LONGCHEER HOLDINGS LIMITED Incorporated in Bermuda Company Registration No

Transcription

1 UNAUDITED FINANCIAL STATEMENTS AND DIVIDEND ANNOUNCEMENT FOR THE FIRST QUARTER ENDED 30 SEPTEMBER 2012 PART I - INFORMATION REQUIRED FOR ANNOUNCEMENTS OF QUARTERLY (Q1, Q2 & Q3), HALF-YEAR AND FULL YEAR RESULTS 1 (a) An income statement and statement of comprehensive income, or a statement of comprehensive income, for the group, together with a comparative statement for the corresponding period of the immediately preceding financial year. Group Income Statement for the first quarter ended 30 September2012. These figures have not been audited. Income Statement For1 st Quarter < The Group > FY2013 FY st Qtr 1 st Qtr 1 Jul 12 to 1 Jul11 to 30Sep12 30 Sept11 +/(-) RMB 000 RMB 000 % Revenue 616, , Cost of sales (563,789) (656,676) -14 Gross profit 52,226 47, Other income 375 2, Distribution costs (5,211) (9,627) -46 Administrative expenses (51,003) (57,530) -11 Equity-settled share-based payment expenses 4,002 (764) nm Other operating expenses (123) (1,570) -92 Profit / (Loss) from operation 266 (19,732) nm Other financial net income 4,692 4,753-1 Share of results of associates 1,976 4, Finance costs (3,955) (1,963) +101 Profit / (loss)before income tax 2,979 (12,888) nm Income tax expense / (credit) (131) 644 nm Profit / (loss) for the period 2,848 (12,244) nm Profit / (loss) for the period attributable to: Owners of the Company 1,771 (6,441) nm Non-controlling interests 1,077 (5,803) nm 2,848 (12,244) nm Page 1 of 16

2 Statement of Comprehensive Income LONGCHEER HOLDINGS LIMITED < The Group > FY2013 FY st Qtr 1 st Qtr 1 Jul 12 to 1 Jul11 to 30Sep12 30 Sept11 +/(-) RMB 000 RMB 000 % Profit / (loss) for the period 2,848 (12,244) nm Other comprehensive income Change in fair value on available-for-sale financial assets Currency translation 136 (2,093) nm - Group Associates (131) (858) Available-for-sale financial assets (51) (117) -56 Other comprehensive income for the period 203 (2,991) nm Total comprehensive income for the period 3,051 (15,235) nm Total comprehensive income attributable to: Owners of the Company 1,974 (9,432) nm Non-controlling interests 1,077 (5,803) nm 3,051 (15,235) nm nm: Not meaningful / material Page 2 of 16

3 Notes: (i) Profit before tax is determined after crediting / (charging) the following: < The Group > FY2013 FY st Qtr 1 st Qtr 1 Jul 12 to 1 Jul11 to +/(-) 30Sep12 30 Sept11 RMB 000 RMB 000 % (a) Interest income 4, (b) Interest expenses (3,955) (1,706) +132 (c) Interest on put option liability - (257) nm (d) Amortisation of land use rights (100) (100) - (e) Amortisation of other intangible assets (1,661) (1,902) -13 (f) Depreciation of property, plant and equipment (3,058) (2,881) +6 (g) Foreign exchange (loss) / gain, net (86) 2,375 nm (h) Interest income on long-term receivables - 1,669 nm (i) Loss on disposal of property, plant and equipment, net (92) (192) -52 (j) Write off of other intangible assets - (1,074) nm (ii) (iii) Other financial net income includes interest income, interest income on long-term receivables, foreign exchange gain/loss. Finance costs include interest expense and amortisation cost of put option liability. Page 3 of 16

