CTI.L Regulatory News (CTI)

Cathay International Holdings Limited

("Cathay" or the "Company" or the "Group")

Annual Results for the Year Ended 31 December 2010

Hong Kong, 16 March 2011:Cathay International Holdings Limited (LSE: CTI.L), an investment holding company and a leading investor in the growing healthcare sector in the People's Republic of China, today announces its Annual Results for the year ended 31 December 2010.

Financial Highlights

·; Revenue increased 10.0% to USD81.6 million (2009: USD74.2 million)

·; Gross profit increased 15.3% to USD40.9 million (2009: USD35.4 million)

·; Operating profit increased 55.9% to USD9.8 million (2009: USD6.3 million)

·; Profits before non-controlling interest increased to USD4.9 million (2009: USD0.3 million)

·; Profits attributable to owners of the parent increased to USD0.9 million (2009: turnaround from a loss of USD0.3 million)

·; Net assets were USD189.4 million (2009: USD114.8 million)

·; CIH's gearing decreased significantly to 33.5% (2009: 64.5%)

·; EPS US cents 0.24 (2009: loss per share US cents 0.11)

Operational Highlights

·; Lansen was successfully listed on the Hong Kong Stock Exchange

·; Lansen and Cathay Investment Capital acquired a total of 21.5% in Starry, a leading API manufacturer in China

·; Expansion of Haotian's inositol project entered its final phase, with production and sales to commence in H2 2011. Fine tuning resulted in a lowering of production costs and an improvement of the quality of a by-product, dicalcium phosphate ("DCP"), making it commercially viable

·; Successful implementation of hotel's repositioning strategy to target high end business travelers

Commenting on the Annual Results, Mr Sum Soon Lim, Chairman of Cathay International Holdings Limited, said: "The last financial year has been transformational for Cathay, with management delivering on a number of milestones across the group. We believe that the Group is well positioned to capitalize on the growth seen in the Chinese market and further selected investment opportunities. We look forward to the future with confidence and to delivering increased shareholder value in 2011 and beyond."

About Cathay International Holdings Limited

Cathay International Holdings Limited ("CIH"), focused on the People's Republic of China ("PRC"), is an investment holding company and a leading investor in the growing healthcare sector in China. The Group now employs more than 2000 people across the PRC, including over 30 specialist corporate and business development staff based at the holding company's headquarters in Hong Kong and Shenzhen.

The Group aims to identify investment opportunities with emphasis on high growth healthcare markets and build them into market sector leaders, with a clear exit strategy. The Group has demonstrated a strong track record of identifying potential high-growth investment opportunities in this area, including: Lansen Group, a leading specialty pharmaceutical company focused on rheumatology and Haotian Group, a company engaged in the manufacture, marketing and sale of key active ingredients for healthcare products, including inositol. To complement its healthcare portfolio, CIH has an R&D business focused on bringing new products to the growing Chinese market.

The Group also has a private equity investment arm focused on minority investment opportunities and a hotel investment.

Chairman's Statement

A transformational year

The last financial year was transformational for Cathay International Holdings Limited ("CIH") with management delivering on a number of milestones across the group.

Lansen Pharmaceutical Holdings Limited ("Lansen") was successfully listed on the Hong Kong Stock Exchange, with the Group continuing to retain a majority stake. An exemplar of our business strategy, the listing provides funds for further investment purposes and growth in other areas of the business. The Haotian Group's expansion of inositol production facilities has entered into the final phase, with sales expected to begin mid-2011. Cathay Investment Capital ("CIC") and Lansen acquired a significant stake in Zhejiang Starry Pharmaceutical Co. Limited ("Starry"), providing raw material production expertise and additional future revenues and earnings. Finally, the hotel has been repositioned for future success, targeting higher end business traveler accounts.

