LONGCHEER HOLDINGS LIMITED Incorporated in Bermuda Company Registration No

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1 UNAUDITED FULL YEAR FINANCIAL STATEMENTS AND DIVIDEND ANNOUNCEMENT FOR THE QUARTER ENDED 31 DECEMBER 2012 PART I - INFORMATION REQUIRED FOR ANNOUNCEMENTS OF QUARTERLY (Q1, Q2 & Q3), HALF-YEAR AND FULL YEAR RESULTS 1 (a) An income statement (for the group) together with a comparative statement for the corresponding period of the immediately preceding financial year. Group Income Statement for the 2 nd quarter ended 31 December These figures have not been audited. Income Statement For 2 nd Quarter < The Group > FY2013 FY2012 FY2013 FY nd Qtr 2 nd Qtr 1 st Half 1 st Half 1 Oct 12 to 1 Oct 11 to 1 Jul 12 to 1 Jul 11 to +/(-) 31 Dec Dec Dec Dec 11 RMB 000 RMB 000 % RMB 000 RMB 000 % Revenue 1,006, , ,622,214 1,276, Cost of sales (928,896) (519,128) +79 (1,492,685) (1,175,804) +27 Gross profit 77,303 53, , , Other income 4,292 2, ,667 5,075-8 Distribution costs (11,558) (7,154) +62 (16,769) (16,781) - Administrative expenses (52,392) (47,684) +10 (103,395) (105,214) -2 Equity-settled share-based payment expenses +/(-) (160) 70 nm 3,842 (694) nm Other operating expenses (406) (964) -58 (529) (2,534) -79 Profit/ (loss) from operation 17, ,646 17,345 (19,110) nm Other financial net income 7,934 1, ,626 6, Share of results of associates 767 2, ,743 6, Finance costs (3,762) (2,336) +61 (7,717) (4,299) +80 Profit / (loss) before income tax 22,018 1,575 +1,298 24,997 (11,313) nm Income tax (expense) / credit (2,820) (78) +3,515 (2,951) 566 nm Profit / (loss) for the period 19,198 1,497 +1,182 22,046 (10,747) nm Profit / (loss) for the period attributable to: Owners of the Company 19,590 2, ,361 (4,172) nm Non-controlling interests (392) (772) (6,575) nm 19,198 1,497 +1,182 22,046 (10,747) nm Page 1 of 17

2 Statement of Comprehensive Income LONGCHEER HOLDINGS LIMITED < The Group > FY2013 FY2012 FY2013 FY nd Qtr 2 nd Qtr 1 st Half 1 st Half 1 Oct 12 to 1 Oct 11 to 1 Jul 12 to 1 Jul 11 to +/(-) 31 Dec Dec Dec Dec 11 RMB 000 RMB 000 % RMB 000 RMB 000 % Profit / (loss) for the period 19,198 1,497 +1,182 22,046 (10,747) nm +/(-) Other comprehensive income Change in fair value on available-for-sale financial assets Currency translation (337) (958) -65 (201) (3,051) Group (532) 29 nm (283) 106 nm - Associates (340) (430) -21 (471) (1,288) Available-for-sale financial assets Other comprehensive income for the period Total comprehensive income for the period (23) (36) -36 (74) (153) -52 (1,232) (1,395) -12 (1,029) (4,386) , ,514 21,017 (15,133) nm Total comprehensive income attributable to Owners of the Company 18, ,000 20,332 (8,558) nm Non-controlling interests (392) (772) (6,575) nm 17, ,514 21,017 (15,133) nm nm: Not meaningful / material Page 2 of 17

