to [7.77]% and [4.86]% to [5.84]% per annum respectively. The financing costs that would be saved under the non-compliant trade financing arrangements in FY2008, FY2009 and FY2010 in comparison to the interest on the equivalent amount of short-term bank loans during the relevant periods, being the alternative source of funding made available to the Group (and assuming the relevant bank loans carried interest at the weighted average effective interest rate at the end of each reporting period), were approximately RMB[244,000], RMB[8,047,000] and RMB[3,808,000] respectively.

As at 31 December 2008 and 28 December 2009, those outstanding non-compliant bills payables were recorded under “Bills payable to a fellow subsidiary” in the statement of financial position of Jiangsu Trigiant. Since the Group ceased to enter into any further non-compliant trade financing arrangements after April 2010 and all prior non-compliant bills payables were settled before the end of October 2010, no non-compliant trade financing arrangement was recorded in the combined statement of financial position of the Group as at 31 May 2011.

Confirmation from regulatory authorities

The Group ceased to enter into non-compliant trade financing transactions after 27 April 2010, and all outstanding loans and borrowings in relation to prior non-compliant trade financing transactions had been fully settled before the end of October 2010. Since then, the Group had not entered into any non-compliant trade financing transaction with Fullway Technology or Bin Fan. Having considered that (i) relevant banks were aware that the non-compliant trade financing transactions were not supported by any genuine underlying transactions; (ii) such non-compliant trade financing arrangements were initiated at the request and with the consent or approval of certain of the relevant banks; (iii) all funds received from such transactions were utilized in the ordinary course of business of the Group; and (iv) such

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activities had not caused any loss to the relevant banks, the Directors have confirmed that no fraudulent activities (such as the provision of falsified contracts or receipts) was involved in obtaining such trade financing. In addition, the Group has received confirmations from CBRC Wuxi Bureau, PBOC Wuxi Centre Branch and all banks involved in the trade financing activities. Details of the confirmations are set out in the paragraphs below.

On 28 December 2010, CBRC Wuxi Bureau, being a competent authority, issued a written confirmation and confirmed in accordance with Article 27 of the PRC Administrative Penalty Law that it will not take any punitive action against the banks involved in the non-compliant trade financing activities since all outstanding amounts involved have been settled, these activities had not caused any loss to those banks involved, the Group has ceased to conduct these activities and has undertaken not to engage in such activities in the future.

The Group received a written confirmation from PBOC Wuxi Centre Branch, being a competent authority, confirming that it will not take any punitive action against Jiangsu Trigiant or senior management involved in the non-compliant trade financing activities since the current PRC laws and regulations do not require PBOC Wuxi Centre Branch to necessarily impose administrative penalties on enterprises that have entered into non-compliant trade financing arrangements.

The Group also received confirmation letters from [each of all relevant] banks (including all the banks from which Fullway Technology or Bin Fan received cash with discounted bills) that facilitated such non-compliant trade financing arrangements stating that:

certain of the relevant banks participated in the non-compliant trade financing arrangements also confirmed that all trade financing arrangements were entered into with the consent or approval of all of the relevant banks and a substantial number of them were made at the request of certain of the relevant banks for the purpose of enhancing the banks’ business;
all amounts owing or outstanding under such trade financing arrangements with the relevant banks have been settled in full;
such activities had not caused any loss to the relevant banks;
there is no potential or contingent disputes associated with the trade financing arrangements;
the relevant bank will not take any legal action against Jiangsu Trigiant, its directors and senior management in relation to the trade financing arrangements;
the relevant bank will not enter into similar trade financing arrangements with Jiangsu Trigiant in future; and
the trade financing arrangements will not adversely affect future bank credit facilities that may be granted to Jiangsu Trigiant by the relevant bank.

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Most of the banks participated in the non-compliant trade financing activities have indicated that they were aware that the trade financing activities of Jiangsu Trigiant were not fully supported by underlying transactions.

Opinion of the PRC Legal Adviser

The PRC Legal Adviser advised the Group that the trade financing transactions entered into by the Group, which were not supported by underlying transactions, were not in compliance with the PRC Negotiable Instruments Law (中華人民共和國票據法) (in particular Article 10 which states that bank bills shall be issued on the basis of genuine underlying transactions) and certain banking regulations promulgated by PBOC, including the Measures for the Implementation of the Administration of Negotiable Instruments (票據管理實施辦法), the Measures for the Payment and Settlement (支付結算辦法) and the Notice of the People’s Bank of China on Certain Improvements of the Negotiable Instruments Systems (中國人民銀行關於完善票據業務制度有關問題的通知). Further, by entering into arrangements without any underlying transactions, Jiangsu Trigiant was also in breach of one of its representations that the bills would be issued with the support of underlying transactions. As advised by the PRC Legal Adviser, [other than this issue, the non-compliant trade financing was in compliance with the terms and conditions stipulated in the bank acceptance agreements in material respects.]

According to the PRC Negotiable Instrument Law and other relevant PRC laws and regulations, parties committing the following acts of deception can be held administratively or even criminally liable:

i. forging and altering a negotiable instruments;
ii. deliberate use of forged and altered negotiable instruments;
iii. issuing of dishonourable checks or deliberately issuing checks where the signature or seal does not tally with the signature or seal in the true name pre-submitted for counter-checking, obtaining property by deception;
iv. issuing unreliable bills of exchange and cashier’s check, where capital is obtained by deception;
v. the person issuing the bills of exchange and cashier’s checks makes false records, obtaining property by deception;
vi. deliberately using overdue or void negotiable instruments in order to obtain property by deception; and
vii. the issuer, payer and holder of the notes who collude maliciously and implements the above six items (“the behaviour that should be held accountable”) will be held accountable.

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According to the legal opinion of the legal adviser to the Sole Sponsor as to PRC laws, the PRC Criminal Law stipulates that it is a criminal offence for an issuer to issue a bill of exchange or promissory note without capital guarantee or to make false recordings at the time of draft in order to obtain property by deception. On the basis that (1) Jiangsu Trigiant did not make any false records at the time of issuance of the bills and did not obtain property by deception on the aforementioned non-compliant trade financing activities; (2) Jiangsu Trigiant had settled all of the proceeds from the non-compliant trade financing activities and had not caused any losses to the relevant banks; and (3) the relevant banks had issued the written confirmations for their consents and approvals of the non-compliant trade financing activities with Jiangsu Trigiant. The legal adviser to the Sole Sponsor as to PRC laws advised that, (1) in construing what amounted to “issue of bills” and “making false records on a bill”, reference should be made to the PRC Negotiable Instrument Law; and (2) the non-compliant trade financing activities of Jiangsu Trigiant and the representations made in the acceptance agreements with banks that the bills would be issued with support of underlying transactions did not constitute an offence of “making false record at the time of issuing bills in order to obtain property by deception” under the PRC Criminal Law. The PRC Legal Adviser concurred with the above view of the legal adviser to the Sole Sponsor as to PRC laws.

The PRC Legal Adviser advised that according to the PRC Negotiable Instrument Law, “issuing of bills” means “a person signing and issuing a bill and delivering the bill to the recipient”. Jiangsu Trigiant did not make any false record on the relevant bills (such as affixing false company seals or applying false signature) at the time of issuing the relevant bills. The representation made on the acceptance agreements with banks that the bills would be issued with the support of underlying transaction did not constitute the conduct of “making false records at the time of issuing bills” under the PRC Criminal Law.

In addition, the “making false records on a bill” within the meaning of the PRC Negotiable Instrument Law as interpreted by PRC Legal Adviser should refer to “the making of records on a bill that are in contradiction with true facts so as to evade liability under the bill, causing the bearer of the bill unable to exercise his rights on the bills”. As required under the PRC Negotiable Instrument Law, a bill must specify the following items: (1) the word “bill”; (2) authorisation of unconditional payment; (3) a fixed sum; (4) the name of the payer; (5) the name of the payee; (6) the date of issue; (7) the endorsement of the issuer. Since the bills issued by Jiangsu Trigiant did not contain any false records on the bills (such as affixing false company seals or producing false signature), the issuing of the bills by Jiangsu Trigiant did not constitute conducts of recording false records on bills.

Lastly, the PRC Legal Adviser was of the opinion that pursuant to the PRC Criminal Law, the “conducts of making false records at the time of issuing bills” and “obtaining property by deception” should be read together and have a causation relationship – the latter be the result of the former. In the context of the previous non-compliant trade financing activities of Jiangsu Trigiant, (1) Jiangsu Trigiant did not make any false record at the time of issuing the relevant bills and as result, Jiangsu Trigiant could not have obtained property by deception; and (2) all amounts owing or outstanding under such trade financing arrangements with the relevant banks were settled in full and such activities did not cause any losses to the relevant banks. Therefore,

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the PRC Legal Adviser is of the opinion that the previous non-compliant trade financing activities of Jiangsu Trigiant did not constitute making false records at the time of issuing bills and obtaining property by deception.

The legal adviser to the Sole Sponsor as to PRC laws confirmed that it concurred with the PRC Legal Adviser’s analysis. Taking into account the legal analysis of the PRC Legal Adviser as presented above and on the basis of the legal adviser to the Sole Sponsor as to PRC laws’ concurrence with such analysis, the Sole Sponsor also concurs with the PRC Legal Adviser that the previous non-compliant trade financing activities of Jiangsu Trigiant did not constitute the relevant offence under the PRC Criminal Law.

According to the advice of the PRC Legal Adviser, it is unlikely that the trade financing arrangements as described above will cause Jiangsu Trigiant, its directors or senior managements to be liable criminally, administratively or civilly under PRC laws on the basis that (i) Jiangsu Trigiant has repaid all amounts due to the relevant banks, and the trade financing arrangements did not cause any loss to the banks; (ii) the relevant banks have issued confirmation letters stating that the trade financing arrangements were entered into with the consent of the relevant banks and the relevant banks will not take any legal action against Jiangsu Trigiant; (iii) the trade financing activities entered into by Jiangsu Trigiant were not amongst those activities that would be subject to any liability under the relevant PRC laws and regulations; and (iv) CBRC Wuxi Bureau and PBOC Wuxi Centre Branch, having competent authority over such trade financing arrangements, have confirmed that they would not take any punitive actions against the banks or Jiangsu Trigiant or senior management involved in such trade financing arrangements.

As the involvement of the Directors and senior management in the non-compliant trade financing activities was in their respective capacity as officers and staff of the Group and based on the confirmations of the relevant banks that no legal action will be taken against the Group regarding the non-compliant trade financing activities, the Directors believe the relevant banks will not take any legal action against the Directors and the senior management of the Group.

The PRC Legal Adviser also advised that Fullway Technology, Bin Fan or their respective directors will not be subject to any significant legal consequences for the non-compliant trade financing activities as the PRC Negotiable Instrument Law and other relevant laws and regulations do not clearly provide that participants in the non-compliant trade financing activities shall be subject to any criminal or administrative liabilities. Further, each of Fullway Technology and Bin Fan issued a written confirmation to Jiangsu Trigiant confirming that they will not request Jiangsu Trigiant to indemnify or assume any liabilities for their losses, expenses or liabilities arising out of such activities.

Internal Control

The Group has ceased to enter into any further non-compliant trade financing transactions after April 2010, and before the end of October 2010, all outstanding loans and borrowings in relation to prior trade financing transactions were fully settled. Since the cessation of the

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non-compliant trade financing transactions, the Group has formulated and implemented a series of measures to ensure such non-compliant trade financing arrangements will not occur in the future. The Group has established an audit committee comprising all independent nonexecutive Directors who will review and supervise its internal control system. In addition, Jiangsu Trigiant already developed and implemented formal internal guidelines and policies in March 2011 for approving, reporting and monitoring all trade financing transactions. For the purpose of and in preparation for [●], on 25 October 2010, the Group engaged an independent consulting firm, which is a renowned consulting firm and an Independent Third Party, to assess overall internal control systems of the Group, including internal control policies and procedures, particularly in relation to its bank/commercial bills transactions. The independent consulting firm noted that the Company did not have comprehensive policies and procedures to guide bill management and related approval process, and the Group lacked a proper mechanism to monitor the processing of bills and its compliance with laws and regulations. It also noted that some bill arrangements were not related to any underlying transactions, which was not in compliance with the relevant PRC laws. Based on recommendations made by the independent consulting firm, Jiangsu Trigiant has formulated, approved and implemented since March 2011 a series of specific internal guidelines and corporate governance measures that provide for cross checking of bank/commercial bills against underlying contracts and that all future trade financings will be properly supported by actual transactions or debtor-creditor relationships. The key policies and procedures implemented by Jiangsu Trigiant include:

cross-checking mechanisms to ensure the duties of trade financing-related matters, such as the application for and the approval of bank/commercial bills are properly segregated;
all trade finance applications must be supported by valid transactions and approved by the finance manager or deputy general manager, or by the chairperson of the board of directors or his authorised person if such applications were made by the finance manager or deputy general manager;
a register shall be prepared to log each trade finance arrangement with detailed information of the underlying transactions;
monthly schedule shall be prepared to monitor the purpose of each trade finance arrangement and the terms of each trade finance transaction including interest rate, loan amount and repayment;
any discrepancy between the register and the monthly schedule shall be subject to investigation;
internal audit functions shall be carried out by internal auditor of the Group or outsourced to independent consulting firm with a view to perform periodical reviews on its trade finance arrangements and to report to the Audit Committee;
the senior management or legal adviser of the Group shall provide training to finance department personnel on related laws and regulations on trade financing.

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A follow up review was performed by the independent consulting firm in June 2011. Based on the trade financing summary prepared and provided by Jiangsu Trigiant, the independent consulting firm reported that the deficiencies in relation to non-compliant trade financing arrangements identified during the previous review had been remedied, and no further deficiencies were found and no non-compliance with the established policies and procedures of the Group for trade financing was noted, except that (i) the contract reference numbers on three of the purchase contracts of the Group were inconsistent with the pre-assigned reference numbers on the contract summary due to clerical error and that the Group did not file and record the said three contracts using the pre-assigned reference number as required by the relevant policy and procedure; and (ii) the monthly schedule of sales, purchase and trade financing amounts only recorded the total amounts of the trade financing that the Group obtained from banks each month instead of an analysis of the trade financing amounts by categories as recommended by the independent consulting firm. The management of the Group has already remedied such clerical error and adopted the recommendation of the independent consulting firm on the preparation of monthly analysis of sales, purchase and trade financing amounts by categories. [The internal control system of the Group will be subject to continuous review and independent verification after [●], the Group will continuously monitor the efficiency of the internal control system from time to time and] the Directors believe that such measures will help the Group monitor and prevent non-compliant trade financing transactions effectively in the future. The Directors confirm that the Group will not engage in any non-compliant trade financing activities in the future.

As at the Latest Practicable Date, the following measures [had been taken] by the Company to ensure that the Directors would be fully aware of their duties and responsibilities as directors of a listed company and be kept abreast of [●] and legal requirements in Hong Kong and the PRC:

(a) the legal adviser to the Company as to Hong Kong laws has conducted training sessions with the Directors (and certain senior management of the Company) on, among other matters, the following topics: (i) directors’ duties and responsibilities under common law, applicable Hong Kong statutory laws and regulations and [●]; (ii) declarations and undertakings with regard to the Directors in accordance with [●]; (iii) corporate governance under [●]; (iv) the continuing obligations of the Directors under [●]; (v) dealing with securities of the Company; and (vi) notifiable and connected transactions (as defined in [●]) and the respective obligations as Directors;
(b) the Company, as recommended by the independent consulting firm, [had implemented internal guidelines and policies, among other matters, on the following areas: (i) corporate governance in accordance with [●] and applicable laws; (ii) procedures on dealing with shares of the Company by the Directors (and their associates); (iii) risk management system of the Company; (iv) disclosure of price sensitive information; and (v) resolving and management of connected transactions (as defined in [●]) of the Company;] and
(c) the Company will, from time to time with the assistance of its professional advisers, review the internal guidelines and policies as referred to in item (b) above and make any amendments and implement as necessary.

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Having (i) reviewed the internal control assessment report prepared by and the relevant supporting documents collected by the independent consulting firm; (ii) discussed with the independent consulting firm in relation to the findings and recommendations of the internal control system of the Group; (iii) followed upon the implementation works performed by the Group; and (iv) participated in the training session provided to the Directors and certain senior management by the legal adviser to the Company as to Hong Kong laws, [●] is of the view that internal control systems of the Group are considered adequate and effective under [●].

Indemnity from Controlling Shareholders

Pursuant to a deed of indemnity dated [●], the Controlling Shareholders have agreed to provide an indemnity to the Group in respect of all possible, potential and contingent losses incurred or likely to be incurred by the Group in relation to such trade financing transactions.

COMPETITION

The RF coaxial cables series industry is highly competitive in the PRC. Some of the Group’s competitors might have lowered the selling prices of their RF coaxial cable products during the Track Record Period in view of market competition. At present, the PRC RF coaxial cables market is mainly dominated by domestic manufacturers, which accounts for over 90% of the market. In China, there are only a few number of cable manufacturers and thus the industry market concentration has been relatively high due to the stringent requirements for production technologies and other high entry barriers. According to the JSPTPD Report, Jiangsu Trigiant, Zhuhai Hansen Technology Co., Ltd. and Hengxin (Jiangsu), the top three leaders in the PRC RF coaxial cables market, capture over 60% market share. However, the market may expand and become more competitive in future.

All suppliers of RF coaxial cables to the three major PRC telecommunications operators are subject to tender. The three major PRC telecommunications operators will consider various aspects of competences of candidates, including but not limited to, prices, qualities and services. Comparing with its major competitor, the Directors believe that there is no significant deviation on the prices, qualities and the scale of operation between the Group and its major competitors as they are also subject to the same assessment from three major PRC major telecommunications operators.

The Directors believe that it is difficult for new entrants to enter into and operate the business on a large scale without strong research and development capabilities. Potential new entrants generally face a number of barriers including (i) ability to meet stringent requirements of customers; (ii) ability to recruit and maintain well-trained and experienced technical personnel; (iii) industry operational and management experience; (iv) financial capability, in particular, for investing in advanced production equipment and research projects; and (v) ability to import advanced equipment.

While the Directors believe that size of operations, use of advanced equipment, research and development capabilities and brand recognition in the industry will give the Group comparative advantages over its competitors, they cannot assure the Group will always be able to compete successfully in both existing and new markets.

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REGULATORY COMPLIANCE

The Directors [and the PRC Legal Adviser] confirmed that, during the Track Record Period and as at the Latest Practicable Date, save as the non-compliant trade financing activities as disclosed above, the Group has complied with all PRC laws and regulations applicable to the operation and business of the Group in all relevant material respects. The Group has obtained all approvals, licenses, permits and qualification certificates required under PRC laws and regulations in order to conduct its businesses, and as at the Latest Practicable Date, such approvals, licenses, permits and qualification certificates had not been revoked, cancelled or otherwise expired.

LEGAL PROCEEDINGS

The Directors [and the PRC Legal Adviser] confirmed that, during the Track Record Period and as at the Latest Practicable Date, no member of the Group was involved in or has been involved in any legal or arbitration proceedings of material importance and no litigation or claim of material importance is known to the Directors to be pending or threatened by or against any member of the Group.

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RELATIONSHIP WITH CONTROLLING SHAREHOLDERS

CONTROLLING SHAREHOLDERS

Immediately upon [●], the Controlling Shareholders will together control the exercise of voting rights of [●]% of the Shares eligible to vote in a general meeting of the Company (assuming [●] is not exercised).

			Approximate
	Total number of		percentage of
Name of Controlling Shareholders	ordinary Shares		interest
Trigiant Investments		[●]	[●]%
Mr. Qian		[●]note	[●]%
Abraholme		[●]note	[●]%

Note: These Shares are registered in the name of Trigiant Investments, a company owned as to 55.5% by Abraholme, which in turn is a company owned as to 80% by Mr. Qian. Under the SFO, each of Mr. Qian and Abraholme is deemed to be interested in all the Shares held by Trigiant Investments.

INDEPENDENCE FROM THE CONTROLLING SHAREHOLDERS

Having considered the following factors, the Directors are satisfied that the Group can carry on its business independently of the Controlling Shareholders following [●]:

(a) the Group is able to operate independently in terms of management, business administration, financially capabilities, staff, the required licences and access to customer base and raw materials and production facilities;
(b) as confirmed by the Directors, the Controlling Shareholders and their respective associates do not have any interests in any business that competes or is likely to compete with the business of the Group; and
(c) there is no significant business transactions, as at the Latest Practicable Date, between the Group on the one hand and any of the Controlling Shareholders or their associates on the other hand.

NON-DISPOSAL UNDERTAKINGS GIVEN BY THE CONTROLLING SHAREHOLDERS

Each of the Controlling Shareholders has, jointly and severally, undertaken with the Company and the Stock Exchange that each of them shall not and shall procure that the relevant registered holder(s) shall not:

(a) in the period commencing on the date of this document and ending on the date which is six months from [●] (the “ First Six-Month Period ”), save for the transaction contemplated under [●], dispose of, nor enter into any agreement to dispose of or otherwise create any options, rights, interests or encumbrances in respect of, any of the Shares in respect of which it/he is shown by this document to be the beneficial owner(s); and

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(b) in the period of six months commencing on the date on which the First Six-Month Period expires (the “ Second Six-Month Period ”), dispose of, nor enter into any agreement to dispose of or otherwise create any options, rights, interests or encumbrances in respect of, any of the Shares if, immediately following such disposal or upon the exercise or enforcement of such options, rights, interests or encumbrances, the Controlling Shareholders would cease to be the controlling shareholders of the Company, i.e. they cease to control 30% or more of the voting power at general meetings of the Company.

Each of the Controlling Shareholders has, jointly and severally, undertaken with the Company and [●] that within a period commencing from [●] and ending on the date on which is the first anniversary of [●], he or it shall:

(a) when he or it pledges or charges any securities beneficially owned by him or it in favour of an authorised institution (as defined under the Banking Ordinance (Chapter 155 of the Laws of Hong Kong)) for a bona fide commercial loan, immediately inform the Company of such pledge or charge together with the number of securities so pledged or charged; and
(b) when he or it receives indications, either verbal or written, from the pledgee or chargee that any of the pledged or charged securities will be disposed of, immediately inform the Company of such indications.

The Company will inform [●] as soon as the Company has been informed of the matters referred to above by any of the Controlling Shareholders and disclose such matters by way of announcement pursuant to the requirements under [●] as soon as possible.

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DIRECTORS, SENIOR MANAGEMENT AND STAFF

DIRECTORS

The Board currently consists of [6] Directors, including [2] executive Directors and [4] independent non-executive Directors. The table below shows certain information in respect of members of the Company’s Board:

Name	Age	Position
Mr. QIAN Lirong	46	Chairman and executive Director
Mr. JIANG Wei	52	Executive Director and group chief
		executive officer
Prof. JIN Xiaofeng	42	Independent non-executive Director
Mr. POON Yick Pang, Philip	41	Independent non-executive Director
Mr. NG Wai Hung	47	Independent non-executive Director
Ms. JIA Lina	44	Independent non-executive Director

Executive Directors

Mr. Qian Lirong ( 錢利榮 ) , aged 46, is the chairman of the Board. Mr. Qian is principally responsible for the overall strategic development of the Group’s operation as well as overall management of the Group. Mr. Qian graduated from Changshu Machinery and Industrial Employees’ University (常熟市機械工業職工大學) in 1987 and completed the No. 3 Industrial and Regional Culture and Economic Management Postgraduate Course offered by Shanghai Social Science Institute (Arts Research Centre) (上海社會科學院文學研究所，第三產業暨區域文化經濟管理碩士研究生班) in 2004. Mr. Qian is a senior engineer, senior economist and an exemplary worker of Jiangsu Province.

Mr. Qian has more than 20 years of experience in the information and telecommunications industry, and has been involved in various divisions in the manufacturing of information and telecommunications products and components including technology development and management. Between November 2004 and January 2007, Mr. Qian was a director and an executive chairman of Hengxin (Singapore). Between November 2004 and February 2007, he acted as the chief executive officer of Hengxin (Singapore). Between June 2003 and January 2007, Mr. Qian held various positions (including chairman and general manager) in Hengxin (Jiangsu), a wholly-owned subsidiary of Hengxin (Singapore). Between December 1996 and June 2003, he was general manager of Jiangsu Hengtong Cable Co., Ltd. (江蘇亨通線纜有限公司). Prior to that, Mr. Qian was an assistant to the manager in Wujiang Qidu Town Industrial Co., Ltd. (吳江市七都鎮工業公司) from September to November 1996. Between December 1988 and September 1996, Mr. Qian worked in Suzhou Wujiang Special Cable Factory (蘇州市吳江特種電纜廠), which was mainly engaged in the manufacture and sale of indoor communications and data cables. During that period, he held various positions including deputy director of the factory.

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Mr. Qian has been awarded several awards in the past, including but not limited to, Outstanding Worker in High and New Technology Industrialisation (高新技術產業化“先進工作者”) by the Ministry of Science and Technology of Jiangsu Province (江蘇省科學技術廳) in 2003, Outstanding Technological Entrepreneur (Private Enterprise) (中國優秀民營科技企業家) by the China Private Enterprise Technology Association (中國民營科技實業家協會) in 2004, Outstanding People of PRC Information Industry of the Year (中國信息產業年度新銳人物) in 2007, Economic People of PRC Information Industry of the Year (中國信息產業年度經濟人物) in 2008 and Chinese Outstanding Entrepreneur (Private Enterprises) (中國優秀民營企業家) in 2010. Mr. Qian is a senior member of Chinese Communications Institute (中國通信學會) as well as a member of the fifth, seventh and eighth of Chinese Communications Cable Committee (中國通信線路委員會). Mr. Qian is a director of Abraholme, a Controlling Shareholder.

Mr. Jiang Wei ( 蔣唯 ) , aged 52, is an executive Director and the group chief executive officer. Mr. Jiang is also responsible for managing the sales management team of the Group. Mr. Jiang has substantial experience in the communications cable industry and is principally responsible for the sales and marketing activities of the Group. Mr. Jiang completed his studies in mechanics manufacturing in Xi’an Electric Power Machinery Manufacturing Co. Ltd., Electromechanical Institute (西安電力機械製造公司機電學院) in 1984 and completed the No. 3 Industrial and Regional Culture and Economic Management Postgraduate Course offered by Shanghai Social Science Institute (Arts Research Centre) (上海社會科學院文學研究所，第三產業暨區域文化經濟管理碩士研究生班) in 2004.

Mr. Jiang joined Jiangsu Trigiant in November 2007 and has been holding the position of executive deputy general manager since January 2009. Between June 2005 and January 2007, he was the executive director and marketing director of Hengxin (Singapore). During the time while Mr. Jiang was serving as an executive director of Hengxin (Singapore), he was also the deputy general manager (sales) of Hengxin (Jiangsu) between July 2003 and March 2007. From July 1999 to June 2003, he was the deputy general manager of Jiangsu Hengtong Cable Co., Ltd. (江蘇亨通線纜有限公司) in charge of sales and marketing matters. From December 1993 to June 1997, he worked in US Global Pacific Co., Ltd. and served as a technician until May 1994 and was seconded to Anhui Lida Communications Cable Co., Ltd. (安徽立達通信電纜有限公司), a company principally engaged in, amongst others, the manufacture and sale of indoor communications and data cables and telephones and held positions of an assistant chief engineer and deputy general manager until June 1997. From 1984 to 1993, Mr. Jiang worked in Xi’an Cable Factory (Plastic Branch) (西安電纜廠全塑分廠) and held various positions from technician to vice factory director.

Independent non-executive Directors

Professor Jin Xiaofeng ( 金曉峰 ) , aged 42, is an independent non-executive Director of the Company. Prof. Jin is currently the deputy head of general affairs of the Institute of Electronic Information Technologies and Systems, Zhejiang University (浙江大學). In February 2007, he was appointed as a Doctor of Philosophy supervisor in the Institute of Electronic Information Technologies and Systems, Zhejiang University. Between January 2004 and February 2006,

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Prof. Jin worked in Hengtong Group Technology Center (亨通集團技術中心). In July 2005, Prof. Jin was appointed as a member of the first Technical Committee of the Optical Transmission Engineering and Technology Center of Jiangsu Province (江蘇省光電傳輸工程技術研究中心第一屆技術委員會). During the period from October 2000 to 2002, Prof. Jin has worked in Oplink Communications Inc., LightMatix Inc. and Agiltron Inc. Prof. Jin obtained his Doctor of Philosophy degree in engineering from Zhejiang University in September 1996 and a master’s degree from China Ship Research & Development Academy (中國艦船研究院) in May 1993. Prof. Jin obtained a bachelor’s degree from the Department of Photoelectronics of Huazhong University (華中科技大學) of Science and Technology in July 1990. From December 1996 to April 2000, Prof. Jin was engaged in teaching and research work in the Department of Electronic and Information Engineering at Zhejiang University. He was appointed as an Associate Professor of Zhejiang University in December 1999 and was appointed as a professor in [December] 2006.

Mr. Poon Yick Pang, Philip ( 潘翼鵬 ) , aged 41, is an independent non-executive Director of the Company. Mr. Poon has over 17 years of experience in corporate finance and accounting. Mr. Poon has been serving as an independent non-executive director of Infinity Chemical Holdings Company Limited (星謙化工控股有限公司) (Stock Code: 640), a company listed on the Stock Exchange, since March 2010. Mr. Poon joined Ruinian International Limited (瑞年國際有限公司), a company then listed on the Stock Exchange, in June 2008 as chief financial officer and company secretary. From 2007 to 2008, he was the director of finance of China Medical Technologies, Inc., a NASDAQ listed company engaging in the manufacture and sale of advanced medical devices in China. From 2002 to 2007, he worked as the senior vice president, qualified accountant and company secretary of Paradise Entertainment Limited (stock code: 1180), a company listed on the Stock Exchange. Mr. Poon also served various positions in Advent International Corporation, a global private equity firm, Legend Holdings Limited, an investment holding company in information technology, investment and real estate and Sun Hung Kai Properties Limited, a company listed on the Stock Exchange (stock code: 16). Mr. Poon obtained a bachelor’s degree in commerce from the University of New South Wales in 1993 and is a Chartered Financial Analyst of the CFA Institute, a Certified Practising Accountant (Australia) and a fellow of the Hong Kong Institute of Certified Public Accountants.

Mr. NG Wai Hung ( 吳偉雄 ) , aged 47, is an independent non-executive Director of the Company. Mr. Ng is a practising solicitor in Hong Kong and a partner in Iu, Lai & Li, a Hong Kong law firm. He has extensive experience in the areas of securities law, corporate law and commercial law in Hong Kong and has been involved in initial public offerings of securities in Hong Kong as well as corporate restructuring, mergers and acquisitions and takeovers of listed companies. Mr. Ng is also an independent non-executive director of four companies listed on the Stock Exchange, namely Fortune Sun (China) Holdings Limited (stock code: 352), HyComm Wireless Limited (stock code: 499), KTP Holdings Limited (stock code: 645) and Tomorrow International Holdings Limited (stock code: 760).

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Ms. Jia Lina ( 賈麗娜 ) , aged 44, is an independent non-executive Director of the Company. She has over 16 years of experience in accounting. From February 2011 up to the Latest Practicable Date, Ms. Jia has been an independent director of Suzhou Tianma Fine Chemicals Co., Ltd (蘇州天馬精細化學品股份有限公司). Ms. Jia has been and remains a certified public accountant in Jiangsu Talent CPA (江蘇天衡會計師事務所) since September 1994. Ms. Jia graduated with a bachelor’s degree in economic trade in July 1989 and a master’s in economics from Dongbei University of Finance and Economics (東北財經大學) in October 1992. Ms. Jia was qualified as an accountant in December 1996 by the Ministry of Finance of the People’s Republic of China (中國人民共和國財政部).

SENIOR MANAGEMENT

Name	Age	Position
QIAN Lirong	46	Chairman and executive Director
JIANG Wei	52	Executive Director and group chief executive officer
LAU Chi Hung	41	Group chief financial officer and company secretary
JIANG Xinhong	44	Deputy general manager of Jiangsu Trigiant

Mr. Qian Lirong (錢利榮) is the chairman of the Board. Please refer to his biography in the paragraph headed “Directors” in this section.

Mr. Jiang Wei (蔣唯) is the group chief executive officer. Please refer to his biography under the paragraph headed “Directors” in this section.

Mr. Lau Chi Hung ( 劉志雄 ) , aged 41, is the group chief financial officer and company secretary. Mr. Lau has over 18 years of experience in corporate finance, accounting, and auditing. Prior to joining the Group in January 2011, Mr. Lau was the group financial controller of Wai Chi Electronics Ltd., a company engaged in the production of light-emitting diode backlights and lighting products between February 2008 and 2010. Between 2005 and January 2008, Mr. Lau worked as the financial controller of Computime Limited, a subsidiary of Computime Group Ltd. (金寳通集團有限公司) (stock code: 320), a company listed on the Stock Exchange. Prior to that, Mr. Lau also held management positions in other companies listed on the Stock Exchange and was responsible for finance and accounting management, such companies include Ngai Lik Enterprises Limited, a subsidiary of Ngai Lik Industrial Holdings Limited (毅力工業集團有限公司) (stock code: 332) and Tonic Industries Holdings Limited (東力實業控股有限公司) (stock code: 978). Mr. Lau also worked in the assurance and advisory department of Deloitte Touche Tohmatsu for over 6 years, where the last position he served was manager. Mr. Lau is a Certified Public Accountant (Practising) of the Hong Kong Institute of Certified Public Accountants, a fellow of the Association of Chartered Certified Accountants, an associate of the Association of Chartered Certified Accountants in England and Wales, an associate and a certified tax adviser of the Taxation Institute of Hong Kong. Mr. Lau graduated with a bachelor’s degree in accountancy in 1993 and a master’s degree in business administration in 2001 from Hong Kong Polytechnic University.

Mr. Jiang Xinhong (蔣新洪), aged 44, is a deputy general manager of Jiangsu Trigiant. Mr. Jiang joined Jiangsu Trigiant in March 2007 and held position as an assistant to general manager. Mr. Jiang has accumulated approximately 17 years of experience in the cable industry. Mr. Jiang is mainly responsible for production, equipment, technology, quality control, material and logistics management.

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Prior to joining the Group, Mr. Jiang served in various positions in several other companies. Between July 2003 and January 2007, Mr. Jiang served Hengxin (Jiangsu) as an assistant to deputy general manager and deputy manager of production department. Between December 1996 and June 2003, Mr. Jiang served Jiangsu Hengtong Cable Co., Ltd. (江蘇亨通線纜有限公司) as deputy manager and then manager of production department. Between March 1994 and December 1996, Mr. Jiang worked in production department of Jiangsu Zhongyou Guohao Optical and Electronic Cable Co., Ltd. (江蘇中郵國浩光電纜有限公司). Mr. Jiang graduated with a bachelor’s degree in party politics management from Jiangsu Radio & Television University (江蘇廣播電視大學) in August 2001. Mr. Jiang was qualified as an assistant economist in September 2002 by Wuxi Personnel Bureau (無錫市人事局).

COMPANY SECRETARY

Mr. Lau Chi Hung (劉志雄) is the company secretary. Please refer to his biography in the paragraph headed “Senior Management” in this section.

To the best knowledge of the Directors, except Mr. Jiang Wei who still holds 210,000 shares in Hengxin (Singapore), none of the Directors or senior management of the Group had equity interests (directly or indirectly) in Hengxin (Singapore) during the Track Record Period and up to the [Latest Practicable Date].

LITIGATION INVOLVING DIRECTORS

During the Track Record Period, certain Directors were involved in certain litigation proceedings, details of which are set out below.

Litigation involving Mr. Qian and Mr. Jiang Wei

Prior to joining the Group, Mr. Qian and Mr. Jiang Wei had been directors of Hengxin (Singapore) since 29 November 2004 and 23 June 2005 respectively until their respective resignation as directors of Hengxin (Singapore) on 17 January 2007. In addition to being an executive director of Hengxin (Singapore), Mr. Qian was also appointed as the chief executive officer of Hengxin (Singapore) pursuant to a service agreement (the “Qian Service Agreement”) dated 9 February 2006 entered into between Hengxin (Singapore) and Mr. Qian. Mr. Qian was also the general manager and legal representative of Hengxin (Jiangsu), a wholly owned subsidiary of Hengxin (Singapore). Mr. Jiang Wei and Hengxin (Singapore) also entered into a service agreement (the “Jiang Service Agreement”) dated 9 February 2006 pursuant to which Mr. Jiang Wei was appointed as an executive director. Mr. Jiang Wei was also the deputy general manager of sales of Hengxin (Jiangsu). In each of the Qian Service Agreement and the Jiang Service Agreement, there was a termination clause which provided that termination may be initiated by either party by giving the other party no less than six months’ written notice.

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DIRECTORS, SENIOR MANAGEMENT AND STAFF

Mr. Qian was one of the founders of Hengxin (Jiangsu) and one of the shareholders of Siskin Investment Ltd. when it acquired the entire issued share capital of Hengxin (Singapore) on 29 November 2004. Hengxin (Jiangsu) acquired the coaxial cable manufacturing business together with related assets from Jiangsu Hengtong Cable Co., Ltd. (江蘇亨通線纜有限公司) (“Jiangsu Hengtong”). Mr. Qian and Mr. Jiang Wei worked at Hengxin (Jiangsu) and Jiangsu Hengtong previously. Hengtong Group Co., Ltd. (“Hengtong”) was owned as to 90% by Cui Genliang, the elder brother of Cui Genxiang and brother-in-law of Mr. Qian and 10% by an Independent Third Party. Hengtong is a Chinese enterprise devoted to communications and electrical power undertakings and its principal products include local telephone cable, power cables, optical fibre and cable, optical device and nylon coated wire. The Group has not entered into any transactions with Hengtong, Jiangsu Hengtong or their respective affiliated companies during the Track Record Period. Save that all executive Directors and Mr. Jiang Xinhong, being a senior management of the Group, were former employees of Jiangsu Hengtong, the Directors confirmed that the Group and its Controlling Shareholders never had any relationship with each of Hengtong and Jiangsu Hengtong. Based on the confirmation of the Directors, the Group does not expect to enter into any transactions with Hengtong, Jiangsu Hengtong, or their respective affiliated companies in future.

On 18 December 2006, Cui Genxiang, being the then non-executive director of Hengxin (Singapore) and another shareholder of Hengxin (Singapore) called an extraordinary general meeting to be held on 18 January 2007 proposing, inter alia, to remove Mr. Qian from his position as a director of Hengxin (Singapore). On 17 January 2007, the day immediately before the extraordinary general meeting, Mr. Qian resigned as director of Hengxin (Singapore). On the same date, Mr. Jiang Wei also resigned as a director of Hengxin (Singapore).

Mr. Qian was appointed a director of Trigiant Singapore in December 2007. Mr. Jiang Wei joined Jiangsu Trigiant as deputy general manager and was appointed a director of Trigiant Singapore in December 2007.

On 3 March 2008, Hengxin (Singapore) filed separate writs of summons against Mr. Jiang Wei and Mr. Qian respectively at the High Court of Singapore (“Singapore High Court”). Statements of claim for both actions were filed on 23 June 2008. The two actions were consolidated by order of court on 9 February 2009.

In the separate actions against Mr. Qian and Mr. Jiang Wei, Hengxin (Singapore) alleged that they had breached the Qian Service Agreement and Jiang Service Agreement respectively and fiduciary and/or statutory duties that they owed at law as director/employee of Hengxin (Singapore) to (i) act bona fide in the interest of Hengxin (Singapore), (ii) not use their position or to act in a manner so as to obtain any unauthorised benefit for themselves or for any third party, and (iii) not act so as to place themselves in a position where their personal interests did or might conflict with that of Hengxin (Singapore).

Hengxin (Singapore) claimed for injunctions restraining Mr. Qian and Mr. Jiang Wei from further breaches of the Qian Service Agreement and the Jiang Service Agreement respectively and sued for damages. Mr. Qian and Mr. Jiang Wei on the other hand, counterclaimed against Hengxin (Singapore) for unpaid bonuses to which they were entitled pursuant to the Qian Service Agreement and the Jiang Service Agreement respectively.

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DIRECTORS, SENIOR MANAGEMENT AND STAFF

On 19 November 2009, the Singapore High Court delivered judgment on the consolidated action (i) dismissing the claims of Hengxin (Singapore), (ii) awarding Mr. Qian an aggregate sum of S$1,260.28, RMB1,101,900.49 and RMB378,574.36 all being unpaid bonuses to which Mr. Qian was entitled, with interests (iii) further awarding Mr. Qian an interlocutory judgment with damages to be assessed for repudiation of the Qian Service Agreement by Hengxin (Singapore), (iv) awarding Mr. Jiang Wei an aggregate sum of S$1,693.15 being unpaid prorated bonus for 2007 and S$3,008.22 being the lost bonus to which Mr. Jiang Wei was entitled, with interests and (v) further awarding Mr. Jiang Wei an interlocutory judgment with damages to be assessed for repudiation of the Jiang Service Agreement by Hengxin (Singapore).

The judgment was made on the basis that (1) Hengxin (Singapore) failed to prove that it or Hengxin (Jiangsu) had any confidential information or trade secrets, (2) the restraint of trade clauses in both Qian Service Agreement and Jiang Service Agreement did not have territorial limits and hence were too wide and therefore void and not enforceable against Mr. Qian and Mr. Jiang Wei respectively, (3) Hengxin (Singapore) failed to disprove that it was not in repudiatory breach of the Qian Service Agreement and the Jiang Service Agreement by making payment in lieu of notice, (4) there was no evidence to show or prove that Mr. Qian or Mr. Jiang Wei removed or took away any confidential information, their knowledge in the cable industry was gained through their past experiences, (5) there was no evidence to show either Mr. Qian or Mr. Jiang Wei had attempted to entice away customers of Hengxin (Singapore) or Hengxin (Jiangsu) to Jiangsu Trigiant and (6) reasons for the removal of Mr. Qian and subsequently Mr. Jiang Wei were out of personal spite.

On 9 December 2009, Hengxin (Singapore) filed a notice of appeal to the Court of Appeal of Singapore against the judgment of the Singapore High Court. Subsequent to its filing of the notice of appeal, on 11 February 2010, Hengxin (Singapore) and Hengxin (Jiangsu) entered into a settlement agreement with Mr. Qian and Mr. Jiang Wei for a full and final settlement of all disputes and issues arising out of the litigations involving Mr. Qian and Mr. Jiang Wei.

Save as disclosed in this section, Mr. Qian and Mr. Jiang Wei were not involved in any other material litigation which should be disclosed herein.

CORPORATE GOVERNANCE

The Directors recognise the importance of incorporating elements of good corporate governance in management and internal control procedures so as to achieve effective accountability.

In accordance with the requirements of [●], the Company has established an [●] in compliance with the Code on Corporate Governance Practices as set out in Appendix 14 to [●] and appointed a qualified accountant to oversee the Company’s financial reporting procedures and internal controls so as to ensure compliance with [●].

The Company has adopted a system of corporate governance.

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DIRECTORS, SENIOR MANAGEMENT AND STAFF

The Company is committed to the view that the Board should include a balanced composition of executive and non-executive Directors (including independent non-executive Directors) so that there is a strong independent element on the Board, which can effectively exercise independent judgment. The Company is also committed to the view that the independent non-executive Directors should be of sufficient caliber and number for their views to carry weight. The independent non-executive Directors, are free of any business or other relationship with the Directors or the Group in general which could interfere in any material manner with the exercise of their independent judgment.

[ ● ]

An [●] was established by the Company on [●] with written terms of reference in compliance with the Code on Corporate Governance Practices as set out in Appendix 14 to [●]. The primary duties of the [●] are to review and approve the Group’s financial reporting process and internal control system. Members of the [●] are [Mr. Poon Yick Pang, Philip, Ms. Jia Lina, Mr. Ng Wai Hung and Prof. Jin Xiaofeng, all being independent non-executive Directors]. [Mr. Poon Yick Pang, Philip] is the chairman of the [●].

[ ● ]

A [●] was established by the Company on [●] with written terms of reference in compliance with the Code on Corporate Governance Practices as set out in Appendix 14 to [●]. The primary duties of the [●] are to review and make recommendations to the Board on terms of remuneration packages, bonuses and other compensation payable to Directors and senior management of the Group. The [●] shall also ensure that no Director or any of his/her associate is involved in deciding his/her own remuneration. Members of the [●] are [Mr. Ng Wai Hung, Mr. Poon Yick Pang, Philip, and Mr. Jiang Wei]. [Mr. Ng Wai Hung] is the chairman of the [●].

[ ● ]

A [●] was established by the Company on [●] with written terms of reference. The primary duties of the [●] are to make recommendations to the Board on the appointment of Directors and the management of the Board succession. The members of the [●] are [Prof. Jin Xiaofeng, Mr. Poon Yick Pang, Philip and Ms. Jia Lina]. Prof. Jin Xiaofeng is the chairman of the [●].

COMPENSATION OF DIRECTORS AND SENIOR MANAGEMENT

The remuneration received by Directors (including fees, salaries, discretionary bonus, contributions to defined contribution benefit plans (including pension), housing and other allowances, and other benefits in kind) in FY2008, FY2009, FY2010 and the five months ended 31 May 2011 was approximately RMB0.80 million, RMB1.2 million, RMB[0.7] million and RMB[0.3] million respectively.

The five highest paid individuals in FY2008 were all Directors, while the five highest paid individuals in FY2009 were all employees. The highest paid individuals in both FY2010 and the five months ended 31 May 2011 were 3 Directors and 2 employees.

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DIRECTORS, SENIOR MANAGEMENT AND STAFF

[The Group has not paid any remuneration to the Directors or the five highest paid individuals as an inducement to join or upon joining the Group or as a compensation for loss of office in respect of FY2008, FY2009, FY2010 and the five months ended 31 May 2011. Further, [none of the Directors had waived any remuneration during the same period/for details of the Directors who agreed to waive the respective remuneration during the Track Record Period, please refer to the Accountants’ Report of the Group in Appendix IA and of Jiangsu Trigiant in Appendix IB to this document].]

Except as disclosed above, no other payments have been paid or are payable, in respect of FY2008, FY2009, FY2010 and the five months ended 31 May 2011, by the Group to the Directors.

STAFF

As at 31 May 2011, the Group had 604 employees. The table below sets forth the number of the Group’s employees by their functions.

	Number of
Department	employees
Directors and senior management (note)	4
Administration	43
Production	394
Procurement	7
Sales and marketing	45
Research and development	61
Others	50

Note: For the above purpose, the independent non-executive Directors are not included.

RELATIONSHIP WITH STAFF

The Directors are of the view that the Group has maintained good relationship with its staff. The Group has not, in the past, experienced any disruption of its operations due to labour disputes.

The Directors are of the view that the ability to recruit and retain experienced and skilled labour is crucial to the Group’s sustainable growth and development. In order to enhance the morale and productivity of employees, employees are remunerated based on their performance, experience and prevailing industry practices. Compensation policies and packages of management staff and functional heads are being reviewed on a yearly basis. [In addition to basic salary, performance-related salary may also be awarded to employees based on internal performance evaluation.]

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DIRECTORS, SENIOR MANAGEMENT AND STAFF

The Group invests in continuing education and training programmes for management staff and other employees with a view to upgrade their skills and knowledge. These training courses include internal courses run by the management of the Group and external courses provided by professional trainers. They range from technical training to production staff, to financial and administrative trainings to management staff.

The Group enters into individual employment contracts with terms ranging from three to five years and other terms such as wages, employee benefits, health and safety conditions at workplace, confidentiality and grounds for termination, etc. The above does not apply to employment contracts with senior management.

In accordance with applicable PRC laws and regulations, as well as the compulsory requirements of local authorities where the Group is located, the Group participates in a pension contribution plan, a work-related injury insurance plan, an unemployment insurance plan, a medical insurance plan and an accident insurance plan for the employees. The contributions to these pension and insurance plans made by the Group in FY2008, FY2009, FY2010 and the five months ended 31 May 2011 were approximately RMB0.84 million, RMB2.09 million, RMB2.46 million and RMB1.32 million respectively. As confirmed by the Group, in addition to the statutorily required benefits, the Group also provides its employees with other welfare benefits including medical care, meal subsidies, education subsidies, housing, transportation and other retirement benefits in accordance with applicable regulations and the internal policies of the Group.

As required by relevant PRC regulations, the Group has formed a workers’ union which protects employees’ rights and welfare benefits, encourages employees’ participation in management decisions, and assists in mediating disputes between the Group and individual employees. As advised by the PRC Legal Adviser, the constitution and operation of such workers’ union are in compliance with relevant PRC regulations. During the Track Record Period, the Group had not experienced any strike or other labour disturbance which have interfered with the Group’s operations.

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SHARE CAPITAL

As at the date of this document

Authorised share capital HK$ [10,000,000,000] Shares [100,000,000] [10,000,000] Shares in issue [100,000]

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FINANCIAL INFORMATION

The following discussion and analysis should be read in conjunction with the audited financial information and the accompanying notes, as of and for the financial year ended 31 December 2008 and period from 1 January to 28 December 2009 of Jiangsu Trigiant in Appendix IB and the audited financial information and the accompanying notes, of the Group as of and for the period from 29 December to 31 December 2009, financial year ended 31 December 2010 and the five months ended 31 May 2011 in Appendix IA. Since there was a change in controlling shareholders of Jiangsu Trigiant on 29 December 2009, the financial information of Jiangsu Trigiant as of and for the year ended 31 December 2008 and period from 1 January to 28 December 2009 could not be included in the same accountants’ report of the Group as of and for the period from 29 December to 31 December 2009, financial year ended 31 December 2010 and the five months ended 31 May 2011. The combined financial information included in the Accountants’ Reports in Appendix IA and the audited financial information of Jiangsu Trigiant in Appendix IB and have been prepared in accordance with HKFRS.

The following discussion and analysis contain certain forward-looking statements that reflect the Company’s current views with respect to future events and financial performance. These statements are based on assumptions and analysis made by the Company in light of the Company’s experience and perception of historical trends, current conditions and expected future developments, as well as other factors which the Company believes are appropriate under the circumstances. However, whether the actual outcome and developments will meet the Company’s expectations and predictions depend on a number of risks and uncertainties over which the Company does not have control. Please refer to the section headed “Risk Factors” in this document.

The term “FY2008” refers to the financial year ended 31 December 2008, the term “FY2009” refers to the period from 1 January 2009 to 28 December 2009 and the term “FY2010” refers to the period from 29 December 2009 to 31 December 2010.

The financial information of FY2008 and FY2009, which is primarily based on the accountants’ report included in Appendix IB, sets out the results and financial position of Jiangsu Trigiant before the change in controlling shareholders, whereas the financial information of FY2010 and the five months ended 31 May 2011, which is primarily based on the accountants’ report included in Appendix IA, sets out the result and financial position of the Group after the change in control of Jiangsu Trigiant. Since 29 December 2009 (being the date of change in control of Jiangsu Trigiant), the business of Jiangsu Trigiant has been managed substantially by the same management team as before and the performance and financial position of Jiangsu Trigiant has reflected substantially the result and financial position of the Group’s business. As the results and changes in financial position of the Group were not material between 29 December 2009 and 31 December 2009, they were combined with the financial information of the Group for the financial year ended 31 December 2010 to provide the financial information of FY2010 and accordingly, no separate financial information of these three days was prepared for analysis. The Directors are of the opinion that the basis of presentation of financial information adopted in this section provides a meaningful analysis and consistent comparison of the performance and financial position of the Group’s business during the Track Record Period.