Well positioned for growth in China

Pharmaceutical industry growth in China continues to outpace the global market, with the industry expected to grow at 12.5% CAGR in the period 2009 - 2014 (Emerging Markets Direct Report, 2010). In 2009, the Chinese Government initiated an RMB850 billion (USD124 billion) three-year medical reform plan, aiming to expand basic medical coverage to 90 per cent of the population. The Group anticipates that the three-year medical reform plan will boost demand for drug products. The rising prevalence of rheumatology disease and the significant growth projected for disease modifying anti-rheumatic drugs ("DMARDs") in the rheumatology market will also benefit the Lansen Group and its future earnings potential.

On the back of this growth however, the Government is imposing tighter regulatory control on drug prices and profit margins through the draft "Drug Price Control Measures" (the "Measures"). Although the timing and extent of the Measures is unclear, it is expected that the direction will remain unchanged. In December 2010, the Government issued a notice lowering the retail price ceiling of 17 major types of products, however none of Lansen's products were subject to these price controls. In March 2011, the Government implemented a further price reduction which included 162 antibiotics and cardiovascular drugs with an average price adjustment of 21%. Again, none of Lansen's products were included. Even though it is not directly affected yet, Lansen is taking pre-emptive remedial actions to mitigate the potential impact from the new regulation by expanding its product range through speeding up development and acquisition of new pharmaceuticals; lowering its production and marketing costs by improving its internal management and control; and boosting the efficiency and capacity of its sales team. The Measures have no impact on manufacturers of ingredients for healthcare products, such as Haotian.

Led by soaring food prices, China's inflation rate jumped during the last quarter of 2010 to close to 5% and at 3.3% for the full year. This inflation has resulted in an increase in operating costs and the Government's tightening of credit and raising interest rates.

To counter this, Lansen and Haotian have taken respective measures including tight raw material control and headcount containment to lower costs. Lansen has secured agreed borrowing limits from domestic banks; and barring unforeseen circumstances, the tight credit environment in China should not materially affect the Group's operations in China. Currently, the Group is leveraged mostly outside China and the increase in interest rates in China has not materially impacted the Group's results.

CIH has all of its assets located in China and generates local currency revenue. The Renminbi ("RMB") appreciation during the year has worked favorably on CIH with exchange gain arising on using RMB profits to service offshore borrowings and conversion gain from expressing the Group's financials in US dollars. It must however be emphasized that the favorable impact may not be always the case.

The Lansen Group

Lansen continues to hold a market leading position in the rheumatology therapeutic area and is a major earnings contributor for the Group. Revenues in 2010 increased by 22.3% (2009: 29.5%) to USD58.6 million (2009: USD47.9 million) and gross profit increased by 18.5% (2009: 24.6%) to USD38.4 million (2009: USD32.4 million).

Lansen was successfully listed on the main board of the Hong Kong Stock Exchange, raising a total of HKD611 million (USD78 million), demonstrating the Group's ability to identify attractive investment opportunities and enhance their value through effective execution.

Even though the Group's effective interest in Lansen was diluted from 87.84% to 50.56% after the listing, thegrowth in Lansen in 2010 substantially compensated for the dilution effect.

Lansen continues to focus on its core business area of autoimmune rheumatic diseases to maintain its leading position in the DMARDs market. Lansen plans to acquire or develop biological agents, hormones and anti-inflammatory and analgesic drugs, aiming at extending its coverage to the market of other rheumatic drugs. Lansen is also considering the acquisition of companies or products of other autoimmune disease related specialties, such as dermatology, making these areas the driver of further growth.

Since the impact of the Government measures on bulk pharmaceuticals is relatively smaller than that on downstream pharmaceutical products, Lansen took the opportunity to acquire a 20% equity interest in Starry, the leading Chinese active pharmaceutical ingredients ("API") manufacturer of iohexol for X-CT non-ionic contrast agents. The investment in Starry enables Lansen to gain more exposure to the upstream operation of bulk pharmaceuticals for further development.

The Haotian Group

To date, the Group has made a total investment of USD45.4 million in Haotian, primarily in building it into potentially one of the largest global producers of inositol, a vitamin-like substance commonly used as an ingredient in dietary healthcare products - such as energy drinks, infant and baby milk powder and vitamin supplements.