3 Notes: (i) Profit before tax is determined after crediting / (charging) the following: < The Group > FY2013 FY2012 FY2013 FY nd Qtr 2 nd Qtr 1 st Half 1 st Half 1 Oct 12 to 1 Oct 11 to +/(-) 1 Jul 12 to 1 Jul 11 to +/(-) 31 Dec Dec Dec Dec 11 RMB 000 RMB 000 % RMB 000 RMB 000 % (a) Interest income 7, ,108 12,475 1, (b) Interest income on long-term receivables - 1,691 nm - 3,360 nm (c) Interest expenses (3,762) (2,336) +61 (7,717) (4,042) +91 (d) Interest on put option liability (257) nm (e) Amortisation of land use rights (100) (100) - (200) (200) - (f) Amortisation of other intangible assets (1,462) (2,121) -31 (3,123) (4,023) -22 (g) Depreciation of property, plant and equipment (3,048) (3,195) -5 (6,106) (6,076) - (h) Foreign exchange (loss) / gain, net 237 (1,058) nm 151 1, (i) Loss on disposal of property, plant and equipment, net - (798) nm (92) (990) -91 (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 expenses and interest on put option liability. Page 3 of 17

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-----> 31 Dec 12 RMB Jun 12 RMB Dec 12 RMB Jun 12 RMB 000 ASSETS AND LIABILITIES Non-current assets Property, plant and equipment 88,757 93, Investment properties 142, , Land use rights 18,921 19, Other intangible assets 5,377 8, Interests in subsidiaries , ,842 Interests in associates 83,617 81, Available-for-sale financial assets 3,314 3, Current assets 342, , , ,842 Cash and deposit balances 186, , Restricted cash and pledged deposits 443,921 66, Amounts due from subsidiaries ,871 53,044 Note receivables 413, , Trade and bill receivables 367, , Other receivables 176, , Trade deposits paid to suppliers 25,564 18, Inventories 288, , ,903, ,914 53,693 53,430 Current liabilities Bank borrowings 99, , Trade and notes payables 1,330, , Amounts due to subsidiaries ,508 24,259 Other payables 112,740 70,630 1,898 2,785 Trade deposits received from customers 83,942 36, Income tax payable 402 4, ,626, ,784 31,406 27,044 Net current assets 276, ,130 22,287 26,386 Non-current liabilities Bank borrowings - 38, , Net assets 618, , , ,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 579, , , , , , , ,228 Non-controlling interests 63,650 68, Total equity 618, , , ,228 Page 4 of 17

5 1(b)(ii) Aggregate amount of group s borrowings and debt securities. Amount repayable within 1 year or less, or on demand 31 December June 2012 Secured Unsecured Secured Unsecured RMB 000 RMB 000 RMB 000 RMB , ,334 20,000 Amount repayable after 1 year 31 December June 2012 Secured Unsecured Secured Unsecured RMB 000 RMB 000 RMB 000 RMB ,000 - Details of Collateral for Secured Borrowings: Charge over investment property in Shanghai, pledged deposits of RMB 52.7 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 2 nd Quarter Ended 31 December < The Group > FY2013 FY2012 FY2013 FY nd Qtr 2 nd Qtr 1 st Half 1 st Half 1 Oct 12 to 1 Oct 11 to 1 Jul 12 to 1 Jul 11 to 31 Dec Dec Dec Dec 11 RMB 000 RMB 000 RMB 000 RMB 000 Cash flow from operating activities: Profit / (loss) before income tax 22,018 1,575 24,997 (11,313) Adjustments for: Interest income (7,697) (637) (12,475) (1,346) Interest income on long-term receivables - (1,691) - (3,360) Interest expenses 3,762 2,336 7,717 4,042 Interest on put option liability Amortisation of land use rights Amortisation of other intangible assets 1,462 2,121 3,123 4,023 Depreciation of property, plant and equipment 3,048 3,195 6,106 6,076 Loss on disposal of property, plant and equipment, net Write off of other intangible assets ,074 Dividend received from available-for-sale financial assets - - (42) - Share of results of associates (767) (2,019) (2,743) (6,073) Equity-settled share-based payment expenses 160 (70) (3,842) 694 Page 5 of 17