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FINANCIAL INFORMATION

MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

The Group has been awarded as one of the top 50 communications equipment suppliers by Communications Weekly (通信產業報社) and China Joint Center for Case Management (中國管理案例聯合中心) for three times. The Group was also awarded “Top 10 Feeder Cable Suppliers (ranked first) (十大饋線供應商 (第一名))” by Communications Weekly (通信產業報社), “China 3G Construction and Innovation Achievement Award” (中國 3G建設與創新成就獎) in 2009, “Core Company for Optical Cables in China Communication Industry” (中國通信光電纜行業核心企業) by the Electrical Cable and Wire Branch of China Electrical Equipment Industry Association (中國電器工業協會電線電纜分會) and OEC in 2010 and 2011, “Key Enterprise of State Torch Program (國家火炬計劃骨幹企業) by Torch High Technology Industry Development Center, Ministry of Science and Technology of PRC (中華人民共和國科學技術部火炬高技術產業開發中心) and “Top 100 PRC Electronic Component Enterprises (ranked 23rd)” (中國電子元件百強企業(第23名)) by Operation Supervision Coordination Bureau of MIIT and CECA in 2011.

The principal products of the Group are RF coaxial cables series (including RF cables for mobile communications and leaky coaxial cables). In addition, the Group manufactures and sells new-type electronic components (such as RF coaxial connectors, antenna lightning arresters and jumpers) and other related accessories (such as flame-retardant flexible cables, splitters, couplers and combiners). The products of the Group are used in the transmission systems of telecommunications operators and service providers and major equipment manufacturers in the PRC. In particular, the products can be applied in different mobile network systems, highways, railways, tunnels, underground facilities, and high-rise buildings. In FY2008, FY2009, FY2010 and the five months ended 31 May 2011, sales of the RF coaxial cables series of the Group accounted for approximately 74.7%, 71.8%, [92.5]% and [93.2]% of its total turnover respectively.

The sales turnover of the Group was principally derived from the PRC market during the Track Record Period. The expertise of the management of the Group, coupled with its extensive sales and distribution network in the PRC, has helped the Group gain business from the three major PRC telecommunications operators, namely China Unicom, China Telecom and China Mobile and their respective provincial subsidiaries. In FY2008, FY2009, FY2010 and the five months ended 31 May 2011, sales to the five largest customers of the Group amounted to approximately RMB[232.4] million, RMB[857.0] million, RMB[1,384.4] million and RMB[689.5] million respectively, and accounted for approximately [99.9]%, [99.1]%, [98.1]% and [97.7]% of the total turnover of the Group in the respective periods. During the same period, sales to China Unicom, being the largest customer of the Group, amounted to approximately RMB[210.0] million, RMB[745.0] million, RMB[1,016.0] million and RMB[330.7] million respectively, and accounted for approximately [90.2]%, [86.1]%, [72.0]% and [46.8]% of the total turnover of the Group in the respective periods respectively. The Group also exported its products to overseas markets, including India, Russia and Southeast Asia.

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FINANCIAL INFORMATION

The business of the Group experienced remarkable growth in the first three years of operation, which was partially attributable to the official launch of the PRC 3G network in 2009. The turnover of the Group increased from approximately RMB[232.7] million in FY2008 to approximately RMB[865.0] million in FY2009, and further increased to approximately RMB[1,410.8] million in FY2010, representing a CAGR of approximately [146.2]%. The turnover of the Group increased from approximately RMB[499.6] million for the five months ended 31 May 2010 to approximately RMB[706.0] million for the five months ended 31 May 2011, representing a growth of approximately [41.3%]. The Group recorded gross profit margins of approximately [18.0]%, [24.3]%, [20.5]% and [21.7]% in FY2008, FY2009, FY2010 and the five months ended 31 May 2011 respectively. The Group’s net profit attributable to [owners of the Company] increased from approximately RMB[15.3] million in FY2008 to approximately RMB[151.3] million in FY2010, representing a CAGR of approximately [214.7]%. The Group’s net profit attributable to owners of the Company for the five months ended 31 May 2011 was approximately RMB[83.9] million, representing an increase of approximately [63.5]% as compared with the corresponding period in 2010.

BASIS OF PRESENTATION

This document includes two accountants’ reports which are set forth in Appendix 1A and Appendix 1B. The accountants’ report in Appendix 1B includes the financial information of Jiangsu Trigiant for (i) the financial year 31 December 2008; and (ii) the period from 1 January 2009 to 28 December 2009, being the track record periods prior to the change of controlling shareholders of Jiangsu Trigiant on 29 December 2009. Details of the change of controlling shareholders of Jiangsu Trigiant on 29 December 2009 are set out in the section headed “History and Development” in this document. The accountants’ report in Appendix 1A includes the audited combined financial information of the Group for the period from 29 December 2009 to 31 December 2009, the year ended 31 December 2010 and the five months ended 31 May 2011. Since there was a change in controlling shareholders of Jiangsu Trigiant on 29 December 2009, the audited financial information of Jiangsu Trigiant for the year ended 31 December 2008 and the period from 1 January 2009 to 28 December 2009 could not be included in the same accountants’ report of the Group for the period from 29 December 2009 to 31 December 2009, the year ended 31 December 2010 and the five months ended 31 May 2011.

Although the financial year end of the Group is on 31 December, and there is a gap of three days between 29 December 2009 and 31 December 2009, the Directors believe that the presentation of the financial information of the Group for the period from 29 December 2009 to 31 December 2010 facilitates a better understanding of the business of the Group during the Track Record Period after taking into consideration the followings:

the business of the Group had been conducted by Jiangsu Trigiant during the period from 1 January 2008 to 28 December 2009 and subsequently by the Group, and has been managed substantially by the same management team;
the financial positions of the Group as of 28 December 2009 and 31 December 2009 were not materially different and the profit or loss for the three days ended 31 December 2009 was immaterial;
the financial information of Jiangsu Trigiant for the year ended 31 December 2008 and the period from 1 January 2009 to 28 December 2009 and the financial information of the Group for the period from 29 December 2009 to 31 December 2010 provide a consistent and meaningful comparison of the financial results of the business of the Group under the period-to-period discussion under the “Review of operating results” in this section.

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FINANCIAL INFORMATION

The Company was incorporated in the Cayman Islands under the Companies Law as an exempted holding company with limited liability on 23 December 2010. Prior to [●], the Group underwent the Reorganisation pursuant to which the Company became the holding company of the Group. Please refer to the paragraph headed “Reorganisation” in Appendix V to this document for details. The Group resulting from the Reorganisation is regarded as a continuing entity. Accordingly, the financial information prepared presents the combined results and financial positions of the Group as if the current group structure had been in existence throughout the Track Record Period.

All significant intra-group transactions and balances have been eliminated on consolidation.

FACTORS AFFECTING THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION OF THE GROUP

The results of operations and financial condition of the Group had been during the Track Record Period, and will continuously be affected by a number of factors, including but not limited those set forth in the section headed “Risk Factors” in this document and as set out below:

Development and opportunities of telecommunications industry in the PRC

RF coaxial cables are integral parts of the communications system and are mainly used for the antenna feeder of wireless communications, while flexible cables are used for power supply to communications devices. In light of the global economic recovery, rapid development of mobile communications in developing countries and upgrades to mobile communications networks in developed countries, market prospects for RF coaxial cables and flexible cables are promising. In the PRC, constructions and maintenance of the telecommunications network put forward by the three major PRC telecommunications operators are the main drivers of the demand for RF coaxial cables and flexible cables.

Reliance on major customers

The Group is dependent on its major customers, being the three major PRC telecommunications operators, namely China Unicom, China Mobile and China Telecom and their respective provincial branches or subsidiaries. Based on the internal policies of these three major customers, potential suppliers are invited to participate in their respective suppliers’ bidding procedure. If the Group wins the tender, the respective telecommunications operator will enter into a framework agreement with the Group which sets out the general terms in respect of the supply of products. The Group will then negotiate specific sales contracts with the provincial branches or subsidiaries of such telecommunications operator. As at [the Latest Practicable Date], the Group had entered into framework agreements with each of China Unicom, China Mobile and China Telecom. As of [the Latest Practicable Date], the Group sold its products to 28 out of 31 provincial branches of China Unicom, 22 out of 31 provincial branches of China Telecom and 17 out of 31 provincial branches of China Mobile.

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FINANCIAL INFORMATION

In FY2008, FY2009, FY2010 and the five months ended 31 May 2011, sales to China Unicom, being the largest customer of the Group, were approximately RMB[210.0] million, RMB[745.0] million, RMB[1,016.0] million and RMB[330.7] million respectively, and accounted for approximately [90.2]%, [86.1]%, [72.0]% and [46.8]% of the total turnover of the Group for the respective period. Turnover arising from sales to China Mobile as a percentage of total turnover was approximately [1.4]%, [3.4]%, [20.8]% and [44.9]% for the same periods, respectively. Turnover arising from sales to China Telecom as a percentage of total turnover was approximately [2.2]%, [4.3]%, [2.7]% and [2.3]% for the same periods, respectively.

As aforementioned, the Group heavily relies on and expects to continue to rely on these major customers, in particular China Unicom, for a significant portion of its future turnovers. However, there is no assurance that the Group will continue to be retained by such key customers as their supplier or that they will maintain or increase their current level of business with the Group. In the event of any cancellation, delay or reduction in the scope of the existing business with any of these key customers or if the Group loses any of its key customers, its business and financial performance will be adversely affected.

Reliance on sales of RF coaxial cables series

The Group has been dependent on its RF coaxial cables series (including RF cables for mobile communications and leaky coaxial cables) for a substantial portion of its turnover during the Track Record Period. The RF coaxial cables series of the Group generated approximately [74.7]%, [71.8]%, [92.5]% and [93.2]% of the turnover of the Group in FY2008, FY2009, FY2010 and the five months ended 31 May 2011 respectively. In FY2010, the increase in the turnover of the Group as derived from sales of its RF coaxial cables series was due to the respective increase of investment in the construction of outdoor 3G base stations by the three major PRC telecommunications operators, which in turn led to an increase in the demand for RF coaxial cables series and a decrease in demand for the new-type electronic components of the Group that are mainly used for indoor transmission systems. Even though the Group intends to leverage on its research and development capabilities to diversify its product portfolio, the Group still expects to continue to derive a majority of its turnover from sales of its RF coaxial cables series in future.

If the Group is unable to manufacture or sell its RF coaxial cables series due to regulatory, intellectual property or other reasons, or if the quality of the RF coaxial cables series of the Group becomes unacceptable to its major customers due to a change in their specifications, the turnover of the Group would significantly decline, and its business, financial condition and results of operation would be materially and adversely affected.

Production capacity

In anticipation of the growing demand from and geographic diversity of its customers, the Group has expanded and will continue to expand its scale of operations by purchasing additional manufacturing equipment. Increase in production capacity of the Group will

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FINANCIAL INFORMATION

strengthen its ability to meet the anticipated growth in customer demand, therefore improving its competitiveness. As at the Latest Practicable Date, the Group had [34] production lines for RF coaxial cables series with an annual production capacity of approximately 150,000 km; and [44] production lines for new-type electronic components with an annual production capacity of approximately [11.2] million sets.

The planned investment in expanding the production capacities of the Group may require significant capital expenditures, which may in turn lead to additional depreciation expenses. Increase of production capacity may have varying impact on the financial condition and results of operations of the Group, such as, increase in capital expenditures and the respective depreciation expenses depending on factors such as utilisation rates, market demand and selling prices of products.

Research, development and production of new products

The Group needs to keep pace with technological changes and introduce new products and models on a timely and cost-effective basis. Success of the Group also depends partially on its ability to continuously upgrade its existing products and develop new products that offer technologies, features and appearances that meet the requirements of its customers, especially the three major PRC telecommunications operators, at a competitive price.

As of Latest Practicable Date, the Group had successfully developed [43] new varieties of RF coaxial cables, new-type electronic components and other related accessories which offer its customers new transmission solutions for mobile communications. While keeping its focus on RF coaxial cable series and new-type electronic components, the Group also intends to utilise its research and development capabilities to improve its product safety and quality as well as to develop new versions of its existing products such as aluminum cables, leaky cables for 3G, connectors, high frequency connectors, multi-core flexible cables and fire resistant cables.

Cost of materials consumed

Cost of materials consumed comprises cost of raw materials and change in work in progress and finished goods, which is the most important component in the cost of goods sold. The ability to obtain a stable supply of raw materials at favourable prices will affect the profitability and overall operating performance of the Group. Despite that the Group has not entered into any long-term contracts with its suppliers, the Directors believe that there are many alternative suppliers in the market that sell similar raw materials and thus there will not be any difficulty in procuring an adequate supply of requisite raw materials.

The most important raw materials to the Group are copper-based materials. The total purchase of copper-based materials accounted for approximately [55.5]%, [66.2]%, [80.3]% and [78.9]% of the total purchases of the Group in FY2008, FY2009, FY2010 and the five months ended 31 May 2011, respectively. The price of copper, which is a bulk commodity, is subject to market fluctuations. Generally, the Group tends to pass on most of the increases in copper price to its customers, by including terms in its supply agreements in respect of RF coaxial cables series with its major customers such as, China Unicom, China Mobile and China Telecom to the effect that the selling price of its products shall be linked to the copper price.

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FINANCIAL INFORMATION

However, there is no assurance that the Group can always successfully pass on such risks to its customers or offset the increase in the price of raw materials, mainly copper-based materials, through various cost control measures. Failure to pass such risks on to customers is likely to have negative impacts on the sales and profits of the Group. However, the Directors believe that the long-term relationships of the Group with its major suppliers enhance its bargaining power and ability to obtain better purchase prices.

Finance costs

The Group has historically met its liquidity requirements through a combination of cash flow from operation, internal resources, short-term and long-term bank borrowings and increase in paid-in capital. When internal capital resources could not meet its operating needs, the Group resorted to external financing resources. In addition, in FY2008, FY2009 and FY2010, Jiangsu Trigiant and Fullway Technology (a former fellow subsidiary of Jiangsu Trigiant and one of the former suppliers of the Group in FY2008, FY2009 and FY2010) entered into certain trade financing transactions with certain commercial banks in the PRC which were not supported by any underlying transactions and not in compliance with relevant PRC laws and regulations. In FY2010, Jiangsu Trigiant and Bin Fan also entered into certain similar non-compliant trade financing transactions with certain commercial banks in the PRC. The principal reason for such non-compliant trade financing arrangements was to lower the overall finance costs and to increase the overall interest income on bank deposits. Please refer to the paragraph headed “Non-compliant Trade Financing” under the section headed “Business” in this document for further details. In FY2008 and FY2009, bank bills issued by Jiangsu Trigiant and discounted by Fullway Technology carried interest rates ranging from 1.99% to 6.06% and 1.58% to 2.47% per annum, respectively, from which Jiangsu Trigiant incurred interest expenses of approximately RMB0.4 million and RMB4.5 million respectively during the same period, which were recognised as finance costs. In FY2010, bank bills issued by Jiangsu Trigiant and discounted by Fullway Technology and Bin Fan carried interest rates ranging from 2.24% to 4.35% per annum, from which Jiangsu Trigiant incurred interest expenses of approximately RMB5.1 million, which were recognised as finance costs.

In FY2008, FY2009, FY2010 and the five months ended 31 May 2011, the finance costs of the Group, being interest on bank loans less interest capitalised, were approximately RMB[2.2] million, RMB[26.2] million, RMB[39.4] million and RMB[17.1] million respectively. Interest on bank borrowings increased from FY2008 to FY2010 mainly due to an increase in bank borrowings in such period for purpose of expanding the business of the Group. As at the end of FY2008, FY2009, FY2010 and the five months ended 31 May 2011, the weighted average effective annual interest rates of the variable rate bank borrowings of the Group were approximately [7.62]%, [5.63]%, [5.80]% and [5.93]% respectively. As at the end of FY2008, FY2009, FY2010 and the five months ended 31 May 2011, the weighted average effective annual interest rates of the fixed rate bank borrowings of the Group were approximately 7.21%, 5.40%, 5.19% and [5.47]%, respectively. Fluctuations in interest rates and the level of bank borrowings of the Group would have an impact on its finance costs, which would in turn affect its results of operation.

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FINANCIAL INFORMATION

Taxation

The Group has not made any provision for Hong Kong Profits Tax as it did not carry out any business in Hong Kong during the Track Record Period. Jiangsu Trigiant, being the sole operating subsidiary of the Group in the PRC, is subject to Foreign Enterprise Income Tax on its taxable income as reported in its statutory financial statements adjusted in accordance with the relevant PRC tax laws and regulations.

Pursuant to the applicable PRC national and local tax laws, Jiangsu Trigiant, as a wholly foreign-owned enterprise, was entitled to enjoy a preferential taxation treatment, “an exemption from the enterprise income tax for the first two years and a 50% reduction in the enterprise income tax for the following three years, commencing from the first profitable year”, or the “tax holiday”. However, under the EIT Law, a unified EIT rate of 25% will be applied equally to both domestic enterprise and foreign-invested enterprise, but enterprises that are currently entitled to exemptions or reductions from standard rate for a fixed term may continue to enjoy such treatment until the fixed term expires.

Therefore, Jiangsu Trigiant, was entitled to the tax holiday and exempted from income tax for 2008 and 2009, and is subject to income tax at 12.5% from 2010 to 2012.

In accordance with Article 28 of the EIT Law, enterprises which are accredited as a high and new technology enterprises (高新技術企業) are entitled to tax reduction for such period as prescribed under the current income tax laws. Jiangsu Trigiant has been accredited as a high and new technology enterprise (高新技術企業) jointly by the Science and Technology Department of Jiangsu Province (江蘇省科學技術廳), Finance Department of Jiangsu Province (江蘇省財政廳), Jiangsu State Administration of Taxation (江蘇省國家稅務局) and Jiangsu Local Taxation Bureau (江蘇省地方稅務局) in March 2009. Beginning from 2013, if Jiangsu Trigiant is still deemed as a high and new technology enterprise then, it shall be entitled to a reduced income tax of 15% according to the EIT Law.

Upon the expiry of the existing preferential tax treatments, the PRC subsidiaries of the Group will be subject to a higher enterprise income tax rate and the financial performance of the Group will be affected.

CRITICAL ACCOUNTING POLICY AND ESTIMATION

The discussion and analysis of the results of operations and financial condition of the Group are based on its combined financial information, which has been prepared in accordance with HKFRSs. The results of operations and financial condition of the Group are sensitive to accounting methods, assumptions and estimates that underlie the preparation of the combined financial information of the Group. Estimates and judgements are continuously being evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The management of the Group evaluates these estimates on an ongoing basis. Actual results may differ from these estimates as facts, circumstances and conditions may differ based on different assumptions.

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FINANCIAL INFORMATION

The Group believes the following critical accounting policies are among those that involve the most significant judgments and estimation used in preparing its combined financial information.

Property, plant and equipment and depreciation

Property, plant and equipment including buildings held for use in the production or supply of goods or services, or for administrative purposes (other than construction in progress) are stated at cost less subsequent accumulated depreciation and accumulated impairment losses, if any.

Depreciation is provided to write off the cost of items of property, plant and equipment other than construction in progress over their estimated useful lives and after taking into account their estimated residual value, using the method. The principal annual rates used for this purpose are as follows:

Buildings	4.5%
Plant and machinery	9%
Furniture, fixtures and equipment	18%
Motor vehicles	18%

Construction in progress includes property, plant and equipment in the course of construction for production or for use by the Group. Construction in progress is carried at cost less any recognised impairment loss. Construction in progress is categorised as property, plant and equipment when completed and ready for use. Depreciation of these assets, on the same basis as other assets, commences when the assets are ready for use.

When an item of property, plant and equipment is transferred to investment property carried at fair value, if the carrying amount is decreased as a result of a revaluation at the date of transfer, any resulting decrease in the carrying amount of the property is recognised in profit or loss. If the carrying amount is increased, to the extent that the increase reverses a previous impairment loss for that property, the increase is recognised in profit or loss. The amount recognised in profit or loss does not exceed the amount needed to restore the carrying amount to the carrying amount that would have been determined (net of depreciation) had no impairment loss been recognised. Any remaining part of the increase is credited directly to equity (other property revaluation reserve). On subsequent disposal of the investment property, the revaluation surplus included in equity may be transferred to retained earnings. The transfer from revaluation surplus to retained earnings is not made through profit or loss.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in profit or loss in the period in which the item is derecognised.

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FINANCIAL INFORMATION

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined on weighted average basis.

Impairment losses

At the end of each reporting period, the Group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as income immediately.

Revenue recognition

Revenue is measured at the fair value of the considerations received or receivable and represents amounts receivable for goods sold in the normal course of business, net of discounts, value added tax and sales related taxes.

(i) Sales of goods

Revenue from the sales of goods is recognised when the goods are delivered and the title has passed.

(ii) Interest income

Interest income from a financial asset is accrued on time basis, by reference to the principal outstanding and at the applicable effective interest rate, which is the rate that exactly discounts the estimated future cash receipts through the expected life of the financial asset to the net carrying amount of that asset on initial recognition.

(iii) Rental income

Rental income from operating lease is recognised in profit or loss on a straight-line basis over the term of the relevant lease.

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FINANCIAL INFORMATION

(iv) Government grants

Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises as expenses the related costs for which the grants are intended to compensate. Government grants related to depreciable assets are recognised as deferred income in the statement of financial position and released to profit or loss over the useful lives of the related assets. Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognised in profit or loss in the period in which they become receivable.

DESCRIPTION OF SELECTED COMBINED STATEMENTS OF COMPREHENSIVE INCOME LINE ITEMS

Turnover

The turnover of the Group during the Track Record Period was mainly derived from the sale of RF coaxial cables series (including RF cables for mobile communications and leaky coaxial cables), new-type electronic components (including connectors, jumpers and antenna lightning arresters), and other related accessories (including flame-retardant flexible cable, couplers and combiners) in the PRC. The following tables show the breakdown of the turnover of the Group and quantities of products sold by the Group by business segments during the Track Record Period:

Set out below is the segment turnover of the Group during the Track Record Period:

Turnover

												months	ended 31 May	ended 31 May
	FY2008			FY2009				FY2010			2010			2011
		% of			% of				% of			% of			% of
		total			total				total			total			total
	RMB’000	turnover	RMB’000		turnover		RMB’000		turnover	RMB’000		turnover	RMB’000		turnover
											(unaudited)
*Segment*
RF coaxial cables series	[173,881]	[74.7]%	[620,983]		[71.8]%	[1,304,738]			[92.5]%	[457,899]		[91.7]%	[657,784]		[93.2]%
New-type electronic
components	[43,213]	[18.6]%	[169,615]		[19.6]%			[73,138]	[5.2]%		[28,058]	[5.6]%		[29,984]	[4.2]%
Others	[15,648]	[6.7]%		[74,411]	[8.6]%			[32,903]	[2.3]%		[13,636]	[2.7]%		[18,222]	[2.6]%

Total	[232,742]	100%	[865,009]		100%	[1,410,779]			100%	[499,593]		100%	[705,990]		100%

– 177 –

FINANCIAL INFORMATION

The following table shows the breakdown of the sales volume of the Group of its RF coaxial cables series and new-type electronic components during the Track Record Period:

				Five months ended	Five months ended
				31 May
	FY2008	FY2009	FY2010	2010	2011
				(unaudited)
Total units sold
RF coaxial cables series
(number of km)	[9,739]	[47,444]	[95,863]	[33,157]	[41,168]
New-type electronic
components (pieces)	[1,388,863]	[8,528,561]	[6,538,965]	[2,311,303]	[3,882,410]

The following table sets out the average selling price of the products of the Group sold during the Track Record Period:

				Five months ended	Five months ended
				31 May
	FY2008	FY2009	FY2010	2010	2011
				(unaudited)
Average unit selling
prices(1)
RF coaxial cables series
(RMB per km)	[17,854]	[13,089]	[13,610]	[13,810]	[15,978]
New-type electronic
components (RMB per
piece)	[31]	[20]	[11]	[12]	[8]

Note 1: Average unit selling price is calculated by dividing the turnover for the year/period by the total units sold for the year/period. [While this is the average unit selling price, the price per unit may vary depending on the specific type of RF coaxial cable or new-type electronic component sold.]

RF coaxial cables series

RF coaxial cables series are mainly used in the transmission of high-frequency signals between antenna and base station equipment for outdoor wireless signal coverage system and indoor wireless signal coverage system in buildings. In FY2008, FY2009, FY2010 and the five months ended 31 May 2011, sales of RF coaxial cables series contributed approximately [74.7]%, [71.8]%, [92.5]% and [93.2]%, respectively, to the total turnover of the Group, making it the largest turnover contributor during the Track Record Period.

Despite fluctuations in the average selling prices per km for RF coaxial cables series during the Track Record Period, the continuous increase in the turnover of the Group was primarily due to an increase in sales volume. The average selling price per km for the RF coaxial cables series decreased by approximately RMB[4,765] or approximately [26.7]% from

– 178 –

FINANCIAL INFORMATION

approximately RMB[17,854] in FY2008 to approximately RMB[13,089] in FY2009, and then increased by approximately RMB[521] or approximately [4.0]% from approximately RMB[13,089] in FY2009 to approximately RMB[13,610] in FY2010. The average selling price per km for the RF coaxial cables series further increased from approximately RMB13,610 in FY2010 to approximately RMB[15,978] for the five months ended 31 May 2011, representing an increase of approximately approximately RMB[2,368] or approximately [17.4]%. The fluctuations of the average selling price of the RF coaxial cables series of the Group during the Track Record Period were primarily attributable to the effect of fluctuations of the commodity price of copper. The framework agreements entered into by the Group with its major customers contain provisions to the effect that the selling price of its products shall be linked to the copper price, which can effectively be hedged against risks brought about by the fluctuation of copper price.

Sales volume of the Group increased during FY2008, FY2009 and FY2010 as a result of increased demand for the RF coaxial cables series of the Group, partly as a result of the issue of 3G licences to the top three telecommunications operators in PRC by the PRC government in January 2009. Sales volume of RF coaxial cables series grew by approximately [387.2]%, from [9,739] km in FY2008 to [47,444] km in FY2009, increased by approximately [102.1]% to [95,863] km in FY2010. Sales volume of the RF coaxial cables series [increased] by approximately [24.2]% from [33,157] km in the five months ended 31 May 2010 to [41,168] km in the [five months ended 31 May 2011].

New-type electronic components

RF coaxial connectors, the principal new-type electronic components, are often used to interface two units such as the antenna to a transmission line, a receiver or a transmitter. Turnover for new-type electronic components was approximately RMB[43.2] million, RMB[169.6] million, RMB[73.1] million and RMB[30.0] million in FY2008, FY2009, FY2010 and the five months ended 31 May 2011 respectively, accounting for approximately [18.6]%, [19.6]%, [5.2]% and [4.2]% of the total turnover of the Group respectively. Sales volume of new-type electronic components decreased in FY2010 mainly because the demand for such products decreased as a result of the increase in investment in the construction of outdoor 3G base stations (in which the consumption of these products is usually less than that for indoor infrastructure) by the three major PRC telecommunications operators. Average selling price per unit for new-type electronic components decreased by approximately RMB[11], or [35.5]%, from RMB[31] in FY2008 to RMB[20] in FY2009, decreased by approximately RMB[9], or approximately [45]%, from RMB[20] in FY2009 to RMB[11] in FY2010. Average selling price per unit of new-type electronic components further decreased to RMB[8] for the five months ended 31 May 2011. The Group lowered the selling price of certain new-type electronic components, being accessories to the RF coaxial cables of the Group, as one of the means to boost the sales of its RF coaxial cables.

– 179 –

FINANCIAL INFORMATION

Others

The Group also produced and sold other related accessories, including flame retardant flexible cables, couplers and combiners. In FY2008, FY2009, FY2010 and the five months ended 31 May 2011, sales of other related accessories were approximately RMB[15.6] million, RMB[74.4] million, RMB[32.9] million and RMB[18.2] million respectively, contributed approximately [6.7]%, [8.6]%, [2.3]% and [2.6]%, respectively, to the total turnover of the Group.

Cost of goods sold

Cost of goods sold as a percentage of the total turnover of the Group was approximately [82.0]%, [75.7]%, [79.5]% and [78.3]% in FY2008, FY2009, FY2010 and the five months ended 31 May 2011, respectively.

Cost of goods sold of the Group mainly consists of costs of materials consumed, direct labour costs, utilities and production costs.

The table below presents a breakdown of the total cost of goods sold of the Group during the Track Record Period:

												months	ended 31 May	ended 31 May
	FY2008			FY2009				FY2010			2010			2011
		% of			% of				% of			% of			% of
		total			total				total			total			total
		cost of			cost of				cost of			cost of			cost of
		goods			goods				goods			goods			goods
	RMB’000	sold	RMB’000		sold		RMB’000		sold	RMB’000		sold	RMB’000		sold
											(unaudited)
Cost of materials consumed	[178,855]	[93.7]%	[622,959]		[95.1]%	[1,084,415]			[96.7%]	[382,212]		[96.8%]	[531,524]		[96.2%]
Direct labour costs	[4,010]	[2.1]%		[9,025]	[1.4]%			[7,976]	[0.7%]		[1,926]	[0.5%]		[4,630]	[0.8%]
Utilities	[1,575]	[0.8]%		[4,753]	[0.7]%			[6,147]	[0.4%]		[1,945]	[0.5%]		[3,079]	[0.6%]
Other production costs	[6,380]	[3.4]%		[18,151]	[2.8]%			[22,680]	[2.2%]		[8,875]	[2.2%]		[13,294]	[2.4%]

Total cost of goods sold	[190,820]	100%	[654,888]		100%	[1,121,218]			100%	[394,958]		100%	[552,527]		100%

Cost of materials consumed

Raw materials used by the Group mainly consist of copper-based materials, PE and PVC. During the Track Record Period, the Group was able to obtain all requisite raw materials from its suppliers. Costs for raw materials, particularly copper-based materials, however, can be volatile and have fluctuated significantly in recent years. Prices of these raw materials may continue to fluctuate and the Group cannot assure that it can always pass on the increase in the cost of these raw materials to its customers, in which case its cost of goods sold may increase and its profit margins may decease.

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FINANCIAL INFORMATION

Direct labour costs

[Direct labour costs of the Group mainly consist of wages and benefits of the approximately [395] employees of Jiangsu Trigiant directly engaged in production as at [31 May 2011], despite some fluctuations in the number of employees during the year depending on production requirement from time to time.] The Group has experienced fluctuations in its direct labour costs during the Track Record Period. Its direct labour costs increased from approximately RMB[4.0] million in FY2008 to approximately RMB[9.0] million in FY2009, and then decreased to approximately RMB8.0 million in FY2010.

Direct labour costs [increased] from approximately RMB[1.9] million in the five months ended 31 May 2010 to approximately RMB[4.6] million in the five months ended 31 May 2011.

The decrease in its direct labour costs in FY2010 was principally due to an increase in production efficiency through continuous innovation in production technology, use of more automated and sophisticated production equipment and inspection instruments, optimization of production workflow and increased training of production employees in FY2010.

However, the labour costs of the Group may increase due to the stringent requirements of the new PRC Labour Contract Law and its implementation.

Utilities

Utilities costs of the Group primarily consist of water and electricity costs. The Group purchases electricity and water from local power grids and local water supplier respectively for its production. During the Track Record Period, there had been relatively stable supply of electricity at relatively stable prices.

Nevertheless, utilities costs jumped from approximately RMB[1.6] million to approximately RMB[4.8] million from FY2008 to FY2009, from approximately RMB[4.8] million to approximately RMB[6.1] million from FY2009 to FY2010, and from approximately RMB[1.9] million for the five months ended 31 May 2010 to approximately RMB[3.1] million for the five months ended 31 May 2011. This increase in utilities cost is mainly attributable to the increase in the sales volume as a direct result of the business expansion strategy of the Group, which aims at constantly increasing the production capacity of the Group.

Other production costs

Production costs of the Group mainly consist of depreciation of equipment used in the production process, maintenance of production lines and equipment, moulding of parts and components and other miscellaneous production-related costs.

– 181 –

FINANCIAL INFORMATION

Gross profit and gross profit margins

The table below sets forth the business segment gross profit and gross profit margin during the Track Record Period:

Five months ended 31 May FY2008 FY2009 FY2010 2010 2011 % of % of % of % of % of Gross total Gross total Gross total Gross total Gross total Gross profit gross Gross profit gross Gross profit gross Gross profit gross Gross profit gross profit margin profit profit margin profit profit margin profit profit margin profit profit margin profit RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (unaudited) RF coaxial cables series [24,759] [14.2]% [59.1]% [116,323] [18.7]% [55.4]% [259,467] [19.9]% [89.6]% [91,657] [20.0]% [87,6]% [147,363] [22.4]% [96.0]% New-type electronic components [14,084] [32.6]% [33.6]% [75,879] [44.7]% [36.1]% [24,446] [33.4]% [8.4]% [10,035] [35.8]% [9.6]% [5,669] [18.9]% [3.7]% Others [3,079] [19.7]% [7.3]% [17,919] [24.1]% [8.5]% [5,648] [17.2]% [2.0]% [2,943] [21.6]% [2.8]% [431] [2.4]% [0.3]% Total [41,922] [18.0]% 100.0% [210,121] [24.3]% 100.0% [289,561] [20.5]% [100]% [104,635] [20.9]% 100.0% [153,463] [21.7]% 100.0%

Gross profit margin of the RF coaxial cables series of the Group increased from [14.2]% in FY2008 to approximately [18.7]% in FY2009 and then further increased to approximately [19.9]% in FY2010, and also increased from approximately [20.0]% for the five months ended 31 May 2010 to approximately [22.4]% for the five months ended 31 May 2011. The framework agreements entered into by the Group with its major customers contain provisions to the effect that the selling price of its products shall be linked to the copper price, which can effectively be hedged against risks associated with the fluctuation of copper prices. In most circumstances, the Group only purchases copper-based materials after its customers have confirmed the quantity of products to be purchased from the Group, and the selling price of RF coaxial cables series of the Group is determined with reference to the prevailing market price of copper. Accordingly, even though copper-based materials are the major components of the RF coaxial cable series of the Group, gross profit margin of RF coaxial cables series did not fluctuate materially during the Track Record Period. On the contrary, the gross profit margin of RF coaxial cables series of the Group increased during the Track Record Period, primarily due to greater economies of scale resulting from increase in production volume.

Gross profit margin of the new-type electronic components and other related accessories of the Group fluctuated over the Track Record Period, mainly due to a change in sales mix within these product categories.

As a result of the above factors, the overall gross profit margin of the Group increased from approximately [18.0]% in FY2008 to approximately [24.3]% in FY2009 and then decreased to approximately [20.5]% in FY2010 (which was higher than that of FY2008). Gross profit margin of the Group [increased] from approximately [20.9]% in the five months ended 31 May 2010 to approximately [21.7]% in the five months ended 31 May 2011. Overall gross profit margin of the Group in FY2009 was approximately [24.3]%, which was relatively high as the gross profit margin of new-type electronic components for that year was approximately

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FINANCIAL INFORMATION

[44.7]% and the percentage of turnover of new-type electronic components accounted for approximately [19.6]% of the total turnover for that year resulting in significant increase in the overall gross profit margin from FY2008 to FY2009.

Other gains and losses

Other gains and losses mainly consist of interest income, net foreign exchange gain or loss and government grants.

Selling and distribution costs

Selling and distribution costs mainly consist of salary and welfare expenses for sales and marketing staff, transportation costs for delivery of products to customers, and other operating expenses, including travelling expenses, entertainment expenses, advertising and promotion expenses, and other miscellaneous expenses.

Administrative expenses

Administrative expenses mainly consist of salary and welfare expense for management and administrative personnel, office expense, entertainment expense, depreciation expense for office building and office equipment, other taxes and other administrative expenses.

Taxation

Taxation mainly consists of income tax charged on the PRC subsidiary of the Group and related deferred tax expenses. The Group was not subject to Hong Kong profits tax or any tax in Cayman Islands and the BVI during Track Record Period.

In accordance with the previous Foreign Enterprise Income Law (外商投資企業所得法), production-type foreign investment with an operation period of 10 years or more were exempt from corporation income tax for the first and the second years starting from the first profitable year from PRC tax perspective, and were subject to 50% of the applicable corporate income tax rated in the third through the fifth years.

According to the Notice of the State Council on the Implementation of Transitional Preferential CIT Policies issued on 26 December 2007, enterprises that were established before March 2007 and were entitled to the above mentioned tax holidays under the then effective tax law regulations, such tax holidays were grandfathered.

The Group did not generate taxable profits in 2007. Pursuant to the above law and notice, the Group was exempt from income tax for 2008 and 2009, and is subject to income tax at 12.5% from 2010 to 2012.

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FINANCIAL INFORMATION

RESULTS OF OPERATIONS

The following table sets out the statements of comprehensive income of Jiangsu Trigiant in FY2008 and FY2009 (immediately before the change in control of Jiangsu Trigiant on 29 December 2009) and the combined statements of comprehensive income of the Group in FY2010 (after the change in control of Jiangsu Trigiant) and the five months ended 31 May 2011.

	Jiangsu	Trigiant		The Group
				Five months ended
				31	May
	FY2008	FY2009	FY2010	2010		2011
	RMB’000	RMB’000	RMB’000	RMB’000		RMB’000
				(unaudited)
Turnover	232,742	865,009	1,410,779	499,593		705,990
Cost of goods sold	(190,820)	(654,888)	(1,121,218)	(394,958)		(552,527)
Gross profit	41,922	210,121	289,561	104,635		153,463
Other gains and losses	2,220	5,709	12,150	2,110		6,539
Selling and distribution costs	(7,302)	(60,849)	(24,299)	(8,098)		(11,529)
Administrative expenses	(19,405)	(43,510)	(58,478)	(20,844)		(31,648)
Finance costs	(2,163)	(26,217)	(39,448)	(15,886)		(17,087)
Profit before taxation	15,272	85,254	179,486	61,917		99,738
Taxation	–	–	(28,225)	(10,564)		(15,790)
Profit for the year/period	15,272	85,254	151,261	51,353		83,948
Other comprehensive income
Revaluation surplus on
properties upon transfer to
investment properties	–	–	830	830		–
Income tax relating to the
component of other
comprehensive income	–	–	(208)	(208)		–
Total comprehensive income for
the year/period	15,272	85,254	151,883	51,975		83,948

– 184 –

FINANCIAL INFORMATION

REVIEW OF HISTORICAL OPERATING RESULTS

Results of the Group for the five months ended 31 May 2011 compared to its unaudited results for the five months ended 31 May 2010

Turnover

The total turnover of the Group increased by approximately RMB[206.4] million, or approximately [41.3]%, from approximately RMB[499.6] million for the five months ended 31 May 2010 to approximately RMB[706.0] million for the five months ended 31 May 2011. Such increase was attributable to the increase in turnover from sales of RF coaxial cables series, new-type electronic components and other related accessories by approximately RMB[200.0] million, RMB[1.9] million and RMB[4.6] million respectively. Sales of RF coaxial cables series accounted for approximately [93.2]% and [91.7]% of the Group’s total turnover for the five months ended 31 May 2011 and 31 May 2010 respectively.

The increase in sales of RF coaxial cables series, new-type electronic components and other related accessories was primarily due to the increase in overall sales to the three major PRC telecommunications operators. Overall sales to the three major PRC telecommunications operators increased by approximately RMB[181.3] million from approximately RMB[482.6] million for the five months ended 31 May 2010 to approximately RMB[663.9] million for the five months ended 31 May 2011. In particular, demand of the RF coaxial cables series of the Group from China Mobile increased significantly as a result of increased investment in construction of outdoor 3G base stations by China Mobile during the five months ended 31 May 2011.

Cost of goods sold

Cost of goods sold increased by approximately RMB[157.5] million, or approximately [39.9]%, from approximately RMB[395.0] million for the five months ended 31 May 2010 to approximately RMB[552.5] million for the five months ended 31 May 2011. Cost of materials consumed accounted for over [96]% of the total cost of goods sold for both periods. The increase in cost of goods sold was primarily due to increase in cost of material consumed by approximately RMB[149.3] million, or approximately [39.1]%, for the five months ended 31 May 2011 comparing to the corresponding period in 2010. Such increase was in line with increase in the turnover of the Group for the five months ended 31 May 2011.

Gross profit and gross profit margin

Gross profit increased by approximately RMB[48.8] million, or approximately [46.7]%, from approximately RMB[104.6] million for the five months ended 31 May 2010 to approximately RMB[153.4] million for the five months ended 31 May 2011. Such increase was mainly attributable to the increase in sales of the RF coaxial cables series of the Group.

Overall gross profit margin increased by approximately [0.8]% from [20.9]% for the five months ended 31 May 2010 to approximately [21.7]% for the five months ended 31 May 2011.

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FINANCIAL INFORMATION

Such increase was primarily attributable to the increase in gross profit margin of the RF coaxial cables series of the Group resulting mainly from (i) further increase in economies of scale and (ii) continuous enhancement of production efficiency during the five months ended 31 May 2011.

Other gains or losses

Other gains or losses increased by approximately RMB[4.4] million, or approximately [209.9]%, from approximately RMB[2.1] million for the five months ended 31 May 2010 to approximately RMB[6.5] million for the five months ended 31 May 2011. Such increase was primarily due to the increase in foreign exchange gain on revaluation of amounts due to shareholders denominated in US Dollars by approximately RMB[3.7] million.

Selling and distribution costs

Selling and distribution costs increased by approximately RMB[3.4] million, or approximately [42.4]%, from approximately RMB[8.1] million for the five months ended 31 May 2010 to approximately RMB[11.5] million for the five months ended 31 May 2011. Such increase was mainly due to (i) the increase in transportation costs by approximately RMB[2.3] million in line with the increase in the turnover of the Group; and (ii) the increase in travelling expenses by approximately RMB[0.4] million for sales and marketing purposes.

Administrative expenses

Administrative expenses increased by approximately RMB[10.8] million, or approximately [51.8]%, from approximately RMB[20.8] million for the five months ended 31 May 2010 to approximately RMB[31.6] million for the five months ended 31 May 2011. Such increase was principally attributable to (i) the increase in salaries for management and administration personnel by approximately RMB[2.3] million resulted mainly from [salary increment and bonus paid for certain staff]; and (ii) [●] amounted to approximately RMB[5.6] million charged for the five months ended 31 May 2011.

Finance costs

Finance costs increased by approximately RMB[1.2] million, or approximately [7.6]%, from approximately RMB[15.9] million for the five months ended 31 May 2010 to approximately RMB[17.1] million for the five months ended 31 May 2011. Such increase was mainly due to the fact that approximately RMB[1.4] million was capitalised during the same period in 2010. No such interest was capitalised during the five months ended 31 May 2011 after construction of the relevant assets was completed.

Taxation

Taxation charged for both periods mainly represent EIT of Jiangsu Trigiant calculated at 12.5% on its taxable income in accordance with the relevant PRC laws and regulations. The taxation charge of the Group increased for the five months ended 31 May 2011 as compared to that for the five months ended 31 May 2010 mainly because taxable income of Jiangsu Trigiant increased.

– 186 –

FINANCIAL INFORMATION

Profit for the period

As a combined result of the foregoing, the profit after tax of the Group increased by approximately RMB[32.6] million, or approximately [63.5]%, from approximately RMB[51.3] million for the five months ended 31 May 2010 to approximately RMB[83.9] million for the five months ended 31 May 2011.

Results of the Group in FY2010 after the change in control in Jiangsu Trigiant compared to the results of Jiangsu Trigiant in FY2009

Turnover

The total turnover of the Group increased by approximately RMB[545.8] million, or approximately [63.1]%, from approximately RMB[865.0] million in FY2009 to approximately RMB[1,410.8] million in FY2010. The increase was mainly attributable to the increase in sales of RF coaxial cables series as a result of the increased purchase orders from three major PRC telecommunications operators, especially China Mobile and its provincial subsidiaries. All of them increased their respective investment in the construction of outdoor 3G base stations, which in turn led to an increase in their demand for RF coaxial cables.

Turnover from the sales of RF coaxial cables series increased by approximately RMB[683.7] million, or approximately [110.1]%, from approximately RMB[621.0] million in FY2009 to approximately RMB[1,304.7] in FY2010, contributing to approximately [92.5]% of the total turnover in FY2010. Sales to China Mobile increased by approximately [900.3]% from approximately RMB[29.4] million in FY2009 to approximately RMB[294.1] million in FY2010.

Cost of goods sold

Cost of goods increased by approximately RMB[466.3] million, or approximately [71.2]% from approximately RMB[654.9] million in FY2009 to approximately RMB[1,121.2] million in FY2010, primarily due to corresponding increase in sales.

Gross profit and gross profit margin

Gross profit of the Group increased by approximately RMB[79.5] million, or approximately [37.8]% from approximately RMB[210.1] million in FY2009 to approximately RMB[289.6] million in FY2010, which reflected the rapid increase in turnover.

Overall gross profit margin of the Group decreased by approximately [3.8]% from approximately [24.3]% in FY2009 to approximately [20.5]% in FY2010. [The decrease mainly reflected a decrease in the gross profit margin of new-type electronic components and other related accessories from approximately [44.7%] in FY2009 to approximately [33.4%] in FY2010 due to (i) decrease in the selling price per unit of new-type electronic components, being accessories to RF coaxial cables series; and (ii) decrease in the demand for the new-type

– 187 –

FINANCIAL INFORMATION

electronic components as a result of increased investment in the construction of outdoor 3G base stations by the three major PRC telecommunications operators. These led to a decrease in the fixed production cost on a proportional basis and their effects were partially offset by a slight increase in the gross profit margin of RF coaxial cables series due to (i) reduction in the consumption of copper-based materials, (ii) transfer of increased purchase cost of copper-based materials to its major customers, including China Unicom, and (iii) greater economies of scale.

Other gains or losses

Other gains or losses increased by approximately RMB[6.4] million, or approximately 112.8%, from approximately RMB[5.7] million in FY2009 to approximately RMB[12.1] million in FY2010. The increase was primarily due to the foreign exchange gain of approximately RMB[6.8] million resulting from the revaluation of amounts due to shareholders denominated in US Dollars.

Selling and distribution costs

Selling and distribution costs decreased dramatically by approximately by RMB[36.5] million or approximately [60.1]% from approximately RMB[60.8] million in FY2009 to approximately RMB[24.3] million in FY2010. This decrease was mainly due to a decrease in salaries for sales and marketing staff and advertising expense by approximately RMB[37.2] million, most of which the Group spent on exploring the PRC markets in 2009.

Administrative expenses

Administrative expenses increased by approximately RMB[15.0] million, or approximately [34.4]%, from approximately RMB[43.5] million in FY2009 to approximately RMB[58.5] million in FY2010. The increase was mainly due to an increase in entertainment expenses and [●].

Finance costs

Finance costs increased by approximately RMB[13.2] million, or approximately [50.5]%, from approximately RMB[26.2] million in FY2009 to approximately RMB[39.4] million in FY2010. The increase was mainly attributable to a significant increase in bank borrowings from approximately RMB[670.2] million at the end of FY2009 to approximately RMB[830.0] million at the end of FY2010, to fund the rapid business expansion and working capital of the Group.

Taxation

The income tax rate of the Group in FY2010 was 12.5%, which amounted to approximately RMB[28.2] million for the year. The Group was exempted from EIT for its first two profitable years of operations and is entitled to a 50% reduction in EIT for the following three financial years under the relevant PRC tax laws and regulations. The first profitable year for the Group commenced on 1 January 2008.

– 188 –

FINANCIAL INFORMATION

Profit for the period

As a result of the foregoing, the profit after tax of the Group increased by approximately RMB[66.0] million, or approximately [77.4]%, from approximately RMB[85.3] million in FY2009 to approximately RMB[151.3] million in FY2010.

Results of Jiangsu Trigiant in FY2009 compared to its results in FY2008

Turnover

Jiangsu Trigiant recorded a significant increase in turnover by approximately RMB[632.3] million, or approximately [271.7]%, from approximately RMB[232.7] million in FY2008 to approximately RMB[865.0] million in FY2009. The increase in turnover was mainly due to (i) the increase in sales of RF coaxial cables series, and new-type electronic components and other related accessories; (ii) the successful acquisition of new purchase orders from three major PRC telecommunications operators; and (iii) a full year operation in 2009 as compared to the half year’s operation in 2008 as Jiangsu Trigiant was established in 2007 and commenced official production in the second half of 2008.

Jiangsu Trigiant increased its RF coaxial cables series production capacities in 2009 to meet the increased demand for its products. Its sales volume for RF coaxial cables series increased by approximately [37,705] km from approximately [9,739] km in FY2008 to approximately [47,444] km in FY2009. The Group’s production volume also increased from approximately [12,000] km in FY2008 to approximately [55,000] km in FY2009, leading to an increase in sales volume.

As a consequence, turnover from the sale of RF coaxial cables series increased by approximately RMB[447.1] million, or approximately [257.1]%, from approximately RMB[173.9] million in FY2008 to approximately RMB[621.0] million in FY2009, contributing to approximately [71.8]% of the total turnover in FY2009.

Turnover from the sale of new-type electronic components increased by approximately RMB[126.4] million, or approximately [292.5]% from approximately RMB[43.2] million in FY2008 to approximately RMB[169.6] million in FY2009 and contributed to approximately [19.6]% of the total turnover in FY2009. Turnover from the sales of new-type electronic components increased mainly due to increase in sales volume even though the effect was partially offset by the decrease in average unit selling price.

Turnover from the sale of other accessories increased by approximately RMB[58.7] million, or approximately [375.5]% from approximately RMB[15.7] million in FY2008 to approximately RMB[74.4] million in FY2009 and contributed to approximately [8.6]% of the total turnover in FY2009.

Cost of goods sold

Cost of goods sold increased by approximately RMB[464.1] million, or approximately [243.2]% from approximately RMB[190.8] million in FY2008 to approximately RMB[654.9] million in FY2009, primarily due to corresponding increase in sales.

– 189 –

FINANCIAL INFORMATION

Gross profit and gross profit margin

Gross profit of Jiangsu Trigiant increased by approximately RMB[168.2] million, or approximately [401.2]%, from approximately RMB[41.9] million in FY2008 to approximately RMB[210.1] million in FY2009 due to an increase in turnover and gross profit margin.

Overall gross profit margin of Jiangsu Trigiant increased by approximately [6.3]% from approximately [18.0]% in FY2008 to approximately [24.3]% in FY2009 due mainly to cost savings from greater economies of scale resulting from the increase in production output, as well as the general decrease in purchase prices of copper-based materials.

Other gains and losses

Other gains and losses increased by approximately RMB[3.5] million, or approximately 157.2%, from approximately RMB[2.2] million in FY2008 to approximately RMB[5.7] million in FY2009. The increase was primarily due to an increase in interest income from fixed deposits of approximately RMB[3.8] million, partially offset by the net exchange loss of approximately RMB0.5 million recorded in FY2009 from a net exchange gain of approximately RMB0.4 million in FY2008.

Selling and distribution costs

Selling and distribution costs increased significantly by approximately RMB[53.5] million or approximately [733.3]% from approximately RMB[7.3] million in FY2008 to approximately RMB[60.8] million in FY2009. This increase was mainly due to an increase in [salaries for sales and marketing staff by approximately RMB[34.6] million, increase in advertising expense by approximately RMB[7.0] million and increase in transportation expense by approximately RMB[7.8] million. These expenses are a direct result of the effort to expand customer base and market share of the Group through aggressive marketing activities, execution of framework agreements with China Unicom, China Mobile, and China Telecom.

The increase in transportation costs of approximately RMB[7.8] million, or approximately [274.2]%, from approximately RMB[2.9] million in FY2008 to approximately RMB[10.7] million in FY2009 was in line with the increase in turnover.

Administrative expenses

Administrative expenses increased by approximately RMB[24.1] million, or approximately [124.2]%, from approximately RMB[19.4] million in FY2008 to approximately RMB[43.5] million in FY2009, primarily due to (i) an increased headcount in the administrative department to cope with the business expansion of the Group, (ii) depreciation of new buildings, (iii) entertainment expense, and (iv) banking charges.