Haotian is in the final phase of the expansion of the inositol project, which, upon commencement of production targeted in H2 of 2011, will have an inositol production capacity of 2,500 tonnes per annum compared to 2010 world production, reportedly in the region of 8,000 to 12,000 tonnes per annum.

During the year, Haotian has been able to secure long term and competitively priced raw materials and has taken time to refine its production process. It is the Group's belief that Haotian should achieve a sustainable competitive advantage over its competitors in terms of quality, stable raw material supply and production cost, which cannot be easily replicated by other market players without incurring significant investment, time and resources.

In addition, the inositol production process produces dicalcium phosphate ("DCP") as a by-product. Currently, DCP produced by inositol producers in China is of fertilizer to animal feed grade. With the refined inositol extraction process, the quality of Haotian's DCP will reach a standard higher than the current China standard for a food additive grade DCP. Haotian will apply for the relevant permit to label and sell its DCP as food additive in China. Until then, for the domestic market, Haotian will sell its DCP as high grade DCP, and for the export market, where such a permit is not required, as food additive grade DCP as long as the quality meets the customers' requirements. DCP will add a new revenue source to Haotian.

With Haotian's experience in marketing and sales of key ingredients for healthcare products, Haotian will build on its customer base, preparing for its sales of inositol and DCP in H2 of 2011.

Haotian is a key growth driver to the Group and it is expected to start contribute earnings to the Group in H2 of 2011.

Botai and Longbai

The research and product development division of the Group, Botai and Longbai, is currently working on feasibility studies to bring two healthcare related products to the Chinese market: collagen for cosmetic use, and Misoprostol for inducing labor. Botai will be the first company in China to locally develop collagen in the form of injectable filler. It is expected that these projects may take one to two years to complete.

Crowne Plaza Hotel & Suites Landmark Shenzhen

The Shenzhen hotel industry remains highly competitive; however, there has been an increase in demand for hotel rooms in Shenzhen since the last quarter in 2010. The Crowne Plaza Hotel and Suites Landmark Shenzhen (the "Hotel") was repositioned during 2010, targeting future growth from high-end business and corporate accounts. Overall revenues of the hotel division increased this year to USD9.0 million (2009: USD8.4 million) and gross profits increased to USD1.3 million (2009: USD485,000).

OTHER DEVELOPMENTS

Grant of share option

On 19 July 2010, the Group granted 2,751,177 options under a share option plan (the "Share Option Plan") approved by shareholders of the Group on 3 June 2010. The number of options granted to the Group's management and employees represents approximately 20% of the options currently available under the approved Share Option Plan.

Cathay Investment Capital

Having successfully completed its first investment in Starry, CIC has demonstrated its ability to coordinate internal resources and execute transactions in a timely manner to maximize investment opportunities. In 2011 the Group will continue to explore further minority interest investment opportunities with emphasis on the healthcare sector.

FUTURE EARNINGS GROWTH AND OUTLOOK

2010 was a breakthrough year for CIH, with management successfully delivering upon the Company's strategy; investing and building sector leaders with clear exit plans. Supported by China's growing and dynamic economy, the Group now has the depth of portfolio and management experience to grow revenues in 2011; particularly in the Lansen and Haotian Groups, and to explore other high growth potential investment opportunities.

The Group looks forward to the future with confidence and is well positioned to increase shareholder value in 2011 and beyond.

Sum Soon Lim

Chairman

Financial Review

Management has dedicated most of its resources in 2010 to strengthening operations, particularly with Haotian's expansion and the repositioning of the Hotel. The aim is to build a solid foundation for the future growth of these two businesses rather than generating short term revenues which may not fit into the strategy. The acquisition of Starry demonstrated CIC's ability to identify and execute attractive projects and seamless coordination with Lansen. The management team at Lansen continued to achieve an above industry average growth on top of a successful listing.