4 1(b)(i) A statement of financial position (for the issuer and group), together with a comparative statement as at the end of the immediately preceding financial year. Statements of Financial Position < Group > < Company-----> 30 Sept12 RMB Jun 12 RMB Sept12 RMB Jun 12 RMB 000 ASSETS AND LIABILITIES Non-current assets Property, plant and equipment 91,192 93, Investment properties 142, , Land use rights 19,021 19, Other intangible assets 6,873 8, Interests in subsidiaries , ,842 Interests in associates 83,321 81, Available-for-sale financial assets 3,683 3, Current assets 346, , , ,842 Cash and deposit balances 246, , Restricted cash and pledged deposits 356,844 66, Amounts due from subsidiaries ,144 53,044 Note receivables 280, , Trade and bill receivables 269, , Other receivables 173, , Trade deposits paid to suppliers 22,934 18, Inventories 175, , ,525, ,914 53,877 53,430 Current liabilities Bank borrowings 99, , Tradeand note payables 974, , Amounts due to subsidiaries ,923 24,259 Other payables 97,027 70,630 1,399 2,785 Trade deposits received from customers 56,965 36, Income tax payable 5,357 4, ,233, ,784 29,322 27,044 Net current assets 292, ,130 24,555 26,386 Non-current liabilities Bank borrowings 38,000 38, ,000 38, Net assets 600, , , ,228 EQUITY Equity attributable to owners of the Company Share capital 65,608 65,608 65,608 65,608 Treasury shares (89,485) (89,485) (89,485) (89,485) Reserves 555, , , , , , , ,228 Non-controlling interests 69,166 68, Total equity 600, , , ,228 Page 4 of 16

5 1(b)(ii) Aggregate amount of group s borrowings and debt securities. Amount repayable within 1 year or less, or on demand 30 September June 2012 Secured Unsecured Secured Unsecured RMB 000 RMB 000 RMB 000 RMB , ,334 20,000 Amount repayable after 1 year 30 September June 2012 Secured Unsecured Secured Unsecured RMB 000 RMB 000 RMB 000 RMB ,000-38,000 - Details of Collateral for Secured Borrowings: Charge over investment property in Shanghai, land use right on factory in Huizhou, pledged deposits of RMB 54.2 million and corporate guarantees from subsidiaries of the Group and third parties. Meanwhile, a subsidiary of the Group provides a guarantee to the third party with reference to the terms and conditions in the guarantee provided by the third party. 1(c) A statement of cash flow (for the group), together with a comparative statement for the corresponding period of the immediately preceding financial year. Statement of cash flow for 1 st Quarter Ended 30 September < The Group > FY2013 FY st Qtr 1 st Qtr 1 Jul 12 to 1 Jul 11 to 30Sep12 30Sep11 RMB 000 RMB 000 Cash flow from operating activities Profit / (loss)before tax 2,979 (12,888) Adjustments for: Interest income (4,778) (709) Interest expenses 3,955 1,706 Interest on put option liability Interest income on long-term receivables - (1,669) Amortisation of land use rights Amortisation of other intangible assets 1,661 1,902 Depreciation of property, plant and equipment 3,058 2,881 Loss on disposal of property, plant and equipment, net Write off of other intangible assets - 1,074 Share of results of associates (1,976) (4,054) Dividend received from available-for-sale financial assets (42) - Equity-settled share-based payment expenses (4,002) 764 Operating cash flows before movements in working capital 1,047 (10,444) Page 5 of 16

6 < The Group > FY2013 FY st Qtr 1 st Qtr 1 Jul 12 to 1 Jul 11 to 30Sep12 30Sep11 RMB 000 RMB 000 Increase in trade, bill and note receivables (29,172) (51,707) Increasein other receivables and trade deposits paid to suppliers (16,666) (34,311) Increase in inventories (72,942) (25,805) Increase in trade and note payables 520,628 22,850 Increase in other payables and trade deposits received from customers 47,064 41,191 Cash generated from / (used in) operations 449,959 (58,226) Interest paid (3,955) (1,706) Income tax paid - 2,819 Net cash generatedfrom / (used in) operating activities 446,004 (57,113) Cash flow from investing activities Interest received 2, Proceeds from disposal of property, plant and equipment Purchase of property, plant and equipment (1,540) (26,542) Purchase of other intangible assets - (1,782) Dividend received from available-for-sale financial assets 42 - Purchase of available-for-sale financial assets - (300) Decrease in fixed bank deposits with an original maturity of more than three months Increase in restricted cash and pledged deposits (290,723) - Net cash used in investing activitiess (289,415) (26,972) Cash flow from financing activities Purchase of non-controlling equity interest of subsidiary - (27,649) Proceeds from bank borrowings 10,000 10,000 Repayment of bank borrowings (40,000) - Net cash used infinancing activities (30,000) (17,649) Net increase / (decrease)in cash and cash equivalents 126,589 (101,734) Cash and cash equivalents at the beginning of the financial period 119, ,216 Effect of foreign exchange rate changes, net Cash and cash equivalents at the end of the financial period 245, ,032 Analysis of cash and cash equivalents Cash and bank balances 176, ,489 Short-term bank deposits 425,867 37, , ,532 Less: Restricted cash and pledged deposits (356,844) (26,500) 245, ,032 Page 6 of 16