Salaries expenses increased by approximately RMB[4.8] million, or approximately [311.1]%, from approximately RMB[1.6] million in FY2008 to approximately RMB[6.4] million in FY2009. Entertainment expenses increased by approximately RMB[12.8] million, or approximately [174.1]%, from approximately RMB[7.3] million in FY2008 to approximately RMB[20.1] million in FY2009.

– 190 –

FINANCIAL INFORMATION

Finance costs

Finance costs increased drastically by approximately RMB[24.1] million or approximately [1,112.1]% from approximately RMB[2.2] million in FY2008 to approximately RMB[26.2] million in FY2009. The increase was mainly attributable to (i) a significant increase in bank borrowings from approximately RMB[174.7] million at the end of FY2008 to approximately RMB[670.2] million at the end of FY2009 to fund the business expansion and working capital of the Group; and (ii) increased interest charges of approximately RMB[4.1] million incurred from the non-compliant trade financing arrangements entered into among the Group, Fullway Technology and certain commercial banks in the PRC.

Taxation

No tax was incurred in FY2008 and FY2009 as Jiangsu Trigiant was exempted from EIT for its first two profitable years of operations and is entitled to a 50% reduction in EIT for the following three financial years under the relevant PRC tax laws and regulations. The first profitable year of the Group commenced on 1 January 2008.

Profit for the year/period

As a result of the foregoing, the profit after tax of Jiangsu Trigiant increased by approximately RMB[70.0] million or approximately [458.2]% from approximately RMB[15.3] million in FY2008 to approximately RMB[85.3] million in FY2009 due mainly to the increase in profit before tax.

LIQUIDITY, FINANCIAL RESOURCES AND CAPITAL STRUCTURE

Overview

During the Track Record Period, the operation of the Group was generally financed through a combination of shareholder’s equity, internally generated cash flows and bank borrowings. The Directors believe that in long term, the operation of the Group will be funded by internally generated cash flow and, if necessary, additional equity financing and bank borrowing.

– 191 –

FINANCIAL INFORMATION

The following table summarises the cash flows in FY2008, FY2009, FY2010 and the five months ended 31 May 2011:

	Jiangsu	Trigiant	The	Group
				Five months
				ended 31 May
	FY2008	FY2009	FY2010	2011
	RMB’000	RMB’000	RMB’000	RMB’000
Net cash (used in)/generated from
operating activities	[(167,598)]	[(239,039)]	[175,854]	[7,997]
Net cash (used in)/generated from
investing activities	[(146,503)]	[(240,601)]	[17,559]	[(56,905)]
Net cash generated from financing
activities	[264,644]	[559,640]	[145,503]	[17,200]

(Decrease)/increase in cash and cash
equivalents	[(49,457)]	[80,000]	[338,916]	[(31,708)]
Cash and cash equivalents at the
beginning of the year/period	[58,857]	[9,400]	–	[338,916]
Cash and cash equivalents at the end
of the year/period	[9,400]	[89,400]	[338,916]	[307,208]

Operating activities

Net cash [generated] from operating activities in the five months ended 31 May 2011 amounted to approximately RMB[8.0] million, reflecting the profit before income tax of the Group of approximately RMB[99.7] million, [increase in approximately RMB[8.0] million in cash resulting from adjustments for non-cash items, a decrease of approximately RMB[96.7] million in cash resulting from changes in working capital, an increase of approximately RMB[15.3] million of non-operating items and income tax paid of approximately RMB[14.4] million]. During this period:

Non-cash adjustments mainly consisted of (i) depreciation of property, plant and equipment of approximately RMB[7.2] million; and (ii) operating lease amortization of land use rights of approximately RMB[0.8] million.
Changes in working capital consisted of (i) [an increase] in inventories of approximately RMB[8.5] million; (ii) [an increase] in trade and bills receivables, prepayments, deposits and other receivables of approximately RMB[121.3] million; and (iii) [an increase] in trade and other payables of approximately RMB[33.2] million.

– 192 –

FINANCIAL INFORMATION

Changes in non-operating items consisted of (i) bank deposit interest income of approximately RMB[1.6] million; (ii) interest expense on bank borrowings of approximately RMB[17.1] million; and (iii) government grants of approximately RMB[0.2] million.

Net cash generated from operating activities in FY2010 was approximately RMB[175.9] million, reflecting the Group’s profit before income tax of approximately RMB[179.5] million, increase of approximately RMB[16.3] million in cash resulting from adjustments for non-cash items, a decrease of approximately RMB[15.5] million in cash resulting from changes in working capital, an increase of approximately RMB[36.7] million of non-operating items and a payment of approximately RMB[16.3] million of PRC tax. During this period:

Non-cash adjustments mainly consisted of (i) depreciation of property, plant and equipment of approximately RMB[14.8] million; (ii) operating lease amortization of land use rights of approximately RMB[1.9] million; and (iii) gain on fair value changes on investment properties of approximately RMB[0.4] million.
Changes in working capital consisted of (i) a decrease in inventories of approximately RMB[5.3] million; (ii) an increase in trade and bills receivables, prepayments, deposits and other receivables of approximately RMB[107.7] million; and (iii) an increase in trade and other payables of approximately RMB[68.9] million.
Changes in non-operating items consisted of (i) bank deposit interest income of approximately RMB[2.4] million; (ii) interest expense on bank borrowings of approximately RMB[39.4] million; and (iii) government grants of approximately RMB[0.3] million.

Net cash used in operating activities in FY2009 was approximately RMB[239.0] million, reflecting the Group’s profit before income tax of approximately RMB[85.3] million, adjustments of approximately RMB[10.8] million for non-cash items, a decrease of approximately RMB[356.3] million in cash resulting from changes in working capital and an increase of approximately RMB[21.2] million of non-operating items. During this period:

Non-cash adjustments mainly consisted of (i) depreciation of property, plant and equipment of approximately RMB[10.0] million; (ii) operating lease amortization of land use rights of approximately RMB[0.8] million.
Changes in working capital consisted of (i) an increase in trade and bills receivables, prepayments, deposits and other receivables of approximately RMB[422.2] million; (ii) an increase in trade and bills payables of approximately RMB[90.7] million; and (iii) an increase in inventories of approximately RMB[24.8] million.
Changes in non-operating items consisted of (i) bank deposit interest income of approximately RMB[4.9] million; (ii) interest expense on bank borrowings of approximately RMB[26.2] million; and (iii) government grants of approximately RMB[0.1] million.

– 193 –

FINANCIAL INFORMATION

Net cash used in operating activities in FY2008 was approximately RMB[167.6] million, reflecting the Group’s profit before income tax of approximately RMB[15.3] million, adjustments of approximately RMB[3.4] million for non-cash items, a decrease of approximately RMB[187.3] million in cash resulting from changes in working capital and an increase of approximately RMB[1.0] million of non-operating items. During this period:

Non-cash adjustments mainly consisted of (i) depreciation of property, plant and equipment of approximately RMB[3.2] million; and (ii) operating lease amortization of land use rights of approximately RMB[0.2] million.
Changes in working capital consisted of (i) an increase in trade and bills receivables, prepayments, deposits and other receivables of approximately RMB[248.1] million; (ii) an increase in trade and bills payables of approximately RMB[92.1] million; and (iii) an increase in inventories of approximately RMB[31.3] million.
Changes in non-operating items consisted of (i) bank deposit interest income of approximately RMB[1.1] million; (ii) interest expense on bank borrowings of approximately RMB[2.2] million; and (iii) government grants of approximately RMB[0.1] million.

Investing activities

For the five months ended 31 May 2011, the Group had net cash used in investing activities of approximately RMB[56.9] million, which was incurred due to [(i) the purchase of property, plant and equipment of approximately RMB[0.4] million; (ii) new pledged deposits raised in the amount of approximately RMB[112.4] million; and (iii) payment for acquisition of land use rights of approximately RMB[8.0] million]. The effects of the foregoing were partially offset by cash inflows from (i) interest income of approximately RMB[2.5] million; and (ii) release of pledged bank deposits of approximately RMB[61.4] million.

In FY2010, the Group had net cash generated from investing activities of approximately RMB[17.6] million, which was primarily due to its [(i) purchase of property, plant and equipment of approximately RMB[36.0] million in connection with capacity expansions; (ii) acquisition of a subsidiary of approximately RMB[115.5] million; (iii) new pledged bank deposits raised in the amount of approximately RMB[207.1] million; and (iv) investments in Jiangsu Opto-electrical and Jiangsu Sensing of approximately RMB[20.0] million. The effects of the foregoing were partially offset by cash inflow from (i) repayment of advances to a former fellow subsidiary of approximately RMB[66.0] million; (ii) government grants of approximately RMB[3.1] million; (iii) interest income of approximately RMB[3.3] million; and (iv) release of pledged bank deposits of approximately RMB[323.8] million.

In FY2009, the Group had net cash used in investing activities of approximately RMB[240.6] million, which was primarily due to its (i) purchase of property, plant and equipment of approximately RMB[63.7] million in connection with capacity expansions; (ii) payment for land use rights of approximately RMB[20.0] million; (iii) advance to a fellow

– 194 –

FINANCIAL INFORMATION

subsidiary of approximately RMB[46.0] million and (iv) increase in pledged deposits with banks in the amount of approximately RMB[599.2] million primarily due to increase in bills payables. The effects of the foregoing were partially offset by cash inflow from (i) government grants of approximately RMB[0.1] million; (ii) repayment by a fellow subsidiary of approximately RMB[10.0] million; (iii) interest income of approximately RMB[4.1] million; and (iv) release of pledged band deposits of approximately RMB[474.1] million.

In FY2008, the Group had net cash used in investing activities of approximately RMB[146.5] million, which was primarily due to its (i) purchase of property, plant and equipment of approximately RMB[48.2] million in connection with capacity expansions; (ii) advance to a fellow subsidiary of approximately RMB[60.8] million; and (iii) increase in pledged deposits with banks in the amount of approximately RMB[86.1] million primarily due to increase in bills payables.] These cash outflows was partially offset by cash inflow from (i) government grants of approximately RMB[2.0] million; (ii) released of pledged bank deposits of approximately RMB[5.0] million; (iii) repayment from a fellow subsidiary of approximately RMB[40.8] million; and (iv) interest income of approximately RMB[0.8] million.

Financing activities

Net cash generated from financing activities for the five months ended 31 May 2011 was approximately RMB[17.2] million, primarily reflecting proceeds from (i) the borrowings of the Group in the amount of approximately RMB[447.5] million; and (ii) advances from Directors of approximately RMB[5.8] million. The cash inflow was partially offset by (i) repayment of bank borrowings in the amount of approximately RMB[402.1] million; (ii) payment of interest on bank borrowings of approximately RMB[16] million; and (iii) repayment to associates of approximately RMB[18] million.

Net cash generated from financing activities in FY2010 was approximately RMB[145.5] million, primarily reflecting proceeds from (i) the Group’s borrowings in the amount of approximately RMB[1,032.7] million; (ii) loan from shareholders of approximately RMB[204.9] million; (iii) bills payable to former fellow subsidiary of approximately RMB[270.0] million raised; (iv) advances from Directors of approximately RMB8.0 million and (v) advances from associates of approximately RMB[21.0] million. The cash inflow was partially offset by (i) repayment of bank borrowings in the amount of approximately RMB[872.9] million; (ii) repayment of bills payable to a former fellow subsidiary and a supplier of approximately RMB[434.0] million; (iii) repayment to advances by the Directors of approximately RMB[39.2] million; and (iv) payment of interest on bank borrowings of approximately RMB[42.0] million.

Net cash generated from financing activities in FY2009 was approximately RMB[559.6] million, primarily reflecting proceeds from (i) the Group’s borrowings in the amount of approximately RMB[829.3] million; (ii) [bills payable to fellow subsidiary] of approximately RMB[494.0] million raised; and (iii) advances from a Director of approximately RMB[7.0] million. The cash inflow was partially offset by (i) repayment of bank borrowings in the amount of approximately RMB[333.8] million; (ii) [repayment of bills payables to a fellow

– 195 –

FINANCIAL INFORMATION

subsidiary of approximately RMB[400.0] million]; (iii) payment of witholding tax of approximately RMB[3.4] million; and (iv) payment of interest on bank borrowings of approximately RMB[33.5] million.

Net cash generated from financing activities in FY2008 was approximately RMB[264.6] million, primarily reflecting proceeds from (i) the borrowings of the Group in the amount of approximately RMB[174.7] million; (ii) [bills payable to fellow subsidiary of approximately RMB[70.0] million raised; and (iii) advances from the Directors of approximately RMB[27.0] million. The cash inflow was partially offset by payment of interest on bank borrowings of approximately RMB[7.1] million.

ANALYSIS OF FINANCIAL POSITION

	Jiangsu	Trigiant	The Group	The Group
	At 31	At 28	At 31
	December	December	December	At 31 May
	2008	2009	2010	2011
	RMB’000	RMB’000	RMB’000	RMB’000
Non-current assets
Investment properties	–	–	[17,900]	[18,100]
Property, plant and equipment	[107,828]	[177,144]	[190,977]	[185,205]
Land use rights	[11,514]	[51,223]	[73,392]	[72,604]
Available-for-sales
investments	–	–	[20,000]	[20,000]

	[119,342]	[228,367]	[302,269]	[295,909]

Current assets
Inventories	[40,483]	[65,300]	[59,980]	[68,520]
Trade and other receivables	[250,526]	[673,497]	[780,308]	[900,759]
Advances to a fellow
subsidiary	30,000	66,000	–	[–]
Land use rights	[244]	[1,226]	[1,891]	[1,891]
Pledged bank deposits	[81,199]	[206,295]	[89,620]	[140,620]
Bank balances and cash	[9,400]	[89,400]	[338,916]	[307,208]

	[411,852]	[1,101,718]	[1,270,715]	[1,418,998]

– 196 –

FINANCIAL INFORMATION

	Jiangsu	Trigiant	The Group	The Group
	At 31	At 28	At 31
	December	December	December	At 31 May
	2008	2009	2010	2011
	RMB’000	RMB’000	RMB’000	RMB’000
Current liabilities
Trade and other payables	[101,997]	[209,010]	[297,414]	[306,742]
Amount due to a director	[27,000]	[34,000]	[2,797]	[8,556]
Amounts due to shareholders	–	–	[198,070]	[194,367]
Bills payables to a fellow
subsidiaries	[70,000]	[164,000]	–	[–]
Bank borrowings
– due within one year	[94,696]	[600,239]	[680,000]	[735,400]
Tax payables	–	–	[8,657]	[7,840]
	[293,693]	[1,007,249]	[1,186,938]	[1,252,905]

Net current assets	[118,159]	[94,469]	[83,777]	[166,093]

Total assets less current
liabilities	[237,501]	[322,836]	[386,046]	[462,002]

Non-current liabilities
Government grants	[1,900]	[1,895]	[2,770]	[2,585]
Payable for acquisition
of land use rights	–	[13,502]	[5,502]	[5,502]
Bank borrowings
– due after one year	[80,000]	[70,000]	[150,000]	[140,000]
Deferred taxation	–	–	[12,937]	[15,130]

	[81,900]	[85,397]	[171,209]	[163,217]

Net assets	[155,601]	[237,439]	[214,837]	[298,785]


Capital and reserves
Paid-in capital/share capital	[148,339]	[216,670]	[7]	[7]
Reserves	[7,262]	[20,769]	[214,830]	[298,778]

Total equity	[155,601]	[237,439]	[214,837]	[298,785]

– 197 –

FINANCIAL INFORMATION

The Group had net assets of approximately RMB[155.6] million as at 31 December 2008, approximately RMB[237.4] million as at 28 December 2009, approximately RMB[214.8] million as at 31 December 2010 and approximately RMB[298.8] million as at 31 May 2011.

Current ratio

As at 31 December 2008, 28 December 2009, 31 December 2010 and 31 May 2011, the Group’s current ratio was approximately 1.4, 1.1, 1.1 and [1.1], respectively, which is considered to be healthy. Current ratio is calculated by dividing the current assets of the Group over its current liabilities.

As at 31 July 2011, current assets consisted of inventories, trade and other receivables, land use rights, pledged bank deposits and bank balances and cash and current liabilities consisted of trade and other payables, amount due to a Director, amounts due to shareholders, bank borrowings due within one year and tax payable, and net current assets amounted to approximately RMB213.4 million. The net current assets increased by approximately RMB47.3 million from approximately RMB[166.1] million as at 31 May 2011 to approximately RMB[213.4] million as at 31 July 2011.

Investment properties

The investment properties of the Group were situated in the PRC under medium-term leases. The fair value of the investment properties of the Group as at 31 December 2010 was approximately RMB17.9 million, which was determined by reference to recently completed transaction prices for similar properties in the market or rental income using applicable market yields for similar locations and types of properties.

Property, plant and equipment

The carrying value of property, plant and equipment, mainly comprising buildings, machinery and equipment, office equipment and fixtures and motor vehicles, amounted to approximately RMB[107.8] million, RMB[177.1] million, RMB[191.0] million and RMB[185.2] million as at 31 December 2008, 28 December 2009, 31 December 2010 and 31 May 2011, respectively. The increase in the carrying value of plant, property and equipment during the Track Record Period mainly resulted from capital expenditure incurred in plant and machinery and construction in progress to cope with business expansion of the Group.

– 198 –

FINANCIAL INFORMATION

Inventories and inventory turnover days

The following table sets out the summary of the balance of the inventories of the Group as of the dates indicated:

	At 31	At 28	At 31
	December	December	December	At 31 May
	2008	2009	2010		2011
	RMB’000	RMB’000	RMB’000		RMB’000
Raw materials	[10,148]	[18,224]	[14,526]		[29,829]
Work in progress	[6,025]	[8,609]	[7,661]		[12,281]
Finished goods	[24,310]	[38,467]	[37,793]		[26,410]
	40,483	65,300	59,980		[68,520]

Inventory of raw materials of the Group increased from approximately RMB[10.1] million as at 31 December 2008 to approximately RMB[18.2] million as at 28 December 2009 and then decreased to approximately RMB[14.5] million as at 31 December 2010 and [increased] to approximately RMB[29.8] million as at 31 May 2011.

As at 31 December 2008, 28 December 2009, 31 December 2010 and 31 May 2011, the Group’s inventory of work in progress were approximately RMB[6.0] million, RMB[8.6] million, RMB[7.7] million and RMB[12.3] million, respectively.

Finished goods of the Group primarily consist of products awaiting delivery to customers. As at 31 December 2008, 28 December 2009, 31 December 2010 and 31 May 2011, the inventory of finished goods of the Group were approximately RMB[24.3] million, RMB[38.5] million, RMB[37.8] million and RMB[26.4] million, respectively.

The increase in raw materials, work in progress and finished goods in FY2009 as compared to FY2008 was attributable to (i) the Group’s proactive and strategic purchase and stockpiling of copper-based materials given its expectation of the increase in the purchase price of such raw materials in the near future; and (ii) the increase in the overall sales volume of the Group’s products. In respect of the decrease in raw materials, work in progress and finished goods in FY2010 (compared to FY2009), the main reason was attributable to the decreased turnover days of inventory as a result of efficient management. Comparing with the amounts as at 31 December 2010, raw materials and work in progress as at 31 May 2011 increased mainly due to increased demand for RF coaxial cables series from customers’ order on hand.

Up to [31 July] 2011, subsequent usage of inventories as at 31 May 2011 amounted to approximately RMB[55.9] million.

– 199 –

FINANCIAL INFORMATION

The following table sets out the inventory turnover days for the Track Record Period:

						Five months
						ended 31
			FY2008	FY2009	FY2010	May 2011
Inventory	turnover	days
(note)			[47]	[29]	[20]	[18]

Note: The calculation of inventory turnover days is based on the average inventory balances divided by cost of goods sold and multiplied by 365 days for the year/151 days for the five months ended 31 May 2011. Average inventory balances are equal to inventory balance at the beginning of the year plus inventory balances at the end of the year/period and divided by two.

The decrease in inventory turnover days from [47] days in FY2008 to [29] days in FY2009, to [20] days in FY2010 and then to [18] days in the five months ended 31 May 2011, respectively was mainly attributable to management’s ability to effectiveness in managing inventories in order to reduce obsolete inventories.

Trade and bills receivables and their turnover days

The Group normally offers its customers a credit period ranging from 180 to 360 days during the Track Record Period. Sales of the Group were principally derived from the three major PRC telecommunications operators, namely China Unicom, China Mobile and China Telecom and their respective provincial branches or subsidiaries.

The table below set out the aging analysis of trade and bills receivables, based on the invoice date, as at the dates indicated:

	At 31	At 28	At 31
	December	December	December	At 31 May
	2008	2009	2010	2011
	RMB’000	RMB’000	RMB’000	RMB’000
Up to 90 days	[241,839]	[466,850]	[626,522]	[498,434]
91 to 180 days	[291]	[147,775]	[129,595]	[355,293]
181 to 365 days	[1,510]	[53,507]	[19,445]	[40,575]
	243,640	668,132	775,562	[894,302]

Trade and bills receivables of the Group were approximately RMB[243.6] million, RMB[668.1] million, RMB[775.6] million and RMB[894.3] million as at 31 December 2008, 28 December 2009, 31 December 2010 and 31 May 2011 respectively. This increase was in line with the increased total turnover.

– 200 –

FINANCIAL INFORMATION

The Group assesses the creditworthiness of its customers by reviewing the recoverable amounts of trade receivables regularly to ensure that follow-up action is taken timely and assigned a dedicated team to monitor the credit risk that takes into consideration the aging status and estimate the likelihood of collection. Currently, the Group does not have policy of general provision for doubtful debts. Specific provision for doubtful debts is made to the extent that the debts are considered to be doubtful on case-by-case basis, if any.

The following is an aging analysis of trade receivables which are past due but not impaired:

				At 31	At 28	At 31
				December	December	December	At 31 May
				2008	2009	2010	2011
				RMB’000	RMB’000	RMB’000	RMB’000
181	to	365	days	[1,510]	[53,507]	[19,346]	[39,919]

As at 31 December 2008, 28 December 2009, 31 December 2010 and 31 May 2011, the Group recorded trade receivables of approximately RMB1.5 million, RMB53.5 million, RMB19.3 million and RMB39.9 million, respectively, that were past due but not impaired. The Directors are of the opinion that no provision on these amounts was necessary as the full amount as at 31 December 2008 and 28 December 2009 were subsequently fully settled and that up to [31 July 2011], approximately [98]% and [52]% of the amounts that were past due but not impaired as at 31 December 2010 and 31 May 2011, respectively, were subsequently settled. Trade receivables that exceeded normal credit terms but were not impaired represented approximately 0.6%, 8.0%, [2.5]% and [4.5]% of the total trade receivables as at 31 December 2008, 28 December 2009, 31 December 2010 and 31 May 2011 respectively. These overdue amounts as at each balance date within the Track Record Period were under the acceptable level as per past experience. As at 31 December 2010 and 31 May 2011, approximately RMB[18.9] million and RMB[39.2] million, respectively, of the trade receivables which were past due but not impaired were due from telecommunications operators in the PRC and the remaining of approximately RMB[0.4] million and RMB[0.7] million, respectively, were due from others including telecommunications equipment providers.

Up to [31 July] 2011, subsequent settlements of trade and bills receivables as at 31 December 2010 and 31 May 2011 amounted to approximately RMB[647.1] million and RMB[127.5] million respectively.

The Directors have confirmed and are of the opinion that no provision for doubtful debts was necessary on the bases that (i) during the Track Record Period, over 90% of the turnover of the Group was derived from sales to the three major PRC telecommunications operators, namely China Unicom, China Mobile and China Telecom, all of which are large and reputable listed companies with sound financial positions and accordingly, there was no recovery problem on the receivables from these major customers which accounted for approximately [100.0]%, [90.0]%, [93.4]% and [95.5]% of the total trade and bills receivables as at 31

– 201 –

FINANCIAL INFORMATION

December 2008, 28 December 2009, 31 December 2010 and 31 May 2011 respectively; (ii) the Group has no historical bad debt record since its establishment; and (iii) the Group had received regular settlements from these three major customers during the Track Record Period.

The table below sets out the trade and bills receivables turnover days of the Group for the Track Record Period:

				Five months
				ended 31
	FY2008	FY2009	FY2010	May 2011
Trade and bills receivables
turnover days (note)	[191]	[192]	[187]	[179]

Note: Trade and bills receivables turnover days is equal to the average trade and bills receivables divided by turnover and multiplied by 365 days for the year/151 days for the five months ended 31 May 2011. Average trade and bills receivables are equal to trade and bills receivables at the beginning of the year plus trade and bills receivables at the end of the year/period and divided by two.

Trade and bills receivables turnover days remained relatively constant in FY2008 and FY2009, and decreased to [187] days in FY2010 and [179] days in the five months ended 31 May 2011. The decrease in turnover days of trade and bills receivables was mainly due to the increased efforts in pursuing payment of balances from customers.

Trade and bills payables and their turnover days

The Group normally receives credit terms ranging from [30] to [90] days from its suppliers. The maturity date of the bills payables of the Group is normally 180 days from the date of issue.

The table below sets out the aging analysis of trade and bills payable, [based on the date of receipt of goods], as at the dates indicated:

				At 31	At 28	At 31
				December	December	December	At 31 May
				2008	2009	2010	2011
				RMB’000	RMB’000	RMB’000	RMB’000
Up	to	90	days	[79,669]	[108,414]	[104,218]	[169,069]
91	to	180	days	[601]	[21,095]	[130,042]	[100,410]
				80,270	129,509	234,260	[269,479]

– 202 –

FINANCIAL INFORMATION

Trade and bills payable balance of the Group increased from approximately RMB[80.3] million as at 31 December 2008, to approximately RMB[129.5] million as at 28 December 2009, to approximately RMB[234.3] million as at 31 December 2010 and to approximately RMB[269.5] million as at 31 May 2011. This change was mainly due to increased purchases of raw materials in line with increased sales. As at 31 December 2010, trade and bills payables aged from 91 to 180 days increased significantly mainly because more bills payables were not yet due for payment.

Up to [31 July] 2011, subsequent settlement of trade and bills payables as at 31 May 2011 amounted to approximately RMB[155.1] million.

The following table sets out the trade and bills payables turnover days for the Track Record Period:

				Five months
				ended 31
	FY2008	FY2009	FY2010	May 2011
Trade and bills payables
turnover days (note)	[79]	[58]	[59]	[69]

Note: Trade and bills payables turnover days is equal to the average trade and bills payables divided by cost of goods sold and multiplied by 365 days for the year/151 days for the five months ended 31 May 2011. Average trade and bills payables are equal to trade and bills payables at the beginning of the year plus trade and bills payables at the end of the year/period and divided by two.

Trade and bills payables turnover days decreased from [79] days in FY2008 to [58] days in FY2009 and then remained relatively constant in FY2010. In FY2009 and FY2010, the Group increased its bank borrowings to finance its working capital requirement for business expansion. Accordingly, the Group had more financial resources to pay its suppliers on time in order to ensure smooth delivery of goods in competitive terms. As a result, the trade and bills payables turnover days remained relatively constant in FY2009 and FY2010, which were within the normal credit period granted by suppliers. Trade and bills payables turnover days increased from 59 days in FY2010 to 69 days for the five months ended 31 May 2011 mainly due to increased purchases during the period to meet customers’ orders.

Other payables

As at 28 December 2009, bonus and promotional expenses payable increased due to the accrual of a special bonus of approximately RMB33 million payable to certain sales and marketing staff of the Group and advertising expenses of approximately RMB7 million payable to an independent advertising company. All of these expenses were subsequently settled in FY2010.

– 203 –

FINANCIAL INFORMATION

Amounts due to shareholders

The then shareholders of Trigiant BVI provided a loan in aggregate of US$30,000,000 million to Trigiant BVI to finance the acquisition of Jiangsu Trigiant in December 2009 by Trigiant Hong Kong, a wholly-owned subsidiary of Trigiant BVI. [The shareholders agreed to waive the loan upon [●]].

CAPITAL EXPENDITURES

The following table sets out the historical capital expenditure during the Track Record Period:

				Five months
				ended 31
	FY2008	FY2009	FY2010	May 2011
	RMB’000	RMB’000	RMB’000	RMB’000
Land use rights	[–]	[41,502]	[–]	[–]
Property, plant and
equipment (other than
construction in progress)	[32,953]	[30,154]	[5,413]	[1,407]
Construction in progress	[47,817]	[49,158]	[26,631]	[4]

Capital expenditures of the Group are incurred primarily in connection with purchases of property, plant and equipment, construction in progress and land use rights. For each of FY2008, FY2009, FY2010, and the five months ended 31 May 2011, the capital expenditures of the Group were approximately RMB[80.8] million, RMB[120.8] million, RMB[32.0] million and RMB[1.4] million, respectively.

The Group budgeted approximately RMB[6] million for the year ending 31 December 2011 on capital expenditure. The Group expect to fund its future capital expenditure needs with cash flows generated from internal resources, including cash generated from operations and [●] of [●], and borrowings from banks, if necessary.

INDEBTEDNESS

[As at the close of business on [31 July 2011], being the latest practicable date for determining the indebtedness of the Group, the Group had (i) outstanding bank borrowings of approximately RMB[925.4] million (of which approximately RMB[130.0] million was secured by certain buildings, machineries and land use right owned by the Group); (ii) payable for acquisition of land use rights of approximately RMB[13.5] million; (iii) amounts due to shareholders of approximately RMB[194.4] million; and (iv) amount due to a Director of approximately RMB[8.6] million. At [31 July] 2011, the Group also had unutilised banking facilities of approximately RMB[923.6] million. Up to the latest practicable date for determining the indebtedness of the Group, [the Group had no intention to raise material external debt financing for specific purpose] other than general trade financing for funding its operation.

– 204 –

FINANCIAL INFORMATION

Banking facilities of the Group in the amount of approximately RMB[1,909] million are also secured by personal guarantees given by certain Directors of the Company and independent third parties to the Group. The Company has obtained approval-in-principle from the relevant banks that these guarantees given by the Directors and independent third parties will be released and will be replaced by guarantees from the Company after [●]. There was no material covenant on the bank borrowings of the Group as at the Latest Practicable Date.

Save as aforesaid or as otherwise disclosed herein, and apart from intra-group liabilities, as at the Latest Practicable Date, the Group did not have any outstanding loan capital issued and outstanding or agreed to be issued, bank overdrafts, loans or other similar indebtedness, liabilities under acceptances or acceptable credits, debentures, mortgages, charges, hire purchases commitments, guarantees or other material contingent liabilities.]

Bank borrowings and gearing ratio

The following table sets forth the short-term banks loans of the Group at the respective balance sheet dates during the Track Record Period:

	At 31	At 28	At 31
	December	December	December	At 31 May
	2008	2009	2010	2011
	RMB’000	RMB’000	RMB’000	RMB’000
The bank borrowings are repayable
as follows:
Within one year	94,696	600,239	680,000	[735,400]
More than two years, but not more than
five years	80,000	70,000	150,000	[140,000]
	174,696	670,239	830,000	[875,000]
Less: Amounts due within one year
shown under current
liabilities	(94,696)	(600,239)	(680,000)	[(735,400)]
	80,000	70,000	150,000	[140,000]


The bank borrowings comprise:
Variable rate borrowings	89,696	355,000	325,000	[425,000]
Fixed rate borrowings	85,000	315,329	505,000	[450,400]
	174,696	670,329	830,000	[875,400]

– 205 –

FINANCIAL INFORMATION

The bank loans comprised fixed rate borrowings and variable rate borrowings. At 31 December 2008, 28 December 2009, 31 December 2010 and 31 May 2011, the fixed rate bank borrowings carried interest ranging from approximately 6.66% to 7.77%, 4.37% to 7.77%, [4.86%] to [5.84%] and [4.8]% to [6.1]% per annum, respectively.

At 31 December 2008, 28 December 2009, 31 December 2010 and 31 May 2011, the variable-rate bank borrowings which carried interests ranging from 90% of PBOC rate to 110% of PBOC rate per annum. Most of which were denominated in Renminbi.

Short-term bank loans increased from approximately RMB94.7 million as at 31 December 2008 to approximately RMB600.2 million as at 28 December 2009, to approximately RMB680.0 million as at 31 December 2010 and approximately RMB[735.4] million as at 31 May 2011, primarily due to the increased working capital requirement of the Group in connection with the fast business expansion.

Long-term bank borrowings increased from approximately RMB80 million at 31 December 2008 to approximately RMB140 million at 31 May 2011 mainly for the purpose of financing the capital expenditure incurred in relation to the construction of production plant and facilities of Jiangsu Trigiant during the Track Record Period.

As a result of the increase in both short-term and long-term bank borrowings from 2008 to 2010 for the above reasons, the gearing ratio of the Group increased from 54.0% as at 31 December 2008 to approximately 157.7% as at 28 December 2009, approximately [186.9]% as at 31 December 2010 and then decreased to approximately [143.1]% as at 31 May 2011. Gearing ratio is calculated by dividing total bank borrowings net of pledged bank deposits and bank balances and cash over total equity.

WORKING CAPITAL

[Taking into account the financial resources available to the Group including internally generated funds, the available banking facilities and the estimated [●] under [●], the Directors are of the opinion that the Group has sufficient working capital for its present requirements and for the next 12 months from the date of this document.]

– 206 –

FINANCIAL INFORMATION

CONTRACTUAL AND CAPITAL COMMITMENTS

The Group had commitments for future minimum lease payables under non-cancellable operating leases falling due as follows:

	At 31	At 28	At 31
	December	December	December	At 31 May
	2008	2009	2010	2011
	RMB’000	RMB’000	RMB’000	RMB’000
Within one year	[471]	[188]	[160]	[349]
In the second to fifth years
inclusive	[129]	[–]	[–]	[–]

As at 31 December 2008, 28 December 2009, 31 December 2010 and 31 May 2011, the Group had the following capital commitments which are not provided for in the Group’s combined financial statements:

	At 31	At 28	At 31
	December	December	December	At 31 May
	2008	2009	2010	2011
	RMB’000	RMB’000	RMB’000	RMB’000
Capital expenditure
contracted for
but not provided in the
Financial Information in
respect of the acquisition
of property, plant and
equipment	[20,834]	[8,468]	[4,160]	[208]

PROPERTY INTERESTS AND PROPERTY VALUATION

Savills, an independent property valuer has valued the property interests of the Group, which amounted to approximately RMB[204.6] million as at 31 [July 2011]. Details concerning the property interests of the Group are set out in Appendix III to this document. A summary of values and valuation certificates issued by the Independent Valuer are included in Appendix III to this document.

MARKET RISKS

The Group is, in the normal course of business, exposed to market risks primarily relating to credit, efficiency reserve of cash, stability of commodity prices and inflation.

– 207 –

FINANCIAL INFORMATION

Interest rate risk

The Group is exposed to cash flow interest risk through the impact of rate changes on interest bearing financial assets and liabilities, mainly interest bearing pledged bank deposits, bank balances and bank borrowings at variable interest rates. Bank borrowings at fixed interest rates exposed the Group to fair value interest rate risk. It currently does not have an interest rate hedging policy. However, the management will consider hedging significant interest rate risk should the need arise. The flow interest rate risk of the Group is mainly concentrated on the fluctuation of the interest rates offered by the PBOC from its RMB denominated borrowings.

The sensitivity analysis below has been determined based on the exposure to interest rates for interest bearing bank pledged deposits, bank balances and variable rate bank borrowings at the end of each reporting period and assumed that the amount of assets and liabilities outstanding at the end of each reporting period was outstanding for the whole year/period.

				Five months
				ended 31
	FY2008	FY2009	FY2010	May 2011
	RMB’000	RMB’000	RMB’000	RMB’000
Increase in profit for the
[year/period]	134	555	453	[241]

Foreign currency risk

The Group has certain exposure to foreign currency risk as most of its business transactions are principally denominated in RMB, US Dollar and Euro. In FY2008, FY2009, FY2010 and the five months ended 31 May 2011, approximately 5.89%, 0.56%, [0.7]% and [2.8]%, respectively, of the Group’s sales were denominated in currencies other than the functional currency of the Group.

– 208 –

FINANCIAL INFORMATION

The carrying amounts of the foreign currency denominated monetary assets and liabilities of the Group at the end of each reporting period are as follows:

	At 31 December 2008	At 31 December 2008	At 28 December 2009	At 28 December 2009	At 31 December 2010	At 31 December 2010	At 31 May 2011	At 31 May 2011
	Assets	Liabilities	Assets	Liabilities	Assets	Liabilities	Assets	Liabilities
	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
US Dollars	[10,311]	[9,696]	[1,716]	[–]	[6,867]	198,324	[3,049]	[194,367]
Euro	[16,375]	[–]	[884]	[–]	[–]	[–]	[–]	[–]
Hong Kong Dollars	[–]	[–]	[–]	[–]	[618]	2,797	[2,093]	[8,662]

The Group is mainly exposed to currency risk of the US Dollar, Euro and Hong Kong Dollar. The following table details the Group’s sensitivity to a 5% increase and decrease in the RMB against the relevant foreign currencies. The Group currently does not have any foreign currencies hedging policy and will consider hedging its foreign currency exposure should the need arise. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the end of each reporting period for a 5% change in foreign currency rates. The sensitivity analysis includes bank balances, trade and other receivables, amount(s) due to directors and shareholders and bank borrowings. If the RMB strengthens 5% against the relevant currencies there will be an increase (decrease) on post tax profit for the [year/period] is as follows:

				Five months
				ended 31
	FY2008	FY2009	FY2010	May 2011
	RMB’000	RMB’000	RMB’000	RMB’000
US Dollars	[(31)]	[(86)]	7,264	[7,174]
Euro	[(819)]	[(44)]	[–]	[–]
Hong Kong Dollars	[–]	[–]	82	[246]

There would be an equal and opposite impact on the result for the period if the RMB weakens 5%.

Credit risk

The maximum exposure to credit risk faced by the Group in the event of the counterparties’ failure to perform their obligations at the end of each reporting period in relation to each class of recognised financial assets is the carrying amount of those assets as stated in the statements of financial position.

The Group has concentration of credit risk in relation to trade receivables from top three customers amounting to approximately RMB233.9 million, RMB603.4 million, RMB724.4 million and RMB[854.5] million, representing approximately 100%, 90%, 93.4% and [95.5]% of the total trade receivables at 31 December 2008, 28 December 2009 and 31 December 2010 and 31 May 2011, respectively. The largest trade receivable from a customer by itself

– 209 –

FINANCIAL INFORMATION

accounted for approximately 96.0%, 76.0%, 61.8% and [47.3]% of the total trade receivables at 31 December 2008, 28 December 2009 and 31 December 2010 and 31 May 2011, respectively. [In order to minimise the credit risk, the management has reviewed the recoverable amounts of trade receivables regularly to ensure that follow-up action is taken timely and assigned a dedicated team to monitor the credit risk that takes into consideration the ageing status and estimate the likelihood of collection. In this regard, the Directors consider that the credit risk on trade receivables is significantly reduced.]

The Group also has concentration of credit risk in relation to advance to a former fellow subsidiary amounting to approximately RMB12.7 million and RMB42.2 million at 31 December 2008 and 28 December 2009, respectively. The directors considered that the credit risk relating to advance to a fellow subsidiary is not significant since the amounts were subsequently repaid in 2010.

The credit risk on bank deposits or bills receivables faced by the Group is limited and there is no significant concentration of credit risk because all bank deposits or bills are deposited in or contracted with several state-owned banks with good reputation and with high credit ratings assigned by international credit-rating agencies.

Liquidity risk

In the management of the liquidity risk, Jiangsu Trigiant monitors and maintains a level of cash and cash equivalents deemed adequate by the management to finance its operations and mitigate the effects of fluctuations in cash flows.

Commodity risk

The Group is exposed to fluctuations in the prices of commodities used as raw materials in the manufacturing process, primarily consisting of copper. While the Group may be able to partially offset these fluctuations with a flexible pricing policy, the Group bears the risks of fluctuations in the costs of these materials. Accordingly, rising prices could adversely affect the cost of goods sold of the Group in the form of higher raw materials prices. There can be no assurance that prices of raw materials will not rise drastically and that such costs can be passed onto customers of the Group.

During the Track Record Period, the Group did not engage in any hedging transactions to protect itself against fluctuations in raw material prices. When evaluating its hedging needs, the Group considers the prevailing economic conditions, its then commodities risk in relation to copper and the historical trend of fluctuation of the copper price.

Inflation

China has not experienced significant inflation or deflation in recent years. Recent inflation and deflation have not materially affected the business of the Group. The Group cannot ensure that the inflation rate in the PRC will increase or decrease in the future. The Group cannot predict the impact a sustained increase in inflation will have on its business, financial condition, results of operations or prospects.

– 210 –

FINANCIAL INFORMATION

CONTINGENT LIABILITIES

The Group has no material contingent liabilities as at 31 May 2011. The Group is not involved in any current material legal proceedings, nor is the Group aware of an pending or potential material legal proceedings involving the Group. If the Group was involved in such material legal proceedings, it would record any loss contingencies when, based on information then available, it is probably that a loss has been incurred and the amount of the loss can be reasonably estimated.

OFF-BALANCE SHEET ARRANGEMENTS

As of the Latest Practicable Date, the Group had not entered into any material off-balance sheet transactions.

DIVIDEND POLICY

No dividend was declared by the Company or Jiangsu Trigiant during the Track Record Period. The Directors are of the view that the payment and the amount of any future dividends will depend on the results of the Group’s operations, cash flow, financial condition, statutory and regulatory restrictions on the payment of dividends, future prospects and all other factors the Board may deem relevant. Holders of the Shares will be entitled to receive such dividends on a pro rata basis according to the amounts paid up or credited as paid up on the Shares. The declaration, payment and amount of any future dividends will be subject to the discretion of the Directors.

[The Directors have no intention to distribute any dividend before [●].] Subject to the above factors, the Directors plan to distribute regular dividends after [●]. The Directors intend to distribute approximately [20]% of the profits attributable to owners of the Company of a year as dividends. Such intention does not amount to any guarantee or representation or indication that the Company must or will declare and pay dividend in such manner or declare and pay any dividend at all.

RELATED PARTY TRANSACTIONS

The Group purchased raw materials from Fullway Technology, a former fellow subsidiary, amounting to approximately RMB[48.6] million and RMB[246.5] million for [FY2008 and FY2009], respectively.

On 29 December 2009, the Group has disposed of its entire interest in Fullway Technology and Fullway Technology has ceased to be a fellow subsidiary of the Group. The Group had not made any purchase from Fullway Technology from [February 2010] and transactions were discontinued since [February] 2010.

– 211 –

FINANCIAL INFORMATION

In addition, the Group rented certain of its buildings to Jiangsu Opto-electrical and Jiangsu Sensing and received rental income of approximately RMB[0.4 million] and approximately RMB[0.2 million], respectively, during FY2010 and approximately RMB[0.2] million and approximately RMB[0.1] million, respectively for the five months ended 31 May 2011. In addition, the Group sold goods to Jiangsu Opto-electrical and Jiangsu Sensing amounting to approximately RMB[1.8 million] and approximately RMB[0.3 million], respectively, during FY2010 and sold goods to Jiangsu Opto-electrical amounting to approximately RMB[1.9] million for the five months ended 31 May 2011.

Prior to [●], the Group has engaged two companies controlled by Mr. Toe Teow Heng (“Mr. Toe”) and his brother (Mr. Toe Teow Teck) namely 北京因特聯企業諮詢有限公司 (Beijing Yin Te Lian Corporate Consultancy Co., Ltd.) (“Beijing YTL”) and ICH Partners Ltd (“ICH Partners”), to provide the Group with the following services in connection with the preparation for [●]:

[●]

Mr. Toe is the ultimate beneficial owner of Zymmetry Investments Ltd, which currently is a shareholder of Trigiant BVI.

The Directors have confirmed that those related party transactions were conducted on normal commercial terms and in the ordinary and usual course of the Group’s business.

For details of these related party transactions, please refer to the Accountants’ Report to the Group as contained in Appendix IA and Accountants’ Report of Jiangsu Trigiant in Appendix IB to this document.

DIRECTORS CONFIRMATION ON NO MATERIAL ADVERSE CHANGE

The Directors have confirmed that, up to the Latest Practicable Date, there has been no material adverse change in the financial or trading position or prospects of the Group since [31 May 2011] and there is no event since [31 May 2011] which would materially affect the information shown in the Accountants’ Report of the Group set out in Appendix IA to this document, in each case except as otherwise disclosed therein.

MATERIAL CHANGE IN INDEBTEDNESS, COMMITMENT AND CONTINGENT LIABILITIES

The Directors confirmed that [there has been no material change in the indebtedness, commitment and contingent liabilities of the Group since the Latest Practicable Date].

– 212 –

FUTURE PLANS

Details of the future plans of the Group are set out in the paragraph headed “Business – Business strategies and future plans” of this document.

– 213 –

APPENDIX IA ACCOUNTANTS’ REPORT OF THE GROUP

The following is the text of a report received from the Company’s reporting accountants, [ ● ], Certified Public Accountants, Hong Kong, for the purpose of incorporation in this document.

[●]

[Date]

The Directors Trigiant Group Limited [●]

Dear Sirs,

We set out below our report on the financial information (the “Financial Information”) relating to Trigiant Group Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”) for the period from 29 December 2009 (the date of change in controlling shareholders, which is described in Accountants’ Report of the financial information of Jiangsu Trigiant Technology Co., Ltd. for Predecessor Track Record Periods (as defined therein)) to 31 December 2009, the year ended 31 December 2010 and the five months ended 31 May 2011 (the “Relevant Periods”), for the inclusion in the document of the Company dated [Date] in connection with [●] of the Company [●].

The Company was incorporated in the Cayman Islands as an exempted company with limited liability on 23 December 2010 under the Companies Law, Cap 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands. Through a group reorganisation as explained in the paragraph headed “Reorganisation” in Appendix V to the document (the “Group Reorganisation”), the Company has since [●] become the holding company of the Group.

At the end of the respective reporting period and the date of this report, the Company has interests in the following subsidiaries:

		Issue and fully		Attributable equity	Attributable equity	Attributable equity
	Place and date of	paid share		interest	of the Group
	incorporation/	capital/registered	31 December		31 May	At	the date of
Name of company	establishment	capital	2009	2010	2011		this report Principal activities
Trigiant Holdings Limited	British Virgin Island	US$1,000	100%	100%	100%		100% Investment holding
(“Trigiant BVI”)#	(“BVI”)
	12 May 2004

– IA-1 –

APPENDIX IA

ACCOUNTANTS’ REPORT OF THE GROUP

		Issue and fully		Attributable equity	Attributable equity	Attributable equity
	Place and date of	paid share		interest	of the Group
	incorporation/	capital/registered	31 December		31 May	At	the date of
Name of company	establishment	capital	2009	2010	2011		this report	Principal activities
Trigiant (HK) Limited	Hong Kong	HK$1	100%	100%	100%		100%	Investment holding
(“Trigiant Hong Kong”)##	8 December 2009
江蘇俊知技術有限公司	The People’s	US$30,000,000	100%	100%	100%		100%	Manufacture and sale
Jiangsu Trigiant Technology	Republic of China							of Radio Frequency
Co., Ltd.### (“Jiangsu	(the “PRC”)							(“RF”) cable series
Trigiant”)	For a term of 50							and related products
	years commencing							for mobile
	15 March 2007							telecommunications

Directly held by the Company.

Directly held by Trigiant BVI.

Directly held by Trigiant Hong Kong as a wholly foreign owned enterprise since 29 December 2009.

The Company and all of the above subsidiaries are limited liability companies and have adopted 31 December as their financial year end date.

We have acted as auditor of the Company since incorporation. No audited financial statements have been prepared for the Company and Trigiant BVI since their date of incorporation as there is no such statutory requirement. The Company has not carried out any business, except for the transactions relating to the Group Reorganisation. We have, however, reviewed all relevant transactions of the Company and Trigiant BVI since their date of incorporation and carried out such procedures as we considered necessary for inclusion in the Financial Information relating to the Group.

The statutory financial statements of Trigiant Hong Kong for the period from its date of incorporation to 31 December 2010 were audited by [●]. No statutory financial statements of Trigiant Hong Kong for the five months ended 31 May 2011 have been prepared as there is no such statutory requirement.

The statutory financial statements of Jiangsu Trigiant for each of the year ended 31 December 2009 and 2010 were prepared in accordance with the relevant accounting principles and financial regulation applicable to enterprises registered in the PRC and were audited by [●], certified public accountants registered in the PRC. No audited financial statements have been prepared for the period from 29 December 2009 to 31 December 2009 and the five months ended 31 May 2011 as there is no such statutory requirement.

For the purpose of this report, the directors of Trigiant BVI have prepared the consolidated financial statements of Trigiant BVI (the “Trigiant BVI Financial Statements”) for the Relevant Periods in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”). We have audited the Underlying Financial Statements in accordance with the Hong Kong Standards on Auditing issued by the HKICPA.

– IA-2 –

APPENDIX IA ACCOUNTANTS’ REPORT OF THE GROUP

We have examined the Trigiant BVI Financial Statements and the management accounts of the Company for the period since its date of incorporation to 31 December 2010 and the five months ended 31 May 2011 (collectively referred to as the “Underlying Financial Statements”) in accordance with the Auditing Guideline 3.340 “Prospectuses and Reporting Accountant” as recommended by the HKICPA.

The Financial Information for the Relevant Periods set out in this report has been prepared from the Underlying Financial Statements on the basis set out in note 1 of Section E below. No adjustment was considered necessary to the Underlying Financial Statements in preparing our report for inclusion in the document.

The Underlying Financial Statements are the responsibility of the directors of the respective entities who approve their issue. The directors of the Company are responsible for the contents of the document in which this report is included. It is our responsibility to compile the Financial Information set out in this report from the Underlying Financial Statements, to form an independent opinion on the Financial Information and to report our opinion to you.

In our opinion, on the basis of preparation set out in note 1 of Section E, the Financial Information gives, for the purpose of this report, a true and fair view of the state of affairs of the Group as at 31 December 2009, 31 December 2010 and 31 May 2011 and of the Company as at 31 December 2010 and 31 May 2011 and of the combined results and combined cash flows of the Group for the Relevant Periods.

The comparative combined statements of comprehensive income, cash flows and changes in equity of the Group for the five months ended 31 May 2010 together with the notes thereon have been extracted from the Group’s unaudited combined financial information for the same period (the “31 May 2010 Financial Information”) which was prepared by the directors of the Company solely for the purpose of this report. We have reviewed the 31 May 2010 Financial Information in accordance with the Hong Kong Standard on Review Engagements 2410 “Review of interim financial information performed by the independent auditor of the entity” issued by the HKICPA. Our review of the 31 May 2010 Financial Information consisted of making enquires, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong 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 31 May 2010 Financial Information. Based on our review, nothing has come to our attention that causes us to believe that the 31 May 2010 Financial Information is not prepared, in all material 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.