Results

Turnover and Gross Profit

The Group's profits before non-controlling interest improved significantly to USD4,937,000 (2009: USD284,000). The increase was mainly derived from the growth in Lansen Group and the reversal of a provision of GBP2,000,000 (equivalent to USD3,198,000) made in relation to a warranty provided under the terms of the sale of Stonehill Industrial Park in 2003 (which was no longer required upon expiry of the warranty this year).

Even though the Group's effective interest in Lansen was diluted from 87.84% to 50.56% upon Lansen's listing, Lansen's contribution to profit attributable to owners of the parent was USD6,084,000, a less than ten percent decline from the year before. The growth in Lansen had substantially compensated for the dilution effect. The Group's profit attributable to owners of the parent was USD891,000 compared to a loss of USD308,000 in 2009. It is due to the improvement in the hotel operation and the reversal of the provision made in relation to the sale of Stonehill Industrial Park, but offset by an increase in loss of Haotian to USD2,737,000 (2009: loss of USD274,000).

During the year, the Haotian Group focused its effort and resources in the refinement of the inositol extraction process and the expansion phase of the inositol project. The Haotian Group is also reformulating its strategy for non-inositol businesses due to soaring raw material costs and highly competitive pricing. This has resulted in a decrease in trading of its other healthcare ingredient products and consequently, suffered an increase in loss, compared to last year. With the targeted commencement of production and sales of the inositol project in H2 of 2011, the Haotian Group is expected to start contributing earnings to the Group.

During the year, the Hotel has implemented its repositioning strategy to focus on high end business travelers. This has temporarily slowed down the room sales, however, the Hotel has started to see a turnaround into profitability.

The Group did not account in its results for the gain of USD10,310,000 on the partial disposal of Lansen upon Lansen's listing. Under International Accounting Standards IAS27 (2008 revised), gain resulting from changes in a parent's ownership interest in a subsidiary, that do not result in the loss of control, are accounted for as an equity transaction. The change in Cathay's ownership interest in Lansen upon Lansen's listing has not resulted in a loss of control in Lansen and accordingly, such gain has been accounted for as an equity transaction.

Corporate office

During 2010 office expenses were USD1,038,000 (2009: USD3,182,000). This decrease in corporate administrative expenses was primarily due to the reversal of provision made in relation to the sale of Stonehill Industrial Park in 2003 (explained above). The effect of the reversal was partially offset by the increase in salaries and compensation expenses, including the appointment of a new Chief Executive Officer.

Finance costs were USD929,000 (2009: USD1,724,000), this decrease was mainly due to a reduction in bank borrowings and lower average costs of borrowing.

Net Assets and Gearing

Net assets at the end of 2010 were USD189,400,000 (2009: USD114,771,000). The increase was primarily owing to the increase in minority interests of USD37,130,000 arising from the public offering of the Lansen Group. As a result, net assets per share at the end of 2010 were USD0.50 (2009: USD0.30) and gearing decreased significantly to 33.5% (2009: 64.5%).

Operational Review 

HEALTH CARE BUSINESSES

The Lansen Group

Revenue of Lansen increased by 22.3% (2009: 29.5%) in 2010 to USD58,607,000 (2009: USD47,932,000). Revenue from rheumatic specialty prescription western pharmaceuticals amounted to USD40.6 million (2009: USD33.1 million), representing an increase of 22.6% over the previous year, whilst revenue from other pharmaceuticals amounted to USD18.0 million (2009: USD14.8 million), representing an increase of 21.6% over the previous year.

In 2010, Mycophenolate Mofetil Capsules ("MMF"), a new agency product was launched successfully. Sales of over USD0.5 million were recorded during the year since its launch in May. MMF represents Lansen's first step to broaden its product range and is expected to improve its contribution as it gains market traction.

The increase in Lansen's revenue during the year was mainly attributable to the growth from its two core rheumatic specialty prescription western pharmaceuticals, Pafulin and Tuoshu (both products are included in the State Medical Insurance Catalogue). In recent years, growth in the use of DMARDs has outpaced that of anti-inflammatory and analgesic drugs in treating rheumatic diseases. This growth is being fueled by a growing population relying on pharmaceutical treatment, increasing patient access to healthcare insurance and greater spending power.