7 1(d)(i) LONGCHEER HOLDINGS LIMITED A statement (for the issuer and group) showing either (i) all changes in equity or (ii) changes in equity other than those arising from capitalisation issues and distributions to shareholders, together with a comparative statement for the corresponding period of the immediately preceding financial year. Statement of Changes in Equity for the Group Share capital Treasury Share shares premium Capital Legal Share award Put option Translation Revaluation Available-forsale financial assets revaluation Retained earnings Total Noncontrolling interests Total equity RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 Balance at 1 Jul ,608 (89,485) 138,818 64,290 69,691 5,345 - (53,414) 10, , ,613 68, ,702 Arising from share award plan (4,002) (4,002) - (4,002) Transactions with owners (4,002) (4,002) - (4,002) Profit for the period ,771 1,771 1,077 2,848 Other comprehensive income -Change in fair value on available-for-sale financial assets Currency translation - Group Associate (131) (131) - (131) - Available-for-sales (51) (51) - (51) financial assets Total comprehensive ,771 1,974 1,077 3,051 income for the period Balance at 30 Sept ,608 (89,485) 138,818 64,290 69,691 1,343 - (53,347) 10, , ,585 69, ,751 Page 7 of 16

8 Share capital Treasury Share shares premium Capital Legal Share award Put option Translation Revaluation Available-forsale financial assets revaluation Retained earnings Total Noncontrolling interests Total equity RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 Balance at 1 Jul ,608 (89,485) 138,818 64,290 73,160 4,572 (13,477) (52,638) 10,994 (107) 425, ,553 69, ,315 Arising from share award plan Redemption of put option , ,429 18,906 8,614 27,520 Purchase of non-controlling interests in subsidiary (18,156) (18,156) (9,521) (27,677) Transactions with owners , (12,727) 1,514 (907) 607 Loss for the period (6,441) (6,441) (5,803) (12,244) Other comprehensive income -Change in fair value on available-for-sale financial assets (2,093) - (2,093) - (2,093) -Currency translation - Group Associate (858) (858) - (858) - Available-for-sales (117) (117) - (117) financial assets Total comprehensive (898) - (2,093) (6,441) (9,432) (5,803) (15,235) income for the period Balance at 30 Sept ,608 (89,485) 138,818 64,290 73,160 5,336 - (53,536) 10,994 (2,200) 406, ,635 63, ,687 Page 8 of 16

9 Statement of Changes in Equity for the Company Company Share capital Treasury shares Proposed dividend Share premium Share award Translation Retained earnings Total RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 Balance at 1 Jul ,608 (89,485) - 138,818 5,345 (78,908) 155, ,228 Arising from share award plan (4,002) - - (4,002) Transactions with owners (4,002) - - (4,002) Profitfor the period ,106 2,106 Other comprehensive income -Currency translation Total comprehensive income for the period ,106 2,606 Balance at 30 Sept ,608 (89,485) - 138,818 1,343 (78,408) 157, ,832 Balance at 1 Jul ,608 (89,485) - 138,818 4,572 (74,159) 164, ,062 Arising from share award plan Transactions with owners Loss for the period (2,489) (2,489) Other comprehensive income -Currency translation (3,774) - (3,774) Total comprehensive income for the period (3,774) (2,489) (6,263) Balance at 30 Sept ,608 (89,485) - 138,818 5,336 (77,933) 162, ,563 Page 9 of 16