6 < The Group > FY2013 FY2012 FY2013 FY nd Qtr 2 nd Qtr 1 st Half 1 st Half 1 Oct 12 to 1 Oct 11 to 1 Jul 12 to 1 Jul 11 to 31 Dec Dec Dec Dec 11 RMB 000 RMB 000 RMB 000 RMB 000 Operating cash flows before movements in working capital 22,086 5,708 23,133 (4,736) (Increase) / decrease in trade, bill and note receivables (231,246) 34,996 (260,418) (16,711) (Increase) / decrease in other receivables and trade deposits paid to suppliers (2,732) 20,541 (19,398) (13,770) (Increase) / decrease in inventories (113,694) 36,471 (186,636) 10,665 Increase / (decrease) in trade and bills payables 356,328 (121,305) 876,956 (98,455) Increase / (decrease) in other payables and trade deposits received from customers 42,686 (46,364) 89,750 (5,173) Cash generated from / (used in) operations 73,428 (69,953) 523,387 (128,180) Interest paid (3,762) (2,336) (7,717) (4,042) Income tax paid (7,873) (5,131) (7,873) (2,312) Net cash generated from / (used in) operating activities 61,793 (77,420) 507,797 (134,534) Cash flow from investing activities: Interest received 4, ,347 1,346 Proceeds from disposal of property, plant and equipment 67 2, ,552 Proceeds from disposal of assets classified as held for sale - 43,590-43,590 Purchase of property, plant and equipment (585) (14,370) (2,125) (40,912) Purchase of other intangible assets - (1,228) - (3,010) Dividend received from available-for-sale financial assets Purchase of available-for-sale financial assets (300) Decrease in fixed bank deposits with an original maturity of more than three ,471 months Decrease / (increase) in restricted cash and pledged deposits (87,077) 7,500 (377,800) 7,500 Net cash (used in) / generated from investing activities (82,779) 39,209 (372,194) 12,237 Cash flow from financing activities: Proceeds from bank borrowings 10,000 40,000 20,000 50,000 Repayment of bank borrowings (48,000) - (88,000) - Purchase of non-controlling equity interest of subsidiary Net cash (used in) / generated from financing activities (27,649) (38,000) 40,000 (68,000) 22,351 Page 6 of 17

7 < The Group > FY2013 FY2012 FY2013 FY nd Qtr 2 nd Qtr 1 st Half 1 st Half 1 Oct 12 to 1 Oct 11 to 1 Jul 12 to 1 Jul 11 to 31 Dec Dec Dec Dec 11 RMB 000 RMB 000 RMB 000 RMB 000 Net (decrease) / increase in cash and cash equivalents (58,986) 1,789 67,603 (99,946) Cash and cash equivalents at the beginning of the financial period 245, , , ,216 Effect of foreign exchange rate changes, net (786) 359 (405) 910 Cash and cash equivalents at the end of the financial period 186, , , ,180 Analysis of cash and cash equivalents Cash and deposit balances with an original maturity of 3 months or less: Cash and bank deposits 78, ,015 78, ,015 Short-term bank deposits 443,921 62, ,921 62,165 Money market funds 107, , , , , ,180 Less: Restricted cash and pledged deposits (443,921) (19,000) (443,921) (19,000) 186, , , ,180 Page 7 of 17

8 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 shares Share premium Capital Legal Share award Translation Property 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 Balance at 1 Oct ,608 (89,485) 138,818 64,290 69,691 1,343 (53,347) 10, , ,585 69, ,751 Purchase of non-controlling interests in subsidiary (3,066) (3,066) 3,066 - Waive of dividend by non-controlling interests ,190 8,190 (8,190) - Arising from share award plan Transactions with owners ,124 5,284 (5,124) 160 Profit / (loss) for the period ,590 19,590 (392) 19,198 Other comprehensive income -Change in fair value on available-for-sale (337) - (337) - (337) financial assets -Currency translation - Group (532) (532) - (532) - Associate (340) (340) - (340) - Available-for-sale (23) (23) - (23) financial assets Total comprehensive (895) - (337) 19,590 18,358 (392) 17,966 income for the period Balance at 31 Dec ,608 (89,485) 138,818 64,290 69,691 1,503 (54,242) 10,994 (201) 348, ,227 63, ,877 Page 8 of 17