Gross profit increased by 18.5% (2009: 24.6%) in 2010 to USD38,433,000 (2009: USD32,439,000). Gross profit margin for Lansen moderately decreased to 65.6% in 2010 (2009: 67.7%), representing a decrease of 2.1% over the previous year. The gross profit margin of Lansen's rheumatic specialty prescription western pharmaceuticals, Pafulin and Tuoshu, was maintained. The decrease in overall gross profit margin was mainly attributable to the increase in raw material prices of non-core products.

During 2010, the prices of Chinese herbs experienced a significant increase. However, Lansen was able to reduce the impact of this by managing its inventory level with more flexibility based on its market intelligence. Going forward, Lansen intends to build its own plantation base and processing facility for white peony to better control the raw material cost for its core product, Pafulin.

An operating profit margin of 22.1% (2009: 19.5%) was maintained, due to Lansen's ability to lower its costs of production and marketing, leveraging on its economy of scale.

To further counter the potential impact from the Measures, Lansen is proactively broadening its product range through three alternatives:

·; exploring acquisition opportunities of companies or products to speed up the pace of widening its product range, primarily focused on those for the treatment of autoimmune rheumatic disease, its core competency, and extending to companies or products of other autoimmune disease related specialties, such as dermatology;

·; conducting market driven research, based on market demand and on the latest progress in related fields in order to maintain its products' market value and leading status; and conducting product development either on its own or jointly with research institutes, primarily focused on products for the treatment of autoimmune disease; and

·; obtaining new agency products which would fit into its existing product range, such as MMF launched this year.

Lansen Group also acquired a 20% equity interest in Starry for a total consideration of USD24 million to enter into the bulk material markets. Starry is the leading API manufacturer of iohexol in China for X-CT non-ionic contrast agents. The acquisition also made possible the potential to explore new sources of revenue from the industry value chain and hence diversify the risk of concentration of Lansen's products. Starry has contributed USD221,000 to Lansen in 2010 since its acquisition in last November.

The Haotian Group

Revenue decreased by 21.8% to USD13,983,000 (2009: USD17,888,000) and gross profit decreased by 56.0% to USD1,109,000 (2009: USD2,522,000). The operating loss was USD2,431,000 (2009: profit of USD192,000). The gross profit margin was reduced to 7.9% (2009: 14.1%), due to an increase in raw material costs during the year.

In 2010, Haotian's revenue was generated from the trading of other healthcare ingredient products, not related to inositol. The market conditions were challenging with soaring raw material costs coupled with highly competitive pricing. Haotian therefore slowed down its trading of other healthcare ingredient products, which led to a decrease in revenue and an increase in loss. Haotian is reformulating its non-inositol trading business strategy, focusing on bilberry and related products with better cost control and market access.

The Haotian Group has dedicated most of its resources to the inositol project in 2010 to refine the extraction process and expand capacity. Haotian has made substantial progress in the final expansion phase of the inositol project, including:

·; the signing of further long term raw material supply contracts with major corn starch producers in Shandong province for its inositol production. The total raw material supply under these contracts is about 5,200 tonnes of corn fluid per day. This will ensure a stable and quality supply of raw material with a certain level of price fluctuation protection;

·; the refining of inositol extraction process has further improved the output efficiency and reduced overall production costs; and

·; the production of high quality DCP, a by-product of the inositol manufacturing process. Haotian's DCP, being produced from its refined extraction process, will reach a quality standard higher than the current standard of food additive grade DCP in China. Haotian will apply for the permit to label and sell its DCP as food additive in China. Until then, for the domestic market, Haotian will sell its DCP as high quality DCP for the customers' own product application; and for the export market where no such permit is required, as food additive grade DCP. The DCP will add a new revenue source to Haotian.

Inositol is a vitamin-like substance commonly used as an ingredient in dietary healthcare products. It has also been reported to help prevent hardening of the arteries and fatty liver. Food grade DCP is generally used as a nutritional supplement for flour, cake and pastry and as a food additive for biscuits, milk powder, cold drinks and ice cream powder. It is mainly used in the pharmaceutical industry to make calcium tablets.