10 1(d)(ii) Details of any changes in the company's share capital arising from rights issue, bonus issue, share buy-backs, exercise of share options or warrants, conversion of other issues of equity securities, issue of shares for cash or as consideration for acquisition or for any other purpose since the end of the previous period reported on.state also the number of shares that may be issued on conversion of all the outstanding convertibles, as well as the number of shares held as treasury shares, if any, against the total number of issued shares excluding treasury shares of the issuer, as at the end of the current financial period reported on and as at the end of the corresponding period of the immediately preceding financial year. There was no change in the authorised, issued and paid-up share capital of the Company since the Company s previous announcement. 30 September 2012, the Company held 42,019,250 (30 September 2011: 42,019,250) treasury shares. There were no purchases, sales, transfers, disposal, cancellation and/or use of treasury shares during the 3 months ended 30 September September 2012, there were784,000 (30 September 2011: 4,499,000) share awards outstanding, which would result in an issue or transfer of an equivalent number of shares in the Company if performance conditions are met. Details of the Share Award Plan are provided in the Circular to shareholders dated 28 September In summary, these share awards would vest over a 3-year period, and subject to achievement of certain performance conditions. Shares would be issued or transferred to such participants in accordance with their entitlements of the share awards. 1(d)(iii) To show the total number of issued shares excluding treasury shares as at the end of the current financial period and as at the end of the immediately preceding year. <----The Company----> 30 Sept Jun 12 Issued shares 396,664, ,664,100 Less: Treasury shares (42,019,250) (42,019,250) Total number of issued shares excluding treasury shares 354,644, ,644,850 1(d)(iv) A statement showing all sales, transfers, disposal, cancellation and/or use of treasury shares as at the end of the current financial period reported on. During the quarter, no treasury shares were used to satisfy the vesting of an equivalent number of share awards. 2. Whether the figures have been audited or reviewed and in accordance with which auditing standard or practice. The figures have not been audited or reviewed by the Company s auditors. 3. Where the figures have been audited or reviewed, the auditors report (including any qualifications or emphasis of a matter). Not applicable. Page 10 of 16

11 4. Whether the same accounting policies and methods of computation as in the issuer s most recently audited annual financial statements have been applied. The Group has adopted the same accounting policies and methods of computations as stated in the audited financial statements for the year ended 30 June 2012, except for the adoption of revised International Financial Reporting Standards (IFRSs) which became effective for the financial period beginning on 1 July The adoption of these revised IFRSs did not give rise to significant changes to the financial statements. 5. If there are any changes in the accounting policies and methods of computation, including any required by an accounting standard, what has changed, as well as the reasons for, and the effect of, the change. Refer to note (4) above. 6. Earnings per ordinary share of the group for the current financial period reported on and the corresponding period of the immediately preceding financial year, after deducting any provision for preference dividends. < The Group > FY2013 FY st Qtr 1 st Qtr RMB cents RMB cents Earnings / (loss) per share 0.50 (1.82) Weighted average number of shares 354,644, ,644,850 There was no dilutive potential ordinary share. There is no dilution effect from contingently issuable shares arising from the share awards as performance conditions for the current financial year has not been met. 7. Net asset value (for the issuer and group) per ordinary share based on the total number of issued shares excluding treasury shares of the issuer at the end of the:(a) current financial period reported on; and (b) immediately preceding financial year. Net asset value per ordinary share based on issued share capital (excluding treasury shares) at the end of period Number of shares (excluding treasury shares) <----The Group----> 30 Sept 12 RMB (cents) 30 Jun 12 RMB (cents) <----The Company---> 30 Sept12 RMB (cents) 30 Jun 12 RMB (cents) ,644, ,644, ,644, ,644,850 Page 11 of 16