– IA-3 –

ACCOUNTANTS’ REPORT OF THE GROUP

A. COMBINED STATEMENTS OF COMPREHENSIVE INCOME

		For the
		period from
		29 December	For the
		2009 to	year ended	For the five months ended
		31 December	31 December	31	May
	Section E	2009	2010	2010		2011
	Notes	RMB’000	RMB’000	RMB’000		RMB’000
				(unaudited)
Turnover	6	5,740	1,405,039	499,593		705,990
Cost of goods sold		(4,868)	(1,116,350)	(394,958)		(552,527)
Gross profit		872	288,689	104,635		153,463
Other gains and losses	7	41	12,109	2,110		6,539
Selling and distribution costs		(330)	(23,969)	(8,098)		(11,529)
Administrative expenses		(372)	(58,106)	(20,844)		(31,648)
Finance costs	8	(62)	(39,386)	(15,886)		(17,087)
Profit before taxation		149	179,337	61,917		99,738
Taxation	11	–	(28,225)	(10,564)		(15,790)
Profit for the period/year
attributable to owners of the
Company	9	149	151,112	51,353		83,948
Other comprehensive income
Revaluation surplus on properties
upon transfer to investment
properties		–	830	830		–
Income tax relating to the
component of other
comprehensive income		–	(208)	(208)		–
Total comprehensive income for the
period/year		149	151,734	51,975		83,948


Earnings per share – Basic	13	0.02 cents	20.15 cents	6.85 cents		11.19 cents

– IA-4 –

APPENDIX IA

ACCOUNTANTS’ REPORT OF THE GROUP

B. COMBINED STATEMENTS OF FINANCIAL POSITION

				THE GROUP	THE GROUP	THE GROUP				THE COMPANY	THE COMPANY	THE COMPANY
		31 December		31 December			31 May		31 December			31	May
	Section E	2009			2010		2011			2010			2011
	Notes	RMB’000			RMB’000		RMB’000			RMB’000		RMB’000
Non-current assets
Investment properties	14		–		17,900		18,100				–		–
Property, plant and equipment	15	186,603			190,977		185,205				–		–
Land use rights	16	79,103			73,392		72,604				–		–
Available-for-sale investments	17		–		20,000		20,000				–		–

		265,706			302,269		295,909				–		–

Current assets
Inventories	18	63,322			59,980		68,520				–		–
Trade and other receivables	19	670,167			780,308		900,759				–		–
Advances to a former fellow subsidiary	20	66,000				–		–			–		–
Land use rights	16	1,891			1,891		1,891				–		–
Pledged bank deposits	21	201,365			89,620		140,620				–		–
Bank balances and cash	21	111,032			338,916		307,208				–		–

		1,113,777			1,270,715		1,418,998				–		–

Current liabilities
Trade and other payables	22	212,227			297,414		306,742				–		–
Bills payables to a former fellow
subsidiary	23	164,000				–		–			–		–
Amount due to a director	24	42,000			2,797		8,556				–		–
Amounts due to shareholders	25		–		198,070		194,367				–		–
Payable for acquisition of a subsidiary	31	204,906				–		–			–		–
Bank borrowings – due within one year	26	600,239			680,000		735,400				–		–
Tax payables			–		8,657		7,840				–		–
		1,223,372			1,186,938		1,252,905				–		–

Net current (liabilities) assets		(109,595)			83,777		166,093				–		–
Total assets less current liabilities		156,111			386,046		462,002				–		–

Non-current liabilities
Government grants	27		–		2,770		2,585				–		–
Payable for acquisition of land use rights	28	13,502			5,502		5,502				–		–
Bank borrowings – due after one year	26	70,000			150,000		140,000				–		–
Deferred taxation	29	9,506			12,937		15,130				–		–

		93,008			171,209		163,217				–		–

Net assets		63,103			214,837		298,785				–		–


Capital and reserves
Share capital	30		7			7		7			–		–
Reserves		63,096			214,830		298,778				–		–

Total equity		63,103			214,837		298,785				–		–

– IA-5 –

APPENDIX IA

ACCOUNTANTS’ REPORT OF THE GROUP

C. COMBINED STATEMENTS OF CHANGES IN EQUITY

		Statutory
		surplus		Property
	Share	reserve	Special	revaluation	Accumulated
	capital	fund	reserve	reserve		profits	Total
	RMB’000	RMB’000	RMB’000	RMB’000		RMB’000	RMB’000
		(Note a)	(Note b)
At 29 December 2009	7	–	–	–		–	7
Profit and total comprehensive
income for the period	–	–	–	–		149	149
Deemed contribution arising
from the Acquisition
(note 31 to Section E)	–	–	62,947	–		–	62,947
At 31 December 2009	7	–	62,947	–		149	63,103

Other comprehensive income
for the year	–	–	–	622		–	622
Profit for the year	–	–	–	–		151,112	151,112
Total comprehensive income
for the year	–	–	–	622		151,112	151,734
Transfers	–	38,496	–	–		(38,496)	–
At 31 December 2010	7	38,496	62,947	622		112,765	214,837

Profit and total comprehensive
income for the period	–	–	–	–		83,948	83,948
At 31 May 2011	7	38,496	62,947	622		196,713	298,785

– IA-6 –

APPENDIX IA

ACCOUNTANTS’ REPORT OF THE GROUP

		Statutory
		surplus		Property
	Share	reserve	Special	revaluation	Accumulated
	capital	fund	reserve	reserve		profits	Total
	RMB’000	RMB’000	RMB’000	RMB’000		RMB’000	RMB’000
		(Note a)	(Note b)
At 1 January 2010	7	–	62,947	–		149	63,103
Other comprehensive income
for the period	–	–	–	622		–	622
Profit for the period	–	–	–	–		51,353	51,353
Total comprehensive income
for the period	–	–	–	622		51,353	51,975
At 31 May 2010 (unaudited)	7	–	62,947	622		51,502	115,078

Notes:

(a) As stipulated by the relevant laws and regulations for foreign investment enterprises in the PRC, the PRC subsidiary of the Company is required to maintain a statutory surplus reserve fund. Appropriation to such reserve is made out of net profit after taxation as reflected in the statutory financial statements of the PRC subsidiary while the amount and allocation basis are decided by its board of directors annually. The statutory surplus reserve fund can be used to make up prior year losses, if any, and can be applied for conversion into capital by means of capitalisation issue.
(b) The special reserve represents the difference between the aggregate consideration of US$30,000,000 (equivalent to RMB204,906,000) and the net fair value of assets and liabilities of Jiangsu Trigiant as a result of the Acquisition (as more fully explained in note 1 to Section E).

– IA-7 –

APPENDIX IA

ACCOUNTANTS’ REPORT OF THE GROUP

D. COMBINED STATEMENTS OF CASH FLOWS

		For the
		period from
		29 December	For the
		2009 to	year ended	For the five months ended
		31 December	31 December	31 May
	Section E	2009	2010	2010	2011
	Note	RMB’000	RMB’000	RMB’000	RMB’000
				(unaudited)
Operating activities
Profit before taxation		149	179,337	61,917	99,738
Adjustments for:
Interest income		(40)	(2,394)	(1,260)	(1,637)
Government grants		–	(339)	(119)	(185)
Gain on fair value changes on investment
properties		–	(400)	(100)	(200)
Exchange gain		–	(6,829)	(52)	(3,703)
Finance costs		62	39,386	15,886	17,087
Depreciation of property, plant and
equipment		15	14,820	5,644	7,183
Operating lease rentals in respect of land
use rights		6	1,891	788	788
Operating cash flows before movements in
working capital		192	225,472	82,704	119,071
Decrease (increase) in inventories		1,978	3,342	(2,742)	(8,540)
Decrease (increase) in trade and other
receivables		3,337	(111,055)	(88,114)	(121,331)
Increase (decrease) in trade and other payables		3,217	65,716	(29,241)	33,211
Cash from (used in) operations		8,724	183,475	(37,393)	22,411
PRC income tax paid		–	(16,345)	(2,705)	(14,414)
Net cash from (used in) operating activities		8,724	167,130	(40,098)	7,997

– IA-8 –

APPENDIX IA

ACCOUNTANTS’ REPORT OF THE GROUP

		For the
		period from
		29 December	For the
		2009 to	year ended	For the five months ended
		31 December	31 December	31 May
	Section E	2009	2010	2010	2011
	Note	RMB’000	RMB’000	RMB’000	RMB’000
				(unaudited)
Investing activities
Interest received		40	3,301	1,288	2,517
Acquisition of a subsidiary	31	89,400	(204,906)	(204,906)	–
Available-for-sale investments		–	(20,000)	(20,000)	–
Government grants received		–	3,109	2,621	–
Purchase of property, plant and equipment		–	(36,060)	(29,221)	(422)
Payment for acquisition of land use rights		–	–	–	(8,000)
Repayment from a former fellow subsidiary		–	66,000	66,000	–
New pledged bank deposits raised		(1,070)	(206,076)	(104,526)	(112,400)
Release of pledged bank deposits		6,000	317,821	186,127	61,400
Net cash from (used in) investing activities		94,370	(76,811)	(102,617)	(56,905)
Financing activities
Interest paid		(62)	(41,899)	(17,093)	(15,959)
Loans from shareholders		–	204,906	204,906	–
Bills payable to former fellow subsidiary and
a supplier raised		–	270,000	270,000	–
Repayment of bills payable to a former
fellow subsidiary and a supplier		–	(434,000)	(164,000)	–
Advances from investors		–	21,000	20,000	–
Repayment to investors		–	(3,000)	–	(18,000)
New bank borrowings raised		–	1,032,700	313,700	447,500
Repayment of bank borrowings		–	(872,939)	(359,139)	(402,100)
Advances from directors		8,000	–	–	5,759
Repayment to directors		–	(39,203)	(31,661)	–
Net cash from financing activities		7,938	137,565	236,713	17,200
Net increase (decrease) in cash and cash
equivalents		111,032	227,884	93,998	(31,708)
Cash and cash equivalent at beginning of the
period/year, represented by bank balances
and cash		−	111,032	111,032	338,916

Cash and cash equivalent at end of the
period/year, represented by bank balances
and cash		111,032	338,916	205,030	307,208

– IA-9 –

ACCOUNTANTS’ REPORT OF THE GROUP

APPENDIX IA

E. NOTES TO THE FINANCIAL INFORMATION

1. GENERAL AND BASIS OF PRESENTATION OF FINANCIAL INFORMATION

The addresses of the registered office and the principle place of business of the Company are set out in the section headed “Corporate Information” to the document. The Group is mainly engaged in the manufacturing and trading of cable series and related products for mobile telecommunications.

Trigiant BVI was incorporated in the British Virgin Islands on 12 May 2004 (formerly known as “New Bright Assets Management Limited” at incorporation and subsequently changed to “Cenarion Investments Ltd.” on 17 May 2007, until it was changed to its present name on 30 December 2009). At incorporation, Trigiant BVI allotted and issued 100 shares at U$1 each to two independent third parties (the “Third Parties”) and remained inactive until the Third Parties transferred all their shares to Abraholme International Limited (“Abraholme”) on 23 December 2009 and on the same date, Trigiant BVI allotted and issued 455 shares to Abraholme and 445 shares to other current shareholders (together with Abraholme collectively referred to as the “Shareholders”). On 23 December 2009, the Shareholders have agreed to provide a loan in aggregate of US$30,000,000 to Trigiant BVI to finance the acquisition of Jiangsu Trigiant (as explained below). The current controlling shareholder of Abraholme is Mr. Qian Lirong (“Mr. Qian”), which is also the director of the Company.

On 28 December 2009, Trigiant BVI acquired the one founder member share, representing the entire issued share capital of Trigiant Hong Kong (formerly known as “Chinese Team Limited”) at par. Trigiant Hong Kong was inactive before it was acquired by Trigiant BVI.

Jiangsu Trigiant is a limited liability company established in the PRC by Trigiant Group Pte. Ltd. (“Trigiant Group Pte”) as a wholly foreign owned enterprise on 15 March 2007. Pursuant to an equity transfer agreement on 28 December 2009, Trigiant Group Pte transferred the entire equity interest in Jiangsu Trigiant to Trigiant Hong Kong for cash consideration of US$30,000,000 (the “Acquisition”) and Jiangsu Trigiant became a subsidiary of Trigiant Hong Kong from 29 December 2009. The details are explained further in note 31.

Trigiant Group Pte was formerly owned as to 38.5% by Abraholme and 39% by other certain Shareholders, therefore, no single party has control over Trigiant Group Pte. As a result of the Acquisition, Abraholme (which owning 55.5% interest in Trigiant BVI) has obtained control over Jiangsu Trigiant on 29 December 2009 and the Acquisition is recognised by using the purchase method of accounting with the excess of the net fair value of Jiangsu Trigiant over the cost of the Acquisition recognised as deemed contribution from shareholders directly in reserve.

Pursuant to the Group Reorganisation to rationalise the structure of the Group in preparation for [●], the Company became the holding company of the Group on [●] by interspersing the Company between Trigiant BVI and the Shareholders.

The combined statements of comprehensive income, combined statements of changes in equity and combined statements of cash flows of the Group during the Relevant Periods have been prepared on the basis as if the Company had always been the holding company of the companies now comprising the Group throughout the Relevant Periods.

The combined statements of financial position of the Group as at 31 December 2009, 31 December 2010 and 31 May 2011 have been prepared to present the assets and liabilities of the companies now comprising the Group as at the end of each reporting period as if the current group structure had been in existence at those dates.

The Financial Information is presented in Renminbi (“RMB”) which is the same as the functional currency of the Company.

– IA-10 –

APPENDIX IA ACCOUNTANTS’ REPORT OF THE GROUP

2. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS (“HKFRSs”)

For the purpose of preparing and presenting the Financial Information for the Relevant Periods, the Group has consistently applied the Hong Kong Accounting Standards (“HKASs”), HKFRSs, Amendments and Interpretations (hereinafter collectively referred to as the “new HKFRSs” which are effective for the accounting period beginning on 1 January 2011 throughout the Relevant Periods.

At the date of this report, the following new and revised standards and amendments have been issued but are not yet effective:

HKFRS 7 (Amendments) Disclosures – Transfers of Financial Assets[3] HKFRS 9 Financial Instruments[1] HKFRS 10 Consolidated Financial Statements[1] HKFRS 11 Joint Arrangements[1] HKFRS 12 Disclosure of Interests in Other Entities[1] HKFRS 13 Fair Value Measurement[1] HKAS 1 (Amendments) Presentation of Items of Other Comprehensive Income[4] HKAS 12 (Amendments) Deferred Tax: Recovery of Underlying Assets[2] HKAS 19 (Revised 2011) Employee Benefits[1] HKAS 27 (Revised 2011) Separate Financial Statements[1] HKAS 28 (Revised 2011) Investments in Associates and Joint Ventures[1]

1 Effective for annual periods beginning on or after 1 January 2013

2 Effective for annual periods beginning on or after 1 January 2012

3 Effective for annual periods beginning on or after 1 July 2011

4 Effective for annual periods beginning on or after 1 July 2012

The Group has not early adopted these new and revised standards or amendments in the preparation of the Financial Information.

HKFRS 9 Financial Instruments introduces new requirements for the classification and measurement of financial assets. The Standard requires all recognised financial assets that are within the scope of HKAS 39 Financial Instruments: Recognition and Measurement to be measured at either amortised cost or fair value. Specifically, debt investments that (i) are held within a business model whose objective is to collect the contractual cash flows and (ii) have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortised cost. All other debt investments and equity investments are measured at fair value. The directors of the Company anticipate that HKFRS 9 that will be adopted in the Group’s consolidated financial statements for financial year ending 31 December 2013 and that the application of the new Standard may have a significant impact on amounts reported in respect of the Group’s available-for-sale investments which are currently stated at cost less impairment and will be measured at fair value upon adoption. In addition, HKFRS 9 Financial Instruments (as revised in November 2010) also adds requirements for financial liabilities and for derecognition. HKFRS 9 is effective for annual periods beginning on or after 1 January 2013 with earlier application permitted.

The directors of the Company anticipate that the application of other new and revised standards or amendments will have no material impact on the Financial Information.

3. SIGNIFICANT ACCOUNTING POLICIES

The Financial Information has been prepared on the historical cost basis except for investment properties that are measured at fair values, in accordance with the accounting policies set out below which conform with HKFRSs. These policies have been consistently applied throughout the Relevant Periods.

In addition, the Financial Information includes applicable disclosures required by [●] and by the Hong Kong Companies Ordinance.

Basis of combination

The Financial Information incorporates the financial information of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

All intra-group transactions, balances, income and expenses are eliminated on combination.

– IA-11 –

APPENDIX IA ACCOUNTANTS’ REPORT OF THE GROUP

Business combinations

Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Group, liabilities incurred by the Group to former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value at the acquisition date, except that:

deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and measured in accordance with HKAS 12 Income Taxes and HKAS 19 Employee Benefits respectively;
liabilities or equity instruments related to share-based payment transactions of the acquiree or the replacement of an acquiree’s share-based payment transactions with share-based payment transactions of the Group are measured in accordance with HKFRS 2 Share-based Payment at the acquisition date; and
assets (or disposal groups) that are classified as held for sale in accordance with HKFRS 5 Non-current Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after assessment, the net of the acquisition date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for good sold in the normal course of business, net of discounts, value added tax and sales related taxes.

Revenue from the sale of goods is recognised when goods are delivered and title has passed.

Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Group and the amount of revenue can be measure reliably. Interest income from a financial asset is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts the estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition.

Investment properties

Investment properties are properties held to earn rentals and/or for capital appreciation. On initial recognition, investment properties are measured at cost, including any directly attributable expenditure. Subsequent to initial recognition, investment properties are measured at their fair values using the fair value model. Gains or losses arising from changes in the fair value of investment property are included in profit or loss for the period in which they arise.

An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from its disposals. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is derecognised.

– IA-12 –

APPENDIX IA ACCOUNTANTS’ REPORT OF THE GROUP

Property, plant and equipment

Construction in progress includes property, plant and equipment in the course of construction for production or for its own use purpose. Construction in progress is carried at cost less any recognised impairment loss. Construction in progress is classified to the appropriate category of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.

When an item of property, plant and equipment is transferred to investment property carried at fair value, if the carrying amount is decreased as a result of a revaluation at the date of transfer, any resulting decrease in the carrying amount of the property is recognised in profit or loss. If the carrying amount is increased, to the extent that the increase reverses a previous impairment loss for that property, the increase is recognised in profit or loss. The amount recognised in profit or loss does not exceed the amount needed to restore the carrying amount to the carrying amount that would have been determined (net of depreciation) had no impairment loss been recognised. Any remaining part of the increase is credited directly to equity (property revaluation reserve). On subsequent disposal of the investment property, the revaluation surplus included in equity may be transferred to retained earnings. The transfer from revaluation surplus to retained earnings is not made through profit or loss.

Land use rights

The land and building elements of a lease of land and building are considered separately for the purpose of lease classification. To the extent the allocation of the lease payments can be made reliably, leasehold interests in land are accounted for as operating leases and amortised over the lease term on a straight line basis, except for those that are classified and accounted for as investment properties under the fair value model.

The up-front payments to acquire leasehold interest in land are accounted for as operating leases and are stated at cost and released over the lease term on a straight line basis.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets. Capitalisation of such borrowing costs ceases when the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

– IA-13 –

APPENDIX IA ACCOUNTANTS’ REPORT OF THE GROUP

Research and development costs

Expenditure on research activities is recognised as an expense in the period in which it is incurred.

An internally generated intangible asset arising from development expenditure is recognised only if it is anticipated that the development costs incurred on a clearly-defined project will be recovered through future commercial activity. The resultant asset is amortised on a straight line basis over its useful life, and carried at cost less subsequent accumulated amortisation and any accumulated impairment losses.

Where no internally generated intangible asset can be recognised, development expenditure is charged to profit or loss in the period in which it is incurred.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is calculated using the weighted average method.

Impairment losses

At the end of the reporting period, the Group reviews the carrying amounts of its assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.

Financial instruments

Financial assets and financial liabilities are recognised in the statements of financial position when the entity becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.

Financial assets

The Group’s financial assets are mainly classified into loans and receivables and available-for-sale financial assets.

All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the Relevant Periods. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset, or, where appropriate, a shorter period to the net carrying amount on initial recognition.

Interest income is recognised on an effective interest basis for debt instruments.

Loans and receivables

Loans and receivables are non-derivative financial, assets with fixed or determinable payments that are not quoted in an active market. Subsequent to initial recognition, loans and receivables (including trade and other receivables, advances to a former fellow subsidiary, pledged bank deposits, bank balances and cash) are carried at amortised cost using the effective interest method, less any identified impairment losses.

– IA-14 –

APPENDIX IA ACCOUNTANTS’ REPORT OF THE GROUP

Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated or not classified as financial assets at fair value through profit or loss, loans and receivables or held-to-maturity investments.

For available-for-sale equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost less any identified impairment losses at the end of each reporting period. (see accounting policy on impairment loss on financial assets below).

Impairment of financial assets

Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the financial assets have been affected.

Objective evidence of impairment could include:

significant financial difficulty of the issuer or counterparty; or
default or delinquency in interest or principal payments; or
it becoming probable that the borrower will enter bankruptcy or financial re-organisation.

For certain categories of financial asset, such as trade receivables that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the credit period granted, observable changes in national or local economic conditions that correlate with default on receivables.

For financial assets carried at amortised cost, an impairment loss is recognised in profit or loss when there is objective evidence that the asset is impaired, and is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the original effective interest rate.

For financial assets carried at cost, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss. When trade receivables are considered uncollectible, they are written off against the allowance account. Subsequent recoveries of amounts previously written off are credited to profit or loss.

For financial assets measured at amortised cost, if, in a subsequent period, the amount of impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment losses was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

Impairment loss on available-for-sale equity investments will not be reversed in profit or loss in subsequent periods. Any increase in fair value subsequent to impairment loss is recognised directly in other comprehensive income.

Financial liabilities and equity instruments

Financial liabilities and equity instruments issued by a group entity are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.

– IA-15 –

APPENDIX IA ACCOUNTANTS’ REPORT OF THE GROUP

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the Relevant Periods. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period to the net carrying amount on initial recognition.

Interest expense is recognised on an effective interest basis.

Financial liabilities

Financial liabilities, including trade and other payables, payable for acquisition of land use rights, amount(s) due to a director and shareholders, payable for acquisition of a subsidiary, bills payable to a former fellow subsidiary and bank borrowings, are subsequently measured at amortised cost, using the effective interest method.

Equity instruments

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

Derecognition

Financial assets are derecognised when the contractual rights to receive cash flows from the assets expire or the financial assets are transferred and the Group has transferred substantially all the risks and rewards of ownership of the financial assets. On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and any cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss.

On derecognition of a financial asset other than in its entirety (e.g. when the Group retains an option to repurchase part of a transferred asset or retains a residual interest that does not result in the retention of substantially all the risks and rewards of ownership and the Group retains control), the Group allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.

Financial liabilities are derecognised when the obligation specified in the relevant contract is discharged, cancelled or expires. The difference between the carrying amount of the financial liability derecognised and the consideration paid or payable is recognised in profit or loss.

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the period/year. Taxable profit differs from profit for the period/year as reported in the statements of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

– IA-16 –

APPENDIX IA

ACCOUNTANTS’ REPORT OF THE GROUP

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each 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 asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset is realised, based on tax rate (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax is recognised in profit or loss, except when it relates to items that are recognised in other comprehensive income or directly in equity, in which case the deferred tax is also recognised in other comprehensive income or directly in equity respectively.

Foreign currencies

In preparing the financial statements of each individual group entity, transactions in currencies other than the functional currency of that entity (foreign currencies) are recorded in the respective functional currency (i.e. the currency of the primary economic environment in which the entity operates) at the rates of exchanges prevailing on the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are recognised in profit or loss in the period/year in which they arise.

Leasing

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

The Group as lessor

Renal income from operating lease is recognised in profit or loss on a straight line basis over the term of the relevant lease.

– IA-17 –

APPENDIX IA ACCOUNTANTS’ REPORT OF THE GROUP

The Group as lessee

Rentals payable under operating leases are recognised in the profit or loss on a straight line basis over relevant leases. Benefits received and receivable as an incentive to enter into an operating lease are recognised as a reduction of rental expense over the lease term on a straight line basis.

Government grants

Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises as expenses the related costs for which the grants are intended to compensate. Government grants related to depreciable assets are recognised as deferred income in the combined statements of financial position and released to profit or loss over the useful lives of the related assets. Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognised in profit or loss in the period in which they become receivable.

Retirement benefit costs

Payments to state-managed retirement benefit schemes are charged as expenses when employees have rendered service entitling them to the contributions.

4. CAPITAL RISK MANAGEMENT

The Group manages its capital to ensure that the group entities will be able to continue as a going concern while maximising the return to shareholders through optimisation of the debt and equity balance. The overall strategy remains unchanged during the Relevant Periods.

The capital structure of the Group consists of bank borrowings, net of cash and cash equivalents, amounts due to shareholders and equity attributable to the owners of the Company, comprising share capital and reserves.

The management of the Group reviews the capital structure periodically. As part of the review, the Group considers the cost of capital and the risks associated with each class of capital and will balance its overall capital structure through the payment of dividends as well as the issue of new debts or the redemption of existing debts.

5. FINANCIAL INSTRUMENTS

Categories of financial instruments

	At	At	At
	31 December	31 December	31 May
	2009	2010	2011
	RMB’000	RMB’000	RMB’000
Financial assets
Loans and receivables (including cash and
cash equivalents)	1,045,509	1,207,759	1,346,755


Available-for-sale investments	−	20,000	20,000


Financial liabilities
Amortised cost	1,300,107	1,327,777	1,380,968

– IA-18 –

APPENDIX IA ACCOUNTANTS’ REPORT OF THE GROUP

Financial risk management objectives and policies

The Group’s major financial instruments include trade and other receivables, advances to a former fellow subsidiary, available-for-sale investments, pledged bank deposits, bank balances and cash, trade and other payables, payable for acquisition of a subsidiary, amount(s) due to a director and shareholders, bills payables to a former fellow subsidiary, payable for acquisition of land use rights and bank borrowings. Details of these financial instruments are disclosed in the respective notes. The risks associated with these financial instruments include market risk (interest rate risk and currency risk), credit risk and liquidity risk. The policies on how to mitigate these risks are set out below. The management manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner.

Interest rate risk

The Group is exposed to cash flow interest rate risk through the impact of rate changes on interest bearing financial assets and liabilities, mainly interest bearing pledged bank deposits, bank balances and bank borrowings at variable interest rates. Bank borrowings at fixed interest rates expose the Group to fair value interest rate risk. The Group currently does not have an interest rate hedging policy. However, the management will consider hedging significant interest rate risk should the need arise. The Group’s cash flow interest rate risk is mainly concentrated on the fluctuation of the interest rates offered by the People’s Bank of China (“PBOC”) from its RMB denominated borrowings.

If interest rates on pledged bank deposits and bank balances had been 5 basis points lower and bank borrowings had been 25 basis points lower and all other variables were held constant, the Group’s post tax profit after capitalisation of borrowing costs for the period from 29 December 2009 to 31 December 2009, the year ended 31 December 2010 and the five months ended 31 May 2011, would be increased by RMB4,000, RMB449,000 and RMB629,000, respectively.

There would be an equal and opposite impact on the post tax profit for the period/year where there had been 5 basis points higher for pledged bank deposits and bank balances and 25 basis points higher for bank borrowings. In the opinion of the directors of the Company, the sensitivity analysis is unrepresentative of the inherent interest risk as the exposures at the end of each reporting period do not reflect the exposure during the Relevant Periods.

Currency risk

The Group has foreign currency sales, payable for acquisition of a subsidiary and loans from shareholders during the Relevant Periods which exposed to foreign currency risk. During the period from 29 December 2009 to 31 December 2009 and the year ended 31 December 2010 and five months ended 31 May 2010 and 31 May 2011, approximately nil, 0.7% and 0.2% and 2.8% of the Group’s sales, respectively, are denominated in currency other than the functional currency of the group entity which it relates.

The carrying amounts of the Group’s foreign currency denominated monetary assets and liabilities at the end of each reporting period are as follows:

	At 31 December 2009	At 31 December 2009	At 31 December 2010	At 31 December 2010	At 31 May 2011	At 31 May 2011
	Assets	Liabilities	Assets	Liabilities	Assets	Liabilities
	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
Hong Kong Dollars	–	–	618	2,797	2,093	8,662
US Dollars	1,716	204,906	6,867	198,324	3,049	194,367
Euro	884	–	−	−	–	–

– IA-19 –

APPENDIX IA ACCOUNTANTS’ REPORT OF THE GROUP

The Group is mainly exposed to currency risk of US Dollars and Hong Kong Dollars. The following table details the Group’s sensitivity to a 5% increase and decrease in the RMB against the relevant foreign currencies. The Group currently does not have any foreign currency hedging policy and will consider hedging its foreign currency exposure should the need arise. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the end of each reporting period for a 5% change in foreign currency rates. The sensitivity analysis includes bank balances, trade and other receivables, trade and other payables, payable for acquisition of a subsidiary and amount(s) due to a director and shareholders. If the RMB strengthens 5% against the relevant currencies, the post tax profit for the period/year will be increased as follows:

	For the
	period from		For the
	29 December	For the	five months
	2009 to	year ended	ended
	31 December	31 December	31 May
	2009	2010	2011
	RMB’000	RMB’000	RMB’000
Hong Kong Dollars	–	82	246
US Dollars	84	7,180	7,174

There would be an equal and opposite impact on the result of the period/year if RMB weakens 5% against the relevant currencies. In the opinion of the directors of the Company, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk as the exposures at the end of each reporting period do not reflect the exposure during the Relevant Periods.

Credit risk

The Group’s maximum exposure to credit risk in the event of the counterparties’ failure to perform their obligations at the end of each reporting period in relation to each class of recognised financial assets is the carrying amount of those assets as stated in the combined statements of financial position.

The Group has concentration of credit risk in relation to trade and bills receivables from top three customers amounting to RMB595,706,000, RMB724,387,000 and RMB854,475,000 representing approximately 89.6%, 93.4% and 95.5% of the total trade and bills receivables at 31 December 2009, 31 December 2010 and 31 May 2011, respectively. The largest trade receivable from a customer by itself accounted for approximately 83.0%, 61.8% and 47.3% of the total trade and bills receivables at 31 December 2009, 31 December 2010 and 31 May 2011, respectively. In order to minimise the credit risk, the management has reviewed the recoverable amounts of trade and bills receivables regularly to ensure that follow-up action is taken timely and assigned a dedicated team to monitor the credit risk that takes into consideration the ageing status and estimate the likelihood of collection. In this regard, the directors of the Company consider that the credit risk on trade receivables is significantly reduced.

The Group also has concentration of credit risk in relation to net advances to a former fellow subsidiary amounting to RMB42,176,000, nil and nil at 31 December 2009, 31 December 2010 and 31 May 2011, respectively. In order to minimise the credit risk, the management has reviewed the recoverable amount of the advances to a fellow subsidiary and its financial ability regularly to ensure that follow-up action is taken timely. The amounts were settled in 2010. In this regard, the directors of Company consider that the credit risk on advances to a fellow subsidiary is significantly reduced.

The Group’s credit risk on bank balances and deposits or bills receivables is limited and there is no significant concentration of credit risk because all bank deposits or bills are deposited in or contracted with several state-owned banks with good reputation and with high credit ratings assigned by international credit-rating agencies.

– IA-20 –

ACCOUNTANTS’ REPORT OF THE GROUP

APPENDIX IA

Liquidity risk

In the management of the liquidity risk, the Group monitors and maintains a level of cash and cash equivalents deemed adequate by the management to finance its operations and mitigate the effects of fluctuations in cash flows.

The following table details the Group’s remaining contractual maturity for its financial liabilities. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The table includes both interest and principal cash flows. To the extent that interest flows are floating rate, the undiscounted amount is derived from current interest rate at the end of the reporting period.

		Repayable
	Weighted	on		Over 1	Over 2
	average	demand		year but	years but
	effective	or less		not more	not more		Total	Total
	interest	than 6	6 months	than 2	than 5	undiscounted		carrying
	rate	months	to 1 year	years	years		cash flows	amount
	%	RMB’000	RMB’000	RMB’000	RMB’000		RMB’000	RMB’000
At 31 December 2009
Trade and other
payables	–	197,460	–	–	–		197,460	197,460
Payable for acquisition
of land use rights	–	8,000	–	8,000	5,502		21,502	21,502
Amount due to a
director	–	42,000	–	–	–		42,000	42,000
Payable for acquisition
of a subsidiary	–	204,906	–	–	–		204,906	204,906
Bills payables to a
former fellow
subsidiary	–	164,000	–	–	–		164,000	164,000
Bank borrowings
– variable rate	5.63	182,379	113,482	4,013	74,868		374,742	355,000
– fixed rate	5.40	221,266	101,365	–	–		322,631	315,239

		1,020,011	214,847	12,013	80,370		1,327,241	1,300,107

– IA-21 –

APPENDIX IA

ACCOUNTANTS’ REPORT OF THE GROUP

					Over		Over
	Weighted	Repayable			1 year		2 years
	average	on demand			but not		but not		Total	Total
	effective	or less than	6 months	more than		more than		undiscounted		carrying
	interest rate	6 months	to 1 year		2 years		5 years		cash flows	amount
	%	RMB’000	RMB’000		RMB’000		RMB’000		RMB’000	RMB’000
At 31 December 2010
Trade and other payables	–	275,408	–		–		–		275,408	275,408
Payable for acquisition of
land use rights	–	16,000	–		5,502		–		21,502	21,502
Amount due to a director	–	2,797	–		–		–		2,797	2,797
Amounts due to shareholders	–	198,070	–		–		–		198,070	198,070
Bank borrowings
– variable rate	5.80	77,179	110,125		8,978		162,494		358,776	325,000
– fixed rate	5.19	215,721	306,792		–		–		522,513	505,000

		785,175	416,917		14,480		162,494		1,379,066	1,327,777


					Over		Over
	Weighted	Repayable			1 year		2 years
	average	on demand			but not		but not		Total	Total
	effective	or less than	6 months	more than		more than		undiscounted		carrying
	interest rate	6 months	to 1 year		2 years		5 years		cash flows	amount
	%	RMB’000	RMB’000		RMB’000		RMB’000		RMB’000	RMB’000
At 31 May 2011
Trade and other payables	–	289,143	–		–		–		289,143	289,143
Payable for acquisition of
land use rights	–	8,000	–		5,502		–		13,502	13,502
Amount due to a director	–	8,556	–		–		–		8,556	8,556
Amounts due to shareholders	–	194,367	–		–		–		194,367	194,367
Bank borrowings
– variable rate	5.93	115,553	187,460		8,535		149,735		461,283	425,000
– fixed rate	5.47	223,815	240,374		–		–		464,189	450,400

		839,434	427,834		14,037		149,735		1,431,040	1,380,968

Fair value of financial instruments

The fair value of financial assets and financial liabilities are determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices or rates from observable current market transactions as input.

The directors of the Company consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the Financial Information approximate their fair values at the end of each reporting period.

– IA-22 –

ACCOUNTANTS’ REPORT OF THE GROUP

APPENDIX IA

6. TURNOVER AND SEGMENT INFORMATION

The Group’s chief operating decision maker has been identified as the board of directors of the Company who reviews the business with the following reportable segments by products:

RF coaxial cable series
New-type electronic components
Others (mainly represented by other accessories)

The above segments have been identified on the basis of internal management reports prepared and regularly reviewed by the board of directors of the Company when making decisions about allocating resources and assessing performance of the Group.

Turnover represents the fair value of the consideration received and receivable for goods sold during the Relevant Periods.

The segment results represent the gross profits earned by each segment (segment revenue less segment cost of goods sold). Other gains and losses, selling and distribution costs, administrative expenses, finance costs and taxation are not allocated to each reportable segment. This is the measure reported to the board of directors for the purpose of resource allocation and assessment of segment performance.

The information of segment results are as follows:

For the period from 29 December 2009 to 31 December 2009

		New-type
	RF coaxial	electronic
	cable series	components	Others	Total
	RMB’000	RMB’000	RMB’000	RMB’000
Revenue	5,740	–	–	5,740
Cost of goods sold	(4,868)	–	–	(4,868)
Segment result	872	–	–	872

For the year ended 31 December 2010

		New-type
	RF coaxial	electronic
	cable series	components	Others	Total
	RMB’000	RMB’000	RMB’000	RMB’000
Revenue	1,298,998	73,138	32,903	1,405,039
Cost of goods sold	(1,040,403)	(48,692)	(27,255)	(1,116,350)
Segment result	258,595	24,446	5,648	288,689

– IA-23 –

APPENDIX IA

ACCOUNTANTS’ REPORT OF THE GROUP

For the five months ended 31 May 2010 (unaudited)

		New-type
	RF coaxial	electronic
	cable series	components	Others	Total
	RMB’000	RMB’000	RMB’000	RMB’000
Revenue	457,899	28,058	13,636	499,593
Cost of goods sold	(366,242)	(18,023)	(10,693)	(394,958)
Segment result	91,657	10,035	2,943	104,635

For the five months ended 31 May 2011

		New-type
	RF coaxial	electronic
	cable series	components	Others	Total
	RMB’000	RMB’000	RMB’000	RMB’000
Revenue	657,784	29,984	18,222	705,990
Cost of goods sold	(510,421)	(24,315)	(17,791)	(552,527)
Segment result	147,363	5,669	431	153,463

The reportable segment results are reconciled to profit after taxation of the Group as follows:

For the

	For the
	period from
	29 December	For the
	2009 to	year ended	For the five	months ended
	31 December	31 December	31	May
	2009	2010	2010		2011
	RMB’000	RMB’000	RMB’000		RMB’000
			(unaudited)
Reportable segment results	872	288,689	104,635		153,463
Unallocated income and expenses
– Other gains and losses	41	12,109	2,110		6,539
– Selling and distribution costs	(330)	(23,969)	(8,098)		(11,529)
– Administrative expenses	(372)	(58,106)	(20,844)		(31,648)
– Finance costs	(62)	(39,386)	(15,886)		(17,087)

Profit before taxation	149	179,337	61,917		99,738
Taxation	–	(28,225)	(10,564)		(15,790)

Profit for the period/year	149	151,112	51,353		83,948

As no discrete information in respect of segment assets and liabilities and other information is for the assessment of performance and allocation of resources for different reportable segment and thus, other than reportable segment revenue and results as disclosed above, no analysis of segment assets and liabilities is presented.

Substantially all of the Group’s turnover is derived from the PRC and its non-current assets are also substantially located in the PRC (the place of domicile).

– IA-24 –

APPENDIX IA ACCOUNTANTS’ REPORT OF THE GROUP

Information about major customers

For the period from 29 December 2009 to 31 December 2009, there was one customer which contributed revenue of RMB5,421,000 which individually accounted for more than 10% of the total turnover of the Group.

For the year ended 31 December 2010, there were two customers which contributed revenues of RMB1,010,558,000 and RMB294,068,000, respectively, which individually accounted for more than 10% of the total turnover of the Group.

For the five months ended 31 May 2010, there was one customer which contributed revenue of RMB430,520,000 (unaudited) which individually accounted for more than 10% of the total turnover of the Group.

For the five months ended 31 May 2011, there were two customers which contributed revenues of RMB330,680,000 and RMB317,104,000, respectively, which individually accounted for more than 10% of the total turnover of the Group.

7. OTHER GAINS AND LOSSES

	For the
	period from
	29 December	For the
	2009 to	year ended	For the five	months ended
	31 December	31 December	31	May
	2009	2010	2010		2011
	RMB’000	RMB’000	RMB’000		RMB’000
			(unaudited)
Gain on fair value changes on
investment properties	–	400	100		200
Government grants (Note)	–	1,640	500		582
Exchange gain	–	6,829	52		3,703
Interest income	40	2,394	1,260		1,637
Rental income	–	604	181		302
Others	1	242	17		115

	41	12,109	2,110		6,539

Note: Included in government grants during the year ended 31 December 2010 and the five months ended 31 May 2010 and 31 May 2011 were amounts of RMB1,301,000, RMB381,000 (unaudited) and RMB397,000, respectively, which represented the incentive provided by the PRC local authorities to the Group for encouragement of business development in the Yixing region. There were no specific conditions attached to the grants, the Group recognised the grants upon receipts. In respect of the remaining RMB339,000, RMB119,000 (unaudited) and RMB185,000, respectively, they represented government subsidies received for the acquisition of property, plant and equipment as disclosed in note 27.

– IA-25 –

APPENDIX IA

ACCOUNTANTS’ REPORT OF THE GROUP

8. FINANCE COSTS

	For the
	period from
	29 December	For the
	2009 to	year ended	For the five	months ended
	31 December	31 December	31	May
	2009	2010	2010		2011
	RMB’000	RMB’000	RMB’000		RMB’000
			(unaudited)
Interest on bank borrowings
wholly repayable within five
years	62	37,706	16,531		17,087
Less: Amount capitalised	–	(3,422)	(1,427)			–
	62	34,284	15,104		17,087
Interest on financing arrangement
(Note 23)	–	5,102	782			–

	62	39,386	15,886		17,087

Borrowing costs capitalised during the Relevant Periods were related to specific borrowing on qualifying assets.

– IA-26 –

APPENDIX IA

ACCOUNTANTS’ REPORT OF THE GROUP

9. PROFIT FOR THE PERIOD/YEAR

	For the
	period from
	29 December	For the
	2009 to	year ended	For the five	months ended
	31 December	31 December	31	May
	2009	2010	2010		2011
	RMB’000	RMB’000	RMB’000		RMB’000
			(unaudited)
Profit for the period/year has been
arrived at after charging:
Directors’ remuneration (Note 10)	3	674	302		288
Other staff costs:
Salaries and other benefits	454	22,637	9,302		13,904
Retirement benefit scheme
contributions	17	2,431	991		1,306

Total staff costs	474	25,742	10,595		15,498
Less: Staff costs included in
research and development costs	(2)	(673)	(278)		(741)
	472	25,069	10,317		14,757

Cost of inventories recognised as
expenses	4,868	1,116,350	394,958		552,527
Depreciation of property, plant and
equipment	15	14,820	5,644		7,183
Operating lease payment in respect
of property	4	530	116		275
Operating lease rentals in respect of
land use rights	6	1,891	788		788
Research and development costs
(include in administrative
expenses)	4	867	487		961
and after crediting:
Gross rental income from investment
properties (net of nil direct
operating expenses)	–	604	181		302

– IA-27 –

APPENDIX IA ACCOUNTANTS’ REPORT OF THE GROUP

10. DIRECTORS’ AND EMPLOYEES’ EMOLUMENTS

Details of the emoluments paid or payable to the directors of the Company for the Relevant Periods are as follows:

	For	the
	period from
	29 December		For the
	2009 to		year ended	For the five		months		ended
	31 December		31 December		31	May
	2009		2010		2010			2011
	RMB’000		RMB’000	RMB’000			RMB’000
				(unaudited)
Directors’ fees
Other emoluments to independent
non-executive directors		–	–		–			–
Other emoluments to executive
directors
– basic salaries and allowances		–	244		98			139
– performance related incentive
payments		3	421		198			140
– retirement benefits scheme
contributions		–	9		6			9

		3	674		302			288

Details of emoluments paid by the Group to the directors of the Company are as follows:

		For	the
		period from
		29 December		For the
		2009 to		year ended	For the five		months	ended
		31 December		31 December		31	May
		2009		2010		2010		2011
		RMB’000		RMB’000	RMB’000		RMB’000
					(unaudited)
Mr.	Qian Lirong
–	basic salaries and allowances		–	79		32		49
–	performance related incentive
	payments (Note)		1	157		82		76
–	retirement benefits scheme
	contributions		–	3		2		3

			1	239		116		128

Mr.	Jiang Wei
–	basic salaries and allowances		–	82		33		44
–	performance related incentive
	payments (Note)		1	144		66		64
–	retirement benefits scheme
	contributions		–	3		2		3

			1	229		101		111

– IA-28 –

APPENDIX IA

ACCOUNTANTS’ REPORT OF THE GROUP

	For the
	period from
	29 December	For the
	2009 to	year ended	For the five	months ended
	31 December	31 December	31	May
	2009	2010	2010		2011
	RMB’000	RMB’000	RMB’000		RMB’000
			(unaudited)
Mr. Xia Jie
– basic salaries and allowances	–	83	33		46
– performance related incentive
payments (Note)	1	120	50		–
– retirement benefits scheme
contributions	–	3	2		3

	1	206	85		49

Total	3	674	302		288

Note: The performance related incentive payments were determined with reference to the operating results, individual performance and comparable market remuneration packages during the Relevant Periods.

Mr. Xia Jie resigned as director of the Company on 27 May 2011.

Of the five highest paid individuals of the Group for the period from 29 December 2009 to 31 December 2009, the year ended 31 December 2010 and the five months ended 31 May 2010 and 31 May 2011, nil, 3, 3 and 3 were the directors of the Company, details of whose emoluments are set out above. The emoluments of the 5 and remaining 2, 2 and 2 individuals during the period from 29 December 2009 to 31 December 2009, year ended 31 December 2010 and the five months ended 31 May 2010 and 31 May 2011, respectively, were as follows:

	For the
	period from
	29 December	For the
	2009 to	year ended	For the five	months ended
	31 December	31 December	31	May
	2009	2010	2010		2011
	RMB’000	RMB’000	RMB’000		RMB’000
			(unaudited)
Basic salaries and allowances	4	167	67		355
Performance related incentive
payments	106	252	114		105
Retirement benefits scheme
contributions	–	6	4		10

	110	425	185		470

The emoluments of each of the five highest paid individuals (including the directors) during the Relevant Periods were within HK$1,000,000.

During the Relevant Periods, no emoluments were paid by the Group to the directors of the Company and any of the five highest paid individuals as an inducement to join or upon joining the Group or as compensation for loss of office. None of the directors of the Company has waived any emoluments during the Relevant Periods.

– IA-29 –

APPENDIX IA

ACCOUNTANTS’ REPORT OF THE GROUP

11. TAXATION

	For the
	period from
	29 December	For the
	2009 to	year ended	For the five	months ended
	31 December	31 December	31	May
	2009	2010	2010		2011
	RMB’000	RMB’000	RMB’000		RMB’000
			(unaudited)
The charge comprises:
PRC Enterprise Income Tax
(“EIT”)	–	25,002	9,337		13,597
Deferred taxation (Note 29)	–	3,223	1,227		2,193

Taxation charge for the period/year	–	28,225	10,564		15,790

PRC Enterprise Income Tax represents the income tax in the PRC which is calculated at the prevailing tax rate on the taxable income of Jiangsu Trigiant in accordance with the relevant laws and regulations in the PRC.

Pursuant to the relevant laws and regulations, Jiangsu Trigiant was entitled to exemption from Foreign Enterprise Income Tax (“FEIT”) for the first two years commencing from its first profit-making year in 2008, followed by a 50% reduction on the FEIT for the following three years (“Tax Holiday”).

On 16 March 2007, the Enterprise Income Tax Law (the “New EIT Law”) was passed at the Fifth session of the Tenth National People’s Congress of the PRC, the income tax rate for both domestic and foreign-investment enterprise would be unified at 25% effective from 1 January 2008 (Order of the President [2007] No. 63). Jiangsu Trigiant which was entitled to Tax Holiday would continue to enjoy such treatment until the exemption and reduction period expired, at the end of 2012.

No provision for Hong Kong Profits Tax has been made in the Financial Information as the Group does not have any operation in Hong Kong during the Relevant Periods.

The taxation for the period/year can be reconciled to the profit before taxation as follows:

	For the
	period from
	29 December	For the
	2009 to	year ended	For the five	months ended
	31 December	31 December	31	May
	2009	2010	2010		2011
	RMB’000	RMB’000	RMB’000		RMB’000
			(unaudited)
Profit before taxation	149	179,337	61,917		99,738


Tax at the applicable income tax
rate of 25%	37	44,834	15,479		24,934
Tax effect on income not taxable for
tax purpose	–	(1,708)	(254)		(1,169)
Tax effect on expenses not
deductible for tax purpose	–	4,034	1,763		2,452
Tax effect of tax concession	(37)	(22,294)	(7,651)		(12,668)
Withholding tax on undistributed
earnings	–	3,359	1,227		2,241
Taxation for the period/year	–	28,225	10,564		15,790

– IA-30 –

APPENDIX IA ACCOUNTANTS’ REPORT OF THE GROUP

12. DIVIDENDS

No dividend declared by the Company since its incorporation nor was distributed by Trigiant BVI to its then shareholders during the Relevant Periods.

13. EARNINGS PER SHARE

The calculation of the basic earnings per share for the Relevant Periods is based on the following data and on the assumption that the Group Reorganisation has been effective on 29 December 2009 and the capitalisation issue as disclosed in “Statutory and General Information” in Appendix V to the document has been retrospectively adjusted:

	For the
	period from
	29 December	For the
	2009 to	year ended	For the five	months ended
	31 December	31 December	31	May
	2009	2010	2010		2011
	RMB’000	RMB’000	RMB’000		RMB’000
			(unaudited)
Earnings
Profit for the period/year attributable
to the owners of the Company for
the purpose of basic earnings per
share	149	151,112	51,353		83,948


	’000	’000	’000		’000
Number of shares
Weighted average number of
ordinary shares for the purpose
of basic earnings per share	750,000	750,000	750,000		750,000

No dilutive earnings per share is presented as there were no potential dilutive shares during the Relevant Periods.

14. INVESTMENT PROPERTIES

	RMB’000
AT FAIR VALUE
At 29 December 2009 and 31 December 2009	–
Reclassification from land use rights and property, plant and equipment	17,500
Changes in fair value recognised in profit or loss	400
At 31 December 2010	17,900
Changes in fair value recognised in profit or loss	200
At 31 May 2011	18,100

The Group’s investment properties were situated in the PRC under medium-term leases.

During the year ended 31 December 2010, the Group changed the use of certain of its properties (previously classified as property, plant and equipment and land use rights) and rented out for rental income. Upon the transfer to investment properties, the respective buildings and land use rights were revalued at fair value with a gain on revaluation of approximately RMB830,000, which have been credited to property revaluation reserve.

– IA-31 –

APPENDIX IA ACCOUNTANTS’ REPORT OF THE GROUP

The fair value of the Group’s investment properties at date of reclassification, 31 May 2010, 31 December 2010 and 31 May 2011 have been arrived at on the basis of a valuation carried out at those dates by [●], independent qualified professional valuer not connected to the Group. [●] are members of the Hong Kong Institute of Valuers whose address is [●]. The valuation was arrived at by reference to market evidence of recent transaction prices for similar properties or rental income using applicable market yields for similar locations and types of properties.

All of the Group’s property interest held under operating leases to earn rentals or for capital appreciation purposes are measured using the fair value model and are classified and accounted for as investment properties.

15. PROPERTY, PLANT AND EQUIPMENT

			Furniture,
			fixtures
		Plant and	and	Motor	Construction
	Buildings	machinery	equipment	vehicles		in progress		Total
	RMB’000	RMB’000	RMB’000	RMB’000			RMB’000	RMB’000
COST
At 29 December 2009	–	–	–	–			–	–
Acquired on acquisition of a subsidiary
(Note 31)	56,078	90,278	2,174	2,837			35,251	186,618

At 31 December 2009	56,078	90,278	2,174	2,837			35,251	186,618
Additions	2,282	542	1,036	1,553			26,631	32,044
Reclassification to investment properties
(Note 14)	(12,962)	–	–	–			–	(12,962)
Transfer	42,194	19,097	–	–			(61,291)	–

At 31 December 2010	87,592	109,917	3,210	4,390			591	205,700
Additions	846	54	507	–			4	1,411

At 31 May 2011	88,438	109,971	3,717	4,390			595	207,111
DEPRECIATION
At 29 December 2009	–	–	–	–			–	–
Provided for the period	3	10	–	2			–	15
At 31 December 2009	3	10	–	2			–	15
Provided for the year	3,312	9,887	554	1,067			–	14,820
Reclassification to investment properties
(Note 14)	(112)	–	–	–			–	(112)

At 31 December 2010	3,203	9,897	554	1,069			–	14,723
Provided for the period	1,950	4,479	297	457			–	7,183
At 31 May 2011	5,153	14,376	851	1,526			–	21,906
CARRYING VALUES
At 31 May 2011	83,285	95,595	2,866	2,864			595	185,205


At 31 December 2010	84,389	100,020	2,656	3,321			591	190,977


At 31 December 2009	56,075	90,268	2,174	2,835			35,251	186,603

– IA-32 –

APPENDIX IA ACCOUNTANTS’ REPORT OF THE GROUP

The above items property, plant and equipment, other than construction in progress, are depreciated after taking into account their estimated residual value, using straight line method, at the following rates per annum:

Buildings	4.5%
Plant and machinery	9%
Furniture, fixtures and equipment	18%
Motor vehicles	18%

The buildings are located on land in the PRC under a lease term of 50 years.