The trialproduction and fine tuning of inositol and DCP is targeted to take place by H1 of 2011. Production and sale of inositol and DCP is targeted to commence in the second half of 2011. When completed, Haotian will have an annual inositol production capacity of 2,500 tonnes, positioning itself as one of the largest quality global manufacturers and suppliers of inositol. As of year-end, the Haotian Group owns four factories in Linqing, Leling, Siping, and Huxian that produce phytin (the intermediary material for inositol production). By the completion of the inositol project targeted by H1 of 2011, the number of phytin factories will increase to six, with additional factories in Gongzhuling and Yushu. The total production capacity of phytin produced by all these phytin factories is about 20,000 tonnes per annum and will meet the need of Haotian's inositol production.

The inositol market is well diversified with lots of small suppliers. Haotian would therefore likely become one of the largest producers after its expansion. Most potential customers contacted by Haotian welcome Haotian as a stable, high quality supplier to provide more flexibility in sourcing their supply.

As of year-end, the Group's total investment in the Haotian Group was USD45.4 million. The Haotian Group has arranged a USD7.0 million banking facility to fund part of the final expansion of the inositol project and working capital for inositol production.

Going forward, the Haotian Group will adopt a product driven approach with inositol and DCP as core products and major contributors to the growth of the Group's profits from 2011 onwards. Haotian will continue to trade in existing healthcare ingredient products such as bilberries. Haotian will continue its production of bilberries in its Yanling facility as an independent product line. Finally, the Haotian Group will continue to dedicate resources to identify other emerging products for future trading and production focus.

Research and Development Division

The research and development division is currently working on the feasibility studies of bringing two products to the market in China. It is in the process of applying for a licence for manufacture of collagen in the PRC for use in cosmetic medicine. Botai could be the first company in China producing collagen in the injectable filler form. Further, the division is also working on misoprostol with application in China to induce labour. It is anticipated that it may take 1 to 2 years to launch these products in the Chinese market.

Cathay International Capital

During the year, CIC established an expert team to identify minority investment opportunities in selected pharmaceutical and healthcare businesses. The level of minority interest is targeted to be at least 20% which allows the Group to equity account for the results of the investee companies.

In November 2010, the Group via its wholly owned subsidiary acquired a 1.5% equity interest in Starry for USD1.8 million, alongside with Lansen's acquisition of 20% equity interest of Starry. This demonstrated CIC's ability to coordinate internal resources and execute transactions in an effective and timely fashion in order to realise investment opportunities.

Hotel operations

Revenue in the hotel investment increased in 2010 to USD9,040,000 (2009: USD8,379,000). With the newly revamped hotel management team in place from mid-2010, the Hotel started to reposition itself as a luxury business hotel, targeting corporate executives and high-end individual travelers. The Hotel now has 312 enlarged superior rooms and suites, enhanced banquet and meeting facilities and a unique butler service for suite guests.

The Hotel has launched a marketing campaign with new images and refreshed food and beverage services. It has eliminated low margin corporate accounts and replaced those with companies desiring high-end accommodation for their employees. It works closely with the InterContinental Hotels Group on cross referral, particularly in the Pearl River Delta. With an expanded sales force, it also emphasizes marketing to the transient businesses through internet agents and domestic mid-sized corporates in Guangzhou, Shenzhen, Shanghai and Beijing. Other than improving the occupancy, the Hotel continues to promote its conference and banqueting facilities to increase food and beverage revenue.

As a result of the repositioning, the average room rate increased to USD128 (2009: USD113), which more than compensates for the short term decrease in occupancy by 1.6% to 43.8% (2009: 45.4%), resulting in higher turnover when compared to the previous year. Gross profit in 2010 increased to USD1,313,000 (2009: USD485,000) together with operating profit of USD1,070,000 (2009: USD513,000).