9 Share capital Treasury shares Share premium Capital LONGCHEER HOLDINGS LIMITED Legal Share award Translation Property 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 Balance at 1 Oct ,608 (89,485) 138,818 64,290 73,160 5,336 (53,536) 10,994 (2,200) 406, ,635 63, ,687 Arising from share award plan (70) (70) - (70) Transactions with owners (70) (70) - (70) Profit / (loss) for the period ,269 2,269 (772) 1,497 Other comprehensive income -Change in fair value on available-for-sale (958) - (958) - (958) financial assets -Currency translation - Group Associate (430) (430) - (430) - Available-for-sale financial assets (36) (36) - (36) Total comprehensive income for the period (437) - (958) 2, (772) 102 Balance at 31 Dec ,608 (89,485) 138,818 64,290 73,160 5,266 (53,973) 10,994 (3,158) 408, ,439 62, ,719 Page 9 of 17

10 Statement of Changes in Equity for the Company Company Share capital Treasury shares Share premium Share award Translation Retained earnings Total RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 Balance at 1 Oct ,608 (89,485) 138,818 1,343 (78,408) 157, ,832 Arising from share award plan Transactions with owners Loss for the period (2,215) (2,215) Other comprehensive income -Currency translation (1,712) - (1,712) Total comprehensive income for the period (1,712) (2,215) (3,927) Balance at 31 Dec ,608 (89,485) 138,818 1,503 (80,120) 155, ,065 Balance at 1 Oct ,608 (89,485) 138,818 5,336 (77,933) 162, ,563 Arising from share award plan (70) - - (70) Transactions with owners (70) - - (70) Loss for the period (2,656) (2,656) Other comprehensive income - Currency translation (1,727) - (1,727) Total comprehensive income for the period (1,727) (2,656) (4,383) Balance at 31 Dec ,608 (89,485) 138,818 5,266 (79,660) 159, ,110 Page 10 of 17

11 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. 31 December 2012, the Company held 42,019,250 (31 December 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 31 December December 2012, there were 784,000 (31 December 2011: 4,237,000) 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----> 31 Dec 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 11 of 17

12 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 FY2012 FY2013 FY nd Qtr 2 nd Qtr 1 st Half 1 st Half RMB cents RMB cents RMB cents RMB cents Earnings / (loss) per share (1.18) Weighted average number of shares 354,644, ,644, ,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----> 31 Dec 12 RMB (cents) 30 Jun 12 RMB (cents) <----The Company---> 31 Dec 12 RMB (cents) 30 Jun 12 RMB (cents) ,644, ,644, ,644, ,644,850 Page 12 of 17

13 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 Q2 FY13 increased by 76% to RMB 1,006.2 million compared to Q2 FY12 of RMB million. The increase in revenue was attributable to an increase of 38% in total shipment from 3.46 million units in Q2 FY12 to 4.76 million units in Q2 FY13. Sales of 3G smartphones in China accounted for 55% of total shipment and 58% of revenue for the current quarter. Shipment for 3G products accounted for 77% of total shipment and 86% of revenue for Q2 FY13. Average selling prices ( ASP ) of handset solutions for Q2 FY13 increased by 29% to RMB per unit compared to RMB per unit in Q2 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 Q2 FY13 increased by 44% to RMB 77.3 million in Q2 FY13 compared to RMB 53.6 million for Q2 FY12. Correspondingly, gross profit margin for Q2 FY13 dropped from 9.36% in Q2 FY12 to 7.68%. The decrease in gross profit margin was resulted from the increasing competition in the 3G smartphones market. Distribution Costs and Administrative Expenses Operating expenses comprising, distribution costs and administrative expenses increased by 16% to RMB 64.0 million in Q2 FY13 as compared to RMB 54.8 million in Q2 FY12 due mainly to increase in distribution costs associated with increase in revenue during Q2 FY13. As result of improvement in productivity and efficiency, distribution costs and administrative expenses to gross profit ratio dropped from 102.2% in Q2 FY12 to 88.8% in Q2 FY13. Other Financial Net Income Other financial net income comprised of interest income, interest income on long-term receivables, gain/loss in foreign exchange. Other financial net income included foreign exchange gain of RMB 0.2 million arising from favourable exchange exposures that benefited from the appreciation of the RMB against USD in Q2 FY13 while the Group recorded foreign exchange loss in Q2 FY12. Interest income increased from RMB 0.7 million in Q2 FY12 to RMB 7.7 million in Q2 FY13 as a result of increase in deposit balances and interest income on other receivables. Share of Results of Associates This mainly relates to the Group s shares of results in Mentech, a 20%-owned associate. Share of results of associates decreased by RMB 1.3 million or 62.0% mainly due to decrease in contribution from Mentech as a result of keen market competition. Page 13 of 17