At 31 December 2009, 31 December 2010 and 31 May 2011, the Group pledged certain of its buildings with aggregate carrying value of RMB53,544,000, RMB36,989,000 and RMB36,223,000, respectively, to certain banks to secure the credit facilities granted to the Group.

At 31 December 2009, 31 December 2010 and 31 May 2011, the Group pledged certain of its machinery with aggregate carrying value of RMB31,285,000, RMB27,064,000 and RMB25,737,000, respectively, to certain banks to secure the credit facilities granted to the Group.

During the period from 29 December 2009 to 31 December 2009, the year ended 31 December 2010 and the five months ended 31 May 2010 and 31 May 2011, interest expenses of nil, RMB3,422,000, RMB1,427,000 (unaudited) and nil, respectively, have been capitalised in construction in progress.

16. LAND USE RIGHTS

	At	At	At
	31 December	31 December	31 May
	2009	2010	2011
	RMB’000	RMB’000	RMB’000
Carrying amount
At beginning of the period/year	–	80,994	75,283
Acquired on acquisition of a subsidiary (Note 31)	81,000	−	–
Transferred to investment properties (Note 14)	–	(3,820)	–
Charge to profit or loss for the period/year	(6)	(1,891)	(788)
At the end of the period/year	80,994	75,283	74,495


Analysed for reporting purposes as:
Current portion	1,891	1,891	1,891
Non-current portion	79,103	73,392	72,604
	80,994	75,283	74,495

The amounts represent prepayment of rentals for land use rights under medium-term lease situated in the PRC for a period of 50 years.

As at 31 December 2009, 31 December 2010 and 31 May 2011, the Group has pledged its land use rights with carrying value of approximately RMB17,783,000, RMB24,416,000 and RMB24,180,000, respectively, to secure general banking facilities granted to the Group.

– IA-33 –

APPENDIX IA ACCOUNTANTS’ REPORT OF THE GROUP

17. AVAILABLE-FOR-SALE INVESTMENTS

	At	At	At
	31 December	31 December	31 May
	2009	2010	2011
	RMB’000	RMB’000	RMB’000
Unlisted equity investment, at cost
Name of investee
江蘇俊知光電通信有限公司
(Jiangsu Trigiant Opto-electrical Telecommunication
Co., Ltd.)
(“Jiangsu Opto-electrical”)	–	14,000	14,000
江蘇俊知傳感技術有限公司
(Jiangsu Trigiant Sensing Technology Co., Ltd.)
(“Jiangsu Sensing”)	–	6,000	6,000
	–	20,000	20,000

The above unlisted equity investments represent 12.5% equity interest in each of the above private entities established in the PRC during the year ended 31 December 2010. Jiangsu Opto-electrical is principally engaged in the manufacture and sales of optical fibre, cables series, electronic components and equipment for communication uses. Jiangsu Sensing is principally engaged in the research, development, manufacture and sales of RF identification system, new electronic components, optoelectronic integrated components, optoelectronic integrated subsystems, microelectronic devices, sensor and micro smart label products. They are measured at cost less impairment at the end of each reporting period because the range of reasonable fair value estimates are so significant that the directors of the Company are of the opinion that their fair values cannot be measured reliably.

18. INVENTORIES

	At	At	At
	31 December	31 December	31 May
	2009	2010	2011
	RMB’000	RMB’000	RMB’000
Raw materials	18,224	14,526	29,829
Work in progress	8,609	7,661	12,281
Finished goods	36,489	37,793	26,410
	63,322	59,980	68,520

– IA-34 –

APPENDIX IA

ACCOUNTANTS’ REPORT OF THE GROUP

19. TRADE AND OTHER RECEIVABLES

	At	At	At
	31 December	31 December	31 May
	2009	2010	2011
	RMB’000	RMB’000	RMB’000
Trade receivables	664,668	759,937	881,553
Bills receivables	37	15,625	12,749

	664,705	775,562	894,302
Prepaid expenses	3,055	1,085	1,832
Interest receivables	996	89	969
Staff advances	–	1,952	2,089
Other receivables	1,411	1,620	1,567

	670,167	780,308	900,759

The Group normally allows a credit period ranging from 180 to 360 days to its customers.

The following is an aged analysis of the trade and bill receivables presented based on the invoice date at the end of each reporting period:

	At	At	At
	31 December	31 December	31 May
	2009	2010	2011
	RMB’000	RMB’000	RMB’000
Age
0 – 90 days	472,589	626,522	498,434
91 – 180 days	147,775	129,595	355,293
181 – 365 days	44,341	19,445	40,575
	664,705	775,562	894,302

Included in the Group’s trade receivables balance are debtors with aggregate carrying amount of RMB43,497,000, RMB19,346,000 and RMB39,919,000 at 31 December 2009, 31 December 2010 and 31 May 2011, respectively, which are past due at end of each reporting period for which the Group has not provided for impairment loss. Based on the historical experiences, trade receivables that are past due but not impaired are generally recoverable. The Group does not hold any collateral over these balances.

The following is an aging analysis of trade receivables which are past due but not impaired:

					At		At	At
				31	December	31	December	31 May
					2009		2010	2011
					RMB’000		RMB’000	RMB’000
Age
181	–	365	days		43,947		19,346	39,919

– IA-35 –

APPENDIX IA ACCOUNTANTS’ REPORT OF THE GROUP

Included in trade and bill receivables are following amounts denominated in currencies other than functional currency of the entity which it relates:

			At		At	At
		31	December	31	December	31 May
			2009		2010	2011
			RMB’000		RMB’000	RMB’000
US	Dollars		1,705		6,462	1,446

20. ADVANCES TO A FORMER FELLOW SUBSIDIARY

The amount represented advances to a former fellow subsidiary of Jiangsu Trigiant, 富威科技(吳江)有限公司 (Fullway Technology Co., Ltd.) (“Fullway Technology”) for the purpose of providing working capital to Fullway Technology for daily operations.

The amount was unsecured, interest free and repayable within one year. The amount was fully settled in 2010.

21. BANK BALANCES AND CASH/PLEDGED BANK DEPOSITS

Bank balances and cash comprise cash held by the Group and short-term bank deposits with an original maturity of three months or less and carry interest at prevailing market rate ranging from 0.05% to 0.36%, 0.36% to 2.25% and 0.01% to 0.5% per annum at 31 December 2009, 31 December 2010 and 31 May 2011, respectively.

The pledged bank deposits carry interest at the prevailing market rate ranging from approximately 1.71% to 3.24%, 1.98% to 2.50% and 1.98% to 3.50% per annum at 31 December 2009, 31 December 2010 and 31 May 2011, respectively.

At 31 December 2009, 31 December 2010 and 31 May 2011, the entire pledged bank deposits represent deposits pledged to banks to secure the bills payables and letters of credit issued by the Group.

Included in bank balance and cash and pledged bank deposits are the following amounts denominated in currencies other than functional currency of the entity which it relates:

	At	At	At
	31 December	31 December	31 May
	2009	2010	2011
	RMB’000	RMB’000	RMB’000
Hong Kong Dollars	–	618	2,093
US Dollars	11	405	1,603
Euro	884	–	–

– IA-36 –

APPENDIX IA

ACCOUNTANTS’ REPORT OF THE GROUP

22. TRADE AND OTHER PAYABLES

	At	At	At
	31 December	31 December	31 May
	2009	2010	2011
	RMB’000	RMB’000	RMB’000
Trade payables
– former fellow subsidiary	23,824	–	–
– others	76,000	54,260	74,479
Bills payables	32,575	180,000	195,000
	132,399	234,260	269,479
Payroll and welfare payables	7,324	6,654	4,252
Bonus and promotional expenses payables	40,000	−	–
Other tax payables	1,569	3,757	6,991
Deposits from suppliers	3,730	6,830	6,773
Amounts due to Jiangsu Opto-electrical and Jiangsu
Sensing	−	18,000	–
Payables for acquisition of property, plant and
equipment	9,151	1,713	2,702
Payable for acquisition of land use rights (Note 28)	8,000	16,000	8,000
Accrued expenses	5,198	2,249	2,608
Other payables	4,856	7,951	5,937
	212,227	297,414	306,742

The Group normally receives credit terms ranging from 30 to 90 days from its suppliers. The following is an aged analysis of trade and bill payables presented based on the invoice date at the end of each reporting period:

	At	At	At
	31 December	31 December	31 May
	2009	2010	2011
	RMB’000	RMB’000	RMB’000
Age
0 – 90 days	111,304	104,218	169,069
91 – 180 days	21,095	130,042	100,410
	132,399	234,260	269,479

At 31 December 2010, the amounts due to Jiangsu Opto-electrical and Jiangsu Sensing of RMB13,000,000 and RMB5,000,000, respectively, represent advances from these companies for daily operations of the Group. The amounts are unsecured, non-interest bearing and repayable on demand. The amounts were fully settled during the five months ended 31 May 2011.

Included in trade and other payables are the following amounts denominated in currencies other than the functional currency of the group entity that it relates:

	At	At	At
	31 December	31 December	31 May
	2009	2010	2011
	RMB’000	RMB’000	RMB’000
Hong Kong Dollars	–	–	106
US Dollars	−	254	–

– IA-37 –

APPENDIX IA

ACCOUNTANTS’ REPORT OF THE GROUP

23. BILLS PAYABLES TO A FORMER FELLOW SUBSIDIARY

During the periods up to October 2010, the Group and its supplier, Wujiang Shi Bin Fan International Trading Limited (“Bin Fan”) and a former fellow subsidiary of Jiangsu Trigiant, Fullway Technology, entered into financing arrangements with certain PRC commercial banks. Under these arrangements, the Group issued bank bills to Bin Fan and Fullway Technology at certain face amounts with pledged bank deposits ranged from 30% to 100% of the face amount of bank bills. These bank bills were used by Bin Fan and Fullway Technology to present to other PRC commercial banks for discounting and then remitted back the proceeds from bills discounting to the Group. During the period from 29 December 2009 to 31 December 2009 and the year ended 31 December 2010, bills amount in aggregate of nil and RMB270,000,000, respectively, were issued by the Group to Bin Fan and Fullway Technology under these financing arrangements. At 31 December 2009 and 31 December 2010, there were bank deposits of RMB159,000,000 and nil, respectively, that were pledged to these PRC commercial banks for these financing arrangements.

During the year ended 31 December 2010, the bank bills issued by the Group and discounted by Bin Fan and Fullway Technology carry interest rates ranging from [2.24]% to [4.35]% per annum. These related interest expenses were incurred and recognised as finance costs of approximately RMB5,102,000 by the Group for the year ended 31 December 2010 and RMB782,000 (unaudited) for the five months ended 31 May 2010.

The Group has ceased to enter into these financing arrangements after April 2010 and all the related bills were settled before the end of October 2010.

24. AMOUNT DUE TO A DIRECTOR

The amount is unsecured, non-interest bearing and repayable on demand. The amount will be settled [after [●]].

Included in the amount due to a director are the following amounts denominated in currencies other than the functional currency of the group entity that it relates to:

				At		At	At
			31	December	31	December	31 May
				2009		2010	2011
Hong	Kong	Dollars		–		2,797	8,556

25. AMOUNTS DUE TO SHAREHOLDERS

The amounts are unsecured, non-interest bearing and repayable on demand. The amounts were denominated in US Dollars. The amounts [will be waived upon [●]].

26. BANK BORROWINGS

		At	At	At
		31 December	31 December	31 May
		2009	2010	2011
		RMB’000	RMB’000	RMB’000
Secured (Note a)		40,000	40,000	40,000
Secured and guaranteed by a director of the Company
and	an independent third party (Note b)	−	100,000	90,000
Unsecured and guaranteed by:
−	a former fellow subsidiary of Jiangsu Trigiant
	(Note c)	15,000	15,000	15,000
−	a former fellow subsidiary of Jiangsu Trigiant
	and an independent third party
	(note c)	20,000	−	–
−	independent third parties (note c)	550,000	385,000	390,000
Unsecured		45,239	290,000	340,400

		670,239	830,000	875,400

– IA-38 –

APPENDIX IA

ACCOUNTANTS’ REPORT OF THE GROUP

	At	At	At
	31 December	31 December	31 May
	2009	2010	2011
	RMB’000	RMB’000	RMB’000
The bank borrowings are payable as follows:
Within one year	600,239	680,000	735,400
More than two years, but not more than five years	70,000	150,000	140,000
	670,239	830,000	875,400
Less: Amounts due within one year shown under
current liabilities	(600,239)	(680,000)	(735,400)

	70,000	150,000	140,000


	At	At	At
	31 December	31 December	31 May
	2009	2010	2011
	RMB’000	RMB’000	RMB’000
The bank borrowings comprise:
Variable rate borrowings	355,000	325,000	425,000
Fixed rate borrowings	315,239	505,000	450,400

Notes:

(a) The bank borrowings were secured by certain buildings and machinery and land use rights owned by the Group as set out in Notes 15 and 16, respectively.
(b) The bank borrowings were secured by land use rights owned by the Group as set out in Note 16. The guarantees will be released [after [●]].
(c) The guarantee will be released [after [●]].

At 31 December 2009, 31 December 2010 and 31 May 2011, the fixed rate bank borrowings carried interests ranging from 4.37% to 7.77%, 4.86% to 5.84% and 4.8% to 6.1% per annum, respectively.

At 31 December 2009, 31 December 2010 and 31 May 2011, the variable-rate bank borrowings which carried interests ranging from PBOC rate to 110% of PBOC rate, 90% of PBOC rate to 110% of PBOC rate and 90% of PBOC rate to 110% PBOC rate per annum, respectively. All bank borrowings at 31 December 2009, 31 December 2010 and 31 May 2011 were denominated in RMB.

– IA-39 –

APPENDIX IA

ACCOUNTANTS’ REPORT OF THE GROUP

27. GOVERNMENT GRANTS

	At	At	At
	31 December	31 December	31 May
	2009	2010	2011
	RMB’000	RMB’000	RMB’000
At beginning of the period/year	–	−	2,770
Additions during the period/year	−	3,109	–
Release to profit or loss for the period/year	−	(339)	(185)
At the end of the period/year	−	2,770	2,585

During the year ended 31 December 2010, the Group received government subsidies of RMB3,109,000 in relation to the acquisition of property, plant and equipment. The amounts have been treated as deferred income and were transferred to income over the useful lives of the relevant assets.

28. PAYABLE FOR ACQUISITION OF LAND USE RIGHTS

								At		At	At
							31	December	31	December	31 May
								2009		2010	2011
								RMB’000		RMB’000	RMB’000
Payable	for	acquisition	of	land	use	rights		21,502		21,502	13,502

The amount represents payable for acquisition of land use rights located in PRC. The respective land use rights certificates were obtained by the Group upon the acquisition in 2009.

The Group is required to repay the above amount:

	At	At	At
	31 December	31 December	31 May
	2009	2010	2011
	RMB’000	RMB’000	RMB’000
Within one year (note 22)	8,000	16,000	8,000
More than one year, but not more than two years	8,000	5,502	5,502
More than two years, but not more than five years	5,502	–	–
	21,502	21,502	13,502

– IA-40 –

ACCOUNTANTS’ REPORT OF THE GROUP

APPENDIX IA

29. DEFERRED TAXATION

The following is the deferred tax liabilities recognised by the Group and movements thereon during the Relevant Periods:

	Fair value
	adjustment	Tax on
	on	undistributed	Revaluation
	Acquisition	earnings	of properties	Total
	RMB’000	RMB’000	RMB’000	RMB’000
At 29 December 2009	–	–	–	–
Addition relating to the Acquisition
(Note 31)	9,506	–	–	9,506

At 31 December 2009	9,506	−	−	9,506
Charged to other comprehensive
income	–	–	208	208
(Credited) charged to profit or loss
for the year	(236)	3,359	100	3,223
At 31 December 2010	9,270	3,359	308	12,937
(Credited) charged to profit or loss
for the period	(98)	2,241	50	2,193
At 31 May 2011	9,172	5,600	358	15,130

Under the New EIT Law, withholding tax is imposed on dividends declared in respect of profits earned by a PRC subsidiary from 1 January 2008 onwards. Deferred tax liability on the undistributed profits earned have been accrued at the tax rate of 10% on the expected dividend stream of [30]% which is determined by the directors of the Company.

30. SHARE CAPITAL

The Group

The share capital at 31 December 2009 represented the fully paid share capital of Trigiant BVI and the share capital at 31 December 2010 and 31 May 2011 represented the combined issued and fully paid share capital of the Company and Trigiant BVI.

The Company

The Company was incorporated in the Cayman Islands on 23 December 2010 with an authorised share capital of HK$100,000 divided into 10,000,000 shares of HK$0.01 each and on the same date, one subscriber share of HK$0.01 each was issued at nil paid to the subscriber and then transferred to Abraholme. At 31 December 2010 and 31 May 2011, the number of authorised and issued share capital remained unchanged from the date of incorporation and no movement has been made during the period from the date of incorporation to 31 May 2011.

31. ACQUISITION OF A SUBSIDIARY

On 28 December 2009, Trigiant Hong Kong entered into an equity transfer agreement with Trigiant Group Pte whereby Trigiant Group Pte transfer the entire equity interest in Jiangsu Trigiant to Trigiant Hong Kong for a total cash consideration of US$30,000,000 (equivalent to RMB204,906,000). The directors of the Company considered that the Acquisition was completed on 29 December 2009 when the Acquisition was approved by the respective board of directors of Trigiant Hong Kong and Trigiant Group Pte and obtained approval from the relevant PRC government authority on the same date. The cash consideration was fully settled on 30 January 2010.

– IA-41 –

APPENDIX IA

ACCOUNTANTS’ REPORT OF THE GROUP

The net assets acquired in the Acquisition were as follows:

	Acquiree’s
	carrying
	amount before	Fair value
	combination	adjustments	Fair value
	RMB’000	RMB’000	RMB’000
Property, plant and equipment	177,144	9,474	186,618
Land use rights	52,449	28,551	81,000
Inventories	65,300	–	65,300
Trade and other receivables	673,497	–	673,497
Advances to a former fellow subsidiary	66,000	–	66,000
Pledged bank deposits	206,295	–	206,295
Bank balances and cash	89,400	–	89,400
Trade and other payables	(209,010)	–	(209,010)
Amount due to a director of Jiangsu Trigiant	(34,000)	–	(34,000)
Bills payables under financing arrangement	(164,000)	–	(164,000)
Government grants	(1,895)	1,895	–
Bank borrowings	(670,239)	–	(670,239)
Payable for acquisition of land use rights	(13,502)	–	(13,502)
Deferred tax liabilities	–	(9,506)	(9,506)

	237,439	30,414	267,853


Deemed contribution from Shareholders			(62,947)

Consideration			204,906

Satisfied by:
Consideration included in payable for
acquisition of a subsidiary as at
31 December 2009			204,906

Cash flow arising on the Acquisition:
Cash consideration paid in 2010			(204,906)
Bank balances and cash acquired in 2009			89,400

32. OPERATING LEASE COMMITMENTS

The Group as lessee

At the end of the reporting period, the Group had commitments for future minimum lease payments under non-cancellable operating leases in respect of rented premises which fall due as follows:

				At		At	At
			31	December	31	December	31 May
				2009		2010	2011
				RMB’000		RMB’000	RMB’000
Within	one	year		188		160	349

The leases are negotiated for a lease term of 1 to 2 years at fixed monthly rental.

– IA-42 –

APPENDIX IA ACCOUNTANTS’ REPORT OF THE GROUP

The Group as lessor

Property rental income earned during the year ended 31 December 2010 and the five months ended 31 May 2010 and 31 May 2011 were RMB604,000, RMB181,000 (unaudited) and RMB302,000 respectively. The Group’s properties are expected to generate rental yield of [4.0]% on an ongoing basis. At 31 December 2010 and 31 May 2011, all of the properties held have committed tenants, Jiangsu Opto-electrical and Jiangsu Sensing, for the next three years.

At the end of the reporting period, the Group had contracted with tenants for the following future minimum lease payments:

	At	At	At
	31 December	31 December	31 May
	2009	2010	2011
	RMB’000	RMB’000	RMB’000
Within one year	–	725	725
In the second to fifth years inclusive	−	846	544
	–	1,571	1,269

33. RELATED PARTY TRANSACTIONS

Other than the transactions and balances with related parties disclosed in the respective notes, the Group had the following transactions with Jiangsu Opto-electrical and Jiangsu Sensing during the Relevant Periods.

	For the
	period from
	29 December	For the year
	2009 to	ended	For the five months
	31 December	31 December	ended	31 May
	2009	2010	2010		2011
	RMB’000	RMB’000	RMB’000		RMB’000
			(unaudited)
Rented buildings to and received
rental income from:
– Jiangsu Opto-electrical	–	403	121		202
– Jiangsu Sensing	–	201	60		100
	–	604	181		302


Sale of goods to:
– Jiangsu Opto-electrical	–	1,834	1,225		1,855
– Jiangsu Sensing	–	300	300		–
	–	2,134	1,525		1,855

– IA-43 –

APPENDIX IA ACCOUNTANTS’ REPORT OF THE GROUP

During the year ended 31 December 2010, the Group has engaged two companies controlled by Mr. Toe Teow Heng (“Mr. Toe”) and his brother (Mr. Toe Teow Teck) namely 北京因特聯企業諮詢有限公司 (Beijing Yin Te Lian Corporate Consultancy Co., Ltd.) (“Beijing YTL”) and ICH Partners Ltd (“ICH Partners”), to provide the Group with the following services in connection with the preparation for [●]:

[●]

Mr. Toe is the ultimate beneficial owner of Zymmetry Investments Ltd, which is currently a shareholder of Trigiant BVI during the Relevant Periods.

In the opinion of the directors of the Company, the above transaction were conducted on mutually agreed price and terms between the Group and the related parties and in the Group’s ordinary and usual course of business.

The details of remuneration of key management personnel, represents emoluments of directors of the Company paid during the Relevant Periods, are set out in Note 10.

34. RETIREMENT BENEFITS SCHEMES

The employees employed in the PRC are members of the state-managed retirement benefit schemes operated by the PRC government. The Group is required to contribute a certain percentage of its payroll to the retirement benefit schemes to fund the benefits. The only obligation of the Group with respect to the retirement benefit schemes is to make the required contributions under the scheme.

35. CAPITAL COMMITMENTS

	At	At	At
	31 December	31 December	31 May
	2009	2010	2011
	RMB’000	RMB’000	RMB’000
Capital expenditure contracted for but not provided in
the Financial Information in respect of the
acquisition of property, plant and equipment	8,468	4,160	208

– IA-44 –

APPENDIX IA ACCOUNTANTS’ REPORT OF THE GROUP

F. IMMEDIATE AND ULTIMATE HOLDING COMPANY

The Company’s immediate and ultimate holding company is Abraholme, a company which is incorporated in the British Virgin Islands.

G. DIRECTORS’ REMUNERATION

Save as disclosed in the Financial Information, no other remuneration has been paid or payable by the Group to the directors of the Company in respect of the Relevant Periods.

Under the arrangements presently in force, the aggregate remuneration for the Company’s directors for the year ending 31 December 2011 is approximately RMB[2.1] million.

H. EVENTS AFTER THE REPORTING PERIOD

The following events took place subsequent to 31 May 2011:

(a) Pursuant to a deed of wavier entered between the Company and the Shareholders on [●] 2011, the Shareholders unconditionally and irrevocably waived absolutely all its title, claims, benefits, rights and remedies against the Company in respect of the Shareholder’s loans amounting to US$30,000,000 (approximately RMB194,367,000).
(b) Pursuant to the resolutions of the sole shareholder which were passed to approve the matters set out in the paragraph headed “Resolutions in writing of the sole shareholder passed on [●] 2011” in Appendix V of the document:
(i) [●]
(ii) conditional on the share premium account of the Company being credited as a result of the issue of shares of the Company in relation to [●] (including [●] pursuant to the exercise of the [●]), the directors of the Company were authorised to allot and issue a total of [●] shares [●] to the holders of shares whose names appear on the register of members of the Company at the close of business on [●] 2011 (or as they may direct) in proportion to their then existing respective shareholdings (save that no shareholder shall be entitled to be allotted and issued any fraction of a share) by way of [●] standing to the credit of [●] of the Company, and the shares be allotted and issued pursuant to this resolution shall rank pari passu in all respects with the existing issued shares.

– IA-45 –

I. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by the Company or any of the companies of the Group in respect of any period subsequent to 31 May 2011.

Yours faithfully, [●]

– IA-46 –

APPENDIX IB ACCOUNTANTS’ REPORT OF JIANGSU TRIGIANT

The following is the text of a report received from the Company’s reporting accountants, [ ● ], Certified Public Accountants, Hong Kong, for the purpose of incorporation in this document.

[●]

[Date]

The Directors

Jiangsu Trigiant Technology Co., Ltd. SinoPac Securities (Asia) Limited

Dear Sirs,

We set out below our report on the financial information (the “Jiangsu Trigiant Financial Information”) relating to Jiangsu Trigiant Technology Co., Ltd. (“Jiangsu Trigiant”) for the year ended 31 December 2008 and for the period from 1 January 2009 to 28 December 2009 (the date prior to change in controlling shareholders) (the “Predecessor Track Record Periods”), for the inclusion in the document of Trigiant Group Limited (the “Company”) dated [●] (the “document”) in connection with the [●] of the Company [●].

Jiangsu Trigiant was established in Jiangsu, the People’s Republic of China (the “PRC”) by Trigiant Group Pte Ltd. (“Trigiant Group Pte”) as a wholly foreign owned enterprise on 15 March 2007. Pursuant to an equity transfer agreement dated 28 December 2009, Trigiant Group Pte transferred the entire equity interest in Jiangsu Trigiant to Trigiant (HK) Limited (“Trigiant Hong Kong”) and Jiangsu Trigiant became a subsidiary of Trigiant Hong Kong from 29 December 2009. The principal activity of Jiangsu Trigiant is manufacturing and sales of Radio Frequency (“RF”) cable series and related products for mobile telecommunications.

The Jiangsu Trigiant Financial Information is prepared to present the historical financial information of Jiangsu Trigiant during the Predecessor Track Record Periods.

Jiangsu Trigiant adopted 31 December as its financial year end date.

The statutory financial statements of Jiangsu Trigiant for the year ended 31 December 2008 were prepared in accordance with the relevant accounting principles and financial regulation applicable to enterprises registered in the PRC and were audited by [●], certified public accountants registered in the PRC. No audited financial statements have been prepared for Jiangsu Trigiant for the period from 1 January 2009 to 28 December 2009 as there is no such statutory requirement.

– IB-1 –

APPENDIX IB ACCOUNTANTS’ REPORT OF JIANGSU TRIGIANT

For the purpose of this report, the directors of Jiangsu Trigiant have prepared the financial statements of Jiangsu Trigiant for the Predecessor Track Record Periods (the “Jiangsu Trigiant Underlying Financial Statements”) in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”). We have audited the Jiangsu Trigiant Underlying Financial Statements in accordance with the Hong Kong Standards on Auditing issued by the HKICPA.

For the purpose of this report, we have examined the Jiangsu Trigiant Underlying Financial Statements in accordance with the Auditing Guideline 3.340 “Prospectuses and the Reporting Accountant” as recommended by the HKICPA.

The Jiangsu Trigiant Financial Information for the Predecessor Track Record Periods set out in this report has been prepared from the Jiangsu Trigiant Underlying Financial Statements. No adjustments were considered necessary to the Jiangsu Trigiant Underlying Financial Statements in preparing our report for inclusion in the document.

The Jiangsu Trigiant Underlying Financial Statements are the responsibility of the directors of Jiangsu Trigiant who approve their issue. The directors of the Company are responsible for the contents of the document in which this report is included. It is our responsibility to compile the Jiangsu Trigiant Financial Information set out in this report from the Jiangsu Trigiant Underlying Financial Statements, to form an independent opinion on the Jiangsu Trigiant Financial Information and to report our opinion to you.

In our opinion, the Jiangsu Trigiant Financial Information gives, for the purpose of this report, a true and fair view of the state of affairs of Jiangsu Trigiant as at 31 December 2008 and 28 December 2009 and of the results and cash flows of Jiangsu Trigiant for the Predecessor Track Record Periods.

– IB-2 –

APPENDIX IB ACCOUNTANTS’ REPORT OF JIANGSU TRIGIANT

A. STATEMENTS OF COMPREHENSIVE INCOME

			For the
			period from
			1 January
		Year ended	2009 to
		31 December	28 December
	Section E	2008	2009
	Notes	RMB’000	RMB’000
Turnover	6	232,742	865,009
Cost of goods sold		(190,820)	(654,888)
Gross profit		41,922	210,121
Other gains and losses	7	2,220	5,709
Selling and distribution costs		(7,302)	(60,849)
Administrative expenses		(19,405)	(43,510)
Finance costs	8	(2,163)	(26,217)
Profit for the year/period and total
comprehensive income attributable
to the owner of Jiangsu Trigiant	9	15,272	85,254

– IB-3 –

APPENDIX IB ACCOUNTANTS’ REPORT OF JIANGSU TRIGIANT

B. STATEMENTS OF FINANCIAL POSITION

		At	At
		31 December	28 December
	Section E	2008	2009
	Notes	RMB’000	RMB’000
Non-current assets
Property, plant and equipment	13	107,828	177,144
Land use rights	14	11,514	51,223
		119,342	228,367

Current assets
Inventories	15	40,483	65,300
Trade and other receivables	16	250,526	673,497
Advances to a fellow subsidiary	17	30,000	66,000
Land use rights	14	244	1,226
Pledged bank deposits	18	81,199	206,295
Bank balances and cash	18	9,400	89,400

		411,852	1,101,718

Current liabilities
Trade and other payables	19	101,997	209,010
Amount due to a director	20	27,000	34,000
Bills payable to a fellow subsidiary	21	70,000	164,000
Bank borrowings – due within one year	22	94,696	600,239
		293,693	1,007,249

Net current assets		118,159	94,469

Total assets less current liabilities		237,501	322,836

Non-current liabilities
Government grants	23	1,900	1,895
Payable for acquisition of land use
rights	24	–	13,502
Bank borrowings – due after one year	22	80,000	70,000
		81,900	85,397

Net assets		155,601	237,439


Capital and reserves
Paid-in capital	25	148,339	216,670
Reserves		7,262	20,769

Total equity		155,601	237,439

– IB-4 –

APPENDIX IB ACCOUNTANTS’ REPORT OF JIANGSU TRIGIANT

C. STATEMENTS OF CHANGES IN EQUITY

		Statutory	Accumulated
	Paid-in	surplus	(losses)
	capital	reserve fund	profits	Total
	RMB’000	RMB’000	RMB’000	RMB’000
		(Note a)
At 1 January 2008	122,838	–	(8,010)	114,828
Profit and total
comprehensive income
for the year	–	–	15,272	15,272
Capital injection (Note b)	25,501	–	–	25,501
Transfers	–	1,516	(1,516)	–
At 31 December 2008	148,339	1,516	5,746	155,601

Profit and total
comprehensive income
for the period	–	–	85,254	85,254
Capitalisation of
accumulated profits
(Note c)	68,331	–	(71,747)	(3,416)
At 28 December 2009	216,670	1,516	19,253	237,439

Notes:

(a) As stipulated by the relevant laws and regulations for foreign investment enterprises in the PRC, Jiangsu Trigiant is required to maintain a statutory surplus reserve fund. Appropriation to such reserve is made out of net profit after taxation as reflected in the statutory financial statements of Jiangsu Trigiant while the amount and allocation basis are decided by its board of directors annually. The statutory surplus reserve fund can be used to make up prior year losses, if any, and can be applied for conversion into capital by means of capitalisation issue.
(b) On 27 March 2008, the registered capital of Jiangsu Trigiant was increased from USD16,370,000 to USD20,000,000 by way of injection of machinery. The capital injection was approved by the relevant PRC authority in December 2007 and verified by a certified public accountant registered in the PRC on 27 March 2008.
(c) Pursuant to a resolution passed at the shareholder’s meeting of Jiangsu Trigiant dated 25 June 2009, accumulated profits of RMB68,331,000 (net of withholding tax paid of RMB3,416,000) was capitalised in the paid-in capital of Jiangsu Trigiant. As a result, the registered capital of Jiangsu Trigiant was increased from USD20,000,000 to USD30,000,000 and was approved by the relevant PRC authority.

– IB-5 –

APPENDIX IB ACCOUNTANTS’ REPORT OF JIANGSU TRIGIANT

D. STATEMENTS OF CASH FLOWS

		For the period
		from
		1 January
	Year ended	2009 to
	31 December	28 December
	2008	2009
	RMB’000	RMB’000
Operating activities
Profit before taxation	15,272	85,254
Adjustments for:
Interest income	(1,107)	(4,872)
Government grants	(100)	(105)
Finance costs	2,163	26,217
Depreciation of property, plant and equipment	3,208	9,996
Operating lease rentals in respect of
land use rights	244	811
Operating cash flows before movements in
working capital	19,680	117,301
Increase in inventories	(31,346)	(24,817)
Increase in trade and other receivables	(248,051)	(422,231)
Increase in trade and other payables	92,119	90,708
Net cash used in operating activities	(167,598)	(239,039)
Investing activities
Interest received	851	4,132
Government grants received	2,000	100
Purchase of property, plant and equipment	(48,158)	(63,737)
Purchase of land use rights	–	(20,000)
Advances to a fellow subsidiary	(60,786)	(46,000)
Repayment from a fellow subsidiary	40,786	10,000
New pledged bank deposits placed	(86,146)	(599,214)
Release of pledged bank deposits	4,950	474,118
Net cash used in investing activities	(146,503)	(240,601)
Financing activities
Withholding tax paid on capitalisation of
accumulated profits	–	(3,416)
Interest paid	(7,052)	(33,487)
Bills payable to a fellow subsidiary raised	70,000	494,000
Repayment of bills payable to a fellow subsidiary	–	(400,000)
New bank borrowings raised	174,696	829,300
Repayment of bank borrowings	–	(333,757)
Advance from a director	27,000	7,000

Net cash from financing activities	264,644	559,640
Net (decrease) increase in cash and cash equivalents	(49,457)	80,000
Cash and cash equivalent at beginning of the
year/period	58,857	9,400
Cash and cash equivalent at end of the year/period,
represented by bank balances and cash	9,400	89,400

– IB-6 –

APPENDIX IB ACCOUNTANTS’ REPORT OF JIANGSU TRIGIANT

E. NOTES TO THE FINANCIAL INFORMATION

1. GENERAL INFORMATION

Jiangsu Trigiant is a limited liability company established in the PRC on 15 March 2007 with an operating period of 50 years. The registered office and the principle place of business is No. 1 Junzhi Road, Industrial Park for Environmental Protection Science & Technology, Yixing City, Jiangsu Province, the PRC. Jiangsu Trigiant is engaged in the manufacturing and trading of cable series and related products for mobile telecommunications.

The Jiangsu Trigiant Financial Information is presented in Renminbi (“RMB”), which is the same as the functional currency of Jiangsu Trigiant.

2. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS (“HKFRSs”)

For the purpose of preparing and presenting the Jiangsu Trigiant Financial Information for the Predecessor Track Record Periods, Jiangsu Trigiant has consistently applied, throughout the Predecessor Track Record Periods, the Hong Kong Accounting Standards (“HKAS”s) and HKFRSs, Amendments and Interpretations (hereinafter collectively referred to as the “new HKFRSs”) which are effective for the accounting period beginning on 1 January 2011.

At the date of this report, the following new and revised standards and amendments have been issued but are not yet effective:

HKFRS 7 (Amendments)	Disclosures-transfer of financial assets3
HKFRS 9	Financial Instruments1
HKFRS 10	Consolidated Financial Statements1
HKFRS 11	Joint Arrangements1
HKFRS 12	Disclosure of Interests in Other Entities1
HKFRS 13	Fair Value Measurement1
HKAS 1 (Amendments)	Presentation of Items of Other Comprehensive Income4
HKAS 12 (Amendments)	Deferred Tax: Recovery of Underlying Assets2
HKAS 19 (Revised 2011)	Employee Benefits1
HKAS 27 (Revised 2011)	Separate Financial Statements1
HKAS 28 (Revised 2011)	Investments in Associates and Joint Ventures1

IFRIC represents the International Financial Reporting Interpretation Committee.
1 Effective for annual periods beginning on or after 1 January 2013.
2 Effective for annual periods beginning on or after 1 January 2012.
3 Effective for annual periods beginning on or after 1 July 2011.
4 Effective for annual periods beginning on or after 1 July 2012.

Jiangsu Trigiant has not early adopted these new and revised standards or amendments in the preparation of the Jiangsu Trigiant Financial Information.

The directors of Jiangsu Trigiant anticipate that the application of other new and revised standards or amendments will have no material impact on the Jiangsu Trigiant Financial Information.

– IB-7 –

APPENDIX IB ACCOUNTANTS’ REPORT OF JIANGSU TRIGIANT

3. SIGNIFICANT ACCOUNTING POLICIES

The Jiangsu Trigiant Financial Information has been prepared on the historical cost basis in accordance with the accounting policies set out below which conform with HKFRSs.

In addition, the Jiangsu Trigiant Financial Information includes applicable disclosures required by [●] and by the Hong Kong Companies Ordinance.

Revenue recognition

Revenue from the sale of goods is recognised when goods are delivered and title has passed.

Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to Jiangsu Trigiant and the amount of revenue can be measured reliably. Interest income from a financial asset is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts the estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition.

Property, plant and equipment

Land use rights

The up-front payments to acquire leasehold interest in land are accounted for as operating leases and are stated at cost and released over the lease term on a straight line basis.

Borrowing costs

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

– IB-8 –

APPENDIX IB ACCOUNTANTS’ REPORT OF JIANGSU TRIGIANT

Research and development costs

Expenditure on research activities is recognised as an expense in the period in which it is incurred.

Where no internally generated intangible asset can be recognised, development expenditure is charged to profit or loss in the period in which it is incurred.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is calculated using the weighted average method.

Impairment losses

At the end of the reporting period, Jiangsu Trigiant reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.

Financial instruments

Financial assets and financial liabilities are recognised in the statements of financial position when an entity becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.

Financial assets

Jiangsu Trigiant’s financial assets are mainly classified into loans and receivables.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset, or, where appropriate, a shorter period to the net carrying amount on initial recognition.

Interest income is recognised on an effective interest basis for debt instruments.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Subsequent to initial recognition, loans and receivables (including trade and other receivables, advances to a fellow subsidiary, pledged bank deposits, bank balances and cash) are carried at amortised cost using the effective interest method, less any identified impairment losses.

Impairment of financial assets

– IB-9 –

APPENDIX IB ACCOUNTANTS’ REPORT OF JIANGSU TRIGIANT

Objective evidence of impairment could include:

significant financial difficulty of the issuer or counterparty; or
default or delinquency in interest or principal payments; or
it becoming probable that the borrower will enter bankruptcy or financial re-organisation.

For certain categories of financial asset, such as trade receivables that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include Jiangsu Trigiant’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the credit period granted, observable changes in national or local economic conditions that correlate with default on receivables.

An impairment loss is recognised in profit or loss when there is objective evidence that the asset is impaired, and is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the original effective interest rate.

If, in a subsequent period, the amount of impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment losses was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

Financial liabilities and equity instruments

Financial liabilities and equity instruments issued by the entity are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of Jiangsu Trigiant after deducting all of its liabilities.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period to the net carrying amount on initial recognition.

Interest expense is recognised on an effective interest basis.

Financial liabilities

Financial liabilities, including trade and other payables, bills payable to a fellow subsidiary, payable for acquisition of land use rights, amount due to a director and bank borrowings, are subsequently measured at amortised cost, using the effective interest method.

Equity instruments

Equity instruments issued by Jiangsu Trigiant are recorded at the proceeds received, net of direct issue costs.

Derecognition

Financial assets are derecognised when the contractual rights to receive cash flows from the assets expire or the financial assets are transferred and Jiangsu Trigiant has transferred substantially all the risks and rewards of ownership of the financial assets. On derecognition of a financial asset, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss.

– IB-10 –

APPENDIX IB ACCOUNTANTS’ REPORT OF JIANGSU TRIGIANT

On derecognition of a financial asset other than in its entirety (e.g. when Jiangsu Trigiant retains an option to repurchase part of a transferred asset or retains a residual interest that does not result in the retention of substantially all the risks and rewards of ownership and Jiangsu Trigiant retains control), Jiangsu Trigiant allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year/period. Taxable profit differs from profit for the year/period as reported in the statements of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. Jiangsu Trigiant’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset is realised, based on tax rate (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which Jiangsu Trigiant expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax is recognised in profit or loss, except when it relates to items that are recognised in other comprehensive income or directly in equity, in which case the deferred tax is also recognised in other comprehensive income or directly in equity respectively.

Foreign currencies

In preparing the financial statements of Jiangsu Trigiant, transactions in currencies other than the functional currency of Jiangsu Trigiant (foreign currencies) are recorded in the respective functional currency (i.e. the currency of the primary economic environment in which the entity operates) at the rates of exchanges prevailing on the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on the re-translation of monetary items, are recognised in profit or loss in the year/period in which they arise.

Operating leases

Rentals payable under operating leases are charged to the profit or loss on a straight line basis over relevant leases. Benefits received and receivable as an incentive to enter into an operating lease are recognised as a reduction of rental expense over the lease term on a straight line basis.

– IB-11 –

APPENDIX IB ACCOUNTANTS’ REPORT OF JIANGSU TRIGIANT

Government grants

Government grants are recognised in profit or loss on a systematic basis over the periods in which Jiangsu Trigiant recognises as expenses the related costs for which the grants are intended to compensate. Government grants related to depreciable assets are recognised as deferred income in the statements of financial position and released to profit or loss over the useful lives of the related assets. Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to Jiangsu Trigiant with no future related costs are recognised in profit or loss in the period in which they become receivable.

Retirement benefit costs

Payments to state-managed retirement benefit schemes are charged as expenses when employees have rendered service entitling them to the contributions.

4. CAPITAL RISK MANAGEMENT

Jiangsu Trigiant manages its capital to ensure that the entity will be able to continue as a going concern while maximising the return to the owner through optimisation of the debt and equity balance. The overall strategy remains unchanged during the Predecessor Track Record Periods.

The capital structure of Jiangsu Trigiant consists of bank borrowings, net of cash and cash equivalents and equity attributable to the owner of Jiangsu Trigiant, comprising paid-in capital and reserves.

The management of Jiangsu Trigiant reviews the capital structure periodically. As part of the review, the management considers the cost of capital and the risks associated with each class of capital and will balance its overall capital structure through the payment of dividends, capital injections as well as the issue of new debts or the redemption of existing debts.

5. FINANCIAL INSTRUMENTS

Categories of financial instruments

	At	At
	31 December	28 December
	2008	2009
	RMB’000	RMB’000
Financial assets
Loans and receivables (including cash and cash equivalents)	369,659	1,032,137


Financial liabilities
Amortised cost	362,023	1,084,311

Financial risk management objectives and policies

Jiangsu Trigiant’s major financial instruments include trade and other receivables, advances to a fellow subsidiary, pledged bank deposits, bank balances and cash, trade and other payables, amount due to a director, bills payable to a fellow subsidiary, payable for acquisition of land use rights and bank borrowings. Details of these financial instruments are disclosed in the respective notes. The risks associated with these financial instruments include market risks (interest rate risk and currency risk), credit risk and liquidity risk. The policies on how to mitigate these risks are set out below. The management manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner.

– IB-12 –

APPENDIX IB ACCOUNTANTS’ REPORT OF JIANGSU TRIGIANT

Interest rate risk

Jiangsu Trigiant is exposed to cash flow interest rate risk through the impact of rate changes on interest bearing financial assets and liabilities, mainly interest bearing pledged bank deposits, bank balances and bank borrowings at variable interest rates. Bank borrowings at fixed interest rates exposed Jiangsu Trigiant to fair value interest rate risk. Jiangsu Trigiant currently does not have an interest rate hedging policy. However, the management will consider hedging significant interest rate risk should the needs arise. Jiangsu Trigiant’s cash flow interest rate risk is mainly concentrated on the fluctuation of the interest rates offered by the People’s Bank of China (“PBOC”) from its RMB denominated borrowings.

							For the
							period from
							1 January
						Year ended	2009 to
						31 December	28 December
						2008	2009
						RMB’000	RMB’000
Increase	in	profit	for	the	year/period	134	555

There would be an equal and opposite impact on the profit for the year/period where there had been 5 basis points higher for pledged bank deposits and bank balances and 25 basis points higher for bank borrowings. In the opinion of the directors of Jiangsu Trigiant, the sensitivity analysis is unrepresentative of the inherent risk as the exposures at the end of each reporting period do not reflect the exposure during the Predecessor Track Record Periods.

Currency risk

Jiangsu Trigiant has foreign currency sales during the Predecessor Track Record Periods which exposed to foreign currency risk. During the year ended 31 December 2008 and the period from 1 January 2009 to 28 December 2009, approximately 5.89% and 0.56% of Jiangsu Trigiant’s sales, respectively, are denominated in currency other than the functional currency of Jiangsu Trigiant.

The carrying amounts of Jiangsu Trigiant’s foreign currency denominated monetary assets and liabilities at the end of each reporting period are as follows:

	At		At
	31 December	2008	28 December	2009
	Assets	Liabilities	Assets	Liabilities
	RMB’000	RMB’000	RMB’000	RMB’000
US Dollars	10,311	9,696	1,716	–
Euro	16,375	–	884	–

– IB-13 –

APPENDIX IB ACCOUNTANTS’ REPORT OF JIANGSU TRIGIANT

Jiangsu Trigiant is mainly exposed to currency risk of US Dollars and Euro. The following table details Jiangsu Trigiant’s sensitivity to a 5% increase and decrease in the RMB against the relevant foreign currencies. Jiangsu Trigiant currently does not have any foreign currencies hedging policy and will consider hedging its foreign currency exposure should the needs arise. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the end of each reporting period for a 5% change in foreign currency rates. The sensitivity analysis includes bank balances, trade and other receivables and bank borrowings. If the RMB strengthens 5% against the relevant currencies the post tax profit for the year/period will be decreased as follows:

		For the
		period from
		1 January
	Year ended	2009 to
	31 December	28 December
	2008	2009
	RMB’000	RMB’000
US Dollars	31	86
Euro	819	44

There would be an equal and opposite impact on the result for the year/period if RMB weakens 5% against the relevant currencies. In the opinion of the directors of Jiangsu Trigiant, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk as the exposures at the end of each reporting period do not reflect the exposure during the Predecessor Track Record Periods.

Credit risk

Jiangsu Trigiant’s maximum exposure to credit risk in the event of the counterparties’ failure to perform their obligations at the end of each reporting period in relation to each class of recognised financial assets is the carrying amount of those assets as stated in the statements of financial position.

Jiangsu Trigiant has concentration of credit risk in relation to trade receivables from top three customers amounting to RMB233,930,000 and RMB603,430,000 representing approximately 100% and 90% of the total trade receivables at 31 December 2008 and 28 December 2009, respectively. The largest trade receivable from a customer by itself accounted for approximately 96% and 76% of the total trade receivables at 31 December 2008 and 28 December 2009, respectively. In order to minimise the credit risk, the management has reviewed the recoverable amounts of trade receivables regularly to ensure that follow-up action is taken timely and assigned a dedicated team to monitor the credit risk that takes into consideration the ageing status and estimate the likelihood of collection. In this regard, the directors of Jiangsu Trigiant consider that the credit risk on trade receivables is significantly reduced.

Jiangsu Trigiant also has concentration of credit risk in relation to net advances to a fellow subsidiary amounting to RMB12,672,000 and RMB42,176,000 at 31 December 2008 and 28 December 2009, respectively. In order to minimise the credit risk, the management has reviewed the recoverable amount of the advances to a fellow subsidiary and its financial ability regularly to ensure that follow-up action is taken timely. In this regard, the directors of Jiangsu Trigiant consider that the credit risk on advances to a fellow subsidiary is significantly reduced. The directors of Jiangsu Trigiant considered that the credit risk relating to advances to a fellow subsidiary is not significant since the amounts were subsequently settled in 2010.

Jiangsu Trigiant’s credit risk on bank balances and deposits or bills receivables is limited and there is no significant concentration of credit risk because all bank deposits or bills are deposited in or contracted with several state-owned banks with good reputation and with high credit ratings assigned by international credit-rating agencies.

Liquidity risk

– IB-14 –

APPENDIX IB ACCOUNTANTS’ REPORT OF JIANGSU TRIGIANT

The following table details Jiangsu Trigiant’s remaining contractual maturity for its financial liabilities based on the agreed payment terms. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which Jiangsu Trigiant can be required to pay. The table includes both interest and principal cash flows. To the extent that interest flows are floating rate, the undiscounted amount is derived from current interest rate at the end of each reporting period.

	Weighted	Repayable		Over 1 year	Over 2 years	Over 2 years
	average	on demand		but not		but not		Total	Total
	effective	or less than	6 months to	more than		more than	undiscounted		carrying
	interest rate	6 months	1 year	2 years		5 years		cash flows	amount
	%	RMB’000	RMB’000	RMB’000		RMB’000		RMB’000	RMB’000
At 31 December 2008
Trade and other payables	–	90,327	–	–		–		90,327	90,327
Amount due to a director	–	27,000	–	–		–		27,000	27,000
Bills payable to a fellow
subsidiary	–	70,000	–	–		–		70,000	70,000
Bank borrowings
– variable rate	7.62	12,924	3,212	6,424		93,880		116,440	89,696
– fixed rate	7.21	3,157	86,148	–		–		89,305	85,000

		203,408	89,360	6,424		93,880		393,072	362,023


	Weighted	Repayable		Over 1 year	Over 2 years
	average	on demand		but not		but not		Total	Total
	effective	or less than	6 months to	more than		more than	undiscounted		carrying
	interest rate	6 months	1 year	2 years		5 years		cash flows	amount
	%	RMB’000	RMB’000	RMB’000		RMB’000		RMB’000	RMB’000
At 28 December 2009
Trade and other payables	–	194,570	–	–		–		194,570	194,570
Payable for acquisition of
land use rights	–	8,000	–	8,000		5,502		21,502	21,502
Amount due to a director	–	34,000	–	–		–		34,000	34,000
Bills payable a fellow
subsidiary	–	164,000	–	–		–		164,000	164,000
Bank borrowings
– variable rate	5.63	182,379	113,482	4,013		74,868		374,742	355,000
– fixed rate	5.40	221,266	101,365	–		–		322,631	315,239

		804,215	214,847	12,013		80,370		1,111,445	1,084,311

Fair value of financial instruments

The directors of Jiangsu Trigiant consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the Jiangsu Trigiant Financial Information approximate their fair values at the end of each reporting period.

– IB-15 –

APPENDIX IB ACCOUNTANTS’ REPORT OF JIANGSU TRIGIANT

6. TURNOVER AND SEGMENT INFORMATION

Jiangsu Trigiant’s chief operating decision maker has been identified as the board of directors of Jiangsu Trigiant who reviews the business with the following reportable segments by products:

RF coaxial cable series
New-type electronic components
Others (mainly represented by other accessories)

The above segments have been identified on the basis of internal management reports prepared and regularly reviewed by the board of directors of Jiangsu Trigiant when making decisions about allocating resources and assessing performance of Jiangsu Trigiant.

Turnover represents the fair value of the consideration received and receivable for goods sold during the Predecessor Track Record Periods.

The segment results represent the gross profits earned by each segment (segment revenue less segment cost of goods sold). Other gains and losses, selling and distribution costs, administrative expenses and finance costs are not allocated to each reportable segment. This is the measure reported to the board of directors for the purpose of resource allocation and assessment of segment performance.