12 8. A review of the performance of the group, to the extent necessary for a reasonable understanding of the group s business. It must include a discussion of the following: (a) any significant factors that affected the turnover, costs, and earnings of the group for the current financial period reported on, including (where applicable) seasonal or cyclical factors; and (b) any material factors that affected the cash flow, working capital, assets or liabilities of the group during the current financial period reported on. Review of the Performance of the Group Revenue The Group s revenue for Q1 FY13 decreased by 12.5% to RMB million compared to Q1 FY12 of RMB million. The decrease in revenue was attributable to a decrease of 44.3% in total shipment from 5.46 million units in Q1 FY12 to 3.04 million units in Q1 FY13.Sales of 3G smartphones in China accounted for 49% of total shipment and 59% of revenue for the current quarter. Average selling prices ( ASP ) of handset solutions for Q1 FY13 increased by 61.2% to RMB per unit compared to RMB per unit in Q1 FY12. This is attributable to the Group s strategy of product rationalisation with focus on high value 3G smartphones. Gross profit and Gross profit margin Gross profit for Q1 FY13 increased by 10.2% to RMB 52.2 million compared to RMB 47.4 million for Q1 FY12. Correspondingly, gross profit margin for Q1 FY13 also increased from 6.73% in Q1 FY12 to 8.48%. The increase in gross profit margin was mainly attributable to the increasing contribution from higher margin 3G smartphones and improved margins on otherproducts due to the Group s effort on rationalisation of products and customers. Other Income Other income mainly represented government subsidies. Other income decreased by RMB 2.0 million or 84.1% in Q1 FY13 compared to corresponding period last year mainly due to decrease in subsidies from government. Distribution Costs and Administrative Expenses Operating expenses comprising, distribution costs and administrative expenses decreased by 16.3% to RMB 56.2 million in Q1 FY13 as compared to RMB 67.2 million in Q1 FY12. The decrease in operating expenses in Q1 FY13 was mainly due to the lowered cost base as a result of successful cost rationalization exercise carried out by the Group. Following the implementation of cost rationalisation, the headcount of the Group was reduced and operate on a smaller scale. Other Financial Net Income Other financial net income comprised of interest income, interest income on long term receivables, gain/loss in foreign exchange and fair value gain/loss on financial assets at fair value through profit and loss. Other financial net income included foreign exchange gain of RMB 2.4 million arising from favourable exchange exposures that benefited from the appreciation of the RMB against USD in Q1 FY12 and the amount was not material for Q1 FY13. Interest income increased from RMB 0.7 million in Q1 FY12 to RMB 4.8 million in Q1 FY13 as a result of increase in deposit balances and interest income on other receivables. Page 12 of 16

13 Share of Results of Associates LONGCHEER HOLDINGS LIMITED This mainly relates to the Group s shares of results in Mentech, a 20%-owned associate. Share of results of associates decreased by RMB 2.1 million or 51.3% mainly due to decrease in contribution from Mentech as a result of keen market competition. Finance Costs Finance costs for Q1 FY13 doubled to RMB 4.0 million compared to RMB 2.0 million in Q1 FY12. This was mainly due to an increase in finance cost on issuing note payables in Q1 FY13 as compared to the corresponding period last year. Balance Sheets Property, Plant & Equipment Property, plant and equipment amounted to RMB 91.2 million which is mainly attributable to the factory and equipment at the Group's manufacturing base located in Huizhou. Investment Properties This mainly relates to the Group s investment properties located in Xi an and Shanghai. Interests in Associates This mainly relates to the Group s investment in 20%-owned associate, Mentech. Restricted cash and pledged deposits During the quarter, restricted cash and pledged deposits increased significantly from RMB 66.1 million as at 30 June 2012 to RMB million as at 30 September This is mainly due to the increase in settlement of amount with suppliers using note payables. For issuing note payables, the Group has to place deposits with banks as restricted cash and pledged deposits. As such, balance of restricted cash and pledged deposits increased. Details of notes payables are discussed under heading Trade and note payables below. Note receivables During the quarter, note receivables decreased by RMB 5.0 million or 1.7% to RMB million upon maturity of certain note receivables. Trade and bill receivables During the quarter, trade and bill receivables increased by RMB 34.1 million or 14.5% to RMB million. This is mainly due to the Group s strategy to rationalise its customers. The Group is reducing the number of smaller customers whom the Group transacts with minimal or no credit terms and is developing a customers base with larger customers who generally require longer and better credit terms. Other receivables Other receivables mainly relates to a refund of deposit paid for a property in Zhangjiang, Shanghai. The refund of deposits bears interest. During the quarter, interest income from the other receivable amounted to RMB 1.7 million. For further details of the transaction, please refer to announcement by Company released on 27 July2011. Page 13 of 16