We expect the Hotel to steadily benefit from the continued economic growth of China, a recovering global economy and greater market awareness. With the new team, the Hotel should improve its market share and increase its contribution to the Group.

CONSOLIDATED INCOME STATEMENT

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENT OFFINANCIAL POSITION

CONSOLIDATED STATEMENT OF CASH FLOWS

NOTES

1. BASIS OF PREPARATION AND ACCOUNTING

This preliminary results statement and the consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards ("IFRSs"), including all new and revised standards effective for the period commencing 1 January 2010.

These consolidated financial statements have been prepared under historical cost convention as modified by the revaluation of hotel properties, investment property and financial instruments.

The preparation of financial statements in accordance with IFRSs requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management's best knowledge of current events and actions, actual results may ultimately differ from those estimates.

2. SEGMENT INFORMATION

Operating Segments

Management currently identifies the Group's four products and service lines as operating segments as follows:

1) the Lansen Group segment is focused on the manufacture, marketing and sale of specialty western pharmaceuticals, modern Chinese medicine extracts and generic pharmaceuticals in the PRC;

2) the Haotian Group segment is involved in the manufacture, marketing and sale of key active ingredients forhealthcare products. The Haotian Group is also in the process of building an inositol plant;

3) the research and development segment is engaged in the development of pharmaceutical products; and

4) the hotel operations segment is a hotel located in the Lowu district of Shenzhen in the PRC.

These operating segments are monitored and strategic decisions are made on the basis of adjusted segment operating results. Segment information can be analysed as follows for the reporting periods under review.

The totals presented for the Group's operating segments reconcile to the entity's key financial figures as presented in its financial statements as follows:

The Group's revenue and its non-current assets (other than financial instruments) are divided into the following geographical areas:

The geographical location of customers is based on the location at which the services were provided or the goods delivered. The geographical location of the non-current assets is based on the physical location of the asset.

No single customer's revenue amounted to 10% or more of the Group's revenue for both 2010 and 2009.

3. DIRECTORS' EMOLUMENTS

The Directors at 31 December 2010 were as follows:

Sum Soon Lim

Wu Zhen Tao

Lee Jin-Yi (appointed on 25 January 2010)

Stephen B. Hunt

Siu Ka Chi Eric (appointed on 25 January 2010)

Patrick Sung

Kenneth K. Toong

Their aggregate emoluments for the year ended 31 December 2010 were USD1,948,000 (2009: USD489,000).

4. INCOME TAX EXPENSE

5. EARNINGS/(LOSS) PER SHARE ATTRIBUTABLE TO OWNERS OF THE PARENT

Basic and diluted earnings/(loss) per share is based upon the profit/(loss) after tax attributable to owners of the parent of USD891,000 (2009: loss of USD308,000) and the following weighted average number of A shares and Common shares in issue during the year:

For the year ended 31 December 2010, the computation of diluted earnings per share does not assume the exercise of the Company's outstanding share options as the exercise price of those options is higher than the average market price for shares nor does it include the 1,292,353 Common Shares contingently issuable to Mr. Lee Jin-Yi, as the conditions for their issue were not met as at 31 December 2010.

6. FINANCIAL INFORMATION

This preliminary results statement was approved by the Board of Directors on 14 March 2011. The above results for the year ended 31 December 2010 have been abridged from the full Group accounts for that year, which received an unqualified auditor's report and which will be delivered to the Registrar of Companies shortly.

The Annual Report and Financial Statements will be posted to shareholders as soon as practicable. Further copies will be available from the company's registered office at Canon's Court, 22 Victoria Street, Hamilton HM12, Bermuda.

The Annual General Meeting will be held at the Company's offices at Suites 1203-4, 12/F, Li Po Chun Chambers, 189 Des Voeux Road Central, Hong Kong on 19 April 2011 at 3:00 p.m. (8:00 a.m. GMT). In addition, a shareholder information session is to be held on 11 April 2011at the offices of Peel Hunt LLP at 111 Old Broad Street, London EC2N 1PH, United Kingdom at 11:00 a.m.