The information of segment results are as follows:

For the year ended 31 December 2008

		New-type
	RF coaxial	electronic
	cable series	components	Others	Total
	RMB’000	RMB’000	RMB’000	RMB’000
Revenue	173,881	43,213	15,648	232,742
Cost of goods sold	(149,122)	(29,129)	(12,569)	(190,820)
Segment result	24,759	14,084	3,079	41,922

For the period from 1 January 2009 to 28 December 2009

		New-type
	RF coaxial	electronic
	cable series	components	Others	Total
	RMB’000	RMB’000	RMB’000	RMB’000
Revenue	620,983	169,615	74,411	865,009
Cost of goods sold	(504,660)	(93,736)	(56,492)	(654,888)
Segment result	116,323	75,879	17,919	210,121

– IB-16 –

APPENDIX IB ACCOUNTANTS’ REPORT OF JIANGSU TRIGIANT

The reportable segment results are reconciled to profit after taxation of Jiangsu Trigiant as follows:

		For the
		period from
		1 January
	Year ended	2009 to
	31 December	28 December
	2008	2009
	RMB’000	RMB’000
Reportable segment results	41,922	210,121
Unallocated income and expenses
– Other gains and losses	2,220	5,708
– Selling and distribution costs	(7,302)	(60,849)
– Administrative expenses	(19,405)	(43,510)
– Finance costs	(2,163)	(26,217)

Profit for the year/period	15,272	85,254

Substantially all of Jiangsu’s Trigiant’s turnover is derived from the PRC and all of non-current assets are located in the PRC (the place of domicile).

Information about major customers

For the year ended 31 December 2008 and for the period from 1 January 2009 to 28 December 2009, there was one customer which contributed revenues of RMB209,987,000 and RMB744,959,000, respectively, which accounted for more than 10% of the total turnover of Jiangsu Trigiant in respective year/period.

7. OTHER GAINS AND LOSSES

		For the
		period from
		1 January
	Year ended	2009 to
	31 December	28 December
	2008	2009
	RMB’000	RMB’000
Government grants (Note)	600	554
Interest income	1,107	4,872
Net exchange gain (loss)	449	(498)
Others	64	781

	2,220	5,709

Note: Included in the government grants were amounts of RMB500,000 for the year ended 31 December 2008 and RMB449,000 for the period from 1 January 2009 to 28 December 2009, which represented the incentive subsidies provided by the PRC local authorities to Jiangsu Trigiant for encouragement of business development in the Yixing region. There were no specific conditions attached to the grants, Jiangsu Trigiant recognised the grants upon receipts. In respect of the remaining amount of RMB100,000 and RMB105,000 for the year ended 31 December 2008 and the period from 1 January 2009 to 28 December 2009, respectively, these are government subsidies received for acquisition of property, plant and equipment as disclosed in note 23.

– IB-17 –

APPENDIX IB ACCOUNTANTS’ REPORT OF JIANGSU TRIGIANT

8. FINANCE COSTS

		For the
		period from
		1 January
	Year ended	2009 to
	31 December	28 December
	2008	2009
	RMB’000	RMB’000
Interest on bank borrowings wholly repayable within five years	7,002	27,432
Less: Amount capitalised	(5,231)	(5,693)
	1,771	21,739
Interest on financing arrangement with a fellow subsidiary (Note 21)	392	4,478
	2,163	26,217

Borrowing costs capitalised during the Predecessor Track Record Periods were related to specific borrowings on qualifying assets.

9. PROFIT FOR THE YEAR/PERIOD

		For the
		period from
		1 January
	Year ended	2009 to
	31 December	28 December
	2008	2009
	RMB’000	RMB’000
Profit for the year/period has been arrived at after charging:
Directors’ remuneration (Note 10)	802	1,197
Other staff costs:
Salaries and other benefits	6,912	54,703
Retirement benefit scheme contributions	822	2,071

Total staff costs	8,536	57,971
Less: Staff costs included in research and development costs	(86)	(264)
	8,450	57,707

Cost of inventories recognised as expenses	190,820	654,888
Depreciation of property, plant and equipment	3,208	9,996
Operating lease payment in respect of property	474	550
Operating lease rentals in respect of land use rights	244	811
Research and development costs (included in administrative expenses)	136	475

– IB-18 –

APPENDIX IB ACCOUNTANTS’ REPORT OF JIANGSU TRIGIANT

10. DIRECTORS’ AND EMPLOYEES’ EMOLUMENTS

Details of the emoluments paid to the directors of Jiangsu Trigiant for the Predecessor Track Record Periods are as follows:

		For the
		period from
		1 January
	Year ended	2009 to
	31 December	28 December
	2008	2009
	RMB’000	RMB’000
Directors’ fees	–	–
Other emoluments to executive directors
– basic salaries and allowances	148	404
– performance related incentive payments	636	775
– retirement benefits scheme contributions	18	18

	802	1,197

– IB-19 –

APPENDIX IB ACCOUNTANTS’ REPORT OF JIANGSU TRIGIANT

Details of emoluments paid by Jiangsu Trigiant to its directors are as follows:

		For the	For the
		period from
		1 January
	Year ended	2009 to
	31 December	28 December
	2008		2009
	RMB’000	RMB’000
Mr. Qian Lirong
– basic salaries and allowances	24		66
– performance related incentive payments (Note)	124		171
– retirement benefits scheme contributions	3		3

	151		240

Mr. Jiang Wei
– basic salaries and allowances	24		68
– performance related incentive payments (Note)	116		132
– retirement benefits scheme contributions	3		3

	143		203

Mr. Xia Jie
– basic salaries and allowances	25		69
– performance related incentive payments (Note)	99		121
– retirement benefits scheme contributions	3		3

	127		193

Mr. Jiang Xinhong
– basic salaries and allowances	27		68
– performance related incentive payments (Note)	99		118
– retirement benefits scheme contributions	3		3

	129		189

Mr. Sun Huxing
– basic salaries and allowances	25		67
– performance related incentive payments (Note)	99		117
– retirement benefits scheme contributions	3		3

	127		187

Mr. Yu Daxiong
– basic salaries and allowances	23		66
– performance related incentive payments (Note)	99		116
– retirement benefits scheme contributions	3		3

	125		185

Total	802		1,197

– IB-20 –

APPENDIX IB ACCOUNTANTS’ REPORT OF JIANGSU TRIGIANT

All the five highest paid individuals for the year ended 31 December 2008 were the directors, details of whose emoluments are set out above. For the period from 1 January 2009 to 28 December 2009, all the five highest paid individuals were employees of Jiangsu Trigiant and their emoluments were as follows:

For the period from 1 January 2009 to 28 December 2009

	RMB’000
Basic salaries and allowances	427
Performance related incentive payments	12,734
Retirement benefits scheme contributions	9

	13,170

The five highest paid individuals for the period from 1 January 2009 to 28 December 2009 were within the following bands:

	No. of employees
HK$2,000,001 to HK$2,500,000 (equivalent to RMB1,730,000 to
RMB2,163,000)	1
HK$2,500,001 to HK$3,000,000 (equivalent to RMB2,163,001 to
RMB2,595,000)	1
HK$3,000,001 to HK$3,500,000 (equivalent to RMB2,595,001 to
RMB3,038,000)	3

During the Predecessor Track Record Periods, no emoluments were paid by Jiangsu Trigiant to the directors as an inducement to join or upon joining Jiangsu Trigiant or as compensation for loss of office. None of the directors has waived any emoluments during the Predecessor Track Record Periods.

11. TAXATION

No provision for PRC income tax has been made as Jiangsu Trigiant entitled to Tax Holiday (defined below) for the year ended 31 December 2008 and for the period from 1 January 2009 to 28 December 2009.

Pursuant to the relevant laws and regulations, Jiangsu Trigiant was entitled to exemption from Foreign Enterprise Income Tax (“FEIT”) for the two years commencing from its first profit-making year of operation in 2008, followed by a 50% reduction on the FEIT for the following three years (“Tax Holiday”).

On 16 March 2007, the Enterprise Income Tax Law was passed at the Fifth session of the Tenth National People’s Congress of the PRC, the income tax rate for both domestic and foreign-investment enterprise would be unified at 25% effective from 1 January 2008 (Order of the President [2007] No. 63). Jiangsu Trigiant which was entitled to the Tax Holiday would continue to enjoy such treatment until the exemption and reduction period expired, at the end of 2012.

No provision for Hong Kong Profits Tax has been made as Jiangsu Trigiant does not have any operation in Hong Kong.

– IB-21 –

APPENDIX IB ACCOUNTANTS’ REPORT OF JIANGSU TRIGIANT

The nil provision for the year/period can be reconciled to the profit before taxation as follows:

		For the
		period from
		1 January
	Year ended	2009 to
	31 December	28 December
	2008	2009
	RMB’000	RMB’000
Profit before taxation	15,272	85,254


Tax at the applicable income tax rate of 25%	3,818	21,314
Tax effect of tax concession	(3,818)	(21,314)

Taxation for the year/period	–	–

12. DIVIDENDS

No dividend has been paid or proposed by Jiangsu Trigiant during the Predecessor Track Record Periods.

13. PROPERTY, PLANT AND EQUIPMENT

			Furniture,
		Plant and	fixtures and	Motor	Construction
	Buildings	machinery	equipment	vehicles	in progress	Total
	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
COST
At 1 January 2008	–	4,057	332	1,425	24,670	30,484
Additions	1,527	26,584	1,733	3,109	47,817	80,770
Transfer	17,733	11,833	–	–	(29,566)	–

At 31 December 2008	19,260	42,474	2,065	4,534	42,921	111,254
Additions	19,676	9,761	717	–	49,158	79,312
Transfer	15,293	46,813	–	–	(62,106)	–

At 28 December 2009	54,229	99,048	2,782	4,534	29,973	190,566

DEPRECIATION
At 1 January 2008	–	46	23	149	–	218
Provided for the year	464	1,886	125	733	–	3,208
At 31 December 2008	464	1,932	148	882	–	3,426
Provided for the period	1,877	6,843	461	815	–	9,996
At 28 December 2009	2,341	8,775	609	1,697	–	13,422

CARRYING VALUES
At 31 December 2008	18,796	40,542	1,917	3,652	42,921	107,828


At 28 December 2009	51,888	90,273	2,173	2,837	29,973	177,144

– IB-22 –

APPENDIX IB ACCOUNTANTS’ REPORT OF JIANGSU TRIGIANT

Buildings	4.5%
Plant and machinery	9%
Furniture, fixtures and equipment	18%
Motor vehicles	18%

The buildings are located on land in the PRC under a lease term of 50 years.

At 31 December 2008 and 28 December 2009, Jiangsu Trigiant pledged certain of its buildings with aggregate carrying value of RMB13,082,000 and RMB29,729,000, respectively, to certain banks to secure the credit facilities granted to Jiangsu Trigiant.

At 31 December 2008 and 28 December 2009, Jiangsu Trigiant pledged certain of its machinery with aggregate carrying value of RMB38,585,000 and RMB31,285,000, respectively, to certain banks to secure the credit facilities granted to Jiangsu Trigiant.

During the year ended 31 December 2008 and the period from 1 January 2009 to 28 December 2009, interest expense of RMB5,231,000 and RMB5,693,000, respectively, have been capitalised in construction in progress.

14. LAND USE RIGHTS

	At	At
	31 December	28 December
	2008	2009
	RMB’000	RMB’000
Carrying amount
At beginning of the year/period	12,002	11,758
Additions during the year/period	–	41,502
Charge to profit or loss for the year/period	(244)	(811)
At the end of the year/period	11,758	52,449


Analysed for reporting purposes as:
Current portion	244	1,226
Non-current portion	11,514	51,223
	11,758	52,449

The amount represents prepayment of rentals for land use rights under medium term lease situated in the PRC for a period of 50 years.

At 31 December 2008 and 28 December 2009, Jiangsu Trigiant has pledged its land use rights with carrying value of approximately RMB11,758,000 and RMB11,514,000, respectively, to secure general banking facilities granted to Jiangsu Trigiant.

– IB-23 –

APPENDIX IB ACCOUNTANTS’ REPORT OF JIANGSU TRIGIANT

15. INVENTORIES

	At	At
	31 December	28 December
	2008	2009
	RMB’000	RMB’000
Raw materials	10,148	18,224
Work in progress	6,025	8,609
Finished goods	24,310	38,467
	40,483	65,300

16. TRADE AND OTHER RECEIVABLES

	At	At
	31 December	28 December
	2008	2009
	RMB’000	RMB’000
Trade receivables	233,944	668,095
Bills receivables	9,696	37

	243,640	668,132
Prepaid expenses	1,466	3,055
Interest receivables	256	996
Staff advances	1,644	–
Other receivables	3,520	1,314

	250,526	673,497

Jiangsu Trigiant normally allows a credit period ranging from 180 to 360 days to its customers.

The following is an aged analysis of the trade and bills receivables presented based on the invoice date at the end of each reporting period:

	At	At
	31 December	28 December
	2008	2009
	RMB’000	RMB’000
Age
0 – 90 days	241,839	466,850
91 – 180 days	291	147,775
181 – 365 days	1,510	53,507
	243,640	668,132

Included in Jiangsu Trigiant’s trade receivables balance are debtors with aggregate carrying amount of RMB1,510,000 and RMB53,507,000 at 31 December 2008 and 28 December 2009, respectively, which are past due at the end of each reporting period for which Jiangsu Trigiant has not provided for impairment loss as all of these past due debts were subsequently collected as of date of this report.

– IB-24 –

APPENDIX IB ACCOUNTANTS’ REPORT OF JIANGSU TRIGIANT

The following is an aging analysis of trade receivables which are past due but not impaired:

					At		At
				31	December	28	December
					2008		2009
					RMB’000		RMB’000
Age
181	–	365	days		1,510		53,507

Included in trade and bills receivables are following amounts denominated in currencies other than functional currency of Jiangsu Trigiant:

			At		At
		31	December	28	December
			2008		2009
			RMB’000		RMB’000
US	Dollars		9,696		1,705

17. ADVANCES TO A FELLOW SUBSIDIARY

The amount represents advances to 富威科技(吳江)有限公司 (Fullway Technology Co., Ltd.) (“Fullway Technology”) for purpose of providing working capital to Fullway Technology for daily operations. During the Predecessor Track Record Periods, Fullway Technology was owned by Trigiant Group Pte, therefore it was a fellow subsidiary of Jiangsu Trigiant.

The amount is unsecured, interest free and repayable within one year. The amount was fully settled in 2010.

18. BANK BALANCES AND CASH/PLEDGED BANK DEPOSITS

Bank balances and cash comprise cash held by Jiangsu Trigiant and short-term bank deposits with an original maturity of three months or less and carry interest at prevailing market rate ranging from 0.36% to 1.15% and 0.05% to 0.36% per annum at 31 December 2008 and 28 December 2009, respectively.

The pledged bank deposits carry interest at the prevailing market rate ranging from approximately 1.71% to 3.78% and 1.71% to 3.24% per annum at 31 December 2008 and 28 December 2009, respectively.

At 31 December 2008 and 28 December 2009, the entire pledged bank deposits represent deposits pledged to banks to secure the issuance of bills payables.

Included in bank balance and cash and pledged bank deposit are the following amounts denominated in currencies other than functional currency of Jiangsu Trigiant:

	At	At
	31 December	28 December
	2008	2009
	RMB’000	RMB’000
US Dollars	615	11
Euro	16,375	884

– IB-25 –

APPENDIX IB ACCOUNTANTS’ REPORT OF JIANGSU TRIGIANT

19. TRADE AND OTHER PAYABLES

	At	At
	31 December	28 December
	2008	2009
	RMB’000	RMB’000
Trade payables
– fellow subsidiary	17,328	23,824
– others	33,957	73,110
Bills payables	28,985	32,575
	80,270	129,509
Payroll and welfare payables	2,106	7,324
Bonus and promotional expense payables	–	40,000
Other tax payables	2,573	1,569
Deposits from suppliers	2,370	3,730
Receipt in advance from customers	7,848	–
Payables for acquisition of property, plant and equipment	1,880	9,151
Payable for acquisition of land use rights (Note 24)	–	8,000
Accrued expenses	1,249	4,871
Other payables	3,701	4,856
	101,997	209,010

Jiangsu Trigiant normally receives credit terms ranging from 30 to 90 days from its suppliers. The following is an aged analysis of trade and bills payables presented based on the invoice date at the end of each reporting period:

	At	At
	31 December	28 December
	2008	2009
	RMB’000	RMB’000
Age
0 – 90 days	79,669	108,414
91 – 180 days	601	21,095
	80,270	129,509

20. AMOUNT DUE TO A DIRECTOR

The amount is unsecured, non-interest bearing and repayable on demand. The amount will be settled [after [●]].

21. BILLS PAYABLE TO A FELLOW SUBSIDIARY

During the Predecessor Track Record Periods, Jiangsu Trigiant and its fellow subsidiary, Fullway Technology, entered into financing arrangements with certain PRC commercial banks. Under these arrangements, Jiangsu Trigiant issued bank bills to Fullway Technology at certain face amounts with pledged bank deposits ranged from 30% to 100% of the face amount of bank bills. These bank bills were used by Fullway Technology to present to other PRC commercial banks for discounting and then remitted back the proceeds from bills discounted to Jiangsu Trigiant. During the year ended 31 December 2008 and the period from 1 January 2009 to 28 December 2009, bills amount in aggregate RMB70,000,000 and RMB494,000,000, respectively, were issued by Jiangsu Trigiant to Fullway Technology under these financing arrangements. At 31 December 2008 and 28 December 2009, there were bank deposits of RMB35,000,000 and RMB159,000,000, respectively, that were pledged to these PRC commercial banks for these financing arrangements.

– IB-26 –

APPENDIX IB ACCOUNTANTS’ REPORT OF JIANGSU TRIGIANT

During the year ended 31 December 2008 and the period from 1 January 2009 to 28 December 2009, the bank bills issued by Jiangsu Trigiant and discounted by Fullway Technology carry interest rates ranging from 1.99% to 6.06% and 1.58% to 2.47% per annum, respectively. These related interest expenses were incurred and recognised as finance costs of approximately RMB392,000 and approximately RMB4,478,000 by Jiangsu Trigiant for the year ended 31 December 2008 and the period from 1 January 2009 to 28 December 2009.

Jiangsu Trigiant has ceased to enter into these financing arrangements after April 2010 and all the related bills were settled before the end of October 2010.

22. BANK BORROWINGS

	At	At
	31 December	28 December
	2008	2009
	RMB’000	RMB’000
Secured (Note a)	40,000	40,000
Unsecured	–	45,239
Unsecured and guaranteed by:
– a director of Jiangsu Trigiant and an independent third party
(Note b)	5,000	–
– a fellow subsidiary (Note c)	–	15,000
– a fellow subsidiary and an independent third party (Note c)	–	20,000
– independent third parties (Note c)	129,696	550,000
	174,696	670,239


	At	At
	31 December	28 December
	2008	2009
	RMB’000	RMB’000
The bank borrowings are repayable as follows:
Within one year	94,696	600,239
More than two years, but not more than five years	80,000	70,000
	174,696	670,239
Less: Amounts due within one year shown under current liabilities	(94,696)	(600,239)
	80,000	70,000


	At	At
	31 December	28 December
	2008	2009
	RMB’000	RMB’000
The bank borrowings comprise:
Variable rate borrowings	89,696	355,000
Fixed rate borrowings	85,000	315,239

– IB-27 –

APPENDIX IB ACCOUNTANTS’ REPORT OF JIANGSU TRIGIANT

Notes:

(a) The bank borrowings were secured by certain buildings and machinery and land use rights owned by Jiangsu Trigiant as set out in Notes 13 and 14, respectively.
(b) The guarantees will be released [after [●]].
(c) The guarantee will be released [after [●]].

At 31 December 2008 and 28 December 2009, the fixed rate bank borrowings carried interest ranging from 6.66% to 7.77% and 4.37% to 7.77% per annum, respectively.

At 31 December 2008 and 28 December 2009, the variable-rate bank borrowings which carried interests ranging from PBOC rate to 110% of PBOC rate per annum.

Included in bank borrowings are following amounts denominated in currencies other than functional currency of Jiangsu Trigiant:

	At	At
	31 December	28 December
	2008	2009
	RMB’000	RMB’000
US Dollars	9,696	–


GOVERNMENT GRANTS
	At	At
	31 December	28 December
	2008	2009
	RMB’000	RMB’000
At beginning of the year/period	–	1,900
Additions during the year/period	2,000	100
Release to profit or loss for the year/period	(100)	(105)
At the end of the year/period	1,900	1,895

23. GOVERNMENT GRANTS

During the year ended 31 December 2008 and the period from 1 January 2009 to 28 December 2009, Jiangsu Trigiant received government subsidies of RMB2,000,000 and RMB100,000, respectively, in relation to the acquisition of property, plant and equipment. The amounts have been treated as deferred income and were transferred to income over the useful lives of the relevant assets.

24. PAYABLE FOR ACQUISITION OF LAND USE RIGHTS

	At	At
	31 December	28 December
	2008	2009
	RMB’000	RMB’000
Payable for acquisition of land use rights	–	21,502
Less: Amount due within one year shown
under current liabilities (Note 19)	–	(8,000)

	–	13,502

– IB-28 –

APPENDIX IB ACCOUNTANTS’ REPORT OF JIANGSU TRIGIANT

The amount represents payable for acquisition of land use rights located in PRC. Jiangsu Trigiant is required to repay RMB8,000,000 and RMB5,502,000 in 2011 and 2012, respectively, therefore it is classified as non-current liabilities. The respective land use rights certificates were obtained by Jiangsu Trigiant upon the acquisition of land use rights in 2009.

25. PAID-IN CAPITAL

The paid-in capital at 31 December 2008 and 28 December 2009 represented the fully paid registered capital of Jiangsu Trigiant contributed by the then equity holder, Trigiant Group Pte. In 2008, Jiangsu Trigiant increased its paid-in capital from US$16,370,000 (approximately RMB122,838,000) to US$20,000,000 (approximately RMB148,339,000) through capital injection of machinery. In 2009, Jiangsu Trigiant further increased its paid-in capital to US$30,000,000 (approximately RMB216,670,000) through capitalisation of accumulated profits of US$10,000,000 (RMB68,331,000).

26. OPERATING LEASE COMMITMENTS

At the end of the reporting period, the Group had commitment for future minimum lease payments under non-cancellable operating lease in respect of rented premises which fall due as follows:

	At	At
	31 December	28 December
	2008	2009
	RMB’000	RMB’000
Within one year	471	188
In the second to fifth years inclusive	129	–
	600	188

The leases are negotiated for a lease term of 1 to 2 years at fixed monthly rental.

27. RELATED PARTY TRANSACTIONS

Other than the transactions and balances with related parties disclosed in respective notes, Jiangsu Trigiant purchased raw materials from Fullway Technology, a then fellow subsidiary, amounting to RMB48,583,000 and RMB246,528,000 for the year ended 31 December 2008 and the period from 1 January 2009 to 28 December 2009, respectively.

On 29 December 2009, Trigiant Group Pte disposed of its entire interest in Fullway Technology and Fullway Technology has ceased to be a fellow subsidiary of Jiangsu Trigiant. Jiangsu Trigiant had not made any purchase from Fullway Technology since February 2010 and the transactions were discontinued in February 2010.

In the opinion of the directors of Jiangsu Trigiant, the above transactions were conducted on normal commercial terms and in the ordinary and usual course of business of Jiangsu Trigiant.

The details of remuneration of key management personnel, represents emoluments of the directors of Jiangsu Trigiant paid during the Predecessor Track Record Periods are set out in Note 10.

28. RETIREMENT BENEFITS SCHEMES

The employees employed in the PRC are members of the state-managed retirement benefit schemes operated by the PRC government. Jiangsu Trigiant is required to contribute a certain percentage of its payroll to the retirement benefit scheme to fund the benefits. The only obligation of Jiangsu Trigiant with respect to the retirement benefit scheme is to make the required contributions under the scheme.

– IB-29 –

APPENDIX IB ACCOUNTANTS’ REPORT OF JIANGSU TRIGIANT

29. CAPITAL COMMITMENTS

	At	At
	31 December	28 December
	2008	2009
	RMB’000	RMB’000
Capital expenditure contracted for but not provided in the
Jiangsu Trigiant Financial Information in respect of the
acquisition of property, plant and equipment	20,834	8,468

F. SUBSEQUENT FINANCIAL STATEMENTS

Except for the statutory audited financial statements for each of the years ended 31 December 2009 and 31 December 2010, no audited financial statements have been prepared by Jiangsu Trigiant in respect of any period subsequent to 28 December 2009.

Yours faithfully, [●]

– IB-30 –

PROPERTY VALUATION

APPENDIX III

The following is a text of the letter, summary of values and valuation certificates, prepared for inclusion in this document, received from [ ● ], an independent property valuer, in connection with their valuations as of [31 July 2011] of the properties held by the Group.

[●]

The Directors

Trigiant Group Limited Room 1801, 18/F, Tai Tung Building, No. 8 Fleming Road, Wanchai, Hong Kong

Date: [●] 2011

Dear Sirs,

In accordance with your instructions for us to value the properties situated in the People’s Republic of China (the “PRC”) and Hong Kong in which Trigiant Group Limited (the “Company”) and its subsidiaries (hereinafter referred to as the “Group”) have interests, we confirm that we have carried out inspections, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of values of such properties as at [31 July 2011] (“date of valuation”) for inclusion in [●].

Our valuation of each of the properties is our opinion of its market value which we would define as intended to mean “the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion”.

The market value is the best price reasonably obtainable in the market by the seller and the most advantageous price reasonably obtainable in the market by the buyer. This estimate specifically excludes an estimated price inflated or deflated by special terms or circumstances such as atypical financing, sale and leaseback arrangements, joint ventures, management agreements, special considerations or concessions granted by anyone associated with the sale, or any element of special value. The market value of a property is also estimated without regard to costs of sale and purchase, and without offset for any associated taxes.

– III-1 –

APPENDIX III

PROPERTY VALUATION

In valuing the property in Group I which is held for owner occupation in the PRC, due to the specific purpose for which the buildings and structures of the property have been constructed, there are no readily available market comparables and thus the buildings and structures of the property cannot be valued on the basis of direct comparison. The property has been valued on the basis of the depreciated replacement cost (“DRC”). We would define “DRC” to be our opinion of the land value in its existing use and an estimate of the new replacement costs of the buildings and structures, including professional fees and finance charges, from which deductions are then made to allow for age, physical, functional and environmental obsolescence. The DRC is subject to adequate profitability of the concerned business.

In valuing the property in Group II, which is held for investment in the PRC, we have made reference to the comparable market transactions as available in the market and where appropriate, on the basis of capitalisation of net incomes as shown on the schedules handed to us with due allowance for reversionary income potential of the property.

In valuing the property in Groups III and IV, which are leased by the Group in the PRC and Hong Kong, we have assigned no commercial value to these properties due to prohibition against assignment or sub-letting or otherwise due to lack of substantial profit rent.

We have been provided with copies of extracts of title documents relating to the properties in the PRC. However, we have not searched the original documents to ascertain the existence of any amendments which do not appear on the copies handed to us. We have relied to a very considerable extent on information given by the Group and its legal advisers, Jin Mao PRC Lawyers, regarding the titles to the properties in the PRC.

We have also accepted advice given to us on such matters as planning approvals or statutory notices, easements, tenure, particulars of occupancy, site and floor areas and all other relevant matters. Dimensions, measurements and areas included in the valuation certificates are based on information contained in the documents provided by the Group to us and are therefore only approximations. No on-site measurements have been taken. We have had no reason to doubt the truth and confirmation from the Group that no material facts have been omitted from the information supplied. We consider that we have been provided with sufficient information to reach an informed view.

We have inspected the exterior and where possible, the interior of the properties. During the course of our inspection, we did not note any serious defects. However, no structural survey has been made, we are therefore unable to report that the properties are free from rot, infestation or any other structural defects. No tests were carried out on any of the services.

No allowance has been made in our valuation for any charges, mortgages or amounts owing on any property nor for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the properties are free from encumbrances, restrictions and outgoings of an onerous nature which could affect their values.

– III-2 –

APPENDIX III PROPERTY VALUATION

In preparing our valuation report, we have complied with the requirements set out in Chapter 5 and Practice Note 12 of [●] issued by [●] and the HKIS Valuation Standards on Properties (First Edition 2005) published by the Hong Kong Institute of Surveyors.

Unless otherwise stated, all money amounts stated are in Renminbi.

Our summary of values and valuation certificates are attached.

Yours faithfully, For and on behalf of [●]

Note: [●]

– III-3 –

PROPERTY VALUATION

APPENDIX III

SUMMARY OF VALUES

Group I – Property held by the Group for owner occupation in the PRC

		Capital value
		in existing state as at
No.	Property	[31 July 2011]
1.	An industrial complex (excluding Secondary Industrial	RMB[186,500,000]
	Building at the west and Industrial Building Block No. 4)
	located at Industrial Park for Environmental Science &
	Technology,
	No. 1 Junzhi Road,
	Yixing,
	Jiangsu Province,
	PRC

	Sub-total:	RMB[186,500,000]
Group II – Property held for investment by the Group in the		PRC
2.	Secondary Industrial Building at the west and	RMB[18,100,000]
	Industrial Building Block No. 4 of an industrial complex
	located at Industrial Park for Environmental
	Science & Technology,
	No. 1 Junzhi Road,
	Yixing,
	Jiangsu Province,
	PRC

	Sub-total:	RMB[18,100,000]
Group III – Property leased by the Group in the PRC
3.	Room 504, Unit 2,	No commercial value
	Block 2, Jinchen International Apartment,
	No. 4 Guangcheng Street,
	Xicheng District,
	Beijing,
	PRC

	Sub-total:	Nil

– III-4 –

APPENDIX III

PROPERTY VALUATION

Group IV – Property leased by the Group in Hong Kong

No. Property

Room 1801, 18/F, Tai Tung Building, No. 8 Fleming Road, Wanchai, Hong Kong

Capital value in existing state as at [31 July 2011] No commercial value Sub-total: Nil Grand total: RMB[204,600,000]

– III-5 –

PROPERTY VALUATION

APPENDIX III

VALUATION CERTIFICATE

Group I – Property held by the Group for owner occupation in the PRC

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy [31 July 2011] 1. An industrial The property comprises 19 The property is RMB[186,500,000] complex buildings and various structures occupied by the (excluding of an industrial complex erected Group for workshop, Secondary on 3 parcels of land with a total office and ancillary Industrial Building site area of [240,737.20] sq.m. uses. at the west and ([2,591,295] sq.ft.). The Industrial Building buildings were completed in Block No. 4) various stages between 2008 and located at 2010. Industrial Park for Environmental The buildings comprise single to Science & 5-storey workshop and office Technology, buildings with a total gross floor No. 1 Junzhi Road, area of approximately Yixing, [70,541.26] sq.m. ([759,306] Jiangsu Province, sq.ft.). The structures mainly PRC include roads and boundary fences. The land use rights of the property were granted for terms expiring on 27 August 2051 and 15 March 2057 respectively for industrial use.

Notes:

Pursuant to three Land Use Rights Certificates Nos. Yi Guo Yong (2009) Di 45601148, Yi Guo Yong (2009) Di 45601150 and Yi Guo Yong (2007) Di 105947, the land use rights of three parcels of land with a total site area of 240,737.2 sq.m. were granted to 江蘇俊知技術有限公司 (Jiangsu Trigiant Technology Co., Ltd.) (“Jiangsu Trigiant”), an indirect wholly-owned subsidiary of the Company, for terms expiring on 27 August 2051 and 15 March 2057 for industrial use.

As advised, the land premium of the land use rights of Land Use Rights Certificate No. Yi Guo Yong (2007) Di 105947 has been fully paid. The outstanding premium of the land use rights of Land Use Rights Certificates Nos. Yi Guo Yong (2009) Di 45601148 and Yi Guo Yong (2009) Di 45601150 was RMB21,502,400 as at 31 July 2011 and was reduced to RMB13,502,400 since January 2011.

Pursuant to 19 Building Ownership Certificates, the building ownership of 19 buildings with a total gross floor area of approximately 70,541.26 sq.m. is vested in Jiangsu Trigiant.
We have been provided with a legal opinion on the title to the property issued by the Group’s legal advisers, which contains, inter-alia , the following information:
i. [Jiangsu Trigiant is the legal owner of the property;
ii. Jiangsu Trigiant is entitled to occupy, transfer, lease or mortgage portion of the property with the land use rights with a site area of 116,016.9 sq.m. and 10 buildings with a total gross floor area of approximately 37,339.71 sq.m.;
iii. the land use rights of two parcels of land with a total site area of 124,720.3 sq.m. and 9 buildings of the property with a total gross floor area of 33,201.55 sq.m. are subject to mortgages; and
iv. Jiangsu Trigiant is entitled to transfer, lease, remortgage or dispose of the mortgaged portion of the property after obtaining the written consent from the mortgagee.]

– III-6 –

APPENDIX III

PROPERTY VALUATION

Group II – Property held for investment by the Group in the PRC

Capital value in
Particulars of existing state as at
No. Property Description and tenure occupancy [31 July 2011] 2. Secondary The property comprises two The property was RMB[18,100,000] Industrial Building single to 2-storey industrial subject to two at the west and buildings erected on an industrial tenancies with terms Industrial Building complex with a site area of both expiring on 28 Block No. 4 of an [240,737.20] sq.m. ([2,591,295] February 2013 at a industrial complex sq.ft.). It was completed in total annual rental of located at between 2009 and 2010. approximately Industrial Park for RMB725,000. Environmental The total gross floor area of the Science & property is approximately Technology, [11,940.31] sq.m. ([128,525] No.1 Junzhi Road, sq.ft.). Yixing, Jiangsu Province, The land use rights of the PRC property were granted for terms expiring on 27 August 2051 and 15 March 2057 for industrial use.

Notes:

Pursuant to three Land Use Rights Certificates Nos. Yi Guo Yong (2009) Di 45601148, Yi Guo Yong (2009) Di 45601150 and Yi Guo Yong (2007) Di 105947, the land use rights of three parcels of land with a total site area of 240,737.2 sq.m. were granted to 江蘇俊知技術有限公司 (Jiangsu Trigiant Technology Co., Ltd.) (“Jiangsu Trigiant”), an indirect wholly-owned subsidiary of the Company, for terms expiring on 27 August 2051 and 15 March 2057 for industrial use.

As advised, the outstanding premium of the land use rights of Land Use Rights Certificates Nos. Yi Guo Yong (2009) Di 45601148 and Yi Guo Yong (2009) Di 45601150 was RMB21,502,400 as at 31 July 2011 and was reduced to RMB13,502,400 since January 2011.

Pursuant to 2 Building Ownership Certificates, the building ownership of the property with a total gross floor area of approximately 11,940.31 sq.m. is vested in Jiangsu Trigiant.
We have been provided with a legal opinion on the title to the property issued by the Group’s legal advisers, which contains, inter-alia , the following information:
i. [Jiangsu Trigiant is the legal owner of the property;
ii. Jiangsu Trigiant is entitled to use, lease, transfer or dispose of the property;
iii. the lease agreements are valid, binding and enforceable under the PRC laws;]
iv. the lease agreements have not been registered and has no effect against third party; and
v. the non-registration of the tenancy agreements will not affect the legal validity of the tenancy agreements.

– III-7 –

APPENDIX III

PROPERTY VALUATION

Group III – Property leased by the Group in the PRC

				Capital value in
		Description and tenancy	Particulars of	existing state as at
No.	Property	particulars	occupancy	[31 July 2011]
3	Room 504, Unit 2,	Jinchen International Apartment	The property is	No commercial value
	Block 2, Jinchen	is a residential development.	currently occupied by
	International	Block 2 is a 12-storey building	the Group for
	Apartment,	completed in 2003.	dormitory use.
	No. 4 Guangcheng
	Street,	The property comprises a
	Xicheng District,	residential unit on the fifth level
	Beijing,	of Block 2 of Jinchen
	PRC	International Apartment with a
		gross floor area of approximately
		243.19 sq.m. (2,618 sq.ft.).
		The property is leased for a term
		commencing on 25 March 2008
		and expiring on 24 March 2011
		at a rental of RMB33,286.63 per
		month.

Notes:

The lessee, Jiangsu Trigiant Technology Co., Ltd. (“Jiangsu Trigiant”), an indirect wholly-owned subsidiary of the Company, leased the property from 北京金宸星合資產管理有限公司, (the “lessor”) an independent third party.
We have been provided with a legal opinion on the legality of the tenancy agreement issued by the Group’s legal adviser, which contains, inter-alia , the following information:
i. the lessor, has obtained the Building Ownership Certificate of the property and has the right to lease the property to Jiangsu Trigiant;
ii. Jiangsu Trigiant is entitled to occupy the property;
iii. the tenancy agreement is valid, enforceable and legally binding;
iv. the tenancy agreement has not been registered and has no effect against third party; and
v. the non-registration of the tenancy agreement will not affect the legal validity of the tenancy agreement.

– III-8 –

APPENDIX III

PROPERTY VALUATION

Group IV – Property leased by the Group in the Hong Kong

				Capital value in
		Description and tenancy	Particulars of	existing state as at
No.	Property	particulars	occupancy	[31 July 2011]
4	Room 1801, 18/F,	Tai Tung Building is a 27-storey	The property is	No commercial value
	Tai Tung Building,	commercial building completed	currently occupied by
	No. 8 Fleming	in 2004.	the Group for office
	Road, Wanchai,		use.
	Hong Kong	The property comprises an office
		unit on the 18th Floor of the
		building with a gross floor area
		of approximately 101.08 sq.m.
		(1,088 sq.ft.).
		The property is leased for a term
		commencing on 1 April 2011 and
		expiring on 31 March 2013 at a
		rental of HK$34,816 per month.
	Note:

The property is leased to Trigiant (HK) Limited, an indirect wholly-owned subsidiary of the Company, from Tak Shing Investment Company Limited, an independent third party.

– III-9 –

SUMMARY OF THE CONSTITUTION OF THE COMPANY AND THE COMPANIES LAW

APPENDIX IV

Set out below is a summary of certain provisions of the Memorandum and Articles of Association of the Company and of certain aspects of Cayman company law.

The Company was incorporated in the Cayman Islands as an exempted company with limited liability on 23 December 2010 under the Companies Law, Cap 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands (the “Companies Law”). The Memorandum of Association (the “Memorandum”) and the Articles of Association (the “Articles”) comprise its constitution.

1. MEMORANDUM OF ASSOCIATION

(a) The Memorandum states, inter alia, that the liability of the members of the Company is limited to the amount, if any, for the time being unpaid on the Shares respectively held by them and that the objects for which the Company is established are unrestricted (including acting as an investment company), and that the Company shall have and be capable of exercising all functions of a natural person of full capacity irrespective of any question of corporate benefit, as provided in section 27(2) of the Companies Law and in view of the fact that the Company is an exempted company that the Company will not trade in the Cayman Islands with any person, firm or corporation except in furtherance of the business of the Company carried on outside the Cayman Islands.
(b) The Company may by special resolution alter its Memorandum with respect to any objects, powers or other matters specified therein.

2. ARTICLES OF ASSOCIATION

The Articles were adopted on [●] 2011. The following is a summary of certain provisions of the Articles:

(a) Directors

(i) Power to allot and issue shares and warrants

Subject to the provisions of the Companies Law and the Memorandum and Articles and to any special rights conferred on the holders of any shares or class of shares, any share may be issued with or have attached thereto such rights, or such restrictions, whether with regard to dividend, voting, return of capital, or otherwise, as the Company may by ordinary resolution determine (or, in the absence of any such determination or so far as the same may not make specific provision, as the board may determine). Subject to the Companies Law, the rules of any Designated Stock Exchange (as defined in the Articles) and the Memorandum and Articles, any share may be issued on the terms that, at the option of the Company or the holder thereof, they are liable to be redeemed.

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APPENDIX IV

SUMMARY OF THE CONSTITUTION OF THE COMPANY AND THE COMPANIES LAW

The Board may issue warrants conferring right upon the holders thereof to subscribe for any class of shares or securities in the capital of the Company on such terms as it may from time to time determine.

Subject to the provisions of the Companies Law and the Articles and, where applicable, the rules of any Designated [●] (as defined in the Articles) and without prejudice to any special rights or restrictions for the time being attached to any shares or any class of shares, all unissued shares in the Company shall be at the disposal of the Board, which may offer, allot, grant options over or otherwise dispose of them to such persons, at such times, for such consideration and on such terms and conditions as it in its absolute discretion thinks fit, but so that no shares shall be issued at a discount.

Neither the Company nor the Board shall be obliged, when making or granting any allotment of, offer of, option over or disposal of shares, to make, or make available, any such allotment, offer, option or shares to members or others with registered addresses in any particular territory or territories being a territory or territories where, in the absence of a registration statement or other special formalities, this would or might, in the opinion of the board, be unlawful or impracticable. Members affected as a result of the foregoing sentence shall not be, or be deemed to be, a separate class of members for any purpose whatsoever.

(ii) Power to dispose of the assets of the Company or any subsidiary

There are no specific provisions in the Articles relating to the disposal of the assets of the Company or any of its subsidiaries. The Directors may, however, exercise all powers and do all acts and things which may be exercised or done or approved by the Company and which are not required by the Articles or the Companies Law to be exercised or done by the Company in general meeting.

(iii) Compensation or payments for loss of office

Pursuant to the Articles, payments to any Director or past Director of any sum by way of compensation for loss of office or as consideration for or in connection with his retirement from office (not being a payment to which the Director is contractually entitled) must be approved by the Company in general meeting.

(iv) Loans and provision of security for loans to Directors

There are provisions in the Articles prohibiting the making of loans to Directors.

(v) Disclosure of interests in contracts with the Company or any of its subsidiaries.

A Director may hold any other office or place of profit with the Company (except that of the auditor of the Company) in conjunction with his office of Director

– IV-2 –

APPENDIX IV

SUMMARY OF THE CONSTITUTION OF THE COMPANY AND THE COMPANIES LAW

for such period and, subject to the Articles, upon such terms as the Board may determine, and may be paid such extra remuneration therefor (whether by way of salary, commission, participation in profits or otherwise) in addition to any remuneration provided for by or pursuant to any other Articles. A Director may be or become a director or other officer of, or otherwise interested in, any company promoted by the Company or any other company in which the Company may be interested, and shall not be liable to account to the Company or the members for any remuneration, profits or other benefits received by him as a director, officer or member of, or from his interest in, such other company. Subject as otherwise provided by the Articles, the board may also cause the voting power conferred by the shares in any other company held or owned by the Company to be exercised in such manner in all respects as it thinks fit, including the exercise thereof in favour of any resolution appointing the Directors or any of them to be directors or officers of such other company, or voting or providing for the payment of remuneration to the directors or officers of such other company.

Subject to the Companies Law and the Articles, no Director or proposed or intended Director shall be disqualified by his office from contracting with the Company, either with regard to his tenure of any office or place of profit or as vendor, purchaser or in any other manner whatsoever, nor shall any such contract or any other contract or arrangement in which any Director is in any way interested be liable to be avoided, nor shall any Director so contracting or being so interested be liable to account to the Company or the members for any remuneration, profit or other benefits realised by any such contract or arrangement by reason of such Director holding that office or the fiduciary relationship thereby established. A Director who to his knowledge is in any way, whether directly or indirectly, interested in a contract or arrangement or proposed contract or arrangement with the Company shall declare the nature of his interest at the meeting of the Board at which the question of entering into the contract or arrangement is first taken into consideration, if he knows his interest then exists, or in any other case, at the first meeting of the Board after he knows that he is or has become so interested.

A Director shall not vote (nor be counted in the quorum) on any resolution of the board approving any contract or arrangement or other proposal in which he or any of his associates is materially interested, but this prohibition shall not apply to any of the following matters, namely:

(aa) any contract or arrangement for giving to such Director or his associate(s) any security or indemnity in respect of money lent by him or any of his associates or obligations incurred or undertaken by him or any of his associates at the request of or for the benefit of the Company or any of its subsidiaries;
(bb) any contract or arrangement for the giving of any security or indemnity to a third party in respect of a debt or obligation of the Company or any

– IV-3 –

APPENDIX IV

SUMMARY OF THE CONSTITUTION OF THE COMPANY AND THE COMPANIES LAW

of its subsidiaries for which the Director or his associate(s) has himself/themselves assumed responsibility in whole or in part whether alone or jointly under a guarantee or indemnity or by the giving of security;

(cc) any contract or arrangement concerning an offer of shares or debentures or other securities of or by the Company or any other company which the Company may promote or be interested in for subscription or purchase, where the Director or his associate(s) is/are or is/are to be interested as a participant in the underwriting or sub-underwriting of the offer;
(dd) any contract or arrangement in which the Director or his associate(s) is/are interested in the same manner as other holders of shares or debentures or other securities of the Company by virtue only of his/their interest in shares or debentures or other securities of the Company;
(ee) any contract or arrangement concerning any other company in which the Director or his associate(s) is/are interested only, whether directly or indirectly, as an officer or executive or a shareholder or in which the Director and any of his associates are not in aggregate beneficially interested in 5 percent. or more of the issued shares or of the voting rights of any class of shares of such company (or of any third company through which his interest or that of any of his associates is derived); or
(ff) any proposal or arrangement concerning the adoption, modification or operation of a share option scheme, a pension fund or retirement, death, or disability benefits scheme or other arrangement which relates both to Directors, his associates and employees of the Company or of any of its subsidiaries and does not provide in respect of any Director, or his associate(s), as such any privilege or advantage not accorded generally to the class of persons to which such scheme or fund relates.

(vi) Remuneration

The ordinary remuneration of the Directors shall from time to time be determined by the Company in general meeting, such sum (unless otherwise directed by the resolution by which it is voted) to be divided amongst the Directors in such proportions and in such manner as the Board may agree or, failing agreement, equally, except that any Director holding office for part only of the period in respect of which the remuneration is payable shall only rank in such division in proportion to the time during such period for which he held office. The Directors shall also be entitled to be prepaid or repaid all travelling, hotel and incidental expenses reasonably expected to be incurred or incurred by them in attending any board meetings, committee meetings or general meetings or separate meetings of any class of shares or of debentures of the Company or otherwise in connection with the discharge of their duties as Directors.

– IV-4 –

APPENDIX IV

SUMMARY OF THE CONSTITUTION OF THE COMPANY AND THE COMPANIES LAW

Any Director who, by request, goes or resides abroad for any purpose of the Company or who performs services which in the opinion of the Board go beyond the ordinary duties of a Director may be paid such extra remuneration (whether by way of salary, commission, participation in profits or otherwise) as the Board may determine and such extra remuneration shall be in addition to or in substitution for any ordinary remuneration as a Director. An executive Director appointed to be a managing director, joint managing director, deputy managing director or other executive officer shall receive such remuneration (whether by way of salary, commission or participation in profits or otherwise or by all or any of those modes) and such other benefits (including pension and/or gratuity and/or other benefits on retirement) and allowances as the Board may from time to time decide. Such remuneration may be either in addition to or in lieu of his remuneration as a Director.

The Board may establish or concur or join with other companies (being subsidiary companies of the Company or companies with which it is associated in business) in establishing and making contributions out of the monies of the Company to any schemes or funds for providing pensions, sickness or compassionate allowances, life assurance or other benefits for employees (which expression as used in this and the following paragraph shall include any Director or ex-Director who may hold or have held any executive office or any office of profit with the Company or any of its subsidiaries) and ex-employees of the Company and their dependents or any class or classes of such persons.

The Board may pay, enter into agreements to pay or make grants of revocable or irrevocable, and either subject or not subject to any terms or conditions, pensions or other benefits to employees and ex-employees and their dependents, or to any of such persons, including pensions or benefits additional to those, if any, to which such employees or ex-employees or their dependents are or may become entitled under any such scheme or fund as is mentioned in the previous paragraph. Any such pension or benefit may, as the Board considers desirable, be granted to an employee either before and in anticipation of, or upon or at any time after, his actual retirement.

(vii) Retirement, appointment and removal

At each annual general meeting, one third of the Directors for the time being (or if their number is not a multiple of three, then the number nearest to but not less than one third) will retire from office by rotation provided that every Director shall be subject to retirement at an annual general meeting at least once every three years. The Directors to retire in every year will be those who have been longest in office since their last re-election or appointment but as between persons who became or were last re-elected Directors on the same day those to retire will (unless they otherwise agree among themselves) be determined by lot. There are no provisions relating to retirement of Directors upon reaching an age limit.

– IV-5 –

APPENDIX IV

SUMMARY OF THE CONSTITUTION OF THE COMPANY AND THE COMPANIES LAW

The Directors shall have the power from time to time and at any time to appoint any person as a Director either to fill a casual vacancy on the board or as an addition to the existing board. Any Director appointed to fill a casual vacancy shall hold office until the first general meeting of members after his appointment and be subject to re-election at such meeting and any Director appointed as an addition to the existing board shall hold office only until the next following annual general meeting of the Company and shall then be eligible for re-election. Neither a Director nor an alternate Director is required to hold any share in the Company by way of qualification.

A Director may be removed by an ordinary resolution of the Company before the expiration of his period of office (but without prejudice to any claim which such Director may have for damages for any breach of any contract between him and the Company) and may by ordinary resolution appoint another in his place. Unless otherwise determined by the Company in general meeting, the number of Directors shall not be less than two. There is no maximum number of Directors.

The office of director shall be vacated:

(aa) if he resigns his office by notice in writing delivered to the Company at the registered office of the Company for the time being or tendered at a meeting of the Board;
(bb) becomes of unsound mind or dies;
(cc) if, without special leave, he is absent from meetings of the board (unless an alternate director appointed by him attends) for six (6) consecutive months, and the board resolves that his office is vacated;
(dd) if he becomes bankrupt or has a receiving order made against him or suspends payment or compounds with his creditors;
(ee) if he is prohibited from being a director by law;
(ff) if he ceases to be a director by virtue of any provision of law or is removed from office pursuant to the Articles.

The Board may from time to time appoint one or more of its body to be managing director, joint managing director, or deputy managing director or to hold any other employment or executive office with the Company for such period and upon such terms as the Board may determine and the board may revoke or terminate any of such appointments. The Board may delegate any of its powers, authorities and discretions to committees consisting of such Director or Directors and other persons as the Board thinks fit, and it may from time to time revoke such delegation or

– IV-6 –

APPENDIX IV SUMMARY OF THE CONSTITUTION OF THE COMPANY AND THE COMPANIES LAW

revoke the appointment of and discharge any such committees either wholly or in part, and either as to persons or purposes, but every committee so formed shall, in the exercise of the powers, authorities and discretions so delegated, conform to any regulations that may from time to time be imposed upon it by the board.

(viii) Borrowing powers

The Board may exercise all the powers of the Company to raise or borrow money, to mortgage or charge all or any part of the undertaking, property and assets (present and future) and uncalled capital of the Company and, subject to the Companies Law, to issue debentures, bonds and other securities of the Company, whether outright or as collateral security for any debt, liability or obligation of the Company or of any third party.

Note: These provisions, in common with the Articles in general, can be varied with the sanction of a special resolution of the Company.

(ix) Proceedings of the Board

The Board may meet for the despatch of business, adjourn and otherwise regulate their meetings as they think fit. Questions arising at any meeting shall be determined by a majority of votes. In the case of an equality of votes, the chairman of the meeting shall have an additional or casting vote.

(x) Register of Directors and Officers

The Companies Law and the Articles provide that the Company is required to maintain at its registered office a register of directors and officers which is not available for inspection by the public. A copy of such register must be filed with the Registrar of Companies in the Cayman Islands and any change must be notified to the Registrar within thirty (30) days of any change in such directors or officers.

(b) Alterations to constitutional documents

The Articles may be rescinded, altered or amended by the Company in general meeting by special resolution. The Articles state that a special resolution shall be required to alter the provisions of the Memorandum, to amend the Articles or to change the name of the Company.