14 Inventories The increase in amount of inventories is mainly due to an increase in procurement near quarter end and increase in contribution from delivery of complete handset instead of PCBA. Complete handsets normally composes greater portion of materials than for PCBA and hence balance of inventories increase. Trade and note payables Trade and note payables increased significantly by RMB million or 114.8% mainly due to increase in settlement using note payables with maturity ranged from 3 months to 1 year. As a result of this, the trade payables turnover days also increased during the quarter. Amount of note payables increased from RMB million as at 30 June 2012 to RMB million as at 30 September For issuance of note payables, the Group has to place deposits with banks as restricted cash and pledged deposits, hence balance of restricted cash and pledged deposits also increased from RMB 66.1 million as at 30 June 2012 to RMB million as at 30 September 2012 which is discussed above. Other payables The increase in other payables ismainly due to an increase in deferred government grant and increase in accruals. Working Capital Management Working capital was well managed:- Q1 FY13 Q1 FY12 Turnover Days Days Days Trade receivables (including trade deposits paid to suppliers) Inventories Trade payables (including trade deposits received from customers) As a result of increase in settlement using note payables with maturity ranged from 3 months to 1 year and thus trade payables turnover days increase accordingly. Cash Flow For Q1 FY13, the Group recorded net cash generated from operating activities of RMB 446.0million. This is mainly attributable to increase in using note payables with maturity ranged from 3 months to 1 year for settlement of balance with suppliers. As such trade payables turnover days increased and resulting cash inflow. During the quarter, the Group paid RMB 1.5 million for acquisition of fixed assets and placed RMB million as restricted cash and pledged deposits for issuance of note payables. To reduce interest expenses, the Group made a net repayment of bank borrowings of RMB 30 million during Q1 FY13. Page 14 of 16

15 9. Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results. No forecast or prospect statement had been made. 10. A commentary at the date of the announcement of the significant trends and competitive conditions of the industry in which the group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months. The continued growth in demand for 3G smartphones has allowed the Group to improve its margins and enabling it to offset against the steep decline in sales of 2G feature phones. As a result of changes in the Group s product mix to deliver more high value 3G smartphones and implementation of cost rationalisation, both ASP and gross profit margin of the Group were improved in the past quarter. The trend towards 3G smartphones remains intact and demand for these products remains robust. However, the 3G smartphone market is highly competitive and is going to be intensifying in the future. Both the ASP and gross profit margin will be continuously under pressure. The Group will continue to rationalise its clientele and execute strict cost control to improve its operating efficiency and lessen the pressure on gross profit margin. The positive effects from rationalization of products and customers have yet to materialize fully and the industry continues to face challenges from this transition, hence more time is required to achieve sustained profitability and growth. This release may contain forward-looking statements that involve risks and uncertainties. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements as a result of a number of risks, uncertainties and assumptions. Representative examples of these factors include (without limitation) general industry and economic conditions, interest rate trends, cost of capital and capital availability, competition from other companies and venues for the sale/distribution of goods and services, shifts in customer demands, customers and partners, changes in operating expenses, including employee wages, benefits and training, and governmental and public policy changes. You are cautioned not to place undue reliance on these forward-looking statements, which are based on current view of management on future events. Page 15 of 16

16 11. Dividend (a) Current Financial Period Reported On Any dividend declared for the current financial period reported on? None (b) Corresponding Period of the Immediately Preceding Financial Year Any dividend declared for the corresponding period of the immediately preceding financial year? None (c) Dividend is before tax, net of tax or tax exempt : N.A. (d) Date of Dividend payable : N.A. (e) Book Closure Date : N.A. 12. If no dividend has been declared (recommended), a statement to that effect. No dividend has been recommended. 13. If the Group has obtained a general mandate from shareholders for IPTs, the aggregate value of such transactions as required under Rule 920(1)(a)(ii). If no IPT Mandate has been obtained, a statement to that effect. No IPT mandate has been obtained. 14. Negative Confirmation pursuant to Rule 705(5) of the Listing Manual The Directors of the Company confirm that to the best of their knowledge, nothing has come to their attention which may render these unaudited interim financial statements for the quarter ended 30 September 2012, to be false or misleading in any material aspect. BY ORDER OF THE BOARD Dr Du Junhong Executive Chairman 29 October 2012 Page 16 of 16