14 Finance Costs Finance costs for Q2 FY13 increased to RMB 3.8 million compared to RMB 2.3 million in Q2 FY12. This was mainly due to an increase in finance cost on issuing note payables in Q2 FY13 as compared to the corresponding period last year. Balance Sheets (31 December 2012 compared to 30 June 2012) Property, Plant & Equipment Property, plant and equipment amounted to RMB 88.8 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 period, restricted cash and pledged deposits increased significantly from RMB 66.1 million as at 30 June 2012 to RMB million as at 31 December 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 period, note receivables increased by RMB million or 44.9% to RMB million as a result of increase in revenue from sales of 3G smartphones to customers in China who pay using bank notes. As a result of this, balance of note receivables increased. Trade and bill receivables During the period, trade and bill receivables increased by RMB million or 56.1% 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 customer 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 period, interest income from the other receivable amounted to RMB 4.1 million. For further details of the transaction, please refer to announcement by Company released on 27 July Trade Deposits paid to suppliers The increase in trade deposits paid to suppliers was due to advance payment paid to chipset suppliers. Page 14 of 17

15 Inventories The increase in amount of inventories is mainly due to an increase in business volume 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 increased. Trade and note payables Trade and note payables increased significantly by RMB million or 193.3% mainly due to (i) increase in trade payable as a result of increase in procurement to cope with increase in business volume; and (ii) 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 period. Amount of note payables increased from RMB million as at 30 June 2012 to RMB million as at 31 December 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 31 December 2012 which is discussed above. As a result of increase in settlement using note payables, net finance costs (defined as interest income excluding income on other receivables over interest expenses) improved from RMB -1.7 million in Q2 FY12 to RMB 1.6 million in Q2 FY13. Other Payables The increase in other payables is mainly due to an increase in deferred government grant and increase in accruals. Trade Deposits received from customers The increase in trade deposits received from customers was due to increase in business volume. Working Capital Management Working capital was managed as to optimise capital efficiency:- Q2 FY13 Q2 FY12 Turnover Days Days Days Trade receivables (including trade deposits paid to suppliers) Inventories Trade payables (including trade deposits received from customers) Despite increase in settlement using note payables with maturity ranged from 3 months to 1 year and thus trade payables turnover days increase accordingly, the overall net finance cost has been reduced. Cash Flow For Q2 FY13, the Group recorded net cash generated from operating activities of RMB 61.8 million. This is mainly attributable to (i) profit recorded during Q2 FY13 and (ii) 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 0.5 million for acquisition of fixed assets and placed RMB 87.1 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 38 million during Q2 FY13. Page 15 of 17

16 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 performance and to enable 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 complete handset, both ASP and net 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. While the Company is benefiting from the positive effects of products and customers rationalization, 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. 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. Page 16 of 17

17 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 31 December 2012, to be false or misleading in any material aspect. BY ORDER OF THE BOARD LONGCHEER HOLDINGS LIMITED Dr Du Junhong Executive Chairman 4 February 2013 Page 17 of 17