(c) Alteration of capital

The Company may from time to time by ordinary resolution in accordance with the relevant provisions of the Companies Law:

(i) increase its capital by such sum, to be divided into shares of such amounts as the resolution shall prescribe;

– IV-7 –

APPENDIX IV

SUMMARY OF THE CONSTITUTION OF THE COMPANY AND THE COMPANIES LAW

(ii) consolidate and divide all or any of its capital into shares of larger amount than its existing shares;
(iii) divide its shares into several classes and without prejudice to any special rights previously conferred on the holders of existing shares attach thereto respectively any preferential, deferred, qualified or special rights, privileges, conditions or restrictions as the Company in general meeting or as the directors may determine;
(iv) sub-divide its shares or any of them into shares of smaller amount than is fixed by the Memorandum, subject nevertheless to the provisions of the Companies Law, and so that the resolution whereby any share is sub-divided may determine that, as between the holders of the shares resulting from such sub-division, one or more of the shares may have any such preferred or other special rights, over, or may have such deferred rights or be subject to any such restrictions as compared with the others as the Company has power to attach to unissued or new shares; or
(v) cancel any shares which, at the date of passing of the resolution, have not been taken, or agreed to be taken, by any person, and diminish the amount of its capital by the amount of the shares so cancelled.

The Company may subject to the provisions of the Companies Law reduce its share capital or any capital redemption reserve or other undistributable reserve in any way by special resolution.

(d) Variation of rights of existing shares or classes of shares

Subject to the Companies Law, all or any of the special rights attached to the shares or any class of shares may (unless otherwise provided for by the terms of issue of that class) be varied, modified or abrogated either with the consent in writing of the holders of not less than three-fourths in nominal value of the issued shares of that class or with the sanction of a special resolution passed at a separate general meeting of the holders of the shares of that class. To every such separate general meeting the provisions of the Articles relating to general meetings will mutatis mutandis apply, but so that the necessary quorum (other than at an adjourned meeting) shall be two persons holding or representing by proxy not less than one-third in nominal value of the issued shares of that class and at any adjourned meeting two holders present in person or by proxy whatever the number of shares held by them shall be a quorum. Every holder of shares of the class shall be entitled to one vote for every such share held by him.

The special rights conferred upon the holders of any shares or class of shares shall not, unless otherwise expressly provided in the rights attaching to the terms of issue of such shares, be deemed to be varied by the creation or issue of further shares ranking pari passu therewith.

– IV-8 –

SUMMARY OF THE CONSTITUTION OF THE COMPANY AND THE COMPANIES LAW

APPENDIX IV

(e) Special resolution-majority required

Pursuant to the Articles, a special resolution of the Company must be passed by a majority of not less than three-fourths of the votes cast by such members as, being entitled so to do, vote in person or, in the case of such members as are corporations, by their duly authorised representatives or, where proxies are allowed, by proxy at a general meeting of which notice of not less than twenty-one (21) clear days and not less than ten (10) clear business days specifying the intention to propose the resolution as a special resolution, has been duly given. Provided that if permitted by the Designated Stock Exchange (as defined in the Articles), except in the case of an annual general meeting, if it is so agreed by a majority in number of the members having a right to attend and vote at such meeting, being a majority together holding not less than ninety-five per cent. (95%) in nominal value of the shares giving that right and, in the case of an annual general meeting, if so agreed by all members entitled to attend and vote thereat, a resolution may be proposed and passed as a special resolution at a meeting of which notice of less than twenty-one (21) clear days and less than ten (10) clear business days has been given.

A copy of any special resolution must be forwarded to the Registrar of Companies in the Cayman Islands within fifteen (15) days of being passed.

An ordinary resolution is defined in the Articles to mean a resolution passed by a simple majority of the votes of such members of the Company as, being entitled to do so, vote in person or, in the case of corporations, by their duly authorised representatives or, where proxies are allowed, by proxy at a general meeting held in accordance with the Articles.

(f) Voting rights

Subject to any special rights or restrictions as to voting for the time being attached to any shares by or in accordance with the Articles, at any general meeting on a poll every member present in person or by proxy or, in the case of a member being a corporation, by its duly authorised representative shall have one vote for every fully paid share of which he is the holder but so that no amount paid up or credited as paid up on a share in advance of calls or installments is treated for the foregoing purposes as paid up on the share. A member entitled to more than one vote need not use all his votes or cast all the votes he uses in the same way.

At any general meeting a resolution put to the vote of the meeting is to be decided by way of a poll.

If a recognised clearing house (or its nominee(s)) is a member of the Company it may authorise such person or persons as it thinks fit to act as its representative(s) at any meeting of the Company or at any meeting of any class of members of the Company provided that, if more than one person is so authorised, the authorisation shall specify the

– IV-9 –

APPENDIX IV

SUMMARY OF THE CONSTITUTION OF THE COMPANY AND THE COMPANIES LAW

number and class of shares in respect of which each such person is so authorised. A person authorised pursuant to this provision shall be deemed to have been duly authorised without further evidence of the facts and be entitled to exercise the same powers on behalf of the recognised clearing house (or its nominee(s)) as if such person was the registered holder of the shares of the Company held by that clearing house (or its nominee(s)).

Where the Company has any knowledge that any shareholder is, under the rules of the Designated Stock Exchange (as defined in the Articles), required to abstain from voting on any particular resolution of the Company or restricted to voting only for or only against any particular resolution of the Company, any votes cast by or on behalf of such shareholder in contravention of such requirement or restriction shall not be counted.

(g) Requirements for annual general meetings

An annual general meeting of the Company must be held in each year, other than the year of adoption of the Articles (within a period of not more than fifteen (15) months after the holding of the last preceding annual general meeting or a period of eighteen (18) months from the date of adoption of the Articles, unless a longer period would not infringe the rules of any Designated Stock Exchange (as defined in the Articles)) at such time and place as may be determined by the Board.

(h) Accounts and audit

The Board shall cause true accounts to be kept of the sums of money received and expended by the Company, and the matters in respect of which such receipt and expenditure take place, and of the property, assets, credits and liabilities of the Company and of all other matters required by the Companies Law or necessary to give a true and fair view of the Company’s affairs and to explain its transactions.

The accounting records shall be kept at the registered office or at such other place or places as the Board decides and shall always be open to inspection by any Director. No member (other than a Director) shall have any right to inspect any accounting record or book or document of the Company except as conferred by law or authorised by the Board or the Company in general meeting.

A copy of every balance sheet and profit and loss account (including every document required by law to be annexed thereto) which is to be laid before the Company at its general meeting, together with a printed copy of the Directors’ report and a copy of the auditors’ report, shall not less than twenty-one (21) days before the date of the meeting and at the same time as the notice of annual general meeting be sent to every person entitled to receive notices of general meetings of the Company under the provisions the Articles; however, subject to compliance with all applicable laws, including the rules of the Designated Stock Exchange (as defined in the Articles), the Company may send to such persons summarised financial statements derived from the Company’s annual

– IV-10 –

SUMMARY OF THE CONSTITUTION OF THE COMPANY AND THE COMPANIES LAW

APPENDIX IV

accounts and the directors’ report instead provided that any such person may by notice in writing served on the Company, demand that the Company sends to him, in addition to summarised financial statements, a complete printed copy of the Company’s annual financial statement and the directors’ report thereon.

Auditors shall be appointed and the terms and tenure of such appointment and their duties at all times regulated in accordance with the provisions of the Articles. The remuneration of the auditors shall be fixed by the Company in general meeting or in such manner as the members may determine.

The financial statements of the Company shall be audited by the auditor in accordance with generally accepted auditing standards. The auditor shall make a written report thereon in accordance with generally accepted auditing standards and the report of the auditor shall be submitted to the members in general meeting. The generally accepted auditing standards referred to herein may be those of a country or jurisdiction other than the Cayman Islands. If so, the financial statements and the report of the auditor should disclose this fact and name such country or jurisdiction.

(i) Notices of meetings and business to be conducted thereat

An annual general meeting shall be called by notice of not less than twenty-one (21) clear days and not less than twenty (20) clear business days and any extraordinary general meeting at which it is proposed to pass a special resolution shall (save as set out in sub-paragraph (e) above) be called by notice of at least twenty-one (21) clear days and not less than ten (10) clear business days. All other extraordinary general meetings shall be called by notice of at least fourteen (14) clear days and not less than ten (10) clear business days. The notice must specify the time and place of the meeting and, in the case of special business, the general nature of that business. In addition notice of every general meeting shall be given to all members of the Company other than such as, under the provisions of the Articles or the terms of issue of the shares they hold, are not entitled to receive such notices from the Company, and also to the auditors for the time being of the Company.

Notwithstanding that a meeting of the Company is called by shorter notice than that mentioned above if permitted by the rules of the Designated Stock Exchange, it shall be deemed to have been duly called if it is so agreed:

(i) in the case of a meeting called as an annual general meeting, by all members of the Company entitled to attend and vote thereat; and
(ii) in the case of any other meeting, by a majority in number of the members having a right to attend and vote at the meeting, being a majority together holding not less than ninety-five per cent (95%) in nominal value of the issued shares giving that right.

– IV-11 –

APPENDIX IV SUMMARY OF THE CONSTITUTION OF THE COMPANY AND THE COMPANIES LAW

All business shall be deemed special that is transacted at an extraordinary general meeting and also all business shall be deemed special that is transacted at an annual general meeting with the exception of the following, which shall be deemed ordinary business:

(aa) the declaration and sanctioning of dividends;
(bb) the consideration and adoption of the accounts and balance sheet and the reports of the directors and the auditors;
(cc) the election of directors in place of those retiring;
(dd) the appointment of auditors and other officers;
(ee) the fixing of the remuneration of the directors and of the auditors;
(ff) the granting of any mandate or authority to the directors to offer, allot, grant options over or otherwise dispose of the unissued shares of the Company representing not more than twenty per cent (20%) in nominal value of its existing issued share capital; and
(gg) the granting of any mandate or authority to the directors to repurchase securities of the Company.

(j) Transfer of shares

All transfers of shares may be effected by an instrument of transfer in the usual or common form or in a form prescribed by the Designated Stock Exchange (as defined in the Articles) or in such other form as the board may approve and which may be under hand or, if the transferor or transferee is a clearing house or its nominee(s), by hand or by machine imprinted signature or by such other manner of execution as the Board may approve from time to time. The instrument of transfer shall be executed by or on behalf of the transferor and the transferee provided that the board may dispense with the execution of the instrument of transfer by the transferee in any case in which it thinks fit, in its discretion, to do so and the transferor shall be deemed to remain the holder of the share until the name of the transferee is entered in the register of members in respect thereof. The Board may also resolve either generally or in any particular case, upon request by either the transferor or the transferee, to accept mechanically executed transfers.

The Board in so far as permitted by any applicable law may, in its absolute discretion, at any time and from time to time transfer any share upon the principal register to any branch register or any share on any branch register to the principal register or any other branch register.

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APPENDIX IV

SUMMARY OF THE CONSTITUTION OF THE COMPANY AND THE COMPANIES LAW

Unless the Board otherwise agrees, no shares on the principal register shall be transferred to any branch register nor may shares on any branch register be transferred to the principal register or any other branch register. All transfers and other documents of title shall be lodged for registration and registered, in the case of shares on a branch register, at the relevant registration office and, in the case of shares on the principal register, at the registered office in the Cayman Islands or such other place at which the principal register is kept in accordance with the Companies Law.

The Board may, in its absolute discretion, and without assigning any reason, refuse to register a transfer of any share (not being a fully paid up share) to a person of whom it does not approve or any share issued under any share incentive scheme for employees upon which a restriction on transfer imposed thereby still subsists, and it may also refuse to register any transfer of any share to more than four joint holders or any transfer of any share (not being a fully paid up share) on which the Company has a lien.

The Board may decline to recognise any instrument of transfer unless a fee of such maximum sum as any Designated Stock Exchange (as defined in the Articles) may determine to be payable or such lesser sum as the Directors may from time to time require is paid to the Company in respect thereof, the instrument of transfer, if applicable, is properly stamped, is in respect of only one class of share and is lodged at the relevant registration office or registered office or such other place at which the principal register is kept accompanied by the relevant share certificate(s) and such other evidence as the board may reasonably require to show the right of the transferor to make the transfer (and if the instrument of transfer is executed by some other person on his behalf, the authority of that person so to do).

The registration of transfers may be suspended and the register closed on giving notice by advertisement in a relevant newspaper and, where applicable, any other newspapers in accordance with the requirements of any Designated Stock Exchange (as defined in the Articles), at such times and for such periods as the board may determine and either generally or in respect of any class of shares. The register of members shall not be closed for periods exceeding in the whole thirty (30) days in any year.

(k) Power for the Company to purchase its own shares

The Company is empowered by the Companies Law and the Articles to purchase its own shares subject to certain restrictions and the Board may only exercise this power on behalf of the Company subject to any applicable requirements imposed from time to time by any Designated Stock Exchange (as defined in the Articles).

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APPENDIX IV SUMMARY OF THE CONSTITUTION OF THE COMPANY AND THE COMPANIES LAW

(l) Power for any subsidiary of the Company to own shares in the Company and financial assistance to purchase shares of the Company

There are no provisions in the Articles relating to ownership of shares in the Company by a subsidiary.

Subject to compliance with the rules and regulations of the Designated Stock Exchange (as defined in the Articles) and any other relevant regulatory authority, the Company may give financial assistance for the purpose of or in connection with a purchase made or to be made by any person of any shares in the Company.

(m) Dividends and other methods of distribution

Subject to the Companies Law, the Company in general meeting may declare dividends in any currency to be paid to the members but no dividend shall be declared in excess of the amount recommended by the Board.

The Articles provide dividends may be declared and paid out of the profits of the Company, realised or unrealised, or from any reserve set aside from profits which the directors determine is no longer needed. With the sanction of an ordinary resolution dividends may also be declared and paid out of share premium account or any other fund or account which can be authorised for this purpose in accordance with the Companies Law.

Except in so far as the rights attaching to, or the terms of issue of, any share may otherwise provide, (i) all dividends shall be declared and paid according to the amounts paid up on the shares in respect whereof the dividend is paid but no amount paid up on a share in advance of calls shall for this purpose be treated as paid up on the share and (ii) all dividends shall be apportioned and paid pro rata according to the amount paid up on the shares during any portion or portions of the period in respect of which the dividend is paid. The Directors may deduct from any dividend or other monies payable to any member or in respect of any shares all sums of money (if any) presently payable by him to the Company on account of calls or otherwise.

Whenever the Board or the Company in general meeting has resolved that a dividend be paid or declared on the share capital of the Company, the Board may further resolve either (a) that such dividend be satisfied wholly or in part in the form of an allotment of shares credited as fully paid up, provided that the shareholders entitled thereto will be entitled to elect to receive such dividend (or part thereof) in cash in lieu of such allotment, or (b) that shareholders entitled to such dividend will be entitled to elect to receive an allotment of shares credited as fully paid up in lieu of the whole or such part of the dividend as the Board may think fit. The Company may also upon the recommendation of the Board by an ordinary resolution resolve in respect of any one particular dividend of the Company that it may be satisfied wholly in the form of an allotment of shares credited as fully paid up without offering any right to shareholders to elect to receive such dividend in cash in lieu of such allotment.

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APPENDIX IV

SUMMARY OF THE CONSTITUTION OF THE COMPANY AND THE COMPANIES LAW

Any dividend, interest or other sum payable in cash to the holder of shares may be paid by cheque or warrant sent through the post addressed to the holder at his registered address, or in the case of joint holders, addressed to the holder whose name stands first in the register of the Company in respect of the shares at his address as appearing in the register or addressed to such person and at such addresses as the holder or joint holders may in writing direct. Every such cheque or warrant shall, unless the holder or joint holders otherwise direct, be made payable to the order of the holder or, in the case of joint holders, to the order of the holder whose name stands first on the register in respect of such shares, and shall be sent at his or their risk and payment of the cheque or warrant by the bank on which it is drawn shall constitute a good discharge to the Company. Any one of two or more joint holders may give effectual receipts for any dividends or other moneys payable or property distributable in respect of the shares held by such joint holders.

Whenever the Board or the Company in general meeting has resolved that a dividend be paid or declared the board may further resolve that such dividend be satisfied wholly or in part by the distribution of specific assets of any kind.

All dividends or bonuses unclaimed for one year after having been declared may be invested or otherwise made use of by the board for the benefit of the Company until claimed and the Company shall not be constituted a trustee in respect thereof. All dividends or bonuses unclaimed for six years after having been declared may be forfeited by the Board and shall revert to the Company.

No dividend or other monies payable by the Company on or in respect of any share shall bear interest against the Company.

(n) Proxies

Any member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint another person as his proxy to attend and vote instead of him. A member who is the holder of two or more shares may appoint more than one proxy to represent him and vote on his behalf at a general meeting of the Company or at a class meeting. A proxy need not be a member of the Company and shall be entitled to exercise the same powers on behalf of a member who is an individual and for whom he acts as proxy as such member could exercise. In addition, a proxy shall be entitled to exercise the same powers on behalf of a member which is a corporation and for which he acts as proxy as such member could exercise if it were an individual member. Votes may be given either personally (or, in the case of a member being a corporation, by its duly authorised representative) or by proxy.

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SUMMARY OF THE CONSTITUTION OF THE COMPANY AND THE COMPANIES LAW

APPENDIX IV

(o) Call on shares and forfeiture of shares

Subject to the Articles and to the terms of allotment, the Board may from time to time make such calls upon the members in respect of any monies unpaid on the shares held by them respectively (whether on account of the nominal value of the shares or by way of premium). A call may be made payable either in one lump sum or by installments. If the sum payable in respect of any call or instalment is not paid on or before the day appointed for payment thereof, the person or persons from whom the sum is due shall pay interest on the same at such rate not exceeding twenty per cent. (20%) per annum as the Board may agree to accept from the day appointed for the payment thereof to the time of actual payment, but the Board may waive payment of such interest wholly or in part. The Board may, if it thinks fit, receive from any member willing to advance the same, either in money or money’s worth, all or any part of the monies uncalled and unpaid or installments payable upon any shares held by him, and upon all or any of the monies so advanced the Company may pay interest at such rate (if any) as the Board may decide.

If a member fails to pay any call on the day appointed for payment thereof, the Board may serve not less than fourteen (14) clear days’ notice on him requiring payment of so much of the call as is unpaid, together with any interest which may have accrued and which may still accrue up to the date of actual payment and stating that, in the event of non-payment at or before the time appointed, the shares in respect of which the call was made will be liable to be forfeited.

If the requirements of any such notice are not complied with, any share in respect of which the notice has been given may at any time thereafter, before the payment required by the notice has been made, be forfeited by a resolution of the Board to that effect. Such forfeiture will include all dividends and bonuses declared in respect of the forfeited share and not actually paid before the forfeiture.

A person whose shares have been forfeited shall cease to be a member in respect of the forfeited shares but shall, notwithstanding, remain liable to pay to the Company all monies which, at the date of forfeiture, were payable by him to the Company in respect of the shares, together with (if the board shall in its discretion so require) interest thereon from the date of forfeiture until the date of actual payment at such rate not exceeding twenty per cent. (20%) per annum as the Board determines.

(p) Inspection of register of members

Pursuant to the Articles the register and branch register of members shall be open to inspection for at least two (2) hours on every business day by members without charge, or by any other person upon a maximum payment of HK$2.50 or such lesser sum specified by the Board, at the registered office or such other place at which the register is kept in accordance with the Companies Law or, upon a maximum payment of HK$1.00 or such lesser sum specified by the Board, at the Registration Office (as defined in the Articles), unless the register is closed in accordance with the Articles.

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SUMMARY OF THE CONSTITUTION OF THE COMPANY AND THE COMPANIES LAW

APPENDIX IV

(q) Quorum for meetings and separate class meetings

No business shall be transacted at any general meeting unless a quorum is present when the meeting proceeds to business, but the absence of a quorum shall not preclude the appointment of a chairman.

Save as otherwise provided by the Articles the quorum for a general meeting shall be two members present in person (or, in the case of a member being a corporation, by its duly authorised representative) or by proxy and entitled to vote. In respect of a separate class meeting (other than an adjourned meeting) convened to sanction the modification of class rights the necessary quorum shall be two persons holding or representing by proxy not less than one-third in nominal value of the issued shares of that class.

A corporation being a member shall be deemed for the purpose of the Articles to be present in person if represented by its duly authorised representative being the person appointed by resolution of the directors or other governing body of such corporation to act as its representative at the relevant general meeting of the Company or at any relevant general meeting of any class of members of the Company.

(r) Rights of the minorities in relation to fraud or oppression

There are no provisions in the Articles relating to rights of minority shareholders in relation to fraud or oppression. However, certain remedies are available to shareholders of the Company under Cayman law, as summarised in paragraph 3(f) of this Appendix.

(s) Procedures on liquidation

A resolution that the Company be wound up by the court or be wound up voluntarily shall be a special resolution.

Subject to any special rights, privileges or restrictions as to the distribution of available surplus assets on liquidation for the time being attached to any class or classes of shares (i) if the Company shall be wound up and the assets available for distribution amongst the members of the Company shall be more than sufficient to repay the whole of the capital paid up at the commencement of the winding up, the excess shall be distributed pari passu amongst such members in proportion to the amount paid up on the shares held by them respectively and (ii) if the Company shall be wound up and the assets available for distribution amongst the members as such shall be insufficient to repay the whole of the paid-up capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by the members in proportion to the capital paid up, or which ought to have been paid up, at the commencement of the winding up on the shares held by them respectively.

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APPENDIX IV

SUMMARY OF THE CONSTITUTION OF THE COMPANY AND THE COMPANIES LAW

If the Company shall be wound up (whether the liquidation is voluntary or by the court) the liquidator may, with the authority of a special resolution and any other sanction required by the Companies Law divide among the members in specie or kind the whole or any part of the assets of the Company whether the assets shall consist of property of one kind or shall consist of properties of different kinds and the liquidator may, for such purpose, set such value as he deems fair upon any one or more class or classes of property to be divided as aforesaid and may determine how such division shall be carried out as between the members or different classes of members. The liquidator may, with the like authority, vest any part of the assets in trustees upon such trusts for the benefit of members as the liquidator, with the like authority, shall think fit, but so that no contributory shall be compelled to accept any shares or other property in respect of which there is a liability.

(t) Untraceable members

Pursuant to the Articles, the Company may sell any of the shares of a member who is untraceable if (i) all cheques or warrants in respect of dividends of the shares in question (being not less than three in total number) for any sum payable in cash to the holder of such shares have remained uncashed for a period of 12 years; (ii) upon the expiry of the 12 year period, the Company has not during that time received any indication of the existence of the member; and (iii) the Company has caused an advertisement to be published in accordance with the rules of the Designated Stock Exchange (as defined in the Articles) giving notice of its intention to sell such shares and a period of three (3) months, or such shorter period as may be permitted by the Designated Stock Exchange (as defined in the Articles), has elapsed since the date of such advertisement and the Designated Stock Exchange (as defined in the Articles) has been notified of such intention. The net proceeds of any such sale shall belong to the Company and upon receipt by the Company of such net proceeds, it shall become indebted to the former member of the Company for an amount equal to such net proceeds.

(u) Subscription rights reserve

The Articles provide that to the extent that it is not prohibited by and is in compliance with the Companies Law, if warrants to subscribe for shares have been issued by the Company and the Company does any act or engages in any transaction which would result in the subscription price of such warrants being reduced below the par value of a share, a subscription rights reserve shall be established and applied in paying up the difference between the subscription price and the par value of a share on any exercise of the warrants.

– IV-18 –

SUMMARY OF THE CONSTITUTION OF THE COMPANY AND THE COMPANIES LAW

APPENDIX IV

3. CAYMAN ISLANDS COMPANY LAW

The Company is incorporated in the Cayman Islands subject to the Companies Law and, therefore, operates subject to Cayman law. Set out below is a summary of certain provisions of Cayman company law, although this does not purport to contain all applicable qualifications and exceptions or to be a complete review of all matters of Cayman company law and taxation, which may differ from equivalent provisions in jurisdictions with which interested parties may be more familiar:

(a) Operations

As an exempted company, the operations of the Company must be conducted mainly outside the Cayman Islands. The Company is required to file an annual return each year with the Registrar of Companies of the Cayman Islands and pay a fee which is based on the amount of its authorised share capital.

(b) Share capital

The Companies Law provides that where a company issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount of the value of the premiums on those shares shall be transferred to an account, to be called the “share premium account”. At the option of a company, these provisions may not apply to premiums on shares of that company allotted pursuant to any arrangement in consideration of the acquisition or cancellation of shares in any other company and issued at a premium. The Companies Law provides that the share premium account may be applied by the company subject to the provisions, if any, of its memorandum and articles of association in (a) paying distributions or dividends to members; (b) paying up unissued shares of the company to be issued to members as fully paid bonus shares; (c) the redemption and repurchase of shares (subject to the provisions of section 37 of the Companies Law); (d) writing-off the preliminary expenses of the company; and (e) writing-off the expenses of, or the commission paid or discount allowed on, any issue of shares or debentures of the company.

No distribution or dividend may be paid to members out of the share premium account unless immediately following the date on which the distribution or dividend is proposed to be paid, the company will be able to pay its debts as they fall due in the ordinary course business.

The Companies Law provides that, subject to confirmation by the Grand Court of the Cayman Islands (the “Court”), a company limited by shares or a company limited by guarantee and having a share capital may, if so authorised by its articles of association, by special resolution reduce its share capital in any way.

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APPENDIX IV SUMMARY OF THE CONSTITUTION OF THE COMPANY AND THE COMPANIES LAW

The Articles includes certain protections for holders of special classes of shares, requiring their consent to be obtained before their rights may be varied. The consent of the specified proportions of the holders of the issued shares of that class or the sanction of a resolution passed at a separate meeting of the holders of those shares is required.

(c) Financial assistance to purchase shares of a company or its holding company

Subject to all applicable laws, the Company may give financial assistance to Directors and employees of the Company, its subsidiaries, its holding company or any subsidiary of such holding company in order that they may buy Shares in the Company or shares in any subsidiary or holding company. Further, subject to all applicable laws, the Company may give financial assistance to a trustee for the acquisition of Shares in the Company or shares in any such subsidiary or holding company to be held for the benefit of employees of the Company, its subsidiaries, any holding company of the Company or any subsidiary of any such holding company (including salaried Directors).

There is no statutory restriction in the Cayman Islands on the provision of financial assistance by a company to another person for the purchase of, or subscription for, its own or its holding company’s shares. Accordingly, a company may provide financial assistance if the directors of the company consider, in discharging their duties of care and acting in good faith, for a proper purpose and in the interests of the company, that such assistance can properly be given. Such assistance should be on an arm’s-length basis.

(d) Purchase of shares and warrants by a company and its subsidiaries

Subject to the provisions of the Companies Law, a company limited by shares or a company limited by guarantee and having a share capital may, if so authorised by its articles of association, issue shares which are to be redeemed or are liable to be redeemed at the option of the company or a shareholder and the Companies Law expressly provides that it shall be lawful for the rights attaching to any shares to be varied, subject to the provisions of the company’s articles of association, so as to provide that such shares are to be or are liable to be so redeemed. In addition, such a company may, if authorised to do so by its articles of association, purchase its own shares, including any redeemable shares. However, if the articles of association do not authorise the manner and terms of purchase, a company cannot purchase any of its own shares unless the manner and terms of purchase have first been authorised by an ordinary resolution of the company. At no time may a company redeem or purchase its shares unless they are fully paid. A company may not redeem or purchase any of its shares if, as a result of the redemption or purchase, there would no longer be any issued shares of the company other than shares held as treasury shares. A payment out of capital by a company for the redemption or purchase of its own shares is not lawful unless immediately following the date on which the payment is proposed to be made, the company shall be able to pay its debts as they fall due in the ordinary course of business.

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APPENDIX IV

SUMMARY OF THE CONSTITUTION OF THE COMPANY AND THE COMPANIES LAW

Shares purchased by a company shall be treated as cancelled unless, subject to the memorandum and articles of association of the company, the directors of the company resolve to hold such shares in the name of the company as treasury shares prior to the purchase. Where shares of a company are held as treasury shares, the company shall be entered in the register of members as holding those shares, however, notwithstanding the foregoing, the company shall not be treated as a member for any purpose and shall not exercise any right in respect of the treasury shares, and any purported exercise of such a right shall be void, and a treasury share shall not be voted, directly or indirectly, at any meeting of the company and shall not be counted in determining the total number of issued shares at any given time, whether for the purposes of the company’s articles of association or the Companies Law. Further, no dividend may be declared or paid, and no other distribution (whether in cash or otherwise) of the company’s assets (including any distribution of assets to members on a winding up) may be made to the company, in respect of a treasury share.

A company is not prohibited from purchasing and may purchase its own warrants subject to and in accordance with the terms and conditions of the relevant warrant instrument or certificate. There is no requirement under Cayman Islands law that the memorandum or articles of association of a company must contain a specific provision enabling such purchases and the directors of a company may rely upon the general power contained in its memorandum of association to buy and sell and deal in personal property of all kinds.

Under Cayman Islands law, a subsidiary may hold shares in its holding company and, in certain circumstances, may acquire such shares.

(e) Dividends and distributions

With the exception of section 34 of the Companies Law, there is no statutory provisions relating to the payment of dividends. Based upon English case law, which is regarded as persuasive in the Cayman Islands, dividends may be paid only out of profits. In addition, section 34 of the Companies Law permits, subject to a solvency test and the provisions, if any, of the company’s memorandum and articles of association, the payment of dividends and distributions out of the share premium account (see paragraph 2(m) above for further details).

(f) Protection of minorities

The Cayman Islands courts ordinarily would be expected to follow English case law precedents which permit a minority shareholder to commence a representative action against or derivative actions in the name of the company to challenge (a) an act which is ultra vires the company or illegal, (b) an act which constitutes fraud against the minority and the wrongdoers are themselves in control of the company, and (c) an irregularity in the passing of a resolution which requires a qualified (or special) majority.

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SUMMARY OF THE CONSTITUTION OF THE COMPANY AND THE COMPANIES LAW

APPENDIX IV

In the case of a company (not being a bank) having a share capital divided into shares, the Court may, on the application of members holding not less than one fifth of the shares of the company in issue, appoint an inspector to examine into the affairs of the company and to report thereon in such manner as the Court shall direct.

Any shareholder of a company may petition the Court which may make a winding up order if the Court is of the opinion that it is just and equitable that the company should be wound up or, as an alternative to a winding up order, (a) an order regulating the conduct of the affairs of the company in the future, (b) an order requiring the company to refrain from doing or continuing an act complained of by the shareholder petitioner or to do an act which the shareholder petitioner has complained it has omitted to do, (c) an order authorising civil proceedings to be brought in the name and on behalf of the company by the shareholder petitioner on such terms as the Court may direct, or (d) an order providing for the purchase of the shares of any shareholders of the company by other shareholders or by the company itself and, in the case of a purchase by the company itself, a reduction of the company’s capital accordingly.

Generally claims against a company by its shareholders must be based on the general laws of contract or tort applicable in the Cayman Islands or their individual rights as shareholders as established by the memorandum and articles of association of the company.

(g) Management

The Companies Law contains no specific restrictions on the power of directors to dispose of assets of a company. However, as a matter of general law, every officer of a company, which includes a director, managing director and secretary, in exercising his powers and discharging his duties must do so honestly and in good faith with a view to the best interests of the company and exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

(h) Accounting and auditing requirements

A company shall cause proper books of account to be kept with respect to (i) all sums of money received and expended by the company and the matters in respect of which the receipt and expenditure takes place; (ii) all sales and purchases of goods by the company; and (iii) the assets and liabilities of the company.

Proper books of account shall not be deemed to be kept if there are not kept such books as are necessary to give a true and fair view of the state of the affairs of the company and to explain its transactions.

(i) Exchange control

There are no exchange control regulations or currency restrictions in the Cayman Islands.

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SUMMARY OF THE CONSTITUTION OF THE COMPANY AND THE COMPANIES LAW

APPENDIX IV

(j) Taxation

Pursuant to section 6 of the Tax Concessions Law (1999 Revision) of the Cayman Islands, the Company has obtained an undertaking from the Governor-in-Cabinet:

(1) that no law which is enacted in the Cayman Islands imposing any tax to be levied on profits, income, gains or appreciation shall apply to the Company or its operations; and
(2) that the aforesaid tax or any tax in the nature of estate duty or inheritance tax shall not be payable on or in respect of the shares, debentures or other obligations of the Company.

The undertaking for the Company is for a period of twenty years from 1 February 2011.

The Cayman Islands currently levy no taxes on individuals or corporations based upon profits, income, gains or appreciations and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to the Company levied by the Government of the Cayman Islands save certain stamp duties which may be applicable, from time to time, on certain instruments executed in or brought within the jurisdiction of the Cayman Islands. The Cayman Islands are not party to any double tax treaties.

(k) Stamp duty on transfers

No stamp duty is payable in the Cayman Islands on transfers of shares of Cayman Islands companies except those which hold interests in land in the Cayman Islands.

(l) Loans to directors

There is no express provision in the Companies Law prohibiting the granting of loans by a company to any of its directors.

(m) Inspection of corporate records

Members of the Company will have no general right under the Companies Law to inspect or obtain copies of the register of members or corporate records of the Company. They will, however, have such rights as may be set out in the Articles.

An exempted company may, maintain its principal register of members and any branch registers at such locations, whether within or without the Cayman Islands, as the directors may, from time to time, think fit. A branch register shall be kept in the same manner in which a principal register is by the Companies Law required or permitted to

– IV-23 –

APPENDIX IV SUMMARY OF THE CONSTITUTION OF THE COMPANY AND THE COMPANIES LAW

be kept. The company shall cause to be kept at the place where the company’s principal register is kept a duplicate of any branch register duly entered up from time to time. There is no requirement under the Companies Law for an exempted company to make any returns of members to the Registrar of Companies of the Cayman Islands. The names and addresses of the members are, accordingly, not a matter of public record and are not available for public inspection.

(n) Winding up

A company may be wound up compulsorily by order of the Court voluntarily; or, under supervision of the Court. The Court has authority to order winding up in a number of specified circumstances including where it is, in the opinion of the Court, just and equitable to do so.

A company may be wound up voluntarily when the members so resolve in general meeting by special resolution, or, in the case of a limited duration company, when the period fixed for the duration of the company by its memorandum or articles expires, or the event occurs on the occurrence of which the memorandum or articles provides that the company is to be dissolved, or, the company does not commence business for a year from its incorporation (or suspends its business for a year), or, the company is unable to pay its debts. In the case of a voluntary winding up, such company is obliged to cease to carry on its business from the time of passing the resolution for voluntary winding up or upon the expiry of the period or the occurrence of the event referred to above.

For the purpose of conducting the proceedings in winding up a company and assisting the Court, there may be appointed one or more than one person to be called an official liquidator or official liquidators; and the Court may appoint to such office such qualified person or persons, either provisionally or otherwise, as it thinks fit, and if more persons than one are appointed to such office, the Court shall declare whether any act hereby required or authorised to be done by the official liquidator is to be done by all or any one or more of such persons. The Court may also determine whether any and what security is to be given by an official liquidator on his appointment; if no official liquidator is appointed, or during any vacancy in such office, all the property of the company shall be in the custody of the Court. A person shall be qualified to accept an appointment as an official liquidator if he is duly qualified in terms of the Insolvency Practitioners Regulations. A foreign practitioner may be appointed to act jointly with a qualified insolvency practitioner.

In the case of a members’ voluntary winding up of a company, the company in general meeting must appoint one or more liquidators for the purpose of winding up the affairs of the company and distributing its assets. A declaration of solvency must be signed by all the directors of a company being voluntarily wound up within twenty-eight (28) days of the commencement of the liquidation, failing which, its liquidator must apply to Court for an order that the liquidation continue under the supervision of the Court.

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APPENDIX IV

SUMMARY OF THE CONSTITUTION OF THE COMPANY AND THE COMPANIES LAW

Upon the appointment of a liquidator, the responsibility for the affairs of the Company rests entirely in his hands and no future executive action may be carried out without his approval. The duties of a liquidator are to collect the assets of the company (including the amount (if any) due from the contributories), settle the list of creditors and, subject to the rights of preferred and secured creditors and to any subordination agreements or rights of set-off or netting of claims, discharge the company’s liability to them ( pari passu if insufficient assets exist to discharge the liabilities in full) and to settle the list of contributories (shareholders) and divide the surplus assets (if any) amongst them in accordance with the rights attaching to the shares.

As soon as the affairs of the company are fully wound up, the liquidator must make up an account of the winding up, showing how the winding up has been conducted and the property of the company has been disposed of, and thereupon call a general meeting of the company for the purposes of laying before it the account and giving an explanation thereof. At least twenty-one (21) days before the final meeting, the liquidator shall send a notice specifying the time, place and object of the meeting to each contributory in any manner authorised by the company’s articles of association and published in the Gazette in the Cayman Islands.

(o) Reconstructions

There are statutory provisions which facilitate reconstructions and amalgamations approved by a majority in number representing seventy-five per cent. (75%) in value of shareholders or class of shareholders or creditors, as the case may be, as are present at a meeting called for such purpose and thereafter sanctioned by the Court. Whilst a dissenting shareholder would have the right to express to the Court his view that the transaction for which approval is sought would not provide the shareholders with a fair value for their shares, the Court is unlikely to disapprove the transaction on that ground alone in the absence of evidence of fraud or bad faith on behalf of management.

(p) Compulsory acquisition

Where an offer is made by a company for the shares of another company and, within four (4) months of the offer, the holders of not less than ninety per cent. (90%) of the shares which are the subject of the offer accept, the offeror may at any time within two (2) months after the expiration of the said four (4) months, by notice in the prescribed manner require the dissenting shareholders to transfer their shares on the terms of the offer. A dissenting shareholder may apply to the Court within one (1) month of the notice objecting to the transfer. The burden is on the dissenting shareholder to show that the Court should exercise its discretion, which it will be unlikely to do unless there is evidence of fraud or bad faith or collusion as between the offeror and the holders of the shares who have accepted the offer as a means of unfairly forcing out minority shareholders.

– IV-25 –

SUMMARY OF THE CONSTITUTION OF THE COMPANY AND THE COMPANIES LAW

APPENDIX IV

(q) Indemnification

Cayman Islands law does not limit the extent to which the articles of association of a company may provide for indemnification of officers and directors, except to the extent any such provision may be held by the court to be contrary to public policy (e.g. for purporting to provide indemnification against the consequences of committing a crime).

4. GENERAL

[●], the special legal counsel on Cayman Islands law of the Company, have sent to the Company a letter of advice summarising certain aspects of Cayman Islands company law. This letter, together with a copy of the Companies Law, is available for inspection as referred to in the paragraph headed “Documents available for inspection” in Appendix VI. Any person wishing to have a detailed summary of Cayman Islands company law or advice on the differences between it and the laws of any jurisdiction with which he is more familiar is recommended to seek independent legal advice.

– IV-26 –

STATUTORY AND GENERAL INFORMATION

APPENDIX V

A. FURTHER INFORMATION ABOUT THE GROUP

1. Incorporation of the Company

The Company was incorporated in the Cayman Islands as an exempted company with limited liability under the Companies Law on 23 December 2010. The Company has established its principal place of business in Hong Kong at 1801, Tai Tung Building, 8 Fleming Road, Wanchai, Hong Kong and was registered as a non-Hong Kong company in Hong Kong under Part XI of the Companies Ordinance on 21 June 2011. Mr. Lau Chi Hung is appointed as the authorised representative of the Company for the acceptance of process and notices on behalf of the Company in Hong Kong.

As the Company was incorporated in the Cayman Islands, it operates subject to the relevant laws and regulations of the Cayman Islands and its constitution which comprises the Memorandum and the Articles. A summary of the relevant laws and regulations of the Cayman Islands and of the Company’s constitution is set out in Appendix IV to this document.

2. Changes in share capital of the Company

(a) Increase in authorised share capital

The authorised share capital of the Company as at the date of incorporation was HK$100,000 divided into 10,000,000 Shares of HK$0.01 each. On 23 December 2010, one Share was allotted and issued, nil-paid to Codan Trust Company (Cayman) Limited as subscriber’s share which was subsequently transferred to Abraholme on the same date.

On 23 August 2011, the one issued nil-paid Share held by Abraholme was transferred to Trigiant Investments at nil consideration and was subsequently credited as fully paid at par, and 9,999,999 Shares were allotted and issued, fully-paid to Trigiant Investments as more particularly described in paragraph 4 below.

The authorised share capital of the Company was increased from HK$100,000 divided into 10,000,000 Shares of HK$0.01 each to HK$100,000,000 divided into 10,000,000,000 Shares of HK$0.01 each and [●] was approved pursuant to the resolutions in writing of the sole Shareholder passed on [●] referred to in paragraph 3 below and subject to the conditions contained therein.

Immediately following the completion of [●] and the [●] (taking no account of any Shares which may be allotted and issued pursuant to the exercise of [●]), the authorised share capital of the Company will be HK$100,000,000 divided into 10,000,000,000 Shares, of which [1,000,000,000] Shares will be issued fully paid or credited as fully paid, and [9,000,000,000] Shares will remain unissued.

– V-1 –

APPENDIX V STATUTORY AND GENERAL INFORMATION

Other than pursuant to the exercise of [●], the Company does not have any present intention to issue any of the authorised but unissued share capital and, without the prior approval of the Shareholders in general meeting, no issue of Shares will be made which would effectively alter the control of the Company.

Save as disclosed in this paragraph and in paragraphs 3 and 4 of this Appendix, there has been no alteration in the share capital of the Company since its incorporation.

(b) Founder shares

The Company has no founder shares, management shares or deferred shares.

3. Resolutions in writing of the sole Shareholder passed on [ ● ] 2011

By resolutions in writing of the sole Shareholder passed on [●]:

(a) the Company approved and conditionally adopted the Memorandum and the Articles;
(b) the authorised share capital of the Company was increased from HK$100,000 to HK$100,000,000 by the creation of 9,990,000,000 new Shares ranking pari passu in all respects with the then existing issued Shares;
(c) conditional upon [●]:
(i) the [●] and [●] was approved and the Directors were authorised to allot and issue [●] pursuant to the [●] and such number of Shares as may be allotted and issued upon the exercise of [●] as they see fit, on and subject to the terms and conditions stated in this document and in the relevant [●];
(ii) conditional on the share premium account of the Company being credited as a result of the issue of [●] pursuant to the [●] (including any additional Shares issued pursuant to the exercise of the [●]), the Directors were authorised to allot and issue a total of 740,000,000 Shares credited as fully paid at par to the holders of Shares whose names appear on the register of members of the Company at 4:00 p.m. on [●] 2011 (or as they may direct) by way of capitalisation of the sum of HK$7,400,000 standing to the credit of the share premium account of the Company, and the Shares be allotted and issued pursuant to this resolution shall rank pari passu in all respects with the existing issued Shares;
(iii) a general unconditional mandate was given to the Directors to allot, issue and deal with, otherwise than by way of rights issue, scrip dividend schemes or similar arrangements providing for allotment of Shares in lieu

– V-2 –

APPENDIX V

STATUTORY AND GENERAL INFORMATION

of the whole or in part of any dividend in accordance with the Articles or under the [●] or [●] or upon the exercise of [●], Shares with an aggregate nominal amount of not exceeding the sum of (aa) 20% of the aggregate nominal amount of the share capital of the Company in issue immediately following completion of the [●] and [●]; and (bb) the aggregate nominal amount of the share capital of the Company which may be repurchased by the Company (if any) pursuant to the authority granted to the Directors as referred to in sub-paragraph (iv) below, until the conclusion of the next annual general meeting of the Company, or the date by which the next annual general meeting of the Company is required by the Articles or any applicable law to be held, or the passing of an ordinary resolution by the Shareholders revoking or varying the authority given to the Directors, whichever occurs first;

(iv) a general unconditional mandate was given to the Directors to exercise all powers of the Company to repurchase Shares to be listed on [●] or any other stock exchange on which the Shares may be listed and recognised by the [●] and [●] for this purpose such number of Shares with an aggregate nominal amount of not exceeding 10% of the aggregate nominal amount of the share capital of the Company in issue immediately following completion of [●] and the [●] but excluding any Shares which may be issued pursuant to the exercise of [●]; until the conclusion of the next annual general meeting of the Company, or the date by which the next annual general meeting of the Company is required by the Articles or any applicable law to be held, or the passing of an ordinary resolution by the Shareholders revoking or varying the authority given to the Directors, whichever occurs first; and
(v) the general unconditional mandate mentioned in sub-paragraph (iii) above was extended by the addition to the aggregate nominal value of the Shares which may be allotted and issued or agreed to be allotted and issued by the Directors pursuant to such general mandate of an amount representing the aggregate nominal value of the Shares purchased by the Company pursuant to the mandate to repurchase Shares referred to in sub-paragraph (iv) above.

– V-3 –

STATUTORY AND GENERAL INFORMATION

APPENDIX V

4. Reorganisation

The companies comprising the Group underwent the Reorganisation to rationalise the Group’s structure in preparation for [●]. The Reorganisation involved the transfer to the Company from Abraholme, Forerich, Headwell, Zymmetry and Ace Speed their interest of 55.5%, 25%, 5.5%, 12% and 2% respectively (an aggregate of 100%) in the issued share capital of Trigiant BVI, the intermediate investment holding company of the Group, in consideration of and in exchange for which the Company:

(i) allotted and issued, credited as fully paid, 9,999,999 new Shares to Trigiant Investments (as directed by Abraholme, Forerich, Headwell, Zymmetry and Ace Speed); and
(ii) credited as fully paid at par the one nil-paid Share then held by Trigiant Investments.

In addition to the acquisition of shares of Trigiant BVI by the Company as referred to above, the Group also underwent the following corporate restructuring:

(a) on 26 December 2007, Trigiant Singapore (the then sole owner of Jiangsu Trigiant) allotted and issued 999 new shares in the share capital of Trigiant Singapore for cash at par, as to 384 shares, representing 38.4% of the enlarged issued share capital of Trigiant Singapore, to Abraholme; as to 250 shares, representing 25% of the enlarged issued share capital of Trigiant Singapore, to Forerich; as to 100 shares, representing 10% of the enlarged issued share capital of Trigiant Singapore, to Premo Superior Investments Limited; as to 35 shares, representing 3.5% of the enlarged issued share capital of Trigiant Singapore, to Globalwealth Resources Limited; as to 110 shares, representing 11% of the enlarged issued share capital of Trigiant Singapore, to Headwell; as to 90 shares, representing 9% of the enlarged issued share capital of Trigiant Singapore, to Noble Luck Investments Limited and as to 30 shares, representing 3% of the enlarged issued share capital of Trigiant Singapore, to Zymmetry;
(b) on 23 December 2009, the shareholding structure of Trigiant BVI was changed as a result of (i) the acquisition of its then entire issued share capital by Abraholme and (ii) the allotment and issue of new shares for cash at par, to Abraholme, Forerich, Headwell, Zymmetry and Ace Speed. Subsequent to such share transfer and allotment and issue of new shares, Trigiant BVI was owned as to 55.5% by Abraholme, 25% by Forerich, 5.5% by Headwell, 12% by Zymmetry and 2% by Ace Speed;
(c) on 28 December 2009, Trigiant Hong Kong became wholly owned by Trigiant BVI after Trigiant BVI acquired the one founder member share, representing the entire issued share capital of Trigiant Hong Kong, from the founder member of Trigiant Hong Kong for cash at par; and

– V-4 –

STATUTORY AND GENERAL INFORMATION

APPENDIX V

(d) on 29 December 2009, Jiangsu Trigiant became wholly owned by Trigiant Hong Kong after Trigiant Hong Kong acquired Trigiant Singapore’s 100% equity interest in Jiangsu Trigiant at a cash consideration of US$30 million.

5. Changes in share capital or registered capital of the subsidiaries of the Group

The subsidiaries of the Group are listed in the Accountants’ Report set out in Appendix IA to this document.

Save as disclosed in paragraph 4 above and those as disclosed below, there has been no alteration in the share capital of any of the subsidiaries of the Company which took place within the two years immediately preceding the date of this document are as follows:

(a) Trigiant Hong Kong

On 8 December 2009, Trigiant Hong Kong was incorporated in Hong Kong with an authorised share capital of HK$10,000 comprising 10,000 shares of HK$1 each and one founder member share was allotted and issued to the founder member for cash at par.

(b) Trigiant BVI

On 23 December 2009, Trigiant BVI allotted and issued 900 new shares in the share capital of Trigiant BVI, as to 455 shares to Abraholme, as to 250 shares to Forerich, as to 55 shares to Headwell, as to 120 shares to Zymmetry, and as to 20 shares to Ace Speed, in each case, for cash at par.

– V-5 –

STATUTORY AND GENERAL INFORMATION

APPENDIX V

6. Further information on the Group’s PRC establishment

(i)	Name of the enterprise:	江蘇俊知技術有限公司(Jiangsu Trigiant
		Technology Co., Ltd.)
(ii)	Economic nature:	Wholly foreign-owned enterprise
(iii)	Registered owner:	Trigiant Hong Kong (100%)
(iv)	Total investment:	USD74,800,000
(v)	Registered capital:	USD30,000,000 (fully paid up)
(vi)	Attributable interest of	100%
	the Group:
(vii)	Term:	50 years, commencing from 15 March 2007
		to 14 March 2057
(viii)	Scope of business:	Research, development, production and
		technical customer service of new-type
		electronic components, RF coaxial cables,
		communication power soft cables and special
		cables. The business also includes the
		manufacturing of mobile communication
		switching equipment, optic fibre, optic cable
		and accessories, the manufacturing and
		packaging services of wood panels as well as
		wholesaling of electrolytic copper and
		copper products and import and export
		businesses.

– V-6 –

APPENDIX V STATUTORY AND GENERAL INFORMATION

7. Repurchase by the Company of its securities

This paragraph includes information required by [●] to be included in this document concerning the repurchase by the Company of its own securities.

(a) Shareholders’ approval

All proposed repurchases of securities (which must be fully paid up in the case of shares) by a company [●] must be approved in advance by an ordinary resolution of the shareholders, either by way of general mandate or by specific approval of a particular transaction.

Note: Pursuant to a resolution in writing passed by the sole Shareholder on [●] 2011, the Repurchase Mandate was given to the Directors authorising any repurchase by the Company of Shares on the [●] or any other [●] on which the securities of the Company may be [●] and which is recognised by the [●] and [●] for this purpose, of up to 10% of the aggregate nominal amount of the share capital of the Company in issue immediately following completion of [●] and [●] but excluding any Shares which may be issued pursuant to the exercise of [●]. This mandate will expire at the conclusion of the next general meeting of the Company, or the date by which the next annual general meeting of the Company is required by the Articles or applicable Cayman Islands law to be held, or the passing of an ordinary resolution by the Shareholders in general meeting revoking or varying the authority given to the Directors, whichever occurs first.

(b) Source of funds

Repurchases must be paid out of funds legally available for the purpose in accordance with the Memorandum and Articles, [●] and the applicable laws of the Cayman Islands. A listed company may not repurchase its own securities on [●] for a consideration other than cash or for settlement otherwise than in accordance with the trading rules of [●] from time to time.

Under the laws of the Cayman Islands, any repurchases of Shares by the Company may be made out of profits of the Company, out of the Company’s share premium account or out of the proceeds of a fresh issue of Shares made for the purpose of the repurchase or, if authorised by the Articles and subject to the Companies Law, out of capital. Any premium payable on a redemption or purchase over the par value of the Shares to be repurchased must be provided for out of profits or from sums standing to the credit of the share premium account of the Company or, if authorised by the Articles and subject to the Companies Law, out of capital.

(c) Reasons for repurchases

The Directors believe that it is in the best interests of the Company and the Shareholders for the Directors to have general authority from the Shareholders to enable the Company to repurchase Shares in the market. Such repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net asset value per Share and/or earnings per Share and will only be made if the Directors believe that such repurchases will benefit the Company and the Shareholders.

– V-7 –

APPENDIX V

STATUTORY AND GENERAL INFORMATION

(d) Funding of repurchases

In repurchasing securities, the Company may only apply funds legally available for such purpose in accordance with the Memorandum and Articles, [●] and the applicable laws of the Cayman Islands. On the basis of the current financial position of the Group as disclosed in this document and taking into account the current working capital position of the Company, the Directors consider that, if the Repurchase Mandate were to be exercised in full, it might have a material adverse effect on the working capital and/or the gearing position of the Company as compared with the position disclosed in this document. However, the Directors do not propose to exercise the Repurchase Mandate to such an extent as would, in the circumstances, have a material adverse effect on the working capital requirements of the Company or the gearing levels which in the opinion of the Directors are from time to time appropriate for the Company.

(e) General

None of the Directors nor, to the best of their knowledge having made all reasonable enquiries, any of their associates, has any present intention to sell any Shares to the Company or its subsidiaries.

The Directors have undertaken to [●] that, so far as the same may be applicable, they will exercise the Repurchase Mandate in accordance with the Memorandum and Articles, [●] and the applicable laws of the Cayman Islands.

If, as a result of a securities repurchase, a Shareholder’s proportionate interest in the voting rights of the Company is increased, such increase will be treated as an acquisition for the purpose of [●]. Accordingly, a Shareholder or a group of Shareholders acting in concert could obtain or consolidate control of the Company and become obliged to make a mandatory offer in accordance with Rule 26 of [●]. Save as aforesaid, the Directors are not aware of any consequences of repurchases which would arise under [●] as a consequence of any repurchases pursuant to the Repurchase Mandate.

No connected person of the Company has notified the Company that he/she/it has a present intention to sell his/her/its Shares to the Company, or has undertaken not to do so if the Repurchase Mandate is exercised.

– V-8 –

STATUTORY AND GENERAL INFORMATION

APPENDIX V

8. Registration under Part XI of the Companies Ordinance

The Company has established its principal place of business in Hong Kong for the purpose of registration under Part XI of the Companies Ordinance at 1801, Tai Tung Building, 9 Fleming Road, Wanchai, Hong Kong. The Company was registered as a non-Hong Kong company in Hong Kong under Part XI of the Companies Ordinance on 21 June 2011. Mr. Lau Chi Hung is appointed as the authorised representative of the Company for the acceptance of service of process and notices on behalf of the Company in Hong Kong (for the purpose of the Companies Ordinance).

B. FURTHER INFORMATION ABOUT THE BUSINESS OF THE COMPANY

1. Summary of material contracts

The following contracts (not being contracts entered into in the ordinary course of business) have been entered into by the Company or its subsidiaries within the two years preceding the date of this document and are or may be material:

(a) an undated tenancy agreement made between Jiangsu Trigiant and Jiangsu Opto-electrical pursuant to which Jiangsu Trigiant agreed to lease to Jiangsu Opto-electrical a parcel of land more particularly referred to in the Land Use Rights Certificate No. Yi Guo Yong (2009) Di 45601150 and certain buildings erected thereon for RMB484,428 per year exclusive of water, gas and electricity charges for the period between 1 March 2010 to 28 February 2013;
(b) an undated tenancy agreement made between Jiangsu Trigiant and Jiangsu Sensing pursuant to which Jiangsu Trigiant agreed to lease to Jiangsu Sensing a parcel of land more particularly referred to in the Land Use Rights Certificate No. Yi Guo Yong (2009) Di 45601148 and certain buildings erected thereon for RMB240,660 per year exclusive of water, gas and electricity charges for the period between 1 March 2010 to 28 February 2013;
(c) a financial advisor agreement dated 16 July 2010 entered into between Jiangsu Trigiant and 北京因特聯企業諮詢有限公司 (Beijing Yin Te Lian Corporate Consultancy Co., Ltd.) (“Beijing YTL”) pursuant to which Beijing YTL would provide the Group with certain advisory services in connection with the Group’s preparation for [●] for a period of two years at an aggregate consideration of RMB300,000. The provision of the above service will cease upon [●];
(d) a financial advisor agreement dated 16 July 2010 entered into between Jiangsu Trigiant and ICH Partners Ltd pursuant to which ICH Partners Ltd would provide the Group with certain advisory services in connection with the Group’s preparation for [●] for a period of two years at an aggregate consideration of [●]. The provision of the above service will cease upon [●];

– V-9 –

APPENDIX V

STATUTORY AND GENERAL INFORMATION

(e) an agreement dated 3 December 2010 made between Jiangsu Trigiant and Jiangsu Opto-electrical pursuant to which Jiangsu Trigiant agreed to grant a royalty-free non-exclusive license to Jiangsu Opto-electrical to use the name of “俊知” (Jun Zhi) from 1 March 2010 until Jiangsu Trigiant ceases to hold any equity interests in Jiangsu Opto-electrical in accordance with the terms and conditions of the agreement at nil consideration;
(f) an agreement dated 3 December 2010 made between Jiangsu Trigiant and Jiangsu Sensing pursuant to which Jiangsu Trigiant agreed to grant a royalty-free non-exclusive license to Jiangsu Sensing to use the name of “俊知” (Jun Zhi) from 1 March 2010 until Jiangsu Trigiant ceases to hold any equity interests in Jiangsu Sensing in accordance with the terms and conditions of the agreement at nil consideration;
(g) a deed of assignment dated 5 January 2011 entered into between Trigiant Singapore as assignor and Trigiant Hong Kong pursuant to which Trigiant Singapore should assign 8 trademarks previously registered in its name in Singapore (namely items 13 to 20 on page [V-17] of this appendix) under the section headed “Further Information about the Business of the Company” at nil consideration to Trigiant Hong Kong;
(h) a confirmation dated 12 February 2011 entered into between Jiangsu Trigiant and 北京因特聯企業諮詢有限公司 (Beijing Yin Te Lian Corporate Consultancy Co., Ltd.) (“Beijing YTL”) pursuant to which both parties agreed to confirm that the financial advisor agreement dated 16 July 2010 as referred to in paragraph (c) above shall be terminated on (i) the end of the period of two years as stated in the financial advisor agreement; or (ii) the day of [●] of Jiangsu Trigiant’s shareholding company on [●] as prescribed by Jiangsu Trigiant, whichever is the earlier;
(i) a confirmation dated 12 February 2011 entered into between Jiangsu Trigiant and ICH Partners Ltd pursuant to which both parties agreed to confirm that the financial advisor agreement dated 16 July 2010 as referred to in paragraph (d) above shall be terminated on (i) the end of the period of two years as stated in the financial advisor agreement; or (ii) the day of [●] of Jiangsu Trigiant’s shareholding company on [●] as prescribed by Jiangsu Trigiant, whichever is the earlier;

– V-10 –

STATUTORY AND GENERAL INFORMATION

APPENDIX V

(j) a deed made between Abraholme, Forerich, Zymmetry, Headwell, Ace Speed and Trigiant BVI in relation to the absolute waiver of shareholders’ loan in an aggregate principal amount of US$30,000,000 owing by Trigiant BVI to Abraholme, Forerich, Zymmetry, Headwell and Ace Speed;
(k) an agreement dated 23 August 2011 made between Abraholme, Forerich, Headwell, Zymmetry and Ace Speed as vendors, Mr. Qian, Shen Xinren, Toe Teow Heng, Jiang Wei and Goi Seng Hui as warrantors and the Company as purchaser for the acquisition by the Company of the entire issued share capital of Trigiant BVI in consideration of (i) the allotment and issue, credited as fully paid, of an aggregate of 9,999,999 new Shares to Trigiant Investments (as directed by Abraholme, Forerich, Headwell, Zymmetry and Ace Speed) and (ii) the crediting as fully paid at par the one nil-paid Share then held by Trigiant Investments;
(l) a deed of indemnity dated [●] executed by Mr. Qian, Abraholme and Trigiant Investments in favour of the Company for itself and as trustee for the other members of the Group stated therein containing the indemnities more particularly referred to in paragraph 1 under the section headed “Other Information” of this Appendix; and
(m) [●].]

2. Intellectual property rights

(a) Trademarks

(i) Registered trademarks owned by the Group

As at the Latest Practicable Date, Jiangsu Trigiant was the registered owner of the following trademarks:

Duration of validity Registration Place of (year.month. number Class Trademark registration date) 1. 6275999 9 (Note 1) PRC 2010.3.28 to 2020.3.27 2. 6276000 9 (Note 1) PRC 2010.3.28 to 2020.3.27 3. 6276001 9 (Note 1) PRC 2010.3.28 to 2020.3.27

– V-11 –

APPENDIX V

STATUTORY AND GENERAL INFORMATION

					Duration of
					validity
	Registration			Place of	(year.month.
	number	Class	Trademark	registration	date)
4.	6276002	9 (Note 1)		PRC	2010.3.28 to
					2020.3.27
5.	6712645	31 (Note 2)		PRC	2010.3.21 to
					2020.3.20
6.	6712356	10 (Note 3)		PRC	2010.3.28 to
					2020.3.27
7.	6712359	7 (Note 4)		PRC	2010.3.28 to
					2020.3.27
8.	6712360	6 (Note 5)		PRC	2010.3.28 to
					2020.3.27
9.	6712363	3 (Note 6)		PRC	2010.3.28 to
					2020.3.27
10.	6712367	19 (Note 7)		PRC	2010.3.28 to
					2020.3.27
11.	6712369	17 (Note 8)		PRC	2010.3.28 to
					2020.3.27
12.	6712374	12 (Note 9)		PRC	2010.3.28 to
					2020.3.27
13.	6712642	34 (Note 10)		PRC	2010.3.28 to
					2020.3.27
14.	6712643	33 (Note 11)		PRC	2010.3.28 to
					2020.3.27
15.	6712647	29 (Note 12)		PRC	2010.3.28 to
					2020.3.27
16.	6712644	32 (Note 13)		PRC	2010.4.7 to
					2020.4.6

– V-12 –

APPENDIX V

STATUTORY AND GENERAL INFORMATION

					Duration of
					validity
	Registration			Place of	(year.month.
	number	Class	Trademark	registration	date)
17.	6712646	30 (Note 14)		PRC	2010.4.7 to
					2020.4.6
18.	6712655	21 (Note 15)		PRC	2010.4.7 to
					2020.4.6
19.	6550539	9 (Note 16)		PRC	2010.4.14 to
					2020.4.13
20.	6712636	40 (Note 17)		PRC	2010.4.14 to
					2020.4.13
21.	6712638	38 (Note 18)		PRC	2010.4.14 to
					2020.4.13
22.	6712639	37 (Note 19)		PRC	2010.4.14 to
					2020.4.13
23.	6712640	36 (Note 20)		PRC	2010.4.14 to
					2020.4.13
24.	6712366	20 (Note 21)		PRC	2010.4.21 to
					2020.4.20
25.	6712370	16 (Note 22)		PRC	2010.4.21 to
					2020.4.20
26.	6712371	15 (Note 23)		PRC	2010.4.21 to
					2020.4.20
27.	6712372	14 (Note 24)		PRC	2010.4.21 to
					2020.4.20
28.	6712362	4 (Note 25)		PRC	2010.5.7 to
					2020.5.6
29.	6712364	2 (Note 26)		PRC	2010.5.7 to
					2020.5.6

– V-13 –

APPENDIX V

STATUTORY AND GENERAL INFORMATION

					Duration of
					validity
	Registration			Place of	(year.month.
	number	Class	Trademark	registration	date)
30.	6712361	5 (Note 27)		PRC	2010.5.14 to
					2020.5.13
31.	6712365	1 (Note 28)		PRC	2010.5.14 to
					2020.5.13
32.	6712626	45 (Note 29)		PRC	2010.5.14 to
					2020.5.13
33.	6712627	44 (Note 30)		PRC	2010.5.14 to
					2020.5.13
34.	6712628	43 (Note 31)		PRC	2010.5.14 to
					2020.5.13
35.	6712357	9 (Note 32)		PRC	2010.6.7 to
					2020.6.6
36.	6712358	8 (Note 33)		PRC	2010.6.7 to
					2020.6.6
37.	6712373	13 (Note 34)		PRC	2010.6.7 to
					2020.6.6
38.	6712375	11 (Note 35)		PRC	2010.6.7 to
					2020.6.6
39.	6712641	35 (Note 36)		PRC	2010.7.14 to
					2020.7.13
40.	6712368	18 (Note 37)		PRC	2010.7.28 to
					2020.7.27
41.	6712648	28 (Note 38)		PRC	2010.7.28 to
					2020.7.27
42.	6712649	27 (Note 39)		PRC	2010.7.28 to
					2020.7.27

– V-14 –

APPENDIX V

STATUTORY AND GENERAL INFORMATION

					Duration of
					validity
	Registration			Place of	(year.month.
	number	Class	Trademark	registration	date)
43.	6712650	26 (Note 40)		PRC	2010.7.28 to
					2020.7.27
44.	6712651	25 (Note 41)		PRC	2010.7.28 to
					2020.7.27
45.	6712652	24 (Note 42)		PRC	2010.7.28 to
					2020.7.27
46.	6712653	23 (Note 43)		PRC	2010.7.28 to
					2020.7.27
47.	6712654	22 (Note 44)		PRC	2010.7.28 to
					2020.7.27
48.	6712629	42 (Note 45)		PRC	2010.9.7 to
					2020.9.6
49.	6712630	41 (Note 46)		PRC	2010.9.7 to
					2020.9.6
50.	6712637	39 (Note 47)		PRC	2010.9.7 to
					2020.9.6

As at the Latest Practicable Date, Trigiant Hong Kong was the registered owner of the following marks:

					Duration of
	Trade Mark	Place of			validity (year.
	number	registration	Class	Mark	month.day)
1.	301703006	Hong Kong	9 (Note 48)		2010.8.31 to
					2020.8.30
2.	301703006	Hong Kong	35 (Note 49)		2010.8.31 to
					2020.8.30

– V-15 –

APPENDIX V

STATUTORY AND GENERAL INFORMATION

					Duration of
	Trade Mark	Place of			validity (year.
	number	registration	Class	Mark	month.day)
3.	301703006	Hong Kong	42 (Note 50)		2010.8.31 to
					2020.8.30
4.	301703033	Hong Kong	9 (Note 48)		2010.8.31 to
					2020.8.30
5.	301703033	Hong Kong	35 (Note 49)		2010.8.31 to
					2020.8.30
6.	301703033	Hong Kong	42 (Note 50)		2010.8.31 to
					2020.8.30
7.	301703051	Hong Kong	9 (Note 48)		2010.8.31 to
					2020.8.30
8.	301703051	Hong Kong	35 (Note 49)		2010.8.31 to
					2020.8.30
9.	301703051	Hong Kong	42 (Note 50)		2010.8.31 to
					2020.8.30
10.	301703060	Hong Kong	9 (Note 48)		2010.8.31 to
					2020.8.30
11.	301703060	Hong Kong	35 (Note 49)		2010.8.31 to
					2020.8.30

– V-16 –

APPENDIX V

STATUTORY AND GENERAL INFORMATION

					Duration of
	Trade Mark	Place of			validity (year.
	number	registration	Class	Mark	month.day)
12.	301703060	Hong Kong	42 (Note 50)		2010.8.31 to
					2020.8.30
13.	T0804338B	Singapore	6 (Note 51)		2008.4.3 to
					2018.4.2
14.	T0804338B	Singapore	9 (Note 52)		2008.4.3 to
					2018.4.2
15.	T0804339J	Singapore	6 (Note 51)		2008.4.3 to
					2018.4.2
16.	T0804339J	Singapore	9 (Note 52)		2008.4.3 to
					2018.4.2
17.	T0804341B	Singapore	6 (Note 51)		2008.4.3 to
					2018.4.2
18.	T0804341B	Singapore	9 (Note 52)		2008.4.3 to
					2018.4.2
19.	T0804342J	Singapore	6 (Note 51)		2008.4.3 to
					2018.4.2
20.	T0804342J	Singapore	9 (Note 52)		2008.4.3 to
					2018.4.2

– V-17 –

STATUTORY AND GENERAL INFORMATION

APPENDIX V

(ii) Application for registration of trademarks

As at the Latest Practicable Date, Trigiant Hong Kong has applied for registration of the following trademarks, the registration of which has not yet been granted:

Application Place of Application number registration Class Mark date
302011887 Hong Kong 9 (Note 48) 2011.8.22
302011887 Hong Kong 35 (Note 49)
302011887 Hong Kong 42 (Note 50)

==> picture [69 x 93] intentionally omitted <==

2011.8.22

Notes:

Class 9: Cables; wires; coaxial cables; lightning arresters; antennas; transmitters of electronic signals; transmitters (telecommunication); optical communication instruments; network communication equipment; connectors for communication
Class 31: Trees; grains (cereals); plants; live animals; fresh fruits; fresh vegetables; plant seeds; feedstuffs; brewing malt; animal shelter articles
Class 10: Medical devices and apparatuses; dentures; galvanic therapeutic appliances; furniture designed for medical purposes; feeding bottles; non-chemical contraceptives; surgical implants (artificial materials); orthopedic articles; suture materials
Class 7: Printing machines; metal processing machines; presses (machines for industrial purposes); electrical wires manufacturing, machines for cables; electronics industry equipment; gas engine components; jacks (machines); bearings (machine parts); gas-operated soldering apparatus; packaging machines
Class 6: Common metals, unwrought or semi-wrought; tubes of metal, building materials of metal; wires of common metal; cable joints of metal, non-electric; ironmongeries; safes; machine belts (reinforcing materials); metal containers; works of art of common metal

– V-18 –

APPENDIX V

STATUTORY AND GENERAL INFORMATION

Class 3: Soap; washing preparations; cleaning preparations; polishing wax; grinding preparations; perfumes; cosmetics; toothpaste; incenses; cosmetics for animals
Class 19: Timber; concrete; building glass; cement; concrete building elements; non-metal tiles; non-metal fire proofing building materials; waterproof roll materials; non-metal building materials; non-metal building structures
Class 17: Rubber, raw or semi-processed; seals; synthetic resins (semi-finished products); plastic tubes; plastic film not for packaging; non-metal hoses; non-conducting materials for retaining heat; fiberglass heat preservation boards and pipes; insulating materials; sound proofing materials
Class 12: Vehicles for locomotion by land, sea, water or rail; automobiles; propulsion mechanisms for land vehicles; upholsteries for vehicles; motorcycles; bicycles; trams; tires for vehicle wheels; air vehicles; boats
Class 34: Cigarettes; pipes; non-precious metal cigarette cases; non-precious metal ashtrays; non-precious metal match boxes; lighters for smokers; butane gas (for smoking); cigarette filters; cigarette papers; filtrate bundles for cigarettes
Class 33: Alcohol (drinks); sake; grape wine; fruit wine (alcoholic); yellow wine
Class 29: Meat, fish food products; canned meat; crystallized fruits; edible dry fungi; eggs; dairy products; edible oil; prepared nuts; gelatin for food
Class 32: Beer; non-alcoholic drinks; preparations for making beverages; water (drinks); juices; soy bean drinks
Class 30: Cocoa products; tea; sugar; nutrition fluids not for medical purposes; bread; flavorings; cereal preparations; flour made products; pop corn; ice cream;
Class 21: Non-precious metal kitchen utensils; glassware (including cups, trays, pots and jars); pottery; brushes; toothbrushes; cosmetic utensils; thermally insulated containers for food; cleaning instruments (hand-operated); ceramics; insect traps
Class 9: Cables; wires; coaxial cables; lightning arresters; antennas; transmitters of electronic signals; transmitters (telecommunication); optical communication instruments; magnetism materials and apparatus; junction sleeves for electric cables
Class 40: Customized assembling of materials (for others); metal processing; textile chemical treatment; woodworking; paper processing; fired pottery; printing; waste treatment (transformation); engraving; production of energy
Class 38: Television broadcasting; wire service: information transfer; telephone communication; information about telecommunication; satellite transmission; provision of telecommunication service connecting the global computer network
Class 37: Construction information; architecture; mining; interior design and decoration; computer hardware installation, maintenance and repairs; disinfection; installation and repairs of elevators; maintenance and repairs of vehicles; shipbuilding; installation, maintenance and repairs of office machinery and equipment
Class 36: Insurance; financial services; jewel appraisal; real estate leasing; real estate management; brokerage; guarantee; charity fund raising; factoring; pawnshop
Class 20: Furniture; non-metal containers (for storage and transport); work benches; mirrors (looking glass); bamboo woodwork art; wood, wax, plaster or plastic art figures; display boards; decorations of plastic for foodstuffs; non-metal fittings for furniture; pillows
Class 16: Papers; copying papers (stationery); napkins; cardboard articles; printed matters; printed publications; pictures; paper boxes; stationery; speed printing machines
Class 15: Musical instruments; stands for musical instruments; cases for musical instruments; bows for musical instruments; conductors; drum sticks; keyboards for musical instruments; strings for musical instruments; dampers for musical instruments; plectrum

– V-19 –

APPENDIX V STATUTORY AND GENERAL INFORMATION

Class 14: Precious heavy metals, unwrought or semi-wrought; boxes for precious heavy metals; ornaments (jewels); artificial jewels (jewels for costumes); silver arts and crafts; jade carving jewelry; jewels (jewelry); precious stones; watches; clocks
Class 4: Industrial oil; lubricants; fuels; gasoline; coal; electricity; industrial wax; candles; dust removing preparations; diesels
Class 2: Dyes; colorants; food dyes; printing ink; oil paints; preservatives; natural resins; paints; ink for skin painting; waterproof powder (coatings)
Class 5: Medicine for humans; radioactive substances for medical purposes; gases for medical purposes; chemical conductors for electrocardiogram electrodes; disinfectants for hygiene purposes; pesticides; culture for microorganisms; nutritional foods adapted for medical purposes; depuratives; medicines for veterinary purposes
Class 1: Solidified gases for industrial purposes; acids; salts (chemical preparations); acetates; acetylene; alcohol; phenol for industrial purposes; industrial chemicals; aldehyde for chemical purposes; esters
Class 45: Night guards; monitoring of burglar and security alarms; clothing rental; funeral; opening of security locks; marriage agencies; fire services; litigation services; social escort (chaperoning); adoption agencies
Class 44: Hospitals; clinics; rehab centers; public baths; beauty centers; hair salons; animal raising; gardening; opticians’ services; rental of sanitation facilities
Class 43: Hotels; bars; tea houses; cafes; provision of camping facilities; elderly homes; day nurseries (child care); animal boarding; rental of chairs, tables, table cloth and glassware; restaurants
Class 9: Calculators; telephotograph apparatuses; weighing machines; measures; intercommunication apparatuses; semiconductor apparatus; measuring instruments; materials designed for gauge components and instruments; electronic measuring devices; detectors for scientific purposes; optical apparatuses and instruments; power source materials (wires, cables); carbon materials; printed circuits; electrical conductors; control panels (electricity); light conducting filaments (optical fibers); electrolysers; fire extinguishing apparatuses; electric welding apparatuses; radioactive apparatuses for industrial purposes; alarms; protection devices for individual use against accidents; electric door closers; electrical installations for remote control of industrial operations
Class 8: Abrasion tools (hand tools); agricultural tools (hand-operated); gardening tools (hand-operated); appliances and instruments for animal slaughtering; side arms; manicure sets; hand-operated hand tools; hand-operated lifting jacks; knives; cutleries (knives, forks and spoons)
Class 13: Mobile weapons; explosives; fireworks products; firecrackers; fireworks; sprays for individual protection
Class 11: Lighters; vehicle lights; soldering lamps; acetylene burners; electrical cooking utensils; cooling appliances and installations; ventilation installations and apparatuses (air-conditioning); heating apparatuses; ornamental fountains; sanitary apparatuses and installations
Class 35: Advertisements; supplementary business management; bid and tender price; auction; import and export agencies; employment agencies; relocation services for business; secretarial services; accounting; rental of vending machines
Class 18: Leather, semi-worked or raw; handbags; leather trimmings for furniture; leather-made straps; fur (animal skin); umbrellas; canes; saddler; sausage skin
Class 28: Game players; fishing tools; toys; automated mahjong tables (machines); playing balls; body building apparatuses; machines for physical exercises; swimming pools (for recreational use); plastic tracks; ornaments for Christmas trees (other than lighting articles and confectionery)
Class 27: Carpets; mats; artificial lawns; wall paper; floor coverings; automobile carpets; floor mats; plastic or rubber floor bricks

– V-20 –

APPENDIX V STATUTORY AND GENERAL INFORMATION

Class 26: Hair ornaments; trimmings for clothes; buttons; wigs; haberdashery other than thread; artificial flowers; shoulder pads for clothing; heat adhesive patches for decoration of textile articles (haberdashery); athletes’ numbers; tea cosies
Class 25: Clothes; layettes; swimsuits; wedding gowns; ties; soccer shoes; shoes; hats; socks; gloves (clothing)
Class 24: Cloth; nonwovens; wall hangings of textile products; felt; textile towels; sheets and pillow cases; covers for furniture; curtains of textile or plastic; washing mitts; banners
Class 23: Yarn; thread; spun silk; elastic silk (for textile purposes); filament; rayon thread and yarn; woolen thread and yarn; wool
Class 22: Ropes; nets; covers for camouflage; sails; tarpaulins; tents; weave bags; straw packaging for bottles; fillings; raw fibrous textile
Class 42: Engineering; quality testing; chemical services; biology study; styling (exterior design of industrial articles); development of construction projects; design of computer systems; authentication of art works; design of graphic arts; intangible asset assessment
Class 41: Education; arranging and organizing meetings; pay libraries; book publications (other than promotion booklets); video distribution; program production; entertainment; fitness club department; zoo; lottery operations
Class 39: Transportation; commodity packaging; vessel chartering; unloading; vehicle rental; storage; rental of diving suits; resources allocation; courier services (mail and merchandise); travel agencies (excluding hotel reservation)
Class 9: Electronic components for semiconductors; receivers of electronic signals; transmitters of electronic signals; transmission machines of electronic signals; electronic components; electrical devices; electronic accessories and crate assembly; electronic parts; power source materials; power source materials (wires); power source materials (cables); power source materials (wires, cables); cables
Class 35: Agency of electronic components; distribution of electronic components
Class 42: Technology research; technology project research; advisor of mechanical engineering technology; provision of technology research and advisory services to others; scientific technology services; planning and design of communication systems and equipment engineering; data transfer of electronic procedures and data (non-physical transfer); installation of electronic network; maintenance of electronic network; design of electronic network
Class 06: Brass, unwrought or semi-wrought; brazing alloys; brazing (rods of metal for-); cable joints of metal, non-electric; cables and pipes (clips of metal for-); cables of metal, non-electric; clips of metal for cables and pipes; copper, unwrought or semi-wrought; copper wire, not insulated
Class 09: Antennas; cables (coaxial-); cables, electric; cables (junction sleeves for electric-); coaxial cables; connectors [electricity]

– V-21 –

STATUTORY AND GENERAL INFORMATION

APPENDIX V

(b) Patents

(i) Registered patents owned by the Group

As at the Latest Practicable Date, Jiangsu Trigiant was the registered owner of the following patents:

				Date of
				authorised	Effective
				publication	period
		Place of	Patent	date (year.	(year.
	Title of patent	registration	number	month.date)	month.day)
1.	Wrinkled tube outer conductor RF	PRC	ZL 2008 2	2009.1.21	2008.1.21 to
	coaxial cable connector core		0031327.5		2018.1.20
	(皺紋管外導體射頻同軸電纜連接
	器內芯)
2.	Wrinkled tube outer conductor RF	PRC	ZL 2008 2	2008.11.5	2008.1.21 to
	coaxial cable connector ring		0031326.0		2018.1.20
	(皺紋管外導體射頻同軸電纜連接
	器套環)
3.	Coaxial cable for mobile	PRC	ZL 2008 2	2009.2.18	2008.9.7 to
	communications		0185492.6		2018.9.6
	(移動通信用同軸電纜)
4.	Antenna and feeder coaxial	PRC	ZL 2007 2	2008.6.18	2007.8.13 to
	arrester for mobile		0042835.9		2017.8.12
	communications
	(移動通信用天饋線
	同軸避雷器)
5.	RF coaxial cable	PRC	ZL 2007 2	2008.6.18	2007.8.14 to
	connector plug		0042850.3		2017.8.13
	(射頻同軸電纜連接器插頭)
6.	Corrugated tube outer conductor	PRC	ZL 2008 2	2009.3.11	2008.5.20 to
	RF coaxial cable connector		0036733.0		2018.5.19
	cartridge clip
	(波紋管外導體射頻同軸
	電纜連接器套夾)

– V-22 –

APPENDIX V

STATUTORY AND GENERAL INFORMATION

				Date of
				authorised	Effective
				publication	period
		Place of	Patent	date (year.	(year.
	Title of patent	registration	number	month.date)	month.day)
7.	Ultra-wideband (UWB) leaky	PRC	ZL 2005 2	2006.9.13	2005.7.21 to
	coaxial cable		0021272.6		2015.7.20
	(超寬帶泄漏同軸電纜)
8.	Improved metal band outer	PRC	ZL 2009 2	2010.3.24	2009.7.9 to
	conductor longitudinally welding		0043489.5		2019.7.8
	molding process
	(改良的金屬帶外導體縱包焊接模
	具)
9.	Welded RF coaxial	PRC	ZL 2009 2	2010.5.5	2009.7.9 to
	cable components		0043488.0		2019.7.8
	(焊接式射頻同軸電纜組件)
10.	A type of radial pattern leaky	PRC	ZL 2009 2	2010.3.24	2009.7.9 to
	coaxial cable		0043487.6		2019.7.8
	(一種輻射型漏泄同軸電纜)
11.	Coaxial cable using	PRC	ZL 2009 2	2010.5.19	2009.7.30 to
	copper aluminum tube inner		0233788.5		2019.7.29
	conductor
	(一種同軸電纜用鍍銅鋁管內導體)
12.	New combination cable	PRC	ZL 2009 2	2010.6.2	2009.7.24 to
	(一種新型組合電纜)		0232898.X		2019.7.23
13.	New “8” style	PRC	ZL 2009 2	2010.6.2	2009.8.12 to
	combination cable		0234507.8		2019.8.11
	(一種新型“8”字形
	組合電纜)
14.	Flexible power cable with	PRC	ZL 2009 2	2010.8.4	2009.9.27 to
	corrugated steel armor layer		0236084.3		2019.9.26
	(一種帶有鋼帶軋紋縱包鎧裝層的
	電力軟電纜)

– V-23 –

APPENDIX V

STATUTORY AND GENERAL INFORMATION

				Date of
				authorised	Effective
				publication	period
		Place of	Patent	date (year.	(year.
	Title of patent	registration	number	month.date)	month.day)
15.	Fire-resistant multi-core flexible	PRC	ZL 2010 2	2011.3.30	2010.8.2 to
	cable for communications power		0277971.8		2020.8.1
	supply (一種通信源用耐火多芯軟
	電纜)
16.	Yellow/green earth	PRC	ZL 2010 2	2011.5.25	2010.8.31 to
	flexible cable for		0510975.6		2020.8.30
	communication use
	(一種通信電源用黃綠雙色接地軟
	電纜)
17.	Corrugated outer conductor	PRC	ZL 2010 2	2011.6.22	2010.8.5 to
	rolling device		0282680.8		2020.8.4
	(一種波紋管外導體軋制裝置)
18.	Improved flexible coaxial cable	PRC	ZL2010 2	2011.8.3	2010.8.2 to
	for mobile communications		0277974.1		2020.8.1
	(一種改良的移動通信用柔軟同軸
	電纜)
19.	Ultra flexible environmentally-	PRC	ZL2011 2	2011.7.27	2011.1.13 to
	friendly power supply with flame-		0009869.4		2021.1.12
	retardant flexible cable
	(一種超柔的環保型通信電源用阻
	燃軟電纜)

– V-24 –

APPENDIX V

STATUTORY AND GENERAL INFORMATION

(ii) Application for registration of patents

As at the Latest Practicable Date, Jiangsu Trigiant has applied for registration of the following patents, the registration of which has not yet been granted:

			Patent	Application
		Place of	application	date
	Title of patent	application	number	(year.month.date)
1.	Radial pattern leaky	PRC	200910032124.7	2009.7.9
	coaxial cable
	(一種輻射型漏泄同軸電纜)
2.	New combination cable	PRC	200910181621.3	2009.7.24
	(一種新型組合電纜)
3.	Coaxial cable using	PRC	200910183283.7	2009.7.30
	copper aluminum tube
	inner conductor
	(一種同軸電纜用鍍銅
	鋁管內導體)
4.	New “8” style	PRC	200910181899.0	2009.8.12
	combination cable
	(一種新型“8”字形
	組合電纜)
5.	Welded RF coaxial	PRC	200910175583.0	2009.9.18
	cable component
	(焊接式射頻同軸電纜組件)
6.	Flexible power cable with	PRC	200910035396.2	2009.9.27
	longitudinally corrugated
	steel armor layer
	(一種帶有鋼帶軋紋縱包鎧
	裝層的電力軟電纜)
7.	Corrugated outer	PRC	201010242133.1	2010.8.2
	conductor rolling device
	(一種波紋管外導體
	軋制裝置)

– V-25 –

APPENDIX V

STATUTORY AND GENERAL INFORMATION

Patent Application Place of application date Title of patent application number (year.month.date) 8. Metal band outer scrap PRC 201120009895.7 2011.1.13 cutting edge collection device (一種金屬帶廢切邊收集裝置) 9. Cable clip for new coaxial PRC 201120009882.X 2011.1.13 connector (一種新型同軸連接器用電纜夾) 10. Improved metal inner PRC 201120009862.2 2011.1.13 conductor radius drawer module (一種改良的金屬內導體拉撥定徑模具)

(c) Domain names

As at the Latest Practicable Date, the Group had registered the following domain name:

			Date of	Commencement
	Domain names	Registrant	registration	Date	Expiry date
				(year.month.date)	(year.month.date)
1.	trigiant.com.cn	Jiangsu	2007.2.26	2007.2.26	2012.2.26
		Trigiant
2.	俊知.中國	Jiangsu	2010.5.4	2010.5.4	2012.5.4
		Trigiant
3.	俊知集團.中國	Jiangsu	2010.5.4	2010.5.4	2012.5.4
		Trigiant
4.	江蘇俊知技術	Jiangsu	2010.5.4	2010.5.4	2012.5.4
	有限公司.中國	Trigiant
5.	俊知傳感.中國	Jiangsu	2010.5.4	2010.5.4	2012.5.4
		Trigiant
6.	俊知光電.中國	Jiangsu	2010.5.4	2010.5.4	2012.5.4
		Trigiant
7.	trigiant.hk	Trigiant Hong	2010.4.19	2010.4.19	2014.4.19
		Kong
8.	trigiant.com.hk	Trigiant Hong	2010.4.19	2010.4.19	2014.4.19
		Kong

– V-26 –

APPENDIX V STATUTORY AND GENERAL INFORMATION

Save as aforesaid, there are no other trade or service marks, patents, other intellectual or industrial property rights which are or may be material in relation to the Group’s business.

3. Connected transactions and related party transactions

Save as disclosed in this document and in note 33 to the Accountants’ Report of the Group, the text of which is set out in Appendix IA to this document, and in note 27 to the Accountants’ Report of Jiangsu Trigiant, the text of which is set out in Appendix IB to this document, during the two years immediately preceding the date of this document, the Company has not engaged in any other material connected transactions or related party transactions.

C. FURTHER INFORMATION ABOUT DIRECTORS AND SHAREHOLDERS

1. Directors

(a) Disclosure of interests of Directors

[●]

(b) Particulars of Directors’ service agreements

(i) Executive Directors

Each of the executive Directors has entered into a service agreement with the Company pursuant to which he agreed to act as a Director for a fixed term of three years with effect from [●].

Each of these executive Directors is entitled to a basic annual salary as set out below. In addition, each of the Directors is also entitled to a discretionary bonus provided that the aggregate amount of the bonuses payable to all the executive Directors for any financial year of the Company may not exceed 10% of the net profit as shown in the audited consolidated accounts of the Group (after taxation and minority interests and payment of such bonuses but before ordinary items) in respect of that financial year of the Company. A Director shall abstain from voting on any resolution of the Directors regarding the discretionary bonus payable to him. The current basic annual salaries of the executive Directors are as follows:

Name	Annual Salary
	(HK$)
Mr. Qian	1,200,000
Mr. Jiang Wei	1,000,000

– V-27 –

APPENDIX V

STATUTORY AND GENERAL INFORMATION

(ii) Independent non-executive Directors

Each of the independent non-executive Directors has been appointed for a fixed term of three years commencing from 23 August 2011. Each of Prof. Jin Xiaofeng, Mr. Poon Yick Pang, Philip, Mr. Ng Wai Hung and Ms. Jia Lina, is entitled to an annual director’s fee of HK$60,000, HK$200,000, HK$150,000 and HK$60,000, respectively. Save for directors’ fees, none of the Company’s independent non-executive Directors is expected to receive any other remuneration, for holding their office as an independent non-executive Director.

Save as disclosed above, none of the Directors has or is proposed to have a service contract with the Company or any of the subsidiaries of the Group other than contracts expiring or determinable by the employer within one year without the payment of compensation (other than statutory compensation).

(c) Remuneration of Directors

  - (i) The aggregate emoluments paid by the Group to the Directors in respect of FY2010 were approximately RMB674,000.

  - (ii) Under the arrangements currently in force, the aggregate emoluments (excluding the discretionary bonus) payable by the Group to the Directors (including the independent non-executive Directors (in their respective capacity as directors) for the year ending 31 December 2011, are expected to be approximately RMB[●].

  - (iii) None of the Directors or any past directors of any members of the Group has been paid any sum of money in each of FY2008, FY2009 and FY2010 as (i) an inducement to join or upon joining the Company; or (ii) for loss of office as a director of any member of the Group or of any other office in connection with the management of the affairs of any members of the Group.

  - (iv) There has been no arrangement under which a Director has waived or agreed to waive any emoluments in each of FY2008, FY2009 and FY2010.

(d) [●]

2. [●]

– V-28 –

STATUTORY AND GENERAL INFORMATION

APPENDIX V

3. Disclaimers

Save as disclosed in this document:

(a) the Directors are not aware of any person (not being a Director or chief executive of the Company) who will, immediately after completion of [●] and [●] (taking no account of any Shares which may be taken up under [●] or upon the exercise of [●]), have an interest or a short position in Shares or underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the [●], or who will, directly or indirectly, be 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 the Company or any other member of the Group;
(b) none of the Directors has any interest or short position in any of the Shares, underlying Shares or debentures of the Company or any associated corporations within the meaning of Part XV of the [●], which will have to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the [●] (including interests and short positions which any of them is deemed to have under such provisions of the [●]) or which will be required, pursuant to section 352 of the [●], to be entered in the register referred to therein or which will be required to be notified to the Company and [●] pursuant to the [●], in each case once the Shares are [●];
(c) none of the Directors nor any of the parties listed in the paragraph headed “Qualifications of experts” of this Appendix has been interested in the promotion of, or has any direct or indirect interest in any assets which have been, within the two years immediately preceding the date of this document, acquired or disposed of by or leased to the Company or any of the subsidiaries of the Group, or are proposed to be acquired or disposed of by or leased to the Company or any other member of the Group nor will any Director apply for [●] either in his own name or in the name of a nominee;
(d) none of the Directors nor any of the parties listed in the paragraph headed “Qualifications of experts” of this Appendix is materially interested in any contract or arrangement subsisting at the date of this document which is significant in relation to business of the Group;
(e) none of the Directors or their associates has any interest in the Group’s five largest suppliers or the Company’s top five business customers;
(f) none of the Directors is interested in any business apart from the business of the Group, which competes or is likely to compete, either directly or indirectly, with the Group’s business; and

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APPENDIX V

STATUTORY AND GENERAL INFORMATION

(g) save in connection with [●], none of the parties listed in the paragraph headed “Qualifications of experts” of this Appendix:
(i) is interested legally or beneficially in any securities of any member of the Group; or
(ii) has any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

D. OTHER INFORMATION

1. Estate duty, tax and other indemnity

The Controlling Shareholders (collectively the “ Indemnifiers ”) have entered into a deed of indemnity with and in favour of the Company (for itself and as trustee for each of its present subsidiaries) (being the material contract referred to in paragraph 1(k) of section B of this Appendix) to provide indemnities on a joint and several basis in respect of, among other matters, any liability for Hong Kong estate duty which might be incurred by any member of the Group by reason of any transfer of property (within the meaning of section 35 or section 43 of the Estate Duty Ordinance (Chapter 111 of the Laws of Hong Kong) or any law equivalent or similar thereto under the laws of any jurisdiction outside Hong Kong) to any member of the Group on or before [●]. The Directors have been advised that no material liability for estate duty is likely to fall on the Company or any of its subsidiaries in the Cayman Islands, the BVI and the PRC.

Under the deed of indemnity, the Indemnifiers have also given indemnities to the Group on a joint and several basis in relation to:

(a) any tax (which includes estate duty) liabilities in whatever part of the world which might be payable by any member of the Group in respect of among other matters any income, profits, gains, transactions, events, matters or things earned, accrued or received or deemed to have been earned, accrued or received as a result of a transfer by any person on or before the [●]; and
(b) any amount of surtaxes and penalties imposed on any member of the Group relating to enterprise income tax liability or any tax obligations under the relevant PRC laws and regulations in relation to any matters occurring on or before the [●].

The deed of indemnity does not cover any claim and the Indemnifiers shall be under no liability under the deed of indemnity in respect of any taxation:

(a) to the extent that provision has been made for such taxation in the audited combined accounts of the Company and of its subsidiaries as set out in Appendices IA and IB to this document (the “Accounts”); or

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APPENDIX V

STATUTORY AND GENERAL INFORMATION

(b) to the taxation falling on any member of the Group in respect of its accounting period commencing on or after 1 June 2011 unless liability for such taxation would not have arisen but for some act or omission of, or transaction voluntarily effected by, any member of the Group (whether alone or in conjunction with some other act, omission or transaction, whenever occurring) with the prior written consent or agreement of the Indemnifiers other than any such act, omission or transaction:
(i) carried out or effected in the ordinary course of business after 31 May 2011; or
(ii) carried out, made or entered into pursuant to a legally binding commitment created on or before 31 May 2011 or pursuant to any statement of intention made in this document; or
(c) to the extent that such taxation claim arises or is incurred as a result of the imposition of taxation as a consequence of any retrospective change in the law or the interpretation or practice thereof by the Inland Revenue Department of Hong Kong or any other relevant authority in any other part of the world coming into force after [●] or to the extent such taxation claim arises or is increased by an increase in rates of taxation after [●] with retrospective effect; or
(d) to the extent of any provisions or reserve made for taxation in the Accounts which is finally established to be an over-provision or an excessive reserve provided that the amount of any such provision or reserve applied pursuant this paragraph to reduce the Indemnifiers’ liability in respect of taxation shall not be available in respect of any such liability arising thereafter.

Under the deed of indemnity, the Indemnifiers have also undertaken to indemnify, on a joint and several basis, the Group against:

(a) any penalty which may be imposed on any member of the Group, or any costs, expenses and losses which any member of the Group may suffer in connection with such penalty, due to such Group member’s failure to observe laws, regulations or rules concerning social security funds, housing accumulation funds or any other laws and regulations in connection with the employee welfare and benefits in the PRC;
(b) any fines, penalties, losses, damages, liabilities, fees, costs, expenses, demands, claims, proceedings, actions (including without limitation any legal costs) and taxation which any member of the Group may suffer, sustain or incur or which may be commenced, brought or instituted against any member of the Group arising in connection with the trade financing arrangements as referred to in the paragraph headed “Non-compliant trade financing” under the section headed “Business” in this document; and

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APPENDIX V

STATUTORY AND GENERAL INFORMATION

(c) any penalty, administrative or other charges, levies, fines or payments which may be imposed on any member of the Group, or any cost, expense, damages, loss which such member of the Group has suffered or may suffer in connection therewith, due to the failure of such member of the Group to obtain the land planning permits and/or construction permits before it commenced construction works for three buildings having an aggregate total gross floor area of 1,121.28 square metres and as more particularly described in the three building ownership certificates numbered Yi Fang Quan Zheng Yi Cheng Zi numbered 1000049702 (宜房權證宜城字第 1000049702號), Yi Fang Quan Zheng Yi Cheng Zi numbered 1000049703 (宜房權證宜城字第 1000049703號) and Yi Fang Quan Zheng Yi Cheng Zi numbered 1000049704 (宜房權證宜城字第 1000049704號), respectively.

2. Litigation

As at the Latest Practicable Date, save as disclosed in this document, no member of the Group is engaged in any litigation, arbitration or claim of material importance, and no litigation, arbitration or claim of material importance is known to the Directors to be pending or threatened by or against the Company, that would have a material adverse effect on the Group’s results of operations or financial condition of the Company.

3. Preliminary expenses

The preliminary expenses of the Company are estimated to be approximately HK$40,000 and are payable by the Company.

4. Promoters

(a) The promoter of the Company is Abraholme.
(b) Within the two years preceding the date of this document, no amount or benefit has been paid or given to the promoter named in sub-paragraph 4(a) above in connection with [●] or the related transactions described in this document.

5. [ ● ]

The [●] has made an application on behalf of the Company to [●] of [●] for [●] of, and permission to deal in, the Shares in issue and to be issued as mentioned in this document and any Shares which may be issued upon the exercise of [●]. All necessary arrangements have been made to enable the securities to be admitted into [●].

6. Binding effect

This document shall have the effect, if an application is made in pursuance hereof, of rendering all persons concerned bound by all the provisions (other than the penal provisions) of sections 44A and 44B of the Companies Ordinance so far as applicable.

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STATUTORY AND GENERAL INFORMATION

APPENDIX V

7. Taxation of holders of Shares

Dealings in Shares registered on the Company’s Hong Kong branch register of members will be subject to Hong Kong stamp duty. Intending holders of Shares are recommended to consult their professional advisers if they are in any doubt as to the taxation implications of subscribing for, purchasing, holding or disposing of or dealing in Shares. It is emphasised that none of the Company, the Directors or the other parties involved in [●] can accept responsibility for any tax effect on, or liabilities of, holders of Shares resulting from their subscription for, purchase, holding or disposal of or dealing in Shares.

Profits from dealings in the Shares arising in or derived from Hong Kong may also be subject to Hong Kong profits tax.

Under present Cayman Islands law, transfers and other dispositions of Shares are exempt from Cayman Islands stamp duty.

8. Bilingual document

The English language and Chinese language versions of this document are being published separately in reliance upon the exemption provided by section 4 of the Companies Ordinance (Exemption of Companies and Prospectuses from Compliance with Provisions) Notice (Chapter 32L of the Laws of Hong Kong).

9. No material adverse change

The Directors confirm that there has been no material adverse change in the financial or trading position or prospects of the Group since 31 May 2011 (being the date to which the latest audited combined financial statements of the Group were made up).

10. Miscellaneous

Save as disclosed in this document:

(i) within the two years preceding the date of this document:
(aa) no share or loan capital of the Company or of any of its subsidiaries has been issued, agreed to be issued or is proposed to be issued fully or partly paid either for cash or for a consideration other than cash;
(bb) no commissions, discounts, brokerages or other special terms have been granted in connection with the issue or sale of any share or loan capital of the Company or any of its subsidiaries; and
(cc) no commission has been paid or payable for subscribing or agreeing to subscribe, or procuring or agreeing to procure the subscriptions, for any shares in the Company or any of its subsidiaries;

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STATUTORY AND GENERAL INFORMATION

APPENDIX V

(ii) no share or loan capital of the Company or any of the subsidiaries of the Group is under option or is agreed conditionally or unconditionally to be put under option.
(iii) there are no founder, management or deferred shares nor any debentures in the Company or any of its subsidiaries and no amount or benefit had been paid or given within two immediately preceding years or is intended to be paid or given to any promoter;
(iv) there has not been any interruption in the business of the Group which may have or has had a significant effect on the financial position of the Group in the 12 months preceding the date of this document;
(v) the register of members of the Company will be maintained in Hong Kong by [●]. Unless the Directors otherwise agree, all transfer and other documents of title of Shares must be lodged for registration with and registered by the Company’s share register in Hong Kong and may not be lodged in the Cayman Islands. All necessary arrangements have been made to enable the Shares to be admitted to [●];
(vi) no company within the Group is presently listed on any stock exchange or traded on any trading system;
(vii) the Directors have been advised that, under the Companies Law, the use of a Chinese name pre-approved by the Registrar of Companies in the Cayman Islands by the Company in conjunction with its English name does not contravene the Companies Law; and
(viii)the English text of this document shall prevail over the Chinese text.

– V-34 –

AI assistant

Trigiant Group Limited — Capital/Financing Update 2012

49834_rns_2012-03-19_8c193d2d-2fa7-469e-8dc6-c8b85477524c.pdf

Web Proof Information Pack of

Trigiant Group Limited 俊知集團有限公司[*]

WARNING

CONTENTS

SUMMARY

OVERVIEW

SUMMARY

Turnover

SUMMARY

SUMMARY

NON-COMPLIANT TRADE FINANCING

SUMMARY

COMPETITIVE STRENGTHS

BUSINESS STRATEGIES

SUMMARY

SUMMARY OF TRACK RECORD PERIOD

Summary of statements of comprehensive income

SUMMARY

Summary of statements of financial position

SUMMARY

SUMMARY

RISK FACTORS

Risks relating to the Business

SUMMARY

Risks relating to the Industry

Risks relating to the PRC

SUMMARY

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

GLOSSARY OF TECHNICAL TERMS

“2G”

GLOSSARY OF TECHNICAL TERMS

GLOSSARY OF TECHNICAL TERMS

GLOSSARY OF TECHNICAL TERMS

RISK FACTORS

RISKS RELATING TO THE BUSINESS

The limited operating history of the Group may make it difficult to evaluate its business, financial performance or prospects

The future growth of the Group is dependent upon its research and development of new products, which may not result in any commercially viable products

RISK FACTORS

The Group is dependent on its major customers and sales to them are subject to their respective tender

RISK FACTORS

The Group is exposed to risks arising from credit terms extended to its customers

The Group relies upon its major raw material supplier

The Group had negative cash flow from operating activities for FY2008, FY2009 and the five months ended 31 May 2010

RISK FACTORS

If the Group is unable to retain, recruit and hire skilled and experienced personnel, its ability to effectively manage its operations and meet its strategic objectives will be harmed

RISK FACTORS

If the patents and other intellectual property rights of the Group do not adequately protect its products, the Group may lose market share to its competitors and be unable to operate its business profitably

Any disruption in the manufacturing facilities of the Group could cause losses to the Group and materially and adversely affect its business, financial condition and results of operations

RISK FACTORS

The Group has previously entered into certain trade financing transactions that were not in compliance with PRC laws

The Controlling Shareholders have substantial influence over the Company and their interests may not be aligned with the interests of other Shareholders

RISK FACTORS

The Group may not have adequate insurance coverage for its potential losses and liabilities

RISKS RELATING TO THE INDUSTRY

The Group is dependent on the PRC telecommunications industry

The Group operates in a competitive environment and if it is unable to stay competitive, its results of operations may be adversely affected

RISK FACTORS

The Group is subject to risks associated with technological changes

Failure to meet industry technical standards prescribed by relevant authorities and specifications of customers may result in product liability claims and may adversely affect the business, financial condition and results of operations of the Group

RISK FACTORS

An increase in the prices or a shortage of raw materials will lead to increased costs and will adversely affect the results of operations of the Group

RISK FACTORS

Monthly Copper Prices from January 2008 to May 2011

The Group faces risks related to natural disasters and health epidemics in China, which could have a material adverse effect on its business and results of operations

RISKS RELATING TO THE PRC

The recent global market fluctuations, economic downturn and decline in the availability of credit could materially and adversely affect the business, financial condition and results of operation of the Group

RISK FACTORS

Changes in political or economic policies, and a slowdown in the economy of the PRC may have a material adverse impact on the business, financial condition and results of operation of the Group

Changes and uncertainties in the PRC legal system may have a material adverse impact on the business, financial condition and results of operation of the Group

RISK FACTORS

Trigiant Group Limited Capital/Financing Update 2012

**Trigiant Group Limited 俊知集團有限公司[*]**